**Exhibit 10.11**

 

**AMENDEDAND RESTATED PLEDGE AGREEMENT**

 

THISAMENDED AND RESTATED PLEDGE AGREEMENT dated as of December 17, 2008 (this “PledgeAgreement”) is by and among CANO PETROLEUM, INC., a Delaware corporation (“Borrower”),each subsidiary of the Borrower signatory hereto (together with the Borrower,the “Pledgors” and individually, each a “Pledgor”) and Union Bankof California, N.A. as Administrative Agent (as hereinafter defined) for theratable benefit of itself, the Issuing Lender (as hereinafter defined), theLenders (as hereinafter defined), and the Swap Counterparties (as defined inthe Credit Agreement referred to below, and together with the AdministrativeAgent, the Issuing Lender, and the Lenders collectively referred to herein asthe “Secured Parties” and individually, a “Secured Party”).

 

**RECITALS**

 

A.                                   The Borrowerhas previously entered into that certain Credit Agreement dated November 29,2005 (as it has been amended, restated, supplemented or otherwise modified fromtime to time, the “Existing Credit Agreement”), among Borrower, theLenders, the Administrative Agent and the Issuing Lender.

 

B.                                     In order tosecure the full and punctual payment and performance of the obligations underthe Existing Credit Agreement and the other Loan Documents (as defined in theExisting Credit Agreement), the Borrower executed and delivered to theAdministrative Agent that certain Pledge Agreement dated as of November 29,2005 (as heretofore amended and supplemented, the “Existing Pledge Agreement”).

 

C.                                     The parties tothe Existing Credit Agreement have agreed to amend and restate the ExistingCredit Agreement in its entirety pursuant to that certain Amended and RestatedCredit Agreement dated as of December 17, 2008 (as amended, restated,supplemented or otherwise modified from time to time, the “Credit Agreement”),among the Borrower, the lenders party thereto from time to time (the “Lenders”),and Union Bank of California, N.A., as administrative agent (in such capacity,the “Administrative Agent”) and as issuing lender (in such capacity, the“Issuing Lender”).

 

D.                                    It is a requirement under the CreditAgreement that (i) the Borrower shall continue to secure the due paymentand performance of all Obligations (as defined in the Credit Agreement) byamending and restating in its entirety the Existing Pledge Agreement as setforth herein, and (ii) the other Pledgors shall continue to secure the duepayment and performance of all Obligations (as defined in the Credit Agreement)by executing and delivering this Pledge Agreement, in each case, in favor ofthe Administrative Agent for the ratable benefit of the Secured Parties.

 

E.                                      Each Pledgor(other than the Borrower) is a subsidiary of the Borrower and will derivesubstantial direct and indirect benefits from (i) the transactionscontemplated by the Credit Agreement and the other Loan Documents (as definedthe Credit Agreement) and (ii) the Hedge Contracts (as defined in theCredit Agreement) entered into by the Borrower or any of its subsidiaries witha Swap Counterparty.

 

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**AGREEMENT**

 

NOW, THEREFORE, in consideration of the foregoing and other good andvaluable consideration, the receipt and sufficiency of which is herebyacknowledged and confessed, each Pledgor hereby agrees with the AdministrativeAgent for the benefit of the Secured Parties as follows:

 

Section 1.  Definitions. All capitalized terms not otherwise defined in this Pledge Agreementthat are defined in the Credit Agreement shall have the meanings assigned tosuch terms by the Credit Agreement.  Anyterms used in this Pledge Agreement that are defined in the Uniform CommercialCode in effect in the State of Texas from time to time (the “UCC”) and nototherwise defined herein or in the Credit Agreement, shall have the meaningsassigned to those terms by the UCC.  Allmeanings to defined terms, unless otherwise indicated, are to be equallyapplicable to both the singular and plural forms of the terms defined.  Article, Section, Schedule, and Exhibit referencesare to Articles and Sections of and Schedules and Exhibits to this PledgeAgreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements arereferences to such instruments, documents, contracts, and agreements as thesame may be amended, supplemented, and otherwise modified from time to time,unless otherwise specified.  The words “hereof”,“herein” and “hereunder” and words of similar import when used in this PledgeAgreement shall refer to this Pledge Agreement as a whole and not to anyparticular provision of this Pledge Agreement. As used herein, the term “including” means “including, withoutlimitation,”. Paragraph headings have been inserted in this Pledge Agreement asa matter of convenience for reference only and it is agreed that such paragraphheadings are not a part of this Pledge Agreement and shall not be used in theinterpretation of any provision of this Pledge Agreement.

 

Section 2.  Pledge.

 

2.01.                        Grant of Pledge.

 

(a)                                  Each Pledgor hereby pledges to theAdministrative Agent, and grants to the Administrative Agent, for the benefitof the Secured Parties, a continuing security interest in, the PledgedCollateral, as defined in Section 2.02 below.  This Pledge Agreement shall secure (i) allObligations (as defined in the Credit Agreement) now or hereafter existing; (ii) allother amounts now or hereafter owed by the Borrower, any Pledgor, or any oftheir respective Subsidiaries under this Pledge Agreement, the Credit Agreementor the other Loan Documents to the Administrative Agent or any other SecuredParty; and (iii) any increases, extensions, modifications, substitutions,amendments, restatements and renewals of any of the foregoing obligations,whether for principal, interest, fees, expenses, indemnification or otherwise.**** Allsuch obligations shall be referred to in this Pledge Agreement as the “SecuredObligations”.

 

(b)                                 Notwithstanding anything contained hereinto the contrary, it is the intention of each Pledgor, the Administrative Agentand the Secured Parties that the amount of the Secured Obligation secured byeach Pledgor’s interests in any of its property or assets (whether real orpersonal, or mixed, tangible or intangible) (“Property”) shall be in,but not in excess of, the maximum amount permitted by fraudulent 

 

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conveyance, fraudulent transfer and other similar law, rule orregulation of any Governmental Authority (as defined in the Credit Agreement)applicable to such Pledgor. Accordingly, notwithstanding anything to thecontrary contained in this Pledge Agreement or in any other agreement orinstrument executed in connection with the payment of any of the SecuredObligations, the amount of the Secured Obligations secured by each Pledgor’sinterests in any of its Property pursuant to this Pledge Agreement shall belimited to an aggregate amount equal to the largest amount that would notrender such Pledgor’s obligations hereunder or the liens and security interestgranted to the Administrative Agent hereunder subject to avoidance under Section 548of the United States Bankruptcy Code or any comparable provision of any otherapplicable law.

