Document:

Exhibit 10.88

 

STOCK VOTING AGREEMENT

 

STOCK
VOTING AGREEMENT, dated as of                           ,
20     (this “Agreement”),
is by and among the undersigned stockholder (the “Stockholder”),
and Cano Petroleum, Inc.,
a Delaware corporation (the “Company”).

 

WHEREAS, concurrently
herewith, Resaca Exploitation, Inc., a Texas corporation (“Resaca”),
Resaca Acquisition Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of Resaca (“Merger Sub”), and
the Company are entering into an Agreement and Plan of Merger of even date
herewith (the “Merger Agreement”),
pursuant to which Merger Sub will merge with and into Company (the “Merger”).  Each capitalized term used herein and not
otherwise defined shall have the meaning set forth in the Merger Agreement;

 

WHEREAS, the
Stockholder, as of the date hereof, has Beneficial Ownership, as defined in Section 6
hereof, of the number of shares of Series D Convertible Preferred Stock,
no par value per share, of the Company (“Company
Preferred Stock”) set forth on Exhibit A
hereto (together with any shares of Company Preferred Stock or common stock,
par value $0.0001 per share, of the Company (“Company Common Stock”)
acquired by the Stockholder after the date hereof and prior to the termination
of this Agreement whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable shares, or by means of
purchase, dividend, distribution or otherwise, hereinafter collectively
referred to as the “Shares”); and

 

WHEREAS, the Company
has required, as condition to it entering into the Merger Agreement, that the
Stockholder enter into this Agreement.

 

NOW,
THEREFORE, in consideration of the Company’s execution of the
Merger Agreement and the mutual covenants and agreements herein contained and
other good and valuable consideration, and intending to be legally bound
hereby, it is agreed as follows:

 

1.                                       Vote.

 

1.1                                 Agreement
to Vote.  The Stockholder hereby revokes any and all
previous proxies with respect to the Stockholder’s Shares and irrevocably
agrees to vote and otherwise act (including pursuant to written consent) with
respect to all of such Shares:  (i) in
favor of the amendment to the Certificate of Designations, Preferences and
Rights of Series D Convertible Preferred Stock of the Company, filed with
the Secretary of State of Delaware on August 31, 2006 (the “Original
Certificate”), attached hereto as Exhibit B (the “Amendment”),
(ii) in favor of the adoption and approval of the Merger Agreement (or any
amended version or versions of the Merger Agreement, and (iii) in accordance with the recommendation of the
Board of Directors of the Company in connection with any Target Acquisition
Proposal, and, in each case, take all actions required in furtherance thereof,
at any meeting or meetings of the stockholders of the Company, and at any
adjournment, postponement or continuation thereof, at which the such matter is
submitted for the consideration and vote of the stockholders of the Company.  The Stockholder shall not enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions and agreements contained in this
Section 1.  The obligations
of the Stockholder under this Section 1 shall remain in effect with
respect to the Shares until, and shall terminate upon, the earlier to occur of
the Effective Time or the termination of the Merger Agreement in accordance
with its terms.  The Stockholder hereby
agrees to execute such additional documents as the Company may reasonably
request to effectuate the foregoing.

 

 

1.2                                 Irrevocable
Proxy.  Concurrently with the execution of this Agreement, the
Stockholder agrees to deliver to the Company a proxy in the form attached
hereto as Exhibit C (the “Proxy”), which shall be irrevocable to the
fullest extent permissible by applicable law, with respect to the Shares.

 

2.                                       Representations and Warranties of the
Stockholder.  The Stockholder represents and warrants to
the Company as follows:

 

2.1                                 Ownership
of Shares.  On the date hereof, the Shares are all of the
Shares currently Beneficially Owned by the Stockholder.  The Stockholder has sole voting power and
sole power to issue instructions with respect to the matters set forth in Section 1
hereof, sole power of disposition, sole power of conversion and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares set forth on Exhibit A hereto, with no
limitations, qualifications or restrictions on such rights, subject to applicable
securities laws and the terms of this Agreement.  The Stockholder currently has, and at all
times during the term hereof will have, good, valid and marketable title to the
Shares, free and clear of all liens, encumbrances and security interests (other
than the encumbrances created by this Agreement and other than restrictions on
transfer under applicable federal and state securities laws) and free of other
restrictions, options, rights to purchase or other claims that would adversely
affect the ability of the Stockholder to perform its obligations hereunder or
pursuant to which the Stockholder could be required to sell, assign or
otherwise transfer the Shares.

 

2.2                                 Authority;
Binding Agreement.  The
Stockholder has the full legal right, power and authority to enter into and
perform all of its obligations under this Agreement. This Agreement has been
duly executed and delivered by the Stockholder and constitutes a legal, valid
and binding agreement of the Stockholder, enforceable in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors’ rights and to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).  Neither the execution and delivery
of this Agreement nor the consummation by the Stockholder of the transactions
contemplated hereby will (i) violate, or require any consent, approval or
notice under, any provision of any judgment, order, decree, statute, law, rule or
regulation applicable to the Stockholder or the Shares or (ii) constitute
a violation of, conflict with or constitute a default under, any contract,
commitment, agreement, understanding, arrangement or other restriction of any
kind to which the Stockholder is a party or by which the Stockholder is bound,
in each case the effect of which would adversely affect the ability of the
Stockholder to perform his obligations hereunder.

