Document:

Exhibit
10.2

 

THE SECURITIES OFFERED
HEREIN HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S. PERSONS (AS THAT TERMS IS DEFINED IN THE 1933 ACT) UNLESS THE
SECURITIES ARE REGISTERED UNDER THE 1933 ACT, OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT IS AVAILABLE. THIS SUBSCRIPTION IS
EXECUTED IN RELIANCE UPON THE EXEMPTIONS PROVIDED BY RULE 506 OF REGULATION D
UNDER THE 1933 ACT.

 

SUBSCRIPTION

 

THIS SUBSCRIPTION (the “Subscription”) has been executed by the
undersigned in connection with the offering of 301,932 shares of common stock,
par value $0.001 (hereinafter referred to as the “Stock”), of Cano Petroleum, Inc.,
a corporation organized under the laws of the State of Delaware (hereinafter
referred to as the “Issuer”).  There is
no minimum offering.  The Stock being
subscribed for pursuant to this Subscription has not been registered under the
1933 Act.  The offer of the Stock and, if
this Subscription is accepted by the Issuer, the sale of Stock, is being made
in reliance upon Rule 506 of Regulation D promulgated under the 1933 Act.
(All dollar amounts in this Subscription are expressed in U.S. Dollars).

 

ARTICLE 1

SUBSCRIPTION

 

Subscription

 

1.1           The undersigned (the “Subscriber”),
as principal, hereby subscribe to purchase, in the aggregate, a minimum of Three
Hundred One Thousand Nine Hundred Thirty-Two (301,932) shares of Common Stock
(the “Shares”), having a purchase price of $4.14 per Share for an aggregate
purchase price of $1,250,000.00 (the “Subscription Price”).

 

Minimum Subscription

 

1.2           A minimum number of 301,932 Shares
must be purchased by the Subscriber.

 

Method of Payment

 

1.3           The Subscriber shall pay the
Subscription Price by delivering good funds in United States Dollars by way of
wire transfer of funds to the Issuer and concurrent with the execution and
delivery of this Subscription.  The wire
transfer instructions are:

 

Wires from Correspondent Banks
Worldwide:

 

	
  Beneficiary Bank:

  	
  Worth National Bank

  
	
   

  	
  801 Cherry
  Street, unit 27

  
	
   

  	
  Fort
  Worth, TX  76102

  
	
   

  	
  Tel: 817-877-2018

  
	
  Beneficiary:

  	
  Cano Petroleum, Inc.

  
	
  ABA Routing#:

  	
  111907568

  
	
  Account Number:

  	
  31002914

  

 

 

As soon as reasonably
practicable after September 14, 2005 (the “Closing Date”) the Company
shall issue and cause to be delivered to the Subscriber a certificate or
certificates representing the Shares (the “Certificates”) pursuant to Article 6
hereof.  Upon receipt of the
Certificates, the Subscriber shall deliver the full Subscription Funds to the wire instructions provided
above.  The Subscriber acknowledges that
the subscription for Shares hereunder may be rejected in whole or in part by
the Issuer in its sole discretion.

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF
THE SUBSCRIBER

 

Representations
and Warranties

 

2.1           The Subscriber represents
and warrants in all material respects to the Issuer, with the intent that the
Issuer will rely thereon in accepting this Subscription, that:

 

(a)           Experience.  The Subscriber is sufficiently experienced in
financial and business matters to be capable of evaluating the merits and risks
of its investments, and to make an informed decision relating thereto, and to
protect its own interests in connection with the purchase of the Shares;

 

(b)           Own Account.  The Subscriber is purchasing the Shares as
principal for its own account.  The
Subscriber is purchasing the Stock for investment purposes only and not with an
intent or view towards further sale thereof, and has not pre-arranged any sale
with any other subscriber;

 

(c)           Not Underwriter.  The Subscriber is not an underwriter, or
dealer in, the Stock, and the Subscriber is not participating, pursuant to a
contractual agreement, in a distribution of the Stock;

 

(d)           Importance of
Representations.  The
Subscriber understands that the Stock are being offered and sold to it in
reliance on an exemption from the registration requirements of the 1933 Act,
and that the Issuer is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Subscriber set forth herein in order to determine the applicability of such
exemptions and the suitability of the Subscriber to acquire the Stock;

 

(e)           Registration.  The Issuer shall use its best efforts to file
a registration statement to be filed with and declared effective by the
Securities and Exchange Commission (the “SEC”) at the earliest practicable date
after the Closing Date.  The Subscriber
represents and warrants and hereby agrees that all offers and sales of the
Securities shall be made only pursuant to such registration or to such
exemption from registration;

 

(f)            Risk.  The Subscriber acknowledges that the purchase
of the Stock involves a high degree of risk, is aware of the risks and further
acknowledges that it can bear the economic risk of the Stock, including the
total loss of its investment;

 

(g)           Current
Information.  The
Subscriber has been furnished with or has acquired copies of all requested
information concerning the Issuer, including a copies of reports filed by the

 

2

 

Issuer pursuant to the
United States Securities Exchange Act of 1934, as amended (the “1934 Act”) and
copies of press releases issued by the Issuer;

 

(h)           Independent
Investigation.  The Subscriber, in making the decision to
subscribe for the Shares, has relied upon independent investigations made by it
and its purchaser representatives, if any, and the Subscriber and such
representatives, if any, have, prior to making this Subscription, been given
access and the opportunity to examine all material contracts and documents
relating to this offering and an opportunity to ask questions of, and to
receive answers from, the Issuer or any person acting on its behalf concerning
the terms and conditions of this offering. 
The Subscriber and its advisors, if any, have been furnished with access
to all materials relating to the business, finances and operation of the Issuer
and materials relating to the offer and sale of the Shares which have been
requested.  The Subscriber and its
advisors, if any, have received complete and satisfactory answers to any such
inquiries;

 

(i)            No Written or
Oral Representations.  No person
has made to the Subscriber any written or oral representations

 

(i)                    that any person will resell or
repurchase the Stock,

 

(ii)                   that any person will refund the
purchase price of the Stock, or

 

