Document:

Exhibit 10.7

 

EMPLOYEE
RESTRICTED STOCK AWARD

 

CANO
PETROLEUM, INC.

2005
LONG-TERM INCENTIVE PLAN

 

Pursuant to the Cano
Petroleum, Inc. 2005 Long-Term Incentive Plan (the “Plan”) for key
employees, key consultants, and outside directors of Cano Petroleum, Inc.,
a Delaware corporation (the “Company”) and its Subsidiaries,

 

John Lacik

(the “Participant”)

 

has been granted a
Restricted Stock Award in accordance with Section 6.4 of the Plan.

 

1.                                       Terms
of Award. The number of shares of Common Stock awarded under this Award
Agreement (this “Agreement”)  is 30,000 shares (the “Awarded Shares”). The
Date of Grant of this Award is June 1, 2006.

 

2.                                       Subject
to Plan. This Agreement is subject to the terms and conditions of the Plan,
and the terms of the Plan shall control to the extent not otherwise
inconsistent with the provisions of this Agreement. The capitalized terms used
herein that are defined in the Plan shall have the same meanings assigned to
them in the Plan. This Agreement is subject to any rules promulgated
pursuant to the Plan by the Board or the Committee and communicated to the
Participant in writing.

 

3.                                       Vesting.
Except as specifically provided in this Agreement and subject to certain
restrictions and conditions set forth in the Plan, all the Awarded Shares shall
be vested on the third anniversary of the Date of Grant, provided the
Participant is employed by (or, if the Participant is a Consultant, is
providing services to) the Company or a Subsidiary on that date.

 

4.                                       Forfeiture
of Awarded Shares. Awarded Shares that are not vested in accordance with Section 3
shall be forfeited on the date of the Participant’s Termination of Service.
Upon forfeiture, all of the Participant’s rights with respect to the forfeited
Awarded Shares shall cease and terminate, without any further obligations on
the part of the Company.

 

5.                                       Restrictions
on Awarded Shares. Awarded Shares that are not vested in accordance with Section 3
and which are subject to forfeiture in accordance with Section 4
shall be subject to the terms, conditions, provisions, and limitations of this Section 5.

 

(a)                                  Subject
to the provisions of the Plan and the other terms of this Agreement, from the
Date of Grant until the date the Awarded Shares are vested in accordance with Section 3
and no longer subject to forfeiture in accordance with Section 4
(the “Restriction Period”),
the Participant shall not be permitted to sell, transfer, pledge or assign
shares any of the Awarded Shares.

 

(b)                                 Except
as provided in paragraph (a) above, the Participant shall have, with
respect to his or her Awarded Shares, all of the rights of a stockholder of the
Company, including the right to vote the shares, and the right to receive any
dividends thereon.

 

 

6.                                       Legend.
The following legend shall be placed on all certificates representing Awarded
Shares:

 

On the face of the
certificate:

 

“Transfer of this stock
is restricted in accordance with conditions printed on the reverse of this
certificate.”

 

On the reverse:

 

“The shares of stock
evidenced by this certificate are subject to and transferable only in
accordance with that certain Cano Petroleum, Inc. 2005 Long-Term Incentive
Plan, a copy of which is on file at the principal office of the Company in
Dallas, Texas. No transfer or pledge of the shares evidenced hereby may be
made except in accordance with and subject to the provisions of said Plan. By
acceptance of this certificate, any holder, transferee or pledgee hereof agrees
to be bound by all of the provisions of said Plan.”

 

The following
legend shall be inserted on a certificate evidencing Common Stock issued under
the Plan if the shares were not issued in a transaction registered under the
applicable federal and state securities laws:

 

“Shares of stock
represented by this certificate have been acquired by the holder for investment
and not for resale, transfer or distribution, have been issued pursuant to
exemptions from the registration requirements of applicable state and federal
securities laws, and may not be offered for sale, sold or transferred
other than pursuant to effective registration under such laws, or in
transactions otherwise in compliance with such laws, and upon evidence
satisfactory to the Company of compliance with such laws, as to which the
Company may rely upon an opinion of counsel satisfactory to the Company.”