 

2.02.                        Pledged Collateral.  “PledgedCollateral” shall mean all of each Pledgor’s right, title, and interest inthe following, whether now owned or hereafter acquired:

 

(a)                                  (i) all of the membership interestslisted in the attached Schedule 2.02(a) issued to such Pledgor and allsuch additional membership interests of any issuer of such interests hereafteracquired by such Pledgor (the “Membership Interests”), (ii) thecertificates representing the Membership Interests, if any, and (iii) allrights to money or Property which such Pledgor now has or hereafter acquires inrespect of the Membership Interests, including, without limitation, (A) any proceeds from a sale by oron behalf of such Pledgor of any of the Membership Interests, and (B) anydistributions, dividends, cash, instruments and other property fromtime-to-time received or otherwise distributed in respect of the MembershipInterests, whether regular, special or made in connection with the partial ortotal liquidation of the issuer and whether attributable to profits, the returnof any contribution or investment or otherwise attributable to the MembershipInterests or the ownership thereof (collectively, the “Membership Interests Distributions”);

 

(b)                                 (i) all of the general and limitedpartnership interests listed in the attached Schedule 2.02(b) issued tosuch Pledgor and all such additional limited or general partnership interestsof any issuer of such interests hereafter acquired by such Pledgor (the “PartnershipInterests”), and (ii) all rights to money or Property which suchPledgor now has or hereafter acquires in respect of the Partnership Interests,  including, without limitation, (A) anyproceeds from a sale by or on behalf of such Pledgor of any of the PartnershipInterests, and (B) any distributions, dividends, cash, instruments andother property from time-to-time received or otherwise distributed in respectof the Partnership Interests, whether regular, special or made in connectionwith the partial or total liquidation of the issuer and whether attributable toprofits, the return of any contribution or investment or otherwise attributableto the Partnership Interests or the ownership thereof  (collectively, the “Partnership InterestsDistributions”);

 

(c)                                  (i) all of the shares of stocklisted in the attached Schedule 2.02(c) issued to such Pledgor and allsuch additional shares of stock of any issuer of such shares of stock hereafterissued to such Pledgor (the “Pledged Shares”), (ii) thecertificates representing the Pledged Shares, and (iii) all rights tomoney or Property which such Pledgor now has or hereafter acquires in respectof the Pledged Shares, including, 

 

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without limitation, (A) any proceeds from a sale by or on behalfof such Pledgor of any of the Pledged Shares, and (B) any distributions,dividends, cash, instruments and other property from time-to-time received orotherwise distributed in respect of the Pledged Shares, whether regular,special or made in connection with the partial or total liquidation of theissuer and whether attributable to profits, the return of any contribution orinvestment or otherwise attributable to the Pledged Shares or the ownershipthereof (collectively, the “Pledged Shares Distributions”; together withthe Membership Interests Distributions and the Partnership InterestDistributions, the “Distributions”); and

 

(d)                                 all proceeds from the Pledged Collateraldescribed in paragraphs (a), (b) and (c) of this Section 2.02.

 

2.03.                        Delivery of Pledged Collateral. All certificates or instruments, if any, representing the PledgedCollateral shall be delivered to the Administrative Agent and shall be insuitable form for transfer by delivery, or shall be accompanied by dulyexecuted instruments of transfer or assignment in blank, all in form andsubstance reasonably satisfactory to the Administrative Agent.  After the occurrence and during thecontinuance of an Event of Default, the Administrative Agent shall have theright, upon prior written notice to the applicable Pledgor, to transfer to orto register in the name of the Administrative Agent or any of its nominees anyof the Pledged Collateral, subject to the rights specified in Section 2.04.  In addition, after the occurrence and duringthe continuance of an Event of Default, the Administrative Agent shall have theright at any time to exchange the certificates or instruments representing thePledged Collateral for certificates or instruments of smaller or largerdenominations.

 

2.04.                        Rights Retained by Pledgor. Notwithstanding the pledge in Section 2.01,

 

(a)                                  so long as no Event of Default shall haveoccurred and remain uncured or unwaived and except as otherwise provided in theCredit Agreement, (i) each Pledgor shall be entitled to receive and retainany dividends and other Distributions paid on or in respect of the PledgedCollateral and the proceeds of any sale of the Pledged Collateral; and (ii) eachPledgor shall be entitled to exercise any voting and other consensual rightspertaining to its Pledged Collateral for any purpose not inconsistent with theterms of this Pledge Agreement or the Credit Agreement; provided, however,that no Pledgor shall exercise nor shall it refrain from exercising any suchright if such action or inaction, as applicable, would have a materiallyadverse effect on the value of the Pledged Collateral; and

 

(b)                                 if an Event of Default shall haveoccurred and remain uncured or unwaived,

 

(i)                                     until such time thereafter as theAdministrative Agent gives written notice of its election to exercise suchvoting and other consensual rights pursuant to Section 5.02 hereof, eachPledgor shall be entitled to exercise any voting and other consensual rightspertaining to its Pledged Collateral for any purpose not inconsistent with theterms of this Pledge Agreement or the Credit Agreement; provided, however,that no Pledgor shall exercise nor shall it refrain from 

 

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exercising anysuch right if such action or inaction, as applicable, would have a materiallyadverse effect on the value of the Pledged Collateral; and

 

(ii)                                  at and after such time as theAdministrative Agent gives written notice of its election to exercise suchvoting and other consensual rights pursuant to Section 5.02 hereof, eachPledgor shall execute and deliver (or cause to be executed and delivered) tothe Administrative Agent all proxies and other instruments as theAdministrative Agent may reasonably request to enable the Administrative Agentto (A) exercise the voting and other rights which such Pledgor is entitledto exercise pursuant to paragraph (a) or paragraph (b)(i) ofthis Section 2.04, and (B) receive any Distributions and proceeds ofsale of the Pledged Collateral which such Pledgor is authorized to receive andretain pursuant to paragraph (a)(i) of this Section 2.04.

 

Section 3.  Pledgor’s Representations and Warranties. Each Pledgor represents and warrants to the Administrative Agent and theSecured Parties as follows:

 

(a)                                  The Pledged Collateral applicable to suchPledgor listed on the attached Schedules 2.02(a), 2.02(b) and 2.02(c) havebeen duly authorized and validly issued to such Pledgor and are fully paid andnonassessable.