(iii)                  as to the future price or value of
the Stock;

 

(j)            No
Recommendation or Endorsement.  The Subscriber understands that no federal or
state agency has passed on or made any recommendation or endorsement of the
Stock;

 

(k)           Partnership,
Corporation or Trust.  If
the Subscriber is a partnership, corporation or trust, the person executing
this Subscription on its behalf represents and warrants that

 

(i)            he or she has
made due inquiry to determine the truthfulness of the representations and
warranties made pursuant to this Subscription, and

 

(ii)           he or she is
duly authorized (and if the undersigned is a trust, by the trust agreement) to
make this investment and to enter into and execute this Subscription on behalf
of such entity;

 

(l)            Affiliate
Status.  Upon purchase of the Stock,
the Subscriber will be an affiliate of the Issuer and the Subscriber
acknowledges that the Stock held by it will be subject to certain resale
restrictions under the 1933 Act;

 

(m)          Other
Subscribers.  The Subscriber acknowledges that Shares
may be issued to other purchasers under this offering concurrently with the
Closing;

 

(n)           No
Advertisement or General Solicitation.  The sale of the Shares has not been
advertised through any article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio; or
through any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising;

 

3

 

(o)           Accredited Investor. 
The Subscriber is (i) an “accredited investor” as that term is
defined in Rule 501 of the General Rules and Regulations under the
1933 Act by reason of Rule 501(a)(3), (ii) experienced in making
investments of the kind described in this Agreement and the related documents, (iii) able,
by reason of the business and financial experience of its officers (if an
entity) and professional advisors (who are not affiliated with or compensated
in any way by the Company or any of its Affiliates or selling agents), to
protect its own interests in connection with the transactions described in this
Subscription, and to evaluate the merits and risks of an investment in the
Stock, and (iv) able to afford the entire loss of its investment in the
Stock.;

 

(p)           Hedging Transactions. 
The Subscriber acknowledges and agrees that all offers and sales of the
Stock, as applicable, by the Subscriber shall be made only pursuant to
registration of the Stock under the 1933 Act, or pursuant to an available
exemption from the registration requirements of the 1933 Act.;

 

(q)           Beneficial Ownership. 
Upon consummation of the transactions contemplated by this Subscription,
the Subscriber will be the beneficial owner of the Stock issued to it pursuant
to this Subscription.  The Subscriber has
not pre-arranged any sale of the Stock with any person or persons in the United
States;

 

(r)            No Short Position. 
The Subscriber will not, directly or indirectly, or through one or more
intermediaries, maintain any short position in the common shares of the Company
during the applicable distribution compliance period;

 

(s)           Restriction on Transfer. 
The Subscriber understands and acknowledges that the Issuer will not
allow any transfer or other disposition of the Stock until the Stock has been
registered under the 1933 Act.  The
Certificate(s) shall bear the following legend in addition to any other legend
required under this Subscription:

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Non-Merger and Survival

 

2.2           The
representations and warranties of the Subscribers contained herein will be true
at the date of execution of this Subscription by the Subscribers and as of the
Closing Date in all material respects as though such representations and
warranties were made as of such times and shall survive the Closing Date and
the delivery of the Certificates.

 

Indemnity

 

2.3           The Subscriber
agrees to indemnify and hold harmless the Issuer from and against any and all
claims, demands, actions, suits, proceedings, assessments, judgments, damages,
costs, losses and expenses, including attorney’s fees incurred in contesting
any such claim and any payment made in good

 

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faith
in settlement of any claim (subject to the right of the Subscriber to defend
any such claim), resulting from the breach of any representation or warranty of
such party under this Subscription.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF
THE ISSUER

 

3.1           The Issuer, upon taking up
and accepting this Subscription, represents and warrants in all material
respects to the Subscriber, with the intent that the Subscriber will rely
thereon in making this Subscription, that:

 

(a)           Legality.  The Issuer has the requisite corporate power
and authority to accept this Subscription and to issue, sell and deliver the
Shares; this Subscription and the issuance, sale and delivery of the Shares
hereunder and the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action by the Issuer; this Subscription
and the Shares have been duly and validly executed and delivered by and on
behalf of the Issuer, and are valid and binding agreements of the Issuer,
enforceable in accordance with their respective terms, except as enforceability
may be limited by general equitable principles, bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or other laws affecting
creditors’ rights generally;

 

(b)           Transfer.  Provided that
a registration statement in respect of the Shares is in effect as required
under all applicable securities laws, such Shares shall be freely transferable
on the books and records of the Issuer, provided that the sale is made to a
bona-fide purchaser and that the prospectus delivery requirements are met;

 

(c)           Listed Company Status. 
The Issuer is required to make current filings with the SEC pursuant to Section 13
or 15(d) of the 1934 Act,
the Stock is presently listed on the American Stock Exchange and the Issuer has
received no notice, either oral or written, with respect to its continued
eligibility for such listing;

 

(d)           Listing of Shares. 
Subject to notification to the American Stock Exchange of actual
issuance, the Shares are listed on the American Stock Exchange.

 

(e)           Proper
Organization.  The Issuer
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and is duly qualified as a
foreign corporation in all jurisdictions where the failure to be so qualified
would have a materially adverse effect on its business, taken as whole;

 

(f)            No Legal
Proceedings.  There is no
action, suit or proceeding before or by any court or any governmental agency or
body, domestic or foreign, now pending or to the knowledge of the Issuer,
threatened, against or affecting the Issuer, or any of its properties or
assets, which might result in any material adverse change in the condition
(financial or otherwise) or in the earnings, business affairs or business
prospects of the Issuer, or which might materially and adversely affect the
properties or assets thereof;

 

(g)           Non-Default.  The Issuer is not in default in the performance
or observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it or its property
may be bound; and

 

5

 

(h)           Non-Contravention.  The execution and delivery of this
Subscription and the consummation of the issuance of the Shares and the
transactions contemplated by this Agreement do not and will not conflict with or
result in a breach by the Issuer of any of the terms or provisions of, or constitute a
default under, the Certificate of Incorporation or Bylaws of the Issuer, or any
indenture, mortgage, deed of trust, or other material agreement or instrument
to which the Issuer is a party or by which it or any of its properties or
assets are bound, or any existing applicable decree, judgment or order of any
court, Federal or state regulatory body, administrative agency or other
domestic governmental body having jurisdiction over the Issuer or any of its
properties or assets.  