 

All Awarded Shares owned
by the Participant shall be subject to the terms of this Agreement and shall be
represented by a certificate or certificates bearing the foregoing legend.

 

7.                                       Delivery
of Certificates. Certificates for Awarded Shares free of restriction under
this Agreement shall be delivered to the Participant promptly after, and only
after, the Restriction Period shall expire without forfeiture in respect of
such shares of Common Stock. Certificates for shares of Common Stock forfeited
pursuant to Section 4 shall be promptly returned to the Company by
the Participant. In connection with the issuance of a certificate for
Restricted Stock, the Participant shall endorse such certificate in blank or
execute a stock power in a form satisfactory to the Company in blank and
deliver such certificate and executed stock power to the Company. The parties
acknowledge that remedies at law will be inadequate remedies for breach of this
Section 7 and consequently agree that this Section 7
shall be enforceable by specific performance. The remedy of specific
performance shall be cumulative of all of the rights and remedies at law or in
equity of the parties under this Section 7.

 

8.                                       Voting.
The Participant, as record holder of the Awarded Shares, has the exclusive
right to vote, or consent with respect to, such Awarded Shares until such time
as the Awarded Shares are transferred in accordance with this Agreement or a
proxy is granted pursuant to Section 9 below; provided, however,
that this

 

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Section 8
shall not create any voting right where the holders of such Awarded Shares
otherwise have no such right.

 

9.                                       Proxies.
Participant may not grant a proxy to any person, other than a revocable
proxy not to exceed 30 days in duration granted to another stockholder for the
sole purpose of voting for directors of the Company.

 

10.                                 Representations,
Etc. Each spouse individually is bound by, and such spouse’s interest, if
any, in any Awarded Shares is subject to, the terms of this Agreement. Nothing
in this Agreement shall create a community property interest where none
otherwise exists.

 

11.                                 Simultaneous
Death. If Participant and his or her spouse both suffer a common accident
or casualty which results in their respective deaths within 60 days of each
other, it shall be conclusively presumed, for the purpose of this Agreement,
that the Participant died first and the spouse died thereafter.

 

12.                                 Participant’s
Representations. Notwithstanding any of the provisions hereof, the
Participant hereby agrees that he will not acquire any Awarded Shares, and that
the Company will not be obligated to issue any Awarded Shares to the
Participant hereunder, if the issuance of such shares shall constitute a
violation by the Participant or the Company of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Company shall be final, binding, and conclusive. The obligations of the
Company and the rights of the Participant are subject to all applicable laws,
rules, and regulations.

 

13.                                 Participant’s
Acknowledgments. The Participant acknowledges receipt of a copy of the
Plan, which is annexed hereto, and represents that he or she is familiar with
the terms and provisions thereof, and hereby accepts this Award subject to all
the terms and provisions thereof. The Participant hereby agrees to accept as
binding, conclusive, and final all decisions or interpretations of the Board or
the Committee upon any questions arising under the Plan or this Agreement.

 

14.                                 Law
Governing. This Agreement shall be governed by, construed, and enforced in
accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle of Texas law that might refer the
governance, construction, or interpretation of this agreement to the laws of
another state).

 

15.                                 Legal
Construction. In the event that any
one or more of the terms, provisions, or agreements that are contained in this
Agreement shall be held by either a court of competent jurisdiction, with
respect to claims under Section 7, or by an arbitrator, with
respect to all other claims under the Agreement, to be invalid, illegal, or
unenforceable in any respect for any reason, the invalid, illegal, or
unenforceable term, provision, or agreement shall not affect any other term,
provision, or agreement that is contained in this Agreement and this Agreement
shall be construed in all respects as if the invalid, illegal, or unenforceable
term, provision, or agreement had never been contained herein.

 

16.                                 Covenants
and Agreements as Independent Agreements. Each of the covenants and
agreements that is set forth in this Agreement shall be construed as a covenant
and agreement independent of any other provision of this Agreement. The
existence of any claim or cause of action of the Participant against the
Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of the covenants and
agreements that are set forth in this Agreement.

 

17.                                 Entire
Agreement. This Agreement together with the Plan supersede any and all
other prior understandings and agreements, either oral or in writing, between
the parties with respect to the subject matter hereof and constitute the sole
and only agreements between the parties with respect to the said subject matter.
All prior negotiations and agreements between the parties with respect to the
subject matter hereof are merged

 

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into this Agreement. Each
party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any party or by
anyone acting on behalf of any party, which are not embodied in this Agreement
or the Plan and that any agreement, statement or promise that is not contained
in this Agreement or the Plan shall not be valid or binding or of any force or
effect.

 

18.                                 Parties
Bound. The terms, provisions, and agreements that are contained in this
Agreement shall apply to, be binding upon, and inure to the benefit of the
parties and their respective heirs, executors, administrators, legal
representatives, and permitted successors and assigns, subject to the
limitation on assignment expressly set forth herein. No person or entity shall
be permitted to acquire any Awarded Shares without first executing and
delivering an agreement in the form satisfactory to the Company making
such person or entity subject to the restrictions on transfer contained in Section 5
hereof.

 

19.                                 Modification.
No change or modification of this Agreement shall be valid or binding upon the
parties unless the change or modification is in writing and signed by the
parties; provided, however, that the Company may change or modify this
Agreement without the Participant’s consent or signature if the Company
determines, in its sole discretion, that such change or modification is
necessary for purposes of compliance with or exemption from the requirements of
Section 409A of the Code or any regulations or other guidance issued
thereunder. Notwithstanding the preceding sentence, the Company may amend
the Plan to the extent permitted by the Plan.

 

20.                                 Headings.
The headings that are used in this Agreement are used for reference and
convenience purposes only and do not constitute substantive matters to be
considered in construing the terms and provisions of this Agreement.

 

21.                                 Gender
and Number. Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular number shall
be held to include the plural, and vice versa, unless the context requires
otherwise.

 

22.                                 Notice.
Any notice required or permitted to be delivered hereunder shall be deemed to
be delivered only when actually received by the Company or by the Participant,
as the case may be, at the addresses set forth below, or at such other
addresses as they have theretofore specified by written notice delivered in
accordance herewith:

 

(a)                                  Notice
to the Company shall be addressed and delivered as follows:

 

Cano Petroleum, Inc.

309 West Seventh Street, Suite 1600

Fort Worth, Texas  76102

Attn:  General Counsel

Facsimile:  (817)
698-0796

 

(b)                                 Notice
to the Participant shall be addressed and delivered as set forth on the
signature page.

 

23.                                 Tax
Requirements. The Participant is hereby advised to consult immediately with
his or her own tax advisor regarding the tax consequences of this Agreement, the method and timing for filing an
election to include this Agreement in income under Section 83(b) of
the Code, and the tax consequences of such election. By execution of this
Agreement, the Participant agrees that if the Participant makes such an
election, the Participant shall provide the Company with written notice of such
election in accordance with the regulations promulgated under Code Section 83(b).
The Company or, if applicable, any Subsidiary (for

 

