Exhibit 10.1

 

Final Settlement Agreement

 

A.                                    Background and Parties

 

1.                                       Parties:  The parties (hereinafter
referred to as “Parties” and individually as a “Party”) to this settlement
agreement (hereinafter “Settlement Agreement” or “Agreement”) are:

 

a.                                       “Pioneer,” which for purposes of this
Agreement means and includes Pioneer Natural Resources Company and Pioneer
Natural Resources USA, Inc., in their individual capacities, in its capacity as
managing general partner of the Mesa Offshore Royalty Partnership
(“Partnership”), and as Subject Lessee and/or operator under the Overriding
Royalty Conveyance (“Conveyance”).   Pioneer includes (unless otherwise
specified) Pioneer’s affiliates, subsidiaries, and partners and also includes
all of these entities’ owners, employees, agents, directors, officers, and
attorneys.

 

b.                                      “Plaintiffs,” which for purposes of this
Agreement means and includes MOSH Holding, L.P. and Dagger-Spine Hedgehog
Corporation in all of their capacities, as asserted in the Lawsuit or otherwise.
 Plaintiffs include (unless otherwise specified) Plaintiffs’ affiliates,
subsidiaries, and partners and also include all of these entities’ owners,
employees, agents, directors, officers, and attorneys.

 

c.                                       “Trustee” or “JPMorgan,” which for
purposes of this Agreement means and includes JPMorgan Chase Bank, N.A., in its
individual capacity, in its capacity as Trustee of the Mesa Offshore Trust
(“Trust”), and in its capacity as general partner of the Partnership.  JPMorgan
and/or Trustee includes (unless otherwise specified) JPMorgan and/or Trustee’s
affiliates, subsidiaries, and partners and also includes all of JPMorgan and/or
Trustee’s owners, employees, agents, directors, officers, and attorneys.

 

d.                                      “Woodside,” which for purposes of this
Agreement means and includes Woodside Energy (USA) Inc.  Woodside includes
(unless otherwise specified) Woodside’s affiliates, subsidiaries, and partners
and also includes all of Woodside’s employees, agents, directors, officers, and
attorneys.

 

e.                                       The “Partnership,” which for purposes
of this Agreement means and includes the Mesa Offshore Royalty Partnership. 
Partnership includes the Partnership’s affiliates, subsidiaries, and partners
and also includes all of the Partnership’s employees, agents, directors,
officers, and attorneys.

 

f.                                         The “Trust,” which for purpose of
this Agreement means and includes the Mesa Offshore Trust.

 

2.                                       Defendants:  “Defendants” refers to
Pioneer, JPMorgan, and Woodside.

 

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3.                                       The “Lawsuit:”  Plaintiffs have
pursued, on their own behalf and for the Trust and its Unit Holders, based upon,
among other things, the Trust Fund Doctrine and as authorized by the Trustee,
claims in the case styled MOSH Holding, L.P. v. Pioneer Natural Resources
Company; Pioneer Natural Resources USA, Inc.; Woodside Energy (USA) Inc.; and
JPMorgan Chase Bank, N.A., as Trustee of the Mesa Offshore Trust; Cause
No. 2006-01984; pending in the 334th Judicial District Court of Harris County,
Texas (“Lawsuit” or “Suit”).  This settlement disposes of all claims that were
raised or that could have been raised in this Lawsuit, and Plaintiffs hereby
acknowledge and agree that all of the claims they have pursued  (or could have
pursued) in the Lawsuit, including claims known or unknown to the Plaintiffs,
are settled as set forth below.

 

4.                                       No Admission of Liability:  This
settlement is made for the purpose of avoiding the expense, uncertainty, and
inconvenience of litigation and is the result of the compromise of disputed
claims.  This settlement shall not be offered or construed as an admission of
liability by any Party, and all Parties expressly deny any liability to any
Party to the Lawsuit.

 

5.                                       Execution Date:  The Execution Date of
this Settlement Agreement is May 18, 2009.

 

B.                                    Consideration

 

1.                                       Sufficiency:  The Parties agree that
good and sufficient consideration has been exchanged pursuant to this Agreement.

 

2.                                       Pioneer Settlement Sum and Settlement
Interests:  Pioneer will pay to the Trust the sum of $13 million (“Pioneer
Settlement Sum”).  The timing for payment by Pioneer of the Pioneer Settlement
Sum is set forth in paragraph D(2) below.  Pioneer will also sell its interests
in Brazos Block A-39 (“Pioneer Settlement Interests”), which were identified in
Pioneer’s tender letter of October 10, 2008 to Plaintiffs and JPMorgan, and
Pioneer will contribute to the Trust all proceeds earned from this sale.  The
Pioneer Settlement Interests are identified in the two Sales Assignments
attached as Exhibits A-1 and A-2 to this Agreement.  The Pioneer Settlement
Interests will be sold pursuant to the terms set forth in paragraph D(1) below.

 

3.                                       JPMorgan Settlement Sum:  JPMorgan will
pay to the Trust the sum of $5 million (“JPMorgan Settlement Sum”).  The timing
for payment by JPMorgan of the JPMorgan Settlement Sum is set forth in paragraph
D(2) below.  JPMorgan will also release all claims for and forgive repayment of
the existing $5 million loan provided by JPMorgan to the Trust; however,
notwithstanding anything to the contrary provided for herein, JPMorgan may use
the remaining balance of the credit facility and any other Trust income to pay
Trust liabilities and expenses as permitted under the Royalty Trust Indenture
(“Indenture”) prior to receipt of the Settlement Proceeds (defined in paragraph
D(2)) below) and the Final Distribution to the Unit Holders (defined in
paragraph D(4) below).

 

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4.                                       Woodside Settlement Sum:  Woodside will
pay to the Trust the sum of $1 million (“Woodside Settlement Sum”).  The timing
for payment by Woodside of the Woodside Settlement Sum is set forth in paragraph
D(2) below.

 

5.                                       Settlement Proceeds:  The Woodside
Settlement Sum, the JPMorgan Settlement Sum, and the Pioneer Settlement Sum will
together be referred to as the  “Settlement Proceeds.”

 

6.                                       Release of Pioneer by all Parties: 
Plaintiffs in all of their capacities, as alleged or otherwise, including on
behalf of the Trust and/or the Partnership and/or the Unit Holders as authorized
by the Trust Fund Doctrine and otherwise; the Trustee (on behalf of the Trust
and its Unit Holders); the Trustee (in its capacity as general partner of the
Partnership); JPMorgan (individually); and Woodside each agree to fully, finally
and forever release, acquit, and discharge Pioneer (individually, as managing
general partner of the Partnership, and as Subject Lessee and/or operator under
the Conveyance), its predecessors, successors and assigns, from any and all
claims, causes of action, demands and liabilities known or unknown, contingent
or direct, that arise from or relate in any way to the claims, matters, or
theories that have been or could have been asserted in the Lawsuit including,
without limitation, any and all claims relating to or concerning in any way the
acts and/or omissions of Pioneer or of any of the Parties.  These releasing
parties expressly warrant and represent that no promise or agreement which has
not herein been expressed has been made to or relied upon by them in executing
this release and that the releasing parties are relying upon their own judgment
and are not relying upon any statement or representation of Pioneer or any of
the other Parties.  This release shall include and encompass any such claims,
causes of action, demands, liabilities, matters or theories, including, but not
limited to, those based in contract or in tort and whether based on alleged
breaches of fiduciary duty, misapplication of fiduciary property, fraud,
negligence or gross negligence, breach of contract, conspiracy, or aiding or
abetting.  This release will also include, without limiting the foregoing, any
claim by any releasing party for reimbursement of attorney’s fees or of any
costs, other than as provided for in paragraph D(3).

 

7.                                       Release of JPMorgan a/k/a the Trustee: 
Plaintiffs in all of their capacities, as alleged or otherwise, including on
behalf of the Trust and/or the Partnership and/or the Unit Holders as authorized
by the Trust Fund Doctrine and otherwise; Pioneer (individually, as managing
general partner of the Partnership, and as Subject Lessee and/or operator under
the Conveyance); and Woodside each agree to fully, finally and forever release,
acquit, and discharge the Trustee, its predecessors, successors, and assigns
from any and all claims, causes of action, demands and liabilities, known or
unknown, contingent or direct, that arise from or relate in any way to the
claims, matters, or theories that have been or could have been asserted in the
Lawsuit including, without limitation, any and all claims relating to or
concerning in any way the acts and/or omissions of JPMorgan or of any of the
Parties.  These releasing parties expressly warrant and represent that no
promise or agreement which has not herein been expressed has been made to or
relied upon by them in executing this release and that the releasing parties are
relying upon their own judgment and are not relying upon any statement or

 

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representation of JPMorgan or any of the other Parties.  This release shall
include and encompass any such claims, causes of action, demands, liabilities,
matters or theories, including, but not limited to, those based in contract or
in tort and whether based on alleged breaches of fiduciary duty, misapplication
of fiduciary property, fraud, negligence or gross negligence, breach of
contract, conspiracy, or aiding or abetting.  This release will also include,
without limiting the foregoing, any claim by any releasing party for
reimbursement of attorney’s fees or of any costs, other than as provided for in
paragraph D(3).

 

8.                                       Release of Plaintiffs:  JPMorgan
(individually, as Trustee on behalf of the Trust and its Unit Holders and as
general partner of the Partnership); Pioneer (individually, as managing general
partner of the Partnership, and as Subject Lessee and/or operator under the
Conveyance); and Woodside each agree to fully, finally and forever release,
acquit, and discharge Plaintiffs, their predecessors, successors, and assigns
from any and all claims, causes of action, demands and liabilities, known or
unknown, contingent or direct, that arise from or relate in any way to the
claims, matters, or theories that have been or could have been asserted in the
Lawsuit including, without limitation, any and all claims relating to or
concerning in any way the acts and/or omissions of Plaintiffs or of any of the
Parties.  These releasing parties expressly warrant and represent that no
promise or agreement which has not herein been expressed has been made to or
relied upon by them in executing this release and that the releasing parties are
relying upon their own judgment and are not relying upon any statement or
representation of Plaintiffs or any of the other Parties, subject to paragraph
E(5) below.  This release shall include and encompass any such claims, causes of
action, demands, liabilities, matters or theories, including, but not limited
to, those based in contract or in tort and whether based on alleged breaches of
fiduciary duty, misapplication of fiduciary property, fraud, negligence or gross
negligence, breach of contract, conspiracy, or aiding or abetting.  This release
will also include, without limiting the foregoing, any claim by any releasing
party for reimbursement of attorney’s fees or of any costs, other than as
provided for in paragraph D(3).

 

9.                                       Release of Woodside:  Plaintiffs in all
of their capacities, as alleged or otherwise, including on behalf of the Trust
and/or the Partnership and/or the Unit Holders as authorized by the Trust Fund
Doctrine and otherwise; Pioneer (individually, as managing general partner of
the Partnership, and as Subject Lessee and/or operator under the Conveyance);
and JPMorgan (individually, as general partner of the Partnership, and as
Trustee on behalf of the Trust and its Unit Holders) each agree to fully,
finally and forever release, acquit, and discharge Woodside, its predecessors,
successors, and assigns from any and all claims, causes of action, demands and
liabilities, known or unknown, contingent or direct, that arise from or relate
in any way to the claims, matters, or theories that have been or could have been
asserted in the Lawsuit including, without limitation, any and all claims
relating to or concerning in any way the acts and/or omissions of Woodside or of
any of the Parties.  These releasing parties expressly warrant and represent
that no promise or agreement which has not herein been expressed has been made
to or relied upon by them in executing this release and that the releasing
parties are relying upon their own judgment and are not relying upon any
statement or representation

 

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of Woodside or any of the other Parties.  This release shall include and
encompass any such claims, causes of action, demands, liabilities, matters or
theories, including, but not limited to, those based in contract or in tort and
whether based on alleged breaches of fiduciary duty, misapplication of fiduciary
property, fraud, negligence or gross negligence, breach of contract, conspiracy,
or aiding or abetting.  This release will also include, without limiting the
foregoing, any claim by any releasing party for reimbursement of attorney’s fees
or of any costs, other than as provided for in paragraph D(3).

 

10.                                 Release of Trust and Partnership:  
Plaintiffs in all of their capacities, as alleged or otherwise, including on
behalf of the Trust and/or the Partnership and/or the Unitholders as authorized
by the Trust Fund Doctrine and otherwise; Pioneer (individually, as managing
general partner of the Partnership, and as Subject Lessee and/or operator under
the Conveyance); JPMorgan (individually, as general partner of the Partnership,
and as Trustee on behalf of the Trust and its Unit Holders); and Woodside each
agree to fully, finally and forever release, acquit, and discharge the Trust and
the Partnership from any and all claims, causes of action, demands and
liabilities, known or unknown, contingent or direct, that arise from or relate
in any way to the claims, matters, or theories that have been or could have been
asserted in the Lawsuit including, without limitation, any and all claims
relating to or concerning in any way the acts and/or omissions of the Trust
and/or the Partnership or of any of the Parties.  These releasing parties
expressly warrant and represent that no promise or agreement which has not
herein been expressed has been made to or relied upon by them in executing this
release and that the releasing parties are relying upon their own judgment and
are not relying upon any statement or representation of the Trust, the
Partnership or any of the other Parties.  This release shall include and
encompass any such claims, causes of action, demands, liabilities, matters or
theories, including, but not limited to, those based in contract or in tort and
whether based on alleged breaches of fiduciary duty, misapplication of fiduciary
property, fraud, negligence or gross negligence, breach of contract, conspiracy,
or aiding or abetting.  This release will also include, without limiting the
foregoing, any claim by any releasing party for reimbursement of attorney’s fees
or of any costs, other than as provided for in paragraph D(3).

 

11.                                 Release by the Trust and Partnership:  The
Trust (through the Trustee and through Plaintiffs in their representative
capacity, as alleged or otherwise, under the Trust Fund Doctrine and otherwise)
and the Partnership (through the Trustee as general partner, Plaintiffs in their
representative capacity, as alleged or otherwise, under the Trust Fund Doctrine
and otherwise, and Pioneer as managing general partner) agree to fully, finally
and forever release, acquit, and discharge Plaintiffs and Defendants, their
predecessors, successors, and assigns from any and all claims, known or unknown,
contingent or direct,  that arise from or relate in any way to the claims,
causes of action, demands and liabilities, known or unknown, that have been or
could have been asserted in the Lawsuit including, without limitation, any and
all claims relating to or concerning in any way the acts and/or omissions of
Plaintiffs or Defendants.  These releasing parties expressly warrant and
represent that no promise or agreement which has not herein been expressed has
been made to or relied upon by them in executing this release and that the
releasing

 

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parties are not relying upon any statement or representation of Plaintiffs or
Defendants.  This release shall include and encompass any such claims, causes of
action, demands, liabilities, matters or theories, including, but not limited
to, those based in contract or in tort and whether based on alleged breaches of
fiduciary duty, misapplication of fiduciary property, fraud, negligence or gross
negligence, breach of contract, conspiracy, or aiding or abetting.  This release
will also include, without limiting the foregoing, any claim by any releasing
party for reimbursement of attorney’s fees or of any costs, other than as
provided for in paragraph D(3).

 

12.                                 Limitations on Releases:  The claims
released pursuant to this section are referred to hereafter as “Released
Claims.”  The following is carved out from the scope of the Released Claims:

 

a.                                       JPMorgan/Pioneer Commercial Lending: 
Any claims to enforce the rights and obligations owed between and amongst
Pioneer, in its individual capacity, and JPMorgan, in its individual capacity,
arising out of any commercial lending and/or non-Trust related relationships and
contracts existing between them;

 

b.                                      JPMorgan/Woodside Commercial Lending: 
Any claims to enforce the rights and obligations owed between and amongst
Woodside, in its individual capacity, and JPMorgan, in its individual capacity,
arising out of any commercial lending and/or non-Trust related relationships and
contracts existing between them;

 

c.                                       Pioneer/Woodside Ordinary Course:  Any
claims to enforce the day-to-day rights and obligations owed between and amongst
Pioneer, in its individual capacity, and Woodside, arising out of the ordinary
course, operating-based relationship set forth in the Offshore Operating
Agreement during the time such agreement is effective between Pioneer and
Woodside, and in particular does not include any obligations that may exist
associated with Pioneer’s assignment of its interests in the South Half of
Brazos Block A-39 to occur as part of the sales process described below. 
However, this limitation does not in any way exclude from the scope of coverage
of the releases provided between and amongst Pioneer and Woodside any claims,
causes of action, demands and liabilities, known or unknown, contingent or
direct, that arise from or relate in any way to the claims, matters, or theories
that have been or could have been asserted in the Lawsuit.

 

d.                                      Enforcement Rights:  Any claims to
enforce the rights and obligations set forth pursuant to the Final Settlement
Agreement between the Parties or the terms of the Final Agreed Judgment.

 

C.                                    Conditions Precedent

 

1.                                       Court Approval of the Terms of the
Settlement Agreement:  The consideration by the Parties set forth in Part B
(Consideration) is subject to and contingent upon the approval by the Court of
the Settlement Agreement.  The Settlement Agreement will be presented to the
Court for consideration and approval and a settlement

 

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hearing will be scheduled so as to provide adequate time for the Trustee to
notify the Unit Holders in accordance with the notice provisions set forth in
the Indenture and the Texas Trust Code.  The Parties will cooperate in
submitting  a Joint Motion for Approval and/or any other reasonably necessary
filing to support the approval of the Settlement Agreement and entry of the
Final Agreed Judgment.  Should the Court within a reasonable time fail to
approve this Settlement Agreement pursuant to the terms set forth in the Final
Agreed Judgment (attached hereto as Exhibit B), subject to paragraph C(2),
below, any party to this Settlement Agreement will have the right to declare the
Settlement Agreement void and unenforceable.

 

2.                                       Entry by the Court of the Final Agreed
Judgment:  The consideration by the Parties set forth in Part B (Consideration)
is also subject to and contingent upon entry by the Court of the Final Agreed
Judgment in the form attached as Exhibit B to this Settlement Agreement, subject
to the terms of this paragraph C(2).  For purposes of this Settlement Agreement,
the Final Agreed Judgment means and includes findings of fact and conclusions of
law (that may be filed separately pursuant to Tex. R. Civ. P.
299(a) accompanying the Final Agreed Judgment, which are likewise attached
hereto as Exhibit C).  Should the Court materially modify the Final Agreed
Judgment, any party to this Settlement Agreement will have the right to declare
the Settlement Agreement void and unenforceable as to that party.  Material
modifications would include (but would not be limited to) modifications altering
the releases (or their scope); the termination procedures; the scope and
enforceability of the Final Agreed Judgment; and/or if the Court fails to find
that the Settlement Agreement is fair to and in the best interest of the Trust
and its Unit Holders.  The Parties further agree that they will cooperate in
submitting any redrafted Agreed Final Judgment (including any finding of fact or
conclusion of law) containing non-material modifications as may be requested by
the Court.

 

3.                                       Appeal of the Final Agreed Judgment: 
Should any party, person or entity appeal the Court’s entry of the Final Agreed
Judgment, the release of Settlement Proceeds held in escrow to the Trust, as
described in (D)(2) below, will not occur until such time as the Final Agreed
Judgment becomes final and non-appealable.  Should the Final Agreed Judgment be
reversed or modified, any party to this Settlement Agreement will have the right
to declare the Settlement Agreement void and unenforceable.

 

D.                                    Liquidation and Funding Process

 

1.                                       Sale of Partnership Assets and Pioneer
Settlement Interests:

 

a.                                       Timing of Sale:  After the Settlement
Agreement is approved and the Final Agreed Judgment entered, the Trustee will
complete the liquidation and wind up process for the Trust and will instruct
Pioneer to do the same with respect to the Partnership.  As part of this
liquidation process, the Pioneer Settlement Interests and the Partnership Assets
will be offered for sale via a public auction.  The sale will be conducted by
Pioneer consistent with the terms contained herein as approved by the Court and
the instructions of the Trustee.  The sale shall be conducted promptly

 

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following the approval of the Settlement Agreement and entry of the Agreed Final
Judgment.  In conducting the sale, Pioneer may utilize the services of the Oil &
Gas Asset Clearinghouse or, as necessary, any other auction service selected by
Pioneer.  The effective date of the sale of the Pioneer Settlement Interests and
the Partnership Interests will be 7:00 a.m. CT of the first day of the month in
which the auction occurs subject to the procedures of the auction service.

 

b.                                      Sale by Lot:  The Partnership Assets and
the Pioneer Settlement Interests will be offered in two lots (“Sales Lots” or
“Lots”) as follows:

 

(i)                                     the “West Delta Lot” comprised of the
Partnership’s West Delta 61 overriding royalty interest together with any other
interests of the Partnership in West Delta Block 61.  The interests comprising
the West Delta Lot are described in the West Delta Lot Assignment, which
together with the ancillary sales documentation is attached hereto as
Exhibit A-1;

 

(ii)                                  the “Brazos A-39 Lot” comprised of
(a) Pioneer’s record title and operating rights in and to the Brazos A-39 lease,
(b) the $1.6 million dedicated plugging and abandonment escrow fund earmarked
for the Brazos A-39 lease, which will remain escrowed until abandonment of the
lease is complete (the Abandonment Agreement and Abandonment Escrow Agreement
are attached hereto as Exhibits D and E, respectively), and (c) certain
interests that burden Pioneer’s record title and/or operating rights including
Pioneer’s and the Partnership’s overriding royalty interest in the Midway and
the Nimitz wells created under the Pioneer-Woodside 2003 farmout and the
Pioneer-Hydro Gulf of Mexico 2006 farmout and the royalty interest under the
Overriding Royalty Conveyance as to the areas not covered by the
Pioneer-Woodside farmout.  The Brazos A-39 Lot interest will be sold subject to
the operating rights in and to the south half of the Brazos A-39 lease assigned
to Woodside in that Partial Assignment of Operating rights made effective
January, 2003.   The interests comprising the Brazos A-39 Lot are described in
the Brazos A-39 Lot Assignment, which together with the ancillary sales
documentation is attached hereto as Exhibit A-2.

 

c.                                       Minimum Bid/Right of First Refusal
Agreements: Plaintiffs have designated MOSH, LLC as a “Qualified Bidder” for the
West Delta Lot and the Brazos A-39 Lot. The Qualified Bidder will have the right
(but not the obligation) within five (5) business days following the entry of
the Agreed Final Judgment by the Court to enter into a separate Right of First
Refusal Agreement pertaining to the public auction of the Sales Lots as set
forth below and in the Right of First Refusal Agreement attached hereto as
Exhibit F.  To constitute a “Qualified Bidder,” so as to be able to enter into
the Right of First Refusal Agreement within the time specified above, the person
or entity identified by Plaintiffs must demonstrate to Pioneer that the person
or entity meets the following requirements:  (a) with respect to both Sales
Lots, the Qualified Bidder must place in escrow pursuant to the terms of the
Right of First Refusal Escrow Agreement (attached hereto as Exhibit G) $375,000
(“Escrow Sums”) for each Sales Lot (i.e., $750,000 in the aggregate) within five
(5) business days following the date the trial court enters an Agreed Final
Judgment approving the terms of the Final Settlement; and (b) with respect

 

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to the Brazos A-39 Lot, demonstrate its qualification with the Minerals
Management Service of the US Department of the Interior (“MMS”) to hold record
title interest in and be a qualified and bonded operator for offshore interests
pursuant to the regulations and requirements of the MMS.  Should the Qualified
Bidder exercise its right to enter into the Right of First Refusal Agreement, it
will become obligated to provide a minimum bid on each lot of $375,000 and in
the event no higher bid is received, the Qualified Bidder will be obligated to
purchase the Lot for the $375,000 sum escrowed or the Lots for the $750,000 sum
escrowed.  Should bid(s) be received that are higher than the $375,000 sums
escrowed by the Qualified Bidder, the Qualified Bidder will have the right (but
not the obligation) to match the bids and purchase the Lot(s).

 

d.                                      Completion of Sale:  The Lot(s) will be
sold to the highest bidder(s) subject to the exercise by the Qualified Bidder of
its Right of First Refusal.  Should the Qualified Bidder choose not to exercise
its Right of First Refusal, then the Lot(s) will be sold to the highest
bidder(s).  In the event the Qualified Bidder exercises its Right of First
Refusal, but then fails to close for any reason, Pioneer will offer the
Lot(s) to the highest remaining bidder(s) and close the sale(s) should such
bidder(s) agree to purchase the Lots at the price offered during the bidding
process, and shall continue such offers to bidders in order to close a sale or
sales for the highest available cash price.  If such bidders are unwilling to
purchase the Lot(s) at the prices they bid during the auction, or if this
liquidation process does not result, for any reason, in a sale of both of the
Lots, Pioneer is entitled (at its sole option and its sole discretion) to
dispose of the Pioneer Settlement Interests in any manner it sees fit.  In such
event, Pioneer will have the absolute right, in its sole discretion, to cancel,
extinguish, or otherwise dispose of all or part of such interest(s).  For
example, and not by way of limiting Pioneer’s options, Pioneer may withdraw from
its participation in and ownership in Brazos Block A-39 pursuant to the terms of
the Offshore Operating Agreement governing Brazos Block A-39.  It is further
agreed and understood that if any of the Partnership’s assets remain after the
sales process for which no buyer can be found, Pioneer will have the absolute
right, in its sole discretion, to cancel, extinguish, or otherwise dispose of
all or part of such interest(s).  Up until the time of any sale or other
disposition of the Partnership’s assets, Pioneer, as managing general partner of
the Partnership, shall continue to operate the Partnership’s assets and
distribute in the normal course any net proceeds to the Trustee for the benefit
of the Trust.

 

2.                                       Payment of Sales Proceeds and
Settlement Proceeds:  Pioneer will tender the proceeds obtained from the sale of
both Lots (“Sales Proceeds”) to the Trustee promptly upon receipt by Pioneer. 
Upon payment of the Sales Proceeds to the Trustee, the Partnership will be
deemed terminated, liquidated, and wound up in all respects.  Within seven
(7) business days after the sales auction is held, Defendants will tender the
Settlement Proceeds to JPMorgan to be held in escrow at JPMorgan in interest
bearing accounts.  Once the Final Agreed Judgment becomes final and
non-appealable, but not before, the Settlement Proceeds will be released to the
Unit Holders by the Trustee for distribution in accordance with the terms set
forth below in paragraph D(4).  The combined sum of the Settlement Proceeds and
Sales Proceeds, after they have been released to the Trustee for distribution,
is referred to as the “Gross Resolution Proceeds.”