 

Non-Merger and Survival

 

3.2           The
representations and warranties of the Issuer contained herein will be true at
the date of execution of this Subscription by the Issuer and as of the Closing
Date in all material respects as though such representations and warranties
were made as of such times and shall survive the Closing Date and the delivery
of the Certificates.

 

Indemnity

 

3.3           The Issuer
agrees to indemnify and hold harmless the Subscriber from and against any and
all claims, demands, actions, suits, proceedings, assessments, judgments,
damages, costs, losses and expenses, including attorney’s fees incurred in
contesting any such claim and any payment made in good faith in settlement of
any claim (subject to the right of the Issuer to defend any such claim),
resulting from the breach of any representation, warranty or covenant of such
party under this Subscription.

 

ARTICLE 4

COVENANTS OF THE ISSUER

 

Covenants of the Issuer

 

4.1           The Issuer
covenants and agrees with the Subscriber that:

 

(a)           Filings.  The Issuer will make all necessary filings in
connection with the sale of the Shares as required by the laws and regulations
of all appropriate jurisdictions;

 

(b)           Section 13
Compliance.  The Issuer
shall, from and after the Closing Date, use its best efforts to comply with the
requirements of Section 13 of the 1934 Act and maintain the listing of the
Common Stock on the American Stock Exchange or other quotation medium;

 

(c)           Rule 144
Opinion.  The Issuer will, upon written
request by the Subscriber, take such steps as are necessary to cause its
counsel to issue an opinion to the Issuer’s transfer agent allowing the
Subscriber to offer and sell any Shares issued in reliance on the applicable
provisions of Rule 144 provided that the holding period and other
requirements of such Rule 144 are met. 
The costs of obtaining such an opinion shall be borne by the Issuer; and

 

(d)           Use of Proceeds.  The Issuer will apply the Subscription Price,
together will all other subscription funds received from other subscribers
under this offering, for general corporate and working capital purposes.

 

6

 

Survival

 

4.2           The covenants set forth in
this Article 4 shall survive the Closing for the benefit of the
Subscriber.

 

ARTICLE 5

DEMAND REGISTRATION RIGHTS

 

Registration
Statement

 

4.1           Upon the Closing, the Issuer shall use its
best efforts to file a registration statement under the 1933 Act and under any
applicable Blue Sky laws registering the resale of Shares and shall use its
best efforts to cause such registration statement to be declared effective by
the Commission at the earliest practicable date, all at the Issuer’s sole cost
and expense.  Such best efforts shall include promptly responding to all
comments received by the staff of the SEC, and promptly preparing and filing
amendments to such registration statement which are responsive to the comments
received from the staff of the SEC, and in no event later than twenty-one (21)
days from receipt by the Issuer of the comments of the staff of the SEC. 
Such registration statement shall name the Subscriber as a selling shareholder
and shall provide for the sale of the Shares by the Subscriber from time to
time directly to purchasers or in the over-the-counter market or through or to
securities brokers or dealers that may receive compensation in the form of
discounts, concessions, or commissions.  The Issuer shall provide the
Subscriber with such number of copies of the prospectus as shall be reasonably
requested to facilitate the sale of the Shares.  None of the foregoing
shall in any way limit the Subscriber’s rights to sell the Shares in reliance
on an exemption from the registration requirements under the 1933 Act in
connection with a particular transaction.

 

Currency
of Registration Statement

 

4.2           The Issuer shall use its best efforts to
maintain the currency of the registration statement filed with the SEC and
under all applicable Blue Sky laws in respect of the Shares for 12 months from
the Closing Date.

 

Indemnification
of Subscriber by Issuer

 

4.3           To the extent permitted by law, the Issuer
will indemnify the Subscriber, within the meaning of Section 15 of the
1933 Act, with respect to which registration, qualification or compliance has
been effected pursuant to this Subscription Agreement, and each underwriter, if
any, and each person who controls any underwriter within the meaning of Section 15
of the 1933 Act, against all expenses, claims, losses, damages or liabilities
(or actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or treated, to the extent such
expenses, claims, losses, damages or liabilities arise out of or are based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other document,
or any amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, or any violation by the Issuer of the 1933 Act or any rule or
regulation promulgated under the 1933 Act applicable to the Issuer in
connection with any such registration, qualification or compliance, and the
Issuer will reimburse the Subscriber, each of its officers and directors and
partners, and each person controlling the Subscriber, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expense reasonably incurred in connection with investigation,

 

7

 

preparing or defending any such claim, loss, damage, liability or
action, provided, however, that the indemnity contained herein shall not apply
to amounts paid in settlement of any claim, loss, damage, liability or expense
if settlement is effected without the consent of the Issuer (which consent
shall not unreasonably be withheld); provided, further, that the Issuer will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Issuer by the Subscriber,
such controlling person or such underwriter specifically for use therein.  Notwithstanding the foregoing, insofar as the
foregoing indemnity relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at
the time the registration statement becomes effective or in the final
prospectus filed with the SEC pursuant to Rule 424(b) of the SEC, the
indemnity agreement herein shall not inure to the benefit of any underwriter or
(if there is no underwriter) the Subscriber if a copy of the final prospectus
filed pursuant to Rule 424(b) was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such furnishing is required by the 1933 Act.