 

3.                                       Certain Covenants of the Stockholder. 
Except in accordance with the provisions of this Agreement, the
Stockholder agrees with and covenants to the Company as follows:

 

3.1                                 Transfer. 
Prior to the termination of this Agreement, except as otherwise provided
herein, the Stockholder shall not:  (i) transfer
(which term shall include, without limitation, for the purposes of this
Agreement, any sale, gift, pledge, assignment, encumbrance or other
disposition), whether directly or indirectly (including by operation of law),
or consent to any transfer of, any or all of the Shares or any interest
therein, except pursuant to the Merger; (ii) grant any proxies,
powers-of-attorney or other authorizations or consents with respect to the
Shares, deposit the Shares into a voting trust or enter into a voting agreement
or similar arrangement with respect to the Shares; or (iii) enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all such Shares or any interest therein.

 

3.2                                 Stop
Transfer.  The Stockholder hereby agrees with and
covenants to each other party hereto that the Stockholder shall not request
that the Company register the transfer (book entry or otherwise) of any
certificate or uncertified interest representing any of its Shares, unless such
transfer is 

 

2

 

made in compliance with this Agreement.

 

3.3                                 Notifications. 
The Stockholder shall, while this Agreement is in effect, notify the
Company promptly, but in no event later than two business days, of the number
of any shares of Company Common Stock acquired by the Stockholder after the
date hereof.

 

3.4                                 Waiver
of Claims. 
The Stockholder agrees that it will not bring, commence, institute,
maintain, prosecute, participate in or voluntarily aid any action, claim, suit
or cause of action, in law or in equity, in any court or before any
governmental entity, which challenges the validity of or seeks to enjoin the
operation of any provision of this Agreement; provided, that the Stockholder
may defend against, contest or settle any such action, claim, suit or cause of
action brought against the Stockholder that relates to the Stockholder’s
capacity as a director or officer of the Company.

 

3.5                                 Appraisal
Rights.  To the extent permitted by applicable law,
the Stockholder shall not exercise any rights (including, without limitation,
under Section 262 of the DGCL) to demand appraisal of any Shares that may
arise with respect to the Merger.

 

3.6                                 Additional
Voting Agreements.  If requested by the Company, the Stockholder
agrees to use its commercially reasonable efforts to cause the other beneficial
owners of any shares of capital stock of the Company over which the Stockholder
has shared voting or dispositive power (such shares, the “Shared Securities”)
to execute stock voting agreements and Irrevocable Proxies, in substantially
similar form to this Agreement and the Irrevocable Proxy attached hereto, prior
to the Effective Time.  If not so
requested by the Company, the Stockholder nonetheless agrees to use its
commercially reasonable efforts to cause the Shared Securities to be voted in a
manner consistent with this Agreement.

 

4.                                       Effect
of Purported Transfer.  The
Company agrees with, and covenants with, the Stockholder that the Company shall
not register the transfer (book entry or otherwise) of any certificate or
uncertified interest representing any of the Shares, unless such transfer is
made in compliance with this Agreement. 
The parties hereto agree that any transfer of the Shares made other than
in compliance with this Agreement shall be null and void.  Any such transfer shall convey no interest in
any of the Shares purported to be transferred, and the transferee shall not be
deemed to be a stockholder of the Company nor entitled to receive a new share
certificate or any rights, dividends or other distributions on or with respect
to such Shares.

 

5.                                       Termination. This Agreement shall terminate, and
neither the Company nor the Stockholder shall have any rights or obligations
hereunder, and this Agreement shall become null and void and have no effect on
the earlier of (i) the Effective Time, (ii) upon the termination of the
Merger Agreement in accordance with its terms, (iii) upon any amendment,
modification or supplement to the Merger Agreement or any waiver by any party
thereto that is individually or in the aggregate adverse to the interests of
the Stockholder without the prior written consent of the Stockholder, or (iv) the
failure of Resaca to assume the Company’s obligations under the Transaction
Documents (as defined in the Original Certificate) to the extent not otherwise
eliminated pursuant to proposed Section (23) of the Amendment with respect
to the Merger.

 

6.                                       Definitions. 
For the purposes of this Agreement:

 

6.1                                 “Beneficial
Ownership” or “Beneficial Owner” with respect to any securities shall mean
having “beneficial ownership” of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934 (the “Exchange Act”),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that notwithstanding Rule 13d-3
under the Exchange Act, “Beneficial Ownership” or “Beneficial Owner” for
purposes of this 

 

3

 

Agreement shall include only those securities
over which the Stockholder has sole voting and dispositive power.  Without duplicative counting of the same
security by the same holder, securities Beneficially Owned by a Person shall
include securities Beneficially Owned by all other Persons with whom such
Person would constitute a “group” as within the meaning of Section 13(d)(3) of
the Exchange Act.

 

6.2                                 “Person” shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.

 

7.                                       Miscellaneous.

 

7.1                                 Notices. 
Any notice or communication required or permitted hereunder shall be in
writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be given,
dated and received (i) when so delivered personally, (ii) upon
receipt of an appropriate electronic answerback or confirmation when so
delivered by telegraph or telecopy (to such number specified below or another
number or numbers as such person may subsequently designate by notice given
hereunder), or (iii) five business days after the date of mailing to the
following address or to such other address or addresses as such person may
subsequently designate by notice given hereunder, if so delivered by mail:

 

	
  If to the Company:

  	
  Cano
  Petroleum, Inc.

