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.
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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
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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,
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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
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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.
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(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
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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