FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT (“Amendment”) 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 Patrick M. McKinney , an individual currently residing in
Tarrant County, Texas (“Senior Vice President”), effective as of the 31 day of December, 2008 (the
“Amendment Effective Date”).
WHEREAS , the Company and Senior Vice President entered into that certain Employment Agreement
dated June 1, 2006, as amended by the First Amendment to Employment Agreement effective November 9,
2006; Second Amendment to Employment Agreement effective June 29, 2007; and Third Amendment to
Employment Agreement effective May 31, 2008 (the “Agreement”); and
WHEREAS , the Company and Senior Vice President desire to amend, alter, modify, and change the
provisions of the Agreement to bring the provisions into compliance with Section 409A of the Internal Revenue
Code of 1986, as amended.
NOW THEREFORE , for and in consideration of the mutual benefits to be obtained hereunder and
other good and valuation consideration, the receipt and sufficiency of which are hereby acknowledged and
confessed, the Company and Senior Vice President do hereby agree to amend, alter, modify and change the
Agreement, as of the Amendment Effective Date as follows:
1. Section 12 of the Agreement is hereby adding the following new sentence at the end of
the first paragraph of said Section:
Subject to Section 18 below, all payments made pursuant to this Section 12 shall be paid in a single lump
sum within ten (10) days following Senior Vice President’s termination of employment, and any provision
of in-kind benefits hereunder shall not affect the in-kind benefits provided in any other taxable year.
Except as specifically amended hereby, the Agreement remains in full force and effect as ori