Document:

Exhibit 10.4

 

DIRECTORS’ STOCK AWARD PLAN

(Approved by the Stockholders
on May 16, 2005)

 

The Company has a
stockholder approved plan, the Directors’ Stock Award Plan (“Plan”) which
provides that directors who are not compensated as employees of the Company
will be automatically awarded 200 shares of common stock upon election and 200
additional shares following each annual meeting of stockholders
thereafter.  Under the Plan, 100,000 shares have been reserved for
awards.  At December 31, 2005, 31,200 shares have been awarded under
the Plan, leaving 68,800 shares available for use after that date.

 

The following is a
description of the Plan.

 

1.  Purpose

 

The purposes of the
Directors’ Stock Award Plan are (a) to attract and retain highly qualified
individuals to serve as members of the Board of Directors (the “Board”) of
Southern Copper Corporation (the “Company”), (b) to increase the stock
ownership in the Company of members of the Board who are not compensated as
employees and (c) to relate the compensation of members of the Board who
are not compensated as employees more closely to the Company’s performance and
its shareholders’ interest by granting such directors shares of common stock,
par value $0.01 per share, of the Company (the “Shares”).

 

2.  Administration

 

The Plan shall be
administered by the Board.  Subject to the provisions of the Plan, the
Board shall be authorized to interpret the Plan, to establish, amend, and
rescind any rules and regulations relating to the Plan and to make all
other determinations necessary or advisable for the administration of the Plan;
provided, however, that the Board shall have no discretion with respect to the
selection of directors to receive awards of Shares or the number of Shares to
be awarded.  The determinations of the Board in the administration of the
Plan, as described herein, shall be final and conclusive.  The Secretary
of the Company shall be authorized to implement the Plan in accordance with its
terms and to take such actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof.  The validity, construction
and effect of the Plan and any rules and regulations relating to the Plan
shall be determined in accordance with the laws of the State of Delaware.

 

3.  Eligibility

 

The class of individuals
eligible to receive awards of Shares under the Plan shall be directors of the
Company who are not compensated as employees of the Company (“Eligible
Directors”).  Any recipient of an award
granted hereunder shall hereinafter be referred to as a “Participant”.

 

Once elected at the 2005
annual meeting of stockholders, Messrs. Emilio Carrillo Gamboa, Jaime
Fernando Collazo Gonzalez, Xavier Garcia de Quevedo Topete, J. Eduardo Gonzalez
Felix, Harold S. Handelsman, German Larrea Mota-Velasco, Genaro Larrea
Mota-Velasco, Armando Ortega Gomez, Luis Miguel Palomino Bonilla, Gilberto
Perezalonso Cifuentes, Juan Rebolledo Gout, and Carlos Ruiz Sacristan will be
Eligible Directors.

 

4.  Shares Subject to the Plan

 

Subject to adjustment as
provided in Section 6, an aggregate of 100,000 shares shall be available
for awards under the Plan.  The shares
may be made available from authorized but unissued shares or treasury
shares.  If any stock awards under the
Plan shall be 

 

 

foregone or returned to the
Company for any reason, the shares subject to such award shall again be
available for awards.

 

5.  Grant, Stock Awards

 

(a) 
Upon first election to the Board after September 1, 1995, each newly
elected Eligible Director will be granted 200 Shares.

 

(b) 
Immediately following each Annual Shareholders Meeting, each Eligible Director
will be granted 200 Shares as of the date of such meeting.

 

(c) 
An Eligible Director may forego any grant of Shares by giving irrevocable
written notice to such effect to the Secretary of the Company six months in
advance of such grant.

 

6.  Adjustment of and Changes in Shares

 

In the event of a stock
split, stock dividend, extraordinary dividend, subdivision or combination of
the Shares or other change in corporate structure affecting the Shares, the
number of Shares authorized by the Plan and the number of Shares to be granted
under Section 5 shall be appropriately and equitably adjusted.

 

7.  Withholding of Taxes and Other Laws

 

The Company shall be
authorized to withhold from any payment due under this Plan the amount of
withholding taxes, if any, due in respect of an award hereunder, unless other
provisions satisfactory to the Company shall have been made for the payment of
such taxes.

 

The Board may refuse to
issue or transfer any Shares if, acting in its sole discretion, it determines
that the issuance or transfer of such Shares might violate any applicable law
or regulation or entitle the Company to recover the same under Section 16(b) of
the Securities Exchange Act of 1934, as amended.  Without limiting the
generality of the foregoing, no award granted hereunder shall be construed as
an offer to sell securities of the Company, and no such offer shall be
outstanding, unless and until the Board in its sole discretion has determined
that any such offer, if made, would be in compliance with all applicable
requirements of the U.S. federal securities laws.

 

8.  Effective Date and Duration of Plan

 

The Plan became effective on
January 1, 1996 on the effective date of the exchange of the Company’s
shares for certain labor shares of the Peruvian Branch of Southern Peru Limited
(the “Exchange Offer”), subject to the completion of such Exchange Offer. 
The Plan shall terminate on January 31, 2016, unless the Plan is extended
or terminated at an earlier date by Shareholders or is terminated by exhaustion
of the shares available for issuance hereunder.Exhibit
4.1

Execution
Copy

REGISTRATION RIGHTS
AGREEMENT

REGISTRATION
RIGHTS AGREEMENT (this “Agreement”),
dated as of August 25, 2006, by and among Cano Petroleum, Inc., a Delaware
corporation, with headquarters located at 801 Cherry St., Suite 3200, Fort
Worth, Texas 76102 (the ”Company”),
and the undersigned buyers (each, a “Buyer”,
and collectively, the “Buyers”).

WHEREAS:

A.            In connection with the Securities Purchase Agreement by
and among the parties hereto of even date herewith (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to
the conditions set forth in the Securities Purchase Agreement, to issue and
sell to each Buyer (i) shares (the “Common
Shares”) of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) (ii) preferred shares of
the Company designated as Series D Convertible Preferred Stock, the terms of
which are set forth in the certificate of designations for such series of
preferred shares (the “Certificate of
Designations”) in the form attached as Exhibit A to the Securities
Purchase Agreement (the “Preferred Shares”)
which, among other things, will be convertible into shares of Common Stock (as
converted, the “Conversion Shares”), in accordance with the terms of the Certificate of
Designations and (iii) warrants (the “Warrants”), which will be exercisable to
purchase shares of Common Stock (as exercised collectively, the “Warrant Shares”).

B.            In accordance with the terms of the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities
laws.

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:

1.     Definitions.

Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set
forth in the Securities Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:

a.     “Business Day”
means any day other than Saturday, Sunday or any other day on which commercial
banks in the City of New York are authorized or required by law to remain
closed.

b.     “Closing Date”
shall have the meaning set forth in the Securities Purchase Agreement.

c.     “Effective Date”
means the date that the Registration Statement has been declared effective by
the SEC.