 

Indemnification
of Issuer by Subscriber

 

4.4           To the extent permitted by law, the
Subscriber will indemnify the Issuer, each of its directors and officers,
affiliates, counsel, advisors, employees and, each underwriter, if any, of the
Issuer’s securities covered by such a registration statement, each person who
controls the Issuer or such underwriter within the meaning of Section 15
of the 1933 Act, and each other person selling the Issuer’s securities covered
by such registration statement, each of such person’s officers and directors
and each person controlling such persons within the meaning of Section 15
of the 1933 Act, against all claims, losses, damages and liabilities (or
actions in respect thereof), including attorneys fees and costs, arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein or necessary to make the statements therein not misleading or any other
violation by the Subscriber of any rule or regulation promulgated under
the 1933 Act applicable to the Subscriber and relating to action or inaction
required of the Subscriber in connection with any such registration,
qualification or compliance, and will reimburse the Issuer, such other person,
such directors, officers, persons, underwriters or control persons for any
legal or other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided, however,
that the indemnity contained herein shall not apply to amounts paid in
settlement of any claim, loss, damage, liability or expense if settlement is
effected without the consent of the Subscriber (which consent shall not be
unreasonably withheld). Notwithstanding the foregoing, the liability of the
Subscriber under this subsection (b) shall be limited in an amount
equal to the net proceeds from the sale of the shares sold by the Subscriber,
unless such liability arises out of or is based on wilful conduct by the
Subscriber.

 

Removal
of Legend

 

4.5           After the registration statement referenced
in Section 4.1 is declared effective by the SEC, the Subscribers may
deliver to the Issuer the Certificate representing the Shares issued to such
Subscriber and the Issuer will, within three days after receipt by the Issuer
of the foregoing, issue a new certificate representing and in exchange for the
aforementioned certificate, which new certificate shall be legended as follows:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF

 

8

 

1933, AS AMENDED. THE SECURITIES MAY BE SOLD PURSUANT TO THE
REGISTRATION STATEMENT PROVIDED THAT (I) THE REGISTRATION STATEMENT IS CURRENT
AND EFFECTIVE, (II) THE HOLDER COMPLIES WITH THE PROSPECTUS DELIVERY
REQUIREMENTS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND (III) THE SALE
IS IN COMPLIANCE WITH THE PLAN OF DISTRIBUTION SET FORTH IN THE PROSPECTUS. THE
TRANSFER OF SUCH SECURITIES IS RESTRICTED AS SET FORTH IN A SUBSCRIPTION
AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER.

 

ARTICLE 6

ISSUANCE OF CERTIFICATES

 

As soon as reasonably practicable following the Closing Date, the
Issuer will prepare and issue one or more Certificates for the Shares
registered in such name or names as specified by the Subscriber and cause the
same to be delivered to the Subscriber pursuant to the delivery instructions
provided by the Subscriber.

 

ARTICLE 7

CLOSING

 

Closing shall be effected
through the acceptance of this Subscription by the Issuer and the taking up of
the Subscription Funds by the Issuer.

 

ARTICLE 8

GENERAL PROVISIONS

 

Governing Law

 

8.1           This Subscription shall be governed by and
construed under the law of the State of Delaware without regard to its choice
of law provision.  Any disputes arising
out of, in connection with, or with respect to this Subscription, the subject
matter hereof, the performance or non-performance of any obligation hereunder,
or any of the transactions contemplated hereby shall be adjudicated in a Court
of competent civil jurisdiction sitting in the City of Wilmington, Delaware and
nowhere else.

 

Successors and Assigns

 

8.2           This Subscription shall
inure to the benefit of and be binding on the respective successors and assigns
of the parties hereto.

 

Execution by Counterparts and Facsimile

 

8.3           This Subscription may be
executed in counterparts and by facsimile, each of which when executed by any
party will be deemed to be an original and all of which counterparts will
together constitute one and the same Subscription.

 

9

 

[Remainder of page intentionally left blank.]

 

10

 

SIGNATURE PAGE FOR ENTITIES

 

IN WITNESS WHEREOF, the undersigned represents that the
foregoing statements are true and that it caused this Subscription to be duly
executed on its behalf on this 13th day of September, 2005.

 

 

	
  Renaissance US Growth Investment Trust PLC

  	
   

  	
   

  	
  /s/ Russell Cleveland

  	
   

  
	
  Printed Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Russell Cleveland, Director

  	
   

  	
   

  	
   

  
	
  Printed Title

  	
   

  	
   

  
						

 

 

Agreed to this 14th day of September, 2005:

 

CANO
PETROLEUM, INC.

 

 

	
  Per:

  	
  /s/ Michael
  J. Ricketts

  	
   

  
	
   

  
	
  Print Name: Michael J. Ricketts

  

 

 

This is page 11 to the Subscription by the above subscriber to
Cano Petroleum, Inc. dated as stated above.

 

 

Full
Name and Address of Subscriber for Registration Purposes:

 

NAME:                  Renaissance US Growth Investment
Trust PLC c/o Frost National Bank, Custodian, Trust No. W00740100

 

ADDRESS:            8080 N. Central Expressway, Suite 210,
LB-59, Dallas, TX  75206

 

 

TEL.NO.:                214-891-8294

 

FAX  NO.:             214-891-8291

 

EMAIL ADDRESS:              corpfin@rencaptial.com

 

CONTACT NAME:             Russell Cleveland

 

Delivery
Instructions (if different from Registration Name):

 

NAME:                   Frost National Bank

 

ADDRESS:            100 W. Houston St.

Attn:  Henri Domingues T-8,

San Antonio, TX  78205

 

TEL.NO.:                (210) 220-5216

 

	
  FAX NO.:

  	
   

  	
   

  

 

 

CONTACT NAME:             Henri Domingues

 

SPECIAL INSTRUCTIONS:

 

Send copy to:

RENN Capital Group, Inc.

Attn:  Compliance

8080 N. Central Expressway

Suite 210, LB-59

Dallas, TX  75206

 

Send copy to:

Sinclair Henderson, Ltd.

Attn:  Hayley Highgate

23 Cathedral Yard

Exeter EX11HB England

 

 

This is page 12
to the Subscription by the above subscriber to Cano Petroleum, Inc.Exhibit
10.3

 

THE SECURITIES OFFERED
HEREIN HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR
TO U.S. PERSONS (AS THAT TERMS IS DEFINED IN THE 1933 ACT) UNLESS THE
SECURITIES ARE REGISTERED UNDER THE 1933 ACT, OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT IS AVAILABLE. THIS SUBSCRIPTION IS
EXECUTED IN RELIANCE UPON THE EXEMPTIONS PROVIDED BY RULE 506 OF REGULATION D
UNDER THE 1933 ACT.

