Exhibit
10.1


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into
in Dallas County, Texas, effective as of the 28th day of May; 2004 (the
“Effective Date”) by and between Huron
Ventures, Inc., a Delaware corporation having its principal place of
business in Tarrant County, Texas (the “Company”),
and S. Jeffrey Johnson, a resident
of Tarrant County, Texas (the “Executive”).


 


Background


 


A.                                   The
Company desires to employ the Executive in such a manner as will reinforce and
encourage the highest attention and dedication to the Company of the Executive
as a member of the Company’s management, in the best interest of the Company
and its shareholders; and


 


B.                                     The
Executive is willing to serve the Company in the capacity and on the terms and
conditions herein provided.


 


Terms and Conditions


 


In consideration of the mutual benefits to be derived and the
covenants, conditions and promises herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:


 


ARTICLE I


 


Terms
of Employment


 


1.01                           Employment.  The Company hereby employs
the Executive as the Chief Executive Officer of the Company for and during the
term hereof, or as such other executive officer of the Company as the Board of
Directors of the Company (the “Board”)
may designate from time to time during the term hereof, subject to the
discretion of the Board and the terms and conditions hereof.   The Executive hereby accepts such
employment pursuant to the terms and conditions set forth in this Agreement.


 


1.02                           Duties of the Executive.  The
Executive shall serve and perform in the capacities described in
Section 1.01 hereof and shall have such duties, responsibilities, and
authorities as are designated for such offices pursuant to the Bylaws of the
Company, and as may be reasonably assigned to the Executive from time to time
by the Board; provided, however, the Executive shall, during the term hereof,
continuously have and retain such duties, responsibilities, and authorities
which are at least as significant in scope and substance as the duties,
responsibilities, and authorities required of the Executive’s office and
position with the Company as of the Effective Date.  Subject to the discretion of the Board, the Executive shall, and
shall have commensurate authority to, direct, manage, supervise and control the
business, affairs and property of the Company, including but not limited
to:  managing and coordinating the
business operations and activities of the Company and its


 


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divisions
and subsidiaries, if any (the “Subsidiaries”);
promulgating, approving and implementing operating plans and administrative
policies and fostering economy throughout the Company and its divisions and
Subsidiaries; acting as the principal public relations officer of the Company;
approving the addition, elimination and/or modification of management and
non-management positions and related personnel within the Company and its
divisions and Subsidiaries; approving salary and wage structures; and
performing any and all other duties as the Executive shall deem necessary or
appropriate for the efficient management and operation of the Company’s
business.  The Executive shall report
and be responsible to the Board.


 


The
Executive agrees to devote the Executive’s full time, best efforts, abilities,
knowledge  and experience to the
faithful performance of the duties, responsibilities, and authorities
which  may be reasonably assigned to the
Executive and which are consistent with the Executive’s executive offices
described under Section 1.01 of this Agreement.   Notwithstanding the preceding, the Executive may, without being
in violation of the Executive’s obligations hereunder, (i) serve on corporate,
civic or charitable boards, or committees which are not engaged in business in
competition with the Company or any Subsidiary; (ii) deliver lectures, accept
and fulfill speaking engagements, teach at educational institutions and
seminars and write or publish papers, articles or books; and (iii) invest the
Executive’s personal assets in such form or manner as will not require any
material services by the Executive in the operation of the entities in which
such investments are made, provided the Executive shall use his best efforts to
pursue such activities in such a manner so that such activities shall not
prevent the Executive from fulfilling his obligations to the Company hereunder.


 


1.03                           Term.  This Agreement shall become
effective as of the Effective Date and shall end at the close of
business on the date which is two years from the Effective Date (the “Employment
Period”).


 


1.04                           Directorship.  The
Executive agrees to serve as a Director of the Company during the Employment
Period, if so elected by the shareholders of the Company; provided, however,
that the Company shall indemnify the Executive for any and all liabilities
incurred by the Executive in connection with serving the Company in any and all
such capacities, to the maximum extent permitted by applicable state law, and
in any case on a basis no less favorable than is currently provided to other
members of the Company’s Board.


 


1.05                           Place of Performance.  In
connection with the Executive’s employment by the Company during the Employment
Period, the Executive shall be based and the Executive’s services shall be
performed at the Company’s principal office in Tarrant County, Texas, or at any
office or location not more than forty (40) miles from Fort Worth, Texas,
except for reasonable travel required in connection with the Company’s business
to an extent substantially consistent with the business travel obligations of
the other executive officers of the Company as of the Effective Date hereof.


 


1.06                           Compensation.  The
Company shall pay the Executive, as full compensation for services rendered by
the Executive under this Agreement, as follows:


 


(a)                                  Annual Base Salary.  he
Company shall pay Employee for his services a base salary, on an annualized
basis, of Two Hundred Fifty Thousand and No/100 Dollars ($250,000) per annum
for the period from the Effective Date through June 30, 2005, and Two
Hundred Sixty-seven Thousand Five Hundred and No/100 Dollars ($267,500.00) for
the remainder of the Employment Period.   Such Annual Base Salary shall be subject to
all appropriate federal and state withholding and payroll taxes and shall be
paid by the Company


 


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to
the Executive in twenty-four (24) equal semi-monthly installments in accordance
with the regular payroll policies and practices of the Company or in such other
periodic installments and on such days during the month as the Company and the
Executive shall mutually determine.  The
Company’s compensation of the Executive by payments of the Annual Base Salary
pursuant to this Section 1.06(a) shall not be deemed exclusive and shall
not prevent the Executive from participating in any other compensation or
benefit plan of the Company, nor shall such compensation in any way limit or
reduce any other obligation of the Company hereunder; and, except to the extent
specifically set forth herein, no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of the Company to pay
the Annual Base Salary to the Executive during the term of this Agreement.