  
	
   

  	
  Burnett
  Plaza

  
	
   

  	
  801
  Cherry St., Suite 3200

  
	
   

  	
  Fort
  Worth, Texas 76102

  
	
   

  	
  Telephone:
  (817) 698-0900

  
	
   

  	
  Facsimile:
  (817) 334-0222

  
	
   

  	
  Attention: Phillip B. Feiner, Esq., General Counsel

  

 

	
  with
  a copy to:

  	
  Thompson & Knight LLP

  
	
   

  	
  1722 Routh Street

  
	
   

  	
  Suite 1500

  
	
   

  	
  Dallas, Texas 75201-2533

  
	
   

  	
  Telephone: (214) 969-1303

  
	
   

  	
  Facsimile:
  (214) 999-1695

  
	
   

  	
  Attention: Wesley P. Williams

  

 

If to the Stockholder: at the
address set forth on Exhibit A

 

7.2                                 Tax
Matters.  The parties agree to treat the exchange
of Company Preferred Stock for Parent Series A Shares as qualifying
for non-recognition of gain or loss for federal and any applicable state or
local income tax purposes, except to the extent of payments received for
accrued dividends, and further agree to file all U.S. federal, state and local
income tax and information returns and reports consistent with such treatment
unless and until the occurrence of a “determination” to the contrary under
section 1313 of the Internal Revenue Code of 1986, as amended.

 

7.3                                 Further
Actions. 
Each
of the parties hereto agrees that it will use its commercially reasonable
efforts to do all things necessary to effectuate this Agreement.  The Stockholder and the Company hereby
covenant and agree to execute and deliver any additional documents reasonably
necessary or desirable to carry out the purpose and intent of this Agreement.

 

7.4                                 Entire
Agreement.  This Agreement, together with the documents
expressly referred to herein, constitutes the entire agreement, and supersedes
all prior agreements and understandings, both 

 

4

 

written and oral, among the parties with respect
to the subject matter hereof.

 

7.5                                 Amendments. 
This Agreement may not be modified, amended, altered or supplemented,
except upon the execution and delivery of a written agreement executed by the
parties hereto.  The failure of any party
hereto to exercise any right, power or remedy provided under this Agreement or
otherwise available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder, and any
custom or practice of the parties at variance with the terms hereof shall not
constitute a waiver by such party of its right to exercise any such or other
right, power or remedy or to demand such compliance.

 

7.6                                 Expenses. 
All costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.  Notwithstanding the foregoing, the Company
will reimburse to Stockholder its reasonable out-of-pocket expenses (including
attorneys fees, etc.).

 

7.7                                 Specific
Performance.  Each of the parties hereto acknowledges and
agrees that in the event of any breach of this Agreement, each non-breaching
party would be irreparably and immediately harmed and could not be made whole
by monetary damages. It is accordingly agreed that the parties hereto (i) will
waive, in any action for specific performance, the defense of adequacy of a
remedy at law and (ii) shall be entitled, in addition to any other remedy
to which they may be entitled at law or in equity, including monetary damages,
to compel specific performance of this Agreement without the necessity of
posting bond or proving actual damages.

 

7.8                                 Assignment. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns and personal
representatives, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties.

 

7.9                                 Governing
Law.  This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.

 

7.10                           Counterparts. 
This Agreement may be executed manually or by facsimile in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when a counterpart hereof shall have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

 

7.11                           Severability. 
Any term or provision of this Agreement that is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.  If
any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.

 

7.12                           Effect of
Headings. The section headings herein are for
convenience only and shall not affect the construction or interpretation of
this Agreement.

 

[SIGNATURE
PAGE FOLLOWS]

 

5

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed, as of the date and year
first above written.

 

	
   

  	
  CANO PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Benjamin Daitch

  
	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Printed
  Name of Stockholder)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SIGNATURE PAGE TO STOCK VOTING AGREEMENT

 

1

 

EXHIBIT A

 

Stock Ownership and Address Notice List

 

	
  Beneficial Ownership:

  	
   

  	
                      shares
  of Company Preferred Stock

  
	
   

  	
   

  	
                      shares
  of Company Common Stock, acquirable upon conversion of the Company Preferred
  Stock.

  

 

 

Address
for Notices:

 

A-1

 

EXHIBIT B

 

CERTIFICATE OF AMENDMENT

TO

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF SERIES D CONVERTIBLE PREFERRED STOCK

OF

CANO PETROLEUM, INC.

 

 

Cano
Petroleum, Inc., a corporation organized and existing under the laws of
the State of Delaware (the “Company”), DOES
HEREBY CERTIFY as follows:

 

FIRST:  That the Board of Directors of the Company,
at a duly convened meeting on September 29, 2009, duly adopted resolutions
approving and adopting the amendments set forth below to the Certificate of
Designations of Series D Convertible Preferred Stock of the Company (the “Certificate of Designations”), and that such amendments have
been approved and adopted by the requisite number of existing holders of the
Common Stock and the Series D Convertible Preferred Stock of the Company.

