Exhibit 10.11


 


AMENDED
AND RESTATED PLEDGE AGREEMENT


 


THIS
AMENDED AND RESTATED PLEDGE AGREEMENT dated as of December 17, 2008 (this “Pledge
Agreement”) 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 Bank
of California, N.A. as Administrative Agent (as hereinafter defined) for the
ratable benefit of itself, the Issuing Lender (as hereinafter defined), the
Lenders (as hereinafter defined), and the Swap Counterparties (as defined in
the Credit Agreement referred to below, and together with the Administrative
Agent, the Issuing Lender, and the Lenders collectively referred to herein as
the “Secured Parties” and individually, a “Secured Party”).


 


RECITALS


 


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


 


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


 


C.                                     The parties to
the Existing Credit Agreement have agreed to amend and restate the Existing
Credit Agreement in its entirety pursuant to that certain Amended and Restated
Credit 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 Credit
Agreement that (i) the Borrower shall continue to secure the due payment
and performance of all Obligations (as defined in the Credit Agreement) by
amending and restating in its entirety the Existing Pledge Agreement as set
forth herein, and (ii) the other Pledgors shall continue to secure the due
payment and performance of all Obligations (as defined in the Credit Agreement)
by executing and delivering this Pledge Agreement, in each case, in favor of
the 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 derive
substantial direct and indirect benefits from (i) the transactions
contemplated by the Credit Agreement and the other Loan Documents (as defined
the Credit Agreement) and (ii) the Hedge Contracts (as defined in the
Credit Agreement) entered into by the Borrower or any of its subsidiaries with
a Swap Counterparty.


 


1

















 


AGREEMENT


 


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


 


Section 1.  Definitions. 
All capitalized terms not otherwise defined in this Pledge Agreement
that are defined in the Credit Agreement shall have the meanings assigned to
such terms by the Credit Agreement.  Any
terms used in this Pledge Agreement that are defined in the Uniform Commercial
Code in effect in the State of Texas from time to time (the “UCC”) and not
otherwise defined herein or in the Credit Agreement, shall have the meanings
assigned to those terms by the UCC.  All
meanings to defined terms, unless otherwise indicated, are to be equally
applicable to both the singular and plural forms of the terms defined.  Article, Section, Schedule, and Exhibit references
are to Articles and Sections of and Schedules and Exhibits to this Pledge
Agreement, unless otherwise specified. 
All references to instruments, documents, contracts, and agreements are
references to such instruments, documents, contracts, and agreements as the
same 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 Pledge
Agreement shall refer to this Pledge Agreement as a whole and not to any
particular provision of this Pledge Agreement. 
As used herein, the term “including” means “including, without
limitation,”. Paragraph headings have been inserted in this Pledge Agreement as
a matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Pledge Agreement and shall not be used in the
interpretation of any provision of this Pledge Agreement.


 


Section 2.  Pledge.


 


2.01.                        Grant of Pledge.


 


(a)                                  Each Pledgor hereby pledges to the
Administrative Agent, and grants to the Administrative Agent, for the benefit
of the Secured Parties, a continuing security interest in, the Pledged
Collateral, as defined in Section 2.02 below.  This Pledge Agreement shall secure (i) all
Obligations (as defined in the Credit Agreement) now or hereafter existing; (ii) all
other amounts now or hereafter owed by the Borrower, any Pledgor, or any of
their respective Subsidiaries under this Pledge Agreement, the Credit Agreement
or the other Loan Documents to the Administrative Agent or any other Secured
Party; 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.   All
such obligations shall be referred to in this Pledge Agreement as the “Secured
Obligations”.


 


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


 


2

















 


conveyance, fraudulent transfer and other similar law, rule or
regulation of any Governmental Authority (as defined in the Credit Agreement)
applicable to such Pledgor. Accordingly, notwithstanding anything to the
contrary contained in this Pledge Agreement or in any other agreement or
instrument executed in connection with the payment of any of the Secured
Obligations, the amount of the Secured Obligations secured by each Pledgor’s
interests in any of its Property pursuant to this Pledge Agreement shall be
limited to an aggregate amount equal to the largest amount that would not
render such Pledgor’s obligations hereunder or the liens and security interest
granted to the Administrative Agent hereunder subject to avoidance under Section 548
of the United States Bankruptcy Code or any comparable provision of any other
applicable law.