 


(b)                                 Annual Bonus Compensation.  In
addition to the Annual Base Salary set forth in Section 1.06(a) hereof and
any other amounts of compensation payable to the Executive pursuant to any
other provisions of this Agreement, the Company shall also pay the Executive
discretionary annual bonus compensation (the “Annual Bonus Compensation”) in
the form of shares of the common stock of the Company in such amount, if any,
determined by the Board or the Compensation Committee of the Board to be proper
and appropriate for each fiscal year of the Company during the term of this
Agreement but in no event shall the value (based on the closing price of the
shares of the Company’s common stock on the day immediately preceding the date
of grant) of the shares of stock awarded as a bonus in any fiscal year of the
Employment Period exceed One Hundred Thousand and No/100 Dollars
($100,000.00)..  Such Annual Bonus
Compensation shall be based upon such factors as the Board or the Compensation
Committee of the Board shall deem appropriate and consistent with factors
applicable to other executive officers of the Company, including (i) the
Executive’s contributions to the success of the business operations and the
consolidated net-after-tax profits of the Company, its divisions and its
Subsidiaries for each fiscal year of the Company during the term hereof, as
determined in accordance with generally accepted accounting principles; (ii)
the consolidated revenues of the Company, its divisions and its Subsidiaries
for each fiscal year of the Company; (iii) the increase in energy reserves to
the  asset base of the Company, its
divisions and its Subsidiaries; and (iv) the general overall economic
performance of the Company, its divisions and its Subsidiaries for each fiscal
year of the Company.  Such Annual Bonus
Compensation, if any, shall be paid by the Company to the Executive in the
manner set forth in the resolution of the Board or the Compensation Committee
of the Board, as applicable, authorizing and declaring the payment of such
Annual Bonus Compensation to the Executive (the “Bonus Resolution”).  Notwithstanding anything herein to the
contrary, the Executive shall not be entitled to any Annual Bonus Compensation
for any fiscal year of the Company or any part thereof during the term of this
Agreement unless and until such Annual Bonus Compensation is determined and
declared by the Board or the Compensation Committee of the Board, as
applicable.


 


1.07                           Employment Benefits.  In
addition to the Annual Base Salary and any Annual Bonus Compensation payable to
the Executive hereunder, the Executive shall be entitled to the following
benefits upon satisfaction by the Executive of the eligibility requirements
therefor, subject to the following limitations:


 


(a)                                  Hospitalization, Accident,
and  Major Medical Insurance.  During the Employment Period, the Company,
at its own expense, shall provide the Executive with group


 


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hospitalization,
group accident, major medical, and dental insurance in amounts of coverage
comparable to the coverage, if any, provided other executive officers of the
Company.


 


(b)                                 Vacations.  The
Executive shall be entitled to a reasonable paid vacation of not less than
twenty (20) business days each calendar year during the Employment Period,
exclusive of holidays and weekends, which vacation shall be taken by the
Executive in accordance with the business requirements of the Company at the
time and its vacation plans, policies and practices as applied to executive
officers of the Company then in effect relative to this subject. The Executive
shall also be entitled to compensation in respect of earned or accrued but
unused vacation time based on the Executive’s Annual Base Salary applicable at
the time and to all paid holidays granted by the Company to its executive
officers.


 


(c)                                  Employment Facilities. 
During the Employment Period, the Company shall provide, at its expense,
appropriate and adequate office space, furniture, communications, stenographic
and word-processing equipment, supplies, personnel (including professional,
clerical, support and other personnel) and such other facilities and services
as shall be suitable to the Executive’s position and adequate for the
Executive’s use in performing the Executive’s duties and responsibilities under
this Agreement.


 


(d)                                 Other Employment Benefits. 
During the Employment Period, the Company shall (i) provide a
separate vehicle allowance payment to the Executive of not less than $850 per
month; ((ii) permit the Executive to
participate in employee benefit plans and programs maintained by the
Company applicable to officer employees on the same basis as other officer
employees of the Company; and (iii)
provide and pay for the Executive’s membership in a golf club of his choice.


 


(e)                                  Reimbursement of Employee
Expenses.  The Executive is authorized to incur
ordinary, necessary and reasonable expenses in connection with the performance
of the Executive’s duties and responsibilities under this Agreement and for the
promotion of the business and activities of the Company during the Employment
Period, including, without limitation, expenses for necessary travel and
entertainment and other items of expenses required in the normal and routine
course of the Executive’s employment hereunder.  The Company shall reimburse the Executive from time to time for
all such business expenses incurred pursuant to and in conformity with the
provisions of this Section and the policies and practices of the Company
then in effect relative to the reimbursement of business expenses.


 


1.08                           Termination.


 


(a)                                  Absence of a Breach of
Agreement.  This Agreement and the Executive’s
employment hereunder may be terminated without any breach of this Agreement at
any time during the term hereof only by reason of and in accordance with the
following provisions:


 


(1)                                  Death.  If
the Executive dies during the term of this Agreement and while in the employ of
the Company, the Executive’s employment hereunder shall automatically terminate
as of the date of the Executive’s death, and the Company shall have no further
liability hereunder to the Executive or the Executive’s estate, except to the
extent set forth in Section 1.09(a) hereof.