 

 

d.     “Effectiveness Deadline”
means the date which is (i) in the event that the Registration Statement is not
subject to any review by the SEC, ninety (90) days after the Closing Date or
(ii) in the event that the Registration Statement is subject to any review by
the SEC, one hundred twenty (120) days after the Closing Date.

e.     “Filing Deadline”
means the date that is forty five (45) days after the Closing Date.

f.      “Investor” means
a Buyer or any transferee or assignee thereof to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9 and any transferee or assignee
thereof to whom a transferee or assignee assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.

g.     “Person” means
an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

h.     “register,” “registered,” and “registration”
refer to a registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the 1933 Act and
pursuant to Rule 415, and the declaration or ordering of effectiveness of such
Registration Statement(s) by the SEC.

i.      “Registrable Securities”
means (i) the Common Shares, (ii) the Conversion Shares issued or issuable upon
conversion of the Preferred Shares, (iii) the Warrant Shares issued or issuable
upon exercise of the Warrants and (iv) any capital stock of the Company
issued or issuable with respect to the Warrants, the Warrant Shares, the Common
Shares or the Conversion Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitations on conversions of the Preferred Shares or exercises of the
Warrants.

j.      “Registration Statement”
means a registration statement or registration statements of the Company filed
under the 1933 Act covering the Registrable Securities.

k.     “Required Holders”
means the holders of at least a majority of the Registrable Securities.

l.      “Required Registration
Amount” means the sum of (i) 100% of the number of Common Shares issued and (ii) 130% of the maximum number of Conversion Shares issued and
issuable pursuant to the Certificate of Designations and (iii) 100% of the
maximum number of Warrant Shares issued and issuable pursuant to the Warrants,
as of the trading day immediately preceding the applicable date of
determination, all subject to adjustment as provided in Section 2(e) (without
regard to any limitations on conversion of the Preferred Shares or exercise of
the Warrants).

m.    “Rule 415” means
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis.

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n.     “SEC” means the
United States Securities and Exchange Commission.

2.     Registration.

a.     Mandatory Registration. The Company shall prepare, and,
as soon as practicable, but in no event later than the Filing Deadline, file
with the SEC the Registration Statement on Form S-1 covering the resale of all
of the Registrable Securities. The Registration Statement prepared pursuant
hereto shall register for resale at least the number of shares of Common Stock
equal to the Required Registration Amount determined as of the date the
Registration Statement is initially filed with the SEC. The Registration
Statement shall contain (except if otherwise directed by the Required Holders)
the “Selling Stockholders” and “Plan of Distribution” sections in
substantially the form attached hereto as Exhibit B. The Company shall
use its best efforts to have the Registration Statement declared effective by
the SEC as soon as practicable, but in no event later than the Effectiveness
Deadline. By 9:30 am on the second Business Day following the Effective Date,
the Company shall file with the SEC in accordance with Rule 424 under the 1933
Act the final prospectus to be used in connection with sales pursuant to such
Registration Statement.

b.     Allocation of Registrable Securities. The initial number
of Registrable Securities included in any Registration Statement and any increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Investor’s Registrable Securities, each transferee shall be allocated a pro
rata portion of the then remaining number of Registrable Securities included in
such Registration Statement for such transferor. Any shares of Common Stock
included in a Registration Statement and which remain allocated to any Person
which ceases to hold any Registrable Securities covered by such Registration
Statement shall be allocated to the remaining Investors, pro rata based on the
number of Registrable Securities then held by such Investors which are covered
by such Registration Statement. Except for Scott White and the Estate of Miles
O’Loughlin, who have the right to include up to 1,791,320 shares of Common
Stock in the Registration Statement, in no event shall the Company include any
securities other than Registrable Securities on any Registration Statement
without the prior written consent of the Required Holders.

c.     Legal Counsel. Subject to Section 5 hereof, the Required
Holders shall have the right to select one legal counsel to review and oversee
any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Schulte Roth & Zabel LLP
or such other counsel as thereafter designated by the Required Holders. The
Company and Legal Counsel shall reasonably cooperate with each other in
performing the Company’s obligations under this Agreement.

d.     Ineligibility for Form S-3. In the event that Form S-3 is
not available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the Required
Holders and (ii) undertake to register the Registrable Securities on Form S-3
as soon as such form is available, provided that the Company shall maintain the

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effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.

e.     Sufficient Number of Shares Registered. In the event the
number of shares available under a Registration Statement filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities
required to be covered by such Registration Statement or an Investor’s
allocated portion of the Registrable Securities pursuant to Section 2(b), the
Company shall amend the applicable Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable),
or both, so as to cover at least the Required Registration Amount as of the
trading day immediately preceding the date of the filing of such amendment or
new Registration Statement, in each case, as soon as practicable, but in any
event not later than fifteen (15) days after the necessity therefor arises. The
Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof. For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed “insufficient to cover
all of the Registrable Securities” if at any time the number of shares of
Common Stock available for resale under the Registration Statement is less than
the product determined by multiplying (i) the Required Registration Amount as
of such time by (ii) 0.90. The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on the conversion of the
Preferred Shares or the exercise of the Warrants and such calculation shall
assume that the Preferred Shares are then convertible into shares of Common
Stock at the then prevailing Conversion Rate (as defined in the Certificate of
Designations) and that the Warrants are then exercisable for shares of Common
Stock at the then prevailing Exercise Price (as defined in the Warrants).

f.      Effect of Failure to File and Obtain and Maintain
Effectiveness of Registration Statement. If (i) a Registration Statement
covering all of the Registrable Securities required to be covered thereby and
required to be filed by the Company pursuant to this Agreement is (A) not filed
with the SEC on or before the respective Filing Deadline (a “Filing Failure”)
or (B) not declared effective by the SEC on or before the respective
Effectiveness Deadline (an “Effectiveness Failure”) or (ii) on any day after
the Effective Date sales of all of the Registrable Securities required to be
included on such Registration Statement cannot be made (other than during an
Allowable Grace Period (as defined in Section 3(r)) pursuant to such
Registration Statement (including, without limitation, because of a failure to
keep such Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to such Registration Statement, to
register a sufficient number of shares of Common Stock or to maintain the
listing of the Common Stock) (a “Maintenance Failure”) then, as partial relief
for the damages to any holder by reason of any such delay in or reduction of
its ability to sell the underlying shares of Common Stock and not as a penalty
(which remedy shall not be exclusive of any other remedies available at law or
in equity), the Company shall pay to each holder of Registrable Securities
relating to such Registration Statement an amount in cash equal to one and
one-half percent (1.5%) of the aggregate Purchase Price (as such term is
defined in the Securities Purchase Agreement) of such Investor’s Registrable
Securities included in such Registration Statement on each of the following
dates: (i) the day of a Filing Failure; (ii) the day of an Effectiveness
Failure; (iii) the initial day of a Maintenance Failure; (iv) on every
thirtieth day after the day of a Filing Failure and thereafter (pro rated for
periods totaling less than thirty

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days) until such Filing Failure is cured; (v)
on every thirtieth day after the day of an Effectiveness Failure and thereafter
(pro rated for periods totaling less than thirty days) until such Effectiveness
Failure is cured; and (vi) on every thirtieth day after the initial day of a
Maintenance Failure and thereafter (pro rated for periods totaling less than
thirty days) until such Maintenance Failure is cured. The payments to which a
holder shall be entitled pursuant to this Section 2(f) are referred to herein
as “Registration Delay Payments.” Registration Delay Payments shall be paid on
the earlier of (I) the dates set forth above and (II) the third Business Day
after the event or failure giving rise to the Registration Delay Payments is
cured. In the event the Company fails to make Registration Delay Payments in a
timely manner, such Registration Delay Payments shall bear interest at the rate
of one and one-half percent (1.5%) per month (prorated for partial months)
until paid in full. Notwithstanding anything herein or in the Securities
Purchase Agreement to the contrary (i) no Registration Delay Payments shall be
due and payable with respect to the Warrants or the Warrant Shares and (ii) in
no event shall the aggregate amount of Registration Delay Payments (other than
Registration Delay Payments payable pursuant to events that are within the
control of the Company) exceed, in the aggregate, 10% of the aggregate Purchase
Price.