 

(b)                                 Such Pledgor is the legal and beneficialowner of the Pledged Collateral free and clear of any Lien or option, exceptfor (i) the security interest created by this Pledge Agreement and (ii) otherLiens permitted under the Credit Agreement ( the “Permitted Liens”).

 

(c)                                  No authorization, authentication,approval, or other action by, and no notice to or filing with, any GovernmentalAuthority or regulatory body is required either (a) for the pledge by suchPledgor of the Pledged Collateral pursuant to this Pledge Agreement or for theexecution, delivery, or performance of this Pledge Agreement by such Pledgor or(b) for the exercise by the Administrative Agent or any Secured Party ofthe voting or other rights provided for in this Pledge Agreement or theremedies in respect of the Pledged Collateral pursuant to this Pledge Agreement(except as may be required in connection with such disposition by lawsaffecting the offering and sale of securities generally).

 

(d)                                 Such Pledgor has the full right, powerand authority to deliver, pledge, assign and transfer the Pledged Collateral tothe Administrative Agent.

 

(e)                                  The Membership Interests listed on theattached Schedule 2.02(a) constitute the percentage of the issued andoutstanding membership interests of the respective issuer thereof set forth onSchedule 2.02(a) and all of the Equity Interest in such issuer in whichthe Pledgor has any ownership interest.

 

(f)                                    The Partnership Interests listed on theattached Schedule 2.02(b) constitute the percentage of the issued andoutstanding general and limited partnership interests of the respective issuerthereof set forth on Schedule 2.02(b) and all of the Equity Interest insuch issuer in which the Pledgor has any ownership interest.

 

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(g)                                 The Pledged Shares list on the attachedSchedule 2.02(c) constitute the percentage of the issued and outstandingshares of capital stock of the respective issuer thereof set forth on Schedule2.02(c) and all of the Equity Interest in such issuer in which the Pledgorhas any ownership interest.

 

(h)                                 Schedule 3 sets forth its solejurisdiction of formation, type of organization, federal tax identificationnumber, the organizational number, and all names used by it during the lastfive years prior to the date of this Pledge Agreement.

 

Section 4.  Pledgor’s Covenants. During the term of this Pledge Agreement and until all of the SecuredObligations (including all Letter of Credit Obligations) have been fully andfinally paid and discharged in full, the termination of the Hedge Contractswith the Secured Parties, the Commitments (as defined in the Credit Agreement)under the Credit Agreement have been terminated or expired, all Letters ofCredit have terminated or expired, and all obligations of the Issuing Lenderand the Lenders in respect of Letters of Credit have been terminated, eachPledgor covenants and agrees with the Administrative Agent that:

 

4.01.                        Protect Collateral; Further Assurances. Each Pledgor will warrant and defend the rights and title herein grantedunto the Administrative Agent in and to the Pledged Collateral (and all right,title, and interest represented by the Pledged Collateral) against the claimsand demands of all Persons whomsoever. Each Pledgor agrees that, at the expense of such Pledgor, such Pledgorwill promptly execute and deliver all further instruments and documents, andtake all further action, that may be reasonably necessary and that theAdministrative Agent or any Secured Party may reasonably request, in order toperfect and protect any security interest granted or purported to be grantedhereby or to enable the Administrative Agent or any Secured Party to exerciseand enforce its rights and remedies hereunder with respect to any PledgedCollateral.  Each Pledgor herebyauthorizes the Administrative Agent to file any financing statements,amendments or continuations without the signature of such Pledgor to the extentpermitted by applicable law in order to perfect or maintain the perfection ofany security interest granted under this Pledge Agreement.

 

4.02.                        Transfer, Other Liens, and AdditionalShares.  Each Pledgor agrees that it will not (a) exceptas otherwise permitted by the Credit Agreement, sell or otherwise dispose of,or grant any option with respect to, any of the Pledged Collateral or (b) createor permit to exist any Lien upon or with respect to any of the PledgedCollateral, except for Permitted Liens. Each Pledgor agrees that it will (i) cause each issuer of thePledged Collateral that is a Subsidiary of such Pledgor not to issue any otherEquity Interests in addition to or in substitution for the Pledged Collateralissued by such issuer, except to such Pledgor or any other Pledgor and (ii) pledgehereunder, immediately upon its acquisition (directly or indirectly) thereof,any additional Equity Interests of an issuer acquired by such Pledgor.  No Pledgor shall approve any amendment ormodification of any of the Pledged Collateral without the Administrative Agent’sprior written consent.

 

4.03.                        Jurisdiction of Formation; Name Change. Each Pledgor shall give the Administrative Agent at least 30 days’ priorwritten notice before it (i) in the case of a Pledgor that is not a “registeredorganization” (as defined in Section 9-102 of the UCC) changes thelocation of its principal place of business and chief executive office, or (ii) usesa trade name 

 

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other than its currentname used on the date hereof.  Other thanas permitted by Section 6.11 of the Credit Agreement, no Pledgor shallamend, supplement, modify or restate its articles or certificate ofincorporation, bylaws, limited liability company agreements, or other equivalentorganizational documents, nor amend its name or change its jurisdiction ofincorporation, organization or formation.

 

Section 5.  Remedies upon Default. If any Event of Default shall have occurred and be continuing:

 

5.01.                        UCC Remedies. To the extent permitted by law, the Administrative Agent may exercise inrespect of the Pledged Collateral, in addition to other rights and remediesprovided for in this Pledge Agreement or otherwise available to it, all therights and remedies of a Administrative Agent under the UCC (whether or not theUCC applies to the affected Pledged Collateral).

 

5.02.                        Dividends and Other Rights.

 

(a)                                  All rights of the Pledgors to exercisethe voting and other consensual rights which it would otherwise be entitled toexercise pursuant to Section 2.04(a) may be exercised by theAdministrative Agent if the Administrative Agent so elects and gives writtennotice of such election to the affected Pledgor and all rights of the Pledgorsto receive any Distributions on or in respect of the Pledged Collateral and theproceeds of sale of the Pledged Collateral which it would otherwise beauthorized to receive and retain pursuant to Section 2.04(b) shallcease.

 

(b)                                 All Distributions on or in respect of thePledged Collateral and the proceeds of sale of the Pledged Collateral which arereceived by any Pledgor shall be received in trust for the benefit of theAdministrative Agent, shall be segregated from other funds of such Pledgor, andshall be promptly paid over to the Administrative Agent as Pledged Collateralin the same form as so received (with any necessary indorsement).

