EXHIBIT 10.4

 

FIRST AMENDMENT TO THE

CANO PETROLEUM, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

 

This FIRST AMENDMENT (the “Amendment”) to the Nonqualified Stock Option
Agreement (the “Agreement”) dated December 13, 2005, is hereby made and entered
as of the 2nd day of January, 2008 by and between Cano Petroleum, Inc., a
Delaware corporation (the “Company”) and Donnie Dale Dent (the “Participant”). 
Terms used in this Amendment with initial capital letters that are not otherwise
defined herein shall have the meanings ascribed to such terms in the Agreement.

 

WHEREAS, Section 24 of the Agreement provides that the parties to the Agreement
may change or modify the Agreement in a writing signed by the parties; and

 

WHEREAS, the parties desire to amend the Agreement’s vesting provisions to
reflect changes made by the Compensation Committee of Cano Petroleum, Inc. and
the Board of Directors, on June 28, 2007 and the Participant’s resignation as a
director in good standing from the Board of Directors on December 12, 2007.

 

NOW THEREFORE, pursuant to Section 24 of the Agreement, in consideration of the
mutual promises, conditions and covenants contained herein and in the Agreement,
and other good and valuable consideration, the adequacy of which is hereby
acknowledged, the parties agree as follows:

 

1.             Section 3 of the Agreement shall be amended in its entirety to
read as follows:

 

3.               Vesting; Time of Exercise.  100% of the total Optioned Shares
shall vest immediately upon the Participant’s resignation on December 12, 2007
and the Stock Option shall become exercisable for an extended period of
Twenty-Four (24) months from the date of resignation with the exercise period
ending at 5:00 p.m. on December 12, 2009.

 

2.                                       Section 27.a. of the Agreement shall be
amended to read as follows:

 

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

 

Cano Petroleum, Inc.

Burnett Plaza

801 Cherry Street

Suite 3200, Unit 25

Fort Worth, TX  76102

Attn:  Corporate Secretary

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and
year first above written.

 

 

CANO PETROLEUM, INC.

 

 

 

By:

/s/ S. Jeffrey Johnson

 

Name:

S. Jeffrey Johson

 

Title:

Chairman and Chief Executive Officer

 

 

 

PARTICIPANT

 

 

 

By:

/s/ Donnie Dale Dent

 

Name:

DONNIE DALE DENT

 

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