3.     Related Obligations.

At such time as the Company is obligated to file a
Registration Statement with the SEC pursuant to Section 2(a), 2(d) or 2(e), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:

a.     The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement relating to the
Registrable Securities to become effective as soon as practicable after such
filing (but in no event later than the Effectiveness Deadline). The Company
shall keep each Registration Statement effective pursuant to Rule 415 at all
times until the earlier of (i) the date as of which the Investors may sell all
of the Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated
under the 1933 Act or (ii) the date on which the Investors shall have sold all
of the Registrable Securities covered by such Registration Statement (the “Registration Period”). The Company shall ensure that each
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein (in the case of prospectuses, in
the light of the circumstances in which they were made) not misleading. The
term “reasonable best efforts” shall mean, among other things, that the Company
shall submit to the SEC, within three (3) Business Days after the later of the
date that (i) the Company learns that no review of a particular Registration
Statement will be made by the staff of the SEC or that the staff has no further
comments on a particular Registration Statement, as the case may be, and (ii)
the approval of Legal Counsel pursuant to Section 3(c) (which approval is
immediately sought and shall not be unreasonably withheld or delayed), a
request for acceleration of effectiveness of such Registration Statement to a
time and date not later than 48 hours after the submission of such request.

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b.     The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration
Statement until such time as all of such Registrable Securities shall have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof as set forth in such Registration Statement. In the
case of amendments and supplements to a Registration Statement which are
required to be filed pursuant to this Agreement (including pursuant to this
Section 3(b)) by reason of the Company filing a report on Form 10-Q, Form 10-K
or any analogous report under the Securities Exchange Act of 1934, as amended
(the “1934 Act”), the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC within one (1) Business Day after the day on which the 1934 Act report is
filed which created the requirement for the Company to amend or supplement such
Registration Statement.

c.     The Company shall (A) permit Legal Counsel to review and comment
upon (i) a Registration Statement at least five (5) Business Days prior to its
filing with the SEC and (ii) all amendments and supplements to all Registration
Statements (except for Annual Reports on Form 10-K or Form 10-KSB, Quarterly
Reports on Form 10-Q or Form 10-QSB, Current Reports on Form 8-K, and any
similar or successor reports) within a reasonable number of days prior to their
filing with the SEC, and (B) not file any Registration Statement or amendment
or supplement thereto in a form to which Legal Counsel reasonably objects. The
Company shall not submit a request for acceleration of the effectiveness of a
Registration Statement or any amendment or supplement thereto without the prior
approval of Legal Counsel, which consent shall not be unreasonably withheld or
delayed. The Company shall furnish to Legal Counsel, without charge, (i) copies
of any correspondence from the SEC or the staff of the SEC to the Company or
its representatives relating to any Registration Statement, (ii) promptly after
the same is prepared and filed with the SEC, one copy of any Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by an
Investor, and all exhibits and (iii) upon the effectiveness of any Registration
Statement, one copy of the prospectus included in such Registration Statement
and all amendments and supplements thereto. The Company shall reasonably
cooperate with Legal Counsel in performing the Company’s obligations pursuant
to this Section 3.

d.     The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy
of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, and, if requested by an Investor, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as such Investor may 

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reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned by such
Investor.

e.     The Company shall use its best efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or “blue sky” laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

f.      The Company shall notify Legal Counsel and each Investor in
writing of the happening of any event, as promptly as practicable after
becoming aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (provided that in no
event shall such notice contain any material, nonpublic information), and,
subject to Section 3(r), promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to Legal Counsel and
each Investor (or such other number of copies as Legal Counsel or such Investor
may reasonably request). The Company shall also promptly notify Legal Counsel
and each Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration Statement
or any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Investor by
facsimile or e-mail on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, and (iii)
of the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.

g.     The Company shall use its best efforts to prevent the issuance
of any stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension at the earliest
possible moment and to notify Legal Counsel and each Investor who holds
Registrable Securities

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being sold of the issuance of such order and
the resolution thereof or its receipt of actual notice of the initiation or
threat of any proceeding for such purpose.

h.     If any Investor is deemed to be, alleged to be or reasonably
believes it may be deemed or alleged to be, an underwriter or is required under
applicable securities laws to be described in the Registration Statement as an
underwriter, at the reasonable request of such Investor, the Company shall
furnish to such Investor, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as an Investor may
reasonably request (i) a letter, dated such date, from the Company’s
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the Investors, and (ii) an
opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors.

i.      Upon the written request of any Investor in connection with
such Investor’s due diligence requirements, if any, the Company shall make
available for inspection by (i) any Investor, (ii) Legal Counsel and (iii) one
firm of accountants or other agents retained by the Investors (collectively,
the “Inspectors”),
all pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees, counsel and the Company’s
independent certified public accountants to supply all information which may be
necessary and any Inspector may reasonably request; provided, however, that
each Inspector shall agree to hold in strict confidence and shall not make any
disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Agreement. Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing herein (or in
any other confidentiality agreement between the Company and any Investor) shall
be deemed to limit the Investors’ ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and regulations.

j.      The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent jurisdiction,
or (iv) such information has been made generally available to the public other
than by disclosure in violation of this Agreement or any other agreement. The
Company agrees that it shall, upon learning that

 8
 

 

 

disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to such
Investor and allow such Investor, at the Investor’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.

k.     The Company shall use its best efforts either to (i) cause all
of the Registrable Securities covered by a Registration Statement to be listed
on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange or
(ii) secure the inclusion for quotation of all of the Registrable Securities on
The NASDAQ Global Market or The NASDAQ Global Select Market, or (iii) if,
despite the Company’s best efforts, the Company is unsuccessful in satisfying
the preceding clauses (i) or (ii), to secure the inclusion for quotation on The
NASDAQ Capital Market for such Registrable Securities and, without limiting the
generality of the foregoing, to use its best efforts to arrange for at least
two market makers to register with the National Association of Securities
Dealers, Inc. (“NASD”) as such with respect to such Registrable Securities. The
Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(k).

l.      The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Investors may reasonably
request and registered in such names as the Investors may request.

m.      If requested by an Investor, the Company
shall as soon as practicable but in no event later than five (5) days after the
receipt of notice from such Investor, (i) incorporate in a prospectus
supplement or post-effective amendment such information as an Investor
reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) make
all required filings of such prospectus supplement or post-effective amendment
after being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and (iii) supplement or make amendments
to any Registration Statement if reasonably requested by an Investor holding
any Registrable Securities.

n.     The Company shall use its best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities.

o.     The Company shall make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with, and in the manner provided by, the provisions of Rule 158 under the 1933
Act) covering a twelve-month period beginning not later than the first

 9
 

 

 

day of the Company’s fiscal quarter next
following the effective date of the Registration Statement.

p.     The Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.

q.     Within two (2) Business Days after a Registration Statement
which covers Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.