 


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


 


(a)                                  (i) all of the membership interests
listed in the attached Schedule 2.02(a) issued to such Pledgor and all
such additional membership interests of any issuer of such interests hereafter
acquired by such Pledgor (the “Membership Interests”), (ii) the
certificates representing the Membership Interests, if any, and (iii) all
rights to money or Property which such Pledgor now has or hereafter acquires in
respect of the Membership Interests, 
including, without limitation, (A) any proceeds from a sale by or
on behalf of such Pledgor of any of the Membership Interests, and (B) any
distributions, dividends, cash, instruments and other property from
time-to-time received or otherwise distributed in respect of the Membership
Interests, whether regular, special or made in connection with the partial or
total liquidation of the issuer and whether attributable to profits, the return
of any contribution or investment or otherwise attributable to the Membership
Interests or the ownership thereof 
(collectively, the “Membership Interests Distributions”);


 


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


 


(c)                                  (i) all of the shares of stock
listed in the attached Schedule 2.02(c) issued to such Pledgor and all
such additional shares of stock of any issuer of such shares of stock hereafter
issued to such Pledgor (the “Pledged Shares”), (ii) the
certificates representing the Pledged Shares, and (iii) all rights to
money or Property which such Pledgor now has or hereafter acquires in respect
of the Pledged Shares, including, 


 


3

















 


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


 


(d)                                 all proceeds from the Pledged Collateral
described 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 Pledged
Collateral shall be delivered to the Administrative Agent and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Administrative Agent.  After the occurrence and during the
continuance of an Event of Default, the Administrative Agent shall have the
right, upon prior written notice to the applicable Pledgor, to transfer to or
to register in the name of the Administrative Agent or any of its nominees any
of the Pledged Collateral, subject to the rights specified in Section 2.04.  In addition, after the occurrence and during
the continuance of an Event of Default, the Administrative Agent shall have the
right at any time to exchange the certificates or instruments representing the
Pledged Collateral for certificates or instruments of smaller or larger
denominations.


 


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


 


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


 


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


 


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


 


4

















 


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


 


(ii)                                  at and after such time as the
Administrative Agent gives written notice of its election to exercise such
voting and other consensual rights pursuant to Section 5.02 hereof, each
Pledgor shall execute and deliver (or cause to be executed and delivered) to
the Administrative Agent all proxies and other instruments as the
Administrative Agent may reasonably request to enable the Administrative Agent
to (A) exercise the voting and other rights which such Pledgor is entitled
to exercise pursuant to paragraph (a) or paragraph (b)(i) of
this Section 2.04, and (B) receive any Distributions and proceeds of
sale of the Pledged Collateral which such Pledgor is authorized to receive and
retain 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 the
Secured Parties as follows:


 


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


 


(b)                                 Such Pledgor is the legal and beneficial
owner of the Pledged Collateral free and clear of any Lien or option, except
for (i) the security interest created by this Pledge Agreement and (ii) other
Liens 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 Governmental
Authority or regulatory body is required either (a) for the pledge by such
Pledgor of the Pledged Collateral pursuant to this Pledge Agreement or for the
execution, delivery, or performance of this Pledge Agreement by such Pledgor or
(b) for the exercise by the Administrative Agent or any Secured Party of
the voting or other rights provided for in this Pledge Agreement or the
remedies in respect of the Pledged Collateral pursuant to this Pledge Agreement
(except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally).


 


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


 


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


 


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


 


5

















 


(g)                                 The Pledged Shares list on the attached
Schedule 2.02(c) constitute the percentage of the issued and outstanding
shares of capital stock of the respective issuer thereof set forth on Schedule
2.02(c) and all of the Equity Interest in such issuer in which the Pledgor
has any ownership interest.