 

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Should the Final Agreed Judgment be reversed, the Settlement Proceeds (together
with accrued interest) will be remitted by JPMorgan to Defendants.

 

3.                                       Plaintiffs’ Counsel’s Attorney’s Fees: 
Plaintiffs’ counsel will seek recovery of attorney’s fees of six million two
hundred fifty thousand dollars ($6,250,000.00) and expenses of approximately two
million five hundred thousand dollars ($2,500,000.00).  The actual amount
awarded will be subject to Court approval.  Should the Court determine that a
different amount should be awarded for attorney’s fees and expenses to
Plaintiffs’ counsel, such a determination will not constitute grounds for
voiding this Settlement Agreement.  The fees and expenses will be paid by the
Trustee out of the Gross Resolution Proceeds after (but not before) the
Settlement Proceeds are released to the Trust in accordance with paragraph
D(4) below.  If the Settlement Proceeds are not released to the Trust from the
JPMorgan escrow accounts referred to in D(2) above (for example if the Agreed
Final Judgment is reversed on appeal), no attorney’s fees or expenses will be
paid to Plaintiffs’ counsel under this Settlement Agreement.

 

4.                                       Liquidation of Trust and Partnership: 
The Trustee will pay Plaintiffs’ counsel’s attorney’s fees and expenses awarded
by the Court pursuant to the terms of the Final Agreed Judgment out of the Gross
Resolution Proceeds per the paragraph above.  In addition, the Trustee will
deduct the reasonable costs incurred subsequent to April 27, 2009 of effecting
the sales of the Lots (including without limitation any commission or sales
administrative charges) and other fees and expenses relating to the
administration of the Trust for which the Trustee is entitled to pay or to
receive payment under the Indenture, notwithstanding anything to the contrary
provided herein.  The remaining sum, which will include any other ordinary
course proceeds received by the Trust (“Net Resolution Proceeds”) will be
distributed by check to the Unit Holders, as of the future Record Date as
provided below and approved by the Court in the Agreed Final Judgment.  This
distribution, which shall take place promptly after, but in no event later than
the 30th day following, the Record Date, is referred to as the “Final
Distribution.”  Plaintiffs will share in the Final Distribution based solely
upon their pro rata beneficial interest in the Trust as of the Record Date.  The
Record Date shall be twenty (20) days after the last of the following events to
occur: (1) the payment of the Sales Proceeds to the Trustee, or (2) the day this
Final Agreed Judgment becomes final and non-appealable, or (3) if appealed, and
the appeal does not result in a reversal or modification, the day on which no
further appeal or petition for review to a higher court can be taken.  Once the
Final Distribution has been made by the Trustee, the Trust will be deemed
terminated, liquidated, and wound up in all respects.  Should any Unit Holder’s
share of the Final Distribution be retained (for example, as a result of the
failure of Unit Holders to accept and/or cash their distribution checks), the
retained sums will escheat as provided for under Texas Law.

 

E.                                      Miscellaneous Terms

 

1.                                       Dispute Resolution:  The Parties agree
that if any dispute arises between the Parties under the Settlement Agreement
prior to the date that the Trustee makes the Final Distribution, Grant Cook will
serve as the sole arbitrator, and he will resolve any

 

10

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such disputes in accordance with the arbitration procedures he believes (in his
sole discretion) to be appropriate.  Mr. Cook’s decision will be final and
binding; however, Mr. Cook is not empowered to alter any of the express terms of
this Settlement Agreement.  This provision, among others, will be included in
the Court’s Agreed Final Judgment.  Should any dispute between the Parties arise
after the Final Distribution is made by the Trustee, or should Mr. Cook be
unable to act as an arbitrator for any dispute arising prior to the Final
Distribution, such dispute(s) will be resolved by binding arbitration with a
single arbitrator that must be an attorney admitted to practice law in Texas
under the administration of the American Arbitration Association pursuant to its
Commercial Arbitration Rules.

 

2.                                       Construction of Agreement: The Parties
agree that the terms of this Settlement Agreement were negotiated and reviewed
by the Parties and their counsel and that all participated in the drafting.  To
that point, the terms of this Settlement Agreement are not to be construed
against any of the drafters.

 

3.                                       Reasonable Cooperation:  The Parties
will reasonably cooperate with each other with respect to the preparation of
additional settlement documentation (and related materials) necessary to
effectuate the completion of this settlement in accordance with the terms set
forth in this Settlement Agreement.

 

4.                                       Final Agreement:  This Settlement
Agreement supersedes any prior discussions and/or agreements (whether oral,
written or other) including, without limitation, the Term Sheet.  No
modifications or amendments will be enforced unless such modifications are in
writing signed by the Party to be charged.

 

5.                                       No Reliance:  The Parties disclaim any
reliance upon any representations (or omissions) by any other party, with the
exception of Plaintiffs’ representation that neither MOSH Holding, L.P. and
Dagger-Spine nor any of their owners, officers, or affiliates have any
ownership, direct or indirect, or interest, direct or indirect, in MOSH, LLC. 
The Parties and their counsel have had the full and complete opportunity to
litigate the issues (and/or related issues) and have agreed to the terms set
forth in this Settlement Agreement.  The Parties further disclaim any right to
assert any claim for fraudulent inducement (or similar legal theory used to set
aside releases) and agree that the releases provided herein are enforceable to
the fullest extent permissible under Texas law.

 

6.                                       Texas Law:  The enforcement,
application, and interpretation of this Settlement Agreement is subject to Texas
Law without regard to any conflicts of law principles.

 

Executed by

/s/ William F. Hannes

 

Printed

William F. Hannes

 

Date

May 18, 2009

 

 

On behalf of Pioneer Natural Resources Company and Pioneer Natural Resources
Company USA, Inc., both individually, and as Managing General

 

11

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Partner of the Mesa Offshore Royalty Partnership, and as Subject Lessee and/or
operator under the Overriding Royalty Conveyance

 

Executed by

/s/ Timothy M. Roberson

 

Printed

Timothy M. Roberson

 

Date

May 18, 2009

 

 

On behalf of MOSH Holding, L. P. in its individual capacity, and for the limited
purposes set forth herein, on behalf of the Mesa Offshore Trust and its Unit
Holders and the Mesa Offshore Royalty Partnership

 

Executed by

/s/ Loyd W. Powell, Jr.

 

Printed

Loyd W. Powell, Jr.

 

Date

May 18, 2009

 

 

On behalf of Dagger-Spine Hedgehog Corporation in its individual capacity, and
for the limited purposes set forth herein, on behalf of the Mesa Offshore Trust
and its Unit Holders and the Mesa Offshore Royalty Partnership

 

Executed by

/s/ T.J. Foley

 

Printed

T.J. Foley

 

Date

May 18, 2009

 

 

On behalf of JPMorgan Chase Bank, N.A., as Trustee of the Mesa Offshore Trust
and its Unit Holders, as General Partner of the Mesa Offshore Royalty
Partnership, and individually

 

Executed by

/s/ Richard O’Loughlin

 

Printed

Richard O’Loughlin

 

Date

May 18, 2009

 

 

On behalf of Woodside Energy (USA) Inc.

 

12

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Exhibit A-1

 

This Assignment and Bill of Sale contains provisions requiring one party to be
responsible
for the negligence, strict liability or other fault of the other party.

 

Notice of Confidentiality Rights: If you are a natural person, you may remove or
strike any of the following information from this instrument before it is filed
for record in public records: your social security number or your driver’s
license.

 

ASSIGNMENT AND BILL OF SALE

(West Delta)

 

OFFSHORE LOUISIANA

 

 

 

 

 

PARISH OF PLAQUEMINES

§

 

 

§

 

STATE OF LOUISIANA

§

 

 

This Assignment and Bill of Sale (“Assignment”) dated effective as of the     
day of                         , 2009, is executed by and between Pioneer
Natural Resources USA, Inc., a Delaware corporation (“Pioneer USA”),
individually and on behalf of the Mesa Offshore Royalty Partnership (the “Mesa
Partnership”) in its capacity of Managing General Partner, with the address of
5205 N. O’Connor Blvd., Suite 900, Irving, Texas 75039-3746, (Pioneer and Mesa
Offshore being collectively called the “Assignor”), and

 

(“Assignee”), hereafter sometimes referred to individually as a “Party”, or
collectively as the “Parties”.

 

I.

 

Assignor desires to sell and transfer to Assignee the assets described herein
further to the bid by Assignee in Sale No. 231 in The Oil & Gas Asset
Clearinghouse’s July 8, 2009 auction.[(Insert if Applicable), all pursuant to
that certain RIGHT OF FIRST REFUSAL AGREEMENT dated the      day of
               , 2009, between Assignor and Assignee.]    The assets include
certain interests owned by Pioneer USA and/or certain interests owned by the
Mesa Partnership, as specified herein.  The sale and transfer shall occur as of
the Effective Time (as defined hereinafter) and the benefits and
responsibilities associated with the assets shall be owned and held by Assignee
as of and after the Effective Time, as specified herein.  Therefore, for and in
consideration of the sum of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
of the performance by Assignee of the covenants, agreements, obligations and
conditions hereinafter contained, to be kept and performed by Assignee,
effective as of July 1, 2009 at 7:00 a.m., (“Effective Time”), Assignor assigns
unto Assignee, all of Assignor’s rights, titles and interests, in and to the
following described assets, less and except the Excluded Assets (the “Assets”):

 

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An undivided 90% of that certain after payout twelve and one-half percent of
six-sixths (12.5% of 6/6ths) overriding royalty interest reserved in that
certain Assignment of Operating Rights dated effective May 13, 1998, between
Pioneer USA and Basin Exploration, Inc., recorded in C.O.B. 940 at Folio 820 of
the records of Plaquemines Parish, Louisiana and in that certain Assignment of
Operating Rights dated effective as of April 1, 2004, between Pioneer USA and
Stone Energy Corporation, et al., recorded in C.O.B. 1088, at Folio 372 of the
records of Plaquemines Parish, Louisiana, covering the oil and gas lease listed
on Exhibit “A” (the “Lease”)  (the “Conveyed Overriding Royalty Interest”).

 

II.

 

(a) Notwithstanding anything in this Assignment to the contrary, the Assets do
not include, and Pioneer USA, individually, hereby reserves and retains unto
itself, all of its rights, titles and interests in and to the following: (i) an
undivided ten percent (10%) of that certain after payout twelve and one-half
percent of six-sixths (12.5% of 6/6ths) overriding royalty interest reserved in
that certain Assignment of Operating Rights dated effective May 13, 1998,
between Pioneer USA and Basin Exploration, Inc., recorded in C.O.B. 940 at Folio
820 of the records of Plaquemines Parish, Louisiana and in that certain
Assignment of Operating Rights dated effective as of April 1, 2004, between
Pioneer USA and Stone Energy Corporation, et al., recorded in C.O.B. 1088, at
Folio 372 of the records of Plaquemines Parish, Louisiana (the “Retained
Overriding Royalty Interest”); and (ii) all rights of reassignment of interest
in the Lease as expressly provided for in paragraph 10 of the Basin Farmout (as
identified on Exhibit “B” hereto) and all rights of reassignment of interest in
the Lease provided for in paragraph 4.9 of the Stone Farmout (as defined in said
Exhibit “B”) ( the “Retained Reassignment Rights”); and

 

(b) notwithstanding anything is this Assignment to the contrary, the Assets do
not include, and each Assignor herby reserves and retains unto itself, any and
all of such Assignor’s rights, titles and interests in and to the following: 
(i) seismic, geologic and geophysical records, information, and interpretations
relating to the Assets; (ii) any and all records which consist of previous,
contemporaneous or subsequent offers, discussions, or analyses associated with
the purchase, sale or exchange of the Assets or any part thereof, proprietary
information, personnel information, tax information, information covered by a
non-disclosure obligation of a third party and information or documents covered
by a legal privilege; (iii) originals or copies of all records, files, contracts
and agreements pertaining to the Assets; (iv) all oil and gas produced prior to
the Effective Time and the proceeds therefrom pertaining to the Assets; (v) any
refund of taxes, costs or expenses borne by Assignor or Assignor’s predecessors
in title pertaining to the Assets attributable to the period of time prior to
the Effective Time; (vi) any and all proceeds receivable from the settlement or
final adjudication of contract disputes with lessors, insurers, co-owners, or
operators of the Assets or with assignors, gatherers processors or transporters
of hydrocarbons from or attributable to the Assets, including without
limitation, settlement of royalty, take-or-pay, pricing or volume adjustments
disputes, insofar as said proceeds are attributable to periods

 

2

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of time prior to the Effective Time; (vii) all rights of use of Assignor’s or
any Affiliate’s name, marks, trade dress or insignia and all of Assignor’s
intellectual property; and (viii) all rights and claims of such Assignor against
third parties (including rights and claims of such Assignor against the other
Assignor), asserted and unasserted, known and unknown, relating to the period
prior to the Effective Time relating to the Assets.  The properties described in
clauses (i) through (viii) above, together with the Retained Overriding Royalty
Interest and the Retained Reassignment Rights, are collectively referred to
herein as the “Excluded Assets.”

 

III.

 

(a)           Prior Use of Lease.  ASSIGNEE ACKNOWLEDGES AND AGREES THAT: THE
LEASE AND REAL PROPERTY HAVE BEEN USED OR MAY HAVE BEEN USED FOR EXPLORATION,
DEVELOPMENT, PRODUCTION, STORAGE, TREATMENT, PROCESSING, DISPOSAL, INJECTION AND
TRANSPORTATION OF OIL OR GAS AND OTHER SUBSTANCES AND RELATED OIL AND GAS FIELD
OPERATIONS.  POLLUTION, SUBSIDENCE, FRACTURES OR PHYSICAL CHANGES IN THE REAL
PROPERTY MAY HAVE OCCURRED AS A RESULT OF SUCH USES.  THE LEASE OR THE REAL
PROPERTY ALSO MAY INCLUDE BURIED PIPELINES, WASTES AND OTHER EQUIPMENT, WHETHER
OR NOT OF A SIMILAR NATURE, THE LOCATIONS OF WHICH MAY BE HIDDEN OR NOT NOW BE
KNOWN OR NOT READILY APPARENT BY A PHYSICAL INSPECTION OF THE AFFECTED LEASE OR
REAL PROPERTY.  HYDROCARBONS AND OTHER SUBSTANCES, INCLUDING HAZARDOUS
SUBSTANCES, MAY HAVE COME TO BE RELEASED OR LOCATED ON OR BENEATH THE SURFACE OF
THE LEASE OR THE REAL PROPERTY.

 

(b)           Limitation and Disclaimer of Representations and Warranties. 
ASSIGNEE ACKNOWLEDGES THAT ASSIGNOR HAS NOT MADE, AND ASSIGNOR HEREBY EXPRESSLY
DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
RELATING TO THE CONDITION OF ANY WELL, IMMOVABLE PROPERTY, MOVABLE PROPERTY,
EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY SITUATED ON OR
CONSTITUTING ANY PART OF THE LEASE (INCLUDING, WITHOUT LIMITATION, (a) ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (d) ANY RIGHTS OF
ASSIGNEE UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR
RETURN OF THE PURCHASE PRICE, (e) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM
FROM REDHIBITORY VICES OR DEFECTS OR OTHER VICES OR DEFECTS, WHETHER KNOWN OR
UNKNOWN, (f) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK
INFRINGEMENT, (g) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW
NOW OR HEREAFTER IN EFFECT, AND (h) ANY IMPLIED OR EXPRESS WARRANTY REGARDING
ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS OR SUBSTANCES INTO THE ENVIRONMENT
OR THE PRESENCE OF MATERIALS OR SUBSTANCES IN, ON OR UNDER THE LEASE OR REAL
PROPERTY OR PROTECTION OF THE ENVIRONMENT OR HEALTH. IN ADDITION, ASSIGNOR

 

3

--------------------------------------------------------------------------------

 

SPECIFICALLY NEGATES AND MAKES NO WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA,
INTERPRETATIVE INFORMATION, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR
MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO ASSIGNEE
IN CONNECTION WITH THIS ASSIGNMENT, THE ASSETS OR THE CONTEMPLATED TRANSACTIONS,
INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THE ASSETS, PRICING
ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY)
ATTRIBUTABLE TO THE ASSETS OR THE ABILITY OR POTENTIAL OF THE LEASE TO PRODUCE
HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE LEASE OR PROPERTY OR ANY
OTHER MATTERS CONTAINED IN CONFIDENTIAL INFORMATION OR ANY OTHER MATERIALS
FURNISHED OR MADE AVAILABLE TO ASSIGNEE BY ASSIGNOR OR BY ASSIGNOR’S
REPRESENTATIVES (DEFINED BELOW).  ANY AND ALL SUCH DATA, RECORDS, REPORTS,
PROJECTIONS, INFORMATION AND OTHER MATERIALS FURNISHED BY ASSIGNOR OR BY
ASSIGNOR’S REPRESENTATIVES OR OTHERWISE MADE AVAILABLE TO ASSIGNEE OR ASSIGNEE’S
REPRESENTATIVES OR ASSIGNEE’S AFFILIATES ARE PROVIDED AS A CONVENIENCE, AND
SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST ASSIGNOR,
ASSIGNOR’S AFFILIATES OR THEIR RESPECTIVE REPRESENTATIVES.  ANY RELIANCE ON OR
USE OF THE SAME SHALL BE AT ASSIGNEE’S (AND ITS SUCCESSORS AND ASSIGNS’) SOLE
RISK.

 

For purposes of Articles III and Article IV of this Assignment, “Real Property”,
“Real Properties”, “REAL PROPERTY” or “REAL PROPERTIES” mean the real property
or properties, surface and subsurface, in which and on which the Assets, or any
portion thereof, are located, operated, pertain, or relate and includes the
land, if any, described or referred to in Exhibit “A”.

 

IV.

 

(a)   Claims/Laws/Affiliates Defined.  As used in this Assignment, “Claims”  or
“CLAIMS” shall include costs, expenses, obligations, claims, demands, lawsuits,
causes of action, liabilities, damages, fines, penalties and judgments of any
kind or character, whether matured or unmatured, absolute or contingent, accrued
or unaccrued, liquidated or unliquidated, known or unknown, and all costs,
expenses and fees (including without limitation, interest, attorneys’ fees,
costs of experts, court costs, arbitration costs and costs of investigation)
incurred in connection therewith, including, but not limited to claims arising
from or directly or indirectly related to personal or bodily injury, death,
property damage or loss, environmental damage or the remediation thereof,
contract, royalty, and suspense obligations attributable or relating in any way
to the Assets.  “Laws” means laws, statutes, ordinances, permits, decrees,
orders, judgments, rules or regulations which are promulgated, issued or enacted
by a governmental entity (whether federal, state or local) or tribal authority
having appropriate jurisdiction. “Affiliate” or “Affiliates” means, as to any
entity, corporation, partnership, company or person, each other entity,
corporation, partnership, company or person that directly or indirectly (through
one or more intermediaries or otherwise) controls, is controlled by, or is under
common control with, such entity, corporation, partnership, company or person.

 

4

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(b)           (i) IT IS THE EXPRESS INTENT AND AGREEMENT OF ASSIGNOR AND
ASSIGNEE THAT ASSIGNEE SHALL ACCEPT THE ASSETS IN THEIR “AS IS” AND “WHERE IS”
CONDITION, SUBJECT TO AND WITH ANY AND ALL FAULTS, DEFECTS, DEFICIENCIES,
IRREGULARITIES AND CLAIMS RELATED OR ATTRIBUTABLE IN ANY MANNER THERETO,
INCLUDING, WITHOUT LIMITATION, TITLE DEFECTS, LEASE TERMINATION, ENVIRONMENTAL
DEFECTS, CESSATIONS IN PRODUCTION OR ANY OTHER MATTER AFFECTING IN ANY RESPECT
THE TITLE OR PHYSICAL CONDITION OF, OR THE RIGHT TO OWN, USE, OPERATE, POSSESS,
DEVELOP OR ENJOY, THE ASSETS, WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR
UNLIQUIDATED, FIXED OR CONTINGENT, DIRECT OR INDIRECT.

 

(ii) WITHOUT FURTHER ACTION OR DOCUMENTATION, ASSIGNEE, ITS SUCCESSORS AND
ASSIGNS HEREBY, (1) ASSUMES, SHALL BE RESPONSIBLE FOR AND SHALL COMPLY WITH ALL
DUTIES AND OBLIGATIONS, EXPRESS OR IMPLIED, ARISING AT ANY TIME WITH RESPECT TO
THE ASSETS, WHETHER ARISING BEFORE, ON OR AFTER THE EFFECTIVE TIME, INCLUDING,
WITHOUT LIMITATION (I) THOSE ARISING UNDER OR BY VIRTUE OF ANY RELATED
AGREEMENT, LEASE, CONTRACT, AGREEMENT, DOCUMENT, PERMIT, LAW, STATUTE, RULE,
REGULATION OR ORDER OF ANY GOVERNMENTAL AUTHORITY OR COURT (SPECIFICALLY
INCLUDING, WITHOUT LIMITATION, ANY GOVERNMENTAL REQUEST OR (II) CLAIMS IN
CONNECTION WITH THE MISPAYMENT OF THE CONVEYED OVERRIDING ROYALTY INTEREST;

 

(iii)    FURTHER, WITHOUT FURTHER DOCUMENTATION AND WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING ASSIGNEE, ITS SUCCESSORS AND ASSIGNS, SHALL
INDEMNIFY, DEFEND AND HOLD HARMLESS ASSIGNOR, ASSIGNOR’S AFFILIATES AND THEIR
RESPECTIVE REPRESENTATIVES FROM ANY AND ALL CLAIMS ARISING AT ANY TIME ON OR
AFTER THE EFFECTIVE TIME MADE BY ANY PERSON AND ARISING OUT OF OR RESULTING
FROM:

 

(1)           THE REVIEW, INSPECTION AND ASSESSMENT OF THE ASSETS OR THE REAL
PROPERTY;

 

(2)           THE OWNERSHIP OR OPERATION OF THE ASSETS OR THE REAL PROPERTY;

 

(3)           RIGHTS AND OBLIGATIONS OF THE PARTIES OR THIRD PARTIES UNDER THE
RELATED AGREEMENTS;

 

(4)           FAILURE BY THIRD PARTIES TO APPROVE OR CONSENT TO ANY ASPECT OF
THE TRANSACTION CONTEMPLATED IN THIS ASSIGNMENT

 

5

--------------------------------------------------------------------------------

 

OR THE SALE OR TRANSFER OF THE ASSETS OR ANY PORTION THEREOF;

 

(5)           GAS IMBALANCES AND PAYMENTS, ROYALTIES OR DISBURSEMENTS PAYABLE TO
THIRD PARTIES RELATING TO THE ASSETS;

 

(6)           INABILITY OR FAILURE TO OBTAIN THE TRANSFER OF A PERMIT OR
AUTHORIZATION OR THE INABILITY TO OBTAIN A PERMIT OR AUTHORIZATION RELATING TO
THE ASSETS.

 

(c)           ASSIGNEE’S RELEASE OF ASSIGNOR.  WITHOUT FURTHER ACTION OR
DOCUMENTATION, ASSIGNEE RELEASES AND DISCHARGES, TO THE MAXIMUM EXTENT ALLOWED
BY LAW (BUT NO FURTHER), ASSIGNOR AND ASSIGNOR’S AFFILIATES AND THEIR
RESPECTIVE, SUCCESSORS AND ASSIGNS AND REPRESENTATIVES FROM ALL CLAIMS RELATING
IN ANY WAY TO THE ASSETS, THE REAL PROPERTY OR THE TRANSACTIONS CONTEMPLATED BY
THIS ASSIGNMENT, REGARDLESS OF WHEN OR HOW THE CLAIMS AROSE OR ARISE, OR WHETHER
THE CLAIMS WERE FORESEEABLE OR UNFORESEEABLE. ASSIGNEE’S RELEASE OF ASSIGNOR AND
ITS AFFILIATES AND THEIR RESPECTIVE REPRESENTATIVES, SUCCESSORS AND ASSIGNS,
INCLUDES CLAIMS RESULTING IN ANY WAY FROM THE NEGLIGENCE OR STRICT LIABILITY OF
ASSIGNOR AND ITS AFFILIATES AND THEIR RESPECTIVE REPRESENTATIVES, SUCCESSORS AND
ASSIGNS, WHETHER THE NEGLIGENCE OR STRICT LIABILITY IS ACTIVE, PASSIVE, JOINT,
CONCURRENT, OR SOLE. THERE ARE NO EXCEPTIONS TO ASSIGNEE’S RELEASE OF ASSIGNOR
AND ITS AFFILIATES AND THEIR RESPECTIVE REPRESENTATIVES, SUCCESSORS AND ASSIGNS,
AND THIS RELEASE IS BINDING ON ASSIGNEE AND ITS SUCCESSORS AND ASSIGNS. WITHOUT
LIMITING THE FOREGOING, THIS RELEASE EXPRESSLY COVERS AND INCLUDES ANY AND ALL
CLAIMS RELATING IN ANY WAY TO THE CLAIMS THAT WERE ASSERTED, OR THAT COULD HAVE
BEEN ASSERTED, WHETHER KNOWN OR UNKNOWN, IN THE CASE STYLED MOSH HOLDING, L.P.
V. PIONEER NATURAL RESOURCES COMPANY; PIONEER NATURAL RESOURCES USA, INC.;
WOODSIDE ENERGY (USA), INC.; AND JPMORGAN CHASE BANK, N.A., AS TRUSTEE OF THE
MESA OFFSHORE TRUST; CAUSE NO. 2006-01984; IN THE 334TH JUDICIAL DISTRICT COURT
OF HARRIS COUNTY, TEXAS. ASSIGNEE EXPRESSLY WARRANTS AND REPRESENTS AND DOES
HEREBY STATE AND REPRESENT THAT NO PROMISE OR AGREEMENT WHICH IS NOT HEREIN
EXPRESSED HAS BEEN MADE TO ASSIGNEE IN EXECUTING THIS ASSIGNMENT OR AGREEING TO
THIS RELEASE AND THAT ASSIGNEE IS NOT RELYING UPON ANY STATEMENT OR
REPRESENTATION OF ASSIGNOR OR ANY AFFILIATE OF ASSIGNOR OR ANY OF THEIR
RESPECTIVE REPRESENTATIVES. ASSIGNEE HAS BEEN REPRESENTED BY LEGAL COUNSEL AND
SAID COUNSEL HAS READ AND EXPLAINED TO ASSIGNEE THE ENTIRE

 

6

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CONTENTS OF THIS ASSIGNMENT AND THIS RELEASE AND EXPLAINED THE LEGAL
CONSEQUENCES THEREOF.