r.      Notwithstanding anything to the contrary herein, at any time
after the Effective Date, the Company may delay the disclosure of material,
non-public information concerning the Company the disclosure of which at the
time is not, in the good faith opinion of the Board of Directors of the Company
and its counsel, in the best interest of the Company and, in the opinion of
counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company shall promptly
(i) notify the Investors in writing of the existence of material, non-public
information giving rise to a Grace Period (provided that in each notice the
Company will not disclose the content of such material, non-public information
to the Investors) and the date on which the Grace Period will begin, and (ii)
notify the Investors in writing of the date on which the Grace Period ends;
and, provided further, that no Grace Period shall exceed twelve (12)
consecutive days and during any three hundred sixty five (365) day period such
Grace Periods shall not exceed an aggregate of twenty-five (25) days and the
first day of any Grace Period must be at least five (5) trading days after the
last day of any prior Grace Period (each, an “Allowable
Grace Period”). For purposes of determining the length of a Grace
Period above, the Grace Period shall begin on and include the date the
Investors receive the notice referred to in clause (i) and shall end on and
include the later of the date the Investors receive the notice referred to in
clause (ii) and the date referred to in such notice. The provisions of Section
3(g) hereof shall not be applicable during the period of any Allowable Grace
Period. Upon expiration of the Grace Period, the Company shall again be bound
by the first sentence of Section 3(g) with respect to the information giving rise
thereto unless such material, non-public information is no longer applicable. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection with any sale
of Registrable Securities with respect to which an Investor has entered into a
contract for sale, and delivered a copy of the prospectus included as part of
the applicable Registration Statement (unless an exemption from such delivery
requirement exists), prior to the Investor’s receipt of the notice of a Grace
Period and for which the Investor has not yet settled.

4.     Obligations of the
Investors.

a.     At least ten (10) Business Days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify each Investor
in writing of the information the Company requires from each such Investor if
such Investor elects to have any of such Investor’s Registrable Securities
included in such Registration Statement. It shall be a condition

 10
 

 

 

precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect and maintain
the effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.

b.     Each Investor, by such Investor’s acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing
of such Investor’s election to exclude all of such Investor’s Registrable
Securities from such Registration Statement.

c.     Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the
copies of the supplemented or amended prospectus contemplated by Section 3(g)
or the first sentence of 3(f) or receipt of notice that no supplement or
amendment is required. Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to
a transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the
Investor’s receipt of a notice from the Company of the happening of any event
of the kind described in Section 3(g) or the first sentence of 3(f) and for
which the Investor has not yet settled.

d.     Each Investor covenants and agrees that it will comply with the
prospectus delivery requirements of the 1933 Act as applicable to it or an
exemption therefrom in connection with sales of Registrable Securities pursuant
to the Registration Statement.

5.     Expenses of Registration.

All reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings
or qualifications pursuant to Sections 2 and 3, including, without limitation,
all registration, listing and qualifications fees, printers and accounting
fees, and fees and disbursements of counsel for the Company shall be paid by
the Company. The Company shall also reimburse the Investors for the fees and
disbursements of Legal Counsel in connection with registration, filing or
qualification pursuant to Sections 2 and 3 of this Agreement which amount shall
be limited to $15,000.

6.     Indemnification.

In the event any Registrable Securities are included
in a Registration Statement under this Agreement:

a.     To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, members,

 11
 

 

 

partners, employees, agents, representatives
of, and each Person, if any, who controls any Investor within the meaning of
the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement or expenses, joint or several, other than
consequential, indirect or incidental damages (collectively, “Claims”) incurred in investigating, preparing or defending
any action, claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading, (iii) any violation or
alleged violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, “Violations”). Subject to Section
6(c), the Company shall reimburse the Indemnified Persons, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(d) and (ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.

b.     In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person, if
any, who controls the Company within the meaning of the 1933 Act or the 1934
Act (each, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may

 12
 

 

 

become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or
are based upon any Violation, in each case to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section 6(c),
such Investor will reimburse any legal or other expenses reasonably incurred by
an Indemnified Party in connection with investigating or defending any such
Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in
Section 7 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor,
which consent shall not be unreasonably withheld or delayed; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only
that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9.

c.     Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such proceeding. In
the case of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a majority in interest of the Registrable Securities included in the
Registration Statement to which the Claim relates. The Indemnified Party or
Indemnified Person shall cooperate reasonably with the indemnifying party in
connection with any negotiation or defense of any such action or Claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or Claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant

 13
 

 

 

or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such Claim or
litigation, and such settlement shall not include any admission as to fault on
the part of the Indemnified Party or the Indemnified Person. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

d.     The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

e.     The indemnity agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

7.     Contribution.

To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that: (i) no Person involved in the sale of Registrable
Securities which Person is guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be
entitled to contribution from any Person involved in such sale of Registrable
Securities who was not guilty of fraudulent misrepresentation; and (ii)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities pursuant to such Registration Statement.

8.     Reports Under the 1934
Act.

With a view to making available to the Investors the
benefits of Rule 144 promulgated under the 1933 Act or any other similar rule
or regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration (“Rule 144”), the Company agrees to:

a.     make and keep public information available, as those terms are
understood and defined in Rule 144;

b.     file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long
as the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company’s obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

 14
 

 

 

c.     furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of Rule
144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
to permit the Investors to sell such securities pursuant to Rule 144 without
registration.

9.     Assignment of
Registration Rights.

The rights under this Agreement shall be automatically
assignable by the Investors to any transferee of all or any portion of such
Investor’s Registrable Securities if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment;
(ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned; (iii) immediately
following such transfer or assignment the further disposition of such
securities by the transferee or assignee is restricted under the 1933 Act or
applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement.

10.   Amendment of Registration
Rights.

Provisions of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of
the Company and the Required Holders. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company. No such amendment shall be effective to the extent that it applies to
less than all of the holders of the Registrable Securities. No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.

11.   Miscellaneous.

a.     A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the such record owner of such Registrable Securities.

b.     Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by
the sending party); or (iii) one Business Day after deposit with a nationally

 15
 

 

 

recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:

	
  If to the Company:

  
	
   

  	
   

  
	
   

  	
  Cano Petroleum, Inc.

  
	
   

  	
  801 Cherry
  Street

  
	
   

  	
  Suite 3200

  
	
   

  	
  Fort Worth,
  Texas 76102

  
	
   

  	
  Telephone:

  	
  (817) 698-0900

  
	
   

  	
  Facsimile:

  	
  (817) 334-0222

  
	
   

  	
  Attention:

  	
  Morris B. Smith and James K. Teringo, Jr.

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  W. Bruce Newsome

  
	
   

  	
  Haynes and
  Boone, LLP

  
	
   

  	
  901 Main St.,
  Suite 3100

  
	
   

  	
  Dallas, TX 75202

  
	
   

  	
  Telephone:

  	
  (214) 651-5119

  
	
   

  	
  Facsimile:

  	
  (214) 200-0636

  
	
   

  	
   

  	
   

  
	
  If to Legal
  Counsel:

  
	
   

  
	
   

  	
  Schulte Roth
  & Zabel LLP

  
	
   

  	
  919 Third Avenue

  
	
   

  	
  New York, New
  York 10022

  
	
   

  	
  Telephone:

  	
  (212) 756-2000

  
	
   

  	
  Facsimile:

  	
  (212) 593-5955

  
	
   

  	
  Attention:

  	
  Eleazer N.
  Klein, Esq.

