Exhibit 10.2

 

PLEDGE AGREEMENT

 

This PLEDGE AGREEMENT (this “Agreement”) made as of the 28th day of September,
2007 by and between JP MORGAN CHASE BANK, N.A., solely in its capacity as
trustee for MESA OFFSHORE TRUST, a trust formed under the laws of the State of
Texas, having an address at 919 Congress Avenue, Austin, Texas 78701 (the
“Pledgor”) and JP MORGAN CHASE BANK, N.A., having an address at 1111 Polaris
Parkway, Columbus, Ohio 43240 (the “Secured Party”).

RECITALS

A.                                   Pledgor has executed the Demand Promissory
Note (the “Note”) in favor of Secured Party, dated September 28, 2007,
evidencing an extension of credit for borrowed money in the amount of
$3,000,000.00 (the “Loan”), as authorized under Section 3.07 of the Royalty
Trust Indenture (the “Indenture”), dated of December 1, 1982, by and between
Mesa Petroleum Co., as Trustor, and JP Morgan Chase Bank, N.A.
(successor-in-interest to Texas Commerce Bank National Association), as Trustee
of Mesa Offshore Trust (the “Trust”).

B.                                     The Trust is the owner of a 99.99%
general partnership interest in Mesa Offshore Royalty Partnership, a Texas
general partnership (the “Partnership”).  The Indenture authorizes Pledgor to
pledge the Trust’s general partnership interest in the Partnership as security
for a loan pursuant to Section 3.07 of the Indenture.  It is in Pledgor’s
interest for Secured Party to make the Loan to Pledgor.

C.                                     As one of the conditions for executing
the Note and making the Loan to Pledgor, Pledgor has agreed to pledge and grant
to Secured Party, for the benefit of Secured Party, a security interest in and
to all of the Trust’s interest in the Partnership to secure the Obligations (as
defined below).  The parties hereto are entering into this Agreement to set
forth their entire understanding with respect to the subject matter hereof.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, and in
consideration of the foregoing and the mutual covenants herein contained, agree
as follows:

1                                          DEFINITIONS

 

1.1                                 CERTAIN DEFINED TERMS.

(A)                                  EACH CAPITALIZED TERM USED AND NOT
OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANING ASSIGNED TO SUCH TERM IN NOTE.

(B)                                 FOR PURPOSES OF THIS AGREEMENT, THE
FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

“Collateral” shall mean:

(A)                                  ALL OF THE ISSUED AND OUTSTANDING GENERAL
PARTNERSHIP INTERESTS NOW OR HEREAFTER OWNED BY PLEDGOR IN THE PARTNERSHIP,
TOGETHER WITH ANY CASH OR PROPERTY RECEIVED IN EXCHANGE OR IN SUBSTITUTION FOR
SUCH INTERESTS (THE AFORESAID GENERAL PARTNERSHIP INTERESTS AND ANY INCOME,

 

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PROCEEDS, CASH OR OTHER PROPERTY RECEIVED IN EXCHANGE OR IN SUBSTITUTION
THEREFOR IS HEREINAFTER REFERRED TO AS THE “PLEDGED INTERESTS”); ALL
DISTRIBUTIONS WHICH MAY BE MADE ON, OR DISTRIBUTED IN CONSEQUENCE OF THE
OWNERSHIP OF, THE PLEDGED INTERESTS; AND ALL INVESTMENT PROPERTY, FINANCIAL
ASSETS, SECURITIES, SECURITIES ENTITLEMENTS, INSTRUMENTS OR DISTRIBUTIONS OF ANY
KIND ISSUABLE, ISSUED OR RECEIVED UPON CONVERSION OF, IN RESPECT OF, OR IN
EXCHANGE FOR THE PLEDGED INTERESTS;

(B)                                 ALL INVESTMENT PROPERTY, FINANCIAL ASSETS,
SECURITIES, SECURITIES ENTITLEMENTS, EQUITY INTERESTS, SUBSCRIPTIONS, WARRANTS,
OPTIONS OR OTHER RIGHTS ISSUED BY THE PARTNERSHIP, IF ANY, WHICH ARE NOW OR
HEREAFTER OWNED BY THE PLEDGOR (THE “OTHER COLLATERAL”); AND

(C)                                  ALL PROCEEDS OF ANY OF THE FOREGOING.

In the event subscriptions, warrants, options or other rights are issued to the
Pledgor in connection with any of the Collateral, such subscriptions, warrants,
options and rights shall be deemed to be part of the Collateral.