 

(d)           Inducement to Assignor.  Assignee acknowledges that it evaluated
its obligations under this Article IV and understands its assumption of these
obligations is a material inducement to Assignor to enter into this Assignment.

 

(e)           Inurement. This Assignment is made subject to governmental and
regulatory agency laws, rules and regulations and subject to all the terms and
the express and implied covenants and conditions of the Lease described in said
Exhibit “A”.  Further, the terms, covenants, indemnities, releases,
requirements, obligations and conditions of this Assignment shall be binding
upon and shall inure to the benefit of the Assignor and the Assignee and their
respective successors and assigns, and such terms, covenants, indemnities,
releases, requirements, obligations and conditions of this Assignment are
effective as stated, shall be covenants running with the lands and the leasehold
estates herein assigned and with each transfer or assignment of said lands and
leasehold estates, whether or not the terms, covenants, indemnities, releases,
requirements, obligations and conditions of this Assignment are memorialized in
future assignments or other instruments. No future action, agreement or
assignment pertaining, all or in part, to this Assignment, the Assets or any
rights thereto or thereunder by Assignee or any of its successors or assigns
shall relieve Assignee or any of its successors or assigns of any responsibility
or liability for the performance of Assignee’s obligations under this Assignment
unless expressly agreed to in writing by an authorized officer of Assignor.

 

(f)            BENEFIT OF INDEMNITIES AND RELEASES.            THE BENEFIT OF
THE INDEMNITIES AND RELEASES PROVIDED IN THIS ASSIGNMENT BY ASSIGNEE, ITS
SUCCESSORS AND ASSIGNS, TO ASSIGNOR SHALL EXTEND TO ASSIGNOR AND ITS CORPORATE
PARENT, SUBSIDIARIES, PARTNERS AND AFFILIATES AND TO ANY PERSON WHO AT ANY TIME
HAS SERVED OR IS SERVING AS A DIRECTOR, OFFICER, TRUSTEE, EMPLOYEE, CONSULTANT
(INCLUDING, BUT NOT LIMITED TO THE OIL & GAS ASSET CLEARINGHOUSE AND ITS
RESPECTIVE PARTNERS OR AFFILIATED ENTITIES AND THEIR RESPECTIVE DIRECTORS,
OFFICERS AND EMPLOYEES) OR AGENT OF ANY OF THE FOREGOING (EACH A
“REPRESENTATIVE” AND ANY TWO OR MORE BEING “REPRESENTATIVES”), AND EACH OF THEIR
RESPECTIVE HEIRS, EXECUTORS, SUCCESSORS AND ASSIGNS, AND SHALL APPLY TO ALL
CLAIMS SUBJECT TO INDEMNITY HEREUNDER, INCLUDING, TO THE MAXIMUM EXTENT ALLOWED
BY LAW (AND NO FURTHER), THOSE BASED ON NEGLIGENCE OF ANY NATURE, INCLUDING SOLE
NEGLIGENCE, SIMPLE NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE NEGLIGENCE, PASSIVE
NEGLIGENCE, STRICT LIABILITY OR FAULT OF ASSIGNOR (OR ANY OTHER INDEMNIFIED
PARTY OR REPRESENTATIVE) OR ANY OTHER THEORY OF LIABILITY OR FAULT, WHETHER OF
LAW (WHETHER COMMON OR STATUTORY) OR IN EQUITY.

 

7

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V.

 

Disclaimer of Warranties. ASSIGNOR MAKES NO, AND EXPRESSLY DISCLAIMS ANY,
WARRANTY OF TITLE, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION RIGHTS TO
RETURN OF ANY CONSIDERATION OR PURCHASE PRICE.  WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, ALL IMPLIED COVENANTS AND WARRANTIES ARISING FROM THE USE OF
THE WORDS “GRANTS,” “BARGAINS,” “ASSIGNS” AND “CONVEYS” ARE HEREBY EXPRESSLY
DISCLAIMED AND NEGATED. THIS ASSIGNMENT IS MADE WITHOUT ANY EXPRESS, IMPLIED,
STATUTORY OR OTHER WARRANTY OR REPRESENTATION WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, WARRANTY OF TITLE.

 

VI.

 

(a)           Governing Law.  This Assignment executed in accordance herewith
shall be governed by and interpreted in accordance with the laws of the State of
Texas, without regard to conflict of law rules that would direct application of
the laws of another jurisdiction, except to the extent that it is mandatory that
the law of the jurisdiction wherein the Assets are located shall apply.

 

(b)           Captions.  The captions in this Assignment are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Assignment.

 

(c)           WAIVER OF CONSUMER RIGHTS/DTPA WAIVER.  TO THE EXTENT THE
PROVISIONS ARE APPLICABLE TO THE ASSETS OR ANY PORTION THEREOF, ASSIGNEE HEREBY
VOLUNTARILY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES ACT
(DTPA), CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER
THAN SECTION 17.555, WHICH IS NOT WAIVED), TEX. BUS. & COM. CODE, A LAW THAT
GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS.  IN ORDER TO EVIDENCE ITS
ABILITY TO GRANT SUCH WAIVER, ASSIGNEE HEREBY REPRESENTS AND WARRANTS TO
ASSIGNOR THAT IT (i) IS IN THE BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR
LEASE, GOODS OR SERVICES FOR COMMERCIAL OR BUSINESS USE; (ii) HAS CONSULTED WITH
AN ATTORNEY OF ASSIGNEE’S OWN CHOOSING; (iii) HAS KNOWLEDGE AND EXPERIENCE IN
FINANCIAL, BUSINESS AND OIL AND GAS MATTERS THAT ENABLE IT TO EVALUATE THE
MERITS AND RISKS OF THE TRANSACTIONS CONTEMPLATED HEREBY; (iv) IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION; AND (v) UNDERSTANDS THAT THIS
WAIVER IS A MATERIAL AND INTEGRAL PART OF THIS ASSIGNMENT AND THE CONSIDERATION
THEREOF.  IN ADDITION, ASSIGNEE WAIVES ITS RIGHTS UNDER ALL OTHER CONSUMER
PROTECTION STATUTES OF TEXAS OR ANY OTHER STATE APPLICABLE TO THIS TRANSACTION
THAT MAY BE WAIVED. ASSIGNEE EXPRESSLY RECOGNIZES THAT THE PURCHASE PRICE FOR
WHICH ASSIGNOR HAS AGREED TO PERFORM ITS OBLIGATIONS UNDER THIS ASSIGNMENT HAS
BEEN PREDICATED UPON THE INAPPLICABILITY OF THE DTPA AND THE WAIVER

 

8

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OF ASSIGNEE OF ITS RIGHTS UNDER CONSUMER PROTECTION STATUTES AND ASSIGNEE
FURTHER RECOGNIZES THAT ASSIGNOR IN DETERMINING TO PROCEED WITH THE ENTERING
INTO OF THIS ASSIGNMENT, HAS EXPRESSLY RELIED ON THIS WAIVER AND THE
INAPPLICABILITY OF THE DTPA AND THE CONSUMER PROTECTION STATUTES.

 

(d)           No Sale of Fractional Undivided Interests.  Assignee is Accredited
Investor.  Assignee has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment
in the Assets; it is acquiring the Assets for its own account for investment and
not with a view to or for the subdivision, resale, distribution or
fractionalization thereof; it has no contract, undertaking, or arrangement with
any person to sell, transfer or pledge to any person the Assets and it has no
present plans to enter into any such contract, undertaking, agreement or
arrangement; it understands that the Assets may not have been and will not be
registered under the Securities Act of 1933, as amended (the “Act”), or under
any state securities laws, and that transferability and sale of the Assets may
be restricted without registration under the Act and applicable state securities
laws, or an exemption therefrom.  Assignee is an “accredited investor” as that
item is defined in Regulation D promulgated under the Act.

 

(e)           Severability.   The provisions of this Assignment are severable. 
If a court of competent jurisdiction finds any part of this Assignment to be
void, invalid, or otherwise unenforceable (except for the release, waiver,
defense and indemnity provisions), such holding will not affect other portions
that can be given effect without the invalid or void portion.

 

 (f)           Related Agreements.  Unless specifically provided otherwise in
this Assignment, the sale of the Assets is made subject to all of the contracts
and agreements identified on Exhibit “B” (the “Related Agreements”).

 

(g)           Ejusdem Generis  The word “includes” and “including” and their
syntactical variants mean “includes, but not limited to” and its corresponding
syntactical variants.  The rule of ejusdem generis may not be invoked to
restrict or limit the scope of the general term or phrase followed or proceeded
by an enumeration of particular examples.

 

(h)           No Ratification.  Recitation of or reference to any agreement or
other instrument in this Assignment, including its exhibits, does not operate to
ratify, confirm, revise, or reinstate the agreement or instrument if it has
previously lapsed or expired.

 

(i)            Not to be Construed Against Drafter.  Assignor and Assignee
acknowledge that they have read this Assignment, have had the opportunity to
review it with an attorney of their respective choice, and have agreed to all
its terms.  Under these circumstances, Assignee and Assignor agree that the
rule of construction that a contract be construed against the drafter shall not
be applied in interpreting this Assignment and that in the event of any
ambiguity in any of the terms or conditions of this Assignment, including any
exhibits hereto and whether or not placed of record, such ambiguity shall not be
construed for or against any party hereto on the basis that such party did or
did not author the same.

 

9

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(j)            Waiver of Jury Trial.  ASSIGNOR AND ASSIGNEE DO HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING BASED UPON,
ARISING OUT OF OR RELATING TO THIS ASSIGNMENT THE RIGHTS AND OBLIGATIONS UNDER
THIS ASSIGNMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(k)           Express Negligence Rule; Conspicuousness.  ASSIGNEE ACKNOWLEDGES
THAT THE PROVISIONS IN THIS ASSIGNMENT THAT ARE SET OUT IN ITALICS, IN BOLD,
UNDERLINE OR CAPITALS (OR ANY COMBINATION THEREOF) SATISFY THE REQUIREMENTS FOR
THE EXPRESS NEGLIGENCE RULE AND/OR ARE CONSPICUOUS.

 

(l)            Counterparts.  This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

(m)          Compliance with Laws.  Assignee will comply with all rules, laws,
regulations and statutes applicable to Assignee’s ownership of the Assets.

 

(N)           REFERENCES.           REFERENCES HEREIN TO THE SINGULAR INCLUDES
THE PLURAL, AND VICE VERSA. REFERENCE TO ANY EXHIBIT MEANS AN EXHIBIT TO THIS
ASSIGNMENT, ALL OF WHICH ARE INCORPORATED INTO AND MADE A PART OF THIS
ASSIGNMENT. UNLESS EXPRESSLY PROVIDED TO THE CONTRARY, “HEREUNDER”, “HEREOF”,
“HEREIN” AND WORDS OF SIMILAR IMPORT ARE REFERENCES TO THIS ASSIGNMENT AS A
WHOLE AND NOT ANY PARTICULAR ARTICLE, SECTION OR OTHER PROVISION OF THIS
ASSIGNMENT.

 

(o)         Waiver of Louisiana Rights in Redhibition.    ASSIGNEE EXPRESSLY
WAIVES THE WARRANTY OF FITNESS FOR INTENDED PURPOSES OR GUARANTEE AGAINST HIDDEN
OR LATENT REDHIBITORY VICES UNDER LOUISIANA LAW, INCLUDING LOUISIANA CIVIL CODE
ARTICLES 2520 (1870) THROUGH 2548 (1870), AND THE WARRANTY IMPOSED BY LOUISIANA
CIVIL CODE ARTICLE 2476; WAIVES ALL RIGHTS IN REDHIBITION PURSUANT TO LOUISIANA
CIVIL CODE ARTICLE 2520, ET SEQ., (INCLUDING ANY AMENDMENTS OR REVISIONS OF THE
FOREGOING), ACKNOWLEDGES THAT THIS EXPRESS WAIVER SHALL BE CONSIDERED A MATERIAL
AND INTEGRAL PART OF THIS SALE AND THE CONSIDERATION THEREOF; AND ACKNOWLEDGES
THAT THIS WAIVER HAS BEEN BROUGHT TO THE ATTENTION OF THE ASSIGNEE AND EXPLAINED
IN DETAIL AND THAT ASSIGNEE HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THIS
WAIVER OF WARRANTY OF FITNESS AND/OR WARRANTY AGAINST REDHIBITORY  VICES AND
DEFECTS FOR THE ASSETS, TO THE EXTENT THE ASSETS ARE LOCATED IN OR ADJACENT TO
LOUISIANA.

 

(p)           Proceeds and Expenses.  Except as otherwise provided herein, all
proceeds, receipts and credits and all income attributable to the Assets for all
periods on or before the Effective Time shall belong to Assignor and all
proceeds, receipts and credits and all income

 

10

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attributable to the Assets for all periods after the Effective Time shall belong
to Assignee. Except as otherwise provided herein, all costs and expenses
relating to the Assets and attributable to the periods prior to the Effective
Time shall be the responsibility of Assignor and all costs and expenses relating
to the Assets and attributable to the periods on and after the Effective Time
shall be the responsibility of Assignee. Assignor may, but is not obligated to,
send out a Final Settlement Statement to account for the items in this paragraph
and the parties shall utilize reasonable efforts to reach agreement on such
matters. There shall be no interest or penalties due from or owed to Assignor or
Assignee arising from this paragraph or under the Final Settlement Statement. If
Assignor sends an invoice to Assignee pursuant to a Final Settlement Statement,
Assignee shall pay such invoice within ten (10) days of receipt.

 

(q)           Other Instruments.        A copy of this Assignment may be filed
with the U.S. Department of the Interior, Minerals Management Service. Assignee
represents and warrants that it is qualified to own the Assets in accordance
with applicable Laws. The Bidder/Buyer Terms and Conditions and Qualified Bidder
Registration of The Oil & Gas Asset Clearinghouse are also binding on Assignee
with respect to the Assets and are not merged into or with this Assignment.

 

(r)            Binding Effect.        Subject to the terms herein, this
Assignment is binding upon and shall inure to the benefit of the successors and
assigns of the Parties hereto, however, Assignee shall remain responsible for
the performance of its obligations hereunder along with its successors and
assigns and subsequent assignees.

 

TO HAVE AND TO HOLD the Assets unto Assignee, its successors and assigns,
subject to the terms, covenants and conditions hereinabove set forth.

 

EXECUTED in the presence of the undersigned witnesses on the dates indicated
below in the acknowledgments of each signatory to be effective in all respects
as of the Effective Time.

 

[REMAINDER OF PAGE LEFT BLANK]

 

 

 

 

ASSIGNOR:

WITNESSES:

 

Pioneer Natural Resources USA, Inc., individually

 

 

 

 

 

 

Print Name:

 

By:

 

 

 

 

William F. Hannes

 

 

 

Executive Vice President

Print Name:

 

 

Business Development

 

11

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ASSIGNOR:

WITNESSES:

 

Mesa Offshore Royalty Partnership

 

 

By: Pioneer Natural Resources USA, Inc., in its capacity as

 

 

Managing General Partner

Print Name:

 

 

 

 

 

 

 

By:

 

 

 

William F. Hannes

Print Name:

 

Executive Vice President

 

 

Business Development

 

 

ACKNOWLEDGMENT

 

 

STATE OF TEXAS

§

 

§

COUNTY OF DALLAS

§

 

This instrument was acknowledged before me on the          day of             ,
2009, by                             as                              , of
Pioneer Natural Resources (USA), Inc., a Delaware corporation, on behalf of said
corporation.

 

I have hereunto set my hand and official seal this        day of             ,
2009.

 

 

 

 

Notary Public, State of Texas

 

My Commission expires on

 

12

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ACKNOWLEDGMENT

 

STATE OF TEXAS

§

 

§

COUNTY OF DALLAS

§

 

This instrument was acknowledged before me on the          day of             ,
2009, by                            as                               , of
Pioneer Natural Resources (USA), Inc., as Managing General Partner of the Mesa
Offshore Royalty Partnership, a Texas general partnership, on behalf of the
general partnership.

 

I have hereunto set my hand and official seal this        day of             ,
2009.

 

 

 

 

Notary Public, State of Texas

 

My Commission expires on

 

13

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SIGNATURE PAGE OF ASSIGNEE

 

 

 

 

ASSIGNEE:

WITNESSES:

 

 

 

 

 

 

 

 

Print Name:

 

 

 

 

 

 

 

Print Name:

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

ACKNOWLEDGMENT

 

STATE OF TEXAS

§

 

§

COUNTY OF

§

 

 

This instrument was acknowledged before me on the        day of             ,
2009,                               , as                               , of a
                         corporation, on behalf of said corporation.

 

I have hereunto set my hand and official seal this        day of               ,
2009.

 

 

 

 

Notary Public, State of Texas

 

My Commission expires on

 

14

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EXHIBIT “A”

 

Attached to and made a part of that certain Assignment and Bill of Sale dated
effective             , 2009

 

Oil and Gas Lease bearing Serial No. OCS-G 3186, effective July 1, 1975, by and
between the United States of America, as Lessor, and Mesa Petroleum Co., as
Lessee, covering all of Block 61, West Delta Area, as shown on OCS Leasing Map,
Louisiana, Map, No. 8, containing 5,000 acres, more or less.

 

--------------------------------------------------------------------------------

 

EXHIBIT “B”

 

Attached to and made a part of that certain Assignment and Bill of Sale dated
effective             , 2009

 

Farmout Agreement dated February 1, 1998, by and between Pioneer Natural
Resources USA, Inc., as Farmor and Basin Exploration, Inc., as Farmee, as
amended, and associated assignments or conveyances (the “Basin Farmout”).

 

Letter Agreement from Stone Energy Corporation dated June 27, 2002, agreed to
and accepted by Pioneer Natural Resources USA, Inc. dated July 2, 2002,
evidencing an Amendment To Farmout Agreement dated February 1, 1998, by and
between Pioneer Natural Resources USA, Inc., as Farmor and Basin
Exploration, Inc., as Farmee, and associated assignments or conveyances.

 

Farmout Agreement made effective July 1, 2003, by and between Pioneer Natural
Resources USA, Inc., as Farmor and Stone Energy Corporation, as Farmee, as
amended, and associated assignments or conveyances (the “Stone Farmout”).

 

Assignment of Operating Rights dated effective May 13, 1998, between Pioneer USA
and Basin Exploration, Inc., recorded in C.O.B. 940 at Folio 820 of the records
of Plaquemines Parish, Louisiana, to the extent and only to the extent same
pertain to the Conveyed Overriding Royalty Interest.

 

Assignment of Operating Rights dated effective as of April 1, 2004, between
Pioneer USA and Stone Energy Corporation, et al., recorded in C.O.B. 1088, at
Folio 372 of the records of Plaquemines Parish, Louisiana, to the extent and
only to the extent same pertain to the Conveyed Overriding Royalty Interest.

 

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Exhibit A-2

 

This Assignment and Bill of Sale contains provisions requiring one party to be
responsible for the negligence, strict liability or other fault of the other
party.

 

Notice of Confidentiality Rights: If you are a natural person, you may remove or
strike any of the following information from this instrument before it is filed
for record in public records: your social security number or your driver’s
license.

 

ASSIGNMENT AND BILL OF SALE

(Brazos A-39)

 

OFFSHORE TEXAS

 

COUNTY OF MATAGORDA

§

 

§

STATE OF TEXAS

§

 

This Assignment and Bill of Sale (“Assignment”) dated effective as of the     
day of                       , 2009, is executed by and between Pioneer Natural
Resources USA, Inc., a Delaware corporation (“Pioneer USA”), individually and on
behalf of the Mesa Offshore Royalty Partnership (the “Mesa Partnership”) in its
capacity of Managing General Partner, with the address of 5205 N. O’Connor
Blvd., Suite 900, Irving, Texas 75039-3746, (Pioneer and Mesa Offshore being
collectively called the “Assignor”), and

 

(“Assignee”), hereafter sometimes referred to individually as a “Party”, or
collectively as the “Parties”.

 

I.

 

Assignor desires to sell and transfer to Assignee the assets described herein
further to the bid by Assignee in Sale No. 231 in The Oil & Gas Asset
Clearinghouse’s July 8, 2009 auction.  The assets include certain contractual
rights, working interests, record title interests, operating rights and/or
overriding royalty interests owned by Pioneer USA and certain interests owned by
Mesa Offshore, as specified herein.  The sale and transfer is made, however,
reserving to Assignor certain rights and claims relating to the period prior to
the Effective Time, as specified herein.  Therefore, for and in consideration of
the sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and of the performance
by Assignee of the covenants, agreements, obligations and conditions hereinafter
contained, to be kept and performed by Assignee, effective as of July 1, 2009 at
7:00 a.m., (“Effective Time”), Assignor assigns unto Assignee, all of Assignor’s
rights, titles and interests, in and to the following described assets, less and
except the Excluded Assets (the “Assets”):

 

--------------------------------------------------------------------------------

 

(a)           The oil and gas lease listed on Exhibit “A”, including, without
limitation, contractual rights, working interests, record title interests,
operating rights and/or overriding royalty interests (the “Lease”) and the lands
covered, as of the Effective Time, by the Lease and or block listed on
Exhibit “A” (hereinafter referred to as the “Lands”), said Lease and Lands,
together with Assignor’s interest in any pooled, communitized or unitized
acreage with the Lands and Lease, comprise the “Subject Properties”;

 

(b)           To the extent located on the Lands or attributable or allocable to
the Subject Properties:  (1) all wells, including, without limitation, all oil,
gas, injection, disposal and water wells, whether active, idle, plugged or
unplugged and whether abandoned or not (“Wells”), and well equipment (surface
and subsurface), all materials, fixtures, platforms, facilities, pumps,
equipment, electrical distribution systems, flowlines, gathering pipelines, gas
facilities, gathering systems, storage, distribution, treating, processing and
disposal facilities and tanks, tools, compressors, and all other real or
tangible personal property and fixtures which are located in, on or under the
Subject Properties and used in connection with the production, disposal,
gathering, storing, measuring, compression, injection, treating, operating,
maintaining, marketing or transportation of production and substances from the
Subject Properties and Wells, and all other improvements located on the Lands
and which were acquired for or are used in connection with the operation of the
Subject Properties (the “Equipment”), but specifically excluding portable tools,
inventory, boats and vehicles not used exclusively on or exclusively appurtenant
to the Subject Properties or the Wells, and personal property temporarily
located on the Subject Properties; (2) all oil, gas, mineral and other
hydrocarbon substances produced on or after the Effective Time; (3) all
contracts and agreements insofar as they relate to the Subject Properties, Wells
and Equipment (but subject to all limitations of assignability or
transferability by Assignor and subject to the rights of third parties),
including, without limitation, all contracts and agreements identified on
Exhibit “B” hereto, and all orders, unit orders, leases, deeds, unitization
agreements, pooling agreements, operating agreements, division of interest
statements, participation agreements, license agreements, farmin and farmout
agreements, oil and gas leases, assignments, compression and/or processing
agreements, and oil and gas sales, purchase,  transportation, gathering and
processing contracts, pipeline crossing non-objection agreements, and boarding
agreements; (4) easements, rights-of-way, licenses, authorizations, permits and
similar rights and interests, limited by and subject to the rights of third
parties and regulatory agencies;  and (5) all files in the data room for auction
Sale No. 231 conducted by The Oil & Gas Asset Clearinghouse on July 8, 2009,
2009 with respect to the Subject Properties (the “Records”), and with all the
files described in this subsection I (b)(5) being limited by and subject to the
rights of third parties and applicable Related Agreements (as defined hereafter)
and limitations on transfer contained therein.

 

2

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II.

 

Excluded Assets.         Notwithstanding anything in this Assignment to the
contrary, the Assets do not include and Assignee agrees and acknowledges that
Assignor has reserved and retained from the Assets and each Assignor hereby
reserves and retains unto itself, any and all of such Assignor’s rights, titles
and interests in and to the following (collectively, the “Excluded Assets”):
(i) seismic, geologic and geophysical records, information, and interpretations
relating to the Assets; (ii) any and all records which consist of previous,
contemporaneous or subsequent offers, discussions, or analyses associated with
the purchase, sale or exchange of the Assets or any part thereof, proprietary
information, personnel information, tax information, information covered by a
non-disclosure obligation of a third party and information or documents covered
by a legal privilege; (iii) originals or copies of Records retained by Assignor;
(iv) boats, trucks, communication equipment,  computers and related switching
equipment and software; (v) all oil and gas produced prior to the Effective Time
and the proceeds therefrom; (vi) any refund of taxes, costs or expenses borne by
Assignor or Assignor’s predecessors in title attributable to the period of time
prior to the Effective Time; (vii) any and all proceeds receivable from the
settlement or final adjudication of contract disputes with lessors, insurers,
co-owners, or operators of the Assets or with assignors, gatherers processors or
transporters of hydrocarbons from or attributable to the Assets, including
without limitation, settlement of royalty, take-or-pay, pricing or volume
adjustments disputes, insofar as said proceeds are attributable to periods of
time prior to the Effective Time; (viii) all rights of use of Assignor’s or any
Affiliate’s name, marks, trade dress or insignia and all of Assignor’s
intellectual property; (ix) all rights and claims of such Assignor against third
parties (including rights and claims of such Assignor against the other
Assignor), asserted and unasserted, known and unknown, relating to the period
prior to the Effective Time relating to the Assets.