  

 

If to a Buyer, to its
address and facsimile number set forth on the Schedule of Buyers attached
hereto, with copies to such Buyer’s representatives as set forth on the
Schedule of Buyers, or to such other address and/or facsimile number and/or to
the attention of such other Person as the recipient party has specified by
written notice given to each other party pursuant to this Section. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

c.     Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

 16
 

 

 

d.     All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of
the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES
NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR
IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

e.     This Agreement, the other Transaction Documents (as defined in
the Securities Purchase Agreement) and the instruments referenced herein and
therein constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
and therein. This Agreement, the other Transaction Documents and the instruments
referenced herein and therein supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

f.      Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.

g.     The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

h.     This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

 17
 

 

 

i.      Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions
contemplated hereby.

j.      All consents and other determinations required to be made by
the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders.

k.     The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.

l.      This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for
the benefit of, nor may any provision hereof be enforced by, any other Person.

m.    Notwithstanding anything to the contrary contained herein, no
Buyer or holder of Registrable Securities shall be entitled to consequential,
indirect or incidental damages hereunder. However, the foregoing shall not in
any way limit a Buyer or holder of Registrable Securities from being reimbursed
for its costs, fees or expenses, including, without limitation, reasonable
attorneys’ fees and disbursements in connection with any of its rights and
remedies hereunder.

n.     The obligations of each Investor hereunder are several and not
joint with the obligations of any other Investor, and no provision of this
Agreement is intended to confer any obligations on any Investor vis-à-vis any
other Investor. Nothing contained herein, and no action taken by any Investor
pursuant hereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated herein.

* * * * * *

 18

 

 

IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
  

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CANO PETROLEUM,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ S. Jeffery
  Johnson

  	
   

  
	
   

  	
   

  	
  Name:   S. Jeffrey Johnson

  
	
   

  	
   

  	
  Title:    Chairman and CEO

  

 

 

 

IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  WILLIAM
  HERBERT HUNT TRUST

  ESTATE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. W. Beavers, Jr., Trustee

  	
   

  
	
   

  	
   

  	
  Name:  J. W.
  Beavers, Jr. 

  
	
   

  	
   

  	
  Title:   
  Trustee

  

 

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Registration Rights Agreement to be duly executed as of the date
first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  S.A.C. CAPITAL ASSOCIATES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  S.A.C. Capital Advisors, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Nussbaum

  	
   

  
	
   

  	
   

  	
  Name:  Peter
  Nussbaum

  
	
   

  	
   

  	
  Title:   
  General Counsel

  

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  RADCLIFFE SPC, LTD., for and on

  behalf of the Class A Convertible

  Crossover Segregated Portfolio

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RG Capital Management, L.P. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RGC Management Company, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven B. Katznelson

  	
   

  
	
   

  	
   

  	
  Name:  Steven
  B. Katznelson

  
	
   

  	
   

  	
  Title:   
  Managing Director

  

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  D.E. SHAW LAMINAR PORTFOLIOS,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Julies Gaudio

  	
   

  
	
   

  	
   

  	
  Name:  Julies
  Gaudio

  
	
   

  	
   

  	
  Title:   
  Authorized Signatory

  

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  INVESTCORP INTERLACHEN MULTI-

  STRATEGY MASTER FUND LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Interlachen Capital Group LP,

  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregg T. Colburn

  	
   

  
	
   

  	
   

  	
  Name:  Gregg
  T. Colburn

  
	
   

  	
   

  	
  Title:   
  Authorized Signatory

  

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  ING VP NATURAL RESOURCES

  TRUST c/o ING Investment Management

  Co.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sal DiGanzi

  	
   

  
	
   

  	
   

  	
  Name:  Sal
  DiGanzi

  
	
   

  	
   

  	
  Title:    VP
  Compliance

  

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  ING GLOBAL RESOURCES

  PORTFOLIO c/o ING Investment

  Management Co.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sal DiGanzi

  	
   

  
	
   

  	
   

  	
  Name:  Sal
  DiGanzi

  
	
   

  	
   

  	
  Title:    VP
  Compliance

  

 

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  TRUK OPPORTUNITY FUND, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Atoll Asset Management, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael E. Fein

  	
   

  
	
   

  	
   

  	
  Name:  Michael
  E. Fein

  
	
   

  	
   

  	
  Title:    Principal

  

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  TRUK INTERNATIONAL FUND, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Atoll Asset Management, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael E. Fein

  	
   

  
	
   

  	
   

  	
  Name:  Michael
  E. Fein

  
	
   

  	
   

  	
  Title:    Principal

  

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  FORT MASON MASTER, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dan German

  	
   

  
	
   

  	
   

  	
  Name:  

  	
  Dan German

  
	
   

  	
   

  	
  Title:    

  	
  Managing Member

  Fort Mason Capital, LLC

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  FORT MASON PARTNERS, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dan German

  	
   

  
	
   

  	
   

  	
  Name:  

  	
  Dan German

  
	
   

  	
   

  	
  Title:    

  	
  Managing Member

  Fort Mason Capital, LLC

  
					

 

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  UBS O’CONNOR LLC fbo O’Connor

  Pipes Corporate Strategies

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Illegible Signature

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  DYNAMIS ENERGY FUND, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John H. Bocock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John H. Bocock

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  DYNAMIS ENERGY FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John H. Bocock

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John H. Bocock

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  KELLOGG CAPITAL GROUP LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nicholas Cappalleri

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nicholas Cappalleri

  
	
   

  	
   

  	
  Title:

  	
  Director – Finance and

  
	
   

  	
   

  	
   

  	
  Operations

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  GLG PARTNERS, LP acting as

  investment manager for GLG North

  American Opportunity Fund

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Simon White

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Simon White

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer GLG 

  
	
   

  	
   

  	
  Partners LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Victoria Parry

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Victoria Parry

  
	
   

  	
   

  	
  Title:

  	
  Senior Legal Counsel

  
	
   

  	
   

  	
   

  	
  GLG Partners LP

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly executed
as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  CAMCAP ENERGY OFFSHORE

  MASTER FUND, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roland A. von Metzsch

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Roland A. von Metzsch

  
	
   

  	
   

  	
  Title:

  	
  Managing Member,

  
	
   

  	
   

  	
   

  	
  CamCap Energy Partners, LLC

  
	
   

  	
   

  	
   

  	
  GP of CamCap Energy 

  
	
   

  	
   

  	
   

  	
  Offshore Master Fund, L.P.

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  TOURADJI DEEPROCK MASTER

  FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas S. Dwan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Thomas S. Dwan

  
	
   

  	
   

  	
  Title:

  	
  CFO

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  TOURADJI GLOBAL RESOURCES

  MASTER FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas S. Dwan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Thomas S. Dwan

  
	
   

  	
   

  	
  Title:

  	
  CFO

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  EUROPA INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fred Knoll

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fred Knoll

  
	
   

  	
   

  	
  Title:

  	
  Knoll Capital Management

  
	
   

  	
   

  	
   

  	
  Investment Manager for

  
	
   

  	
   

  	
   

  	
  Europa International, Inc.

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  KNOLL CAPITAL FUND II MASTER

  FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fred Knoll

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Fred Knoll

  
	
   

  	
   

  	
  Title:

  	
  KOM Capital Management 

  
	
   

  	
   

  	
   

  	
  Investment Manager

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  ADVANTAGE ADVISORS CATALYST

  INT’L LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd McElroy

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Todd McElroy

  
	
   

  	
   

  	
  Title:

  	
  CFO

  
					

 

 

 

IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.