“Event of Default” shall mean either or both of the following:

(D)                                 AN OCCURRENCE OF AN EVENT OF DEFAULT AS
DEFINED OR REFERENCED IN NOTE, OR IN ANY AGREEMENT, DOCUMENT OR INSTRUMENT
INCIDENTAL TO OR EXECUTED PURSUANT THERETO, OR AS AN AMENDMENT OR MODIFICATION
TO, OR IN SUBSTITUTION THEREFOR; OR

(E)                                  A DEFAULT IN THE DUE PERFORMANCE OR
OBSERVANCE OF ANY TERM, COVENANT OR AGREEMENT REQUIRED TO BE PERFORMED OR
OBSERVED PURSUANT TO THIS AGREEMENT.

“Obligations” shall include (a) any and all obligations and liabilities of any
type or nature, now existing or hereafter created, of Pledgor or its respective
successors or assigns, to Secured Party or its respective successors, assigns or
participants pursuant to the Note; (b) all liabilities and obligations of
Pledgor hereunder; and (c) all costs, expenses and liabilities which may be
incurred or advances which may be made by Secured Party in any way in connection
with any of the Obligations or any collateral security therefor.

“Partnership Agreement” shall mean those certain Articles of General Partnership
dated November 30, 1982, as amended by First Amended and Restated Articles of
General Partnership dated December 1, 1982, Amendment to First Amended and
Restated Articles of General Partnership, dated December 27, 1985, and Second
Amendment to First Amended and Restated Articles of General Partnership, dated
January 5, 1994, and as the same may be amended, supplemented or restated from
time to time.

2                                          CREATION OF SECURITY INTEREST

As security for the full, prompt and complete performance by Pledgor of all of
the Obligations, Pledgor hereby pledges and grants a security interest to the
Secured Party, in and to the Collateral under the Uniform Commercial Code of the
State of Texas, as amended.  Pledgor hereby further agrees to do any and all
further things and to execute any and all further documents (including without
limitation UCC-l financing statements) as Secured Party shall require or as
shall be necessary to effectuate the perfection of the security interest created
hereunder in items now or hereafter constituting the Collateral.

 

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3                                          REPRESENTATIONS AND WARRANTIES OF
PLEDGOR

Pledgor makes the following representations and warranties, which
representations and warranties shall survive the execution and delivery of this
Agreement and shall continue until all of the Obligations have been discharged:

3.1                                 THE COLLATERAL IS OWNED BY THE TRUST AS SET
FORTH ON EXHIBIT A HERETO AND IS FREE AND CLEAR OF ANY AND ALL OPTIONS, CLAIMS,
SECURITY INTERESTS, LIENS, PLEDGES AND ENCUMBRANCES EXCEPT THOSE IN FAVOR OF THE
SECURED PARTY BEING GRANTED HEREBY.

3.2                                 PLEDGOR HAS THE FULL POWER AND LEGAL
AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY (INCLUDING THE RIGHT AND POWER TO PLEDGE AND TRANSFER THE
COLLATERAL), AND THIS AGREEMENT CONSTITUTES THE AUTHORIZED, VALID AND LEGALLY
BINDING OBLIGATION THEREOF ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, EXCEPT THAT
THE ENFORCEABILITY OF THE REMEDIES SET FORTH IN THIS AGREEMENT MAY BE LIMITED BY
BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM AND OTHER SIMILAR LAWS NOW OR
HEREAFTER IN EFFECT AFFECTING CREDITOR’S RIGHTS GENERALLY.

3.3                                 THE COLLATERAL NOW CONSTITUTES AND AT ALL
TIMES SHALL CONSTITUTE (A) ALL OF THE PLEDGED INTERESTS OWNED BY THE TRUST AND
(B) ALL OF THE OTHER COLLATERAL OWNED BY THE TRUST.

3.4                                 THERE ARE NO OUTSTANDING OPTIONS, WARRANTS
OR OTHER RIGHTS TO PURCHASE, OR CONTRACTS OR COMMITMENTS TO ISSUE, OR ANY
INTERESTS, INSTRUMENTS OR EVIDENCES OF INDEBTEDNESS CONVERTIBLE IN ANY MANNER
INTO EQUITY INTERESTS OF THE PARTNERSHIP.