 


(h)                                 Schedule 3 sets forth its sole
jurisdiction of formation, type of organization, federal tax identification
number, the organizational number, and all names used by it during the last
five 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 Secured
Obligations (including all Letter of Credit Obligations) have been fully and
finally paid and discharged in full, the termination of the Hedge Contracts
with the Secured Parties, the Commitments (as defined in the Credit Agreement)
under the Credit Agreement have been terminated or expired, all Letters of
Credit have terminated or expired, and all obligations of the Issuing Lender
and the Lenders in respect of Letters of Credit have been terminated, each
Pledgor 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 granted
unto the Administrative Agent in and to the Pledged Collateral (and all right,
title, and interest represented by the Pledged Collateral) against the claims
and demands of all Persons whomsoever. 
Each Pledgor agrees that, at the expense of such Pledgor, such Pledgor
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be reasonably necessary and that the
Administrative Agent or any Secured Party may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Administrative Agent or any Secured Party to exercise
and enforce its rights and remedies hereunder with respect to any Pledged
Collateral.  Each Pledgor hereby
authorizes the Administrative Agent to file any financing statements,
amendments or continuations without the signature of such Pledgor to the extent
permitted by applicable law in order to perfect or maintain the perfection of
any security interest granted under this Pledge Agreement.


 


4.02.                        Transfer, Other Liens, and Additional
Shares.  Each Pledgor agrees that it will not (a) except
as 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) create
or permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for Permitted Liens. 
Each Pledgor agrees that it will (i) cause each issuer of the
Pledged Collateral that is a Subsidiary of such Pledgor not to issue any other
Equity Interests in addition to or in substitution for the Pledged Collateral
issued by such issuer, except to such Pledgor or any other Pledgor and (ii) pledge
hereunder, 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 or
modification of any of the Pledged Collateral without the Administrative Agent’s
prior written consent.


 


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


 


6

















 


other than its current
name used on the date hereof.  Other than
as permitted by Section 6.11 of the Credit Agreement, no Pledgor shall
amend, supplement, modify or restate its articles or certificate of
incorporation, bylaws, limited liability company agreements, or other equivalent
organizational documents, nor amend its name or change its jurisdiction of
incorporation, 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 in
respect of the Pledged Collateral, in addition to other rights and remedies
provided for in this Pledge Agreement or otherwise available to it, all the
rights and remedies of a Administrative Agent under the UCC (whether or not the
UCC applies to the affected Pledged Collateral).


 


5.02.                        Dividends and Other Rights.


 


(a)                                  All rights of the Pledgors to exercise
the voting and other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 2.04(a) may be exercised by the
Administrative Agent if the Administrative Agent so elects and gives written
notice of such election to the affected Pledgor and all rights of the Pledgors
to receive any Distributions on or in respect of the Pledged Collateral and the
proceeds of sale of the Pledged Collateral which it would otherwise be
authorized to receive and retain pursuant to Section 2.04(b) shall
cease.


 


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


 


5.03.                        Sale of Pledged Collateral. The Administrative Agent may sell all
or part of the Pledged Collateral at public or private sale, at any of the
Administrative Agent’s offices or elsewhere, for cash, on credit, or for future
delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable in accordance with applicable laws.  Each Pledgor agrees that to the extent
permitted by law such sales may be made without notice.  If notice is required by law, each Pledgor
hereby deems 10 days’ advance notice of the time and place of any public sale
or the time after which any private sale is to be made reasonable notification,
recognizing that if the Pledged Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market shorter notice
may be reasonable.  The Administrative
Agent shall not be obligated to make any sale of the Pledged Collateral
regardless of notice of sale having been given. 
The Administrative Agent may adjourn any public or private sale from
time-to-time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.  Each Pledgor shall fully
cooperate with Administrative Agent in selling or realizing upon all or any
part of the Pledged Collateral.  In
addition, each Pledgor shall fully comply with the securities laws of the
United States, the State of Texas, and other states and take such actions as 


 


7

















 


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


 


5.04.                        Exempt Sale. 
If, in the opinion of the Administrative Agent, there is any question
that a public or semipublic sale or distribution of any Pledged Collateral will
violate any state or federal securities law, the Administrative Agent in its reasonable
discretion (a) may offer and sell securities privately to purchasers who
will agree to take them for investment purposes and not with a view to
distribution and who will agree to imposition of restrictive legends on the
certificates representing the security, or (b) may sell such securities in
an intrastate offering under Section 3(a)(11) of the Securities Act of
1933, as amended, and no sale so made in good faith by the Administrative Agent
shall be deemed to be not “commercially reasonable” solely because so
made.  Each Pledgor shall cooperate fully
with the Administrative Agent in selling or realizing upon all or any part of
the Pledged Collateral.