 

5.03.                        Sale of Pledged Collateral. The Administrative Agent may sell allor part of the Pledged Collateral at public or private sale, at any of theAdministrative Agent’s offices or elsewhere, for cash, on credit, or for futuredelivery, and upon such other terms as the Administrative Agent may deemcommercially reasonable in accordance with applicable laws.  Each Pledgor agrees that to the extentpermitted by law such sales may be made without notice.  If notice is required by law, each Pledgorhereby deems 10 days’ advance notice of the time and place of any public saleor the time after which any private sale is to be made reasonable notification,recognizing that if the Pledged Collateral threatens to decline speedily invalue or is of a type customarily sold on a recognized market shorter noticemay be reasonable.  The AdministrativeAgent shall not be obligated to make any sale of the Pledged Collateralregardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale fromtime-to-time by announcement at the time and place fixed therefor, and suchsale may, without further notice, be made at the time and place to which it wasso adjourned.  Each Pledgor shall fullycooperate with Administrative Agent in selling or realizing upon all or anypart of the Pledged Collateral.  Inaddition, each Pledgor shall fully comply with the securities laws of theUnited States, the State of Texas, and other states and take such actions as 

 

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may be necessary topermit Administrative Agent to sell or otherwise dispose of any securitiesrepresenting the Pledged Collateral in compliance with such laws.

 

5.04.                        Exempt Sale. If, in the opinion of the Administrative Agent, there is any questionthat a public or semipublic sale or distribution of any Pledged Collateral willviolate any state or federal securities law, the Administrative Agent in its reasonablediscretion (a) may offer and sell securities privately to purchasers whowill agree to take them for investment purposes and not with a view todistribution and who will agree to imposition of restrictive legends on thecertificates representing the security, or (b) may sell such securities inan intrastate offering under Section 3(a)(11) of the Securities Act of1933, as amended, and no sale so made in good faith by the Administrative Agentshall be deemed to be not “commercially reasonable” solely because somade.  Each Pledgor shall cooperate fullywith the Administrative Agent in selling or realizing upon all or any part ofthe Pledged Collateral.

 

5.05.                        Application of Collateral. The proceeds of any sale, or otherrealization (other than that received from a sale or other realizationpermitted by the Credit Agreement) upon all or any part of the PledgedCollateral pledged by the Pledgors shall be applied by the Administrative Agentas set forth in Section 7.06 of the Credit Agreement.

 

5.06.                        Cumulative Remedies. Each right, power and remedy herein specifically granted to theAdministrative Agent or otherwise available to it shall be cumulative, andshall be in addition to every other right, power and remedy herein specificallygiven or now or hereafter existing at law, in equity, or otherwise, and eachsuch right, power and remedy, whether specifically granted herein or otherwiseexisting, may be exercised at any time and from time-to-time as often and insuch order as may be deemed expedient by the Administrative Agent in its solediscretion.  No failure on the part ofthe Administrative Agent to exercise, and no delay in exercising, and no courseof dealing with respect to, any such right, power or remedy, shall operate as awaiver thereof, nor shall any single or partial exercise of any such rights,power or remedy preclude any other or further exercise thereof or the exerciseof any other right.

 

Section 6.  Administrative Agent as Attorney-in-Factfor Pledgor.

 

6.01.                        Administrative Agent AppointedAttorney-in-Fact.  Each Pledgor hereby irrevocably appoints theAdministrative Agent as such Pledgor’s attorney-in-fact, with full authorityafter the occurrence and during the continuance of an Event of Default to actfor such Pledgor and in the name of such Pledgor, and, in the AdministrativeAgent’s discretion, to take any action and to execute any instrument which theAdministrative Agent may deem reasonably necessary or advisable to accomplishthe purposes of this Pledge Agreement, including, without limitation, toreceive, indorse, and collect all instruments made payable to such Pledgorrepresenting any dividend, or the proceeds of the sale of the PledgedCollateral, or other distribution in respect of the Pledged Collateral and togive full discharge for the same.  **Each Pledgor hereby acknowledges, consents and agreesthat the power of attorney granted pursuant to this Section is irrevocableand coupled with an interest.**

 

6.02.                        Administrative Agent May Perform. The Administrative Agent may from time-to-time,at its option but at the Pledgors’ expense, perform any act which any Pledgoragrees hereunder to perform and which such Pledgor shall fail to perform afterbeing requested in 

 

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writing so to perform (itbeing understood that no such request need be given after the occurrence andduring the continuance of any Event of Default and after notice thereof by theAdministrative Agent to the affected Pledgor) and the Administrative Agent mayfrom time-to-time take any other action which the Administrative Agentreasonably deems necessary for the maintenance, preservation or protection ofany of the Pledged Collateral or of its security interest therein.  The Administrative Agent shall provide noticeto the affected Pledgor of any action taken hereunder; provided however, thefailure to provide such notice shall not be construed as a waiver of any rightsof the Administrative Agent provided under this Pledge Agreement or underapplicable law.

 

6.03.                        Administrative Agent Has No Duty. The powers conferred on the Administrative Agent hereunder are solely toprotect its interest in the Pledged Collateral and shall not impose any duty onit to exercise any such powers.  Exceptfor reasonable care of any Pledged Collateral in its possession and theaccounting for moneys actually received by it hereunder, the AdministrativeAgent shall have no duty as to any Pledged Collateral or responsibility fortaking any necessary steps to preserve rights against prior parties or anyother rights pertaining to any Pledged Collateral.

 

6.04.                        Reasonable Care. The Administrative Agent shall be deemed to have exercised reasonablecare in the custody and preservation of the Pledged Collateral in itspossession if the Pledged Collateral is accorded treatment substantially equalto that which the Administrative Agent accords its own property, it beingunderstood that the Administrative Agent shall have no responsibility for (a) ascertainingor taking action with respect to calls, conversions, exchanges, maturities,tenders, or other matters relative to any Pledged Collateral, whether or notthe Administrative Agent has or is deemed to have knowledge of such matters, or(b) taking any necessary steps to preserve rights against any parties withrespect to any Pledged Collateral.

 

Section 7.  Miscellaneous.