 


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(2)                                  Disability.  If,
during the term of this Agreement, the Executive shall be prevented from
performing the Executive’s duties hereunder by reason of becoming totally and
permanently disabled as hereinafter defined, then the Company may terminate the
Executive’s employment hereunder upon written Notice of Termination (effective
as of the Date of Termination specified in Section 1.08(d) hereof) to the
Executive without any further liability hereunder to the Executive, except as
set forth in Section 1.09(b) hereof.  
For purposes of this Agreement, the Executive shall be deemed to have
become totally and permanently disabled when (i) the Executive receives “total
disability benefits” under either (a) Social Security, or (b) the Company’s
long-term disability plan, if any (whether funded with insurance paid for by
either the Company or the Executive or self-funded by the Company), (ii) the
Board, upon the written report of a qualified physician (after a complete
physical examination of the Executive) selected by the Board or the Company’s
insurers and acceptable to the Executive or the Executive’s authorized legal
representative (which agreement as to acceptability will not be unreasonably
withheld), shall have determined that the Executive has become physically
and/or mentally incapable of performing the Executive’s duties under this
Agreement on a permanent basis even after reasonable accommodations (within the
meaning of the Americans With Disabilities Act) have been attempted by the
Company for the benefit of the Executive to enable the Executive to perform his
duties hereunder, or (iii) the Executive is unable, due to injury, illness or
other incapacity (physical or mental), to perform the essential functions,
duties and responsibilities of the positions contemplated herein on a full-time
basis for the entire time of a continuous period of ninety (90) consecutive
calendar days during any twelve (12) month period even after reasonable accommodations
(within the meaning of the Americans With Disabilities Act) have been attempted
by the Company for the benefit of the Executive to enable the Executive to
perform his duties hereunder.


 


(3)                                  Termination by the Company.


 


(A)                              For Cause. 
During the Employment Period, the Company may discharge the Executive
for cause and terminate the Executive’s employment hereunder upon written
Notice of Termination (effective as of the Date of Termination specified in
Section 1.08(d) hereof) to the Executive without any further liability
hereunder to the Executive or the Executive’s estate, except to the extent set
forth in Sections 1.09(c) hereof.  Such
notice of discharge shall describe with reasonable specificity the cause or causes
for the termination of the Executive’s employment, as well as the effective
Date of Termination of employment.  For
purposes of this Agreement, a discharge for “Cause”
shall mean termination of the Executive’s employment upon written Notice of
Termination to the Executive, limited, however, to one or more of the following
reasons:


 


(i)                                     the Executive shall have been convicted by a
court of competent jurisdiction of or admitted to an act of fraud, theft or
embezzlement against the Company;


 


(ii)                                  the Executive shall have otherwise been
convicted by a court of competent jurisdiction of a felony;


 


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(iii)                               the willful and unauthorized disclosure by the Executive of Trade
Secrets (as defined in Section 1.10(b) hereof) of the Company as
determined by the affirmative vote of at least a majority of the Board; or


 


(iv)                              the willful and continued failure by the Executive to substantially
perform his obligations under this Agreement (other than any such failure
resulting from the Executive’s incapacity due to physical or mental illness)
which is not remedied within thirty (30) days after a Notice of Termination (as
defined in Section 1.08(c) hereof) is delivered to the Executive that
specifically identifies, as required below, the facts and circumstances leading
the Company to believe that the Executive has willfully and continuously failed
to substantially perform his obligations under and in violation of this
Agreement.   For purposes of this
subsection, no act, or failure to act, on the Executive’s part shall be
considered “willful” unless done, or omitted to be done, by him in bad faith
and without reasonable belief that his action or omission was in the best
interests of the Company. 
Notwithstanding the foregoing, the Executive shall not be deemed to have
been terminated for Cause pursuant to this Section 1.08(a)(3)(A)(iv)
without (1) reasonable notice to the Executive setting forth the reasons,
facts and circumstances for the Company’s intention to terminate for Cause, (2)
an opportunity for the Executive, together with his counsel, to be heard before
the Board, and (3) delivery to the Executive of a Notice of Termination
pursuant to Section 1.08(c) hereof, from the Board or its authorized
delegate finding that in the Board’s good faith determination the Executive was
guilty of the conduct set forth above, and specifying the particulars thereof
in detail.


 


(B)                                Without Cause.  In
the event the Executive’s employment hereunder is terminated by the Company
pursuant to the provisions of Section 1.08(a)(3)(A) hereof for Cause as
determined by the Board and it is subsequently determined pursuant to the
dispute resolution procedures set forth in Section 2.08 hereof that the
Company did not have proper Cause to discharge the Executive, then and in such
event, notwithstanding any other provision herein to the contrary, the
Executive’s employment hereunder shall be deemed to have been terminated by the
Company in breach of this Agreement without Cause, but with notice pursuant to
the provisions of Section 1.08(b) hereof as of the date the Executive’s
employment was previously terminated by the Company purportedly for Cause, and
the Company shall have no liability to the Executive or the Executive’s estate
other than as set forth in Section 1.09(f)(2) hereof.


 


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(4)                                  Termination by the Executive.


 


(A)                              Reasons for Termination.  The
Executive may terminate his employment hereunder (i) for “Good Reason” (as hereinafter defined) at
any time upon sixty (60) days written Notice of Termination to the Company, in
which event the Company shall have no further liability hereunder to the
Executive, except to the extent set forth in Section 1.09(d) hereof, or
(ii) voluntarily, at the Executive’s option, at any time upon sixty (60) days
written Notice of Termination to the Company, in which event the Company shall
have no further liability hereunder to the Executive, except to the extent set
forth in Section 1.09(e) hereof.