 

SUBSCRIPTION

 

THIS SUBSCRIPTION (the “Subscription”) has been executed by the
undersigned in connection with the offering of 301,932 shares of common stock,
par value $0.001 (hereinafter referred to as the “Stock”), of Cano Petroleum,
Inc., a corporation organized under the laws of the State of Delaware
(hereinafter referred to as the “Issuer”). 
There is no minimum offering.  The
Stock being subscribed for pursuant to this Subscription has not been
registered under the 1933 Act.  The offer
of the Stock and, if this Subscription is accepted by the Issuer, the sale of
Stock, is being made in reliance upon Rule 506 of Regulation D promulgated
under the 1933 Act. (All dollar amounts in this Subscription are expressed in
U.S. Dollars).

 

ARTICLE 1

SUBSCRIPTION

 

Subscription

 

1.1           The undersigned (the
“Subscriber”), as principal, hereby subscribe to purchase, in the aggregate, a
minimum of Three Hundred One Thousand Nine Hundred Thirty-Two (301,932) shares
of Common Stock (the “Shares”), having a purchase price of $4.14 per Share for
an aggregate purchase price of $1,250,000.00 (the “Subscription Price”).

 

Minimum Subscription

 

1.2                                 A minimum number of 301,932 Shares
must be purchased by the Subscriber.

 

Method of Payment

 

1.3           The
Subscriber shall pay the Subscription Price by delivering good funds in United
States Dollars by way of wire transfer of funds to the Issuer and concurrent
with the execution and delivery of this Subscription.  The wire transfer instructions are:

 

Wires from Correspondent Banks
Worldwide:

 

	
   

  	
  Beneficiary Bank:

  	
  Worth National Bank

  
	
   

  	
   

  	
  801 Cherry
  Street, unit 27

  
	
   

  	
   

  	
  Fort
  Worth, TX   76102

  
	
   

  	
   

  	
  Tel: 817-877-2018

  
	
   

  	
  Beneficiary:

  	
  Cano Petroleum, Inc.

  
	
   

  	
  ABA Routing#:

  	
  111907568

  
	
   

  	
  Account Number:

  	
  31002914

  

 

 

As soon as reasonably
practicable after September 14, 2005 (the “Closing Date”) the Company shall
issue and cause to be delivered to the Subscriber a certificate or certificates
representing the
Shares (the “Certificates”) pursuant to Article 6 hereof.  Upon receipt of the Certificates, the
Subscriber shall deliver the full Subscription Funds to the wire instructions provided above.  The Subscriber acknowledges that the
subscription for Shares hereunder may be rejected in whole or in part by the
Issuer in its sole discretion.

 

ARTICLE 2

REPRESENTATIONS
AND WARRANTIES OF THE SUBSCRIBER

 

Representations
and Warranties

 

2.1           The
Subscriber represents and warrants in all material respects to the Issuer, with
the intent that the Issuer will rely thereon in accepting this Subscription,
that:

 

(a)                                  Experience.  The Subscriber is sufficiently experienced in
financial and business matters to be capable of evaluating the merits and risks
of its investments, and to make an informed decision relating thereto, and to
protect its own interests in connection with the purchase of the Shares;

 

(b)                                 Own Account.  The Subscriber is purchasing the Shares as
principal for its own account.  The
Subscriber is purchasing the Stock for investment purposes only and not with an
intent or view towards further sale thereof, and has not pre-arranged any sale
with any other subscriber;

 

(c)                                  Not Underwriter.  The Subscriber is not an underwriter, or
dealer in, the Stock, and the Subscriber is not participating, pursuant to a
contractual agreement, in a distribution of the Stock;

 

(d)                                 Importance of
Representations.  The
Subscriber understands that the Stock are being offered and sold to it in
reliance on an exemption from the registration requirements of the 1933 Act,
and that the Issuer is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Subscriber set forth herein in order to determine the applicability of such
exemptions and the suitability of the Subscriber to acquire the Stock;

 

(e)                                  Registration.  The Issuer shall use its best efforts to file
a registration statement to be filed with and declared effective by the
Securities and Exchange Commission (the “SEC”) at the earliest practicable date
after the Closing Date.  The Subscriber
represents and warrants and hereby agrees that all offers and sales of the
Securities shall be made only pursuant to such registration or to such
exemption from registration;

 

(f)                                    Risk.  The Subscriber acknowledges that the purchase
of the Stock involves a high degree of risk, is aware of the risks and further
acknowledges that it can bear the economic risk of the Stock, including the
total loss of its investment;

 

(g)                                 Current
Information.  The
Subscriber has been furnished with or has acquired copies of all requested
information concerning the Issuer, including a copies of reports filed by the

 

2

 

Issuer pursuant to the
United States Securities Exchange Act of 1934, as amended (the “1934 Act”) and
copies of press releases issued by the Issuer;

 

(h)                                 Independent
Investigation.  The Subscriber, in making the decision to
subscribe for the Shares, has relied upon independent investigations made by it
and its purchaser representatives, if any, and the Subscriber and such
representatives, if any, have, prior to making this Subscription, been given
access and the opportunity to examine all material contracts and documents
relating to this offering and an opportunity to ask questions of, and to
receive answers from, the Issuer or any person acting on its behalf concerning
the terms and conditions of this offering. 
The Subscriber and its advisors, if any, have been furnished with access
to all materials relating to the business, finances and operation of the Issuer
and materials relating to the offer and sale of the Shares which have been
requested.  The Subscriber and its
advisors, if any, have received complete and satisfactory answers to any such
inquiries;

 

(i)                                     No Written or
Oral Representations.  No person
has made to the Subscriber any written or oral representations

 

(i)                                                             that any person will resell or
repurchase the Stock,

 

(ii)                                                          that any person will refund the
purchase price of the Stock, or

 

(iii)                                                       as to the future price or value of
the Stock;

 

(j)                                     No
Recommendation or Endorsement.  The Subscriber understands that no federal or
state agency has passed on or made any recommendation or endorsement of the
Stock;