 

7.01.                        Expenses.  The Pledgorswill upon demand pay to the Administrative Agent for its benefit and thebenefit of the other Secured Parties the amount of any reasonable out-of-pocketexpenses, including the reasonable fees and disbursements of its counsel and ofany experts, which the Administrative Agent and the other Secured Parties mayincur in connection with (a) the custody, preservation, use, or operationof, or the sale, collection, or other realization of, any of the PledgedCollateral, (b) the exercise or enforcement of any of the rights of theAdministrative Agent or any Lender or any other Secured Parties hereunder, and (c) thefailure by any Pledgor to perform or observe any of the provisions hereof.

 

7.02.                        Amendments, Etc. No amendment or waiver of any provision of this Pledge Agreement norconsent to any departure by any Pledgor herefrom shall be effective unless madein writing and executed by the affected Pledgor and the Administrative Agent(acting upon the written direction of the Majority Lenders or all Lenders, asapplicable), and such waiver or consent shall be effective only in the specificinstance and for the specific purpose for which given.

 

7.03.                        Addresses for Notices. All notices and other communications provided for hereunder shall be inthe manner and to the addresses set forth in the Credit Agreement.

 

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7.04.                        Continuing Security Interest; Transfer of Interest.

 

(a)                                  This Pledge Agreement shall create acontinuing security interest in the Pledged Collateral and, unless expresslyreleased by the Administrative Agent, shall (i) remain in full force andeffect until the indefeasible payment in full in cash of, and termination of,the Secured Obligations and the termination of the Commitments under the CreditAgreement, (ii) be binding upon the Pledgors, the Administrative Agent,the Secured Parties and their successors, and assigns, and (iii) inure,together with the rights and remedies of the Administrative Agent hereunder, tothe benefit of and be binding upon, the Administrative Agent, and the SecuredParties and their respective successors, transferees, and assigns, and to thebenefit of and be binding upon, the Swap Counterparties, and each of theirrespective successors and assigns only to the extent such successors,transferees, and assigns of a Swap Counterparty is a Lender or an Affiliate ofa Lender.  Without limiting thegenerality of the foregoing clause, when any Secured Party assigns or otherwisetransfers any interest held by it under the Credit Agreement or other LoanDocument (other than an Interest Hedge Agreement or a Hydrocarbon HedgeAgreement) to any other Person pursuant to the terms of the Credit Agreement orsuch other Loan Document, that other Person shall thereupon become vested withall the benefits held by such Secured Party under this Pledge Agreement.  Furthermore, when any Swap Counterparty assignsor otherwise transfers any interest held by it under an Interest HedgeAgreement or a Hydrocarbon Hedge Agreement to any other Person pursuant to theterms of such agreement, that other Person shall thereupon become vested withall the benefits held by such Secured Party under this Pledge Agreement only ifsuch Person is also then a Lender or an Affiliate of a Lender.

 

(b)                                 Upon the indefeasible payment in full andtermination of the Secured Obligations and the termination of all Commitmentsunder the Credit Agreement, the security interest granted hereby shallterminate and all rights to the Pledged Collateral shall revert to theapplicable Pledgor to the extent such Pledged Collateral shall not have beensold or otherwise applied pursuant to the terms hereof.  Upon any such termination, the AdministrativeAgent will, at the Pledgors’ expense, deliver all Pledged Collateral to theapplicable Pledgor, execute and deliver to the applicable Pledgor suchdocuments as such Pledgor shall reasonably request and take any other actionsreasonably requested to evidence or effect such termination.

 

7.05.                        Waivers.  Each Pledgorhereby waives:

 

(a)                                  promptness, diligence, notice ofacceptance, and any other notice with respect to any of the Secured Obligationsand this Pledge Agreement;

 

(b)                                 any requirement that the AdministrativeAgent or any Secured Party protect, secure, perfect, or insure any Lien or anyProperty subject thereto or exhaust any right or take any action against anyPledgor, any Guarantor, or any other Person or any collateral; and

 

(c)                                  any duty on the part of theAdministrative Agent to disclose to any Pledgor any matter, fact, or thingrelating to the business, operation, or condition of any 

 

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Pledgor, any Guarantor, or any other Person and their respective assetsnow known or hereafter known by such Person.

 

7.06.                        Severability. Wherever possible each provision of this Pledge Agreement shall beinterpreted in such manner as to be effective and valid under applicable law,but if any provision of this Pledge Agreement shall be prohibited by or invalidunder such law, such provision shall be ineffective to the extent of suchprohibition or invalidity, without invalidating the remainder of such provisionor the remaining provisions of this Pledge Agreement.

 

7.07.                        Choice of Law. This Pledge Agreement shall be governed by and construed and enforced inaccordance with the laws of the State of Texas, except to the extent that thevalidity or perfection of the security interests hereunder, or remedieshereunder, in respect of any particular Pledged Collateral are governed by thelaws of a jurisdiction other than the State of Texas.

 

7.08.                        Counterparts. The parties may execute this Pledge Agreement in counterparts, each ofwhich constitutes an original, and all of which, collectively, constitute onlyone agreement.  Delivery of an executedcounterpart signature page by facsimile is as effective as executing anddelivering this Pledge Agreement in the presence of the other parties to thisPledge Agreement.  In proving this PledgeAgreement, a party must produce or account only for the executed counterpart ofthe party to be charged.

 

7.09.                        Headings.  Paragraphheadings have been inserted in this Pledge Agreement as a matter of conveniencefor reference only and it is agreed that such paragraph headings are not a partof this Pledge Agreement and shall not be used in the interpretation of anyprovision of this Pledge Agreement.

 

7.10.                        Reinstatement. If, at any time after payment in full of all Secured Obligations andtermination of the Administrative Agent’s security interest, any payments onthe Secured Obligations previously made must be disgorged by any Secured Partyfor any reason whatsoever, including, without limitation, the insolvency,bankruptcy or reorganization of any Pledgor or any other Person, this PledgeAgreement and the Administrative Agent’s security interests herein shall bereinstated as to all disgorged payments as though such payments had not beenmade, and each Pledgor shall sign and deliver to the Administrative Agent alldocuments, and shall do such other acts and things, as may be necessary toreinstate and perfect the Administrative Agent’s security interest.  **EACHPLEDGOR SHALL DEFEND AND INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH OTHER****SECURED PARTY FROM ANDAGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSE UNDER THIS SECTION 7.10(INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES) IN THE DEFENSE OF ANY SUCHACTION OR SUIT INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSEARISING AS A RESULT OF THE INDEMNIFIED****SECUREDPARTY’S****OWN NEGLIGENCE BUT EXCLUDING SUCHCLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL,NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTEDFROM SUCH INDEMNIFIED SECURED PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.**

 

11

----

 

7.11.                        Conflicts.  In the eventof any explicit or implicit conflict between any provisions of this PledgeAgreement and any provision of the Credit Agreement, the terms of the CreditAgreement shall be controlling.