 

III.

 

(a)           Prior Use of Assets.  ASSIGNEE ACKNOWLEDGES AND AGREES THAT: THE
ASSETS AND REAL PROPERTY HAVE BEEN USED OR MAY HAVE BEEN USED FOR EXPLORATION,
DEVELOPMENT, PRODUCTION, STORAGE, TREATMENT, PROCESSING, DISPOSAL, INJECTION AND
TRANSPORTATION OF OIL OR GAS AND OTHER SUBSTANCES AND RELATED OIL AND GAS FIELD
OPERATIONS.  POLLUTION, SUBSIDENCE, FRACTURES OR PHYSICAL CHANGES IN THE REAL
PROPERTY MAY HAVE OCCURRED AS A RESULT OF SUCH USES.  THE ASSETS OR THE REAL
PROPERTY ALSO MAY INCLUDE BURIED PIPELINES, WASTES AND OTHER EQUIPMENT, WHETHER
OR NOT OF A SIMILAR NATURE, THE LOCATIONS OF WHICH MAY BE HIDDEN OR NOT NOW BE
KNOWN OR NOT READILY APPARENT BY A PHYSICAL INSPECTION OF THE AFFECTED ASSETS OR
REAL PROPERTY.  HYDROCARBONS AND OTHER SUBSTANCES, INCLUDING HAZARDOUS
SUBSTANCES, MAY HAVE COME TO BE RELEASED OR LOCATED ON OR BENEATH THE SURFACE OF
THE ASSETS OR THE REAL PROPERTY.

 

3

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(b)           Limitation and Disclaimer of Representations and Warranties. 
ASSIGNEE ACKNOWLEDGES THAT ASSIGNOR HAS NOT MADE, AND ASSIGNOR HEREBY EXPRESSLY
DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
RELATING TO THE CONDITION OF ANY WELL, IMMOVABLE PROPERTY, MOVABLE PROPERTY,
EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY CONSTITUTING ANY
PART OF THE ASSETS (INCLUDING, WITHOUT LIMITATION, (a) ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS, (d) ANY RIGHTS OF ASSIGNEE UNDER APPROPRIATE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE,
(e) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM REDHIBITORY VICES OR DEFECTS
OR OTHER VICES OR DEFECTS, WHETHER KNOWN OR UNKNOWN, (f) ANY IMPLIED OR EXPRESS
WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, (g) ANY AND ALL
IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW NOW OR HEREAFTER IN EFFECT, AND
(h) ANY IMPLIED OR EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF
MATERIALS OR SUBSTANCES INTO THE ENVIRONMENT OR THE PRESENCE OF MATERIALS OR
SUBSTANCES IN, ON OR UNDER THE SUBJECT PROPERTIES OR REAL PROPERTY OR PROTECTION
OF THE ENVIRONMENT OR HEALTH; IT BEING THE EXPRESS INTENTION OF ASSIGNEE AND
ASSIGNOR THAT THE WELLS, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY SHALL BE CONVEYED TO
ASSIGNEE “AS IS” AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR AND ASSIGNEE
ACCEPTS THE WELLS, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY AS IS, IN THEIR PRESENT CONDITION AND
STATE OF REPAIR. IN ADDITION, ASSIGNOR SPECIFICALLY NEGATES AND MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE
ACCURACY OR COMPLETENESS OF ANY DATA (INCLUDING SEISMIC DATA), INTERPRETATIVE
INFORMATION, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW,
HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO ASSIGNEE IN CONNECTION
WITH THIS ASSIGNMENT, THE ASSETS OR THE CONTEMPLATED TRANSACTIONS, INCLUDING,
WITHOUT LIMITATION, ANY DESCRIPTION OF THE ASSETS, PRICING ASSUMPTIONS, OR
QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE ASSETS
OR THE ABILITY OR POTENTIAL OF THE ASSETS TO PRODUCE HYDROCARBONS OR THE
ENVIRONMENTAL CONDITION OF THE ASSETS OR PROPERTY OR ANY OTHER MATTERS CONTAINED
IN CONFIDENTIAL INFORMATION OR ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE
TO ASSIGNEE BY ASSIGNOR OR BY ASSIGNOR’S REPRESENTATIVES (DEFINED BELOW).  ANY
AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER
MATERIALS FURNISHED BY ASSIGNOR OR BY ASSIGNOR’S REPRESENTATIVES OR OTHERWISE
MADE AVAILABLE TO ASSIGNEE OR ASSIGNEE’S REPRESENTATIVES OR ASSIGNEE’S
AFFILIATES ARE PROVIDED

 

4

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AS A CONVENIENCE, AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR
AGAINST ASSIGNOR, ASSIGNOR’S AFFILIATES OR THEIR RESPECTIVE REPRESENTATIVES. 
ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT ASSIGNEE’S (AND ITS SUCCESSORS
AND ASSIGNS’) SOLE RISK.

 

For purposes of Articles III and Article IV of this Assignment, “Real Property”,
“Real Properties”, “REAL PROPERTY” or “REAL PROPERTIES” mean the real property
or properties, surface and subsurface, in which and on which the Assets, or any
portion thereof, are located, operated, pertain, or relate and includes the
land, if any, described or referred to in Exhibit “A”.

 

IV.

 

(a)   Claims/Laws/Environmental Laws/Affiliates Defined.  As used in this
Assignment, “Claims” or “CLAIMS” shall include costs, expenses, obligations,
claims, demands, lawsuits, causes of action, liabilities, damages, fines,
penalties and judgments of any kind or character, whether matured or unmatured,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, known
or unknown, and all costs, expenses and fees (including without limitation,
interest, attorneys’ fees, costs of experts, court costs, arbitration costs and
costs of investigation) incurred in connection therewith, including, but not
limited to claims arising from or directly or indirectly related to personal or
bodily injury, death, property damage or loss, environmental damage or the
remediation thereof, contract, royalty, operating, suspense and capital
obligations attributable or relating in any way to the Assets or the Real
Property.  “Law” or “Laws” means laws, statutes, ordinances, permits, decrees,
orders, judgments, rules or regulations which are promulgated, issued or enacted
by a governmental entity (whether federal, state or local) or tribal authority
having appropriate jurisdiction. “Affiliate” or “Affiliates” means, as to any
entity, corporation, partnership, company or person, each other entity,
corporation, partnership, company or person that directly or indirectly (through
one or more intermediaries or otherwise) controls, is controlled by, or is under
common control with, such entity, corporation, partnership, company or person. 
“Environmental Laws” means any and all laws including, but not limited to, those
in existence on the Effective Time that relate to: (a) the prevention of
pollution or environmental damages, (b) the abatement, remediation or
elimination of pollution or environmental damage, (c) the protection of the
environment generally, and/or (d) the protection of persons or property from
actual or potential exposure (or the effects of exposure) to pollution or
environmental damage, including without limitation, the Clean Air Act, as
amended, the Clean Water Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (“CERCLA”), as amended, the
Federal Water Pollution Control Act, as amended, the Resource Conservation and
Recovery Act of 1976, as amended, the Safe Drinking Water Act, as amended, the
Toxic Substance and Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous and the Solid Waste
Amendments Acts of 1984, as amended, and the Oil Pollution Act of 1990, as
amended, and all other federal, state and local statutes, regulations, and
ordinances serving similar or related purposes.

 

(b)           (i) IT IS THE EXPRESS INTENT AND AGREEMENT OF ASSIGNOR AND
ASSIGNEE THAT ASSIGNEE SHALL ACCEPT THE ASSETS IN THEIR “AS IS”

 

5

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AND “WHERE IS” CONDITION, SUBJECT TO AND WITH ANY AND ALL FAULTS, DEFECTS,
DEFICIENCIES, IRREGULARITIES AND CLAIMS RELATED OR ATTRIBUTABLE IN ANY MANNER
THERETO, INCLUDING, WITHOUT LIMITATION, REDHIBITORY VICES, TITLE DEFECTS,
ENVIRONMENTAL DEFECTS AND ENVIRONMENTAL LAWS, SUBSIDENCE, DECAY, CESSATIONS IN
PRODUCTION OR ANY OTHER MATTER AFFECTING IN ANY RESPECT THE TITLE OR PHYSICAL
CONDITION OF, OR THE RIGHT TO OWN, USE, OPERATE, POSSESS, DEVELOP OR ENJOY, THE
ASSETS, WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR UNLIQUIDATED, FIXED OR
CONTINGENT, DIRECT OR INDIRECT.

 

(ii) WITHOUT FURTHER ACTION OR DOCUMENTATION, ASSIGNEE, ITS SUCCESSORS AND
ASSIGNS HEREBY, (1) ASSUMES, SHALL BE RESPONSIBLE FOR AND SHALL COMPLY WITH ALL
DUTIES AND OBLIGATIONS, EXPRESS OR IMPLIED, ARISING AT ANY TIME WITH RESPECT TO
THE ASSETS, WHETHER ARISING BEFORE, ON OR AFTER THE EFFECTIVE TIME, INCLUDING,
WITHOUT LIMITATION (I) THOSE ARISING UNDER OR BY VIRTUE OF ANY RELATED
AGREEMENT, LEASE, CONTRACT, AGREEMENT, DOCUMENT, PERMIT, LAW (INCLUDING
ENVIRONMENTAL LAWS), STATUTE, RULE, REGULATION OR ORDER OF ANY GOVERNMENTAL
AUTHORITY OR COURT (SPECIFICALLY INCLUDING, WITHOUT LIMITATION, ANY GOVERNMENTAL
REQUEST OR OTHER REQUIREMENT TO PLUG, RE-PLUG OR ABANDON OR RE-ABANDON ANY ASSET
OR WELL OF WHATSOEVER TYPE, STATUS OR CLASSIFICATION, OR TAKE ANY RESTORATION,
CLEAN-UP, REMEDIAL OR OTHER ACTION WITH RESPECT TO THE ASSETS OR REAL PROPERTY),
(II) PREFERENTIAL RIGHTS TO PURCHASE, AND (III) THIRD PARTY CONSENTS, AND
(IV) CLAIMS IN CONNECTION WITH THE MISPAYMENT OR UNDERPAYMENT OF ROYALTIES OR
OTHER BURDENS ON PRODUCTION; AND (2) ASSUMES, SHALL BE RESPONSIBLE FOR AND PAY
ALL CLAIMS, DIRECTLY OR INDIRECTLY AFFECTING, OR ARISING IN CONNECTION WITH THE
ASSETS, WHETHER ARISING BEFORE, ON OR AFTER THE EFFECTIVE TIME, INCLUDING,
WITHOUT LIMITATION, CLAIMS FOR PERSONAL OR PROPERTY INJURY OR DAMAGE,
RESTORATION, ENVIRONMENTAL CLEANUP, REMEDIATION, OR COMPLIANCE, OR FOR ANY OTHER
RELIEF, ARISING DIRECTLY OR INDIRECTLY FROM OR INCIDENT TO, THE USE, OWNERSHIP,
OCCUPATION, OPERATION, MAINTENANCE OR ABANDONMENT OF OR PRODUCTION FROM THE
ASSETS, OR THE CONDITION OF THE ASSETS OR REAL PROPERTY, WHETHER LATENT OR
PATENT, INCLUDING, WITHOUT LIMITATION, CONTAMINATION OF PROPERTY OR PREMISES
WITH NATURALLY OCCURRING RADIOACTIVE MATERIALS (“NORM”) OR ASBESTOS,
ENVIRONMENTAL LAWS, AND WHETHER OR NOT ARISING SOLELY FROM OR CONTRIBUTED TO BY
THE STRICT LIABILITY, NEGLIGENCE IN ANY FORM, WHETHER ACTIVE OR PASSIVE, OR OF
ANY KIND OR NATURE, OF ASSIGNOR OR ITS PREDECESSORS IN TITLE OR THEIR RESPECTIVE
AFFILIATES AGENTS, EMPLOYEES OR CONTRACTORS.  NOTWITHSTANDING THE PROVISIONS OF
THIS CLAUSE (ii) TO THE

 

6

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CONTRARY, ASSIGNEE DOES NOT ASSUME ANY OBLIGATIONS TO PAY (1) VENDORS FOR UNPAID
AMOUNTS FOR SERVICES PERFORMED FOR THE DAY TO DAY OPERATION OF THE REAL
PROPERTIES PRIOR TO THE EFFECTIVE TIME OR (2) ROYALTIES OWED TO THE MINERALS
MANAGEMENT SERVICE UNDER THE LEASE AND ATTRIBUTABLE TO PERIODS PRIOR TO THE
EFFECTIVE TIME.”

 

(iii)          ASSIGNEE, ITS SUCCESSORS AND ASSIGNS, SHALL INDEMNIFY, DEFEND AND
HOLD HARMLESS ASSIGNOR, ASSIGNOR’S AFFILIATES AND THEIR RESPECTIVE
REPRESENTATIVES FROM AND AGAINST ANY AND ALL CLAIMS AND LOSSES ATTRIBUTABLE TO
ENVIRONMENTAL LAWS, ENVIRONMENTAL COMPLIANCE, DAMAGE TO PROPERTY, INJURY TO OR
DEATH OF PERSONS OR OTHER LIVING THINGS, NATURAL RESOURCE DAMAGES, CERCLA
RESPONSE COSTS, ENVIRONMENTAL REMEDIATION AND RESTORATION COSTS (COLLECTIVELY,
“ENVIRONMENTAL CLAIMS”) ARISING OUT OF OR ATTRIBUTABLE TO, IN WHOLE OR IN PART,
EITHER DIRECTLY OR INDIRECTLY, TO THE ENVIRONMENTAL CONDITION OR COMPLIANCE OF
THE ASSETS AT ANY TIME BEFORE THE EFFECTIVE TIME (INCLUDING, WITHOUT LIMITATION,
ANY CLAIMS OR LOSSES RELATED TO ANY CONDITION EXISTING ON, IN OR UNDER, OR
RESULTING FROM OPERATION OF, THE ASSETS AT ANY TIME BEFORE THE EFFECTIVE TIME)
WHETHER AS A RESULT OF OR CAUSED IN WHOLE OR IN PART BY VIOLATION OF, FAILURE TO
FULFILL DUTIES IMPOSED BY OR INCURRENCE OF LIABILITY UNDER, ANY ENVIRONMENTAL
LAWS OR UNDER ANY PRINCIPLE OF COMMON LAW RELATING TO DUTIES TO PROTECT OR NOT
UNDULY DISTURB HUMAN HEALTH OR ENVIRONMENTAL QUALITY, AND WHETHER OR NOT ARISING
SOLELY FROM OR CONTRIBUTED TO BY THE STRICT LIABILITY, NEGLIGENCE IN ANY FORM,
WHETHER ACTIVE OR PASSIVE, OR OF ANY KIND OR NATURE, OF ASSIGNOR OR ITS
PREDECESSORS IN TITLE OR THEIR RESPECTIVE AFFILIATES, AGENTS, EMPLOYEES OR
CONTRACTORS.

 

(iv) FURTHER, WITHOUT FURTHER DOCUMENTATION AND WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING ASSIGNEE, ITS SUCCESSORS AND ASSIGNS, SHALL INDEMNIFY, DEFEND
AND HOLD HARMLESS ASSIGNOR, ASSIGNOR’S AFFILIATES AND THEIR RESPECTIVE
REPRESENTATIVES FROM ANY AND ALL CLAIMS ARISING AT ANY TIME, ON OR AFTER THE
EFFECTIVE TIME, MADE BY ANY PERSON AND ARISING OUT OF OR RESULTING FROM:

 

(1)           THE REVIEW, INSPECTION AND ASSESSMENT OF THE ASSETS OR THE REAL
PROPERTY;

 

(2)           THE OWNERSHIP OR OPERATION OF THE ASSETS OR THE REAL PROPERTY;

 

(3)           RIGHTS AND OBLIGATIONS OF THE PARTIES OR THIRD PARTIES UNDER THE
RELATED AGREEMENTS;

 

7

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(4)           FAILURE BY THIRD PARTIES TO APPROVE OR CONSENT TO ANY ASPECT OF
THE TRANSACTION CONTEMPLATED IN THIS ASSIGNMENT OR THE SALE OR TRANSFER OF THE
ASSETS OR ANY PORTION THEREOF;

 

(5)           OBLIGATIONS TO PLUG, RE-PLUG, ABANDON OR RE-ABANDON WELLS, REMOVE
FACILITIES, EQUIPMENT, PIPELINES AND FLOWLINES, DREDGE, AND RESTORE, CLEAN UP
AND/OR REMEDIATE THE ASSETS OR REAL PROPERTY;

 

(6)           GAS IMBALANCES AND PAYMENTS, ROYALTIES OR DISBURSEMENTS PAYABLE TO
THIRD PARTIES RELATING TO THE ASSETS;

 

(7)           THE PHYSICAL OR ENVIRONMENTAL CONDITION OF OR RELATING TO THE
ASSETS OR REAL PROPERTY OR ANY DISPOSAL SITE (WHETHER ON THE ASSETS OR REAL
PROPERTY OR OFFSITE) CONTAINING MATERIALS OR WASTES FROM THE OPERATIONS OR
ACTIVITIES ON THE REAL PROPERTY OR ASSETS INCLUDING CLAIMS UNDER ANY LAW OR
ENVIRONMENTAL LAW;

 

(8)           REMEDIATION ACTIVITIES, INCLUDING DAMAGES INCURRED BY ASSIGNEE
DURING OR ARISING FROM REMEDIATION ACTIVITIES RELATING TO THE ASSETS OR REAL
PROPERTY; AND

 

(9)           INABILITY OR FAILURE TO OBTAIN THE TRANSFER OF A PERMIT OR
AUTHORIZATION OR THE INABILITY TO OBTAIN A PERMIT OR AUTHORIZATION RELATING TO
THE ASSETS.

 

(c)           ASSIGNEE’S RELEASE OF ASSIGNOR.  WITHOUT FURTHER ACTION OR
DOCUMENTATION, ASSIGNEE RELEASES AND DISCHARGES, TO THE MAXIMUM EXTENT ALLOWED
BY LAW (BUT NO FURTHER), ASSIGNOR AND ASSIGNOR’S AFFILIATES AND THEIR
RESPECTIVE, SUCCESSORS AND ASSIGNS AND REPRESENTATIVES FROM ALL CLAIMS RELATING
IN ANY WAY TO THE ASSETS, THE REAL PROPERTY OR THE TRANSACTIONS CONTEMPLATED BY
THIS ASSIGNMENT, REGARDLESS OF WHEN OR HOW THE CLAIMS AROSE OR ARISE, OR WHETHER
THE CLAIMS WERE FORESEEABLE OR UNFORESEEABLE. ASSIGNEE’S RELEASE OF ASSIGNOR AND
ITS AFFILIATES AND THEIR RESPECTIVE REPRESENTATIVES, SUCCESSORS AND ASSIGNS,
INCLUDES CLAIMS RESULTING IN ANY WAY FROM THE NEGLIGENCE OR STRICT LIABILITY OF
ASSIGNOR AND ITS AFFILIATES AND THEIR RESPECTIVE REPRESENTATIVES, SUCCESSORS AND
ASSIGNS, WHETHER THE NEGLIGENCE OR STRICT LIABILITY IS ACTIVE, PASSIVE, JOINT,
CONCURRENT, OR SOLE. THERE ARE NO EXCEPTIONS TO ASSIGNEE’S RELEASE OF ASSIGNOR
AND ITS AFFILIATES AND THEIR

 

8

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RESPECTIVE REPRESENTATIVES, SUCCESSORS AND ASSIGNS, AND THIS RELEASE IS BINDING
ON ASSIGNEE AND ITS SUCCESSORS AND ASSIGNS.   WITHOUT LIMITING THE FOREGOING,
THIS RELEASE EXPRESSLY COVERS AND INCLUDES ANY AND ALL CLAIMS RELATING IN ANY
WAY TO THE CLAIMS THAT WERE ASSERTED, OR THAT COULD HAVE BEEN ASSERTED, WHETHER
KNOWN OR UNKNOWN, IN THE CASE STYLED MOSH HOLDING, L.P. V. PIONEER NATURAL
RESOURCES COMPANY; PIONEER NATURAL RESOURCES USA, INC.; WOODSIDE ENERGY (USA),
INC.; AND JPMORGAN CHASE BANK, N.A., AS TRUSTEE OF THE MESA OFFSHORE TRUST;
CAUSE NO. 2006-01984; IN THE 334TH JUDICIAL DISTRICT COURT OF HARRIS COUNTY,
TEXAS. ASSIGNEE EXPRESSLY WARRANTS AND REPRESENTS AND DOES HEREBY STATE AND
REPRESENT THAT NO PROMISE OR AGREEMENT WHICH IS NOT HEREIN EXPRESSED HAS BEEN
MADE TO ASSIGNEE IN EXECUTING THIS ASSIGNMENT OR AGREEING TO THIS RELEASE AND
THAT ASSIGNEE IS NOT RELYING UPON ANY STATEMENT OR REPRESENTATION OF ASSIGNOR OR
ANY AFFILIATE OF ASSIGNOR OR ANY OF THEIR RESPECTIVE REPRESENTATIVES. ASSIGNEE
HAS BEEN REPRESENTED BY LEGAL COUNSEL AND SAID COUNSEL HAS READ AND EXPLAINED TO
ASSIGNEE THE ENTIRE CONTENTS OF THIS ASSIGNMENT AND THIS RELEASE AND EXPLAINED
THE LEGAL CONSEQUENCES THEREOF.

 

(d)           Inducement to Assignor.  Assignee acknowledges that it evaluated
its obligations under this Article IV and understands its assumption of these
obligations is a material inducement to Assignor to enter into this Assignment.

 

(e)           Inurement. This Assignment is made subject to governmental and
regulatory agency laws, rules and regulations and subject to all the terms and
the express and implied covenants and conditions of the Lease described in said
Exhibit “A”.  Further, the terms, covenants, indemnities, releases,
requirements, obligations and conditions of this Assignment shall be binding
upon and shall inure to the benefit of the Assignor and the Assignee and their
respective successors and assigns, and such terms, covenants, indemnities,
releases, requirements, obligations and conditions of this Assignment are
effective as stated, shall be covenants running with the lands and the leasehold
estates herein assigned and with each transfer or assignment of said lands and
leasehold estates, whether or not the terms, covenants, indemnities, releases,
requirements, obligations and conditions of this Assignment are memorialized in
future assignments or other instruments. No future action, agreement or
assignment pertaining, all or in part, to this Assignment, the Assets or any
rights thereto or thereunder by Assignee or any of its successors or assigns
shall relieve Assignee or any of its successors or assigns of any responsibility
or liability for the performance of Assignee’s obligations under this Assignment
unless expressly agreed to in writing by an authorized officer of Assignor.

 

(f)            BENEFIT OF INDEMNITIES AND RELEASE. THE BENEFIT OF THE
INDEMNITIES AND, RELEASE PROVIDED IN THIS ASSIGNMENT BY ASSIGNEE, ITS SUCCESSORS
AND ASSIGNS, TO ASSIGNOR SHALL EXTEND TO ASSIGNOR AND ITS CORPORATE PARENT,
SUBSIDIARIES, PARTNERS AND AFFILIATES AND TO ANY PERSON WHO AT ANY TIME HAS
SERVED OR IS SERVING AS A

 

9

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DIRECTOR, OFFICER, TRUSTEE, EMPLOYEE, CONSULTANT (INCLUDING, BUT NOT LIMITED TO
THE OIL & GAS ASSET CLEARINGHOUSE AND ITS RESPECTIVE PARTNERS OR AFFILIATED
ENTITIES AND THEIR RESPECTIVE DIRECTORS, OFFICERS AND EMPLOYEES) OR AGENT OF ANY
OF THE FOREGOING (EACH A “REPRESENTATIVE” AND ANY TWO OR MORE BEING
“REPRESENTATIVES”), AND EACH OF THEIR RESPECTIVE HEIRS, EXECUTORS, SUCCESSORS
AND ASSIGNS, AND SHALL APPLY TO ALL CLAIMS SUBJECT TO INDEMNITY HEREUNDER,
INCLUDING, TO THE MAXIMUM EXTENT ALLOWED BY LAW (AND NO FURTHER), THOSE BASED ON
NEGLIGENCE OF ANY NATURE, INCLUDING SOLE NEGLIGENCE, SIMPLE NEGLIGENCE,
CONCURRENT NEGLIGENCE, ACTIVE NEGLIGENCE, PASSIVE NEGLIGENCE, STRICT LIABILITY
OR FAULT OF ASSIGNOR (OR ANY OTHER INDEMNIFIED PARTY OR REPRESENTATIVE) OR ANY
OTHER THEORY OF LIABILITY OR FAULT, WHETHER OF LAW (WHETHER COMMON OR STATUTORY)
OR IN EQUITY.

 

V.

 

Disclaimer of Warranties. ASSIGNOR MAKES NO, AND EXPRESSLY DISCLAIMS ANY,
WARRANTY OF TITLE, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION RIGHTS TO
RETURN OF ANY CONSIDERATION OR PURCHASE PRICE.  WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, ALL IMPLIED COVENANTS AND WARRANTIES ARISING FROM THE USE OF
THE WORDS “GRANTS,” “BARGAINS,” “ASSIGNS” AND “CONVEYS” ARE HEREBY EXPRESSLY
DISCLAIMED AND NEGATED. All equipment and other personal property forming any
part of the Assets is hereby transferred subject to normal wear and tear and
without warranties of any kind whatsoever, whether statutory, express or
implied,  and WITH NO WARRANTY AS TO TITLE, MERCHANTABILITY, FITNESS OR
SUITABILITY FOR ANY PARTICULAR PURPOSE. THIS ASSIGNMENT IS MADE WITHOUT ANY
EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION WHATSOEVER.

 

VI.

 

(a)           Governing Law.  This Assignment executed in accordance herewith
shall be governed by and interpreted in accordance with the laws of the State of
Texas, without regard to conflict of law rules that would direct application of
the laws of another jurisdiction, except to the extent that it is mandatory that
the law of the jurisdiction wherein the Assets are located shall apply.