 


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


 


5.06.                        Cumulative Remedies. 
Each right, power and remedy herein specifically granted to the
Administrative Agent or otherwise available to it shall be cumulative, and
shall be in addition to every other right, power and remedy herein specifically
given or now or hereafter existing at law, in equity, or otherwise, and each
such right, power and remedy, whether specifically granted herein or otherwise
existing, may be exercised at any time and from time-to-time as often and in
such order as may be deemed expedient by the Administrative Agent in its sole
discretion.  No failure on the part of
the Administrative Agent to exercise, and no delay in exercising, and no course
of dealing with respect to, any such right, power or remedy, shall operate as a
waiver thereof, nor shall any single or partial exercise of any such rights,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right.


 


Section 6.  Administrative Agent as Attorney-in-Fact
for Pledgor.


 


6.01.                        Administrative Agent Appointed
Attorney-in-Fact.  Each Pledgor hereby irrevocably appoints the
Administrative Agent as such Pledgor’s attorney-in-fact, with full authority
after the occurrence and during the continuance of an Event of Default to act
for such Pledgor and in the name of such Pledgor, and, in the Administrative
Agent’s discretion, to take any action and to execute any instrument which the
Administrative Agent may deem reasonably necessary or advisable to accomplish
the purposes of this Pledge Agreement, including, without limitation, to
receive, indorse, and collect all instruments made payable to such Pledgor
representing any dividend, or the proceeds of the sale of the Pledged
Collateral, or other distribution in respect of the Pledged Collateral and to
give full discharge for the same.  Each Pledgor hereby acknowledges, consents and agrees
that the power of attorney granted pursuant to this Section is irrevocable
and 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 Pledgor
agrees hereunder to perform and which such Pledgor shall fail to perform after
being requested in 


 


8

















 


writing so to perform (it
being understood that no such request need be given after the occurrence and
during the continuance of any Event of Default and after notice thereof by the
Administrative Agent to the affected Pledgor) and the Administrative Agent may
from time-to-time take any other action which the Administrative Agent
reasonably deems necessary for the maintenance, preservation or protection of
any of the Pledged Collateral or of its security interest therein.  The Administrative Agent shall provide notice
to the affected Pledgor of any action taken hereunder; provided however, the
failure to provide such notice shall not be construed as a waiver of any rights
of the Administrative Agent provided under this Pledge Agreement or under
applicable law.


 


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


 


6.04.                        Reasonable Care. 
The Administrative Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Administrative Agent accords its own property, it being
understood that the Administrative Agent shall have no responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders, or other matters relative to any Pledged Collateral, whether or not
the Administrative Agent has or is deemed to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against any parties with
respect to any Pledged Collateral.


 


Section 7.  Miscellaneous.


 


7.01.                        Expenses.  The Pledgors
will upon demand pay to the Administrative Agent for its benefit and the
benefit of the other Secured Parties the amount of any reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of its counsel and of
any experts, which the Administrative Agent and the other Secured Parties may
incur in connection with (a) the custody, preservation, use, or operation
of, or the sale, collection, or other realization of, any of the Pledged
Collateral, (b) the exercise or enforcement of any of the rights of the
Administrative Agent or any Lender or any other Secured Parties hereunder, and (c) the
failure 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 nor
consent to any departure by any Pledgor herefrom shall be effective unless made
in writing and executed by the affected Pledgor and the Administrative Agent
(acting upon the written direction of the Majority Lenders or all Lenders, as
applicable), and such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.


 


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


 


9

















 


7.04.                        Continuing Security Interest; Transfer of Interest.


 