 


(B)                                Good Reason.  For
purposes of this Agreement, the term “Good
Reason” shall mean, without the Executive’s express written consent,
the occurrence of any of the following circumstances (each of which occurrences
shall constitute a “Change”):


 


(i)                                     the assignment to the Executive of any duties
inconsistent in any material respect (unless in the nature of a promotion) with
the Executive’s position in the Company immediately prior to such Change
(including, but not limited to, the Executive’s status, offices and titles), or
a significant adverse alteration or diminution in the nature or status of the
Executive’s authority, duties or responsibilities from those in effect
immediately prior to such Change, other than either an isolated, insubstantial
and inadvertent action that is fully corrected within five (5) days after receipt
of written notice from the Executive;


 


(ii)                                  the relocation of the Company’s principal
executive offices to a location more than forty (40) miles from Fort Worth,
Texas, or the Company’s requiring the Executive to be based anywhere other than
the location described in Section 1.05 hereof, except for travel
reasonably required of the Executive in the performance of the Executive’s
duties on behalf of the Company to an extent substantially consistent with the
Executive’s business travel obligations of the other executive officers of the
Company as of the Effective Date hereof;


 


(iii)                               any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement, including, but not
limited to, any purported termination which is not effected pursuant to a
Notice of Termination satisfying the requirements of subsections (c) and (d) of
this Section 1.08 hereof (and, if applicable, the requirements of
Section 1.08(a)(3) hereof); or


 


(iv)                              any other failure by the Company to comply with any material provision
of this Agreement that has not been cured within ten (10) business days after
written notice of such 


 


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noncompliance
has been delivered by the Executive to the Company.


 


The Executive’s continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.  For
purposes of this Section 1.08(a)(4)(B), any good faith determination of
“Good Reason” made by the Executive shall constitute and create a reasonable
presumption of Good Reason, subject to rebuttal by the Company.


 


(b)                                 Termination by the Company
with Notice.  Notwithstanding any provision in this
Agreement to the contrary, the Company may terminate the Executive’s employment
hereunder for a reason other than as set forth in Subparagraphs (a)(1), (a)(2),
or (a)(3) of this Section 1.08 upon written Notice of Termination
(effective as of the Date of Termination specified in Section 1.08(d)
hereof) to the Executive without any further liability hereunder to the
Executive, except to the extent set forth in Sections 1.09(f)(1) hereof.


 


(c)                                  Notice of Termination.  Any
termination of the Executive’s employment by the Company or by the Executive
(other than termination pursuant to subsection (a)(1) of this
Section 1.08 hereof) shall be communicated by written Notice of
Termination to the other party.  For
purposes of this Agreement, a “Notice of Termination” shall mean a notice which
(i) indicates the specific termination provision in this Agreement relied
upon; (ii) sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated; and (iii) if the Date of Termination (as
defined in Section 1.08(d) hereof) is other than the date of delivery of
such notice, specifies the termination date (which date shall not be less than
ten [10] days after the delivery of such notice).


 


(d)                                       Date of Termination.  “Date
of Termination” shall mean (i) if the Executive’s employment is terminated by
his death, the date of his death; (ii) if the Executive’s employment is
terminated pursuant to subsection (a)(2) of Section 1.08 hereof
(relating to disability), thirty (30) days after Notice of Termination is
delivered to the Executive (provided that the Executive shall not have returned
to the performance of his duties on a full-time basis during such thirty (30)
day period); (iii) if the Executive’s employment is terminated pursuant to
subsection (a)(3) of Section 1.08 hereof (relating to Cause), ten
(10) days after Notice of Termination is delivered to the Executive; and (iv)
if the Executive’s employment is terminated for any other reason, the date
specified in the Notice of Termination, subject to other applicable provisions
of this Agreement.


 


1.09                           Compensation upon Termination.


 


(a)                                  Death.  In
the event the Executive’s employment hereunder is terminated pursuant to the
provisions of Section 1.08(a)(1) hereof due to the death of the Executive,
the Company shall have no further obligation to the Executive or the
Executive’s estate, except to pay to the Executive’s spouse, or if the
Executive leaves no spouse, to the estate of the Executive any accrued, but
unpaid, Annual Base Salary, any authorized but unreimbursed business expenses,
and any vacation benefits which have accrued as of the date of death, but were
then unpaid or unused.  Any amount due
the Executive under this Paragraph shall be paid in a lump-sum cash payment
within thirty (30) days after the death of the Executive.


 


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(b)                                 Disability.  In
the event the Executive’s employment hereunder is terminated pursuant to the
provisions of Section 1.08(a)(2) hereof due to the Disability of the
Executive, the Company shall be relieved of all of its obligations under this
Agreement, except to pay the Executive (i) any accrued, but unpaid Annual Base
Salary, any authorized but unreimbursed business expenses, and any vacation benefits
which have accrued as of the effective Date of Termination of the Executive’s
employment hereunder due to Disability, but then remain unpaid; and (ii) an
amount equal to three (3) month’s of the Executive Annual Base Salary.  The
provisions of the preceding sentence shall not affect the Executive’s rights to
receive payments under the Company’s disability insurance plan, if any.  Any amount due the Executive under clause
(i) of this Paragraph shall be paid in a lump-sum cash payment within thirty (30)
days after the effective Date of Termination of the Executive’s employment
hereunder and any amount due the Executive under clause (ii) of this Paragraph
shall be paid in accordance with the Company’s regular payroll practices during
the three-month period immediately following the effective Date of Termination
due to Disability of the Executive.


 


(c)                                  Cause.  In
the event the Executive’s employment hereunder is terminated by the Company for
Cause pursuant to the provisions of Section 1.08(a)(3)(A) hereof, the
Company shall have no further obligation to the Executive under this Agreement,
except to pay the Executive (i) any accrued, but unpaid, Annual Base Salary,
any authorized but unreimbursed business expenses, and any vacation benefits
which have accrued as of the effective Date of Termination of the Executive’s
employment hereunder, but were then unpaid or unused.  Any amount due the Executive under this Paragraph shall be paid
in a lump-sum cash payment within thirty (30) days after the effective Date of
Termination of the Executive’s employment hereunder.


