Exhibit 10.2


 


SEPARATION
AGREEMENT AND


GENERAL
RELEASE


 


This Separation Agreement
and General Release (“Agreement”) is entered into as of the 11th day of
November, 2010, by and between Benjamin Daitch (“Employee”)
and Cano Petroleum, Inc. (“Cano”),
hereinafter collectively referred to as the “parties” or individually as “party.”


 


RECITALS


 


WHEREAS, Employee has been
employed by Cano as Senior Vice President and Chief Financial Officer.


 


WHEREAS, Employee and Cano
executed an Employment Agreement on June 23, 2008, which covered the terms
and conditions of Employee’s employment with Cano, as amended by First
Amendment to Employment Agreement on December 31, 2008 (as amended, the “Employment
Agreement”);


 


WHEREAS, Employee and Cano
desire to terminate Employee’s employment with Cano as Senior Vice President
and Chief Financial Officer effective November 10, 2010 (the “Termination
Date”); and


 


WHEREAS, the parties desire
to settle fully and finally, in the manner set forth herein, all differences
between them which have arisen, or which may arise, prior to, or at the time of
the execution of this Agreement, including, but in no way limited to, any and
all claims and controversies arising out of the employment relationship between
Employee and Cano;


 


NOW, THEREFORE, in
consideration of the Recitals and the mutual promises, covenants and agreements
set forth herein, the parties covenant and agree as follows:


 


1.             Except as otherwise provided
herein, Employee, IRREVOCABLY AND UNCONDITIONALLY RELEASES, ACQUITS, AND
FOREVER DISCHARGES Cano, its current and former parent, subsidiaries,
affiliated, and related corporations, firms, associations, partnerships, and
entities, their successors and assigns, and the current and former owners,
shareholders, directors, officers, employees, agents, attorneys and
representatives of said corporations, firms, associations, partnerships, and
entities, and their guardians, successors, assigns, heirs, executors, and
administrators (hereinafter collectively referred to as the “Releases”) from
any and all claims, complaints, grievances, liabilities, obligations, promises,
agreements, damages, causes of action, rights, debts, demands, controversies,
costs, losses, and expenses (including attorneys’ fees and expenses)
whatsoever, other than any arising under this Agreement.


 


2.             Cano, for itself and on
behalf of its current and former parent, subsidiaries, affiliated and related
corporations, firms, associations, partnerships, and entities, their successors



 


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and assigns, and the current
and former owners, shareholders, directors, officers, employees, agents,
attorneys, representatives, and insurers of said corporations, firms,
associations, partnerships, and entities, and their guardians, successors,
assigns, heirs, executors, and administrators hereby IRREVOCABLY AND
UNCONDITIONALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES Employee, from any
and all claims, complaints, grievances, liabilities, obligations, promises,
agreements, damages, causes of action, rights, debts, demands, controversies,
costs, losses, and expenses (including attorneys’ fees and expenses)
whatsoever, other than any arising under this Agreement.


 


3.             Employee waives and releases
forever any right or rights he might have to employment, reemployment, or
reinstatement with Cano or any of the other Releases.


 


4.             Cano and Employee agree that
in addition to the termination of his employment as Senior Vice President and
Chief Financial Officer of Cano, Employee shall also be terminated, effective November 11,
2010 from any other positions he holds as a director or officer with any of the
Releases.  Employee agrees that the
effectiveness of this Agreement constitutes his written resignation from any
such positions.


 


5.             The parties agree as
follows:


 


(a)           Cano agrees to pay Employee
(or Employee’s estate in the event of Employee’s death) a payment of
$125,753.42 (“Severance Payment”), less taxes and deductions required by law,
in consideration for the promises, covenants, agreements, and releases set
forth herein.  The Severance Payment
described in this paragraph shall be paid to Employee by wire transfer to
Employee’s account (as used for direct deposit for payroll) in one lump sum
payment by no later than 1:00 PM Central Time, December 2, 2010.