(a)                                  This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and, unless expressly
released by the Administrative Agent, shall (i) remain in full force and
effect until the indefeasible payment in full in cash of, and termination of,
the Secured Obligations and the termination of the Commitments under the Credit
Agreement, (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, to
the benefit of and be binding upon, the Administrative Agent, and the Secured
Parties and their respective successors, transferees, and assigns, and to the
benefit of and be binding upon, the Swap Counterparties, and each of their
respective successors and assigns only to the extent such successors,
transferees, and assigns of a Swap Counterparty is a Lender or an Affiliate of
a Lender.  Without limiting the
generality of the foregoing clause, when any Secured Party assigns or otherwise
transfers any interest held by it under the Credit Agreement or other Loan
Document (other than an Interest Hedge Agreement or a Hydrocarbon Hedge
Agreement) to any other Person pursuant to the terms of the Credit Agreement or
such other Loan Document, that other Person shall thereupon become vested with
all the benefits held by such Secured Party under this Pledge Agreement.  Furthermore, when any Swap Counterparty assigns
or otherwise transfers any interest held by it under an Interest Hedge
Agreement or a Hydrocarbon Hedge Agreement to any other Person pursuant to the
terms of such agreement, that other Person shall thereupon become vested with
all the benefits held by such Secured Party under this Pledge Agreement only if
such Person is also then a Lender or an Affiliate of a Lender.


 


(b)                                 Upon the indefeasible payment in full and
termination of the Secured Obligations and the termination of all Commitments
under the Credit Agreement, the security interest granted hereby shall
terminate and all rights to the Pledged Collateral shall revert to the
applicable Pledgor to the extent such Pledged Collateral shall not have been
sold or otherwise applied pursuant to the terms hereof.  Upon any such termination, the Administrative
Agent will, at the Pledgors’ expense, deliver all Pledged Collateral to the
applicable Pledgor, execute and deliver to the applicable Pledgor such
documents as such Pledgor shall reasonably request and take any other actions
reasonably requested to evidence or effect such termination.


 


7.05.                        Waivers.  Each Pledgor
hereby waives:


 


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


 


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


 


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


 


10

















 


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


 


7.06.                        Severability. 
Wherever possible each provision of this Pledge Agreement shall be
interpreted 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 invalid
under such law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Pledge Agreement.


 


7.07.                        Choice of Law. 
This Pledge Agreement shall be governed by and 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 interests hereunder, or remedies
hereunder, in respect of any particular Pledged Collateral are governed by the
laws of a jurisdiction other than the State of Texas.


 


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


 


7.09.                        Headings.  Paragraph
headings have been inserted in this Pledge Agreement as a matter of convenience
for reference only and it is agreed that such paragraph headings are not a part
of this Pledge Agreement and shall not be used in the interpretation of any
provision of this Pledge Agreement.


 


7.10.                        Reinstatement. 
If, at any time after payment in full of all Secured Obligations and
termination of the Administrative Agent’s security interest, any payments on
the Secured Obligations previously made must be disgorged by any Secured Party
for any reason whatsoever, including, without limitation, the insolvency,
bankruptcy or reorganization of any Pledgor or any other Person, this Pledge
Agreement and the Administrative Agent’s security interests herein shall be
reinstated as to all disgorged payments as though such payments had not been
made, and each Pledgor shall sign and deliver to the Administrative Agent all
documents, and shall do such other acts and things, as may be necessary to
reinstate and perfect the Administrative Agent’s security interest.  EACH
PLEDGOR SHALL DEFEND AND INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH OTHER SECURED PARTY FROM AND
AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSE UNDER THIS SECTION 7.10
(INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES) IN THE DEFENSE OF ANY SUCH
ACTION OR SUIT INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE
ARISING AS A RESULT OF THE INDEMNIFIED SECURED
PARTY’S  OWN NEGLIGENCE BUT EXCLUDING SUCH
CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
FROM SUCH INDEMNIFIED SECURED PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.


 


11

















 


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


 


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


 


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


 


7.14.                        Entire Agreement.  THIS PLEDGE AGREEMENT, THE CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.


 


THERE
ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.


 


[SIGNATURE PAGES FOLLOW]


 


12
















 


The parties
hereto have caused this Pledge Agreement to be duly executed as of the date
first 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 Pledge
Agreement


 

















 


	
   

  	
  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 Pledge
Agreement


 

















 


SCHEDULE
2.02(a)


 


PLEDGED
COLLATERAL


 


Attached to
and 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 WO
Energy, Inc., as Pledgors, to Union Bank of California, N.A., as the
Administrative Agent.