 


(d)                                 Termination by the
Executive for Good Reason.  In the event this Agreement is terminated by
the Executive pursuant to the provisions of Section 1.08(a)(4)(A)(i)
hereof, the Executive shall be entitled to receive (i) any accrued, but unpaid,
Annual Base Salary, any authorized but unreimbursed business expenses, and any
vacation benefits which have accrued as of the effective Date of Termination of
the Executive’s employment hereunder, but were then unpaid or unused; and (ii)
an amount in cash equal to the Executive’s Annual Base Salary for the remainder
of the Employment Period and the maximum Annual Bonus Compensation that the
Executive might have received had he stayed to the end of Employment Period.  The amounts due the Executive under this
Paragraph shall be paid in a lump-sum cash payment and the shares of common
stock of the Company that the Executive is entitled to receive pursuant to the
Paragraph shall be delivered within thirty (30) days after the effective Date
of Termination of the Executive’s employment hereunder.  In addition to the foregoing, the unvested
potion of the stock awarded to the Executive from the Stock Pool shall vest on
the effective Date of Termination of the Executive’s employment hereunder.


 


(e)                                  Termination by the
Executive with Notice.  In the event the Executive’s employment
hereunder is voluntarily terminated by the Executive pursuant to the provisions
of Section 1.8(a)(4)(A) hereof for other than Good Reason, the Executive
shall be entitled to receive  any
accrued, but unpaid, Annual Base Salary, any authorized but unreimbursed
business expenses, and any vacation benefits which have accrued as of the
effective Date of Termination of the Executive’s employment hereunder, but were
then unpaid or unused.  Any amount due
the Executive under this Paragraph shall be paid in a lump-sum cash payment


 


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within
thirty (30) days after the effective Date of Termination of the Executive’s
employment hereunder.


 


(f)                                    Termination by the Company
with Notice.


 


(1)                                  Pursuant to Section 1.08(b).  In the event the Executive’s employment
hereunder is terminated by the Company pursuant to the provisions of
Section 1.08(b) hereof, the Executive shall be entitled to receive (i) any
accrued, but unpaid, Annual Base Salary, any authorized but unreimbursed
business expenses, and any vacation benefits which have accrued as of the
effective Date of Termination of the Executive’s employment hereunder, but were
then unpaid or unused; and (ii) an amount in cash equal to the Executive’s
Annual Base Salary for the remainder of the Employment Period and the maximum
Annual Bonus Compensation that the Executive might have received had he stayed
to the end of Employment Period.  The
amounts due the Executive under this Paragraph shall be paid in a lump-sum cash
payment and the shares of common stock of the Company that the Executive is
entitled to receive pursuant to the Paragraph shall be delivered within thirty
(30) days after the effective Date of Termination of the Executive’s employment
hereunder.  In addition to the
foregoing, the unvested potion of the stock awarded to the Executive from the
Stock Pool shall vest on the effective Date of Termination of the Executive’s
employment hereunder.


 


(2)                                  Pursuant to Section 1.08(a)(3)(B).  In the event the Executive’s employment is
purportedly terminated by the Company pursuant to the provisions of
Section 1.08(a)(3)(A) for Cause and it is subsequently determined pursuant
to the dispute resolution provisions set forth in Section 2.8 hereof that
the Company did not have adequate Cause to discharge the Executive, the
Executive shall be entitled to receive (i) the amount of compensation set forth
in Section 1.09(f)(1) immediately above, less any amount previously paid
to the Executive pursuant to the provisions of Section 1.09(c) hereof, and
(ii) the amount of the reasonable attorneys’ fees, plus court costs incurred by
the Executive in contesting that the Executive was improperly discharged by the
Company for Cause.  Any amount due the
Executive under clauses (i) and (ii) of this Paragraph shall be paid in a
lump-sum cash payment within thirty (30) days after the rendition of a final
judgment determining that the Executive was not terminated for Cause or the
date of final compromise and settlement of such issue between the parties
pursuant to the provisions of Section 2.8, as applicable.


 


(g)                                 No Duty to Mitigate.  The
Executive’s rights to the payments under the applicable foregoing provisions of
this Section 1.09 shall be considered accrued compensation or severance
pay, as applicable, in consideration of the Executive’s past services and the
Executive’s continued service to the Company from the Effective Date, and the
Executive’s entitlement thereto shall neither be governed by any duty to
mitigate the Executive’s damages by seeking further employment nor offset by
any compensation that the Executive may receive from future employment.


 


1.10                           Protective Covenants.  The
Executive recognizes that the Executive’s employment by the Company exacts the
highest standards of trust and confidence because (i) the Executive will become
fully familiar with and will further enhance his knowledge of all aspects of
the Company’s business and that of its Subsidiaries during the Executive’s
Employment Period with the Company, (ii)


 


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certain
information of which the Executive has secured or will gain knowledge during
the Executive’s Employment Period is proprietary and confidential information
which is of special and peculiar value to the Company or its Subsidiaries, and
(iii) if any such proprietary and confidential information were imparted or
otherwise disclosed to or became known by any person, including the Executive,
engaging in a business in competition with that of the Company or its
Subsidiaries, hardship, loss and irreparable injury and damage could result to
the Company or its Subsidiaries, the measurement of which would be difficult if
not impossible to ascertain.  Therefore,
the Executive agrees that it is necessary for the Company to protect its
business and that of its Subsidiaries from such potential damage, and the
Executive further agrees that the following covenants constitute a reasonable
and appropriate means, consistent with the best interests of both the Executive
and the Company, to protect the Company or its Subsidiaries against such
potential damage and shall apply to and be binding upon the Executive as
provided herein.