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purposes of this Section 23,
the term “Company”
shall be deemed to include any applicable Subsidiary), shall have the right to
deduct from all amounts paid in cash or other form in connection with the
Plan, any Federal, state, local, or other taxes required by law to be withheld
in connection with this Award. The Company may, in its sole discretion, also
require the Participant receiving shares of Common Stock issued under the Plan
to pay the Company the amount of any taxes that the Company is required to
withhold in connection with the Participant’s income arising with respect to
this Award. Such payments shall be required to be made when requested by
Company and may be required to be made prior to the delivery of any
certificate representing shares of Common Stock. Such payment may be made (i) by
the delivery of cash to the Company in an amount that equals or exceeds (to avoid
the issuance of fractional shares under (iii) below) the required tax
withholding obligations of the Company; (ii) if the Company, in its sole
discretion, so consents in writing, the actual delivery by the exercising
Participant to the Company of shares of Common Stock that the Participant has
not acquired from the Company within six (6) months prior to the date of
exercise, which shares so delivered have an aggregate Fair Market Value that
equals or exceeds (to avoid the issuance of fractional shares under (iii) below)
the required tax withholding payment; (iii) if the Company, in its sole
discretion, so consents in writing, the Company’s withholding of a number of
shares to be delivered upon the exercise of this Award, which shares so
withheld have an aggregate fair market value that equals (but does not exceed)
the required tax withholding payment; or (iv) any combination of (i),
(ii), or (iii). The Company may, in its sole discretion, withhold any such
taxes from any other cash remuneration otherwise paid by the Company to the
Participant.

 

 

[Signature Page to Follow]

 

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IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed by its duly authorized
officer, and the Participant, to evidence his consent and approval of all the
terms hereof, has duly executed this Agreement, as of the date specified in Section 1
hereof.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CANO
  PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ S. Jeffrey Johnson

  
	
   

  	
  Name:

  	
  S. Jeffrey Johnson

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ John Lacik

  
	
   

  	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  JOHN LACIK

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  309 West Seventh St., Suite 1600

  
	
   

  	
   

  	
  Fort Worth, TX 76102

  
	
   

  	
   

  	
   

  
							

 

6Exhibit 10.8

 

EMPLOYMENT AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT
(this “Agreement”) is made and entered into by and between Cano Petroleum Inc., a Delaware corporation
with its principal executive offices in Fort Worth, Texas (the “Company”), and John Lacik, an
individual currently residing in Fort Worth, Texas (“Employee”), this 1st day
of May 2005 (the “Effective Date”).

 

Background

 

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

 

B.                                     Employee is willing to serve the Company on
the terms and conditions herein provided.

 

Terms and Conditions

 

In consideration of the
covenants and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

1.                                       Employment. The Company hereby employs Employee in the capacity of Production
Superintendent, and Employee hereby agrees to accept such employment by the
Company, upon the terms and conditions stated in this Agreement.

 

2.                                       Term. The employment of Employee by the Company as provided in Section 1
will be for a term (the ‘“Term”)
commencing on the Effective Date and expiring at the close of business on April 30,
2008.

 

3.                                       Duties. Employee shall perform such services and duties as may be
assigned to him from time to time by the Board of Directors (the “Board”) and Chief Executive Officer of the
Company. Employee shall devote his full working time, efforts and energies to
the performance of his duties hereunder.

 

4.                                       Compensation.

 

(a)                                 Base Salary:  The
Company shall pay Employee for his services a base salary, on an annualized
basis, of $82,000.00 (Eighty Two Thousand Dollars) per annum for the period
from the Effective Date, which salary shall be payable by the Company in
substantially equal installments on the Company’s normal payroll dates. All
applicable taxes on the base salary will be withheld in accordance with
applicable federal, state and local taxation guidelines.

 

(b)                                 Bonus: In addition to the base salary described in paragraph 4(a) above,
Employee shall be eligible for periodic cash or stock bonuses at the sole
discretion of the Executive Committee.

 

(c)                                 Stock Plans:  In
addition to the base salary described in paragraph 4(a) above, Employee
shall be eligible participate in all stock plans offered to employees of the
Company for the term of his employment.

 

(d)                                 Annual Raises:  In
addition to the base salary described in paragraph 4(a) above, Employee
shall receive a 5% (Five percent) raise on each of the 2 (two) anniversary
dates of the Effective Date.