 

SECOND:  That the amendments set forth below have been
duly adopted in accordance with the applicable provisions of Section 242
of the General Corporation Law of the State of Delaware.

 

THIRD:
That the Certificate of Designations is hereby amended as follows:

 

A.                                   The following
is added as Section (23) of the Certificate of Designations:

 

Notwithstanding
anything to the contrary contained in the Transaction Documents, the holders of
the Preferred Shares shall have none of the preferences, rights, privileges or
powers of, or restrictions provided for the benefit of, the Preferred Shares
contained in the Transaction Documents relating to, arising out of or caused by
the execution and delivery of that certain Agreement and Plan of Merger dated September 29,
2009, by and among Resaca Exploitation, Inc., a Texas corporation (“Resaca”), Resaca Acquisition Sub, Inc., a Delaware
corporation and the Company (the “Merger Agreement”)
and the consummation of the transactions contemplated thereby (the “Merger”) (including, without limitation, any rights to
require the Company to redeem any of the Preferred Shares or notice, voting or
consent rights), except to receive the Preferred Conversion Consideration (as
such term is defined in the Merger Agreement) pursuant to the terms of the
Merger Agreement and such other rights (including registration rights and
preemptive rights having terms consistent with those presently contained in the
Transaction Documents) not inconsistent with the foregoing as shall be
reasonably acceptable to the Company, Resaca and the Required Holders.  In the event that (i) the Merger
Agreement is terminated in accordance with its terms, (ii) the Merger
Agreement is amended, modified or 

 

B-1

 

supplemented
or any waiver is given by any party thereto that is individually or in the
aggregate adverse to the interests of the holders of the Preferred Shares
without the prior written consent of the Required Holders or (iii) Parent fails
to assume the Company’s obligations under the Transaction Documents to the
extent not otherwise eliminated pursuant to this Section (23) with respect
to the Merger, this Section (23) shall be inoperative and of no force or
effect.

 

IN
WITNESS WHEREOF, the Company has caused this Certificate of Amendment to be
signed by S. Jeffrey Johnson, its Chairman of the Board of Directors and Chief
Executive Officer, as of the        day of                         ,
2009.

 

	
   

  	
  CANO
  PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  

  	
  S.
  Jeffrey Johnson,

  
	
   

  	
  Title: 

  	
  Chairman of the Board of
  Directors and Chief Executive Officer

  
				

 

B-2

 

EXHIBIT C

 

Irrevocable Proxy

 

The
undersigned stockholder of Cano Petroleum, Inc., a Delaware corporation
(the “Company”), hereby irrevocably (to the fullest extent permitted by
law) appoints the directors on the board of directors of the Company, and each
of them, as the sole and exclusive attorneys and proxies of the undersigned,
with full power of substitution and resubstitution, to vote and exercise all
voting and related rights (to the full extent that the undersigned is entitled
to do so) with respect to all of the shares of capital stock of the Company
that now or hereafter may be beneficially owned by the undersigned, and any and
all other shares or securities of the Company issued or issuable in respect
thereof on or after the date hereof (collectively, the “Shares”) in
accordance with the terms of this Proxy. 
The Shares beneficially owned by the undersigned stockholder of the
Company as of the date of this Proxy are listed on the final page of this
Proxy.  Upon the execution of this Proxy
by the undersigned, any and all prior proxies given by the undersigned with
respect to any Shares shall be revoked and the undersigned hereby agrees not to
grant any subsequent proxies with respect to the Shares until after the
Expiration Date (as defined below).

 

This
Proxy is irrevocable (to the fullest extent permitted by law), is coupled with
an interest and is granted pursuant to the Stock Voting Agreement of even date
herewith by and between the Company and the undersigned stockholder (the “Stock
Voting Agreement”), and is granted in consideration of the Company entering
into the Agreement and Plan of Merger (the “Merger Agreement”), by and
among the Resaca, Merger Sub and the Company, which provides for the merger of
Merger Sub with and into the Company, with the Company being the surviving
corporation (the “Merger”).  This
Proxy shall terminate and be of no further force and effect automatically upon
the Expiration Date.  As used herein, the
term “Expiration Date” shall mean the date that the Stock Voting
Agreement terminates in accordance with its terms.

 

The
attorneys and proxies named above, and each of them, are hereby authorized and
empowered by the undersigned, at any time prior to the Expiration Date, to act
as the undersigned’s attorney and proxy to vote the Shares, and to exercise all
voting, consent and similar rights of the undersigned with respect to the
Shares (including, without limitation, the power to execute and deliver written
consents) (i) in favor of the Amendment (as such term is defined in the
Stock Voting Agreement) and (ii) in favor of the adoption and approval of
the Merger Agreement (or any amended version or versions of the Merger
Agreement), and all actions required in furtherance thereof, at any meeting or
meetings of the stockholders of the Company, and at any adjournment,
postponement or continuation thereof, at which the Amendment and/or the Merger
Agreement (or any amended version or versions of the Merger Agreement) are
submitted for the consideration and vote of the stockholders of the Company.

 

The
attorneys and proxies named above may not exercise this Proxy to vote, consent
or act on any other matter except as provided above.  The undersigned stockholder may vote the
Shares on all other matters.

 

Any
obligation of the undersigned hereunder shall be binding upon the successors
and assigns of the undersigned.