 

	
  

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  ADVANTAGE ADVISORS CATALYST

  PARTNERS LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd McElroy

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Todd McElroy

  
	
   

  	
   

  	
  Title:

  	
  CFO

  
					

 

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  RIDGECREST PARTNERS LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd McElroy

  	
   

  
	
   

  	
   

  	
  Name: Todd McElroy

  
	
   

  	
   

  	
  Title:   CFO

  

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  RIDGECREST PARTNERS QP, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd McElroy

  	
   

  
	
   

  	
   

  	
  Name: Todd McElroy

  
	
   

  	
   

  	
  Title:   CFO

  

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  SPENDRIFT INVESTORS (BERMUDA)

  L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Wellington
  Management Company,

  LLP as Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory S. Konzal

  	
   

  
	
   

  	
   

  	
  Name: Gregory S. Konzal

  
	
   

  	
   

  	
  Title:   Vice President and Counsel

  

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  SPENDRIFT PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Wellington
  Management Company,

  LLP as Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory S. Konzal

  	
   

  
	
   

  	
   

  	
  Name: Gregory S. Konzal

  
	
   

  	
   

  	
  Title:   Vice President and Counsel

  

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  BRIGHTSTREAM FUND, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Zusman

  	
   

  
	
   

  	
   

  	
  Name: David Zusman

  
	
   

  	
   

  	
  Title:   Managing Partner

  

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  BRIGHTSTREAM MASTER FUND, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Zusman

  	
   

  
	
   

  	
   

  	
  Name: David Zusman

  
	
   

  	
   

  	
  Title:   Managing Partner

  

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  HFR HE BRIGHTWATER MASTER

  TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Zusman

  	
   

  
	
   

  	
   

  	
  Name: David Zusman

  
	
   

  	
   

  	
  Title:   Manager

  

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  TRAPEZE CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Herbert Abramson

  	
   

  
	
   

  	
   

  	
  Name: Herbert Abramson

  
	
   

  	
   

  	
  Title:   President

  

 

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  TRAPEZE ASSET MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Herbert Abramson

  	
   

  
	
   

  	
   

  	
  Name: Herbert Abramson

  
	
   

  	
   

  	
  Title:   President

  

 

 

SCHEDULE OF BUYERS

	
  Buyer

  	
   

  	
  Buyer Address

  and Facsimile Number

  
	
   

  	
   

  	
   

  
	
  Brightstream Fund, LLC

  	
   

  	
  c/o Brightstream Asset Management

  598 Madison Avenue, 5th
  Floor

  New York, NY 10022

  Attention: Donald Kreuger
Facsimile: 212-452-6160

  Telephone: 212-452-6100

  
	
  Brightstream Master Fund, LP

  	
   

  	
  c/o Brightstream Asset Management

  598 Madison Avenue, 5th
  Floor

  New York, NY 10022

  Attention: Donald Kreuger
Facsimile: 212-452-6160

  Telephone: 212-452-6100

  
	
  HFR HE Brightwater Master Trust

  	
   

  	
  c/o Brightstream Asset Management

  598 Madison Avenue, 5th
  Floor

  New York, NY 10022

  Attention: Donald Kreuger
Facsimile: 212-452-6160

  Telephone: 212-452-6100

  
	
  D.E. Shaw Laminar Portfolios, L.L.C.

  	
   

  	
  c/o D.E. Shaw & Co

  120 West 45th Street, 39th Floor

  New York, NY 10036

  Attention: Maureen Welby Knoblauch

  Facsimile: 212-845-1628

  Telephone: 212-478-0628

  
	
  Dynamis Energy Fund, LTD

  	
   

  	
  c/o Spectrum Global Fund Administration (Cayman)

  PO Box 10243 APO

  Grand Cayman, Cayman Islands

  Attention: John H.
  Bocock

  Facsimile: 434-220-0234

  Telephone: 434-220-4621

  
	
  Dynamis Energy Fund, LP

  	
   

  	
  c/o Spectrum Global Fund Administration (Cayman)

  PO Box 10243 APO

  Grand Cayman, Cayman Islands

  Attention: John H.
  Bocock

  Facsimile: 434-220-0234

  Telephone: 434-220-4621

  
	
  Fort Mason Master, LP

  	
   

  	
  c/o Fort Mason Capital, LLC

  4 Embarcadero Center, Suite 2050

  San Francisco, CA 94111

  Attention: KC Lynch and Marshall Jensen

  Facsimile: 415-288-8113

  Telephone: 415-288-8100

  
	
  Fort Mason Partners, LP

  	
   

  	
  c/o Fort Mason Capital, LLC

  4 Embarcadero Center, Suite 2050

  San Francisco, CA 94111

  Attention: KC Lynch and Marshall Jensen

  Facsimile: 415-288-8113

  Telephone: 415-288-8100

  
	
  GLG North American Opportunity Fund

  	
   

  	
  c/o GLG Partners LP

  Walker House, P.O. Box 908GT, Mary Street

  Georgetown, Grand Cayman, Cayman Islands

  Attention: Gitesh Parmar

  Facsimile: 44-207-016-7200

  Telephone: 44-207-016-7000

  
	
  Investcorp Interlachen Multi-Strategy Master
  Fund Limited

  	
   

  	
  c/o Interlachen Capital Group LP

  800 Nicollet Mall, Suite 2500

  Minneapolis, MN 55402

  Attention: Gregg Colburn and Legal Department

  Facsimile: 612-659-4457

  Telephone: 612-659-4407

  

 

 1
 

 

 

	
  Kellogg Capital Group LLC

  	
   

  	
  55 Broadway, 4th Floor

  New York, NY 10006

  Attention: Nicholas Cappelleri

  Facsimile: 212-380-5665

  Telephone: 212-607-5061

  
	
  William Herbert Hunt Trust Estate

  	
   

  	
  c/o J.W. Beavers, Jr., Trustee

  1601 Elm Street, Suite 3400

  Dallas, TX 75201

  Attention: David S. Hunt

  Facsimile: 214-880-7101

  Telephone: 214-880-8484

  
	
  Radcliffe SPC, Ltd.

  For and on behalf of the Class A Convertible Crossover Segregated Portfolio

  	
   

  	
  c/o RG Capital Management, L.P.

  3 Bala Plaza - East, Suite 501

  Bala Cynwyd, PA 19004

  Attention: Gerald F. Stahlecker

  Facsimile: 610-617-0580

  Telephone: 610-617-5900

  
	
  Truk Opportunity Fund, LLC

  	
   

  	
  c/o Atoll Asset Management, LLC

  1 East 52nd Street, 6th Floor

  New York, NY 10022

  Attention: Antonia Koleva

  Facsimile: 212-888-0334

  Telephone: 212-888-2224

  
	
  Truk International Fund, LP

  	
   

  	
  c/o Atoll Asset Management, LLC

  1 East 52nd Street, 6th Floor

  New York, NY 10022

  Attention: Antonia Koleva

  Facsimile: 212-888-0334

  Telephone: 212-888-2224

  
	
  Touradji DeepRock Master Fund, Ltd.

  	
   

  	
  c/o Spectrum Global Fund Administration (Cayman)

  PO Box 10243 APO, Anchorage Center, Second Floor

  George Town, Grand Cayman, Cayman Islands, BWI

  Attention: Thomas S. Dwan

  Facsimile: 212-984-8881

  Telephone: 212-984-8899

  
	
  Touradji Global Resources Master Fund, Ltd.