 

1

 

(e)                                 Signing Bonus - Stock:  Company
shall issue 1,000 (One Thousand) shares of Cano Petroleum, Inc. common
stock upon execution of this Agreement as a signing bonus. The stock shall bear
a “restricted” legend until the second anniversary of the Effective Date, at
which time, if the Employee is still employed by the Company, the restrictive
legend shall be removed. In the event the Employee is not employed by the
Company on the second anniversary date, the stock shall be returned unissued to
the treasury.

 

(f)                                 Signing Bonus – Cash:  Company
shall pay employee the sum of $6,833.00 (Six Thousand Eight Hundred Thirty-Three
Dollars) upon execution of this Agreement as an additional signing bonus.

 

5.                                       Vacations and Days Off. Employee shall be entitled to a reasonable
paid vacation of not less than twenty (20) days each calendar year during the
Term, exclusive of holidays and weekends, which vacation shall be taken by
Employee in accordance with the business requirements of the Company at the
time and its vacation plans, policies and practices as applied to other
employees of the Company then in effect relative to this subject. Employee
shall also be entitled to up to five (5) paid days off each calendar year
for paternity leave and up to three (3) paid days off to attend the
funeral of any member of Employee’s immediate family.

 

6.                                       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
Employee’s position and adequate for the Employee’s use in performing Employee’s
duties and responsibilities under this Agreement.

 

7.                                       Expenses and Services. During the term of Employee’s employment
hereunder, Employee shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by Employee by reason of his employment, including
travel and living expenses while away from home at the request of and in the
service of the Company, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by the Company
and in effect when the expenses are incurred.

 

8.                                       Rights under Certain Plans. During the term of Employee’s employment
hereunder, Employee will be entitled to participate in the health and dental
insurance and employee benefit plans and programs maintained by the Company
applicable to other employees on the same basis as other employees of the
Company, subject only to the possible substitution by or on behalf of the
Company of other plans and programs providing substantially similar or
increased benefits for Employee.

 

9.                                       Confidential Information. Employee recognizes and acknowledges that
he will have access to confidential information of the Company and its
Affiliates, including, without limitation, customer information, lists of
suppliers and costs, information concerning the business and operations of the
Company and its Affiliates and other proprietary data or information, that is
valuable, special and a unique asset of the Company and its Affiliates. Employee
agrees not to disclose such confidential information, except as may be
necessary in the performance of his duties, to any Person, nor use such
confidential information in any way, either during the term of his employment
or within the three years immediately following his termination of employment
unless he has received the written consent of the Company or unless such
confidential information becomes public knowledge through no wrongful act of
Employee. Upon termination of Employee’s employment for any reason, Employee
shall promptly deliver to Employer all drawings, manuals, letters, notebooks,
customer lists, documents, records, equipment, files, computer disks or tapes,
reports or any other materials relating to Employer’s business (and all copies)
which are in Employee’s possession or under Employee’s control.

 

10.                                 Early Termination. Employee’s employment hereunder may be
terminated without any breach of this Agreement only under the following
circumstances:

 

2

 

(a)                                  Employee’s employment hereunder will
terminate upon his death;

 

(b)                                 If, as a result of Employee’s incapacity due
to physical or mental illness, Employee shall have been absent from his duties
or unable to perform his full duties hereunder for a total of 90 days
during any 12 month period, and within 15 days after written notice of
termination is given (which may occur before or after the end of such 90
day period), shall not have returned to the performance of his full duties
hereunder on a full-time basis, the Company may terminate the Employee’s
employment hereunder.

 

(c)                                  The Company may terminate Employee’s
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have “Cause” to terminate the Employee’s employment hereunder upon (1) the
willful and continued failure by Employee to substantially perform his
duties hereunder (other than any such failure resulting from Employee’s incapacity
due to physical or mental illness); or (2) the willful engaging by
Employee in misconduct which is materially injurious to the Company; or (3) the
conviction of Employee of any felony or crime of moral turpitude. For purposes
of this subsection (C), no act, or failure to act, on Employee’s part shall
be considered “willful” unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interest of the Company.