 

(b)           Captions.  The captions in this Assignment are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Assignment.

 

(c)           WAIVER OF CONSUMER RIGHTS/DTPA WAIVER.  TO THE EXTENT THE
PROVISIONS ARE APPLICABLE TO THE ASSETS OR ANY PORTION THEREOF, ASSIGNEE HEREBY
VOLUNTARILY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES ACT
(DTPA), CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER
THAN SECTION 17.555, WHICH

 

10

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IS NOT WAIVED), TEX. BUS. & COM. CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS
AND PROTECTIONS.  IN ORDER TO EVIDENCE ITS ABILITY TO GRANT SUCH WAIVER,
ASSIGNEE HEREBY REPRESENTS AND WARRANTS TO ASSIGNOR THAT IT (i) IS IN THE
BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR LEASE, GOODS OR SERVICES FOR
COMMERCIAL OR BUSINESS USE; (ii) HAS CONSULTED WITH AN ATTORNEY OF ASSIGNEE’S
OWN CHOOSING; (iii) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL, BUSINESS AND OIL
AND GAS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF THE
TRANSACTIONS CONTEMPLATED HEREBY; (iv) IS NOT IN A SIGNIFICANTLY DISPARATE
BARGAINING POSITION; AND (v) UNDERSTANDS THAT THIS WAIVER IS A MATERIAL AND
INTEGRAL PART OF THIS ASSIGNMENT AND THE CONSIDERATION THEREOF.  IN ADDITION,
ASSIGNEE WAIVES ITS RIGHTS UNDER ALL OTHER CONSUMER PROTECTION STATUTES OF TEXAS
OR ANY OTHER STATE APPLICABLE TO THIS TRANSACTION THAT MAY BE WAIVED. ASSIGNEE
EXPRESSLY RECOGNIZES THAT THE PURCHASE PRICE FOR WHICH ASSIGNOR HAS AGREED TO
PERFORM ITS OBLIGATIONS UNDER THIS ASSIGNMENT HAS BEEN PREDICATED UPON THE
INAPPLICABILITY OF THE DTPA AND THE WAIVER OF ASSIGNEE OF ITS RIGHTS UNDER
CONSUMER PROTECTION STATUTES AND ASSIGNEE FURTHER RECOGNIZES THAT ASSIGNOR IN
DETERMINING TO PROCEED WITH THE ENTERING INTO OF THIS ASSIGNMENT, HAS EXPRESSLY
RELIED ON THIS WAIVER AND THE INAPPLICABILITY OF THE DTPA AND THE CONSUMER
PROTECTION STATUTES.

 

(d)           No Sale of Fractional Undivided Interests.  Assignee is Accredited
Investor.  Assignee has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment
in the Assets; it is acquiring the Assets for its own account for investment and
not with a view to or for the subdivision, resale, distribution or
fractionalization thereof; it has no contract, undertaking, or arrangement with
any person to sell, transfer or pledge to any person the Assets and it has no
present plans to enter into any such contract, undertaking, agreement or
arrangement; it understands that the Assets may not have been and will not be
registered under the Securities Act of 1933, as amended (the “Act”), or under
any state securities laws, and that transferability and sale of the Assets may
be restricted without registration under the Act and applicable state securities
laws, or an exemption therefrom.  Assignee is an “accredited investor” as that
item is defined in Regulation D promulgated under the Act.

 

(e)           Severability.   The provisions of this Assignment are severable. 
If a court of competent jurisdiction finds any part of this Assignment to be
void, invalid, or otherwise unenforceable (except for the release, waiver,
defense and indemnity provisions), such holding will not affect other portions
that can be given effect without the invalid or void portion.

 

(f)            Related Agreements.  Unless specifically provided otherwise in
this Assignment, the sale of the Assets is made subject to all oil, gas and
mineral leases, deeds, conveyances, purchase and sale and transfer agreements,
asset sale agreements, exploration agreements, assignments, subleases, farmout
agreements, joint operating agreements, operating agreements, unit agreements,
unit operating agreements, pooling agreements, construction management
agreements, data exchange agreements, pipeline system operating agreements,
production

 

11

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handling agreements, natural gas sales and purchase agreements, gas gathering
agreements, participation agreements, engineering procurement construction and
installation agreements, spar use and access agreements, crude oil exchange
agreements, processing agreements, assignment coordination and oversight
agreements, capacity commitment letter agreements, letter agreements, easements,
rights of way and all other contracts and agreements with respect to or
pertaining to the Assets, to the extent same valid and existing and are binding
on the Assets, Assignor or Assignor’s Affiliates or predecessors in title (the
“Related Agreements”), including, without limitation, those identified in
Exhibit “B” hereto.  Assignee expressly assumes the obligations and liabilities
of Assignor and Assignor’s Affiliates under all such agreements insofar as the
obligations and liabilities concern or pertain to the Assets and Assignee agrees
to execute any documents necessary to effectuate such assumption.  The Parties
agree that this paragraph is applicable to all Related Agreements, whether or
not identified in Exhibit “B” hereto and whether recorded or unrecorded. 
Neither the Assets nor the Related Agreements include (i) the Articles of
General Partnership of Mesa Offshore Royalty Partnership dated November 30,
1982, by and between Mesa Petroleum Co. and Mesa Offshore Management Co.;
(ii) the First Amended and Restated Articles of General Partnership of Mesa
Offshore Partnership dated December 1, 1982, by and between Mesa Petroleum Co.
and Mesa Offshore Management Co.; or (iii) the Royalty Trust Indenture dated
December 1, 1982, by and between Mesa Petroleum Co. and Texas Commerce Bank
National Association.

 

(g)           Ejusdem Generis  The word “includes” and “including” and their
syntactical variants mean “includes, but not limited to” and its corresponding
syntactical variants.  The rule of ejusdem generis may not be invoked to
restrict or limit the scope of the general term or phrase followed or proceeded
by an enumeration of particular examples.

 

(h)           No Ratification.  Recitation of or reference to any agreement or
other instrument in this Assignment, including its exhibits, does not operate to
ratify, confirm, revise, or reinstate the agreement or instrument if it has
previously lapsed or expired.

 

(i)            Not to be Construed Against Drafter.  Assignor and Assignee
acknowledge that they have read this Assignment, have had the opportunity to
review it with an attorney of their respective choice, and have agreed to all
its terms.  Under these circumstances, Assignee and Assignor agree that the
rule of construction that a contract be construed against the drafter shall not
be applied in interpreting this Assignment and that in the event of any
ambiguity in any of the terms or conditions of this Assignment, including any
exhibits hereto and whether or not placed of record, such ambiguity shall not be
construed for or against any party hereto on the basis that such party did or
did not author the same.

 

(j)            Agreement to Arbitrate.  ASSIGNOR AND ASSIGNEE AGREE THAT IF ANY
DISPUTES ARISE BETWEEN THEM ARISING OUT OF OR RELATING TO THIS ASSIGNMENT, SUCH
DISPUTE(S) WILL BE RESOLVED BY BINDING ARBITRATION WITH A SINGLE ARBITRATOR
UNDER THE ADMINISTRATION OF THE AMERICAN ARBITRATION ASSOCIATION PURSUANT TO ITS
COMMERCIAL ARBITRATION RULES.

 

(k)           Express Negligence Rule; Conspicuousness.  ASSIGNEE ACKNOWLEDGES
THAT THE PROVISIONS IN THIS ASSIGNMENT THAT ARE SET OUT IN ITALICS, IN

 

12

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BOLD, UNDERLINE OR CAPITALS (OR ANY COMBINATION THEREOF) SATISFY THE
REQUIREMENTS FOR THE EXPRESS NEGLIGENCE RULE AND/OR ARE CONSPICUOUS.

 

(l)            Counterparts.  This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

(m)          Compliance with Laws.  Assignee will comply with all rules, laws,
regulations and statutes applicable to Assignee’s ownership or operation of the
Assets.

 

(n)           Recognition/Bonds.  Assignee will take all necessary steps to
ensure that Assignee is recognized as the owner and, if applicable, operator of
the Assets, as provided herein, by all appropriate parties, including any
regulatory commission, body or board or jurisdiction. None of Assignor’s bonds
will be transferred to Assignee. Assignee shall promptly secure and maintain at
all times new bonds and financial assurance in the required amount such that
Assignor’s financial assurance or bonds are released and discharged as to the
Assets.  Assignee will remove all signage on the Assets containing the name of
Assignor or its Affiliates and install signs complying with applicable
governmental regulations.

 

(o)           References.  References herein to the singular includes the
plural, and vice versa. Reference to any Exhibit means an Exhibit to this
ASSIGNMENT, all of which are incorporated into and made a part of this
ASSIGNMENT. Unless expressly provided to the contrary, “hereunder”, “hereof”,
“herein” and words of similar import are references to this ASSIGNMENT as a
whole and not any particular Article, Section or other provision of this
ASSIGNMENT.

 

(p)           Proceeds and Expenses.  Except as otherwise provided herein, all
proceeds, receipts and credits and all income attributable to the Assets for all
periods on or before the Effective Time shall belong to Assignor and all
proceeds, receipts and credits and all income attributable to the Assets for all
periods after the Effective Time shall belong to Assignee. Except as otherwise
provided herein, all costs and expenses relating to the Assets and attributable
to the periods prior to the Effective Time shall be the responsibility of
Assignor and all costs and expenses relating to the Assets and attributable to
the periods on and after the Effective Time shall be the responsibility of
Assignee. Assignor may, but is not obligated to, send out a Final Settlement
Statement to account for the items in this paragraph and the parties shall
utilize reasonable efforts to reach agreement on such matters. There shall be no
interest or penalties due from or owed to Assignor or Assignee arising from this
paragraph or under the Final Settlement Statement. If Assignor sends an invoice
to Assignee pursuant to a Final Settlement Statement, Assignee shall pay such
invoice within ten (10) days of receipt.

 

(q)           Other Instruments.  A record of the assignment of the Assets or a
portion thereof or the operating rights, if any, may be filed with and for
approval from the U.S. Department of the Interior, Minerals Management Service.
Such assignments do not merge with this Assignment. Assignee represents and
warrants that it is qualified to own and operate the Assets in accordance with
applicable Laws. The Bidder/Buyer Terms and Conditions and

 

13

--------------------------------------------------------------------------------

 

Qualified Bidder Registration of The Oil & Gas Asset Clearinghouse are also
binding on Assignee with respect to the Assets and are not merged into or with
this Assignment.

 

14

--------------------------------------------------------------------------------

 

(r)            Binding Effect.  Subject to the terms herein, this Assignment is
binding upon and shall inure to the benefit of the successors and assigns of the
Parties hereto, however, Assignee shall remain responsible for the performance
of its obligations hereunder along with its successors and assigns and
subsequent assignees.

 

(s)           Abandonment Agreement.  Simultaneously with the execution of this
Assignment, Pioneer USA and Assignee have executed an Abandonment Agreement,
dated as of the Effective Time, and such parties have executed such additional
documents and taken such actions as specifically set forth therein in connection
with such execution.

 

TO HAVE AND TO HOLD the Assets unto Assignee, its successors and assigns,
subject to the terms, covenants and conditions hereinabove set forth.

 

EXECUTED in the presence of the undersigned witnesses on the dates indicated
below in the acknowledgments of each signatory to be effective in all respects
as of the Effective Time.

 

 

 

 

ASSIGNOR:

WITNESSES:

 

Pioneer Natural Resources USA, Inc.

 

 

 

 

 

By:

 

Print Name:

 

 

William F. Hannes

 

 

 

Executive Vice President

 

 

 

Business Development

Print Name:

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSIGNOR:

WITNESSES:

 

Mesa Offshore Royalty Partnership

 

 

by: Pioneer Natural Resources USA, Inc.,

 

 

in its capacity as Managing General Partner

Print Name:

 

 

 

 

 

By:

 

 

 

 

William F. Hannes

Print Name:

 

 

Executive Vice President

 

 

 

Business Development

 

15

--------------------------------------------------------------------------------

 

ACKNOWLEDGMENT

 

STATE OF TEXAS

 

§

 

 

§

COUNTY OF DALLAS

 

§

 

This instrument was acknowledged before me on the          day of             ,
2009, by                                 as                             , of
Pioneer Natural Resources USA, Inc., a Delaware corporation, on behalf of said
corporation.

 

I have hereunto set my hand and official seal this        day of             ,
2009.

 

 

 

 

 

Notary Public, State of Texas

 

My Commission expires on
                                                            

 

STATE OF TEXAS

 

§

 

 

§

COUNTY OF DALLAS

 

§

 

This instrument was acknowledged before me on the          day of             ,
2009, by                                 as                              , of
Pioneer Natural Resources USA, Inc., a Delaware corporation, on behalf of the
Mesa Offshore Royalty Partnership in its capacity as Managing General Partner of
the Mesa Offshore Royalty Partnership.

 

I have hereunto set my hand and official seal this        day of             ,
2009.

 

 

 

 

 

Notary Public, State of Texas

 

My Commission expires on
                                                            

 

16

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SIGNATURE PAGE OF ASSIGNEE

 

WITNESSES:

 

ASSIGNEE:

 

 

 

 

 

 

Print Name:

 

 

 

 

 

Print Name:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

ACKNOWLEDGMENT

 

 

STATE OF TEXAS

 

§

 

 

§

COUNTY OF                

 

§

 

 

This instrument was acknowledged before me on the        day of             ,
2009,                                     , as                               ,
of a                          corporation, on behalf of said corporation.

 

I have hereunto set my hand and official seal this        day of               ,
2009.

 

 

 

 

 

Notary Public, State of Texas

 

My Commission expires on
                                                            

 

17

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EXHIBIT “A”

 

Attached to and made a part of that certain Assignment and Bill of Sale dated
effective               , 2009.

 

PART I

 

Oil and Gas Lease bearing Serial No. OCS-G 4559, effective January 1, 1981, by
and between the United States of America, as Lessor, and Mesa Petroleum Co., as
Lessee, covering all of Block A-39, Brazos Area, as shown on OCS Leasing Map,
Texas Map, No. 5, containing 5,760 acres, more or less;

 

Pioneer Natural Resources USA, Inc. is hereby reserving and retaining:

 

NONE

 

PART II

 

THE ASSETS INCLUDE, WITHOUT LIMITATION, THE FOLLOWING WELLS, TO-WIT:

 

OCS-G 04559 BA A-39 Well No. 005 ST00BP02

 

--------------------------------------------------------------------------------

 

EXHIBIT “B”

 

Attached to and made a part of that certain Assignment and Bill of Sale dated
effective                 , 2009

 

Overriding Royalty Conveyance dated December 1, 1982, by and between Mesa
Petroleum Co., as Assignor and Mesa Offshore Royalty Partnership, as Assignee.

 

Exploration Agreement dated effective January 20, 2003, by and between Woodside
Energy (USA) Inc. and Pioneer Natural Resources USA, Inc.

 

First Amendment to the Exploration Agreement dated effective July 31, 2004, by
and between Woodside Energy (USA) Inc. and Pioneer Natural Resources USA, Inc.

 

Second Amendment to Exploration Agreement entered into on December 19, 2005, but
dated effective January 20, 2003, by and between Woodside Energy (USA) Inc. and
Pioneer Natural Resources USA, Inc.

 

Offshore Operating Agreement made effective January 20, 2003, by and between
Pioneer Natural Resources USA, Inc. and Woodside Energy (USA) Inc.

 

Farmout Agreement made effective January 20, 2003, by and between Pioneer
Natural Resources USA, Inc., as Farmor, and Woodside Energy (USA) Inc., as
Farmee, as amended, and associated assignments and conveyances.

 

Partial Assignment of Operating Rights made effective January 20, 2003, by and
between Pioneer Natural Resources USA, Inc., as Assignor, and Woodside Energy
(USA) Inc., as Assignee.

 

Production Handling Agreement by and between Arena Offshore, LLC, executed
December 23, 2006, as Operator, and Pioneer Natural Resources USA, Inc.,
executed April 5, 2006, and Woodside Energy (USA) Inc., executed April 13, 2006,
each a Well Owner, and Noble Energy, Inc., executed December 16, 2005, as the
Platform Owner.

 

First Amendment To Production Handling Agreement made effective November 21,
2006, by and between Arena Offshore, LLC, as Operator, and Pioneer Natural
Resources USA, Inc. and Woodside Energy (USA) Inc., each a Well Owner, and Noble
Energy, Inc., as a Platform Owner.

 

Farmout Agreement dated November 2, 2006, by and between Pioneer Natural
Resources USA, Inc., as Farmor, and Hydro Gulf of Mexico, L.L.C., as Farmee,
covering and affecting those certain aliquot portions of Blocks A-24, A-25 and
A-39, Brazos Area, as shown on OCS Leasing Map, Texas Map No. 5, as amended, and
associated assignments and conveyances.

 

Amendment to Farmout Agreement made effective November 2, 2006, by and between
Pioneer Natural Resources USA, Inc., as Farmor, and Hydro Gulf of Mexico,
L.L.C., as Farmee, covering and affecting those certain aliquot portions of
Blocks A-24, A-25 and A-39, Brazos

 

--------------------------------------------------------------------------------

 

Area, as shown on OCS Leasing Map, Texas Map No. 5, and associated assignments
and conveyances.

 

--------------------------------------------------------------------------------

 

Exhibit B

 

NO. 2006-01984

 

MOSH HOLDING, L.P., and DAGGER-

§

IN THE DISTRICT COURT

SPINE HEDGEHOG CORPORATION,

§

 

Plaintiffs,

§

 

 

§

 

v.

§

 

 

§

 

PIONEER NATURAL RESOURCES

§

HARRIS COUNTY, TEXAS

COMPANY; PIONEER NATURAL

§

 

RESOURCES USA, INC.; WOODSIDE

§

 

ENERGY (USA) INC.; AND

§

 

JPMORGAN CHASE BANK, N.A.

§

 

AS TRUSTEE OF THE

§

 

MESA OFFSHORE TRUST,

§

 

Defendants

§

334th JUDICIAL DISTRICT

 

FINAL AGREED JUDGMENT

 

On this day, the following parties have appeared before the Court:

 

(1) Plaintiff MOSH Holding, L.P. and Plaintiff-Intervenor Dagger-Spine Hedgehog
Corporation, both in their individual capacities and in their claimed capacities
as representatives of the Mesa Offshore Trust (“the Trust”) and/or the
Certificate Holders (“the Unit Holders”) of the Trust and/or the Mesa Offshore
Royalty Partnership (“the Partnership”).  MOSH Holding, L.P. and Dagger-Spine
Hedgehog Corporation, in all of their capacities, will be referred to
collectively as “the Plaintiffs.”

 

(2)  Defendant Pioneer Natural Resources Company and Defendant Pioneer Natural
Resources USA, Inc., in their individual capacities, its capacity as managing
general partner of the Partnership, and as Subject Lessee and/or operator under
the Overriding Royalty Conveyance (collectively, “Pioneer”).

 

(3)  Defendant JPMorgan Chase Bank, N.A., in its individual capacity (referred
to as “JPMorgan”), in its capacity of Trustee of the Trust (referred to as
“Trustee”), and in its capacity as general partner of the Partnership.

 

--------------------------------------------------------------------------------

 

(4)  Defendant Woodside Energy (USA) Inc. and

 

(5) Intervenors Keith Wiegand, Robert Miles, Gordon Stamper, Michael Brown, and
Benjamin J. Ginter (“the Intervenors”).

 

MOSH Holding, L.P., Dagger-Spine Hedgehog Corporation, Pioneer Natural Resources
Company, Pioneer Natural Resources USA, Inc., JPMorgan Chase Bank, N.A., and
Woodside Energy (USA) Inc., in all of their capacities, shall be referred to
collectively as “the Settling Parties.”

 

The Settling Parties informed the Court that they had entered into a Final
Settlement Agreement (“the Settlement Agreement”) resolving all claims and
causes of action that were asserted or could be asserted in this case.  A
verified copy of the Settlement Agreement is attached to this Final Judgment as
Exhibit A, and is adopted and incorporated into this Final Judgment.

 

After notice to the Unit Holders, the Court held an evidentiary hearing on the
fairness of the settlement (“the Settlement Approval Hearing”).  After
considering the papers filed in the case, the evidence presented, the arguments
of the Settling Parties, and the arguments of the Intervenors and objectors, the
Court issued its Findings of Fact and Conclusions of Law with Respect to Final
Settlement Agreement, which are incorporated by reference.  In its Findings of
Facts and Conclusions of Law, the Court found and concluded, among other things,
that (1) it has jurisdiction of this proceeding and of the subject matter as
required by law, (2) that the claims that were or could be asserted in this case
are owned by the Trust and/or the Partnership, (3) that the Trustee has the
authority to represent the Trust in prosecuting the claims of the Trust and/or
the Partnership asserted in this case and to settle the claims on its behalf;
(4) that the Plaintiffs have the authority to represent the Trust in prosecuting
and settling the claims of the

 

2

--------------------------------------------------------------------------------

 

Trust and/or the Partnership in this case, that the Plaintiffs in this case did
in fact assert and prosecute claims belonging to the Trust and/or Partnership,
and that the Plaintiffs have adequately represented the Trust and/or the
Partnership in doing so; (5) that this Court has the authority to approve the
Settlement Agreement; (6) that the Trust Unit Holders have been given notice of
this action, the Settlement Agreement, and the Settlement Approval Hearing, as
required by law and the Trust Indenture, and were afforded an opportunity to
object; (7) that the Settlement Agreement is fair to and in the best interest of
the Trust and its Unit Holders, and complies with the law in every respect, and
is approved; and (8) that attorneys’ fees in the amount of $6,250,000 and
expenses in the amount of $2,500,000 for Plaintiffs are necessary, reasonable,
and fair for the prosecution of this case and shall be paid as set forth in the
Settlement Agreement.

 

It is, therefore, ORDERED, ADJUDGED, AND DECREED that the Settlement Agreement
is APPROVED.

 

It is further ORDERED, ADJUDGED AND DECREED that all of the terms and provisions
of the Settlement Agreement are adopted and incorporated into this Final
Judgment.  The parties to the Settlement Agreement are instructed to consummate
the Settlement Agreement and perform the actions required thereunder.

 

It is further ORDERED, ADJUDGED, AND DECREED that Pioneer shall conduct a sale
of the Pioneer Settlement Interests and the Partnership Assets as set forth in
the Settlement Agreement, and will promptly tender any Sales Proceeds to the
Trustee, in accordance with the terms of the Settlement Agreement.  To the
extent that the liquidation process does not result in a sale of all or any part
of the Pioneer Settlement Interests and the Partnership Assets, Pioneer will

 

3

--------------------------------------------------------------------------------

 

have the right, in its sole discretion, to cancel, extinguish, or otherwise
dispose of all or part of such remaining interest, in accordance with the terms
of the Settlement Agreement.

 

It is further ORDERED, ADJUDGED, AND DECREED that the Partnership and Trust will
liquidate, wind up, and terminate in accordance with the terms of the Settlement
Agreement.

 

It is further ORDERED, ADJUDGED, AND DECREED that Defendants shall pay the
monetary consideration set forth in the Settlement Agreement (the “Settlement
Proceeds”) to JPMorgan, to be held in escrow, in accordance with the terms of
the Settlement Agreement.  If, however, the Final Judgment is reversed, JPMorgan
shall remit the Settlement Proceeds, together with accrued interest, to
Defendants.

 

It is further ORDERED, ADJUDGED, AND DECREED that, when this Final Judgment
becomes final and non-appealable, and any appeals or petitions for discretionary
review have been exhausted and have not resulted in a reversal or modification
of the Final Judgment, the Settlement Proceeds, Sale Proceeds and Plaintiffs’
attorneys’ fees of $6,250,000 and expenses of $2,500,000 shall be distributed by
the Trustee promptly after the Record Date as set forth in the Settlement
Agreement.

 

It is further ORDERED, ADJUDGED, AND DECREED that all objections to the
Settlement Agreement are overruled and denied.

 

It is further ORDERED, ADJUDGED, and DECREED that all claims brought herein in
any capacity (be it individual, direct, derivative, representative, or other),
or which could have been brought herein in any capacity (be it individual,
direct, derivative, representative, or other), are hereby DISMISSED WITH
PREJUDICE.  This Final Judgment and the Settlement Agreement are binding on the
Trustee, the Plaintiffs, the Defendants, and all Unit Holders of the Trust.

 

4

--------------------------------------------------------------------------------

 

Each party shall bear its own costs.

 

All other relief requested or which could have been requested by any party to
this litigation that is not specifically granted in this Final Agreed Judgment
is denied with prejudice.  This judgment is final, disposes of all claims and
all parties, and is appealable.

 

Signed on                                                , 2009.

 

 

 

 

 

The Honorable Sharon McCally

 

 

APPROVED AS TO FORM AND SUBSTANCE:

 

ATTORNEYS FOR PLAINTIFF, MOSH HOLDING, L.P.:

 

THE KIM LAW FIRM

 

 

 

 

John H. Kim

 

State Bar No. 00784393

 

The Kim Law Firm

 

4309 Yoakum Boulevard, Suite 2000

 

Houston, Texas 77006

 

(713) 522-1177

 

(888) 809-6793 Fax

 

 

 

SPAGNOLETTI & CO.

 

Francis I. Spagnoletti

 

State Bar No. 18869600

 

David S. Toy

 

State Bar No. 24048029

 

Spagnoletti & Co.

 

917 Franklin, 6th Floor

 

Houston, Texas 77002

 

(713) 653-5600

 

(713) 653-5656 Fax

 

 

 

 

 

Charles A. Sharman

 

State Bar No. 18114440

 

 

5

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6575 West Loop South, Suite 455

Bellaire TX 77401

(713) 655-1195

(713) 655-1197 Fax

 

THE BUZBEE LAW FIRM

Anthony G.  Buzbee

600 Travis Street, Suite 7800

Houston, Texas 77002

 

ATTORNEYS FOR PLAINTIFF-INTERVENOR,

DAGGER-SPINE HEDGEHOG CORPORATION

 

BOYER & KETCHAND

 

 

 

 

Robert L. Ketchand

 

State Bar No. 11362500

 

Constance O’Doherty Barnes

 

State Bar No. 01763200

 

Boyer & Ketchand

 

Nine Greenway Plaza, Suite 3100

 

Houston, Texas 77046

 

(713) 871-2025

 

(713) 871-2024 Fax

 

 

 

MELVYN L. DOUGLAS P.C.