  	
   

  	
  c/o Spectrum Global Fund Administration (Cayman)

  PO Box 10243 APO, Anchorage Center, Second Floor

  George Town, Grand Cayman, Cayman Islands, BWI

  Attention: Thomas S. Dwan

  Facsimile: 212-984-8881

  Telephone: 212-984-8899

  
	
  Trapeze Capital Corp.

  	
   

  	
  c/o Trapeze Asset Management Inc.

  22 St. Clair Avenue East, 18th Floor

  Toronto, ON, M4T 253

  Attention: Randall Abramson

  Facsimile: 416-867-9771

  Telephone: 416-861-0774

  
	
  Trapeze Asset Management, Inc.

  	
   

  	
  22 St. Clair Avenue East, 18th Floor

  Toronto, ON, M4T 253

  Attention: Randall Abramson

  Facsimle: 416-867-9771

  Telephone: 416-861-0774

  
	
  O’Connor PIPEs Corporate Strategies Master
  Limited

  	
   

  	
  c/o UBS O’Connor LLC

  1 North Wacker Drive, 32nd Floor

  Chicago, IL 60606

  Attention: Brian Herward

  Facsimile: 312-525-6271

  Telephone: 312-525-5868

  
	
  Spindrift Partners, L.P.

  	
   

  	
  c/o Wellington Management Company, LLP

  75 State Street\

  Boston, MA 02109

  Attention: 914-225-4924

  Facsimile: 617-204-7006

  Telephone: 617-790-7006

  
	
  Spindrift Investors (Bermuda) L.P.

  	
   

  	
  c/o Wellington Management Company, LLP

  75 State Street\

  Boston, MA 02109

  Attention: 914-225-4924

  Facsimile: 617-204-7006

  Telephone: 617-790-7006

  
	
  CamCap Energy Offshore Mater Fund, L.P.

  	
   

  	
  c/o BISYS Hedge Fund Services (Cayman) Ltd.

  P.O. Box 1748GT, Cayman Corporate Center, 27 Hospital Road

  George Town, Grand Cayman, Cayman Islands

  Attention: Roland von Metzsch

  Facsimile: 415-658-3020

  Telephone: 415-658-3010

  

 

 2
 

 

 

	
  ING VP Natural Resources Trust

  	
   

  	
  c/o ING Investment Management Company

  230 Park Avenue

  New York, NY 10169

  Attention: Sal Digangi

  Facsimile: 212-309-8247

  Telephone: 212-309-1755

  
	
  ING Global Resources Portfolio

  	
   

  	
  c/o ING Investment Management Company

  230 Park Avenue

  New York, NY 10169

  Attention: Sal Digangi

  Facsimile: 212-309-8247

  Telephone: 212-309-1755

  
	
  Europa International Inc.

  	
   

  	
  c/o Knoll Capital Management

  666 Fifth Avenue, Suite 3702

  New York, NY 10103

  Attention: Fred Knoll

  Facsimile: 212-808-7475

  Telephone: 212-808-7474

  
	
  Knoll Capital Fund II Master Fund Ltd.

  	
   

  	
  c/o KOM Capital Management

  666 Fifth Avenue, Suite 3702

  New York, NY 10103

  Attention: Fred Knoll

  Facsimile: 212-808-7475

  Telephone: 212-808-7474

  
	
  Ridgecrest Partners Ltd.

  	
   

  	
  c/o Ridgecrest Partners

  220 East 42nd Street, 29 Floor

  New York, NY 10017

  Attention: Todd McElroy

  Facsimile: 212-476-9159

  Telephone: 212-476-5517

  
	
  Ridgecrest Partners QP, L.P.

  	
   

  	
  c/o Ridgecrest Partners

  220 East 42nd Street, 29 Floor

  New York, NY 10017

  Attention: Todd McElroy

  Facsimile: 212-476-9159

  Telephone: 212-476-5517

  
	
  Advantage Advisors Catalyst International Ltd.

  	
   

  	
  c/o Ridgecrest Partners

  220 East 42nd Street, 29 Floor

  New York, NY 10017

  Attention: Todd McElroy

  Facsimile: 212-476-9159

  Telephone: 212-476-5517

  
	
  Advantage Advisors Catalyst Partners L.P.

  	
   

  	
  c/o Ridgecrest Partners

  220 East 42nd Street, 29 Floor

  New York, NY 10017

  Attention: Todd McElroy

  Facsimile: 212-476-9159

  Telephone: 212-476-5517

  
	
  S.A.C. Capital Associates, LLC

  	
   

  	
  c/o S.A.C. Capital Associates, LLC

  P.O. Box 58, Victoria House

  The Valley, Anguilla, BWI 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INFORMATION FOR DISTRIBUTION OF SHARES AND
  CORRESPONDENCE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/o S.A.C. Capital Advisors, LLC

  72 Cummings Point Road

  Stamford, CT 06902

  Attention: General Counsel

  Tel: (203) 890-2000

  

 

 3

 

 

EXHIBIT A

FORM OF NOTICE OF
EFFECTIVENESS

OF REGISTRATION STATEMENT

[Transfer Agent]

[Address]

Attention:

 

Re:          Cano Petroleum, Inc.

Ladies and Gentlemen:

[We are][I am] counsel to Cano Petroleum, Inc., a
Delaware corporation (the “Company”),
and have represented the Company in connection with that certain Securities
Purchase Agreement (the “Securities Purchase Agreement”) entered into
by and among the Company and the buyers named therein (collectively, the “Holders”) pursuant to which the Company
issued to the Holders preferred shares (the “Preferred
Shares”) convertible into the Company’s common stock, $0.0001 par
value (the ”Common Stock”),
shares of Common Stock and warrants exercisable for shares of Common Stock (the
“Warrants”).  Pursuant to the Securities
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Holders (the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other
things, to register the Registrable Securities (as defined in the Registration
Rights Agreement), including the shares of Common Stock issuable upon
conversion of the Preferred Shares, the shares of Common Stock and the shares
of Common Stock issuable upon exercise of the Warrants, under the Securities
Act of 1933, as amended (the “1933 Act”).  In connection with the Company’s obligations
under the Registration Rights Agreement, on             
   , 200 , the Company filed a Registration Statement on
Form S-1 (File No. 333-             )
(the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each
of the Holders as a selling stockholder thereunder.

In connection with the foregoing, [we][I] advise you
that a member of the SEC’s staff has advised [us][me] by telephone that the SEC
has entered an order declaring the Registration Statement effective under the
1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

Subject to the specific prohibitions contained in the
Registration Rights Agreement regarding the inability to use the Registration
Statement under specific circumstances (the “Registration
Statement Limitations”), this letter shall serve as our standing
instruction to you that the shares of Common Stock are freely transferable by
the Holders pursuant to the Registration Statement provided the prospectus
delivery requirements, if any, are complied with.  