 

[Remainder of Page Intentionally Left Blank]

 

C-1

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature
  of Stockholder:

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Print
  Name of Stockholder:

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Shares
  beneficially owned:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
                      shares
  of Company Preferred Stock

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
                      shares
  of Company Common Stock

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
                      shares
  of Company Common Stock issuable upon the exercise of outstanding options,
  warrants or other rights (including upon conversion shares of Company
  Preferred Stock)

  

 

C-2Exhibit
10.89

 

STOCK VOTING AGREEMENT

 

STOCK
VOTING AGREEMENT, dated as of                     ,
20     (this “Agreement”),
is by and among the undersigned stockholder (the “Stockholder”),
and Cano Petroleum, Inc.,
a Delaware corporation (the “Company”).

 

WHEREAS, concurrently
herewith, Resaca Exploitation, Inc., a Texas corporation (“Resaca”),
Resaca Acquisition Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of Resaca (“Merger Sub”), and
the Company are entering into an Agreement and Plan of Merger of even date
herewith (the “Merger Agreement”),
pursuant to which Merger Sub will merge with and into Company (the “Merger”).  Each capitalized term used herein and not
otherwise defined shall have the meaning set forth in the Merger Agreement;

 

WHEREAS, the
Stockholder, as of the date hereof, has Beneficial Ownership, as defined in Section 6
hereof, of the number of shares of Series D Convertible Preferred Stock,
no par value per share, of the Company (“Company
Preferred Stock”) set forth on Exhibit A
hereto (together with any shares of Company Preferred Stock or common stock,
par value $0.0001 per share, of the Company (“Company Common Stock”)
acquired by the Stockholder after the date hereof and prior to the termination
of this Agreement whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable shares, or by means of
purchase, dividend, distribution or otherwise, hereinafter collectively
referred to as the “Shares”); and

 

WHEREAS, the Company
has required, as condition to it entering into the Merger Agreement, that the
Stockholder enter into this Agreement.

 

NOW,
THEREFORE, in consideration of the Company’s execution of the
Merger Agreement and the mutual covenants and agreements herein contained and
other good and valuable consideration, and intending to be legally bound
hereby, it is agreed as follows:

 

1.             Vote.

 

1.1           Agreement
to Vote.  The Stockholder hereby revokes any and all
previous proxies with respect to the Stockholder’s Shares and irrevocably
agrees to vote and otherwise act (including pursuant to written consent) with
respect to all of such Shares in favor of the amendment to the Certificate of
Designations, Preferences and Rights of Series D Convertible Preferred
Stock of the Company, filed with the Secretary of State of Delaware on August 31,
2006 (the “Original Certificate”), attached hereto as Exhibit B
(the “Amendment”), and take all actions required in furtherance thereof,
at any meeting or meetings of the stockholders of the Company, and at any
adjournment, postponement or continuation thereof, at which the such matter is
submitted for the consideration and vote of the stockholders of the
Company.  The Stockholder shall not enter
into any agreement or understanding with any person or entity the effect of
which would be inconsistent or violative of the provisions and agreements
contained in this Section 1. 
The obligations of the Stockholder under this Section 1
shall remain in effect with respect to the Shares until, and shall terminate
upon, the earlier to occur of the Effective Time or the termination of the
Merger Agreement in accordance with its terms. 
The Stockholder hereby agrees to execute such additional documents as
the Company may reasonably request to effectuate the foregoing.

 

1.2           Irrevocable
Proxy.  Concurrently with the execution of this Agreement, the
Stockholder agrees to deliver to the Company a proxy in the form attached
hereto as Exhibit C (the “Proxy”), which shall be irrevocable to the
fullest extent permissible by applicable law, with respect to the Shares.

 

 

2.             Representations and Warranties of the
Stockholder.  The Stockholder represents and warrants to
the Company as follows:

 

2.1           Ownership
of Shares.  On the date hereof, the Shares are all of the
Shares currently Beneficially Owned by the Stockholder.  The Stockholder has sole voting power and
sole power to issue instructions with respect to the matters set forth in Section 1
hereof, sole power of disposition, sole power of conversion and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares set forth on Exhibit A hereto, with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.  The Stockholder currently has, and at all
times during the term hereof will have, good, valid and marketable title to the
Shares, free and clear of all liens, encumbrances and security interests (other
than the encumbrances created by this Agreement and other than restrictions on
transfer under applicable federal and state securities laws) and free of other
restrictions, options, rights to purchase or other claims that would adversely
affect the ability of the Stockholder to perform its obligations hereunder or
pursuant to which the Stockholder could be required to sell, assign or
otherwise transfer the Shares.

 

2.2           Authority;
Binding Agreement.  The
Stockholder has the full legal right, power and authority to enter into and
perform all of its obligations under this Agreement. This Agreement has been
duly executed and delivered by the Stockholder and constitutes a legal, valid
and binding agreement of the Stockholder, enforceable in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors’ rights and to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).  Neither the execution and delivery
of this Agreement nor the consummation by the Stockholder of the transactions
contemplated hereby will (i) violate, or require any consent, approval or
notice under, any provision of any judgment, order, decree, statute, law, rule or
regulation applicable to the Stockholder or the Shares or (ii) constitute
a violation of, conflict with or constitute a default under, any contract,
commitment, agreement, understanding, arrangement or other restriction of any
kind to which the Stockholder is a party or by which the Stockholder is bound,
in each case the effect of which would adversely affect the ability of the
Stockholder to perform his obligations hereunder.