 


(b)           Employee shall continue on
as an employee of Cano until November 30, 2010 to supervise the transition
of his job duties.


 


(c)           Cano agrees to timely make
all necessary and required regulatory filings resulting from or required as a
result of the execution of this Agreement.


 


(d)           Employee agrees to release
and relinquish any and all unvested restricted shares provided by Cano.  Cano and Employee agree that Employee shall
have no right, interest or title to any other stock option or restricted stock
grant under any plan.


 


(e)           Employee agrees to be
personally responsible for all COBRA payments for which he may elect, to
continue his family medical and/or other insurance benefits provided by Cano.


 


(f)            Unless instructed by Cano
otherwise, and specifically excluding all information or documents relating to
current or pending Cano litigation, Employee agrees to return to Cano or its
attorneys or, in the case of information, destroy, immediately upon the
Effective Date, all equipment and property, including confidential information,
written or electronic, as well as any and all documents, notes, memoranda or
other materials in his possession which relate or refer to 


 


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Cano or its Affiliates and
to retain no copies or notes relating to same. However, Employee will be
allowed to retain his current laptop computer and Blackberry.


 


6.             Nothing in this Agreement is
intended to release or relinquish Employee’s right to defense or coverage under
any past, present or future of Cano’s Directors’ and Officers’ Liability
Insurance coverages or any other insurance policies (the “Policies”) regarding
claims respecting matters for which Employee is entitled to defense or coverage
under the Policies.


 


7.             Employee acknowledges that
he has had access to and has become familiar with confidential information of
Cano, its subsidiaries and affiliates, including, but not limited to,
processes, computer programs, compilations of information, records, sales
procedures, customer requirements, pricing techniques, customer lists, methods
of doing business, identities and compensation levels of employees in key
positions, and other confidential information (collectively, referred to as “Confidential
Information”) which are owned by Cano, its subsidiaries and/or affiliates and
regularly used in the operation of its business, and as to which Cano, its
subsidiaries and/or affiliates take precautions to prevent dissemination to
persons other than certain directors, officers and employees.  Employee acknowledges and agrees that the
Confidential Information (1) are secret and not known in the industry; (2) give
the Company or its subsidiaries and/or affiliates an advantage over competitors
who do not know or use the Confidential Information; (3) are of such value
and nature as to make it reasonable and necessary to protect and preserve the
confidentiality and secrecy of the Confidential Information; and (4) are
valuable and special and unique assets of Cano or its subsidiaries and/or
affiliates, the disclosure of which could cause substantial injury and loss of
profits and goodwill to Cano or its subsidiaries and/or affiliates.  Employee may not use in any way or disclose
any of the Confidential Information, directly or indirectly, at any time in the
future, except as required in connection with a judicial or administrative
proceeding, or if the information becomes public knowledge other than as a
result of an unauthorized disclosure by the Employee.  All files, records, documents, information,
data, and similar items relating to the business of Cano, whether prepared by
Employee or otherwise coming into his possession, will remain the exclusive
property of Cano, and in any event must be promptly delivered to Cano or
destroyed.  Employee agrees upon his
receipt of any subpoena, process, or other request to produce or divulge,
directly or indirectly, any Confidential Information to any entity, agency,
tribunal, or person, Employee shall timely notify and promptly deliver a copy
of the subpoena, process or other request to Cano.  Cano shall solely bear any and all cost and
expense, including attorneys’ fees and costs related to the protection of such
Confidential Information in such event. 
This paragraph shall not apply to any information which is or becomes
public knowledge or which was known by Employee prior to his employment with
Cano.