 

Melvyn L. Douglas

 

Melvyn L. Douglas P.C.

 

5500 Preston Road, Suite 393

 

Dallas, Texas 75205-2676

 

(214) 520-1300

 

(214) 520-6422 Fax

 

 

6

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ATTORNEYS FOR PIONEER NATURAL RESOURCES COMPANY

& PIONEER NATURAL RESOURCES USA, INC.:

 

GIBBS & BRUNS, L.L.P.

 

 

 

 

Robin C. Gibbs

 

State Bar No. 07853000

 

Grant J. Harvey

 

State Bar No. 09177700

 

Jennifer Horan Greer

 

State Bar No. 00785611

 

Sam W. Cruse III

 

State Bar No. 24036423

 

GIBBS & BRUNS, L.L.P.

 

1100 Louisiana, Suite 5300

 

Houston, Texas 77002

 

(713) 751-5217

 

(713) 650-8805 (Facsimile)

 

 

 

LAW OFFICE OF ANDREW MCCOLLAM

 

Andrew McCollam, III

 

State Bar No. 13431812

 

Law Office of Andrew McCollam

 

2777 Allen Parkway, Suite 977

 

Houston, TX 77019

 

(713) 640-5020

 

 

 

LAW OFFICE OF HARRELL FELDT

 

Harrell Feldt

 

State Bar No. 06888000

 

Law Offices of Harrell Feldt

 

241 Earl Garrett

 

Kerrville, Texas 78028

 

(830) 792-8888

 

(830) 792-8887 (Facsimile)

 

 

7

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ATTORNEYS FOR DEFENDANT, JPMORGAN CHASE BANK, N.A.,

AS TRUSTEE OF THE MESA OFFSHORE TRUST:

 

 

 

ANDREWS KURTH LLP

 

 

 

 

 

 

 

Craig L. Stahl

 

State Bar No. 19006700

 

Andrews Kurth LLP

 

10001 Woodloch Forest Drive, Suite 200

 

The Woodlands, Texas 77380

 

(713) 220-4834

 

(713) 238-7478 Fax

 

 

 

BECK REDDEN & SECREST

 

David J. Beck

 

State Bar No. 00000070

 

Alistair B. Dawson

 

State Bar No. 05596100

 

Beck Redden & Secrest

 

1221 McKinney St., Ste. 4500

 

Houston, Texas 77010

 

State Bar No. 00000070

 

(713) 951-6209

 

(713) 951-3720 Fax

 

 

 

 

 

ATTORNEYS FOR DEFENDANT, WOODSIDE ENERGY (USA) INC.

 

 

 

 

GORDON, ARATA, MCCOLLAM, DUPLANTIS & EAGAN LLP

Charles L. Stinneford

 

State Bar No.  00785057

 

David V. Bryce

 

State Bar No.  24052876

 

Gordon, Arata, McCollam, Duplantis & Eagan LLP

 

777 South Post Oak Lane, Suite 1300

 

Houston 77056

 

(713) 333-5500

 

(713) 333-5501 Fax

 

 

8

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Exhibit C

 

NO. 2006-01984

 

MOSH HOLDING, L.P., AND DAGGER-

§

 

IN THE DISTRICT COURT

SPINE HEDGEHOG CORPORATION,

§

 

 

Plaintiffs,

§

 

 

 

§

 

 

v.

§

 

 

 

§

 

 

PIONEER NATURAL RESOURCES

§

 

HARRIS COUNTY, TEXAS

COMPANY; PIONEER NATURAL

§

 

 

RESOURCES USA, INC.; WOODSIDE

§

 

 

ENERGY (USA) INC.; AND

§

 

 

JPMORGAN CHASE BANK, N.A.

§

 

 

AS TRUSTEE OF THE

§

 

 

MESA OFFSHORE TRUST,

§

 

 

Defendants

§

 

334th JUDICIAL DISTRICT

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

WITH RESPECT TO FINAL SETTLEMENT AGREEMENT

 

On                               , 2009, this Court held an evidentiary hearing
(“the Settlement Approval Hearing”) on the Joint Motion to Approve Final
Settlement Agreement filed by the following parties:

 

(1)           Plaintiff MOSH Holding, L.P. and Plaintiff-Intervenor Dagger-Spine
Hedgehog Corporation, both in their individual capacities and in their claimed
capacities as representatives of the Mesa Offshore Trust (“the Trust”) and/or
the Certificate Holders (“the Unit Holders”) of the Trust and/or the Mesa
Offshore Royalty Partnership (the “Partnership”).  MOSH Holding, L.P. and
Dagger-Spine Hedgehog Corporation, in all of their capacities, will be referred
to collectively as “the Plaintiffs.”

 

(2)           Defendant Pioneer Natural Resources Company and Defendant Pioneer
Natural Resources USA, Inc., in their individual capacities, its capacity as
managing general partner of the Partnership, and as Subject Lessee and/or
operator under the Overriding Royalty Conveyance (“the Conveyance”)
(collectively, “Pioneer”).

 

(3)           Defendant JPMorgan Chase Bank, N.A., in its individual capacity
(referred to as “JPMorgan”), in its capacity of Trustee of the Trust (“the
Trustee”), and in its capacity as general partner of the Partnership.

 

(4)           Defendant Woodside Energy (USA) Inc.

 

These parties are referred to herein collectively as “the Settling Parties.”

 

--------------------------------------------------------------------------------

 

The Settling Parties seek the Court’s approval of the Final Settlement
Agreement.  After considering the papers filed, the evidence offered at the
hearing, the arguments of the parties, and the arguments of the objectors to the
Settlement Agreement, the Court APPROVES the Settlement Agreement as entirely
fair to and in the best interest of the Trust and its Unit Holders, and issues
the following findings of fact and conclusions of law in support of that
approval.(1)

 

I.              This Court Has Jurisdiction

 

A.            Conclusions of Law with Respect to Jurisdiction(2)

 

1.  This Court concludes that it has jurisdiction over this case.  See Tex.
Prop. Code § 115.001 (providing that, with certain exceptions not applicable
here, “a district court has original and exclusive jurisdiction over all
proceedings by or against a trustee and all proceedings concerning trusts . .
.”).

 

II             The Trustee Has the Authority to Settle

 

A.            Conclusions of Law with Respect to the Trustee’s Authority to
Settle

 

2.  The claims that were or could have been asserted in this case were owned by
the Trust and/or the Partnership.  The Trustee has the power to prosecute and
settle these claims under the Royalty Trust Indenture (“Trust Indenture”), the
Trust Code, and the common law, and, together with the Plaintiffs, to bind the
beneficiaries of the Trust to the settlement.

 

3.  Section 3.01 of the Trust Indenture provides that “the Trustee is authorized
to take such action as in its judgment is necessary or advisable best to achieve
the purposes of the Trust,

 

--------------------------------------------------------------------------------

(1) By citing some examples of evidence that supports the Court’s findings, the
Court does not intend to imply that no other evidence supports the findings; to
the contrary, the evidence adduced at the hearing overwhelmingly supports the
Court’s findings.

 

(2) To the extent that a conclusion of law should have been designated as a
finding of fact, or vice versa, the designation is not controlling, and the
correct designation should be substituted.  See Ray v. Farmers’ State Bank of
Hart, 576 S.W.2d 607, 608 n.1 (Tex. 1979).

 

2

--------------------------------------------------------------------------------

 

including . . . to settle disputes with respect thereto.”  Section 3.05 also
expressly grants the Trustee the power to settle claims:

 

3.05.  Power to Settle Claims.  The Trustee is authorized to prosecute or
defend, and to settle by arbitration or otherwise, any claim of or against the
Trustee, the Trust or the Trust Estate, to waive or release rights of any kind
and to pay or satisfy any debt, tax or claim upon any evidence by it deemed
sufficient.

 

Trust Indenture § 3.05.

 

4.  Similarly, the Texas Trust Code expressly empowers the Trustee to settle
such claims:  “A trustee may compromise, contest, arbitrate, or settle claims of
or against the trust estate or the trustee.”  Tex. Prop. Code § 113.019.

 

5.  Finally, the common law recognizes that that a trustee has the power to
release claims of the trust, and that a “beneficiary of the trust, is bound by
that action.”  Cogdell v. Fort Worth Nat’l Bank, 544 S.W.2d 825, 829 (Tex. Civ.
App.—Eastland 1977, writ ref’d n.r.e.).

 

B.            Findings of Fact with Respect to the Trustee’s Authority to
Represent the Trust and to Settle on Its Behalf

 

6.             The Trustee has the power to prosecute and settle these claims
under the Royalty Trust Indenture (“Trust Indenture”), the Trust Code, and the
common law, and, together with the Plaintiffs, to bind the beneficiaries of the
Trust to the settlement.

 

7.             The Trustee has agreed to settle these claims on behalf of the
Trust on the Terms set forth in the Settlement Agreement, and has agreed that
the Settlement Agreement is fair and in the best interest of the Trust and its
Unit Holders.

 

III.           The Plaintiffs Have the Authority to Represent the Trust and to
Settle on Its Behalf

 

A.            Conclusions of Law with Respect to Plaintiffs’ Authority to
Represent the Trust and to Settle on Its Behalf

 

8.  A beneficiary of a trust may be permitted to enforce a claim or cause of
action belonging to the trust when the trustee cannot or will not enforce it. 
Grinnell v. Munson, 137

 

3

--------------------------------------------------------------------------------

 

S.W.3d 706, 719 (Tex. App.—San Antonio 2004, no pet.) (citing Interfirst
Bank-Houston, N.A. v. Quintana Petroleum Corp., 699 S.W.2d 864, 874 (Tex.
App.—Houston [1st Dist.] 1985, writ ref’d n.r.e.)); Hamilton v. McClean,
No. 03-99-00320-CV, 2000 WL 502828, at *3 (Tex. App.—Austin, April 27, 2000, no
pet.) (not designated for publication).

 

B.            Findings of Fact with Respect to Plaintiffs’ Authority to
Represent the Trust and to Settle on Its Behalf

 

9.  The claims that were asserted or that could have been asserted by the
Plaintiffs in this case are owned by the Trust and/or the Partnership.

 

10. Plaintiffs have alleged that the Trustee failed to pursue the Trust and/or
the Partnership’s claims against Pioneer and Woodside, and that it, in fact, is
unable to pursue such claims due to a conflict of interest.  Plaintiffs have
also argued that they have authority under §§ 115.011 and 115.015 of the Trust
Code to pursue and settle the claims in this case.  Plaintiffs have argued that,
as a result, Plaintiffs are entitled to prosecute and compromise the claims of
the Trust and/or the Partnership.  Furthermore, the Trustee has previously
authorized MOSH Holding, L.P., to pursue claims on behalf of the Trust and its
Unit Holders.  The Court finds that Plaintiffs, as beneficiaries of the Trust,
had the authority to prosecute and agree to a settlement of the claims in this
action on behalf of the Trust and its Unit Holders and/or the Partnership.

 

11.  The Court finds that the Plaintiffs did in fact prosecute and agree to the
settlement of the claims in this action on behalf of the Trust and its Unit
Holders and/or the Partnership, and agrees that the Settlement Agreement is fair
to and in the best interest of the Trust and its Unit Holders.

 

12.  The Court finds that the Plaintiffs are adequate representatives of the
Trust and its Unit Holders and/or the Partnership.  Plaintiffs have fully and
fairly represented the Trust and its Unit Holders and/or the Partnership. 
Plaintiffs have zealously pursued this Lawsuit at great

 

4

--------------------------------------------------------------------------------

 

expense for four years.  MOSH Holdings is the largest Unit Holder in the Trust.
 As such,  Plaintiffs’ interests are similarly situated to those of the absent
Unit Holders.  Plaintiffs have also retained experienced and skilled counsel to
represent them and the interests of the Trust and its Unit Holders and/or
Partnership in this case, thereby further supporting the adequacy of the
Plaintiffs’ representation.  Finally, the Court finds that the Plaintiffs and
the Defendants negotiated the Settlement Agreement at arms’ length and in good
faith.

 

IV.           This Court Has the Authority to Approve the Settlement Agreement

 

A.            Conclusions of Law with Respect to the Court’s Authority to
Approve the Settlement Agreement

 

13.  Plaintiffs have alleged that the Trustee has a conflict of interest in this
case.  Accordingly, the Parties seek the Court’s approval of the Settlement
Agreement.  The Court has the power to approve a Trustee’s settlement of
claims.  See Cogdell, 544 S.W.2d at 828, 829-30 (noting trustee sought court
approval of settlement agreement that released claims against trustee, because
of potential conflict of interest, and holding that approval of settlement was a
question for the court, rather than jury); RESTATEMENT (SECOND) OF TRUSTS § 192,
cmt. d (“Application to court.  If the trustee is in doubt whether he should
compromise or submit to arbitration a claim, he may ask the instruction of the
court or he may agree thereto conditionally upon the subsequent approval of the
court.”).

 

V.            The Unit Holders Were Afforded Proper Notice of and an Opportunity
to Object to the Settlement Agreement

 

A.            Findings of Fact with Respect to the Notice and Opportunity to
Object to the Settlement Agreement Afforded to the Unit Holders

 

14.  Full and proper notice of the nature and existence of this Lawsuit, the
Settlement Agreement, and the Settlement Approval Hearing was given to the Unit
Holders by mail on May 18, 2009, pursuant to the Trust Indenture and the Texas
Trust Code.  Moreover, the Trustee filed

 

5

--------------------------------------------------------------------------------

 

a Form 8K with the Securities and Exchange Commission (“SEC”) and issued a press
release on May 18, 2009, announcing the settlement and the scheduled approval
hearing.  These notices satisfied the requirements under the Trust Indenture and
§ 115.015 of the Texas Property Code.  These notices also provided the Unit
Holders the ability to obtain a copy of the Settlement Agreement, proposed Final
Judgment, and proposed Findings of Fact and Conclusions of Law with Respect to
Settlement Agreement, either by calling a representative of the Trustee or by
visiting www.businesswire.com/cnn/mesaoffshoresettlement.htm.

 

15.           The following Unit Holders appeared and made objections to the
settlement, by objection and/or by intervention:
                          .[Name Unit Holders.]  The Court has considered these
objections in making its findings of fact and conclusions of law.

 

VI.           The Settlement Agreement Is Fair to and in the Best Interests of
the Trust and Its Unit Holders

 

A.            Conclusions of Law with Respect to the Whether the Settlement
Agreement Is Fair to and in the Best Interests of the Trust and Its Unit Holders

 

16.  The factors to be considered in determining whether a settlement on behalf
of a trust should be approved include the following:

 

(a)           the probable validity of the claims;

(b)           the apparent difficulties in enforcing the claims through the
courts;

(c)           the collectibility of any judgment recovered;

(d)           the delay, expense, and trouble of litigation;

(e)           the amount of the compromise as compared with the amount and
collectibility of the judgment; and

(f)            the views of the parties involved, pro and con.

 

Cogdell v. Fort Worth Nat’l Bank, 544 S.W.2d 825, 829 (Tex. Civ. App.—Eastland
1976, writ ref’d n.r.e.) (citing In re Ortiz’s Estate, 26 Del. Ch. 240, 27
A.D.2d 368 (1942)).

 

B.            Findings of Fact with Respect to the Court’s Finding that the
Settlement Agreement Is Fair to and in the Best Interest of the Trust and Its
Unit Holders

 

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17.  The Court finds, based on the Cogdell factors, that the Settlement
Agreement is fair to and in the best interest of the Trust and its Unit
Holders.  An analysis of each factor follows.

 

a.             The probable validity of the claims.  In addition to the evidence
adduced, papers filed, and arguments made in connection with the Settlement
Approval Hearing, the Court has reviewed the voluminous summary judgment
briefing and other briefing filed in this action by all of the parties,
including, without limitation, the briefs filed in connection with Plaintiffs’
attempt to enjoin the sale of Trust assets and Pioneer’s motions to exclude
testimony offered by Plaintiffs’ technical and non-technical experts.  The Court
finds that numerous significant legal and factual arguments were advanced by
Defendants and Plaintiffs, and that the final determination and resolution of
these issues would involve significant risk to all parties if the case went to
trial.  These disputed issues include, but are not limited to, the following:

 

·              With respect to the Plaintiffs’ wrongful farmout claim,
Defendants argued that the Conveyance authorized Pioneer to pool or unitize the
Subject Interests, see Conveyance at § 7.02; that the Farmout Agreement with
Woodside was not an improper farmout under the parties’ agreements; and that
Plaintiffs and the Trust were not harmed by the Farmout, but rather were
benefited by it.

 

·              With respect to Plaintiffs’ claim that Pioneer failed to drill or
drilled in a grossly negligently manner, Pioneer argued that the agreements and
documents accompanying the agreements between the parties did not impose any
duty to drill and, in fact, stated that Pioneer had no duty to drill or develop
the prospects.  Furthermore, Pioneer argued that Pioneer did not owe Plaintiffs
or the Trust a duty to prudently develop the Prospects, and that, in any event,
Plaintiffs had

 

7

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failed to produce any evidence that Pioneer acted in a grossly negligent manner
or otherwise failed to meet any applicable standard of care with respect to its
drilling decisions and operations.  Pioneer also argued that Plaintiffs had
failed to come forward with evidence that Pioneer conducted drilling operations
in a negligent manner or of damages stemming from any alleged failure to drill
or improper drilling.  Finally, Pioneer argued that Pioneer did drill to the
target depth, and that there are simply no oil and gas reserves to be tapped in
the Prospects.

 

·              With respect to Plaintiffs’ breach of contract claim, Pioneer
argued that Pioneer owed no contractual duty to Plaintiffs or the Trust under
the Conveyance Agreement that could support a claim for breach of that
agreement, because neither Plaintiffs nor the Trust were parties to that
agreement.

 

·              Defendants also argued that they were not liable based on the
limitation of liability provisions in the Partnership Agreement and the Trust
Indenture, which provided that Pioneer and the Trustee could “be personally or
individually liable only for fraud or acts or omissions in bad faith or which
constitute gross negligence . . . .”  Trust Indenture § 6.01; First Amended and
Restated Articles of General Partnership of Mesa Offshore Royalty Partnership
(“Partnership Agreement”) at § 5.09(a).

 

·              Pioneer also argued that is was not liable, based on the business
judgment rule provision in the Conveyance, which states that the Operator “will
conduct and carry on the development, maintenance and operation of the Subject
Interests with reasonable and prudent business judgment and in accordance with
sound oil and gas field practices.”  See Conveyance at § 6.01.

 

8

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·              Pioneer argued that Plaintiffs have no basis for their claim that
Pioneer owed a fiduciary duty to the Trust, and that there was no evidence that
Pioneer had breached any of the duties that it did owe: rather, Pioneer’s
actions were expressly authorized by both the Partnership Agreement and the
Texas Revised Partnership Act.

 

·              With respect to Plaintiffs’ claim for civil conspiracy,
Defendants argued that the Supreme Court has emphasized the requirement of a
specific intent to injure the plaintiff, and that no such evidence exists in
this case.  Defendants also argued that none of them knowingly participated in
another’s breach of fiduciary duty, and that, in any event, no such breach of
fiduciary duty occurred.

 

·              With respect to Plaintiffs’ claim for fraud, Defendants argued
that there was no evidence of any material misrepresentations or omissions or
that Plaintiffs and the Trust were harmed by any alleged misrepresentations. 
Pioneer also argued that it owed no duty to disclose.

 

·              Pioneer argued that its conduct was permissible under § 11.02 of
the Partnership Agreement, in which it “retain[ed] the right to engage in all
business and activities of any kind whatsoever (irrespective of whether same may
be in competition with the Partnership), and to acquire and own all assets,
however acquired and wherever situated, and without in any manner being
obligated to disclose or offer such  business and activities or assets or
compensation or profit to the other Partners or to the Partnership.”

 

·              The Trustee argued that there were numerous provisions of the
Trust Indenture that limited or exculpated the Trustee’s liability, including §
11.02, which

 

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permitted the Trustee to rely on experts, and that “the opinion of any such
parties on any matter submitted to them by the Trustee shall be full and
complete authorization and protection in respect of any action taken or suffered
by it hereunder in good faith and in accordance with the opinion of any such
party.”

 

·              Defendants also challenged the ability of Plaintiffs’ experts to
offer competent expert testimony at the time of trial regarding the alleged
hydrocarbon reserves located on the Subject Interests, as well as the damages
associated with the alleged failure to recover these alleged hydrocarbon
reserves.

 

·              Defendants also generally challenged whether Plaintiffs have any
competent evidence of any damages whatsoever.

 

·              Defendants would have asserted at trial numerous affirmative
defenses as well.

 

In sum, the Court finds that there are substantial legal and factual issues that
make the likelihood of Plaintiffs ultimately obtaining a judgment uncertain, and
that there is uncertainty about Plaintiffs’ ability to prove liability and
damages.  By settling, Plaintiffs, the Trust, and its Unit Holders avoid the
significant risks of losing their case on these or the other grounds asserted by
Defendants.

 

b.             The apparent difficulties in enforcing the claims through the
courts.  As set forth above, the Plaintiffs, the Trust, and its Unitholders in
this action face risk to successfully pursuing their claims on the merits, which
would have imposed difficulties to Plaintiffs’ attempt to enforce these claims
in this court.

 

c.             The collectibility of any judgment recovered.  There does not
appear to be any impediment to collection of any judgment recovered in this
case.

 

10

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d.                                      The delay, expense, and trouble of
litigation.   Continuing to litigate the claims in this case, rather than to
settle them, would have resulted in significant delay, expense, and trouble. 
This is a complex case.  The trial was estimated to last at least five weeks. 
It would have involved thousands of exhibits; required the testimony of many
witnesses, including costly experts; and required the time and expense not only
of the parties’ attorneys, but also of the parties and their representatives. 
The parties had indicated a willingness to take this case all the way to the
highest court if they had lost, and the cost of briefing and arguing these
appeals would have been significant.  Settling the case results in its
resolution now, and avoids the delay in resolution that would occur if the
parties had gone forward with trial.

 

Indeed, the delay very well could have been more than just the delay caused by
trial, because Plaintiffs had sought a continuance of the April 2009 trial
date.  Because of the parties’ settlement, the Court was not required to decide
the motion.  If the Court had been required to continue the case, it likely
would not have been reset until fall, due to conflicts in Pioneer’s counsel’s
schedule.  By settling, the parties avoided both the delay and expense of such a
significant trial and the appeals that would follow therefrom.  Furthermore, by
settling, Plaintiffs, the Trust, and its Unit Holders avoid the risk of losing
at trial, which is certainly of value.

 

Delay of this case presents another problem for the Trust and its Unit Holders: 
the Trust is out of money, yet continues to incur expenses.  Continued
litigation of the claims of this case will only result in increased expenses
that will ultimately be deducted from whatever recovery the Trust obtains (if
any).  Furthermore, even if Plaintiffs ultimately obtained a judgment, the Trust
might still have to pay substantial reimbursable

 

11

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expenses owed to the Operator and General Partner before the Unit Holders could
receive any of the proceeds.  Similarly, Pioneer and the Trustee would both be
entitled to recoup substantial legal fees incurred in defending this suit if
they successfully prevailed against such claims.  Moreover, the Trust’s $5
million credit facility loan from JPMorgan would have to be repaid.  These
recoupments would occur before any distribution would be made.    See
Partnership Agreement § 5.10; Conveyance at 20.

 

e.                                       The amount of the compromise as
compared with the amount and collectibility of the judgment.  The value of the
settlement is substantial.  The settlement consideration is at least $19 million
in cash, plus the value of Pioneer’s 50% interest in the Brazos Block A-39, the
proceeds from the sale of which Pioneer has agreed to contribute to the Trust. 
Moreover, the Qualified Bidder process that has been put in place is designed to
facilitate the receipt of at least $750,000 for the properties, while at the
same time allowing the Trust to realize the benefit of any higher bids.  This
process is of additional benefit to the Trust, given that the assets were
offered for sale at public auction on March 18, 2009, and attracted no bidders. 
MOSH Holding, L.P. and Dagger-Spine have represented that neither they nor their
owners, officers, or affiliates have any ownership, direct or indirect, or
interest, direct or indirect, in MOSH LLC, and the Court finds that there is no
evidence that MOSH Holding L.P., Dagger-Spine, or their owners, officers, or
affiliates have any ownership, direct or indirect, or interest, direct or
indirect, in MOSH LLC.

 

In addition, JPMorgan has agreed to forgive the repayment of the existing $5
million loan to the Trust.  Finally, as part of the settlement, Pioneer has
agreed not to pursue an indemnity claim against the Trust or Partnership that
have would exceeded $5 million.

 

12

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Because this case has not been tried, there is no “amount of the judgment” to
compare to the amount of the settlement.  However, Defendants argued
persuasively that Plaintiffs were not harmed (and indeed, were benefited) by any
of Defendants’ actions, and that, in fact, Plaintiffs have never even quantified
their damages.  Indeed, at the time of the settlement, Plaintiffs had yet to
delineate, through expert testimony or otherwise, a specific, competent damages
figure.  The settlement consideration is generous in light of the difficulties
in proof of damages faced by Plaintiffs, as well as in light of the other
impediments Plaintiffs faced on the merits of their claims.

 

f.                                         The views of the parties involved,
pro and con.                   objectors made objections to the Settlement
Agreement.  The objections that were made were not persuasive.  In contrast, all
Defendants and Plaintiffs support the Settlement Agreement.  Plaintiffs own
approximately 13% of the shares of the Trust.  Plaintiffs’ approval is a
persuasive factor in favor of approval of the Settlement Agreement.

 

In conclusion, with the exception of one factor – the collectibility of the
judgment – all of the Cogdell factors compel a finding that the Settlement
Agreement is fair to and in the best interests of the Trust and its Unit Holders
and should be approved.  The fact that a judgment – if obtained despite the
serious impediments on the merits of the claims – may be collectible is far
outweighed by the many other factors establishing that the Settlement Agreement
is more than fair and in the best interest of the Trust and its Unit Holders.