 


	
  Pledgor

  	
   

  	
  Issuer

  	
   

  	
  Type of Membership

  Interest

  	
   

  	
  % of Membership Interest

  Owned

  
	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Schedule 2.02(a) to Amended and Restated Pledge Agreement


 





















 


SCHEDULE
2.02(b)


 


PLEDGED COLLATERAL


 


Attached to
and 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 WO
Energy, Inc., as Pledgors, to Union Bank of California, N.A., as the
Administrative 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

  



 





















 


SCHEDULE
2.02(c)


 


PLEDGED COLLATERAL


 


Attached to
and 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 WO
Energy, Inc., as Pledgors, to Union Bank of California, N.A., as the
Administrative 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 dated
as of December 17, 2008 (as amended, supplemented or otherwise modified
from time to time, the “Pledge Agreement”) by and among CANO PETROLEUM,
INC., a Delaware corporation (“Borrower”), each other party signatory
hereto (together with the Borrower, the “Pledgors” and individually,
each a “Pledgor”) and Union Bank of California, N.A. as Administrative
Agent (as hereinafter defined) under the Credit Agreement (as hereinafter
defined) for the benefit of the Secured Parties (as hereinafter defined).


 


RECITALS


 


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


 


(i)            that certain Amended and Restated
Credit 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 in
the Credit Agreement) that the Borrower or any of its Subsidiaries may from
time to time enter into one or more with a Swap Counterparty (as defined in the
Credit Agreement, and together with the Administrative Agent, the Issuing
Lender and the Lenders, the “Secured Parties”).


 


B.            The Pledgors have entered into the Pledge Agreement in
order to induce the Lenders to make loans and the Issuing Lender to issue
letters of credit under the Credit Agreement. Pursuant to Section 6.15 of
the Credit Agreement, each Subsidiary of the Borrower that was not in existence
on the date of the Credit Agreement is required to enter into the Pledge
Agreement as a Pledgor upon becoming a Subsidiary. Section 7.12 of the
Pledge Agreement provides that additional Subsidiaries of the Borrower may
become Pledgors under the Pledge Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned Subsidiary of the
Borrower (the “New Pledgor”) is executing this Supplement in accordance
with the requirements of the Credit Agreement to become a Pledgor under the
Pledge Agreement in order to induce the Lenders to make additional loans and
the Issuing Lender to issue additional letters of credit and as consideration
for loans previously made and letters of credit previously issued.


 


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


 


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


 


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


 


Annex 1 to Amended and Restated Pledge Agreement


 

















 


force and effect as if
originally named therein as a Pledgor and the New Pledgor hereby agrees (a) to
all the terms and provisions of the Pledge Agreement applicable to it as a
Pledgor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Pledgor thereunder are true and
correct on and as of the date hereof in all material respects. In furtherance
of the foregoing, the New Pledgor, as security for the payment and performance
in full of the Secured Obligations, does hereby create and grant to the
Administrative Agent, its successors and assigns, for the benefit of the
Secured Parties, their successors and assigns, a continuing security interest
in and lien on all of the New Pledgor’s right, title and interest in and to the
Pledged Collateral of the New Pledgor. Each reference to a “Pledgor” in the
Pledge Agreement shall be deemed to include the New Pledgor. The Pledge
Agreement is hereby incorporated herein by reference.


 


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


 


SECTION 3.           This Supplement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Supplement shall become
effective when the Administrative Agent shall have received counterparts of
this Supplement that, when taken together, bear the signatures of the New
Pledgor and the Administrative Agent. Delivery of an executed signature page to
this Supplement by facsimile transmission shall be as effective as delivery of
a manually signed counterpart of this Supplement.


 


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


 


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


 


SECTION 6.           THIS SUPPLEMENT SHALL BE GOVERNED BY
AND 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 INTERESTS
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS.


 


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


 

















 


required to comply with
such provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the remaining
provisions contained herein and in the Pledge Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.


 


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


 


SECTION 9.           The
New Pledgor agrees to reimburse the Administrative Agent for its reasonable
out-of-pocket expenses in connection with this Supplement, including the
reasonable fees, other charges and disbursements of counsel for the
Administrative Agent.


 


THIS
SUPPLEMENT, THE PLEDGE AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.


 


THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES HERETO.


 


[SIGNATURES PAGES FOLLOW]


 

















 


IN WITNESS WHEREOF, the New Pledgor and the Administrative Agent have
duly executed this Supplement to the Pledge Agreement as of the day and year
first 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: