Document:

prc_8k-ex1004.htm

    
      EXHIBIT
10.4

      EMPLOYMENT
AGREEMENT

    

     

    THIS EMPLOYMENT AGREEMENT
(“Agreement”)
is entered into on May 22, 2009 (“Effective
Date”) by and between Petro Resources Corporation, a Delaware corporation
(“Company”),
and Ronald D. Ormand (“Executive”).

     

    R
E C I T A L

     

    Company
is desirous of employing Executive in an executive capacity on the terms and
conditions and for the consideration, hereinafter set forth and Executive is
desirous of being employed by Company on such terms and conditions and for such
consideration.

     

    A
G R E E M E N T

     

    It is
agreed as follows:

     

    ARTICLE
I

     

    DEFINITIONS AND
INTERPRETATIONS

     

    1.1  Definitions.

     

    (a)  “Annual Base Salary” shall
mean Executive’s annual base salary as of the date of his Involuntary
Termination, determined pursuant to Section 4.1. 

     

    (b)  “Board” shall mean the board
of directors of Company.

     

    (c)  “Business Territories” shall
mean all field locations in which the Company has activities directly related to
the exploration or production and sale of oil and gas, including but not limited
to, any location as to which the Company has devoted any significant efforts for
production, analysis, joint venture consideration or interest even if efforts
for the actual exploration or production of oil and gas have not yet
commenced.

     

    (d)  “Cause” shall mean Executive
(i) has engaged in gross negligence, gross incompetence, or willful misconduct
in the performance of his duties at the Company, (ii) has refused, without
proper reason, to perform his duties, (iii) has materially breached any
provision of this Agreement, (iv) has willfully and materially breached a
significant corporate policy or code of conduct established by Company, (v) has
willfully engaged in conduct that is materially injurious to Company or its
subsidiaries (monetarily or otherwise), (vi) has committed an act of fraud,
embezzlement, or breach of a fiduciary duty to Company or an affiliate of
Company (including the unauthorized disclosure of material confidential or
proprietary information of the Company or an affiliate), (vii) has been
convicted of (or pleaded no contest to) a criminal act involving fraud,
dishonesty, or moral turpitude or any felony, or (viii) has been convicted for
any violation of U.S. or foreign securities laws or has entered into a cease and
desist order with the Securities and Exchange Commission alleging violation of
U.S. or foreign securities laws.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e)  “Change of Control” shall mean
a “Change in Control,” as defined under the Incentive Plan as in effect on the
Effective Date.

     

    (f)  “Change of Control Period”
shall mean, with respect to a Change of Control, the one-year period beginning
on the date upon which such Change of Control occurs.

     

    (g)  “Code” shall mean the Internal
Revenue Code of 1986, as amended.

     

    (h)  “Compensation Committee” shall
mean the Compensation and Nominating Committee of the Board.

     

    (i)  “Disability” shall mean that,
as a result of Executive’s incapacity due to physical or mental illness,
Executive shall have been absent from the full-time performance of his duties
for six consecutive months and shall not have returned to full-time performance
of his duties within 30 days after written notice of termination is given to
Executive by Company (provided, however, that such notice may not be given prior
to 30 days before the expiration of such six-month period).

     

    (j)  “Good Reason” shall mean the
occurrence of any one or more of the following:

     

    (i)  a
diminution in Executive’s Annual Base Salary not in accordance with Section
4.1;

     

    (ii)  a
material diminution in Executive’s authority, duties, or responsibilities from
those applicable to him as of the Effective Date, including a material change in
the reporting structure so that Executive reports to someone other than the
Board;

     

    (iii)  a
material change in the geographic location at which Executive must perform
services, which for purposes of this Agreement includes only Company requiring
Executive to involuntarily relocate the geographic location of Executive’s
principal place of employment by more than 10 miles from Houston, Texas;
or

     

    (iv)  a
material breach by Company of any provision of this Agreement (including,
without limitation, the requirements of paragraphs 2.2, 4.2, or 4.3 of this
Agreement).

     

    Notwithstanding
the foregoing provisions of this Section 1.1(j) or any other provision in this
Agreement to the contrary, any assertion by Executive of a termination of
employment for “Good Reason” shall not be effective unless all of the following
conditions are satisfied: (1) any condition described in clauses (i) through
(iv)  of this Section 1.1(j) giving rise to Executive’s termination of
employment must have arisen without Executive’s consent; (2) Executive must
provide written notice to Company of such condition in accordance with Section
9.3 within 30 days of the initial existence of the condition; (3) the condition
specified in such notice must remain uncorrected for a period of 30 days
following receipt of such notice by Company; and (4) the date of Executive’s
termination of employment must occur within one year following the initial
existence of the condition specified in such notice.

     

     

    
      
        
        

      

      
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    (k)  “Incentive Plan” shall mean
the Petro Resources 2006 Stock Incentive Plan.

     

    (l)  “Involuntary Termination”
shall mean any termination of Executive’s employment with Company
which:

     

    (i)  does
not result from a resignation by Executive (other than a resignation pursuant to
clause (ii) of this Section 1.1(l)); or

     

    (ii)  results
from a resignation by Executive for Good Reason;

     

    provided,
however, the term “Involuntary Termination” shall not include a termination for
Cause or any termination as a result of death or Disability.

     

    (m)  “Payment Date” shall mean the
later of (i) the date that is 30 days after Executive’s termination of
employment with Company or (ii) the date upon which the Release described in
Section 5.6 becomes irrevocable by Executive.

     

    1.2  Interpretations.  In
this Agreement, unless a clear contrary intention appears, (a) the words
“herein,” “hereof,” “hereunder,” and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section, or other
subdivision, (b) reference to any Article or Section means such Article or
Section hereof, (c) the word “including” (and with correlative meaning,
“include”) means including, without limiting the generality of any description
preceding such term, and (d) where any provision of this Agreement refers to
action to be taken by either party, or which such party is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such party.

     

    ARTICLE
II

     

    EMPLOYMENT AND
DUTIES

     

    2.1  Employment.  Effective
as of the Effective Date and continuing for the period of time set forth in
Section 3.1 of this Agreement, Executive’s employment by Company shall be
subject to the terms and conditions of this Agreement.

     

    2.2  Positions.  From and
after the Effective Date, Company shall employ Executive in the positions of
Executive Vice President and Chief Financial Officer of the Company or in such
other position or positions as the parties mutually may agree.

     

    2.3  Duties and
Services.  Executive agrees to serve in the positions referred
to in Section 2.2 and to perform diligently and to the best of his abilities the
duties and services appertaining to such offices, as well as such additional
duties and services appropriate to such offices which the parties mutually may
agree upon from time to time.  Executive also agrees to serve, if
elected, as an officer or director of any wholly-owned subsidiary or affiliate
of Company so long as such service is commensurate with Executive’s duties and
responsibilities to Company.  Executive’s employment shall also be
subject to the policies maintained and established by Company that are of
general applicability to Company’s executive employees, as such policies may be
amended from time to time.

     

     

    
      
        
        

      

      
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    2.4  Other
Interests.  Executive agrees, during the period of his
employment by Company, to devote substantially all of his business time, energy,
and best efforts to the business and affairs of Company and its affiliates and
not to engage, directly or indirectly, in any other business or businesses,
whether or not similar to that of Company, except as herein permitted or with
the consent of the Board.  The foregoing notwithstanding, the parties
recognize and agree that Executive may engage in passive personal investment and
charitable activities that do not conflict with the business and affairs of
Company or interfere with Executive’s performance of his duties hereunder, which
shall be at the sole determination of the Board.  The Company
acknowledges that Executive has disclosed to the Company Executive’s membership
on the board of directors of Tremisis Energy Acquisition II Corp. and Help
Worldwide, Inc. and Executive’s equity interest in Gruy Petroleum Management Co.
LLC and Perugia Advisors, Inc.   Company’s acknowledgement of the
foregoing outside activities shall not relieve Executive of his obligation to
ensure that such activities do not conflict with the business and affairs of
Company or interfere with Executive’s performance of his duties
hereunder.

     

    2.5  Duty of
Loyalty.  Executive acknowledges and agrees that Executive owes
a fiduciary duty of loyalty to act at all times in the best interests of
Company.  In keeping with such duty, Executive shall make full
disclosure to Company of all business opportunities pertaining to Company’s
business and shall not appropriate for Executive’s own benefit, or appropriate
for the benefit of any third party, business opportunities concerning Company’s
business.

     

    2.6  Place of
Employment.  Executive’s place of employment hereunder shall be
at Company’s executive offices in the greater Houston, Texas metropolitan
area.

     

    ARTICLE
III

     

    TERM AND TERMINATION OF
EMPLOYMENT

     

    3.1  Term.  Unless sooner
terminated pursuant to other provisions hereof, Company agrees to employ
Executive for the period beginning on the Effective Date and ending on the third
anniversary of the Effective Date.

     

    3.2  Company’s Right to
Terminate.  Notwithstanding the provisions of Section 3.1,
Company shall have the right to terminate Executive’s employment under this
Agreement at any time for any of the following reasons:

     

    (a)  upon
Executive’s death;

     

    (b)  upon
Executive’s Disability;

     

    (c)  for
Cause; or

     

     

    
      
        
        

      

      
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    (d)  at
any time, for any other reason whatsoever, in the sole discretion of the
Board.

     

    3.3  Executive’s Right to
Terminate.  Notwithstanding the provisions of Section 3.1,
Executive shall have the right to terminate his employment under this Agreement
for any of the following reasons:

     

    (a)  for
Good Reason; or

     

    (b)  at
any time for any other reason whatsoever, in the sole discretion of
Executive.

     

    3.4  Notice of
Termination.  If Company desires to terminate Executive’s
employment hereunder at any time prior to expiration of the term of employment
as provided in Section 3.1, it shall do so by giving a 30-day written notice to
Executive that it has elected to terminate Executive’s employment hereunder and
stating the effective date and reason for such termination, provided that no
such action shall alter or amend any other provisions hereof or rights arising
hereunder.  If Executive desires to terminate his employment hereunder
at any time prior to expiration of the term of employment as provided in Section
3.1, he shall do so by giving a 30-day written notice to Company that he has
elected to terminate his employment hereunder and stating the effective date and
reason for such termination, provided that no such action shall alter or amend
any other provisions hereof or rights arising hereunder.

     

    3.5  Deemed
Resignations.  Unless otherwise agreed to in writing by Company
and Executive prior to the termination of Executive’s employment, any
termination of Executive’s employment shall constitute an automatic resignation
of Executive as an officer of Company and each affiliate of Company and an
automatic resignation of Executive from the Board (if applicable) and from the
board of directors or similar governing body of any affiliate of Company and
from the board of directors or similar governing body of any corporation,
limited liability entity, or other entity in which Company or any affiliate
holds an equity interest and with respect to which board or similar governing
body Executive serves as Company’s or such affiliate’s designee or other
representative.

     

    3.6  Meaning of Termination of
Employment.  For all purposes of this Agreement, Executive
shall be considered to have terminated employment with Company when Executive
incurs a “separation from service” with Company within the meaning of Section
409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued
thereunder.

     

    ARTICLE
IV

     

    COMPENSATION AND
BENEFITS

     

    4.1  Base Salary.  During
the period of this Agreement, Executive shall receive a minimum base salary of
$180,000 per annum during the first full year of employment, $200,000 per annum
during the second full year of employment, and $220,000 per annum during the
third full year of employment.  Executive’s base salary shall be
reviewed by the Compensation Committee on an annual basis, and, in the sole
discretion of the Compensation Committee, such base salary may be increased, but
not decreased (except with the prior written consent of Executive), effective as
of any date determined by the Compensation Committee.  Executive’s
base salary shall be paid in equal installments in accordance with Company’s
standard policy regarding payment of compensation to executives but no less
frequently than monthly.

     

     

    
      
        
        

      

      
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    4.2  Stock
Compensation.  Executive shall receive a grant of 1,250,000
shares of common stock of the Company pursuant to the terms and subject to the
conditions of a Restricted Stock Agreement of even date herewith between
Executive and Company.

     

    4.3  Option
Compensation.  Executive shall receive a grant of 1,250,000
non-statutory stock options, at an exercise equal to the volume weighted average
price of the Company’s common stock on the Effective Date, pursuant to the terms
and subject to the conditions of a Stock Option Agreement of even date herewith
between Executive and Company.

     

    4.4  Bonuses and Long-Term
Incentive.

     

    (a)  Annual
Bonus.  Executive shall be eligible for an annual bonus of up
to 100% of Executive’s Base Salary based on performance criteria set by the
Compensation Committee and to otherwise participate in Company’s annual bonus
plan or plans applicable to Executive, all as approved from time to time by the
Compensation Committee in amounts to be determined by the Compensation Committee
based upon criteria established by the Compensation Committee.

     

    (b)  Long-Term Incentive
Plan.  Subject to the sole discretion of the Compensation
Committee, Executive shall also be eligible for participation in the Incentive
Plan or such other long-term incentive arrangement of Company as may from time
to time be made available to other executive officers of Company.  Any
awards made under the Incentive Plan or such other arrangements shall be
governed by Section 5.9 herein.

     

    4.5  Other
Perquisites.  During his employment hereunder, Executive shall
be afforded the following benefits as incidences of his employment:

     

    (a)  Business and Entertainment
Expenses - Subject to Company’s standard policies and procedures with
respect to expense reimbursement as applied to its executive employees
generally, Company shall reimburse Executive for, or pay on behalf of Executive,
reasonable and appropriate expenses incurred by Executive for business-related
purposes, including dues and fees to industry and professional organizations and
costs of entertainment and business development.

     

    (b)  Vacation - During his
employment hereunder, Executive shall be entitled to 4 weeks of paid vacation
each calendar year (or a pro rata portion of such four-week vacation period for
any partial year) and to all holidays provided to executives of Company
generally.

     

    (c)  Other Company Benefits -
Executive and, to the extent applicable, Executive’s spouse, dependents, and
beneficiaries, shall be allowed to participate in all benefits, plans, and
programs, including improvements or modifications of the same, which are now, or
may hereafter be, available to other executive employees of
Company.  Such benefits, plans, and programs shall include, without
limitation, any profit sharing plan, thrift plan, health insurance or health
care plan, life insurance, disability insurance, pension plan, supplemental
retirement plan, vacation and sick leave plan, and the like which may be
maintained by Company. Company shall not, however, by reason of this paragraph
be obligated to institute, maintain, or refrain from changing, amending, or
discontinuing, any such benefit plan or program, so long as such changes are
similarly applicable to executive employees generally.

     

     

    
      
        
        

      

      
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    ARTICLE
V

     

    EFFECT OF TERMINATION ON
COMPENSATION; ADDITIONAL PAYMENTS

     

    5.1  Termination Other Than an Involuntary
Termination.  If Executive’s employment hereunder shall
terminate upon expiration of the term provided in Section 3.1 hereof or if
Executive’s employment hereunder shall terminate for any other reason except
those described in Sections 5.2 and 5.3, then Company shall continue to provide
all compensation and benefits to Executive hereunder until the date of such
termination of employment, and such compensation and benefits shall terminate
contemporaneously with such termination of employment.

     

    5.2  Involuntary Termination Other Than
During a Change of Control Period.  Subject to the provisions
of Sections 5.6 and 5.7 hereof, if Executive’s employment by Company or any
successor thereto shall be subject to an Involuntary Termination which occurs
prior to the date that Change of Control Period begins or after the expiration
of a Change of Control Period, then Company shall, as additional compensation
for services rendered to Company (including its subsidiaries), pay to Executive
the following amounts and take the following actions:

     

    (a)  Pay
Executive a lump sum cash payment in an amount equal to Executive’s Annual Base
Salary on or before the Payment Date.

     

    (b)  During
the portion, if any, of the 12-month period commencing on the date of such
Involuntary Termination that Executive is eligible to elect and elects to
continue coverage for himself and his eligible dependents under Company’s or a
subsidiary’s group health plans, as applicable, under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and/or Sections 601 through 608
of the Employee Retirement Income Security Act of 1974, as amended, Company
shall promptly reimburse Executive on a monthly basis for the difference between
the amount Executive pays to effect and continue such coverage and the employee
contribution amount that active senior executive employees of Company pay for
the same or similar coverage under such group health plans; provided, however,
that such reimbursement shall cease to be effective if and to the extent
Executive becomes eligible to receive medical and/or dental coverage from a
subsequent employer (and any such eligibility shall be promptly reported to
Company by Executive).

     

    5.3  Involuntary Termination During a
Change of Control Period.  Subject to the provisions of
Sections 5.6 and 5.7, if Executive’s employment by Company or any successor
thereto shall be subject to an Involuntary Termination during a Change of
Control Period, then Company shall, as additional compensation for services
rendered to Company (including its subsidiaries), pay to Executive the following
amounts and take the following actions:

     

     

    
      
        
        

      

      
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    (a)  Pay Executive a lump sum
cash payment in an amount equal to two times Executive’s
Annual Base Salary on or before the Payment Date.

     

    (b)  During
the portion, if any, of the 12-month period commencing on the date of such
Involuntary Termination that Executive is eligible to elect and elects to
continue coverage for himself and his eligible dependents under Company’s or a
subsidiary’s group health plans, as applicable, under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and/or Sections 601 through 608
of the Employee Retirement Income Security Act of 1974, as amended, Company
shall promptly reimburse Executive on a monthly basis for the difference between
the amount Executive pays to effect and continue such coverage and the employee
contribution amount that active senior executive employees of Company pay for
the same or similar coverage under such group health plans; provided, however,
that such reimbursement shall cease to be effective if and to the extent
Executive becomes eligible to receive medical and/or dental coverage from a
subsequent employer (and any such eligibility shall be promptly reported to
Company by Executive).

     

    5.4  Interest on Late
Payments.  If any payment provided for in Section 5.2 or 5.3
hereof is not made when due (applying the deferred payment date provided for in
Section 5.7 as the due date, if applicable) then Company shall pay to Executive
interest on the amount payable from the date that such payment should have been
made under such Section until such payment is made, which interest shall be
calculated at the prime or base rate of interest announced by JPMorgan Chase
Bank (or any successor thereto) at its principal office in New York and shall
change when and as any such change in such prime or base rate shall be announced
by such bank.

     

    5.5  Parachute Payments.  Notwithstanding anything to the contrary
in this Agreement, in the event that any payment, distribution, or provision of
a benefit by Company to or for the benefit of Executive, whether paid or
payable, distributed or distributable, or provided or to be provided pursuant to
the terms of this Agreement or otherwise (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest or penalties, are hereinafter collectively referred to as
the “Excise
Tax”), Company shall pay to Executive on or as soon as administratively
practicable following the day on which the Excise Tax is remitted by or on
behalf of Executive (but no later than the end of the taxable year following the
year in which the Excise Tax is remitted) an additional payment (a “Gross-up
Payment”) in an amount such that after payment by Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed on any Gross-up Payment, Executive retains an
amount of the Gross-up Payment equal to the Excise Tax imposed upon the
Payments.  Company and Executive shall make an initial determination
as to whether a Gross-up Payment is required and the amount of any such Gross-up
Payment.  Executive shall notify Company in writing of any claim by
the Internal Revenue Service which, if successful, would require Company to make
a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within ten days of the receipt of such
claim.  Company shall notify Executive in writing at least ten days
prior to the due date of any response required with respect to such claim if it
plans to contest the claim.  If Company decides to contest such claim,
Executive shall cooperate fully with Company in such action; provided, however,
Company shall bear and pay directly or indirectly all costs and expenses
(including additional interest and penalties) incurred in connection with such
action and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of Company’s action.  If, as a result of
Company’s action with respect to a claim, Executive receives a refund of any
amount paid by Company with respect to such claim, Executive shall promptly pay
such refund to Company.  If Company fails to timely notify Executive
whether it will contest such claim or Company determines not to contest such
claim, then Company shall immediately pay to Executive the portion of such
claim, if any, which it has not previously paid to Executive.

     

    
      
        
        

      

      
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    5.6  Release and Full
Settlement.  As a condition to the receipt of any severance
compensation and benefits under this Agreement, Executive must first execute a
release and agreement, in a form reasonably satisfactory to Company, which (a)
shall release and discharge Company and its affiliates, and their officers,
directors, employees, and agents, from any and all claims or causes of action of
any kind or character, including all claims or causes of action arising out of
Executive’s employment with Company or its affiliates or the termination of such
employment, and (b) must be effective and irrevocable within 55 days after the
termination of Executive’s employment.  If Executive is entitled to
and receives the benefits provided hereunder, performance of the obligations of
Company hereunder will constitute full settlement of all claims that Executive
might otherwise assert against Company on account of Executive’s termination of
employment.

     

    5.7  Payments Subject to Section 409A of
the Code.  Notwithstanding the foregoing provisions of this
Article 5, if the payment of any severance compensation or severance benefits
under this Agreement would be subject to additional taxes and interest under
Section 409A of the Code because the timing of such payment is not delayed as
provided in Section 409A(a)(2)(B) of the Code, then any such payments that
Executive (or Executive’s estate) would otherwise be entitled to during the
first six months following the date of Executive’s termination of employment
shall be accumulated and paid on the date that is six months after the date of
Executive’s termination of employment (or if such payment date does not fall on
a business day of Company, the next following business day of Company), or such
earlier date upon which such amount can be paid under Section 409A of the Code
without being subject to such additional taxes and
interest.  Executive hereby agrees to be bound by Company’s
determination of its “specified employees” (as such term is defined in Section
409A of the Code) in accordance with any of the methods permitted under the
regulations issued under Section 409A of the Code.

     

    5.8  Liquidated
Damages.  In light of the difficulties in estimating the
damages for an early termination of Executive’s employment under this Agreement,
Company and Executive hereby agree that the payments, if any, to be received by
Executive pursuant to this Article 5 shall be received by Executive as
liquidated damages.

     

    5.9  Other
Benefits.  This Agreement governs the rights and obligations of
Executive and Company with respect to Executive’s base salary and certain
perquisites of employment.  Except as expressly provided herein,
Executive’s rights and obligations both during the term of his employment and
thereafter with respect to stock options, restricted stock, incentive and
deferred compensation, life insurance policies insuring the life of Executive,
and other benefits under the plans and programs maintained by Company shall be
governed by the separate agreements, plans and other documents and instruments
governing such matters.

     

     

    
      
        
        

      

      
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    ARTICLE
VI

     

    PROTECTION OF CONFIDENTIAL
INFORMATION

     

    6.1  Disclosure to and Property of
Company.

     

    (a)  Confidential Information. All information,
designs, ideas, concepts, improvements, product developments, discoveries, and
inventions, whether patentable or not, that are conceived, made, developed, or
acquired by Executive, individually or in conjunction with others, during the
period of Executive’s employment by Company (whether during business hours or
otherwise and whether on Company’s premises or otherwise) that relate to
Company’s (or any of its affiliates’) business, trade secrets, products, or
services (including, without limitation, all such information relating to
corporate opportunities, product specification, compositions, manufacturing and
distribution methods and processes, research, forms, policies, procedures,
financial and sales data, pricing terms, costs, evaluations, opinions,
interpretations, acquisition prospects, employee lists, property lists, the
identity of customers or their requirements, the identity of key contacts within
the customer’s organizations or within the organization of acquisition
prospects, marketing and merchandising techniques, business plans, negotiation
and documentation strategies, computer software or programs, computer software
and database technologies, prospective names, and marks (collectively, “Confidential
Information”) shall be disclosed to Company and are and shall be the sole
and exclusive property of Company (or its affiliates).

     

    (b)  Work Product. Moreover, all documents,
videotapes, written presentations, brochures, drawings, memoranda, notes,
records, files, correspondence, manuals, models, specifications, computer
programs, E-mail, voice mail, electronic databases, maps, drawings,
architectural renditions, proposals, and all other writings or materials of any
type embodying any of such information, ideas, concepts, improvements,
discoveries, inventions, and other similar forms of expression (including but
not limited to (i) maps, data, and reports that relate to results of
exploration, drilling, drill cores, cuttings, and other samples relating to the
production and operation of Company’s oil and gas properties (whether owned or
prospective) and (ii) title opinions; abstracts of title; land, accounting,
production, or operating expense records; engineering, geological, or
geophysical data; development plans and permits; or any other material or
writing of whatever kind embodying any other information relating to the
production and operation of Company’s oil and gas properties (whether owned or
prospective)) (collectively, “Work
Product”) are and shall be the sole and exclusive property of Company (or
its affiliates).

     

     

    
      
        
        

      

      
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    Upon
Executive’s termination of employment with Company, for any reason, Executive
promptly shall deliver such Confidential Information and Work Product, and all
copies thereof, to Company.

     

    6.2  Disclosure to
Executive.  Company has and will disclose to Executive, or
place Executive in a position to have access to or develop, Confidential
Information and Work Product of Company (or its affiliates); and/or has and will
entrust Executive with business opportunities of Company (or its affiliates);
and/or has and will place Executive in a position to develop business good will
on behalf of Company (or its affiliates).  Executive agrees to
preserve and protect the confidentiality of all Confidential Information or Work
Product of Company (or its affiliates).

     

    6.3  No Unauthorized Use or
Disclosure.  Executive agrees that he will not, at any time
during or after Executive’s employment by Company, make any unauthorized
disclosure of Confidential Information or Work Product of the Company (or its
affiliates), and will not make any use thereof, except in the carrying out of
Executive’s responsibilities during the course of Executive’s employment with
Company.  Executive shall have no obligation hereunder to keep
confidential any Confidential Information if and to the extent disclosure
thereof is specifically required by law; provided, however, that in the event
disclosure is required by applicable law, Executive shall provide Company with
prompt notice of such requirement prior to making any such disclosure, so that
Company may seek an appropriate protective order.  At the request of
Company at any time, Executive agrees to deliver to Company all Confidential
Information that he may possess or control.  Executive agrees that all
Confidential Information of Company (whether now or hereafter existing)
conceived, discovered, or made by him during the period of Executive’s
employment by Company exclusively belongs to Company (and not to Executive), and
Executive will promptly disclose such Confidential Information to Company and
perform all actions reasonably requested by Company to establish and confirm
such exclusive ownership.  Affiliates of Company shall be third party
beneficiaries of Executive’s obligations under this Article 6.  As a
result of Executive’s employment by Company, Executive may also from time to
time have access to, or knowledge of, Confidential Information or Work Product
of third parties, such as customers, suppliers, partners, joint venturers, and
the like, of Company and its affiliates.  Executive also agrees to
preserve and protect the confidentiality of such third party Confidential
Information and Work Product to the same extent, and on the same basis, as
Company’s Confidential Information and Work Product.

     

    6.4  Ownership by
Company.  If, during Executive’s employment by Company,
Executive creates any work of authorship fixed in any tangible medium of
expression that is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company’s business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company’s premises or
otherwise), including any Work Product, Company shall be deemed the author of
such work if the work is prepared by Executive in the scope of Executive’s
employment; or, if the work is not prepared by Executive within the scope of
Executive’s employment but is specially ordered by Company as a contribution to
a collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation, or as an instructional
text, then the work shall be considered to be work made for hire and Company
shall be the author of the work.  If such work is neither prepared by
Executive within the scope of Executive’s employment nor a work specially
ordered that is deemed to be a work made for hire, then Executive hereby agrees
to assign, and by these presents does assign, to Company all of Executive’s
worldwide right, title, and interest in and to such work and all rights of
copyright therein.

     

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    6.5  Assistance by
Executive.  During the period of Executive’s employment by
Company and thereafter, Executive shall assist Company and its nominee, at any
time, in the protection of Company’s (or its affiliates’) worldwide right,
title, and interest in and to Work Product and the execution of all formal
assignment documents requested by Company or its nominee and the execution of
all lawful oaths and applications for patents and registration of copyright in
the United States and foreign countries.

     

    6.6  Remedies.  Executive
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Executive, and Company or its affiliates shall be entitled to
enforce the provisions of this Article 6 by terminating payments then owing to
Executive under this Agreement or otherwise and to specific performance and
injunctive relief as remedies for such breach or any threatened
breach.  Such remedies shall not be deemed the exclusive remedies for
a breach of this Article 6 but shall be in addition to all remedies available at
law or in equity, including the recovery of damages from Executive and his
agents.

     

    ARTICLE
VII

     

    NON-COMPETITION AND
NON-SOLICITATION OBLIGATIONS

     

    7.1  General.  As part of
the consideration for Company’s employment of Executive and the compensation and
benefits that may be paid to Executive hereunder; to protect the trade secrets
and Confidential Information of Company and its affiliates that will in the
future be disclosed or entrusted to Executive, the business good will of Company
and its affiliates that will in the future be developed by Executive, or the
business opportunities that will in the future be disclosed or entrusted to
Executive by Company or its affiliates; and as an additional incentive for
Company to enter into this Agreement, Company and Executive agree to the
provisions of this Article 7.  Executive agrees that during his
employment with Company and for a period of six months following the termination
of Executive’s employment with Company for any reason (the “Non-Compete Period”),
Executive shall not, without the prior written consent of Company:

     

    (a)  directly
or indirectly participate in the ownership, management, operation, or control
of, or be connected as an officer, employee, partner, director, consultant,
contractor, or otherwise with, or have any financial interest in or aid or
assist anyone else in the conduct of, any oil and gas exploration or production
business in any of the Business Territories of the Company (a “Competitive Operation”);
provided, however, that this provision shall not preclude Executive after the
termination of his employment with Company from (i) owning less than 5% of the
equity securities of any publicly held Competitive Operation so long as
Executive does not serve as an employee, officer, director, or consultant to
such business, (ii) being engaged as an investment banker and/or financial
advisor to oil and gas exploration or production business entities, or
(iii) being employed by a commercial bank or investment management
company;

     

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    (b)  call
upon any prospective acquisition candidate on Executive’s own behalf or on
behalf of any Competitive Operation, which candidate is a Competitive Operation
or which candidate was, to Executive’s knowledge after due inquiry, either
called upon by Company or an affiliate or for which Company or an affiliate made
an acquisition analysis, for the purpose of acquiring such entity;
or

     

    (c)  directly
or indirectly, either as principal, agent, independent contractor, consultant,
director, officer, employee, employer, advisor, member, stockholder, partner, or
in any other individual or representative capacity whatsoever, either for his
own benefit or for the benefit of any other person or entity either (i) hire,
contract, or solicit or attempt any of the foregoing with respect to hiring any
then present employee (or person who was an employee at any time during the
six-month period prior to termination of Executive’s employment) of Company or
any affiliate, or (ii) induce or otherwise counsel, advise, or encourage any
employee of Company or any affiliate to leave the employment of Company or any
affiliate.

     

    7.2  Non-Disparagement. During Executive’s
employment with Company and following any termination of employment with
Company, Executive and Company mutually agree not to disparage, either orally or
in writing, Executive, Company, or any of affiliates’ business, products,
services, or practices, or any of Company’s or its affiliates’ directors,
officers, agents, representatives, stockholders, partners, members, employees,
or affiliates.

     

    7.3  Remedies.  Executive
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 7 by Executive, and Company or its affiliates shall be
entitled to enforce the provisions of this Article 7 by terminating
payments then owing to Executive under this Agreement or otherwise and to
specific performance and injunctive relief as remedies for such breach or any
threatened breach.  Such remedies shall not be deemed the exclusive
remedies for a breach of this Article 7 but shall be in addition to all
remedies available at law or in equity, including the recovery of damages from
Executive and his agents.

     

    7.4  Reformation.  Company
and Executive agree that the foregoing restrictions are reasonable under the
circumstances and that any breach of the covenants contained in this
Article 7 would cause irreparable injury to Company.  If any of
the aforesaid restrictions are found by a court of competent jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by the court making such determination so as to be reasonable and
enforceable and, as so modified, to be fully enforced.  By agreeing to
this contractual modification prospectively at this time, Company and Executive
intend to make this provision enforceable under the law or laws of all
applicable States so that the entire agreement not to compete and this Agreement
as prospectively modified shall remain in full force and effect and shall not be
rendered void or illegal.  Such modification shall not affect the
payments made to Executive under this Agreement.

     

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
VIII

     

    DISPUTE
RESOLUTION

     

    8.1  General.  Executive
and the Company explicitly recognize that no provision of this Article VIII
shall prevent either party from seeking to resolve any dispute relating to
Article VI or Article VII of this Agreement in a court of law.

     

    8.2  Negotiation.  The
parties shall attempt in good faith to resolve any dispute arising out of or
relating to this Agreement promptly by negotiations between Executive and an
executive officer of Company who has authority to settle the
controversy.  Any party may give the other party written notice of any
dispute not resolved in the normal course of business.  Within ten
days after the effective date of such notice, Executive and an executive officer
of Company shall meet at a mutually acceptable time and place within the
Houston, Texas metropolitan area, and thereafter as often as they reasonably
deem necessary, to exchange relevant information and to attempt to resolve the
dispute.  If the matter has not been resolved within 30 days of the
disputing party’s notice, or if the parties fail to meet within ten days, either
party may initiate arbitration of the controversy or claim as provided in
Section 8.3 below.  If a negotiator intends to be accompanied at a
meeting by an attorney, the other negotiator shall be given at least three
business days’ notice of such intention and may also be accompanied by an
attorney.  All negotiations pursuant to this Section 8.2 shall be
treated as compromise and settlement negotiations for the purposes of the
federal and state rules of evidence and procedure.

     

    8.3  Arbitration.  Company
and Executive agree that after efforts to negotiate any dispute in accordance
with Section 8.2 have failed, then either party may by written notice (the “Notice”)
demand arbitration of the dispute as set out below, and each party hereto
expressly agrees to submit to, and be bound by, such arbitration.

     

    (a)  Each
party will, within ten business days of the Notice, nominate an arbitrator, who
shall be a non-neutral arbitrator. Each nominated arbitrator must be someone
experienced in dispute resolution and of good character without moral turpitude
and not within the employ or direct or indirect influence of the nominating
party.  The two nominated arbitrators will, within ten business days
of nomination, agree upon a third arbitrator, who shall be neutral. If the two
appointed arbitrators cannot agree on a third arbitrator within such period, the
parties may seek such an appointment through any permitted court proceeding or
by the American Arbitration Association (“AAA”).  The
three arbitrators will set the rules and timing of the arbitration, but will
generally follow the rules of the AAA and this Agreement where same are
applicable and shall provide for a reasoned opinion.

     

    (b)  The
arbitration hearing will in no event take place more than 180 days after the
appointment of the third arbitrator.

     

    (c)  The
arbitration will take place in Houston, Texas unless otherwise unanimously
agreed to by the parties.

     

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    (d)  The
results of the arbitration and the decision of the arbitrators will be final and
binding on the parties, and each party agrees and acknowledges that these
results shall be enforceable in a court of law.

     

    (e)  All
administrative costs and expenses of the mediation and arbitration shall be
borne equally by the Company and Executive during the pendency of the
proceedings.  Such costs and expenses do not include attorney’s fees,
expert witness fees or other party generated expenses.  Upon the
conclusion of the proceedings, the prevailing party shall be entitled to recover
reasonable and necessary attorneys’ fees, expert witness fees, and costs and
expenses of arbitration.

     

    ARTICLE
IX

     

    MISCELLANEOUS

     

    9.1  Indemnification.  Company
shall continue to indemnify Executive following any termination of this
Agreement to the fullest extent permitted by applicable law consistent with the
Articles of Incorporation and By-Laws of Company in effect as of the date of the
termination with respect to Executive’s sole, joint, or concurrent negligence
and any acts of or omissions he may have committed during the period during
which he was an officer, director, and/or employee of (a) Company, (b) any
subsidiary thereof for which he served as an officer, director, or employee at
the request of Company, or (c) any successor thereto; provided, however,
Company shall have no obligation to indemnify Executive for any claim based on
facts or circumstances that served or could have served as grounds for
termination of Executive’s employment under this Agreement by the Company for
Cause.  Any reimbursement of reasonable attorneys’ fees and
disbursements required under this Section 9.1 shall be made within thirty days
of the date that Executive submits an invoice for payment or
reimbursement.  In the event Company and Executive shall have entered
into a separate indemnity agreement, the terms of such agreement, and not this
Section 9.1, shall govern Company’s obligations to indemnify Executive following
the termination of this Agreement.

     

    9.2  Payment Obligations
Absolute.  Except as specifically provided in Sections 6.6 and
7.4, Company’s obligation to pay (or cause one of its subsidiaries to pay)
Executive the amounts and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense,
or other right which Company (including its subsidiaries) may have against
Executive or anyone else.  All amounts payable by Company (including
its subsidiaries hereunder) shall be paid without notice or
demand.  Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and, except as provided in Sections 5.2(b) and 5.3(b) hereof,
the obtaining of any such other employment shall in no event effect any
reduction of Company’s obligations to make (or cause to be made) the payments
and arrangements required to be made under this Agreement.

     

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    9.3  Notices.  Any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto prior to 3:30 p.m. (Houston time) on  any
day except Saturday, Sunday and any day which shall be a federal legal holiday
in the United States (“Business
Day”), (b) the next Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Business Day
or later than 3:30 p.m. (Houston time) on any Business Day, (c) the 2nd Business
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.  All notices and demands to Executive or the Company may be
given to them at the following addresses:

     

    
      	
               
      

            	
              If
      to Executive to:

            	
              Ronald
      D. Ormand

              
                11622
      Monica Lane

                Houston,
      Texas  77024

                 

              

            
	 	If
      to Company:	
              Petro
      Resources Corporation

              777
      Post Oak Blvd., Suite 910

              Houston,
      Texas  77056

            

    

     

    Such
parties may designate in writing from time to time such other place or places
that such notices and demands may be given.

     

    9.4  Applicable Law; Submission to
Jurisdiction.

     

    (a)  This
Agreement is entered into under, and shall be governed for all purposes by, the
laws of the State of Texas, without regard to conflict of law principals
thereof.

     

    (b)  With
respect to any claim or dispute related to or arising under this Agreement, the
parties hereto hereby consent to the exclusive jurisdiction, forum, and venue of
the state or federal (to the extent federal jurisdiction exists) courts located
in Harris County in the State of Texas.

     

    9.5  No Waiver.  No
failure by either party hereto at any time to give notice of any breach by the
other party of or to require compliance with, any condition or provision of this
Agreement shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

     

    9.6  Severability.  Any
provision in this Agreement which is prohibited or unenforceable in any
jurisdiction by reason of applicable law shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

     

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    9.7  Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together will constitute one and the
same Agreement.

     

    9.8  Withholding of Taxes and Other
Employee Deductions.  Company may withhold from any benefits
and payments made pursuant to this Agreement all federal, state, city, and other
taxes as may be required pursuant to any law or governmental regulation or
ruling and all other customary employee deductions made with respect to
Company’s employees generally.

     

    9.9  Headings.  The
Section headings have been inserted for purposes of convenience and shall not be
used for interpretive purposes.

     

    9.10  Gender and
Plurals.  Wherever the context so requires, the masculine
gender includes the feminine or neuter, and the singular number includes the
plural and conversely.

     

    9.11  Assignment.  This
Agreement shall be binding upon and inure to the benefit of Company and any
successor of Company, by merger or otherwise.  This Agreement shall
also be binding upon and inure to the benefit of Executive and his heirs,
representatives and assigns.  If Executive shall die prior to full
payment of amounts due pursuant to this Agreement, such amounts shall continue
to be payable pursuant to the terms of this Agreement.  Executive
shall not have any right to pledge, hypothecate, anticipate, or assign any
portion of this Agreement or any of the rights hereunder, except by will or the
laws of descent and distribution.

     

    9.12  Term.  This
Agreement has a term co-extensive with the term of employment provided in
Section 3.1.  Termination of this Agreement shall not affect any right
or obligation of any party which is accrued or vested prior to such
termination.  The provisions of Section 3.5 and Articles 6 and 7 shall
survive the termination of this Agreement and shall be binding upon Executive
and his or her legal representatives, successors, and assigns following such
termination.

     

    9.13  Entire
Agreement.  This Agreement constitutes the entire agreement of
the parties with regard to the subject matter hereof and contains all the
covenants, promises, representations, warranties, and agreements between the
parties with respect to such subject matter.  Without limiting the
scope of the preceding sentence, all understandings and agreements preceding the
date of execution of this Agreement and relating to the subject matter hereof
are hereby null and void and of no further force and effect, including, without
limitation, all prior employment and severance agreements, if any, by and
between Company and Executive.  Any modification of this Agreement
will be effective only if it is in writing and signed by the party to be
charged.

     

    9.14  Expenses.  The
Company shall reimburse Executive the non-accountable sum of $2,500 for his
legal fees and expenses.  Each party shall otherwise pay all fees and
expenses incurred by such party incident to the negotiation, preparation and
execution of this Agreement.

     

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the
parties hereto have entered into this Agreement as of the date first written
above.

     

    
      
      

       

      
        	 	
                “Company”

                 

                Petro
      Resources Corporation

                a
      Delaware corporation

                 

                 

              	 
	 	By: 	/s/ Wayne P.
      Hall	 
	 	 	Wayne P.
    Hall	 
	 	 	
                Chief
      Executive Officer

              	 
	 	
                
                

                 

                 

                “Executive”

                 

                Ronald
      D. Ormand

                 

              	 
	 	
                
                

                
                  /s/ Ronald
      D. Ormand

                

              	 
	 	
                
                  Ronald
      D. Ormand

                

              	 

      

       

       

       

      -18-prc_8k-ex1005.htm

    
      EXHIBIT
10.5

      NON-STATUTORY
STOCK OPTION AGREEMENT

    

     

    THIS NON-STATUTORY STOCK OPTION AGREEMENT
(“Agreement”)
is entered into effective as of May 22, 2009 (“Effective
Date”) by and between Petro Resources Corporation, a Delaware corporation
(“Company”),
and Ronald D. Ormand (“Optionee”).

     

    R
E C I T A L S

     

    A.  The
Company wishes to grant Optionee options to purchase 1,250,000 shares of the
Corporation’s $.01 par value common stock (“Common
Stock”) on the terms and subject to the conditions set forth
below.

     

    B.  The
options and option shares will not be granted under the Company’s 2006 Stock
Incentive Plan (“Plan”),
however, as a matter of convenience, this Agreement incorporates certain terms
and conditions from the Plan, as it exists as of the Effective Date, as
expressly provided for herein.

     

    C.  This
Agreement is entered into concurrent with the execution and delivery of that
certain Employment Agreement (“Employment
Agreement”) of even date herewith between Optionee and the
Company.

     

    A
G R E E M E N T

     

    It is
hereby agreed as follows:

     

    1.  Grant
of Options.  The
Company hereby grants to Optionee, options (“Options”)
to purchase all or any part of 1,250,000 shares (“Shares”)
of the Corporation’s Common Stock, upon the terms and subject to the conditions
set forth herein.  Except as otherwise determined by the board of
directors (“Board”) of
the Company, this Agreement and the Options granted hereby shall be administered
on behalf of the Company by the Compensation and Nominating Committee (“Committee”)
of the Board. All agreements, notices and waivers to be made by, or delivered
to, the Company under this Agreement shall be made by, or delivered to, the
Committee, except as otherwise determined by the Board.

     

    2.  Option
Period.  The
Options shall vest and become exercisable, unless earlier terminated pursuant to
Section 6 of this Agreement, as set forth in this Section 2.  All
outstanding Options shall expire on May 22, 2014.

     

    (a)  Options
to purchase 312,500 Shares shall vest and first become exercisable subject to
and upon the Company’s acquisition of at least $20 million of additional debt
capital, equity capital, or oil and gas properties, or any combination thereof,
whether in one transaction or in a series of transactions, during the period
commencing on the Effective Date and ending on May 22,
2010.  Recapitalization of existing equity and refinancing of existing
debt shall be excluded from the calculation of acquired capital.  In
the case of credit facilities, (i) all draw downs on the credit facilities
of the Company or its subsidiaries existing as of the Effective Date shall be
excluded from calculation of acquired debt capital, (ii) the initiation of a new
credit facility on the part of the Company or its subsidiaries subsequent to the
Effective Date or any increase in the borrowing amount of a credit facility
existing as of the Effective Date (each a “New Credit
Facility”), shall be excluded from calculation of acquired debt capital
and (iii) all draw downs on a New Credit Facility shall be included in
calculation of acquired debt capital.  In the case of acquisitions of
oil and gas properties, the purchase price paid by the Company for the oil and
gas properties shall be used for purposes of this Section 2(a) and any financing
acquired by the Company for purposes of financing the acquisition shall be
excluded from any calculation of acquired capital pursuant to this Section
2(a).

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)  Options
to purchase 312,500 Shares shall vest and first become exercisable subject to
and upon the Common Stock trading at a VWAP (as defined below) of $0.75 per
share (as adjusted for splits, combinations and the like) for 20 of any 30
consecutive trading days during the period commencing on the Effective Date and
ending on May 22, 2011. The term “VWAP”
means, for any date, the price determined by the first of the following clauses
that applies: (i) if the Common Stock is then listed or quoted on a stock market
or stock exchange other than the OTC Bulletin Board, the daily volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on the trading market on which the Common Stock is then listed or quoted for
trading as reported by Bloomberg Financial L.P. (based on a trading day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (ii) if
the OTC Bulletin Board is the trading market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board; (iii) if the Common Stock is not then quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported in the
“Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (iv) in all other cases, the fair
market value of a share of Common Stock as determined by the Board in good
faith.

     

    (c)  Options
to purchase 312,500 Shares shall vest and first become exercisable subject to
and upon the Common Stock trading at a VWAP of $1.25 per share (as adjusted for
splits, combinations and the like) for 20 of any 30 consecutive trading days
during the period commencing on the Effective Date and ending on May 22,
2012.

     

    (d)  Options
to purchase 312,500 Shares shall vest and first become exercisable subject to
and upon the Company achieving daily production of 1,400 boe per day during the
period commencing on the Effective Date and ending on May 22, 2011. The term
“boe” means
barrels of crude oil equivalent, determined using the ratio of six mcf of
natural gas to one bbl of crude oil, condensate or natural gas
liquids.

     

    3.  Method
of Exercise.  The
Options shall be exercisable by Optionee by giving written notice to the Company
of the election to purchase and of the number of Shares Optionee elects to
purchase, such notice to be accompanied by such other executed instruments or
documents as required by this Agreement or as the Company may otherwise
reasonably require, and unless otherwise directed by the Company, Optionee shall
at the time of such exercise tender the purchase price of the Shares he has
elected to purchase.  Optionee may purchase less than the total number
of Shares for which the Option is exercisable, provided that a partial exercise
of an Option may not be for less than 100 Shares.  If Optionee shall
not purchase all of the Shares which he is entitled to purchase under the
Options, his right to purchase the remaining unpurchased Shares shall continue
until expiration of the Options.  The Options shall be exercisable
with respect of whole Shares only, and fractional Share interests shall be
disregarded.

     

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    4.  Amount
of Purchase Price.  The
purchase price (“Purchase
Price”) per Share for each Share which Optionee is entitled to purchase
under the Options shall be $0.37 per Share.

     

    5.  Payment
of Purchase Price.  At
the option of the Executive, all or any part of the Options may be paid in cash
or in shares of Common Stock equal to the Purchase Price, or in a combination of
cash and shares of the Common Stock of the Company.  At the time of
Optionee’s notice of exercise of the Options, Optionee shall designate the
manner of payment and shall tender (a) in cash or by certified or bank cashier’s
check payable to the Company, the Purchase Price for all Shares then being
purchased for cash, and (b) shares of Common Stock of the Company for the
Purchase Price for all Shares then being purchased not involving a cash payment,
accompanied by appropriate stock powers with original signatures and Medallion
guarantees.  In the case of payment in shares of Common Stock, the per
share value shall be the VWAP for the 20 trading days preceding the Company’s
receipt of the notice of exercise and other deliverables required by this
Section 5.

     

    6.  Effect
of Termination of Employment or Other Relationship.  If
Optionee’s employment with the Company terminates, the effect of the termination
on the Optionee’s rights to acquire Shares shall be as follows:

     

    6.1  Termination
Due to Death or Disability.  In
the event Optionee’s employment with the Company is terminated by reason of
death or Disability (as such term is defined in the Employment Agreement), all
outstanding Options then held by Optionee will, to the extent exercisable as of
such termination, remain exercisable for a period of six (6) months after such
termination (but in no event after the expiration date of any such
Option).  Options not exercisable as of such death or Disability will
be forfeited and terminate.

     

    6.2  Termination
Due to Resignation

     

    .  In
the event Optionee’s employment with the Company is terminated by reason of
resignation by Optionee, excluding any resignation by Optionee for Good Reason
(as such term is defined in the Employment Agreement), all outstanding Options
then held by Optionee will, to the extent exercisable as of such termination,
remain exercisable in full for a period of three (3) months after such
termination (but in no event after the expiration date of any such
Option).  Options not exercisable as of such resignation will be
forfeited and terminate.

     

    6.3  Termination
For Cause.  In the event
Optionee’s employment with the Company is terminated by the Company for Cause
(as such term is defined in the Employment Agreement), all outstanding Options
then held by Optionee will be forfeited and terminate, without notice of any
kind, effective as of the time of termination for Cause. The Company may defer
the exercise of any Option for a period of up to forty-five (45) days in order
for the Committee to make any determination as to the existence of
Cause.

     

    6.4  Termination for Reasons Other than
Death, Disability, Resignation or Cause.  In the event
Optionee’s employment with the Company is terminated for any reason other than
as contemplated by Sections 6.1 through 6.3 above, all outstanding Options then
held by Optionee will, to the extent exercisable as of such termination, remain
exercisable in full until the expiration date of any such
Option.  Options not exercisable as of such termination of employment
shall remain outstanding and will be forfeited and terminate on the earlier of
(a) the vesting date with respect to such Options set forth in Section 2 if the
applicable vesting condition has not been satisfied on or prior to such date and
(b) either (y)  the second anniversary of the date of such termination
of employment in the event  such termination of employment occurs on
or before the first anniversary of the Effective Date or (z) the first
anniversary of the date of such termination of employment in the
event  such termination of employment occurs after the first
anniversary of the Effective Date.  Options that vest prior to the
termination provisions of the preceding sentence shall remain exercisable in
full until the expiration date of such Option.

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    6.5  Modification
of Rights Upon Termination.  Notwithstanding
the other provisions of this Section 6, upon Optionee’s termination of
employment with the Company, the Committee may, in its sole discretion (which
may be exercised at any time on or after the date of grant, including following
such termination), cause Options (or any part thereof) then held by Optionee to
become or continue to become exercisable and/or remain exercisable following
such termination of employment, in the manner determined by the
Committee.

     

    6.6  Determination
of Termination of Employment.  Unless
the Committee otherwise reasonably determines, Optionee’s employment will, for
purposes of this Agreement, be deemed to have terminated on the date recorded on
the personnel or other records of the Company, as reasonably determined by the
Committee upon such records.

     

    7.  Payment
of Withholding Taxes.  The Company is
entitled to (a) withhold and deduct from future wages of the Optionee (or from
other amounts that may be due and owing to the Optionee from the Company), or
make other arrangements for the collection of, all legally required amounts
necessary to satisfy any and all federal, foreign, state and local withholding
and employment-related tax requirements attributable to the Options, or (b)
require the Optionee promptly to remit the amount of such withholding to the
Company before taking any action, including issuing any shares of Common Stock,
with respect to an Option.

     

    8.  Change
in Control.

     

    8.1  General.  In
the event of a Change in Control (as such term is defined in the Plan as of the
Effective Date), the Company, if approved by the Committee in its sole
discretion, and without the consent of Optionee, may determine
that:

     

    (a)  all
Options that have been outstanding for at least six months will become
immediately exercisable in full and will remain exercisable in accordance with
their terms;

     

    (b)  Optionee
will receive, with respect to some or all of the Shares of Common Stock subject
to outstanding Options, either (i) as of the effective date of any such Change
in Control, cash in an amount equal to the excess of the Fair Market Value (as
such term is defined in the Plan as of the Effective Date) of such Shares on the
last business day prior to the effective date of such Change in Control over the
Purchase Price per share of such Shares, (ii) immediately prior to such Change
of Control, a number of shares of Common Stock having an aggregate Fair Market
Value equal to the excess of the Fair Market Value of the Shares as of the last
business day prior to the effective date of such Change in Control over the
Purchase Price per share of such Shares; or (iii) any combination of cash or
shares of Common Stock with the amount of each component to be determined by the
Committee not inconsistent with the foregoing clauses (i) and (ii), as
proportionally adjusted; and

     

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (c)  any
Options which, as of the effective date of any such Change in Control, are
“underwater” (as defined in Section 3.2(d) of the Plan as of the Effective Date)
or not vested shall terminate as of the effective date of any such Change in
Control.

     

    8.2  Limitation
on Change in Control Payments.  Notwithstanding
anything in this Agreement to the contrary, if the acceleration of the
exercisability of an Option as provided in Section 8.1(a) or the payment of
cash or shares of Common Stock in exchange for all or part of an Option as
provided in Section 8.1(b) (which acceleration or payment could be deemed a
“payment” within the meaning of Section 280G(b)(2) of the Internal Revenue
Code of 1986, as amended (“Code”)),
together with any other “payments” that such Optionee has the right to receive
from the Company or any corporation that is a member of an “affiliated group”
(as defined in Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which the Company is a member, would
constitute a “parachute payment” (as defined in Section 280G(b)(2) of the
Code), then the “payments” to such Optionee pursuant to Section 8.1 will be
reduced to the largest amount as will result in no portion of such “payments”
being subject to the excise tax imposed by Section 4999 of the Code; provided,
however, that if Optionee is subject to a separate agreement with the Company
which specifically provides that payments attributable to one or more forms of
employee stock incentives or to payments made in lieu of employee stock
incentives will not reduce any other payments under such agreement, even if it
would constitute an excess parachute payment, or provides that the Optionee will
have the discretion to determine which payments will be reduced in order to
avoid an excess parachute payment, then the limitations of this Section 8.2
will, to that extent, not apply.

     

    9.  Anti-Dilution.

     

    9.1  Stock
Dividends and Splits.  If
the Company, at any time while Options are outstanding: (a) pays a stock
dividend or otherwise makes a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock, (b) subdivides or reclassifies outstanding shares of
Common Stock into a larger number of shares, (c) combines or reclassifies
(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, (d) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock, or (e) issues by
reclassification of shares of the Common Stock any shares of capital stock of
the Company, then in each case the Purchase Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares issuable upon
exercise of the Options shall be proportionately adjusted so that Optionee shall
be entitled to receive the number of shares of capital stock of the Company
which Optionee would have owned immediately following such action had such
Options been exercised immediately prior thereto.

     

    9.2  Fundamental
Transaction.  Subject
to the Company’s rights under Section 8, if at any time while the Options are
outstanding, (a) the Company effects any merger or consolidation or other
business combination with and into another entity, (b) the Company effects any
sale of all or substantially all of its assets in one or a series of related
transactions or (c) the Company effects any reclassification of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental
Transaction”), and such Fundamental Transaction constitutes a Change of
Control then, unless the Company shall have made a determination in accordance
with Section 8.1 above, upon consummation of such transaction the Options shall
automatically become exercisable for the kind and amount of securities, cash or
other assets which Optionee would have owned immediately after the Fundamental
Transaction if Optionee had exercised the Options immediately before the
effective date of such transaction, without further action required on the part
of any party (the “Alternate
Consideration”).  To the extent necessary to effectuate the
foregoing provisions, and subject to the Corporation’s rights under Section 8,
any successor to the Company or surviving entity in such Fundamental Transaction
shall issue to Optionee new Options consistent with the foregoing provisions and
evidencing Optionee’s right to exercise such Options into Alternate
Consideration.

     

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    10.  Nontransferability
of Options.  The
Options shall not be transferable or assignable, either voluntarily or by
operation of law, except as provided in Section 12.3 of the Plan.

     

    11.  Time
of Granting Options.  The
time the Options shall be deemed granted, sometimes referred to herein as the
“date of grant,” shall be May 22, 2009.

     

    12.  Privileges
of Stock Ownership.  Optionee
shall not be entitled to the privileges of stock ownership as to any Shares not
actually issued and delivered to Optionee.  No Shares shall be
purchased upon the exercise of any Options unless and until, in the opinion of
the Company’s counsel, any then applicable requirements of any laws, or
governmental or regulatory agencies having jurisdiction, and of any exchanges
upon which the stock of the Company may be listed shall have been fully complied
with.

     

    13.  Securities
Laws Compliance.  The
Company will diligently endeavor to comply with all applicable securities laws
before any stock is issued pursuant to the Options.  Without limiting
the generality of the foregoing, the Company may require from the Optionee such
investment representation or such agreement, if any, as counsel for the Company
may consider necessary in order to comply with the Securities Act of 1933 as
then in effect, and may require that the Optionee agree that any sale of the
Shares will be made only in such manner as is permitted by the
Corporation.  The Company may in its discretion cause the Shares
underlying the Options to be registered under the Securities Act of 1933 as
amended by filing a Form S-8 Registration Statement covering the Options and the
Shares underlying the Options.  Optionee shall take any action
reasonably requested by the Company in connection with registration or
qualification of the Shares under federal or state securities laws.

     

    14.  Intended
Treatment as Non-Statutory Stock Options.  The
Options granted herein are intended to be non-statutory stock options described
in U.S. Treasury Regulation (“Treas.
Reg.”) §1.83-7 to which Sections 421 and 422 of the Code, do not
apply, and shall be construed to implement that intent.  If all or any
part of the Options shall not be described in Treas. Reg. §1.83-7 or be subject
to Sections 421 and 422 of the Code, the Options shall nevertheless be
valid and carried into effect.

     

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    15.  Shares
Subject to Legend.  If
deemed necessary by the Company’s counsel, all certificates issued to represent
Shares purchased upon exercise of the Options shall bear such appropriate legend
conditions as counsel for the Company shall require.

     

    16.  No
Rights to Continued Employment or Relationship.  Nothing
contained in this Agreement shall obligate the Company to employ or have another
relationship with Optionee for any period or interfere in any way with the right
of the Company to reduce Optionee’s compensation or to terminate the employment
of or relationship with Optionee at any time.

     

    17.  Miscellaneous.

     

    17.1  Binding
Effect.  This
Agreement shall bind and inure to the benefit of the successors, assigns,
transferees, agents, personal representatives, heirs and legatees of the
respective parties.

     

    17.2  Further
Acts.  Each
party agrees to perform any further acts and execute and deliver any documents
which may be necessary to carry out the provisions of this
Agreement.

     

    17.3  Amendment.  This
Agreement may be amended at any time by the written agreement of the Company and
the Optionee.

     

    17.4  Syntax.  Throughout
this Agreement, whenever the context so requires, the singular shall include the
plural, and the masculine gender shall include the feminine and neuter
genders.  The headings and captions of the various Sections hereof are
for convenience only and they shall not limit, expand or otherwise affect the
construction or interpretation of this Agreement.

     

    17.5  Choice
of Law.  The
parties hereby agree that this Agreement has been executed and delivered in the
State of Texas and shall be construed, enforced and governed by the laws
thereof.  This Agreement is in all respects intended by each party
hereto to be deemed and construed to have been jointly prepared by the parties
and the parties hereby expressly agree that any uncertainty or ambiguity
existing herein shall not be interpreted against either of them.

     

    17.6  Severability. In the
event that any provision of this Agreement shall be held invalid or
unenforceable, such provision shall be severable from, and such invalidity or
unenforceability shall not be construed to have any effect on, the remaining
provisions of this Agreement.

     

    17.7  Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 3:30 p.m. (Houston time)
on  any day except Saturday, Sunday and any day which shall be a
federal legal holiday in the United States (“Business
Day”), (b) the next Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Business Day
or later than 3:30 p.m. (Houston time) on any Business Day, (c) the 2nd Business
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.  All notices and demands to Optionee or the Company may be
given to them at the following addresses:

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              If
      to Optionee:

            	
              Ronald
      D. Ormand

              
                11622
      Monica Lane

                Houston,
      Texas  77024

                 

              

            
	 	If
      to Company: 	

              Petro
      Resources Corporation

              777
      Post Oak Blvd., Suite 910

              Houston,
      Texas  77056

            

    

     

    Such
parties may designate in writing from time to time such other place or places
that such notices and demands may be given.

     

    17.8  Entire
Agreement.  This
Agreement constitutes the entire agreement between the parties hereto pertaining
to the subject matter hereof, this Agreement supersedes all prior and
contemporaneous agreements and understandings of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth or referred to
herein.  No supplement, modification or waiver or termination of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby.  No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.

     

    17.9  Attorneys’
Fees.  In
the event that any party to this Agreement institutes any action or proceeding,
including, but not limited to, litigation or arbitration, to preserve, to
protect or to enforce any right or benefit created by or granted under this
Agreement, the prevailing party in each respective such action or proceeding
shall be entitled, in addition to any and all other relief granted by a court or
other tribunal or body, as may be appropriate, to an award in such action or
proceeding of that sum of money which represents the attorneys’ fees reasonably
incurred by the prevailing party therein in filing or otherwise instituting and
in prosecuting or otherwise pursuing or defending such action or proceeding,
and, additionally, the attorneys’ fees reasonably incurred by such prevailing
party in negotiating any and all matters underlying such action or proceeding
and in preparation for instituting or defending such action or
proceeding.

     

    17.10  Counterparts.  This
Agreement may be executed in two or more separate counterparts, each of which
shall be an original, and all of which together shall constitute one and the
same agreement.

     

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the
parties have entered into this Agreement as of the date first set forth
above.

    
       

      
        	 	
                “Company”

                 

                Petro
      Resources Corporation

                a
      Delaware corporation

                 

                 

              	 
	 	By: 	/s/ Wayne P.
      Hall	 
	 	 	Wayne P. Hall, Chief
      Executive Officer	 
	 	 	 	 
	 	
                
                

                 

                 

                “Optionee”

                 

                 

              	 
	 	
                
                

                
                  /s/ Ronald D.
      Ormand

                

              	 
	 	
                Ronald
      D. Ormand

              	 

      

       

       

       
-9-

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