3.5                                 THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE CONSUMMATION OF THE TRANSACTIONS PROVIDED FOR HEREIN, AND THE
FULFILLMENT OF THE TERMS HEREOF, WILL NOT RESULT IN THE BREACH OF ANY OF THE
TERMS, CONDITIONS OR PROVISIONS OF, OR CONSTITUTE A DEFAULT UNDER, OR CONFLICT
WITH, OR CAUSE ANY ACCELERATION OF ANY OBLIGATION UNDER, ANY AGREEMENT OR OTHER
INSTRUMENT TO WHICH PLEDGOR IS A PARTY OR BY WHICH IT IS BOUND, OR ANY PROVISION
OF THE PARTNERSHIP AGREEMENT, AS APPLICABLE, OR ANY JUDGMENT, DECREE, ORDER OR
AWARD OF ANY COURT, GOVERNMENTAL BODY OR ARBITRATOR OR ANY APPLICABLE LAW, RULE
OR REGULATION.

3.6                                 NO APPROVALS OF ANY NATURE ARE REQUIRED BY
ANY GOVERNMENTAL OR REGULATORY BODY IN CONNECTION WITH THE PLEDGE OF THE
COLLATERAL PROVIDED FOR HEREIN AND NO SUCH APPROVALS ARE REQUIRED TO BE OBTAINED
BY PLEDGOR IN CONNECTION WITH THE TRANSFER OF THE COLLATERAL UPON THE EXERCISE
OF SECURED PARTY’S RIGHTS HEREUNDER.

4                                          EXERCISE OF PLEDGOR’S RIGHTS

Prior to the occurrence of an Event of Default, Pledgor shall exercise all of
its rights with respect to the Collateral owned by the Trust including all
rights of the Trust set forth in the Partnership Agreement; provided, however,
that Pledgor shall not in any event exercise any of such rights in a manner
which would cause or constitute an Event of Default or would otherwise be
inconsistent with any of the terms, conditions or provisions of this Agreement
or the Note.  Upon the occurrence and during the continuance of any Event of
Default, Secured Party and its respective successors and assigns may exercise
the rights of Pledgor with respect to the Collateral and otherwise set forth in
the Partnership Agreement irrespective of whether Secured Party exercises any of
its other rights and remedies hereunder or under law, and for such purpose

 

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Secured Party and its respective successors and assigns are hereby designated as
Pledgor’s proxy, which designation shall be deemed to be coupled with an
interest and to be irrevocable and valid until the termination of the security
interest herein granted or the curing of such Event of Default, any limitation
under law as to the length or validity of a proxy to the contrary
notwithstanding.  The designation set forth in the previous sentence shall be
deemed to amend and supersede any inconsistent provision in the Partnership
Agreement or other agreements or documents to which Pledgor is subject or by
which it is bound.  Pledgor shall execute all such further documents and do all
such further things as may be reasonably requested by Secured Party to effect
Secured Party’s ability to exercise Pledgor’s rights with respect to the
Collateral and under the Partnership Agreement.

5                                          COVENANTS OF PLEDGOR

Until the security interests of Secured Party terminate pursuant to this
Agreement, Pledgor shall comply with the following covenants and agreements and
shall exercise its rights with respect to the Collateral and as otherwise
provided in the Partnership Agreement to cause the Partnership to comply with
the following covenants and agreements:

5.1                                 PLEDGOR SHALL PERFORM FULLY AND TIMELY ITS
OBLIGATIONS, COVENANTS AND AGREEMENTS HEREUNDER (INCLUDING THE PERFORMANCE OF
THE OBLIGATIONS).

5.2                                 PLEDGOR SHALL EXECUTE AND DELIVER, UPON
REQUEST OF SECURED PARTY, FROM TIME TO TIME, SUCH FINANCING STATEMENTS,
CONTINUATION STATEMENTS, ASSIGNMENTS, SECURITY AGREEMENTS AND SUCH OTHER
INSTRUMENTS OR DOCUMENTS AS SECURED PARTY MAY REQUEST TO PERFECT, AND TO KEEP
AND CONTINUE PERFECTED AT ALL TIMES, SECURED PARTY’S SECURITY INTEREST IN THE
COLLATERAL.