 

7.12.                        Additional Pledgors*.* Pursuant to Section 6.15 of the Credit Agreement, certainSubsidiaries of the Borrower that were not in existence on the date of the CreditAgreement are required to enter into this Pledge Agreement as Pledgors.  Upon execution and delivery after the datehereof by the Administrative Agent and such Subsidiary of an instrument in theform of Annex 1, such Subsidiary shall become a Pledgor hereunder with thesame force and effect as if originally named as a Pledgor herein.  The execution and delivery of any instrumentadding an additional Pledgor as a party to this Pledge Agreement shall notrequire the consent of any other Pledgor hereunder.  The rights and obligations of each Pledgorhereunder shall remain in full force and effect notwithstanding the addition ofany new Pledgor as a party to this Pledge Agreement.

 

7.13.                        Amendment & Restatement; Confirmation of Liens.  This Pledge Agreement is anamendment and restatement of the Existing Pledge Agreement and supersedes theExisting Pledge Agreement in its entirety; provided, however, that (i) theexecution and delivery of this Pledge Agreement shall not effect a novation ofthe Existing Pledge Agreement but shall be, to the fullest extent applicable,in modification, renewal, confirmation and extension of such Existing PledgeAgreement, and (ii) the Liens, security interests and other interests inthe Pledged Collateral (as such term is defined in the Existing PledgeAgreement, hereinafter the “Original Pledged Collateral”) granted underthe Existing Pledge Agreement are and shall remain legal, valid, binding andenforceable with regard to such Original Pledged Collateral.  Each Pledgor party to the Existing PledgeAgreement hereby acknowledges and confirms the continuing existence andeffectiveness of such Liens, security interests and other interests in theOriginal Pledged Collateral granted under the Existing Pledge Agreement, andfurther agrees that the execution and delivery of this Pledge Agreement and theother Loan Documents shall not in any way release, diminish, impair, reduce orotherwise affect such Liens, security interests and other interests in theOriginal Pledged Collateral granted under the Existing Pledge Agreement.

 

7.14.                        Entire Agreement.  **THIS PLEDGE AGREEMENT, THE CREDIT AGREEMENT AND THEOTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOTBE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORALAGREEMENTS OF THE PARTIES.**

 

**THEREARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.**

 

[SIGNATURE PAGES FOLLOW]

 

12

----

 

The partieshereto have caused this Pledge Agreement to be duly executed as of the datefirst above written.

** **
|   | **PLEDGORS:**                    |
|--------|----------------------------------|
|   | ** **                       |
|   | **CANO  PETROLEUM, INC.**        |
|   |                             |
|   | By:                              | /s/ Benjamin Daitch |
|   |                             | Benjamin Daitch |
|   |                             | Senior Vice President and Chief Financial Officer |
|   |                             |   |
|   | **W.O.  ENERGY, INC.**           |
|   | **W.O.  ENERGY OF NEVADA, INC.** |
|   | ** **                       |
|   |                             |   |
|   | Each by:                         | /s/ Benjamin Daitch |
|   |                             | Benjamin Daitch |
|   |                             | Vice President and Chief Financial Officer |
|        |                                  |  |  |

 

Signature Page to Amended and Restated PledgeAgreement

 

----

 
|   | **ADMINISTRATIVE  AGENT:**                               |
|--------|----------------------------------------------------------|
|   | ** **                                               |
|   | UNION BANK OF CALIFORNIA, N.A., as  Administrative Agent |
|   |                                                     |
|   |                                                     |
|   | By:                                                      | /s/ Randall Osterberg |
|   |                                                     | Randall Osterberg |
|   |                                                     | Senior Vice President |

 

Signature Page to Amended and Restated PledgeAgreement

 

----

 

**SCHEDULE2.02(a)**

 

**PLEDGEDCOLLATERAL**

 

Attached toand forming a part of that certain Amended and Restated Pledge Agreement dated December 17,2008 by Cano Petroleum, Inc., W.O. Energy of Nevada, Inc., and WOEnergy, Inc., as Pledgors, to Union Bank of California, N.A., as theAdministrative Agent.

 
| **Pledgor** | ** ** | **Issuer** | ** ** | **Type of Membership  Interest** | ** ** | **% of Membership Interest  Owned** |
|-------------|------------|------------|------------|--------------------------------------------|------------|----------------------------------------------------|
| None        |       |       |       |                                       |       |                                               |

 

Schedule 2.02(a) to Amended and Restated Pledge Agreement

 

#### 

####  

#### **SCHEDULE2.02(b)**

 

**PLEDGED COLLATERAL**

 

Attached toand forming a part of that certain Amended and Restated Pledge Agreement dated December 17,2008 by Cano Petroleum, Inc., W.O. Energy of Nevada, Inc., and WOEnergy, Inc., as Pledgors, to Union Bank of California, N.A., as theAdministrative Agent.

 
| **Pledgor**                      | ** ** | **Issuer**                    | ** ** | **Type of Partnership  Interest** | ** ** | **% of Partnership Interest  Owned** |
|----------------------------------|------------|-------------------------------|------------|---------------------------------------------|------------|-----------------------------------------------------|
| W.O. Energy of Nevada, Inc. |       | W.O. Operating Company, Ltd.  |       | Limited Partnership Interest                |       | 95% Limited Partnership Interest                    |
| W.O. Energy of Nevada, Inc. |       | W.O. Production Company, Ltd. |       | Limited Partnership Interest                |       | 95% Limited Partnership Interest                    |
| WO Energy, Inc.             |       | W.O. Operating Company, Ltd.  |       | General Partnership Interest                |       | 5% General Partnership Interest                     |
| WO Energy, Inc.             |       | W.O. Production Company, Ltd. |       | General Partnership Interest                |       | 5% General Partnership Interest                     |

 

#### 

####  

#### **SCHEDULE2.02(c)**

 

**PLEDGED COLLATERAL**

 

Attached toand forming a part of that certain Amended and Restated Pledge Agreement dated December 17,2008 by Cano Petroleum, Inc., W.O. Energy of Nevada, Inc., and WOEnergy, Inc., as Pledgors, to Union Bank of California, N.A., as theAdministrative Agent.