 

(d)                                 Any termination of Employee’s employment by
the Company or by Employee (other than termination pursuant to subsection (a) above)
shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee’s
employment under the provision so indicated.

 

(e)                                  “Date of Termination” shall mean (1) if
Employee’s employment is terminated by his death, the date of his death; (2) if
Employee’s employment is terminated pursuant to subsection (b) above,
15 days after Notice of Termination is given (provided that Employee shall not
have returned to the performance of his duties on a full-time basis during such
15 days period); (3) if Employee’s employment is terminated at the
expiration of the Term or any extension thereof, the last day of the Term or,
if applicable, the last day of any extension; and (4) if Employee’s
employment is terminated for any other reason, the date specified in the Notice
of Termination.

 

11.                                 Compensation upon Termination or During
Disability. Upon termination
of Employee’s employment hereunder or during any period of Employee’s physical
or mental disability, Employee shall be paid as follows:

 

(a)                                  During any period that Employee fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness
(the “Disability Period’), the Employee shall continue to receive his annual
base salary at the rate then in effect, until the earlier of (i) the end
of the Term, or (ii) the 90th day following the commencement of the
Disability Period, provided that payments so made to the Employee shall be
reduced by the sum of the amounts, if any, payable to Employee under disability
benefit plans of the Company and which were not previously applied to reduce
any such payment. In addition the Company shall reimburse Employee for any
theretofore unreimbursed expenses incurred prior to the commencement of the
Disability Period.

 

(b)                                 If Employee’s employment is terminated by his
death, the Company shall pay to Employee’s designated beneficiaries, or if he
leaves no designated beneficiaries, to his estate, his annual base salary
through the date of Employee’s death at the rate then in effect and any
theretofore unreimbursed expenses, and the Company shall have no further
obligations to Employee under this Agreement.

 

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(c)                                  If Employee’s employment shall be terminated
for Cause, the Company shall pay Employee his annual base salary (but not the
compensation described in Sections 4(b) and (c)) through the Date of
Termination at the rate in effect at the time Notice of Termination is given
and the Company shall have no further obligations to Employee under this
Agreement.

 

(d)                                 If (1) in breach of this Agreement, the
Company shall terminate Employee’s employment other than pursuant to Section 8(b) or
8(c) hereof (it being understood that a purported termination pursuant to Section 8(b) or
8(c) hereof which is disputed and finally determined not to have been
proper shall be a termination by the Company in breach of this Agreement) then
the Company shall pay Employee, with no offset, an amount equal to three (3) months
of his annual base salary at the rate in effect at the time Notice of
Termination is given, such payments to be made in substantially equal
semimonthly installments on the first and sixteenth of each month commencing
with the month in which the Date of Termination occurs and continuing until the
end of the Term.

 

During
the term of this Agreement Employee shall give the Company immediate notice of
any change of address.

 

If
Employee shall terminate his employment pursuant to Section 8(d), the
Company shall pay Employee his full salary through the Date of Termination at
the rate in effect on the date that Notice of Termination is received by the
Company.

 

12.                                 Defined Terms. For purposes of this Agreement, the terms
set forth in this Section 10 shall have the following meanings:

 

(a)                                  “Affiliate”
shall mean any individual, corporation, unincorporated organization, trust or
other form of entity controlling, controlled by or under common control
with the Company. For purposes of this definition, “control” (including “controlled
by” and “under common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such individual, corporation, unincorporated organization, trust or
other form of entity, whether through the ownership of voting securities
or otherwise.

 

(b)                                 “Person”
shall mean an individual, a corporation, a partnership, an association, a joint-stock
company, a trust, an incorporated organization or a government or political
subdivision thereof.