5.3                                 PLEDGOR HEREBY COVENANTS AND AGREES WITH
SECURED PARTY THAT NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE PARTNERSHIP
AGREEMENT, ANY PAYMENTS WHICH WOULD HAVE BEEN PAID TO PLEDGOR PURSUANT TO THE
PARTNERSHIP AGREEMENT OR BY LAW IN CONNECTION WITH ANY LIQUIDATION OF THE
PARTNERSHIP SHALL BE PAID TO SECURED PARTY AND APPLIED TO THE REPAYMENT OF THE
OBLIGATIONS PRIOR TO BEING PAID TO PLEDGOR.

5.4                                 PLEDGOR SHALL NOT PERMIT THE PARTNERSHIP,
EXCEPT WITH THE PRIOR WRITTEN CONSENT OF SECURED PARTY, TO (A) ISSUE ANY
SECURITIES OR INTERESTS OF ANY KIND OR ANY OPTIONS, WARRANTS OR OTHER RIGHTS
ENTITLING ANY PERSON OR ENTITY TO ACQUIRE ANY MEMBER INTERESTS, (B) MAKE ANY
COMMITMENT TO PURCHASE, LIQUIDATE OR OTHERWISE ACQUIRE ANY SUCH SECURITIES OR
INTERESTS, (C) AMEND THE PARTNERSHIP AGREEMENT, OR (D) AUTHORIZE OR CAUSE ANY
CHANGE IN ITS CAPITAL STRUCTURE.

5.5                                 PLEDGOR SHALL NOT TRANSFER, SELL, ENCUMBER
OR OTHERWISE DISPOSE OF THE COLLATERAL, AND SHALL NOT CREATE, ASSUME OR SUFFER
TO EXIST ANY SECURITY INTEREST, LIEN, CHARGE OR OTHER ENCUMBRANCE IN FAVOR OF
ANY INDIVIDUAL OR ENTITY IN, ON OR TO ANY OF THE COLLATERAL, EXCEPT AS CREATED
HEREUNDER.

 

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6                                          RIGHTS AND REMEDIES OF SECURED PARTY

6.1                                 IN ADDITION TO ANY OTHER RIGHTS ACCORDED TO
SECURED PARTY HEREUNDER, UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF ANY
EVENT OF DEFAULT:

6.1.1                        SECURED PARTY SHALL BE ENTITLED TO RECEIVE ANY CASH
DISTRIBUTIONS OR PAYMENTS ON THE COLLATERAL AND TO EXERCISE IN SECURED PARTY’S
DISCRETION ALL RIGHTS PERTAINING TO THE COLLATERAL.

6.1.2                        SECURED PARTY SHALL HAVE THE RIGHT TO EXERCISE ALL
RIGHTS WITH RESPECT TO THE COLLATERAL AS IF IT WERE THE SOLE AND ABSOLUTE OWNER
THEREOF, INCLUDING, WITHOUT LIMITATION, TO EXERCISE DECISION-MAKING OR CONSENT
RIGHTS WITH RESPECT TO AND/OR TO EXCHANGE, AT ITS SOLE DISCRETION, ANY OR ALL OF
THE COLLATERAL IN CONNECTION WITH A MERGER, REORGANIZATION, CONSOLIDATION,
RECAPITALIZATION OR OTHER READJUSTMENT CONCERNING OR INVOLVING THE COLLATERAL OR
PLEDGOR.

6.1.3                        PLEDGOR SHALL TAKE ANY ACTION NECESSARY OR REQUIRED
OR REQUESTED BY SECURED PARTY IN ORDER TO ALLOW SECURED PARTY FULLY TO ENFORCE
ITS SECURITY INTEREST IN THE COLLATERAL HEREUNDER AND TO REALIZE THEREON TO THE
FULLEST EXTENT POSSIBLE, INCLUDING, BUT NOT LIMITED TO, THE FILING OF ANY CLAIMS
WITH ANY COURT, LIQUIDATOR, TRUSTEE, GUARDIAN, RECEIVER OR OTHER LIKE PERSON OR
PARTY.