 


(a)                                  Proprietary Information.  The
Executive acknowledges that any and all inventions, improvements, discoveries,
formulae, processes, products or designs developed by the Executive alone or in
conjunction with others in connection with the Company’s business during the
term of the Executive’s Employment Period with the Company (the “Proprietary
Information”) shall be the sole and absolute property of the Company in
perpetuity, that the Executive shall promptly disclose such Proprietary
Information to the Company, and the Executive shall have no right, title or
interest therein or to receive additional monies therefor, regardless of
whether development occurred during normal employment hours or any other time
during the term of the Executive’s Employment Period with the Company.  The Executive shall assist the Company in
obtaining patents on all such Proprietary Information deemed patentable by the
Company and shall execute all documents necessary to obtain such patents and to
vest the Company with full and complete title to the patents and to protect the
patents against infringement by others. 
For purposes of this Agreement, an invention or concept shall be deemed
to have been made during the period of the Executive’s Employment Period if,
during such period, the invention or concept was conceived or first actually
reduced to practice, and the Executive agrees that any patent application filed
by the Executive within one (1) year after the termination of the Executive’s
employment with the Company shall be presumed to relate to an invention or
concept made or discovered during the term of the Executive’s Employment Period
with the Company, unless the Executive can establish the contrary.


 


(b)                                 Trade Secrets.  The
Executive further acknowledges that the Company or its Subsidiaries has
developed unique skills, concepts, sales presentations, marketing programs,
marketing strategy, business practices, business ideas, know-how, methods of
operation, trademarks, licenses, technical information, product designs, product
specifications, Proprietary Information, computer software programs, tapes and
discs concerning its operations, systems, customer lists, customer leads,
documents identifying past, present and future customers, hiring and training
methods, financial and other confidential and proprietary information
concerning its business operations and products (the “Trade Secrets”).  The Executive recognizes that the
Executive’s position with the Company is one of the highest trust and
confidence by reason of the Executive’s access to and contact with certain
Trade Secrets of the Company and its Subsidiaries.  The Executive agrees and covenants to use the Executive’s best
efforts and to exercise utmost diligence to protect and safeguard the Trade
Secrets of the Company and its Subsidiaries. 
The Executive further agrees and covenants that, except as may be
required by the Company in connection with this Agreement, or with the prior
written consent of the Company, the Executive shall not, either during the term
of


 


11

















 


this
Agreement or thereafter, directly or indirectly, use for the Executive’s own
benefit or for the benefit of another, or disclose, disseminate, or distribute
to another, any Trade Secret (whether or not acquired, learned, obtained, or
developed by the Executive alone or in conjunction with others) of the Company
or its Subsidiaries or of others with whom the Company or its Subsidiaries has
a business relationship.  All memoranda,
notes, records, drawings, documents, or other writings whatsoever made,
compiled, acquired, or received by the Executive during the term of this
Agreement, arising out of, in connection with, or related to any activity or
business of the Company or its Subsidiaries, including, but not limited to, the
Company’s customers, suppliers, or others with whom the Company has a business
relationship, the Company’s arrangements with such parties, and the Company’s
pricing and product policies and strategies, are, and shall continue to be, the
sole and exclusive property of the Company, and shall, together with all copies
thereof and all advertising literature, be returned and delivered to the
Company by the Executive immediately, without demand, upon the termination of
this Agreement, or at any time upon the Company’s demand.


 


(c)                                  Survival of Covenants. 
Each covenant of the Executive set forth in this Section 1.10 shall
survive the termination of this Agreement and shall be construed as an
agreement independent of any other provision of this Agreement, and the
existence of any claim or cause of action of the Executive against the Company
whether predicated on this Agreement or otherwise shall not constitute a
defense to the enforcement by the Company of such covenants.


 


(d)                                 Remedies.  In
the event of breach or threatened breach by the Executive of any provision of
this Section 1.10, the Company shall be entitled to equitable relief by
temporary restraining order, temporary injunction, permanent injunction or
otherwise without the necessity of posting any bond or other security therefor,
in addition to any other legal or equitable relief to which it may be entitled,
including any and all monetary damages which the Company may incur as a result
of such breach or violation or threatened breach or violation.  The Company may pursue any remedy available
to it concurrently or consecutively in any order as to any breach or violation,
or threatened breach or violation, and the pursuit of one or more of such
remedies at any time shall not be deemed an election of remedies or waiver of
the right to pursue any other of such remedies as to such breach or violation,
or threatened breach or violation, or as to any other breach or violation, or
threatened breach or violation.


 


The Executive
hereby acknowledges that the Executive’s agreement to be bound by the
protective covenants set forth in this Section 1.10 was a material
inducement for the Company entering into this Agreement and agreeing to pay the
Executive the compensation, benefits and other amounts set forth herein.


 


12

















 


ARTICLE II


 


General
Provisions


 


2.01                           Notices.  All notices, requests,
consents, demands and all other communications required or otherwise provided
for under this Agreement shall be in writing and shall be deemed to have been
duly given or made if (i) personally delivered; (ii) transmitted by first class
registered or certified mail, postage prepaid, return receipt requested; (iii)
sent by prepaid overnight courier service; or (iv) sent by telecopy or
facsimile transmission, confirmation of receipt requested, to the parties at
the following addresses (or such other addresses as shall be specified by the
parties by like notice):


 


	
  If
  to the Executive:

  	
   

  	
  S.
  Jeffrey Johnson

  
	
   

  	
   

  	
  309
  West Seventh Street

  
	
   

  	
   

  	
  Suite
  1600

  
	
   

  	
   

  	
  Fort
  Worth, Texas 76102

  
	
   

  	
   

  	
  Facsimile:  817-698-0761

  
	
   

  	
   

  	
   

  
	
  If
  to the Company:

  	
   

  	
  Cano
  Petroleum, Inc.