 

(k)                                  Partnership,
Corporation or Trust.  If
the Subscriber is a partnership, corporation or trust, the person executing
this Subscription on its behalf represents and warrants that

 

(i)                                     he or she has
made due inquiry to determine the truthfulness of the representations and
warranties made pursuant to this Subscription, and

 

(ii)                                  he or she is
duly authorized (and if the undersigned is a trust, by the trust agreement) to
make this investment and to enter into and execute this Subscription on behalf
of such entity;

 

(l)                                     Affiliate
Status.  Upon purchase of the Stock,
the Subscriber will be an affiliate of the Issuer and the Subscriber
acknowledges that the Stock held by it will be subject to certain resale
restrictions under the 1933 Act;

 

(m)                               Other
Subscribers.  The Subscriber acknowledges that Shares
may be issued to other purchasers under this offering concurrently with the
Closing;

 

(n)                                 No Advertisement
or General Solicitation.  The
sale of the Shares has not been advertised through any article, notice or other
communication published in any newspaper, magazine, or similar media or
broadcast over television or radio; or through any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising;

 

3

 

(o)                                 Accredited Investor. 
The Subscriber is (i) an “accredited investor” as that term is defined
in Rule 501 of the General Rules and Regulations under the 1933 Act by reason
of Rule 501(a)(3), (ii) experienced in making investments of the kind described
in this Agreement and the related documents, (iii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its Affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Subscription,
and to evaluate the merits and risks of an investment in the Stock, and (iv)
able to afford the entire loss of its investment in the Stock.;

 

(p)                                 Hedging Transactions. 
The Subscriber acknowledges and agrees that all offers and sales of the
Stock, as applicable, by the Subscriber shall be made only pursuant to
registration of the Stock under the 1933 Act, or pursuant to an available
exemption from the registration requirements of the 1933 Act.;

 

(q)                                 Beneficial Ownership. 
Upon consummation of the transactions contemplated by this Subscription,
the Subscriber will be the beneficial owner of the Stock issued to it pursuant
to this Subscription.  The Subscriber
will share beneficial ownership of the Stock with                                                    as
its investment adviser. The Subscriber has not pre-arranged any sale of the
Stock with any person or persons in the United States;

 

(r)                                    No Short Position. 
The Subscriber will not, directly or indirectly, or through one or more
intermediaries, maintain any short position in the common shares of the Company
during the applicable distribution compliance period;

 

(s)                                  Restriction on Transfer. 
The Subscriber understands and acknowledges that the Issuer will not
allow any transfer or other disposition of the Stock until the Stock has been
registered under the 1933 Act.  The
Certificate(s) shall bear the following legend in addition to any other legend
required under this Subscription:

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

Non-Merger and Survival

 

2.2           The representations and warranties of
the Subscribers contained herein will be true at the date of execution of this
Subscription by the Subscribers and as of the Closing Date in all material
respects as though such representations and warranties were made as of such
times and shall survive the Closing Date and the delivery of the Certificates.

 

Indemnity

 

2.3           The Subscriber agrees to indemnify
and hold harmless the Issuer from and against any and all claims, demands,
actions, suits, proceedings, assessments, judgments, damages, costs, losses and
expenses, including attorney’s fees incurred in contesting any such claim and
any payment made in good

 

4

 

faith
in settlement of any claim (subject to the right of the Subscriber to defend
any such claim), resulting from the breach of any representation or warranty of
such party under this Subscription.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF
THE ISSUER

 

3.1           The Issuer, upon
taking up and accepting this Subscription, represents and warrants in all
material respects to the Subscriber, with the intent that the Subscriber will
rely thereon in making this Subscription, that:

 

(a)
                               Legality.  The Issuer has the requisite corporate power
and authority to accept this Subscription and to issue, sell and deliver the
Shares; this Subscription and the issuance, sale and delivery of the Shares
hereunder and the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action by the Issuer; this Subscription
and the Shares have been duly and validly executed and delivered by and on
behalf of the Issuer, and are valid and binding agreements of the Issuer,
enforceable in accordance with their respective terms, except as enforceability
may be limited by general equitable principles, bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or other laws affecting
creditors’ rights generally;

 

(b)
                              Transfer.  Provided that
a registration statement in respect of the Shares is in effect as required
under all applicable securities laws, such Shares shall be freely transferable
on the books and records of the Issuer, provided that the sale is made to a
bona-fide purchaser and that the prospectus delivery requirements are met;

 

(c)
                               Listed Company Status. 
The Issuer is required to make current filings with the SEC pursuant to
Section 13 or 15(d) of the 1934 Act,
the Stock is presently listed on the American Stock Exchange and the Issuer has
received no notice, either oral or written, with respect to its continued
eligibility for such listing;

 

(d)
                              Listing of Shares. 
Subject to notification to the American Stock Exchange of actual
issuance, the Shares are listed on the American Stock Exchange.

 

(e)
                               Proper
Organization.  The Issuer
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and is duly qualified as a
foreign corporation in all jurisdictions where the failure to be so qualified
would have a materially adverse effect on its business, taken as whole;

 

(f)
                                 No Legal
Proceedings.  There is no
action, suit or proceeding before or by any court or any governmental agency or
body, domestic or foreign, now pending or to the knowledge of the Issuer,
threatened, against or affecting the Issuer, or any of its properties or
assets, which might result in any material adverse change in the condition
(financial or otherwise) or in the earnings, business affairs or business prospects
of the Issuer, or which might materially and adversely affect the properties or
assets thereof;

 

(g)
                              Non-Default.  The Issuer is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it or its property
may be bound; and

 

5

 

(h)
                              Non-Contravention.  The execution and delivery of this
Subscription and the consummation of the issuance of the Shares and the
transactions contemplated by this Agreement do not and will not conflict with
or result in a breach by the Issuer of any of the terms or provisions of, or constitute a
default under, the Certificate of Incorporation or Bylaws of the Issuer, or any
indenture, mortgage, deed of trust, or other material agreement or instrument
to which the Issuer is a party or by which it or any of its properties or
assets are bound, or any existing applicable decree, judgment or order of any
court, Federal or state regulatory body, administrative agency or other
domestic governmental body having jurisdiction over the Issuer or any of its
properties or assets.  