 
| **Pledgor**                      | ** ** | **Issuer**                          | ** ** | **Type of Shares** | ** ** | **Number of  Shares** | ** ** | **% of  Shares  Owned** | ** ** | **Certificate  No.** | ** ** |
|----------------------------------|------------|-------------------------------------|------------|------------------------------|------------|----------------------------|------------|------------------------------|------------|----------------------|------------|
| Cano Petroleum, Inc.        |       | Square One Energy, Inc.        |       | Common Stock                 |       | 1,500                      |       | 100                          | %          | 4                    |       |
| Cano Petroleum, Inc.        |       | Ladder Companies, Inc.         |       | Common Stock                 |       | 1,000                      |       | 100                          |       | 7                    |       |
| Cano Petroleum, Inc.        |       | W.O. Energy of Nevada, Inc.    |       | Common Stock                 |       | 1,200                      |       | 100                          | %          | 5                    |       |
| W.O. Energy of Nevada, Inc. |       | WO Energy, Inc.                |       | Common Stock                 |       | 1,100                      |       | 100                          | %          | 6                    |       |
| Cano Petroleum Inc.              |       | Cano Petro of New Mexico, Inc. |       | Common Stock                 |       | 100                        |       | 100                          | %          | 1                    |       |

 

Schedule 2.02(c) to Amended and Restated Pledge Agreement

 

----

 

**SCHEDULE 3**

 

**PLEDGOR INFORMATION**

 
| **Grantor:**                                          |   | Cano Petroleum, Inc.          |
|-------------------------------------------------------|--------|------------------------------------|
|                                                  |   |                               |
| **Sole Jurisdiction of Formation / Filing:**          |   | Delaware                           |
|                                                  |   |                               |
| **Type of Organization:**                             |   | Corporation                        |
|                                                  |   |                               |
| **Address where records for****Collateral are kept:** |   | 801 Cherry Street, Suite 3200 |
|                                                  |   | Fort Worth, Texas 76102            |
|                                                  |   |                               |
| **Organizational Number:**                            |   | 3664494                            |
|                                                  |   |                               |
| **Federal Tax Identification Number:**                |   | 77-0635673                         |
|                                                  |   |                               |
| **Prior Names:**                                      |   | Huron Ventures, Inc.          |
|                                                  |   |                               |
| **Grantor:**                                          |   | WO Energy, Inc.               |
|                                                  |   |                               |
| **Sole Jurisdiction of Formation / Filing:**          |   | Texas                              |
|                                                  |   |                               |
| **Type of Organization:**                             |   | Corporation                        |
|                                                  |   |                               |
| **Address where records for****Collateral are kept:** |   | 801 Cherry Street, Suite 3200 |
|                                                  |   | Fort Worth, Texas 76102            |
|                                                  |   |                               |
| **Organizational Number:**                            |   | 113518200                          |
|                                                  |   |                               |
| **Federal Tax Identification Number:**                |   | 75-2303966                         |
|                                                  |   |                               |
| **Prior Names:**                                      |   | None.                              |
|                                                  |   |                               |
| **Grantor:**                                          |   | W.O. Energy of Nevada, Inc.   |
|                                                  |   |                               |
| **Sole Jurisdiction of Formation / Filing:**          |   | Nevada                             |
|                                                  |   |                               |
| **Type of Organization:**                             |   | Corporation                        |
|                                                  |   |                               |
| **Address where records for****Collateral are kept:** |   | 801 Cherry Street, Suite 3200 |
| ** **                                            |   | Fort Worth, Texas 76102            |

 

----

 
| **Organizational Number:**             |   | C20757-1996-001 |
|----------------------------------------|--------|-----------------|
|                                   |   |            |
| **Federal Tax Identification Number:** |   | 88-0369151      |
|                                   |   |            |
| **Prior Names:**                       |   | None.           |

 

----

 

Annex 1 to the

Pledge Agreement

 

SUPPLEMENT NO.[      ] dated as of [       ](the “Supplement”), to the Amended and Restated Pledge Agreement datedas of December 17, 2008 (as amended, supplemented or otherwise modifiedfrom time to time, the “Pledge Agreement”) by and among CANO PETROLEUM,INC., a Delaware corporation (“Borrower”), each other party signatoryhereto (together with the Borrower, the “Pledgors” and individually,each a “Pledgor”) and Union Bank of California, N.A. as AdministrativeAgent (as hereinafter defined) under the Credit Agreement (as hereinafterdefined) for the benefit of the Secured Parties (as hereinafter defined).

 

**RECITALS**

 

A.            Reference is made to the followingdocuments related to extension of credit to the Borrower:

 

(i)            that certain Amended and RestatedCredit Agreement dated as of December 17, 2008 (as it may be amended,restated or otherwise modified from time to time, the “Credit Agreement”)by and among the Borrower, the lenders party thereto from time to time (the “Lenders”),and Union Bank of California, N.A., as administrative agent for such Lenders(in such capacity, the “Administrative Agent”), and as issuing lender(in such capacity, the “Issuing Lender”);

 

(ii)           those Hedge Contracts (as defined inthe Credit Agreement) that the Borrower or any of its Subsidiaries may fromtime to time enter into one or more with a Swap Counterparty (as defined in theCredit Agreement, and together with the Administrative Agent, the IssuingLender and the Lenders, the “Secured Parties”).

 

B.            The Pledgors have entered into the Pledge Agreement inorder to induce the Lenders to make loans and the Issuing Lender to issueletters of credit under the Credit Agreement. Pursuant to Section 6.15 ofthe Credit Agreement, each Subsidiary of the Borrower that was not in existenceon the date of the Credit Agreement is required to enter into the PledgeAgreement as a Pledgor upon becoming a Subsidiary. Section 7.12 of thePledge Agreement provides that additional Subsidiaries of the Borrower maybecome Pledgors under the Pledge Agreement by execution and delivery of aninstrument in the form of this Supplement. The undersigned Subsidiary of theBorrower (the “New Pledgor”) is executing this Supplement in accordancewith the requirements of the Credit Agreement to become a Pledgor under thePledge Agreement in order to induce the Lenders to make additional loans andthe Issuing Lender to issue additional letters of credit and as considerationfor loans previously made and letters of credit previously issued.

 

D.            Capitalized terms used herein and not otherwise definedherein shall have the meanings assigned to such terms in the Pledge Agreementand the Credit Agreement.