 

VII.                            Other Potentially Applicable Fairness
Considerations Support Approval

 

A.                                    Conclusions of Law with Respect to Other
Potentially Applicable Fairness Considerations

 

18.  Although the Court concludes that Cogdell articulates the factors that must
be considered when determining whether a settlement agreement is fair and in the
best interests of a

 

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Trust, the Court out of an abundance of caution also addresses the factors set
forth in determining whether a transaction between a fiduciary such as the
Trustee and its beneficiary is fair:

 

(a)

 

whether there was full disclosure regarding the transaction;

(b)

 

whether the consideration (if any) was adequate;

(c)

 

whether the beneficiary had the benefit of independent advice;

(d)

 

whether the fiduciary benefited at the expense of the beneficiary; and

(e)

 

whether the fiduciary significantly benefited from the transaction as viewed in
light of circumstances existing at the time of the transaction.

 

Lee v. Hasson, No. 14-05-00004-CV,        S.W.3d       , 2007 WL 236899, at *15
(Tex. App.–Houston [14th Dist.] Jan. 30, 2007, pet denied).

 

B.                                    Findings of Fact with Respect to the
Court’s Finding that Other Potentially Applicable Fairness Factors Support
Approval of the Settlement Agreement

 

17.  As with the Cogdell factors, the Court finds that the Lee factors also
compel a finding that the Settlement Agreement is eminently fair, as set forth
below.

 

(a)                                  Whether there was full disclosure regarding
the transaction.  The Court finds that there was full disclosure regarding the
Settlement Agreement.  As set forth above, the Unit Holders were given ample
notice of all details of the Settlement Agreement.  The Settlement Agreement and
related documents were posted to the Trust’s website
www.businesswire.com/cnn/mesaoffshoresettlement.htm, and notice of the
settlement terms and the posting was provided to the Unit Holders via U.S. mail,
SEC filing, and press release.  In addition, Unit Holders were provided a phone
number to call and request copies of the Settlement Documents.

 

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(b)                                 Whether the consideration (if any) was
adequate.  As discussed with respect to the Cogdell factors, above, the
consideration to be paid in settlement is substantial, and more than adequate to
compensate for the claims released.

 

(c)                                  Whether the beneficiary had the benefit of
independent advice.  The beneficiaries of the Trustee’s fiduciary duty – here,
the Trust and its Unit Holders – had the benefit of independent advice from the
skilled and experienced counsel for Plaintiffs MOSH Holdings, L.P., and
Dagger-Spine Hedgehog Corporation, and were not required to rely on the advice
of the Trustee with respect to the Settlement Agreement.  Plaintiffs and their
counsel have agreed that the settlement is fair and in the best interests of the
Trust and its Unit Holders.

 

 (d)                              Whether the fiduciary benefited at the expense
of the beneficiary.  There is no evidence that the Trustee (or, for that matter,
any of the Defendants) benefited at the expense of the Trust in entering this
Settlement Agreement; to the contrary, the Settlement Agreement requires the
Defendants to pay substantial consideration to the Trust, in exchange for a
release of claims that would have faced substantial impediments at trial.

 

(e)                                  Whether the fiduciary significantly
benefited from the transaction as viewed in light of circumstances existing at
the time of the transaction.  Although the Trustee and the Defendants benefited
from the transaction, in that they received releases and did not have to go to
trial, the benefit was not significant in light of the circumstances of the
transaction – specifically, in light of the substantial consideration the
Defendants paid in exchange for the release of claims that faced significant
impediments to success.

 

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In sum, even when considered under the Lee factors, the Settlement Agreement is
entirely fair to and in the best interest of the Trust and its Unit Holders.

 

VIII.                        The Attorneys’ Fees Sought for Plaintiffs’ Counsel
Are Necessary, Reasonable, and Fair

 

A.                                    Findings of Fact with Respect to the
Court’s Finding that the Attorneys’ Fees Sought for Plaintiffs’ Counsel and
Necessary, Reasonable, and Fair

 

18.                                 Plaintiffs MOSH and Dagger-Spine have
pursued claims asserted in this lawsuit for the benefit of the Trust and the
Unit Holders.  As a result they are entitled to reimbursement of fees and
expenses which they have incurred under the Trust Fund doctrine.

 

19.                                 The nature of this case has required
extensive funding of expenses by legal counsel.  This case has been
extraordinarily expert intensive, and extensive funds have been paid or are owed
to expert witnesses.  There have been numerous depositions in the case.  There
have been many hearings in the case, including those requiring presentation of
evidence.  In the course of this case, there have been at least three temporary
injunction hearings, two settlement conference hearings, and appeals, including
to the Supreme Court of Texas.

 

20.                                 In addition to amounts spent on expenses,
counsel have expended an enormous amount of time in the prosecution of this
case.  The time actually expended in the pursuit of the case and the value of
this time are in the thousands if not 10,000 hour range with reasonably
associated commercial fee rates.

 

The foregoing amounts represent the Lodestar amounts for the attorneys because
the rates and time are reasonable.

 

21.                                 This case has been one in which the
financial burden and the time burden has been extensive and the means of meeting
these demands has had to be readjusted repeatedly over the course of this case. 
For example, straight hourly rates have given way to blended rates and

 

16

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partial contingences.  Other counsel have had contingent fee agreements which
were then adjusted to accommodate other counsel.  All of these changes have been
necessitated by the enormous expense and difficulty of pursuing this case.  The
dedication of counsel to the case has been reflected in their willingness to
make adjustments in their compensation arrangement and as well as to continue
with the case in the face of difficulty being paid or compensated at times.

 

22.                                 Because of the complexity of the fee
schedules, the varying arrangements over time and the desirability of some
expenses being reimbursed to some parties, the parties on the Plaintiffs’ side
of the case have met and agreed on an amount that is a reasonable number to
represent the fee of the individual parties.  The parties on the Plaintiffs’
side of the case have further agreed to any cross reimbursements that should be
made between the parties and counsel.  Accordingly, the parties on the
Plaintiffs’ side of the case have agreed that the following represent the fee
earned by respective parties: $6,250,000.  The parties on the Plaintiffs’ side
of the case have further agreed to reimbursement of expenses in the amount of
$2,500,000.

 

23.                                 The Court has carefully reviewed the
recommendations of the parties and heard testimony of counsel and reviewed the
underlying data and finds that the fees and expenses are reasonable and should
be born by the settlement proceeds which they have generated for the benefit of
the Trust and the Unit Holders.  Accordingly, it is ordered that these amounts
be paid to the respective parties and their attorneys out of the settlement
proceeds as set forth above.

 

24.                                 In reviewing the foregoing fee application,
the Court has considered the factors set forth in Johnson v. Georgia Highway
Express, 488 F.2d 714 (5th Cir. 1974).  These factors are analyzed as follows:

 

(1)          Time and labor.  The paragraphs above document the time and labor
involved. This case has been lengthy and the Court has been personally involved
in many of the hearings and

 

17

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motions.  The Court has reviewed numerous motions and after review of the record
of this case, the Court is convinced that the time and labor was actually spent
and is reasonable for the case.

 

(2)          Novelty and difficulty of questions.  This case involves truly
novel and difficult questions.  There was an appeal to the Texas Supreme Court
for questions that which needed answering. Additionally, there are many other
questions which have been raised in summary judgment proceedings which can only
be described as novel and difficult.

 

(3)          The skill requisite to perform the legal services properly.  This
is a case in which some of the most esteemed counsel in Harris County have been
present both for the Plaintiff and for the defense of the action.  The
complexity of the case required experienced counsel, and such experience is
present in this case.

 

(4)          Preclusion of other employment by the attorneys due to the
acceptance of the case.  Given the amount of time involved, it is clear that
this case required a substantial commitment of time and involvement of this
case.  The parties were precluded to some extent from being involved with other
cases.  The senior counsel were often present.

 

(5)          Customary fee.  As indicated above, I have reviewed the fees and
the fees in question are well within customary fees in the Harris County area.

 

(6)          Whether the fees are fixed or contingent.  As indicated above, this
case has represented every combination of fee schedule possible including
straight hourly rates, blended rates, partial contingent fees, complete
contingent fees.  All of these have been necessary at various times in the case
to move the case forward and to obtain both time, labor and the financing
necessary to pursue the case.

 

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(7)          Time limitations imposed by the client or the circumstances.  In
this case there have been several trial settings.  Frequently the lawyers have
been up against severe deadlines including filing of expert reports, challenging
expert reports, motions and other matters.  As a result because of the time
deadlines, at times work was required to be done on a very intense schedule.

 

(8)          The amount involved and the results obtained.  This case originally
was a claim in excess of $1 billion.  As time has progressed, the Midway Well on
Brazos Block A-39 has proven to be less productive than originally believed.
Nonetheless, the Plaintiffs have vigorously pursued and attempted to prove the
continued viability of Block A-39 as a drilling prospect.  As a result, the case
has involved very large potential amounts of money throughout.  Notwithstanding
the issues in the case as indicated above, Plaintiffs have obtained value and
benefit to the Trust in excess of $30 million.

 

(9)          Experience reputation and ability of the attorneys in this case. 
Counsel are all experienced attorneys with the reputations for trying cases.

 

(10)    Political undesirability of the case.  This case does not involve
“political” undesirability, but the Court notes that some of the Defendants, in
particular JPMorgan Chase, are prominent entities.  At least one expert in the
case declined to work for Plaintiffs and indeed went to work for JPMorgan Chase
because of concerns over who was the Defendant in the action.

 

(11)    Nature and length of the professional relationship with the client.  For
Boyer & Ketchand, the only relationship has been this case.  Mr. Spagnoletti and
Kim have represented principals of MOSH in other litigation.  Mr. Buzbee has
only represented the parties in this particular action.

 

19

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(12)    Awards in similar cases.  This is not a case when all benefit flow to
the counsel.  Very substantial cash benefits are flowing to the Unit Holders
which would not be obtainable otherwise.  The Trust itself was insolvent and yet
the Plaintiffs have obtained a positive cash value for the Trust.  When the
total value of the case to the Trust is viewed in terms of the contingency, the
contingency is only about 20%.  From the Court’s experience, this is a low
contingency, especially in cases in which counsel are required to expend large
amounts of money for numerous experts.  Suits over royalty trusts are by their
nature rare, so the nature of this outcome needs to be evaluated by litigation
experience in general.

 

25.                                 Accordingly the Court approves as necessary,
reasonable, and fair attorneys fees in the amount of $6,250,000 and expenses in
the amount of $2,500,000 for Plaintiffs’ attorneys and Plaintiffs to be paid as
set forth in these Findings of Fact and Conclusions of Law and in the Final
Agreed Judgment.

 

IX.                                The Intervenors’ Claims Are Being Settled in
the Settlement Agreement

 

A.                                    Conclusions of Law with Respect to
Interventions

 

26.  An intervention may be stricken if (1) it is not “almost essential to
effectively protect the intervenor’s interest,” or (2) if the intervention will
“complicate the case by an excessive multiplication of issues.”  Guar. Fed. Sav.
Bank v. Horseshoe Operating Co., 793 S.W.2d 653, 657 (Tex. 1990).

 

B.                                    Findings of Fact with Respect to
Interventions

 

27.  Gordon Stamper, Robert Miles, Keith Wiegand, Michael Brown, and Benjamin J.
Ginter (“the Intervenors”) have sought to intervene in this case.  To the extent
that the

 

20

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Intervenors have pleaded any claims in their pro se pleadings, they have
purported to assert claims on behalf of and that belong to the Trust and to
object to the Settlement Agreement.

 

28.  The Court finds that the Intervenors’ interventions are not necessary (and
certainly are not “almost essential”) to protect their interests or the
interests of the Trust and its Unit Holders and would unnecessarily complicate
the case with an excessive multiplication of issues.  The Court has approved the
Settlement Agreement, which resolves all of the claims of the Trust and its Unit
Holders, including the claims that the Intervenors purport to assert.  The Court
intends to enter a Final Judgment dismissing these claims with prejudice
pursuant to the Settlement Agreement.  Thus, the claims that the Intervenors
purport to assert on behalf of the Trust and its Unit Holders will be dismissed
with prejudice, and there is no need for them to intervene in this case.

 

29.  It is, furthermore, unnecessary to allow Intervenors to intervene to
protect their interests or those of the Trust and its Unit Holders, because
similarly situated Unit Holders – MOSH Holdings and Dagger-Spine – are already
doing so.  The Court has previously found that MOSH Holdings and Dagger-Spine
are adequate representatives of the Trust and/or the Partnership’s interests,
and thus the Intervenors’ intervention is unnecessary.  Indeed, MOSH Holdings
has been pursuing the claims in this case for four years.  In contrast, three of
the four intervenors – Stamper, Miles, and Wiegand – intervened two years ago as
part of the “Wiegand Group,” then voluntarily took a nonsuit of their own
lawsuit for “strategic reasons,” only to intervene again on the eve of trial. 
In moving to non-suit their earlier intervention, the Intervenors acknowledged
the adequacy of MOSH Holdings’ and Dagger-Spine’s representation:  they stated
that MOSH Holdings and Dagger-Spine “are representative of all unit-holders.” 
See Plaintiffs’ Motion for Non-Suit Without Prejudice for the Wiegand Group at
2.

 

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30.  Furthermore, intervention is not necessary to permit Intervenors’ to
protect their interests or the interests of the Trust and its Unit Holders
and/or the Partnership, because Intervenors, like other objectors, were afforded
ample opportunity to object to the Settlement Agreement and to appear at the
Settlement Approval Hearing and be heard.  The Court has carefully considered
their objections, but on balance finds that they are without merit and should be
denied.

 

31.  Permitting intervention by the Intervenors would also unnecessarily
complicate the case by an excessive multiplication of issues.  That the
Intervenors’ interventions would unnecessarily complicate this case is
particularly true given that Intervenors waited until the eleventh hour, just
before the case was set for trial, to intervene.  There interventions are,
therefore, untimely as well as unnecessary.

 

32.  Although these findings would warrant striking the Intervenors’
interventions, the Court concludes that the motions to strike are moot, because
the claims that are being asserted or could be asserted in this case are claims
of the Trust and/or Partnership, and are being dismissed with prejudice pursuant
to the Settlement Agreement as part of the Final Agreed Judgment.

 

X.                                    Conclusion

 

In conclusion, the Settlement Agreement is APPROVED as fair to and in the best
interests of the Trust and its Unit Holders.

 

All objections to the Settlement Agreement are hereby DENIED.

 

Signed on                                            , 2009.

 

 

 

 

 

 

The Honorable Sharon McCally

 

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Exhibit D

 

ABANDONMENT AGREEMENT

 

(Gulf of Mexico)

 

This Abandonment Agreement (the “Agreement”) is made effective as of the     
day of                         , 2009, between PIONEER NATURAL RESOURCES USA,
INC., a Delaware corporation (“Pioneer”) and                                 , a
                       corporation (“Buyer”), each being a “party” and
collectively being the “parties”.

 

WITNESSETH:

 

WHEREAS, pursuant to the ABOS (as defined below) Pioneer assigned unto Buyer
certain of its interests in oil and gas assets located in areas situated
offshore Texas;

 

WHEREAS, as used herein, the term “Assets” has the meaning provided in the ABOS;

 

WHEREAS, the assignment of the Assets by Pioneer to Buyer was expressly made
subject to the terms and conditions of that certain Assignment and Bill of Sale
(Brazos A-39) (“ABOS”) executed by and between Pioneer and Buyer, dated
effective as of the      day of                     , 2009, which provides inter
alia, for Buyer to be responsible for and comply with certain duties and
obligations of Pioneer with respect to the Assets, including certain plugging,
abandonment and decommissioning obligations relating to Oil and Gas Lease, OCS-G
4559, Brazos Area Block A-39 (hereinafter “BA-A39”) a copy of the ABOS is
attached as Exhibit “A” hereto;

 

WHEREAS, Pioneer desires that (i) an incentive be established to encourage Buyer
to commence and continue on a regular basis the satisfaction of the plugging,
abandonment and decommissioning obligations, and (ii) to provide for certain
funding to aid Buyer in satisfying  the completion of such obligations.

 

NOW, THEREFORE, Buyer and Pioneer agree to the following:

 

--------------------------------------------------------------------------------

 

1.             To aid Buyer in satisfying Buyer’s plugging, abandonment and
decommissioning obligations, as set forth in the ABOS and as summarized in this
Agreement, simultaneously with the execution of this Agreement by the parties
hereto, the parties shall execute the Escrow Agreement described on Exhibit “B”
attached hereto (“Escrow Agreement”) and shall open the escrow account described
therein for the repository and distribution of the sum of one million six
hundred thousand dollars ($1,600,000.00) to be contributed by Pioneer and any
earnings thereon. This $1,600,000 amount represents Pioneer’s estimate of the
cost attributable to a 50% working interest required to plug, abandon and
decommission existing facilities at BA-A39 consistent with currently applicable
rules and regulations.  The parties agree and acknowledge that this is only an
estimate and that the actual cost to plug, abandon and decommission facilities
at BA-A39 may not equal this estimated amount.  The parties further acknowledge
and agree that irrespective of the cost actually required the plug, abandon and
decommission BA-A39, or any associated platform or any other of the Assets as
defined in the ABOS, Pioneer’s sole and exclusive obligation concerning
plugging, abandonment and decommissioning shall be satisfied and extinguished
upon Pioneer’s contribution of the $1,600,000 to the Escrow Account and that any
and all obligations of Pioneer concerning plugging, abandonment and
decommissioning of the Assets assigned under the ABOS shall be assumed and
satisfied by Buyer as provided in the ABOS.  The funds deposited with the
“Escrow Agent,” as defined on Exhibit “B,” together with all interest accrued
thereon or income associated therewith, shall comprise the “Escrow Property.” 
Pioneer and Buyer agree to execute any and all documents provided by Escrow
Agent reasonably required to establish and maintain the said escrow account. 
The disposition of the Escrow Property by the Escrow Agent shall be governed by
this Agreement and the Escrow Agreement. Any conflict between this Agreement and
the Escrow Agreement, as between Buyer and Pioneer, shall be resolved in
accordance with the terms and provisions of this Agreement.

 

2.             The Escrow Agreement shall govern any investments and
reinvestments by the Escrow Agent.

 

3.             With respect to all funds to be remitted to and maintained or
disbursed by Escrow Agent, the Escrow Agent shall provide Pioneer and Buyer with
regular statements as provided in the Escrow Agreement.  All funds deposited in
the Escrow Agreement account and all income

 

2

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associated therewith and together with all interest accrued therein shall be
received by Escrow Agent and held in escrow to satisfy the plugging, abandonment
and decommissioning activities.

 

4.             IN ACCORDANCE WITH THE ABOS, ALL ENVIRONMENTAL LAWS (AS DEFINED
BELOW) AND ALL APPLICABLE AGREEMENTS, BUYER SHALL TIMELY COMMENCE AND DILIGENTLY
PURSUE TO COMPLETION THE PROPER AND PRUDENT PLUGGING, ABANDONMENT AND
DECOMMISSIONING (OR REPLUGGING AND REABANDONMENT) AND/OR REMOVAL OF EACH WELL,
PLATFORM, PILINGS, JACKET, FLOWLINE, PIPELINE, DOCK, COMPRESSOR STATION,
PRODUCTION FACILITY, STRUCTURE, QUARTERS OR OTHER BUILDING, EQUIPMENT OR
FACILITY ON OR UNDER OR COMPRISING THE ASSETS OR ASSOCIATED THEREWITH WHEN
REQUIRED BY SUCH ENVIRONMENTAL LAWS, LEASE TERMS OR THE TERMS OF ANY APPLICABLE
AGREEMENT. FOR PURPOSES OF THIS AGREEMENT AND THE ESCROW AGREEMENT, THE
FOREGOING ARE THE “PLUGGING AND ABANDONMENT OPERATIONS.” THE PREMISES AND
SURFACE AREA SURROUNDING OR UNDER EACH SUCH WELL, PLATFORM, PILINGS, JACKET,
FLOWLINE, PIPELINE, DOCK, COMPRESSOR STATION, PRODUCTION FACILITY, STRUCTURE,
QUARTERS OR OTHER BUILDING, EQUIPMENT OR FACILITY, SHALL ALSO BE RESTORED,
CLEARED, REMEDIATED AND RECLAMATED BY BUYER AS PART OF THE PLUGGING AND
ABANDONMENT OPERATIONS PURSUANT TO ALL ENVIRONMENTAL LAWS AS WELL AS PURSUANT TO
LEASE TERMS OR THE TERMS OF ANY APPLICABLE AGREEMENT, INCLUDING BUT NOT LIMITED
TO, REMOVAL OF WELLHEADS, PLATFORMS, TANK BATTERIES, COMPRESSOR STATION,
FACILITIES, STRUCTURES, PRODUCTION FACILITIES, PIPELINES, AND FLOWLINES.
“ENVIRONMENTAL LAWS” MEANS ALL APPLICABLE LOCAL, STATE, AND FEDERAL LAWS, RULES,
REGULATIONS, AND ORDERS REGULATING OR OTHERWISE PERTAINING TO:  (I) THE USE,
GENERATION, MIGRATION, STORAGE, REMOVAL, TREATMENT, REMEDY, DISCHARGE, RELEASE,
TRANSPORTATION, DISPOSAL, OR CLEANUP OF POLLUTANTS, CONTAMINATION, HAZARDOUS
WASTES, HAZARDOUS SUBSTANCES, HAZARDOUS MATERIALS, TOXIC SUBSTANCES OR TOXIC
POLLUTANTS; (II) SURFACE WATERS, GROUND WATERS, AMBIENT AIR AND ANY OTHER
ENVIRONMENTAL MEDIUM ON OR OFF ANY LEASE; (III) THE ENVIRONMENT OR HEALTH AND
SAFETY-RELATED MATTERS; (IV) THE PREVENTION OF POLLUTION OR ENVIRONMENTAL
DAMAGES, (V) THE ABATEMENT, REMEDIATION OR ELIMINATION OF POLLUTION OR
ENVIRONMENTAL DAMAGE, (VI) THE PROTECTION OF THE ENVIRONMENT GENERALLY, AND/OR
(VII) THE PROTECTION OF PERSONS OR PROPERTY FROM ACTUAL OR POTENTIAL EXPOSURE
(OR THE EFFECTS OF EXPOSURE) TO POLLUTION OR ENVIRONMENTAL DAMAGE, OR
(VIII) PLATFORM, WELL, EQUIPMENT, FACILITY OR PIPELINE REMOVAL, ABANDONMENT,
DECOMMISSIONING OR PLUGGING, INCLUDING WITHOUT LIMITATION THE FOLLOWING AS FROM
TIME TO TIME AMENDED AND ALL OTHERS WHETHER SIMILAR OR DISSIMILAR: THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980,
AS AMENDED BY THE SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT OF 1986, THE
RESOURCE CONSERVATION AND

 

3

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RECOVERY ACT OF 1976, AS AMENDED BY THE USED OIL RECYCLING ACT OF 1980, THE
SOLID WASTE DISPOSAL ACT AMENDMENTS OF 1980, AND THE HAZARDOUS AND SOLID WASTE
AMENDMENTS OF 1984, THE HAZARDOUS MATERIALS TRANSPORTATION ACT, AS AMENDED, THE
TOXIC SUBSTANCE CONTROL ACT, AS AMENDED, THE CLEAN AIR ACT, AS AMENDED, THE
CLEAN WATER ACT, AS AMENDED, THE OIL POLLUTION ACT OF 1990, AS AMENDED, THE
MARINE PROTECTION, RESEARCH, AND SANCTUARIES ACT, AND ALL REGULATIONS
PROMULGATED PURSUANT THERETO.

 

5.             On or before thirty (30) days prior to commencing Plugging and
Abandonment Operations, Buyer shall deliver to Pioneer an informational
Authority for Expenditure (“AFE”), specifying the details of the activities and
operations to be conducted and detailing the total cost thereof, together with
copies of all submittals of all filings and permit requests of the planned
operation initial platform removal application to the governmental agency or
agencies (the “Agency”) of concern having jurisdiction over such matters for
approval, or application of work permit.  When the operations are completed,
Buyer will obtain evidence from each involved agency reflecting that the
activity or operations are completed in compliance with applicable laws and
regulations and will furnish such evidence to Pioneer. Such evidence shall
include but not be limited to the post-removal report for platform or other
facility, pipeline decommissioning application, post-pipeline decommissioning
report, cancellation of Navaids Permit (USCG & MMS), FORM 124, Application for
Permit to Modify (APM) with the appropriate fee via Ewell (online permitting
application), within 30 days of permanent abandonment of well, FORM 125, END OF
OPERATIONS REPORT, (EOR) with description of plug depths, casing cuts BML/AML,
and reports showing the occurrence of site clearance. Where Buyer is not the
operator of the Assets, Buyer shall obtain proof of completion in compliance
with applicable rules and regulations from the operator. Upon completion of the
Plugging and Abandonment Operations, and the provision of proof thereof to
Pioneer, Buyer shall be entitled to withdraw an amount equal to its actual
out-of-pocket costs expended on said Plugging and Abandonment Operations to the
extent  that amount does not exceed the amount allocated to the interest in the
Assets assigned to Buyer under the ABOS or the amount of the Escrow Property,
and such amount shall upon joint written instruction to the Escrow Agent from
Pioneer and Buyer be released from the Escrow Agreement account. Out-of-pocket
costs shall not include internal costs or expenses of whatever nature, overhead,
benefits, employee salaries, or insurance. No

 

4

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Escrow Property shall be disbursed in advance of completion of the plugging,
abandonment and decommissioning of BA-A39 and all facilities and wells located
thereon or associated therewith. If the costs of plugging, abandoning, and
decommissioning the property assigned under the ABOS exceeds the amount of the
Escrow Property, Buyer shall be responsible for such excess amount and Pioneer
shall have no obligation or liability with respect to same. If there is Escrow
Property remaining after the completion of all Plugging and Abandonment
Operations relating to the Assets assigned under the ABOS, such Escrow Property
shall, upon Pioneer’s written concurrence to release of the Escrow Property
(which will be given if Pioneer determines that Buyer has complied with the
terms of the ABOS and this Escrow Agreement), be released to Buyer.  If the
Plugging and Abandonment Operations have not commenced or been completed prior
to the termination of the Escrow Agreement and Escrow Property remains in the
Escrow Account, Buyer and Pioneer shall enter into another mutually acceptable
escrow agreement with a mutually acceptable escrow agent (the “New Escrow
Agent”) and instruct the Escrow Agent to deposit the Escrow Property with such
New Escrow Agent.