 

3.             Certain Covenants of the Stockholder. 
Except in accordance with the provisions of this Agreement, the
Stockholder agrees with and covenants to the Company as follows:

 

3.1           Transfer. 
Prior to the termination of this Agreement, except as otherwise provided
herein, the Stockholder shall not:  (i) transfer
(which term shall include, without limitation, for the purposes of this
Agreement, any sale, gift, pledge, assignment, encumbrance or other
disposition), whether directly or indirectly (including by operation of law),
or consent to any transfer of, any or all of the Shares or any interest
therein, except pursuant to the Merger; (ii) grant any proxies,
powers-of-attorney or other authorizations or consents with respect to the
Shares, deposit the Shares into a voting trust or enter into a voting agreement
or similar arrangement with respect to the Shares; or (iii) enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all such Shares or any interest therein.

 

3.2           Stop
Transfer.  The Stockholder hereby agrees with and
covenants to each other party hereto that the Stockholder shall not request
that the Company register the transfer (book entry or otherwise) of any
certificate or uncertified interest representing any of its Shares, unless such
transfer is made in compliance with this Agreement.

 

3.3           Notifications. 
The Stockholder shall, while this Agreement is in effect, notify the
Company promptly, but in no event later than two business days, of the number
of any shares of 

 

2

 

Company Common Stock acquired by the Stockholder
after the date hereof.

 

3.4           Waiver
of Claims. 
The Stockholder agrees that it will not bring, commence, institute,
maintain, prosecute, participate in or voluntarily aid any action, claim, suit
or cause of action, in law or in equity, in any court or before any
governmental entity, which challenges the validity of or seeks to enjoin the
operation of any provision of this Agreement; provided, that the Stockholder
may defend against, contest or settle any such action, claim, suit or cause of
action brought against the Stockholder that relates to the Stockholder’s
capacity as a director or officer of the Company.

 

3.5           Appraisal Rights. 
To the extent permitted by applicable law, the Stockholder shall not
exercise any rights (including, without limitation, under Section 262 of
the DGCL) to demand appraisal of any Shares that may arise with respect to the
Merger.

 

3.6           Additional Voting
Agreements.  If requested by the Company, the Stockholder
agrees to use its commercially reasonable efforts to cause the other beneficial
owners of any shares of capital stock of the Company over which the Stockholder
has shared voting or dispositive power (such shares, the “Shared Securities”)
to execute stock voting agreements and Irrevocable Proxies, in substantially
similar form to this Agreement and the Irrevocable Proxy attached hereto, prior
to the Effective Time.  If not so
requested by the Company, the Stockholder nonetheless agrees to use its
commercially reasonable efforts to cause the Shared Securities to be voted in a
manner consistent with this Agreement.

 

4.             Effect
of Purported Transfer.  The
Company agrees with, and covenants with, the Stockholder that the Company shall
not register the transfer (book entry or otherwise) of any certificate or
uncertified interest representing any of the Shares, unless such transfer is
made in compliance with this Agreement. 
The parties hereto agree that any transfer of the Shares made other than
in compliance with this Agreement shall be null and void.  Any such transfer shall convey no interest in
any of the Shares purported to be transferred, and the transferee shall not be
deemed to be a stockholder of the Company nor entitled to receive a new share
certificate or any rights, dividends or other distributions on or with respect
to such Shares.

 

5.             Termination. This Agreement shall terminate, and
neither the Company nor the Stockholder shall have any rights or obligations
hereunder, and this Agreement shall become null and void and have no effect on
the earlier of (i) the Effective Time, (ii) upon the termination of
the Merger Agreement in accordance with its terms, (iii) upon any
amendment, modification or supplement to the Merger Agreement or any waiver by
any party thereto that is individually or in the aggregate adverse to the
interests of the Stockholder without the prior written consent of the
Stockholder, or (iv) the failure of Resaca to assume the Company’s
obligations under the Transaction Documents (as defined in the Original
Certificate) to the extent not otherwise eliminated pursuant to proposed Section (23)
of the Amendment with respect to the Merger.

 

6.             Definitions. 
For the purposes of this Agreement:

 

6.1           “Beneficial
Ownership” or “Beneficial Owner” with respect to any securities shall mean
having “beneficial ownership” of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934 (the “Exchange Act”),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that notwithstanding Rule 13d-3
under the Exchange Act, “Beneficial Ownership” or “Beneficial Owner” for
purposes of this Agreement shall include only those securities over which the
Stockholder has sole voting and dispositive power.  Without duplicative counting of the same
security by the same holder, securities Beneficially Owned by a Person shall
include securities Beneficially Owned by all other Persons with whom such Person
would constitute a “group” as within the meaning of Section 13(d)(3) of
the Exchange Act.

 

3

 

6.2           “Person” shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.