 

Accordingly,the Administrative Agent and the New Pledgor agree as follows:

 

SECTION 1.           In accordance with Section 7.12of the Pledge Agreement, the New Pledgor by its signature below becomes aPledgor under the Pledge Agreement with the same 

 

Annex 1 to Amended and Restated Pledge Agreement

 

----

 

force and effect as iforiginally named therein as a Pledgor and the New Pledgor hereby agrees (a) toall the terms and provisions of the Pledge Agreement applicable to it as aPledgor thereunder and (b) represents and warrants that therepresentations and warranties made by it as a Pledgor thereunder are true andcorrect on and as of the date hereof in all material respects. In furtheranceof the foregoing, the New Pledgor, as security for the payment and performancein full of the Secured Obligations, does hereby create and grant to theAdministrative Agent, its successors and assigns, for the benefit of theSecured Parties, their successors and assigns, a continuing security interestin and lien on all of the New Pledgor’s right, title and interest in and to thePledged Collateral of the New Pledgor. Each reference to a “Pledgor” in thePledge Agreement shall be deemed to include the New Pledgor. The PledgeAgreement is hereby incorporated herein by reference.

 

SECTION 2.           The New Pledgor represents andwarrants to the Administrative Agent and the other Secured Parties that thisSupplement has been duly authorized, executed and delivered by it andconstitutes its legal, valid and binding obligation, enforceable against it inaccordance with its terms (subject to applicable bankruptcy, reorganization,insolvency, moratorium or similar laws affecting creditors’ rights generallyand subject, as to enforceability, to equitable principles of generalapplication (regardless of whether enforcement is sought in a proceeding inequity or at law)).

 

SECTION 3.           This Supplement may be executed incounterparts, each of which shall constitute an original, but all of which whentaken together shall constitute a single contract. This Supplement shall becomeeffective when the Administrative Agent shall have received counterparts ofthis Supplement that, when taken together, bear the signatures of the NewPledgor and the Administrative Agent. Delivery of an executed signature page tothis Supplement by facsimile transmission shall be as effective as delivery ofa manually signed counterpart of this Supplement.

 

SECTION 4.           The New Pledgor hereby represents andwarrants that (a) set forth on Schedules 2.02(a), 2.02(b), and 2.02(c) attachedhereto are true and correct schedules of all its Membership Interests,Partnership Interests and Pledged Shares, as each term is defined in the PledgeAgreement, and (b) set forth on Schedule 3 attached hereto are its solejurisdiction of formation, type of organization, its federal tax identificationnumber and the organizational number, and all names used by it during the lastfive years prior to the date of this Supplement.

 

SECTION 5.           Except as expressly supplementedhereby, the Pledge Agreement shall remain in full force and effect.

 

SECTION 6.           THIS SUPPLEMENT SHALL BE GOVERNED BYAND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTSHEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGEDCOLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OFTEXAS.

 

SECTION 7.           In case any one or more of theprovisions contained in this Supplement should be held invalid, illegal orunenforceable in any respect, neither party hereto shall be 

 

----

 

required to comply withsuch provision for so long as such provision is held to be invalid, illegal orunenforceable, but the validity, legality and enforceability of the remainingprovisions contained herein and in the Pledge Agreement shall not in any way beaffected or impaired. The parties hereto shall endeavor in good-faithnegotiations to replace the invalid, illegal or unenforceable provisions withvalid provisions the economic effect of which comes as close as possible tothat of the invalid, illegal or unenforceable provisions.

 

SECTION 8.           All communications and noticeshereunder shall be in writing and given as provided in the Pledge Agreement. Allcommunications and notices hereunder to the New Pledgor shall be given to it atthe address set forth under its signature hereto.

 

SECTION 9.           TheNew Pledgor agrees to reimburse the Administrative Agent for its reasonableout-of-pocket expenses in connection with this Supplement, including thereasonable fees, other charges and disbursements of counsel for theAdministrative Agent.

 

**THISSUPPLEMENT, THE PLEDGE AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER LOANDOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BECONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORALAGREEMENTS OF THE PARTIES.**

 

**THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONGTHE PARTIES HERETO.**

 

[SIGNATURES PAGES FOLLOW]

 

----

 

IN WITNESS WHEREOF, the New Pledgor and the Administrative Agent haveduly executed this Supplement to the Pledge Agreement as of the day and yearfirst above written.

** **
|   | **NEW  PLEDGOR:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | [                                                                                                ] |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | By:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   | Name:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|   | Title:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | **ADMINISTRATIVE  AGENT:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | UNION BANK OF CALIFORNIA, N.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | By:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   | Name:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|   | Title:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  |  |

 

----

 

Schedules

Supplement No.        

to the Pledge Agreement

 

#### Pledged Collateral of the New Pledgor

 

#### SCHEDULE 2.02(a)

 
| **Issuer** | ** ** | **Type of Membership  Interest** | ** ** | **% of Membership Interest  Owned** |
|------------|------------|--------------------------------------------|------------|----------------------------------------------------|
|       |       |                                       |       |                                               |
|       |       |                                       |       |                                               |
|       |       |                                       |       |                                               |

 

#### SCHEDULE 2.02(b)

 
| **Issue**  | ** ** | **Type of Partnership Interest** | ** ** | **% of Partnership Interest  Owned** |
|------------|------------|-------------------------------------------------|------------|-----------------------------------------------------|
| ** ** | ** ** | ** **                                      | ** ** | ** **                                          |
| ** ** | ** ** | ** **                                      | ** ** | ** **                                          |
| ** ** | ** ** | ** **                                      | ** ** | ** **                                          |

 

####  

#### SCHEDULE 2.02(c)

 
| **Issuer** | ** ** | **Type of Shares** | ** ** | **Number of  Shares** | ** ** | **% of Shares  Owned** | ** ** | **Certificate No.** |
|------------|------------|------------------------------|------------|----------------------------|------------|----------------------------------|------------|--------------------------|
|       |       |                         |       |                       |       |                             |       |                     |
|       |       |                         |       |                       |       |                             |       |                     |
|       |       |                         |       |                       |       |                             |       |                     |

 

SCHEDULE 3

 
| New Pledgor:                             |
|------------------------------------------|
|                                     |
| Sole Jurisdiction of Formation / Filing: |
|                                     |
| Type of Organization:                    |
|                                     |
| Organizational Number:                   |
|                                     |
| Federal Tax Identification Number:       |
|                                     |
| Prior Names:                             |

 

----