6.1.4                        SECURED PARTY SHALL HAVE ALL OF THE RIGHTS OF A
SECURED PARTY UNDER THE UNIFORM COMMERCIAL CODE OF THE STATE OF TEXAS, AS
AMENDED, AND ANY OTHER APPLICABLE LAW INCLUDING THE RIGHT TO SELL ANY OR ALL OF
THE COLLATERAL AT ONE OR MORE PUBLIC OR PRIVATE SALES UPON AT LEAST TEN (10)
DAYS’ WRITTEN NOTICE TO PLEDGOR (AT THE ADDRESS SET FORTH IN OR DESIGNATED
PURSUANT TO SECTION 11.1 HEREOF) OF THE TIME AND PLACE OF ANY PUBLIC SALE AND OF
THE DATE ON WHICH THE COLLATERAL WILL FIRST BE OFFERED FOR SALE IN THE CASE OF
ANY PRIVATE SALE AND TO BID THEREAT OR PURCHASE ANY PART OR ALL THEREOF IN ITS
OWN OR A NOMINEE’S NAME, FREE AND CLEAR OF ANY EQUITY OF REDEMPTION; AND TO
APPLY THE NET PROCEEDS OF THE SALE, AFTER DEDUCTION FOR ANY COSTS AND EXPENSES
OF SALE (INCLUDING ANY LIABILITIES INCURRED IN CONNECTION THEREWITH) INCLUDING
REASONABLE ATTORNEYS’ FEES, TO THE PAYMENT OF THE OBLIGATIONS IN ANY MANNER OR
ORDER WHICH SECURED PARTY, IN ITS SOLE DISCRETION, MAY ELECT, TO THE PAYMENT OF
ANY OTHER AMOUNT REQUIRED BY LAW, AND TO PAY ANY REMAINING NET PROCEEDS (IF ANY)
TO PLEDGOR OR ITS SUCCESSORS OR ASSIGNS OR TO WHOMSOEVER MAY LAWFULLY BE
ENTITLED TO RECEIVE THE SAME OR AS A COURT OF COMPETENT JURISDICTION MAY DIRECT,
WITHOUT FURTHER NOTICE TO OR CONSENT OF PLEDGOR AND WITHOUT REGARD TO ANY
EQUITABLE PRINCIPLES OF MARSHALLING OR OTHER LIKE EQUITABLE DOCTRINES.  PLEDGOR
HEREBY ACKNOWLEDGES AND AGREES THAT THE NOTICE PROVIDED FOR ABOVE IS
REASONABLE.  PLEDGOR HEREBY WAIVES ANY RIGHTS IT MAY HAVE OF EQUITY, REDEMPTION,
STAY OR APPRAISAL WITH RESPECT TO THE COLLATERAL.

 

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6.2                                 IN THE EVENT THAT AFTER THE OCCURRENCE AND
DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT, THE SECURED PARTY SHALL SELL ALL
OR ANY OF THE COLLATERAL TO ANOTHER PARTY OR PARTIES (HEREIN CALLED “PURCHASER”)
OR SHALL PURCHASE ALL OR ANY OF THE COLLATERAL OR RETAIN THE COLLATERAL PURSUANT
TO ITS RIGHTS SO TO DO, PLEDGOR SHALL USE ITS BEST EFFORTS TO:

(I)                                     DELIVER TO THE SECURED PARTY OR
PURCHASER, AS THE CASE MAY BE, THE BOOKS OF ACCOUNT, DEEDS, LEASES, INDENTURES,
AGREEMENTS, EVIDENCES OF INDEBTEDNESS AND FINANCIAL RECORDS AND ALL OTHER
DOCUMENTS AND RECORDS OF THE PARTNERSHIP;

(II)                                  OBTAIN RESIGNATIONS OF THE PERSONS THEN
SERVING AS OFFICERS OR MANAGERS, IF ANY, OF THE PARTNERSHIP; AND

(III)                               USE ALL REASONABLE EFFORTS TO OBTAIN ANY
APPROVALS (OTHER THAN FOR A REGISTRATION UNDER FEDERAL OR STATE SECURITIES LAWS)
THAT ARE REQUIRED BY ANY GOVERNMENTAL OR REGULATORY BODY, IF ANY, IN ORDER TO
PERMIT THE SALE OF THE COLLATERAL TO THE PURCHASER AND ALLOW PURCHASER TO
CONTINUE THE BUSINESS OF THE PARTNERSHIP.

6.3                                 TO INDUCE SECURED PARTY TO ENTER INTO THE
NOTE, PLEDGOR AGREES THAT IN THE EVENT PLEDGOR BECOMES THE DEBTOR IN A
BANKRUPTCY PROCEEDING, RECEIVERSHIP, OR SIMILAR PROCEEDING:

(A)                                  SECURED PARTY SHALL BE ENTITLED TO SEEK
IMMEDIATE RELIEF FROM ANY STAY IN ORDER THAT SECURED PARTY MAY EXERCISE ITS
RIGHTS AND REMEDIES WITH RESPECT TO THE COLLATERAL.