 


8.             Employee agrees to cooperate
with Cano, specifically including any attorney retained by Cano, in connection
with any pending or future litigation, business, or investigatory matter which
Employee is not individually named as a party thereto.  The parties acknowledge and agree that such
cooperation may include, but shall in no way be limited to, Employee’s making
himself reasonably available for interview by Cano, or any attorney retained by
Cano, and providing to Cano any documents still in his possession or under his
control relating to the litigation, business, or investigatory matter. Cano
agrees to provide Employee with reasonable notice of the need for assistance.  Cano additionally agrees to schedule such
assistance in such a 


 


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manner as not to interfere
with Employee’s actual or potential employment with a third party and further
agrees to pay Employee a Reasonable Fee, plus bear any expenses of Employee
incurred in association with such assistance. For purposes of this paragraph, a
“Reasonable Fee” is an hourly rate equivalent to the average hourly rate
charged to Cano for the specific attorneys within the firm (partners and
associates) retained by Cano to handle the subject legal matter which requires
the Employee’s assistance.


 


9.             The parties acknowledge and
agree that, in the event either party to this Agreement breaches any provision
of this Agreement, the Party claiming breach will be entitled to such relief as
is available to it at law or equity.  The
prevailing party in any litigation or arbitration resulting from any such claim
shall be entitled to recover attorney’s fees and expenses of litigation or arbitration
from the losing party.


 


10.           One or more waivers of a
breach of any covenant, term, or provision of this Agreement by any party shall
not be construed as a waiver of a subsequent breach of the same covenant, term,
or provision, nor shall it be considered a waiver of any other then existing or
subsequent breach of a different covenant, term, or provision.


 


11.           If any provision or term of
this Agreement is held to be illegal, invalid, or unenforceable, such provision
or term shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised part of this Agreement; and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid, or unenforceable provision or by its severance from this
Agreement.  Furthermore, in lieu of each
such illegal, invalid, or unenforceable provision or term there shall be added
automatically as a part of this Agreement another provision or term as similar
to the illegal, invalid, or unenforceable provision, as may be possible and
that is legal, valid, and enforceable.


 


12.           Employee may revoke this
Agreement by notice to Cano, in writing, within seven (7) days of the date
of its execution by Employee (the “Revocation Period”).  The parties agree that this Agreement shall
not be effective in the event Employee revokes this Agreement.  Employee also acknowledges and agrees that if
Cano has not received from him written notice of his revocation of this
Agreement prior to the expiration of the Revocation Period, Employee will have
forever waived his right to revoke this Agreement and this Agreement shall
thereafter be effective, enforceable and have full force and effect.


 


13.           This Agreement constitutes
the entire Agreement of the parties, and supersedes all prior and
contemporaneous negotiations and agreements, oral or written.  All prior and contemporaneous negotiations
and agreements are deemed incorporated and merged into this Agreement and are
deemed to have been abandoned if not so incorporated.  No representations, oral or written, are
being relied upon by either party in executing this Agreement other than the
express representations of this Agreement. 
This Agreement cannot be changed or terminated without the express
written consent of the parties.


 


14.           This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas,
except where preempted by federal law.


 


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15.           By executing this Agreement,
Employee acknowledges that (a) this Agreement has been reviewed with him
by a representative of Cano; (b) he has had at least twenty-one (21) days
to consider the terms of this Agreement and has considered its terms for that
period of time or has knowingly and voluntarily waived his right to do so; (c) he
has been advised by Cano to consult with an attorney regarding the terms of
this Agreement; (d) he has consulted with, or has had sufficient
opportunity to consult with, an attorney of his own choosing regarding the
terms of this Agreement; (e) any and all questions regarding the terms of
this Agreement have been asked and answered to his complete satisfaction; (f) he
has read this Agreement and fully understands its terms and their import; (g) except
as provided by this Agreement, he has no contractual right or claim to the
benefits described herein; (h) the consideration provided for herein is
good and valuable; and (i) he is entering into this
Agreement voluntarily, of his own free will, and without any coercion, undue
influence, threat, or intimidation of any kind or type whatsoever.


 


	
   

  	
  CANO PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey Johnson

  
	
   

  	
   

  	
  S. Jeffrey Johnson

  
	
   

  	
   

  	
  Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Benjamin Daitch

  
	
   

  	
  Benjamin Daitch

  



 


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