 

Non-Merger and Survival

 

3.2           The representations and warranties of
the Issuer contained herein will be true at the date of execution of this
Subscription by the Issuer and as of the Closing Date in all material respects
as though such representations and warranties were made as of such times and
shall survive the Closing Date and the delivery of the Certificates.

 

Indemnity

 

3.3           The Issuer agrees to indemnify and
hold harmless the Subscriber from and against any and all claims, demands,
actions, suits, proceedings, assessments, judgments, damages, costs, losses and
expenses, including attorney’s fees incurred in contesting any such claim and
any payment made in good faith in settlement of any claim (subject to the right
of the Issuer to defend any such claim), resulting from the breach of any
representation, warranty or covenant of such party under this Subscription.

 

ARTICLE 4

COVENANTS OF THE ISSUER

 

Covenants of the Issuer

 

4.1                                 The Issuer
covenants and agrees with the Subscriber that:

 

(a)                                  Filings.  The Issuer will make all necessary filings in
connection with the sale of the Shares as required by the laws and regulations
of all appropriate jurisdictions;

 

(b)                                 Section 13
Compliance.  The Issuer
shall, from and after the Closing Date, use its best efforts to comply with the
requirements of Section 13 of the 1934 Act and maintain the listing of the
Common Stock on the American Stock Exchange or other quotation medium;

 

(c)                                  Rule 144
Opinion.  The Issuer will, upon written
request by the Subscriber, take such steps as are necessary to cause its counsel
to issue an opinion to the Issuer’s transfer agent allowing the Subscriber to
offer and sell any Shares issued in reliance on the applicable provisions of
Rule 144 provided that the holding period and other requirements of such Rule
144 are met.  The costs of obtaining such
an opinion shall be borne by the Issuer; and

 

(d)                                 Use of Proceeds.  The Issuer will apply the Subscription Price,
together will all other subscription funds received from other subscribers
under this offering, for general corporate and working capital purposes.

 

6

 

Survival

 

4.2           The covenants set
forth in this Article 4 shall survive the Closing for the benefit of the
Subscriber.

 

ARTICLE 5

DEMAND REGISTRATION RIGHTS

 

Registration
Statement

 

4.1           Upon the Closing,
the Issuer shall use its best efforts to file a registration statement under
the 1933 Act and under any applicable Blue Sky laws registering the resale of
Shares and shall use its best efforts to cause such registration statement to
be declared effective by the Commission at the earliest practicable date, all
at the Issuer’s sole cost and expense.  Such best efforts shall include
promptly responding to all comments received by the staff of the SEC, and
promptly preparing and filing amendments to such registration statement which
are responsive to the comments received from the staff of the SEC, and in no
event later than twenty-one (21) days from receipt by the Issuer of the
comments of the staff of the SEC.  Such registration statement shall name
the Subscriber as a selling shareholder and shall provide for the sale of the
Shares by the Subscriber from time to time directly to purchasers or in the
over-the-counter market or through or to securities brokers or dealers that may
receive compensation in the form of discounts, concessions, or
commissions.  The Issuer shall provide the Subscriber with such number of
copies of the prospectus as shall be reasonably requested to facilitate the
sale of the Shares.  None of the foregoing shall in any way limit the
Subscriber’s rights to sell the Shares in reliance on an exemption from the
registration requirements under the 1933 Act in connection with a particular
transaction.

 

Currency
of Registration Statement

 

4.2           The Issuer shall use
its best efforts to maintain the currency of the registration statement filed
with the SEC and under all applicable Blue Sky laws in respect of the Shares
for 12 months from the Closing Date.

 

Indemnification
of Subscriber by Issuer

 

4.3           To the extent
permitted by law, the Issuer will indemnify the Subscriber, within the meaning
of Section 15 of the 1933 Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Subscription
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the 1933 Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any litigation,
commenced or treated, to the extent such expenses, claims, losses, damages or
liabilities arise out of or are based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Issuer of the 1933 Act or any rule or regulation promulgated
under the 1933 Act applicable to the Issuer in connection with any such
registration, qualification or compliance, and the Issuer will reimburse the
Subscriber, each of its officers and directors and partners, and each person
controlling the Subscriber, each such underwriter and each person who controls
any such underwriter, for any legal and any other expense reasonably incurred
in connection with investigation,

 

7

 

preparing or defending any such claim, loss, damage, liability or
action, provided, however, that the indemnity contained herein shall not apply
to amounts paid in settlement of any claim, loss, damage, liability or expense
if settlement is effected without the consent of the Issuer (which consent
shall not unreasonably be withheld); provided, further, that the Issuer will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Issuer by the Subscriber,
such controlling person or such underwriter specifically for use therein.  Notwithstanding the foregoing, insofar as the
foregoing indemnity relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at
the time the registration statement becomes effective or in the final
prospectus filed with the SEC pursuant to Rule 424(b) of the SEC, the indemnity
agreement herein shall not inure to the benefit of any underwriter or (if there
is no underwriter) the Subscriber if a copy of the final prospectus filed
pursuant to Rule 424(b) was not furnished to the person or entity asserting the
loss, liability, claim or damage at or prior to the time such furnishing is
required by the 1933 Act.