(B)                                 PLEDGOR ADMITS THAT THE COLLATERAL IS NOT
NECESSARY TO A PLAN OF REORGANIZATION OR LIQUIDATION, AND THAT SECURED PARTY MAY
NOT HAVE ADEQUATE PROTECTION ABSENT FORECLOSURE AND THE EXERCISE OF SECURED
PARTY’S OTHER REMEDIES AS TO THE COLLATERAL.

(C)                                  PLEDGOR AGREES THAT THE RIGHTS, POWERS AND
REMEDIES GIVEN TO SECURED PARTY UNDER THIS AGREEMENT AND THE NOTE ARE CUMULATIVE
AND NOT EXCLUSIVE OF ANY THEREOF OR OF ANY OTHER POWERS, RIGHTS OR REMEDIES
AVAILABLE TO SECURED PARTY.

7                                          POWER OF ATTORNEY

Secured Party is hereby appointed by Pledgor as its Attorney-in-Fact,
irrevocably, to do any and all acts and things which Secured Party may deem
necessary to perfect and continue perfected the security interest hereby created
including, without limitation, the execution on behalf of Pledgor of any
financing or continuation statement with respect to the security interest
created hereby and, upon the occurrence and during the continuance of any Event
of Default, to do any and all acts and things to protect and preserve the
Collateral, including, without limitation, the endorsement of any drafts or
orders which may be payable to Pledgor in respect of, arising out of, or
relating to any or all of the Collateral and the prosecution of all rights
included in the Collateral.

8                                          DELAY AND NON-WAIVER

No delay or omission by Secured Party to exercise any remedy or right accruing
upon an Event of Default shall impair any such remedy or right, or shall be
construed to be a waiver of any such Event of Default, or an acquiescence
therein, nor shall it affect any subsequent Event of Default of the same or of a
different nature.

9                                          OBLIGATION OF PLEDGOR UNCONDITIONAL

Pledgor hereby agrees that Pledgor’s liability hereunder is unconditional,
irrespective of: (a) the legality, validity or enforceability of the
Obligations; (b) the legality, validity or enforceability of any security
interest, mortgage or pledge granted by the Pledgor or any other person as
collateral for the Obligations, any guarantee, suretyship, letter of credit or
reimbursement agreement issued by any person secondarily or otherwise liable for
any of the Obligations, any right of set-off against any deposit account or
credit on the Secured Party’s or any Lender’s books in favor of the Pledgor or
any person secondarily or otherwise liable for any of the Obligations, or any
other device providing collateral security for payment of the

 

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Obligations (all of the above referenced devices being referred to herein as the
“Collateral Security”); (c) the failure by Secured Party for any reason to
resort to, enforce or exhaust its remedies under or against the Obligations or
the Collateral Security; (d) the waiver or consent by Secured Party with respect
to any term or condition of the Obligations or the Collateral Security; (e) the
recovery of any judgment against Pledgor or any action to enforce such judgment
or any other circumstance which might, absent the unconditional nature of this
Agreement, constitute a legal or equitable discharge or defense of a guarantor,
a pledgor or a debtor.

10                                    TERMINATION OF SECURITY INTEREST

At such time as (a) all of the Obligations have been paid and/or performed in
full, (b) such satisfaction of the Obligations is not then subject to any filed
or threatened claim, contest, voidance or offset of any type whatsoever, and
(c) all applicable preference or other similar periods under applicable
bankruptcy, insolvency or creditors’ rights laws shall have expired as to the
Obligations, the security interest provided herein shall terminate and Secured
Party shall return to Pledgor thereof all Collateral then held by Secured Party,
if any, and upon written request, shall execute, in form for filing, termination
statements of the security interest herein granted and, thereafter, no party
hereto shall have any further rights or obligations hereunder.

11                                    MISCELLANEOUS PROVISIONS

11.1                           NOTICES

All notices and correspondence, hereunder shall be in writing and sent by
certified or registered mail, return receipt requested, or by overnight delivery
service, with all charges prepaid, to the applicable party at the address set
forth below, or by facsimile transmission (including, without limitation,
computer generated facsimile), promptly confirmed in writing sent by first class
mail, to the Fax numbers and the addresses set forth below.

If to Secured Party:

                                                JP Morgan Chase Bank, N.A.