 1
 

 

Subject to the Registration Statement Limitations, you
need not require further letters from us to effect any future legend-free
issuance or reissuance of shares of Common Stock to the Holders as contemplated
by the Company’s Irrevocable Transfer Agent Instructions dated         
  , 2006.  This letter shall
serve as our standing opinion with regard to this matter.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [ISSUER’S COUNSEL]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
  CC:      [LIST NAMES OF HOLDERS]

  	
   

  

 

 2

 

EXHIBIT B

SELLING STOCKHOLDERS

The shares of
Common Stock being offered by the Selling Stockholders are those previously
issued to the Selling Stockholders and those issuable to the Selling
Stockholders upon conversion of the convertible preferred shares, and upon
exercise of the warrants.  For additional
information regarding the issuance of those shares of Common Stock, convertible
preferred shares and warrants, see “Private Placement of Common Shares,
Convertible Preferred Shares and Warrants” above.  We are registering the shares of Common Stock
in order to permit the selling stockholders to offer the shares for resale from
time to time.  Except for [        ][Discuss
Wellington’s relationships] and the ownership of the shares of common stock,
the convertible preferred shares and warrants issued pursuant to the Securities
Purchase Agreement, the selling stockholders have not had any material
relationship with us within the past three years.

The table below
lists the Selling Stockholders and other information regarding the beneficial
ownership of the shares of Common Stock by each of the Selling
Stockholders.  The second column lists
the number of shares of Common Stock beneficially owned by each Selling
Stockholder, based on its ownership of the shares of common stock and the
convertible preferred shares, as of            ,
200 , assuming conversion of all convertible preferred shares and exercise
of the warrants held by the selling stockholders on that date without regard to
any limitations on conversions or exercise.

The third column
lists the shares of Common Stock being offered by this prospectus by the
Selling Stockholders.

In accordance with
the terms of a registration rights agreement with the selling stockholders,
this prospectus generally covers the resale of at least the sum of (i) 100% of
the number of shares of common stock issued and (ii)130% of the maximum the
number of shares of Common Stock issuable upon conversion of the convertible
preferred shares and (iii) 100% of the maximum number of shares of Common Stock
issuable upon exercise of the warrants as of the trading day immediately
preceding the date the registration statement is initially filed with the SEC.  Because the conversion
price of the convertible preferred shares and the exercise price of the
warrants may be adjusted, the number of shares that will actually be issued may
be more or less than the number of shares being offered by this
prospectus.  The fourth column assumes
the sale of all of the shares offered by the Selling Stockholders pursuant to
this prospectus.

Under the terms of the
certificate of designations and the warrants, a Selling Stockholder may not
convert the preferred shares or exercise the warrants to the extent such
conversion or exercise would cause such Selling Stockholder, together with its
affiliates, to beneficially own a number of shares of Common Stock which would
exceed a percentage specified by the Selling Stockholder of our then
outstanding shares of Common Stock following such conversion or exercise, excluding
for purposes of such determination shares of Common Stock issuable upon
conversion of the convertible preferred shares and upon exercise of the
warrants which have not been exercised which have not been converted.  The number of shares in the second column
does

 1
 

 

 

not reflect this limitation.  The
Selling Stockholders may sell all, some or none of their shares in this
offering.  See “Plan of Distribution.”

 2

 

 

	
  Name of Selling Stockholder

  	
   

  	
  Number of Ordinary Shares

  Owned Prior to Offering

  	
   

  	
  Maximum Number of

  Ordinary Shares to be Sold

  Pursuant to this Prospectus

  	
   

  	
  Number of Ordinary

  Shares Owned After

  Offering

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Buyer] (1)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Other Buyers]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(1)

 1

 

PLAN OF DISTRIBUTION

We are registering
the shares of Common Stock previously issued and the shares of Common Stock
issuable upon conversion of the preferred shares and upon exercise of the
warrants to permit the resale of these shares of Common Stock by the holders of
the common stock, preferred shares and warrants from time to time after the
date of this prospectus.  We will not
receive any of the proceeds from the sale by the selling stockholders of the
shares of Common Stock.  We will bear all
fees and expenses incident to our obligation to register the shares of Common
Stock.

The selling
stockholders may sell all or a portion of the shares of Common Stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents.  If the shares of Common Stock are sold
through underwriters or broker-dealers, the selling stockholders will be
responsible for underwriting discounts or commissions or agent’s
commissions.  The shares of Common Stock
may be sold in one or more transactions at fixed prices, at prevailing market
prices at the time of the sale, at varying prices determined at the time of
sale, or at negotiated prices.  These
sales may be effected in transactions, which may involve crosses or block
transactions,

·                  on
any national securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale;

·                  in
the over-the-counter market;

·                  in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;

·                  through
the writing of options, whether such options are listed on an options exchange
or otherwise;

·                  ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;

·                  block
trades in which the broker-dealer will attempt to sell the shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction;

·                  purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;

·                  an
exchange distribution in accordance with the rules of the applicable exchange;

·                  privately
negotiated transactions;

·                  short
sales;

·                  sales pursuant to Rule 144;

 

 

·                  broker-dealers
may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per share;

·                  a
combination of any such methods of sale; and

·                  any
other method permitted pursuant to applicable law.

If the selling
stockholders effect such transactions by selling shares of Common Stock to or
through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of Common Stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved).  In connection with sales of the shares of
Common Stock or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of
the shares of Common Stock in the course of hedging in positions they assume.  The selling stockholders may also sell shares
of Common Stock short and deliver shares of Common Stock covered by this
prospectus to close out short positions and to return borrowed shares in
connection with such short sales.  The
selling stockholders may also loan or pledge shares of Common Stock to
broker-dealers that in turn may sell such shares.

The selling
stockholders may pledge or grant a security interest in some or all of the
preferred shares, warrants or shares of Common Stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or
secured parties may offer and sell the shares of Common Stock from time to time
pursuant to this prospectus or any amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933, as
amended, amending, if necessary, the list of selling stockholders to include,
pursuant to prospectus amendment or prospectus supplement, the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.  The selling stockholders
also may transfer and donate the shares of Common Stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.

The selling
stockholders and any broker-dealer participating in the distribution of the
shares of Common Stock may be deemed to be “underwriters” within the meaning of
the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. 
At the time a particular offering of the shares of Common Stock is made,
a prospectus supplement, if required, will be distributed which will set forth
the aggregate amount of shares of Common Stock being offered and the terms of
the offering, including the name or names of any broker-dealers or agents, any
discounts, commissions and other terms constituting compensation from the
selling stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to broker-dealers.

Under the securities laws
of some states, the shares of Common Stock may be sold in such states only
through registered or licensed brokers or dealers.  In addition, in some states the

 2
 

 

 

shares of Common Stock
may not be sold unless such shares have been registered or qualified for sale
in such state or an exemption from registration or qualification is available
and is complied with.

There can be no
assurance that any selling stockholder will sell any or all of the shares of
Common Stock registered pursuant to the registration statement, of which this
prospectus forms a part.

The selling
stockholders and any other person participating in such distribution will be
subject to applicable provisions of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of Common Stock by the selling
stockholders and any other participating person.  Regulation M may also restrict the ability of
any person engaged in the distribution of the shares of Common Stock to engage
in market-making activities with respect to the shares of Common Stock.  All of the foregoing may affect the
marketability of the shares of Common Stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
Common Stock.

We will pay all
expenses of the registration of the shares of Common Stock pursuant to the
registration rights agreement, estimated to be
$[     ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or “blue sky” laws; provided, however, that a selling
stockholder will pay all underwriting discounts and selling commissions, if
any.  We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution.  We may be indemnified by the selling
stockholders against civil liabilities, including liabilities under the Securities
Act, that may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreement, or we may be entitled to contribution.

Once sold under
the registration statement, of which this prospectus forms a part, the shares
of Common Stock will be freely tradable in the hands of persons other than our
affiliates.

 3

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