Unassociated Document


    AGREEMENT

    


    This
      Agreement is entered into between United
      Heritage Corporation
      and
UHC
      New Mexico Corporation
      (collectively “UHC”), and Lothian
      Oil, Inc. (“Lothian”).
      It shall be deemed effective for all purposes as of June 6, 2007 (the “Effective
      Date”).

    


    BACKGROUND

    


    UHC
      owned
      oil and gas properties in New Mexico (the “Cato Properties”). Lothian and UHC
      entered into a Credit Agreement, which was amended, extended, and renewed,
      providing for Lothian to loan UHC certain sums of money for use in development
      of these properties, and properties in Texas (the “Wardlaw
      Properties”).

    


    UHC
      entered into an agreement with Cano
      Petroleum, Inc.
      (“Cano”)
      to assign its interest in the Cato Properties to Cano in exchange for cash
      and
      restricted common stock in Cano Petroleum, Inc. For the consideration agreed
      on,
      UHC assigned its interest in the Cato Properties to Cano, and Lothian released
      its Deed of Trust and secured liens on the interest in the Cato Properties
      assigned to Cano.

    


    Following
      the transaction, UHC continued to owe Lothian a sum of approximately Three
      Million, Three Hundred Thousand Dollars ($3,300,000.00) (being principal
      indebtedness plus accrued interest) which indebtedness was secured by a Pledge
      Agreement in which UHC pledged the stock of Cano to Lothian to secure the
      balance on the indebtedness provided for in the original Credit Agreement,
      as
      amended, and a lien on the Wardlaw Properties.

    


    The
      stock
      of Cano Petroleum, Inc. issued to UHC New Mexico Corporation is represented
      by
      Certificate No. 2456 for Four Hundred Four Thousand Two Hundred Four (404,204)
      shares. This stock is restricted stock and has not been registered under the
      Securities Act of 1933, and bears a restrictive legend calling for the
      registration of the stock in the event of any transfer, or the issuer to receive
      an opinion of counsel to evidence that any transfer of the stock is exempt
      from
      registration.

    


    UHC
      desires to transfer the stock of Cano to Lothian in exchange for a full and
      complete release of all obligations under the Credit Agreement previously
      entered into applicable to the Cato Properties, the Pledge Agreement in which
      UHC pledged the Cano Petroleum, Inc. stock to Lothian relating to the Cato
      Properties transaction, and a reduction of the indebtedness of UHC to Lothian
      relating to the Wardlaw Properties.

     

    AGREEMENTS

    


    For
      valuable consideration, the receipt and sufficiency of which are acknowledged,
      UHC and Lothian agree as follows:

    


    1. UHC
      New
      Mexico Corporation ASSIGNS, SELLS, CONVEYS, TRANSFERS, and turns over to Lothian
      Oil, Inc., all its interest in the 404,204 shares of Cano Petroleum, Inc.
      represented by Stock Certificate No. 2456. This transfer will be evidenced
      by
      this Agreement and UHC New Mexico Corporation endorsing and delivering to
      Lothian Oil, Inc. the certificate of shares issued by Cano Petroleum,
      Inc.

     

    
      
         

      

      
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    2. Lothian
      Oil, Inc. acknowledges receipt of the certificate of shares in full and final
      satisfaction of the indebtedness of UHC to Lothian under the terms of Credit
      Agreements previously entered into, and all amendments, extensions, and renewals
      of those Agreements pertaining to the Cato Properties.

    


    3. Lothian
      is presently negotiating with a third party to sell to it all Common Stock
      and
      Warrants owned by Lothian in United Heritage Corporation. The contemplated
      transaction provides for a cash purchase price of no less than Four Million,
      Seven Hundred Sixty-Seven Thousand Dollars ($4,767,000.00) (the “Purchase
      Price”).

    


    
      
        
          	
                	(a)	
                  Lothian
                    agrees it will not sell the Stock and Warrants of United Heritage
                    Corporation for less than the Purchase
                    Price.

                


        

      

    

    


    
      	 	
              (b)

            	
              On
                the close of this contemplated transaction, Lothian agrees to reduce
                the
                total amount of the UHC remaining indebtedness to Lothian (debt
                attributable to the Wardlaw Properties of approximately $800,000.00)
                to an
                amount such that UHC’s total indebtedness to unsecured and secured
                creditors does not exceed $500,000.00; such that the debt UHC continues
                to
                owe Lothian will be an amount equal to $500,000.00 less all other
                indebtedness (which includes accounts payable) of
                UHC.

            


    

    


    4. This
      Agreement and the transfer of the stock of Cano Petroleum, Inc. by UHC New
      Mexico Corporation to Lothian, has been approved by the Board of Directors
      of
      both UHC New Mexico Corporation and United Heritage Corporation.

    


    5. This
      Agreement and the receipt of the certificate of shares of Cano Petroleum, Inc.
      by Lothian Oil, Inc., and the complete, full, and final release of all
      indebtedness of UHC to Lothian attributable to the Cato Properties has been
      authorized and approved by its Board of Directors.

    


    6. Both
      UHC
      and Lothian agree to execute such further and additional documents and
      instruments as may be required, advisable, or requested to give full effect
      to
      the transfer of the shares of stock of Cano Petroleum, Inc. to Lothian,
      Lothian’s full and complete release of all indebtedness of UHC to Lothian
      relating to and attributable to the Cato Properties, and a reduction of the
      indebtedness of UHC to Lothian attributable to the Wardlaw
      Properties.

    


    7. Lothian
      acknowledges that the shares transferred to it pursuant to the terms of this
      Agreement are restricted and are not registered under the Securities Act of
      1933, and agrees to notify Cano Petroleum, Inc. of the transfer of the shares
      and the ownership of the shares by Lothian Oil, Inc., and comply with all
      requirements of Cano Petroleum, Inc. for the purposes of effecting a transfer
      of
      the shares.

    


    
      
         

      

      
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    This
      Agreement is executed on behalf of both Lothian and UHC as of the dates opposite
      the signatures below, but is effective for all purposes as of the Effective
      Date
      stated above.

     

    
      	 	 	 
	 	LOTHIAN
              OIL, INC.
	 
 	 
 	 
 
	Date:             
                                                      
              	By:  	/s/ M.
              P.
              Raleigh
	 	
              
Michael
              Raleigh
	 	Chairman
              of the Board 


    

    


    
      	 	 	 
	 	UHC
              NEW
              MEXICO CORPORATION,
              
	 
 	 
 	 
 
	Date: 6/11/2007                                    
              	By:  	/s/ C.
              Scott
              Wilson
	 	
              
C.
              Scott Wilson
	 	President
              and
              Chief Executive Officer 


    

    

      	 	 	 
	 	UNITED
              HERITAGE CORPORATION
	 
 	 
 	 
 
	Date: 6/11/2007                                    
              	By:  	/s/ C.
              Scott
              Wilson
	 	
              
C.
              Scott Wilson
	 	President
              and
              Chief Executive Officer 


    

     

    
      
         

      

      
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