                                                4 New York Plaza — Floor 15

New Yew, New York 10004-2413

                                                Attention: Thomas J. Foley

 

If to Pledgor:

                                                Mesa Offshore Trust

                                                c/o JP Morgan Chase Bank, N.A.,
Trustee

                                                919 Congress Avenue

                                                Suite 500

                                                Austin, Texas 78701

                                                United States of America

                                                Attention: Mike Ulrich, Bank of
New York, Vice President

 

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With copies to:

David C. Buck
Andrews Kurth LLP
600 Travis Street, Suite 4200
Houston, Texas 77002

or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 11.1.  All such notices and correspondence shall be deemed given
upon the earlier to occur of (a) actual receipt, (b) if sent by certified or
registered mail, three business days after being post-marked, (c) if sent by
overnight delivery service, when received at the above stated addresses or when
delivery is refused or (d) if sent by facsimile transmission, when receipt of
such transmission is acknowledged.

11.2                           SUCCESSORS AND ASSIGNS

This Agreement shall be binding upon the successors and assigns of Pledgor and
shall inure to the benefit of and be enforceable by the successors and assigns
of Secured Party.

11.3                           ENTIRE AGREEMENT

This Agreement and the Note set forth all of the promises, covenants,
agreements, conditions and understandings among the parties hereto with respect
to the subject matter hereof, and supersedes all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written, with respect thereto, except as contained or referred to
herein.  This Agreement may not be amended, waived, discharged or terminated
orally but only by an instrument in writing signed by the party against whom
enforcement of such amendment, waiver, discharge or termination is sought.

11.4                           GOVERNING LAW

This Agreement and the rights and obligations of the parties hereunder shall be
construed and enforced in accordance with and shall be governed by the laws of
the State of Texas (without regard to conflict of laws principles).

11.5                           CONSENT TO JURISDICTION SERVICE AND VENUE

For the purpose of any action which may be brought in connection with this
Agreement, Pledgor hereby consents to the jurisdiction and venue of the courts
of the State of Texas and of any federal court located in the State of Texas,
and consents to service of process in connection with any such matter by means
of first class mail, postage prepaid, sent to the address of Pledgor in the
manner specified in Section 11.1.  Pledgor hereby waives the right to contest
the jurisdiction and venue of the aforesaid courts located in the State of Texas
on the ground of inconvenience or otherwise and, further, waives any right to
bring any action or proceeding against Secured Party in any court outside the
State of Texas.  The provisions of this Section shall not limit or otherwise
affect the right of Secured Party to institute and conduct action in any

 

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other appropriate manner, jurisdiction or court.  The provisions of this
Section 11.5 have been fully disclosed by the parties hereto and the provisions
hereof shall be subject to no exceptions.

11.6                           WAIVER OF JURY TRIAL

PLEDGOR AND SECURED PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREIN.  PLEDGOR HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT
OF THE SECURED PARTY (INCLUDING ITS COUNSEL) HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE SECURED PARTY WOULD NOT, IN THE EVENT OF SUCH LITIGATION,
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL. PLEDGOR ACKNOWLEDGES THAT
THE SECURED PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA,
THE PROVISIONS OF THIS SECTION 14.6.

11.7                           SEVERABILITY

If any of the provisions or terms of this Agreement shall for any reason be held
to be invalid or unenforceable such invalidity or unenforceability shall not
affect’ any other of the terms hereof, but this Agreement shall be construed as
if such invalid or unenforceable term had never been contained herein.

11.8                           COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of which shall
constitute an original agreement, but all of which together shall constitute one
and the same instrument.

 

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

 

PLEDGOR:

 

 

 

 

 

 

MESA OFFSHORE TRUST, a Texas trust

 

 

 

By: The Bank of New York Trust Company, N.A. as attorney-in-fact for JPMORGAN
BANK, N.A. , Trustee

 

 

By:

/s/ Mike Ulrich

 

Name:

Mike Ulrich

 

Title:

Vice President

 

Signature Page to Pledge Agreement

 

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SECURED PARTY:

 

 

 

 

 

 

JP MORGAN CHASE BANK, N.A.

 

 

 

 

By:

/s/ Paul Zink

 

Name:

Paul Zink

 

Title:

Vice President

 

Signature Page to Pledge Agreement

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EXHIBIT A

Ownership of Collateral

Mesa Offshore Trust owns 99.99% of the general partnership interest in the Mesa
Offshore Royalty Partnership, a Texas general partnership.  Pledgor as trustee
of the Mesa Offshore Trust has authority to pledge this general partnership
interest.

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