 

13.                                 Waiver. No waiver of any provision of this Agreement shall be deemed, or
shall constitute, a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a waiver of any continuing or succeeding breach of
such provision, a waiver of the provision itself, or a waiver of any right
under this Agreement. No waiver shall be binding unless executed in writing by
the party making the waiver.

 

14.                                 Limitation of Rights. Nothing in this Agreement, except as
specifically stated herein, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective permitted successors and assigns and other legal
representatives, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.

 

15.                                 Notices. All notices given in connection with this Agreement shall be in
writing and shall be delivered either by personal delivery, by telecopy or
similar facsimile means, by certified or registered mail (postage prepaid and
return receipt requested), or by express courier or delivery service, addressed
to the applicable party hereto at the following address:

 

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If to the Company:

 

Cano Petroleum, Inc.

309 West Seventh Street

Suite 1600

Fort Worth, Texas 76102

Attention: S Jeffery Johnson

Telecopy No.: 817-698-0761:

 

If to Employee:

 

John Lacik

5917 Fairglen Avenue Apt #
627

Fort Worth, Texas 76137

 

or such other address and number as either party
shall have previously designated by written notice given to the other party in
the manner hereinabove set forth. Notices shall be deemed given when received,
if sent by telecopy or similar facsimile means (confirmation of such receipt by
confirmed facsimile transmission being deemed receipt of communications sent by
telecopy or other facsimile means); and when delivered and receipted for (or
upon the date of attempted delivery where delivery is refused), if
hand-delivered, sent by express courier or delivery service, or sent by
certified or registered mail.

 

16.                                 Inconsistent Obligations. Employee represents and warrants that he
has not previously assumed any obligations inconsistent with those of this
Agreement.

 

17.                                 Entirety and Amendments. This instrument and the instruments
referred to herein embody the entire agreement between the parties, supersede
all prior agreements and understandings, if any, relating to the subject matter
hereof, and may be amended only by an instrument in writing executed by
all parties, and supplemented only by documents delivered or to be delivered in
accordance with the express terms hereof.

 

18.                                 Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and any successors in interest to
the Company, but neither this Agreement nor any rights hereunder may be
assigned by Employee except in the case of the death of Employee.

 

19.                                 Governing Law And Venue. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas
applicable to agreements made and to be performed entirely in Texas. The
obligations and undertakings of each of the parties to this Agreement shall be
performable in Dallas County, Texas, and each party agrees that if any action
at law or in equity is necessary by the Company or Employee to enforce or
interpret the terms of this Agreement, venue shall be in Dallas County, Texas,
and the prevailing party in any such action shall be entitled to reasonable
attorneys’ fees, costs and necessary disbursements in addition to any other
relief to which it may be entitled.

 

20.                                 Cumulative Remedies. No
remedy herein conferred upon any party is intended to be exclusive of any other
benefits or remedy, and each and every such remedy shall be cumulative and
shall be in addition to every other benefits or remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise. No single
or partial exercise by any party of any right, power or remedy hereunder shall
preclude any other or further exercise thereof.

 

21.                                 Multiple Counterparts. This Agreement may be executed in a
number of identical counterparts, each of which constitute collectively, one
agreement; but in making proof of this Agreement, it shall not be necessary to
produce or account for more than one counterpart.

 

5

 

22.                                 Descriptive Headings. The headings, captions and arrangements
used in this Agreement are for convenience only and shall not be deemed to
limit, amplify or modify the terms of this Agreement, nor affect the meanings
hereof.

 

Signatures

 

To evidence the binding
effect of the covenants and agreements described above, the parties hereto have
executed this Agreement effective as of the date first above written.

 

 

	
    

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  CANO PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ S. Jeffrey Johnson

  	
   

  
	
   

  	
   

  	
  S. Jeffrey Johnson

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
  /s/ John Lacik

  	
   

  
	
   

  	
         John
  Lacik

  

 

6

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