 

7.     Miscellaneous.

 

7.1           Notices. 
Any notice or communication required or permitted hereunder shall be in
writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be given,
dated and received (i) when so delivered personally, (ii) upon
receipt of an appropriate electronic answerback or confirmation when so
delivered by telegraph or telecopy (to such number specified below or another
number or numbers as such person may subsequently designate by notice given
hereunder), or (iii) five business days after the date of mailing to the
following address or to such other address or addresses as such person may
subsequently designate by notice given hereunder, if so delivered by mail:

 

	
  If
  to the Company:

  	
  Cano
  Petroleum, Inc.

  
	
   

  	
  Burnett
  Plaza

  
	
   

  	
  801
  Cherry St., Suite 3200

  
	
   

  	
  Fort
  Worth, Texas 76102

  
	
   

  	
  Telephone:
  (817) 698-0900

  
	
   

  	
  Facsimile:  (817) 334-0222

  
	
   

  	
  Attention: 
  Phillip B. Feiner, Esq., General Counsel

  
	
   

  	
   

  
	
  with a copy to:

  	
  Thompson & Knight LLP

  
	
   

  	
  1722 Routh Street

  
	
   

  	
  Suite 1500

  
	
   

  	
  Dallas, Texas 75201-2533

  
	
   

  	
  Telephone: (214) 969-1303

  
	
   

  	
  Facsimile:
  (214) 999-1695

  
	
   

  	
  Attention: Wesley P. Williams

  

 

If to the Stockholder: at the
address set forth on Exhibit A

 

7.2           Tax
Matters.  The parties agree to treat the exchange
of Company Preferred Stock for Parent Series A Shares as qualifying
for non-recognition of gain or loss for federal and any applicable state or
local income tax purposes, except to the extent of payments received for
accrued dividends, and further agree to file all U.S. federal, state and local
income tax and information returns and reports consistent with such treatment
unless and until the occurrence of a “determination” to the contrary under
section 1313 of the Internal Revenue Code of 1986, as amended.

 

7.3           Further
Actions. 
Each
of the parties hereto agrees that it will use its commercially reasonable
efforts to do all things necessary to effectuate this Agreement.  The Stockholder and the Company hereby
covenant and agree to execute and deliver any additional documents reasonably
necessary or desirable to carry out the purpose and intent of this Agreement.

 

7.4           Entire
Agreement.  This Agreement, together with the documents
expressly referred to herein, constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.

 

7.5           Amendments. 
This Agreement may not be modified, amended, altered or supplemented,
except upon the execution and delivery of a written agreement executed by the
parties hereto.  The failure of any party
hereto to exercise any right, power or remedy provided under this Agreement or
otherwise 

 

4

 

available in respect hereof at law or in equity,
or to insist upon compliance by any other party hereto with its obligations
hereunder, and any custom or practice of the parties at variance with the terms
hereof shall not constitute a waiver by such party of its right to exercise any
such or other right, power or remedy or to demand such compliance.

 

7.6           Expenses. 
All costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.  Notwithstanding the foregoing, the Company
will reimburse to Stockholder its reasonable out-of-pocket expenses (including
attorneys fees, etc.).

 

7.7           Specific Performance. 
Each of the parties hereto acknowledges and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (i) will waive, in any action
for specific performance, the defense of adequacy of a remedy at law and (ii) shall
be entitled, in addition to any other remedy to which they may be entitled at
law or in equity, including monetary damages, to compel specific performance of
this Agreement without the necessity of posting bond or proving actual damages.

 

7.8           Assignment. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns and personal
representatives, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties.

 

7.9           Governing
Law.  This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.

 

7.10         Counterparts. 
This Agreement may be executed manually or by facsimile in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when a counterpart hereof shall have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

 

7.11         Severability. 
Any term or provision of this Agreement that is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.  If
any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.

 

7.12         Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.

 

[SIGNATURE
PAGE FOLLOWS]

 

5

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed, as of the date and year
first above written.

 

	
   

  	
  CANO PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Benjamin Daitch

  
	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Printed
  Name of Stockholder)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SIGNATURE
PAGE TO STOCK VOTING AGREEMENT

1

 

EXHIBIT A

 

Stock Ownership and Address Notice List

 

	
  Beneficial Ownership:

  	
   

  	
                  
  shares of Company Preferred Stock

  
	
   

  	
   

  	
                  
  shares of Company Common Stock, acquirable upon conversion of the Company
  Preferred Stock.

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
   

  

 

A-1

 

EXHIBIT B

 

CERTIFICATE
OF AMENDMENT

TO

CERTIFICATE
OF DESIGNATIONS, PREFERENCES

AND RIGHTS
OF SERIES D CONVERTIBLE PREFERRED STOCK

OF

CANO
PETROLEUM, INC.

 

 

Cano Petroleum, Inc., a corporation organized
and existing under the laws of the State of Delaware (the “Company”),
DOES HEREBY CERTIFY as follows:

 

FIRST:  That
the Board of Directors of the Company, at a duly convened meeting on September 29,
2009, duly adopted resolutions approving and adopting the amendments set forth
below to the Certificate of Designations of Series D Convertible Preferred
Stock of the Company (the “Certificate of
Designations”), and that such amendments have been approved and
adopted by the requisite number of existing holders of the Common Stock and the
Series D Convertible Preferred Stock of the Company.

 

SECOND:  That
the amendments set forth below have been duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation Law of the
State of Delaware.