 

Indemnification
of Issuer by Subscriber

 

4.4           To the extent
permitted by law, the Subscriber will indemnify the Issuer, each of its
directors and officers, affiliates, counsel, advisors, employees and, each
underwriter, if any, of the Issuer’s securities covered by such a registration
statement, each person who controls the Issuer or such underwriter within the
meaning of Section 15 of the 1933 Act, and each other person selling the Issuer’s
securities covered by such registration statement, each of such person’s
officers and directors and each person controlling such persons within the
meaning of Section 15 of the 1933 Act, against all claims, losses, damages and
liabilities (or actions in respect thereof), including attorneys fees and
costs, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein or necessary to make the statements therein not
misleading or any other violation by the Subscriber of any rule or regulation
promulgated under the 1933 Act applicable to the Subscriber and relating to
action or inaction required of the Subscriber in connection with any such
registration, qualification or compliance, and will reimburse the Issuer, such
other person, such directors, officers, persons, underwriters or control
persons for any legal or other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that the indemnity contained herein shall not apply to
amounts paid in settlement of any claim, loss, damage, liability or expense if
settlement is effected without the consent of the Subscriber (which consent
shall not be unreasonably withheld). Notwithstanding the foregoing, the
liability of the Subscriber under this subsection (b) shall be limited in an
amount equal to the net proceeds from the sale of the shares sold by the
Subscriber, unless such liability arises out of or is based on wilful conduct
by the Subscriber.

 

Removal
of Legend

 

4.5           After the
registration statement referenced in Section 4.1 is declared effective by the
SEC, the Subscribers may deliver to the Issuer the Certificate representing the
Shares issued to such Subscriber and the Issuer will, within three days after
receipt by the Issuer of the foregoing, issue a new certificate representing
and in exchange for the aforementioned certificate, which new certificate shall
be legended as follows:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF

 

8

 

1933, AS AMENDED. THE SECURITIES MAY BE SOLD PURSUANT TO THE
REGISTRATION STATEMENT PROVIDED THAT (I) THE REGISTRATION STATEMENT IS CURRENT
AND EFFECTIVE, (II) THE HOLDER COMPLIES WITH THE PROSPECTUS DELIVERY
REQUIREMENTS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND (III) THE SALE
IS IN COMPLIANCE WITH THE PLAN OF DISTRIBUTION SET FORTH IN THE PROSPECTUS. THE
TRANSFER OF SUCH SECURITIES IS RESTRICTED AS SET FORTH IN A SUBSCRIPTION
AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, A COPY OF WHICH MAY BE OBTAINED
FROM THE ISSUER.

 

ARTICLE 6

ISSUANCE OF CERTIFICATES

 

As soon as reasonably practicable following the Closing Date, the
Issuer will prepare and issue one or more Certificates for the Shares registered
in such name or names as specified by the Subscriber and cause the same to be
delivered to the Subscriber pursuant to the delivery instructions provided by
the Subscriber.

 

ARTICLE 7

CLOSING

 

Closing shall be effected
through the acceptance of this Subscription by the Issuer and the taking up of
the Subscription Funds by the Issuer.

 

ARTICLE
8

GENERAL PROVISIONS

 

Governing Law

 

8.1           This Subscription
shall be governed by and construed under the law of the State of Delaware
without regard to its choice of law provision. 
Any disputes arising out of, in connection with, or with respect to this
Subscription, the subject matter hereof, the performance or non-performance of
any obligation hereunder, or any of the transactions contemplated hereby shall
be adjudicated in a Court of competent civil jurisdiction sitting in the City
of Wilmington, Delaware and nowhere else.

 

Successors and Assigns

 

8.2           This Subscription shall inure to the benefit of and be
binding on the respective successors and assigns of the parties hereto.

 

Execution by Counterparts
and Facsimile

 

8.3           This Subscription may be executed in counterparts and by
facsimile, each of which when executed by any party will be deemed to be an
original and all of which counterparts will together constitute one and the
same Subscription.

 

9

 

[Remainder of page intentionally left blank.]

 

10

 

SIGNATURE PAGE FOR ENTITIES

 

IN WITNESS WHEREOF, the undersigned represents that the
foregoing statements are true and that it caused this Subscription to be duly
executed on its behalf on this 13th day of September, 2005.

 

 

	
  BFS US Special Opportunities Trust PLC

  	
   

  	
  /s/ Russell Cleveland

  	
   

  
	
  Printed Name

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
  Russell Cleveland, Director

  	
   

  	
   

  
	
  Printed Title

  	
   

  

 

 

Agreed to this 14th day of September, 2005:

 

CANO
PETROLEUM, INC.

 

 

	
  Per:

  	
  /s/ Michael J. Ricketts

  	
   

  
	
   

  
	
  Print Name: Michael J. Ricketts

  

 

 

This is page 11 to the Subscription by the above subscriber to Cano
Petroleum, Inc. dated as stated above.

 

 

Full
Name and Address of Subscriber for Registration Purposes:

 

	
  NAME:

  	
  BFS US Special Opportunities Trust PLC c/o Frost National Bank,
  Custodian, Trust No. W00118000

  
	
   

  	
   

  
	
  ADDRESS:

  	
  8080 N. Central Expressway, Suite 210, LB-59, Dallas, TX 75206

  
	
   

  	
   

  
	
   

  	
   

  
	
  TEL.NO.:

  	
  214-891-8294

  
	
   

  	
   

  
	
  FAX NO.:

  	
  214-891-8291

  
	
   

  
	
  EMAIL ADDRESS:

  	
  corpfin@rencaptial.com

  
	
   

  	
   

  
	
  CONTACT NAME:

  	
  Russell Cleveland

  
	
   

  	
   

  
	
  Delivery Instructions (if different from
  Registration Name):

  
	
   

  
	
  NAME:

  	
  Frost National Bank

  
	
   

  	
   

  
	
  ADDRESS:

  	
  100 W. Houston St.

  
	
   

  	
  Attn: Henri Domingues T-8,

  
	
   

  	
  San Antonio, TX 78205

  
	
   

  	
   

  
	
  TEL.NO.:

  	
  (210) 220-5216

  
	
   

  	
   

  
	
  FAX NO.:

  	
   

  
	
   

  
	
  CONTACT NAME:

  	
  Henri Domingues

  
				

 

 

SPECIAL INSTRUCTIONS:

 

Send copy to:

RENN Capital Group, Inc.

Attn:  Compliance

8080 N. Central Expressway

Suite 210, LB-59

Dallas, TX  75206

 

Send copy to:

Sinclair Henderson, Ltd.

Attn:  Graham Foster

23 Cathedral Yard

Exeter EX11HB  England

 

 

This is page
12 to the Subscription by the above subscriber to Cano Petroleum, Inc.

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