  
	
   

  	
   

  	
  309
  West Seventh Street

  
	
   

  	
   

  	
  Suite
  1600

  
	
   

  	
   

  	
  Fort
  Worth, Texas 76102

  
	
   

  	
   

  	
  Attn:  Chairman of the Board

  
	
   

  	
   

  	
  Facsimile:  817-698-0761

  



 


Such
notices, requests, demands and other communications shall be effective (i) if
delivered personally or sent by courier service, upon actual receipt by the
intended recipient, (ii) if mailed, upon the earlier of five days after deposit
in the mail or the date of delivery as shown by the return receipt therefor, or
(iii) or if sent by telecopy or facsimile or email transmission, when the
answer back or confirmation of receipt is received.


 


2.02                           Severability.  If
any provision contained in this Agreement is determined to be void, illegal or
unenforceable, in whole or in part, then the other provisions contained herein
shall remain in full force and effect as if the provision which was determined
to be void, illegal, or unenforceable had not been contained herein.


 


2.03                           Waiver, Modification and Integration.  The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach by any
party.  This Agreement contains the
entire agreement of the parties concerning employment of the Executive by the
Company and supersedes all prior and contemporaneous representations,
understandings and agreements, either oral or in writing, between the parties
hereto with respect to the employment of the Executive by the Company, and all
such prior or contemporaneous representations, understandings and agreements,
both oral and written, are hereby terminated. 
This Agreement may not be modified, altered or amended except by written
agreement of the parties hereto.


 


2.04                           Successors; Binding Effect. 
This Agreement shall be binding and effective upon the Company and its
successors and permitted assigns, and upon the Executive, the Executive’s
heirs, executors and legal representatives; provided, however, that the Company
shall not assign this


 


13

















 


Agreement
without the written consent of the Executive. 
This Agreement and all rights of the Executive hereunder shall, inure to
the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If the Executive
should die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement.


 


2.05                           Governing Law.  The
parties hereto agree that the laws of the State of Texas shall govern the
validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the respective parties hereto.


 


2.06                           Representation of Executive.  The
Executive hereby represents and warrants to the Company that the Executive has
not previously assumed any obligations inconsistent with those contained in
this Agreement.  The Executive further
represents and warrants to the Company that the Executive has entered into this
Agreement pursuant to the Executive’s own initiative and that the Company did
not induce the Executive to execute this Agreement in contravention of any
existing commitments.  The Executive
acknowledges that the Company has entered into this Agreement in reliance upon
the foregoing representations of the Executive.


 


2.07                           Survival.  The provisions of Sections
1.09, 1.10 and 2.08 shall survive the termination of this Agreement and the
termination of the employment relationship created hereunder to the extent
necessary or reasonably appropriate to effectuate the intents and purposes of
the parties hereto as expressed in such Sections.


 


2.08                           Dispute Resolution.


 


(a)                                  Definition of Dispute.  Any
controversy or claim, whether based on contract, tort, misrepresentation, or
any other legal theory, related directly or indirectly to this Agreement (the “Dispute”), shall be resolved solely in
accordance with the terms of this Section. 
Either party reserves the right to seek an injunction or other equitable
relief in court to prevent or stop a breach of this Agreement or a violation of
rights either party has under law.


 


(b)                                 Initiation of
Procedure.  The party seeking to initiate the resolution
of a Dispute (the “Initiating Party”) shall give written notice to the other
party, describing in general terms the nature of the Dispute, the Initiating
Party’s claim for relief and identifying one or more individuals with authority
to settle the Dispute on such party’s behalf. 
The party receiving such notice (the “Responding
Party,”) shall have five (5) business days within which to designate
by written notice to the Initiating Party, one or more individuals with
authority to settle the Dispute on such party’s behalf.  The individuals so designated shall be known
as the “Authorized Individuals.”  The Initiating Party and the Responding
Party shall collectively be referred to as the “Disputing Parties” or individually the “Disputing Party.”


 


(c)                                  Direct Negotiations.  The
Authorized Individuals shall be entitled to make such investigation of the
Dispute as they deem appropriate, but agree to promptly, and in no event later
than thirty (30) days from the date of the Initiating Party’s written notice,
meet to discuss resolution of the Dispute. 
The Authorized Individuals shall meet at such times and places and with
such frequency as they may agree.  If
the Dispute has not been resolved within thirty (30) days from the date of
their initial meeting, the Disputing Parties shall cease


 


14

















 


direct
negotiations and shall submit the Dispute to mediation in accordance with the
provisions of Section 2.8(d) hereof.


 


(d)                                 Mediation.


 


(1)                                  Selection of Mediator.  The
Authorized Individuals shall have five (5) business days from the date they
cease direct negotiations to submit to each other a written list of acceptable
qualified attorney-mediators not affiliated with any of the parties.  Within five (5) days from the date of
receipt of such list, the Authorized Individuals shall rank the mediators in
numerical order of preference and exchange such rankings.  If one or more names are on both lists, the
highest ranking person shall be designated as the mediator.  If no mediator has been selected under this
procedure, the Disputing Parties agree jointly to request a State or Federal
District Judge of their choosing (or if they cannot agree, the Local
Administrative Judge for the county in which the principal office of the
Company is located) to supply within ten (10) business days a list of potential
qualified attorney-mediators.  Within
five (5) business days of receipt of the list, the Authorized Individuals shall
again rank the proposed mediators in numerical order of preference and shall
simultaneously exchange such list and shall select as the mediator the
individual receiving the highest combined ranking.  If such mediator is not available to serve, they shall proceed to
contact the mediator who was next highest in ranking until they are able to
select a mediator.


 


(2)                                  Time and Place of Mediation.  In
consultation with the mediator selected, the Authorized Individual shall
promptly designate a mutually convenient time and place for the mediation, and
unless circumstances require otherwise, such time to be not later than thirty
(30) days after selection of the mediator.


 


(3)                                  Exchange of Information.  In
the event any Disputing Party to this Agreement has substantial need for
information in the possession of another Disputing Party to this Agreement in
order to prepare for the mediation, all Disputing Parties shall attempt in good
faith to agree to procedures for the expeditious exchange of such information,
with the help of the mediator if required.


 


(4)                                  Summary of Views.  At
least seven (7) days prior to the first scheduled session of the mediation,
each Disputing Party shall deliver to the mediator and to the other Disputing
Parties a concise written summary of its views on the matter in Dispute, and
such other matters required by the mediator. 
The mediator may also request that a confidential issue paper be
submitted by each Disputing Party to him.


 


(5)                                  Parties to be Represented.  In
the mediation, each Disputing Party shall be represented by an Authorized
Individual and may be represented by counsel. 
In addition, each Disputing Party may, with permission of the mediator,
bring such additional persons as needed to respond to questions, contribute
information, and participate in the negotiations.


 


(6)                                  Conduct of Mediation.  The
mediator shall determine the format for the meetings, designed to assure that
both the mediator and the Authorized


 


15

















 


Individuals
have an opportunity to hear an oral presentation of each Disputing Party’s
views on the matter in dispute, and that the authorized parties attempt to
negotiate a resolution of the matter in dispute, with or without the assistance
of counsel or others, but with the assistance of the mediator.  To this end, the mediator is authorized to
conduct both joint meetings and separate private caucuses with the Disputing
Parties.  The mediation session shall be
private.  The mediator will keep
confidential all information learned in private caucus with any Disputing Party
unless specifically authorized by such Disputing Party to make disclosure of
the information to the other Disputing Party. 
The Disputing Parties agree to sign a document agreeing that the
mediator shall be governed by the provisions of Chapter 154 of the Texas Civil
Practice and Remedies Code and such other rules as the mediator shall
prescribe.  The Disputing Parties commit
to participate in the proceedings in good faith with the intention of resolving
the Dispute if at all possible.


 


(7)                                  Termination of Mediation.  The
Disputing Parties agree to participate in the mediation procedure to its
conclusion.  The mediation shall be
terminated (i) by the execution of a settlement agreement by the Disputing
Parties, (ii) by a declaration of the mediator that the mediation is
terminated, or (iii) by a written declaration of a Disputing Party to the
effect that the mediation process is terminated at the conclusion of one full
day’s mediation session.  Even if the
mediation is terminated without a resolution of the Dispute, the Disputing
Parties agree not to terminate negotiations and not to commence any arbitration
proceedings prior to the expiration of five (5) days following the mediation.  Notwithstanding the foregoing, any Disputing
Party may commence arbitration proceedings within such five (5) day period if
the Dispute could be barred by an applicable statute of limitations.


 


(8)                                  Fees of Mediation; Disqualification.  The
fees and expenses of the mediator shall be shared equally by the Disputing
Parties.  The mediator shall be
disqualified as a witness, consultant, expert or counsel for any Disputing
Party with respect to the Dispute and any related matters.


 


(9)                                  Confidentiality. 
Mediation is a compromise negotiation for purposes of Federal and State
Rules of Evidence and constitutes privileged communication under Texas
law.  The entire mediation process is
confidential, and no stenographic, visual or audio record shall be made.  All conduct, statements, promises, offers,
views and opinions, whether oral or written, made in the course of the
mediation by any Disputing Party, their agents, employees, representatives or
other invitees and by the mediator are confidential and shall, in addition and
where appropriate, be deemed privileged. 
Such conduct, statements, promises, offers, views and opinions shall not
be discoverable or admissible for any purpose, including impeachment, in any
litigation or other proceeding involving the parties, and shall not be
disclosed to anyone not an agent, employee, expert, witness, or representative
of any of the parties; provided, however, that evidence otherwise discoverable
or admissible is not excluded from discovery or admission as a result of its
use in the mediation.


 


(e)                                  Binding Arbitration.  The
parties agree to participate in good faith in the procedures described in
Sections 2.08(c) and 2.08(d) hereof to their respective conclusion.  If the Disputing Parties are not successful
in resolving the dispute through direct negotiations or


 


16

















 


mediation,
then the Disputing Parties agree that the Dispute shall be settled by binding
arbitration in accordance with the provisions of the Federal Arbitration Act
using the Commercial Arbitration Rules of the American Arbitration Association
when not in conflict with such act, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.  The decision of the arbitrator shall be
final and binding upon the Disputing Parties. 
The cost and expenses of arbitration, including the fees of the
arbitrator, shall be borne in such proportion and by such parties as the
arbitrator shall determine.  Discovery
shall be made pursuant to the Federal Rules of Civil procedure and completed
within forty-five (45) days of the selection of the arbitrator.  Final hearing on the matter shall be held
within sixty (60) days of selection of the arbitrator and a final decision
(which may include the award of attorney fees and costs) with a written opinion
stating the reasons therefor shall be rendered within seventy-five (75) days of
the selection of the arbitrator.


 


(f)                                    Limit on Punitive Damages.  The
mediator shall not consider and the arbitrator shall not be empowered to award
punitive damages.


 


2.09                           Counterpart Execution. 
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one and the same document.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]


 


17

















 


Signatures


 


To evidence the binding effect of the covenants and
agreements set forth above, the respective parties hereto have each executed
this Agreement as of the day and year first above written, effective as of the
Effective Date.


 


	
   

  	
  HURON VENTURES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Boehnke     President

  	
   

  
	
   

  	
   

  	
  (Name) (Title)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ S. Jeffrey Johnson

  	
   

  
	
   

  	
  S.
  Jeffrey Johnson

  



 


18