 

THIRD: That the Certificate of Designations is
hereby amended as follows:

 

A.                                   The following
is added as Section (23) of the Certificate of Designations:

 

Notwithstanding anything to the contrary contained
in the Transaction Documents, the holders of the Preferred Shares shall have
none of the preferences, rights, privileges or powers of, or restrictions
provided for the benefit of, the Preferred Shares contained in the Transaction
Documents relating to, arising out of or caused by the execution and delivery
of that certain Agreement and Plan of Merger dated September 29, 2009, by
and among Resaca Exploitation, Inc., a Texas corporation (“Resaca”), Resaca Acquisition Sub, Inc., a Delaware
corporation and the Company (the “Merger Agreement”)
and the consummation of the transactions contemplated thereby (the “Merger”) (including, without limitation, any rights to
require the Company to redeem any of the Preferred Shares or notice, voting or
consent rights), except to receive the Preferred Conversion Consideration (as
such term is defined in the Merger Agreement) pursuant to the terms of the
Merger Agreement and such other rights (including registration rights and
preemptive rights having terms consistent with those presently contained in the
Transaction Documents) not inconsistent with the foregoing as shall be
reasonably acceptable to the Company, Resaca and the Required Holders.  In the event that (i) the Merger
Agreement is terminated in accordance with its terms, (ii) the Merger Agreement
is amended, modified or 

 

B-1

 

supplemented or any waiver is given by any party
thereto that is individually or in the aggregate adverse to the interests of
the holders of the Preferred Shares without the prior written consent of the
Required Holders or (iii) Parent fails to assume the Company’s obligations
under the Transaction Documents to the extent not otherwise eliminated pursuant
to this Section (23) with respect to the Merger, this Section (23)
shall be inoperative and of no force or effect.

 

IN WITNESS WHEREOF, the Company has caused this
Certificate of Amendment to be signed by S. Jeffrey Johnson, its Chairman of
the Board of Directors and Chief Executive Officer, as of the       day
of                    ,
2009.

 

	
   

  	
  CANO PETROLEUM, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  S. Jeffrey Johnson,

  
	
   

  	
  Title:

  	
  Chairman of the Board of Directors and Chief Executive Officer

  

 

B-2

 

EXHIBIT C

 

Irrevocable
Proxy

 

The undersigned stockholder of Cano Petroleum, Inc.,
a Delaware corporation (the “Company”), hereby irrevocably (to the
fullest extent permitted by law) appoints the directors on the board of
directors of the Company, and each of them, as the sole and exclusive attorneys
and proxies of the undersigned, with full power of substitution and
resubstitution, to vote and exercise all voting and related rights (to the full
extent that the undersigned is entitled to do so) with respect to all of the
shares of capital stock of the Company that now or hereafter may be
beneficially owned by the undersigned, and any and all other shares or
securities of the Company issued or issuable in respect thereof on or after the
date hereof (collectively, the “Shares”) in accordance with the terms of
this Proxy.  The Shares beneficially
owned by the undersigned stockholder of the Company as of the date of this
Proxy are listed on the final page of this Proxy.  Upon the execution of this Proxy by the
undersigned, any and all prior proxies given by the undersigned with respect to
any Shares shall be revoked and the undersigned hereby agrees not to grant any
subsequent proxies with respect to the Shares until after the Expiration Date
(as defined below).

 

This Proxy is irrevocable (to the fullest extent
permitted by law), is coupled with an interest and is granted pursuant to the
Stock Voting Agreement of even date herewith by and between the Company and the
undersigned stockholder (the “Stock Voting Agreement”), and is granted
in consideration of the Company entering into the Agreement and Plan of Merger
(the “Merger Agreement”), by and among the Resaca, Merger Sub and the
Company, which provides for the merger of Merger Sub with and into the Company,
with the Company being the surviving corporation (the “Merger”).  This Proxy shall terminate and be of no
further force and effect automatically upon the Expiration Date.  As used herein, the term “Expiration Date”
shall mean the date that the Stock Voting Agreement terminates in accordance
with its terms.

 

The attorneys and proxies named above, and each of
them, are hereby authorized and empowered by the undersigned, at any time prior
to the Expiration Date, to act as the undersigned’s attorney and proxy to vote
the Shares, and to exercise all voting, consent and similar rights of the
undersigned with respect to the Shares (including, without limitation, the
power to execute and deliver written consents) in favor of the Amendment (as
such term is defined in the Stock Voting Agreement) and all actions required in
furtherance thereof, at any meeting or meetings of the stockholders of the
Company, and at any adjournment, postponement or continuation thereof, at which
the Amendment is submitted for the consideration and vote of the stockholders
of the Company.

 

The attorneys and proxies named above may not
exercise this Proxy to vote, consent or act on any other matter except as
provided above.  The undersigned
stockholder may vote the Shares on all other matters.

 

Any obligation of the undersigned hereunder shall be
binding upon the successors and assigns of the undersigned.

 

[Remainder of Page Intentionally Left
Blank]

 

C-1

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature of Stockholder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
   

  	
  Print Name of Stockholder:

  
	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
   

  	
  Shares beneficially owned:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  shares of Company
  Preferred Stock

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  shares of Company Common
  Stock

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  shares of Company Common Stock issuable upon the
  exercise of outstanding options, warrants or other rights (including upon
  conversion shares of Company Preferred Stock)

  

 

C-2

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