 

6.             Buyer will be in default if Pioneer has not received a true copy
of the documentation submitted to appropriate state agencies, the Bureau of Land
Management, and/or the Minerals Management Service, or successors or agencies or
other organizations having jurisdiction reflecting that Buyer has satisfied the
aforementioned requirements no later then 180 days after the obligations
accrue.  Buyer hereby agrees that (i) if such obligations  are not complied with
in a timely and faithful manner as directed by a regulatory agency or Buyer
otherwise defaults in its obligations thereunder, or (ii) in the event of
Buyer’s failure and insolvency, or application for adjudication in bankruptcy,
application by or against Buyer for assignment, composition, extension or
receivership, or (iii) in the event of Buyer’s failure to comply with any
obligation or condition undertaken in the Escrow  Agreement or the ABOS with
respect to the Plugging and Abandonment Operations, then, upon written request
of Pioneer (but Pioneer shall have no obligation to make such request), anything
to the contrary notwithstanding, it shall be lawful for, and Buyer does hereby
authorize and direct the Escrow Agent, to distribute the Escrow Property to
Pioneer to pay or reimburse to Pioneer (without prejudice to Pioneer’s rights
against Buyer) the expenses incurred or to be incurred to remedy the
noncompliance, but Pioneer shall have no obligation to remedy such
non-compliance.  If within

 

5

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sixty (60) days after notice of non-compliance by Pioneer (but Pioneer has no
obligation to give such notice), Buyer has not made or caused to make the
necessary corrections to comply with this Escrow Agreement, Pioneer may remedy
such noncompliance (but without Pioneer having an obligation to do so), without
prejudice to Pioneer’s rights against Buyer, and direct the Escrow Agent to
distribute the Escrow Property  from the Escrow account to pay or reimburse
Pioneer for the expenses incurred or to be incurred in remedying the
noncompliance. The distribution of the Escrow Property to Pioneer shall not
extinguish Buyer’s obligations under the ABOS, or this Agreement, with respect
to Plugging and Abandonment Operations.

 

7.             Pioneer shall have the right, but not the obligation, at its own
expense, to audit Buyer’s records regarding all matters concerning the Plugging
and Abandonment Operations to satisfy itself that Buyer has met all of its
obligations under this Agreement, the Escrow Agreement, and the ABOS.

 

8.             In the event of any circumstance which results in a demand upon
Pioneer or any of its affiliates, by any third party or governmental or
regulatory Agency to take any action or incur any costs or liability for which
Buyer indemnifies Pioneer and is responsible for under the ABOS or hereunder,
and Buyer is unable, or has failed, after notice, to take such action or to
cause such action to be taken, then upon notification by Pioneer to the Escrow
Agent of such demand, Pioneer, without obligation to do so, shall have the right
to receive all or any portion of the Escrow Property for said purpose, without
limiting or relieving in any way the obligations of Buyer under this Agreement,
the ABOS or under Environmental Laws.

 

9.             All claims, notices, requests, demands, or other communications
hereunder shall be in writing and shall be deemed to have been to have been duly
given if delivered or mailed, first class, certified mail, postage prepaid:

 

 

SELLER:

 

 

 

General Counsel

 

 

 

Pioneer Natural Resources USA, Inc.

 

5205 N. O’Connor Blvd., Ste. 200

 

Irving, Texas 75039-3746

 

6

--------------------------------------------------------------------------------

 

with a copy to:

Vice President, Land

 

Pioneer Natural Resources USA, Inc.

 

5205 N. O’Connor Blvd., Ste. 200

 

Irving, Texas 75039-3746

 

 

 

BUYER:

 

 

 

Attention:

 

or at such other address as the parties may have furnished to the other parties
in writing.

 

10.           This Agreement shall be binding upon, and inure to the benefit of,
the respective successors and assigns of the parties hereto, and shall be
governed by and construed in accordance with the laws of the State of Texas.  No
transfer of Buyer’s interest in this Agreement or in the Escrow Agreement may be
made without Pioneer’s prior written consent.  Subject to the preceding
sentence, any assignee of Buyer’s interest herein must expressly assume, in
writing, the obligations herein. This Agreement and the Escrow Property shall
run with the land.

 

11.           The parties acknowledge and agree that nothing herein shall serve
to limit the obligations of Buyer to Pioneer or otherwise with respect to
plugging, abandonment, or decommissioning to only those that may be satisfied by
the Escrow Property.

 

12.           All capitalized terms not defined herein shall have the definition
set forth for such terms in the ABOS. The ABOS is not merged into or amended by
this Agreement.

 

13.           This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original instrument, but all of which together shall
constitute but one and the same instrument.

 

7

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14.           Buyer and Pioneer agree to take such further actions and to
execute, acknowledge and deliver all such further documents and take such
further action that is necessary or useful in carrying out the purposes of this
Agreement.

 

15.           Buyer shall provide Pioneer and Escrow Agent a completed form W-9
or such other similar form as Escrow Agent may reasonably request, with its tax
identification number.

 

EXECUTED this on the herein first above written in he presence of the
undersigned witnesses after due and complete reading of the whole.

 

8

--------------------------------------------------------------------------------

 

 

 

 

Print Name:

 

 

 

 

 

 

 

 

Print Name:

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

PIONEER NATURAL RESOURCES USA, INC.

Print Name:

 

 

 

 

 

 

 

 

Print Name:

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

9

--------------------------------------------------------------------------------

 

STATE OF TEXAS

§

 

§

COUNTY OF DALLAS

§

 

This instrument was acknowledged before me on the          day of             ,
2009, by                         as                                      , of
Pioneer Natural Resources USA, Inc., a Delaware corporation, on behalf of said
corporation, individually and in its capacity as Managing General Partner of the
Mesa Offshore Royalty Partnership.

 

I have hereunto set my hand and official seal this        day of             ,
2009.

 

 

 

 

Notary Public, State of Texas

 

My Commission expires
on                                                             

 

STATE OF TEXAS

§

 

§

COUNTY OF                      

§

 

This instrument was acknowledged before me on the        day of             ,
2009,                                     , as                               ,
of a                          corporation, on behalf of said corporation.

 

I have hereunto set my hand and official seal this        day of               ,
2009.

 

 

 

 

Notary Public, State of Texas

 

My Commission expires
on                                                             

 

10

--------------------------------------------------------------------------------

 

Exhibit E

 

ESCROW AGREEMENT

 

This Escrow Agreement dated this      day of         , 2009 (the “Escrow
Agreement”), is entered into by and among Pioneer Natural Resources USA, Inc., a
Delaware corporation (“Pioneer”),                                [name and legal
status] (“Buyer”) (                         and                         
collectively, the “Parties,” and individually, a “Party”), and Wells Fargo Bank,
National Association, as escrow agent (“Escrow Agent”).

 

RECITALS

 

A.            WHEREAS, pursuant to the ABOS (as defined below) Pioneer assigned
unto Buyer certain of its interests in oil and gas leasehold and other assets
and interests as described therein (the “Assets”) located in areas situated
offshore the State of Texas;

 

WHEREAS, the assignment of the Assets by Pioneer to Buyer was expressly made
subject to the terms and conditions of that certain Assignment and Bill of Sale
(Brazos A-39) (“ABOS”) executed by Pioneer and Buyer and dated effective
                 , 2009, which provides inter alia, for Buyer to be responsible
for and comply with certain duties and obligations of Pioneer with respect to
the Assets, including the Plugging and Abandonment Obligations, as defined in
that certain Abandonment Agreement between Buyer and Pioneer also dated
effective              , 2009.

 

WHEREAS, Pioneer desires that (i) an incentive be established to encourage Buyer
to commence and continue on a regular basis the satisfaction of the Plugging and
Abandonment Obligations, and (ii) to provide for certain funding to aid in
satisfaction of the Plugging and Abandonment Obligations.

 

B.            Pioneer agrees to place in escrow certain funds and the Escrow
Agent agrees to hold and distribute such funds in accordance with the terms of
this Escrow Agreement.

 

In consideration of the promises and agreements of the Parties and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties and the Escrow Agent agree as follows:

 

ARTICLE 1
ESCROW DEPOSIT

 

Section 1.1.            Receipt of Escrow Property.  Upon execution hereof,
Pioneer shall deliver to the Escrow Agent the amount of $1,600,000.00 (the
“Escrow Property”) in immediately available funds.

 

Section 1.2.            Investments.

 

(a)           The Escrow Agent is authorized and directed to deposit, transfer,
hold and invest the Escrow Property and any investment income thereon in such
investment or investments as Buyer shall direct in writing in the form of
Exhibit B to this Escrow Agreement.  The Escrow

 

--------------------------------------------------------------------------------

 

Agent shall invest the Escrow Property in alternative investments in accordance
with written instructions as may from time to time be provided to the Escrow
Agent by Buyer in the form of Exhibit B. In the absence of such direction, the
Escrow Agent is hereby directed to invest the Escrow Property in the Wells Fargo
Advantage Funds, Government Money Market Fund, Service Class Shares.  Any
investment earnings and income on the Escrow Property shall become part of the
Escrow Property, and shall be disbursed in accordance with Section 1.3 or
Section 1.5 of this Escrow Agreement.

 

(b)           The Escrow Agent is hereby authorized and directed to sell or
redeem any such investments as it deems necessary to make any payments or
distributions required under this Escrow Agreement.  The Escrow Agent shall have
no responsibility or liability for any loss which may result from any investment
or sale of investment made pursuant to this Escrow Agreement.  The Escrow Agent
is hereby authorized, in making or disposing of any investment permitted by this
Escrow Agreement, to deal with itself (in its individual capacity) or with any
one or more of its affiliates, whether it or any such affiliate is acting as
agent of the Escrow Agent or for any third person or dealing as principal for
its own account.  The Parties acknowledge that the Escrow Agent is not providing
investment supervision, recommendations, or advice.

 

Section 1.3.            Disbursements.  Upon receipt of Escrow Release Letters
in substantially the form attached hereto as Exhibit A from both Pioneer and
Buyer, Escrow Agent shall disburse Escrow Property funds to Buyer to such
account as Buyer may specify in writing. In addition, upon receipt of a letter
from Pioneer certifying that Buyer is in default under the Abandonment Agreement
and requesting distribution of all or a portion of the Escrow Property to
Pioneer, Escrow Agent shall disburse Escrow Property funds to Pioneer to such
account as Pioneer may specify in writing. With respect to all funds to be
remitted to and maintained or disbursed by Escrow Agent, the Escrow Agent shall
provide Pioneer and Buyer a monthly statement of account.  Beginning         
    , 2009, Escrow Agent shall render to Buyer and Pioneer monthly statements of
account with respect to the Escrow Property which shall contain the following: 
(a) a schedule of receipts and disbursements during the accounting period; (b) a
statement of income and unrealized gains or losses, and (c) a schedule of all
assets held by the Escrow Agent in the Escrow Account.

 

Section 1.4.            Income Tax Allocation and Reporting.

 

(a)           The Parties agree that, for tax reporting purposes, all interest
and other income from investment of the Escrow Property shall, as of the end of
each calendar year and to the extent required by the Internal Revenue Service,
be reported as having been earned by Buyer, whether or not such income was
disbursed during such calendar year.

 

(b)           Prior to closing, the Parties shall provide the Escrow Agent with
certified tax identification numbers by furnishing appropriate forms W-9 or W-8
and such other forms and documents that the Escrow Agent may request.   The
Parties understand that if such tax reporting documentation is not provided and
certified to the Escrow Agent, the Escrow Agent may be required by the Internal
Revenue Code of 1986, as amended, and the Regulations promulgated

 

2

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thereunder, to withhold a portion of any interest or other income earned on the
investment of the Escrow Property.

 

(c)           To the extent that the Escrow Agent becomes liable for the payment
of any taxes in respect of income derived from the investment of the Escrow
Property, the Escrow Agent shall satisfy such liability to the extent possible
from the Escrow Property.  The Parties, jointly and severally, shall indemnify,
defend and hold the Escrow Agent harmless from and against any tax, late
payment, interest, penalty or other cost or expense that may be assessed against
the Escrow Agent on or with respect to the Escrow Property and the investment
thereof unless such tax, late payment, interest, penalty or other expense was
directly caused by the gross negligence or willful misconduct of the Escrow
Agent.  The indemnification provided by this Section 1.4(c) is in addition to
the indemnification provided in Section 3.1 and shall survive the resignation or
removal of the Escrow Agent and the termination of this Escrow Agreement.

 

Section 1.5.            Termination.  Absent an earlier disbursement of the
entirety of the Escrow Property, this Escrow Agreement shall terminate on
             , 2015, at which time the Escrow Agent is authorized and directed
to disburse the Escrow Property to either Buyer or New Escrow Agent (as defined
in the Abandonment Agreement), as directed in the Escrow Release Letter signed
by both Buyer and Pioneer, and this Escrow Agreement shall be of no further
force and effect except that the provisions of Sections 1.4(c), 3.1 and 3.2
hereof shall survive termination.

 

ARTICLE 2
DUTIES OF THE ESCROW AGENT

 

Section 2.1.            Scope of Responsibility.  Notwithstanding any provision
to the contrary, the Escrow Agent is obligated only to perform the duties
specifically set forth in this Escrow Agreement, which shall be deemed purely
ministerial in nature.  Under no circumstances will the Escrow Agent be deemed
to be a fiduciary to any Party or any other person under this Escrow Agreement. 
The Escrow Agent will not be responsible or liable for the failure of any Party
to perform in accordance with this Escrow Agreement. The Escrow Agent shall
neither be responsible for, nor chargeable with, knowledge of the terms and
conditions of any other agreement, instrument, or document other than this
Escrow Agreement, whether or not an original or a copy of such agreement has
been provided to the Escrow Agent; and the Escrow Agent shall have no duty to
know or inquire as to the performance or nonperformance of any provision of any
such agreement, instrument, or document.  References in this Escrow Agreement to
any other agreement, instrument, or document are for the convenience of the
Parties, and the Escrow Agent has no duties or obligations with respect
thereto.  This Escrow Agreement sets forth all matters pertinent to the escrow
contemplated hereunder, and no additional obligations of the Escrow Agent shall
be inferred or implied from the terms of this Escrow Agreement or any other
agreement.

 

Section 2.2.            Attorneys and Agents.  The Escrow Agent shall be
entitled to rely on and shall not be liable for any action taken or omitted to
be taken by the Escrow Agent in accordance with the advice of counsel or other
professionals retained or consulted by the Escrow Agent.  The Escrow Agent shall
be reimbursed as set forth in Section 3.1 for any and all compensation (fees,
expenses and other costs) paid and/or reimbursed to such counsel and/or
professionals.  The

 

3

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Escrow Agent may perform any and all of its duties through its agents,
representatives, attorneys, custodians, and/or nominees.

 

Section 2.3.            Reliance.  The Escrow Agent shall not be liable for any
action taken or not taken by it in accordance with the direction or consent of
the Parties or their respective agents, representatives, successors, or
assigns.  The Escrow Agent shall not be liable for acting or refraining from
acting upon any notice, request, consent, direction, requisition, certificate,
order, affidavit, letter, or other paper or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, without further inquiry into the person’s or persons’ authority. 
Concurrent with the execution of this Escrow Agreement, the Parties shall
deliver to the Escrow Agent authorized signers’ forms in the form of Exhibit C-1
and Exhibit C-2 to this Escrow Agreement.

 

Section 2.4.            Right Not Duty Undertaken.  The permissive rights of the
Escrow Agent to do things enumerated in this Escrow Agreement shall not be
construed as duties.

 

Section 2.5.            No Financial Obligation.  No provision of this Escrow
Agreement shall require the Escrow Agent to risk or advance its own funds or
otherwise incur any financial liability or potential financial liability in the
performance of its duties or the exercise of its rights under this Escrow
Agreement.

 

ARTICLE 3
PROVISIONS CONCERNING THE ESCROW AGENT

 

Section 3.1.            Indemnification.  The Parties, jointly and severally,
shall indemnify, defend and hold harmless the Escrow Agent from and against any
and all loss, liability, cost, damage and expense, including, without
limitation, attorneys’ fees and expenses or other professional fees and expenses
which the Escrow Agent may suffer or incur by reason of any action, claim or
proceeding brought against the Escrow Agent, arising out of or relating in any
way to this Escrow Agreement or any transaction to which this Escrow Agreement
relates, unless such loss, liability, cost, damage or expense shall have been
finally adjudicated to have been directly caused by the willful misconduct or
gross negligence of the Escrow Agent. The provisions of this Section 3.1 shall
survive the resignation or removal of the Escrow Agent and the termination of
this Escrow Agreement.

 

SECTION 3.2.            LIMITATION OF LIABILITY.  THE ESCROW AGENT SHALL NOT BE
LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES, LOSSES OR EXPENSES ARISING
OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES, LOSSES OR EXPENSES
WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY RESULTED FROM THE ESCROW
AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II) SPECIAL, INDIRECT OR
CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT
LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION.

 

4

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Section 3.3.            Resignation or Removal.  The Escrow Agent may resign by
furnishing written notice of its resignation to the Parties, and the Parties may
remove the Escrow Agent by furnishing to the Escrow Agent a joint written notice
of its removal along with payment of all fees and expenses to which it is
entitled through the date of termination.  Such resignation or removal, as the
case may be, shall be effective thirty (30) days after the delivery of such
notice or upon the earlier appointment of a successor, and the Escrow Agent’s
sole responsibility thereafter shall be to safely keep the Escrow Property and
to deliver the same to a successor escrow agent as shall be appointed by the
Parties, as evidenced by a joint written notice filed with the Escrow Agent or
in accordance with a court order.  If the Parties have failed to appoint a
successor escrow agent prior to the expiration of thirty (30) days following the
delivery of such notice of resignation or removal, the Escrow Agent may petition
any court of competent jurisdiction for the appointment of a successor escrow
agent or for other appropriate relief, and any such resulting appointment shall
be binding upon the Parties.

 

Section 3.4.            Compensation.  The Escrow Agent shall be entitled to
compensation for its services as stated in the fee schedule attached hereto as
Exhibit D, which compensation shall be paid from the Escrow Property.  In the
event that the Escrow Property is insufficient or unavailable to pay the
compensation of the Escrow Agent, such compensation shall be paid by Buyer.  The
fee agreed upon for the services rendered hereunder is intended as full
compensation for the Escrow Agent’s services as contemplated by this Escrow
Agreement; provided, however, that in the event that the conditions for the
disbursement of funds under this Escrow Agreement are not fulfilled, or the
Escrow Agent renders any service not contemplated in this Escrow Agreement, or
there is any assignment of interest in the subject matter of this Escrow
Agreement, or any material modification hereof, or if any material controversy
arises hereunder, or the Escrow Agent is made a party to any litigation
pertaining to this Escrow Agreement or the subject matter hereof, then the
Escrow Agent shall be compensated for such extraordinary services and reimbursed
for all costs and expenses, including reasonable attorneys’ fees and expenses,
occasioned by any such delay, controversy, litigation or event.  If any amount
due to the Escrow Agent hereunder is not paid within thirty (30) days of the
date due, the Escrow Agent in its sole discretion may charge interest on such
amount up to the highest rate permitted by applicable law.   The Escrow Agent
shall have, and is hereby granted, a prior lien upon the Escrow Property with
respect to its unpaid fees, non-reimbursed expenses and unsatisfied
indemnification rights, superior to the interests of any other persons or
entities and is hereby granted the right to set off and deduct any unpaid fees,
non-reimbursed expenses and unsatisfied indemnification rights from the Escrow
Property.

 

Section 3.5.            Disagreements.  If any conflict, disagreement or dispute
arises between, among, or involving any of the parties hereto concerning the
meaning or validity of any provision hereunder or concerning any other matter
relating to this Escrow Agreement, or the Escrow Agent is in doubt as to the
action to be taken hereunder, the Escrow Agent is authorized to retain the
Escrow Property until the Escrow Agent (i) receives a final non-appealable order
of a court of competent jurisdiction or a final non-appealable arbitration
decision directing delivery of the Escrow Property, (ii) receives a written
agreement executed by each of the parties involved in such disagreement or
dispute directing delivery of the Escrow Property, in which event the Escrow
Agent shall be authorized to disburse the Escrow Property in accordance with
such final court order, arbitration decision, or agreement, or (iii) files an
interpleader action in any court of

 

5

--------------------------------------------------------------------------------

 

competent jurisdiction, and upon the filing thereof, the Escrow Agent shall be
relieved of all liability as to the Escrow Property and shall be entitled to
recover attorneys’ fees, expenses and other costs incurred in commencing and
maintaining any such interpleader action.  The Escrow Agent shall be entitled to
act on any such agreement, court order, or arbitration decision without further
question, inquiry, or consent.

 

Section 3.6.            Merger or Consolidation.  Any corporation or association
into which the Escrow Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer all or substantially all of
its corporate trust business and assets as a whole or substantially as a whole,
or any corporation or association resulting from any such conversion, sale,
merger, consolidation or transfer to which the Escrow Agent is a party, shall be
and become the successor escrow agent under this Escrow Agreement and shall have
and succeed to the rights, powers, duties, immunities and privileges as its
predecessor, without the execution or filing of any instrument or paper or the
performance of any further act.

 

Section 3.7.            Attachment of Escrow Property; Compliance with Legal
Orders.  In the event that any Escrow Property shall be attached, garnished or
levied upon by any court order, or the delivery thereof shall be stayed or
enjoined by an order of a court, or any order, judgment or decree shall be made
or entered by any court order affecting the Escrow Property, the Escrow Agent is
hereby expressly authorized, in its sole discretion, to respond as it deems
appropriate or to comply with all writs, orders or decrees so entered or issued,
or which it is advised by legal counsel of its own choosing is binding upon it,
whether with or without jurisdiction.  In the event that the Escrow Agent obeys
or complies with any such writ, order or decree it shall not be liable to any of
the Parties or to any other person, firm or corporation, should, by reason of
such compliance notwithstanding, such writ, order or decree be subsequently
reversed, modified, annulled, set aside or vacated.

 

ARTICLE 4
MISCELLANEOUS

 

Section 4.1.            Successors and Assigns.  This Escrow Agreement shall be
binding on and inure to the benefit of the Parties and the Escrow Agent and
their respective successors and permitted assigns. No other persons shall have
any rights under this Escrow Agreement.  No assignment of the interest of any of
the Parties shall be binding unless and until written notice of such assignment
shall be delivered to the other Party and the Escrow Agent and shall require the
prior written consent of the other Party and the Escrow Agent (such consent not
to be unreasonably withheld).

 

Section 4.2.            Escheat.  The Parties are aware that under applicable
state law, property which is presumed abandoned may under certain circumstances
escheat to the applicable state.  The Escrow Agent shall have no liability to
the Parties, their respective heirs, legal representatives, successors and
assigns, or any other party, should any or all of the Escrow Property escheat by
operation of law.

 

Section 4.3.            Notices.  All notices, requests, demands, and other
communications required under this Escrow Agreement shall be in writing, in
English, and shall be deemed to have been

 

6

--------------------------------------------------------------------------------

 

duly given if delivered (i) personally, (ii) by facsimile transmission with
written confirmation of receipt, (iii) by overnight delivery with a reputable
national overnight delivery service, or (iv) by mail or by certified mail,
return receipt requested, and postage prepaid.  If any notice is mailed, it
shall be deemed given five business days after the date such notice is deposited
in the United States mail.  Any notice given shall be deemed given upon the
actual date of such delivery.  If notice is given to a party, it shall be given
at the address for such party set forth below.  It shall be the responsibility
of the Parties to notify the Escrow Agent and the other Party in writing of any
name or address changes.  In the case of communications delivered to the Escrow
Agent, such communications shall be deemed to have been given on the date
received by the Escrow Agent.

 

If to Pioneer:

 

With Copy to:

Pioneer Natural Resources USA, Inc.

 

Pioneer Natural Resources USA, Inc.

5205 North O’Connor Suite 200

 

5205 North O’Connor Suite 200

Irving, Texas 75039-3746

 

Irving, Texas 75039-3746

Attention: Mark Berg, General Counsel

 

Attention: Rich Dealy, EVP & CFO

Telephone:

972-969-4090

 

Telephone:

972-969-4054

Facsimile:

972-969-3584

 

Facsimile:

972-969-3572

 

If to [     ]:

 

 

Attention:

Telephone:

Facsimile:

 

If to the Escrow Agent:

 

Wells Fargo Bank, National Association

201 Main Street, Suite 301

Fort Worth, Texas 76102

Attention: John C. Stohlmann, Corporate, Municipal and Escrow Services

Telephone: 817-732-8356

Facsimile:     817-885-8650

 

Section 4.4.            Governing Law.  This Escrow Agreement shall be governed
by and construed in accordance with the laws of the State of Texas.

 

Section 4.5.            Entire Agreement.  This Escrow Agreement sets forth the
entire agreement and understanding of the parties related to the Escrow
Property.

 

Section 4.6.            Amendment.  This Escrow Agreement may be amended,
modified, superseded, rescinded, or canceled only by a written instrument
executed by the Parties and the Escrow Agent.

 

7

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Section 4.7.            Waivers.  The failure of any party to this Escrow
Agreement at any time or times to require performance of any provision under
this Escrow Agreement shall in no manner affect the right at a later time to
enforce the same performance.  A waiver by any party to this Escrow Agreement of
any such condition or breach of any term, covenant, representation, or warranty
contained in this Escrow Agreement, in any one or more instances, shall neither
be construed as a further or continuing waiver of any such condition or breach
nor a waiver of any other condition or breach of any other term, covenant,
representation, or warranty contained in this Escrow Agreement.

 

Section 4.8.            Headings.  Section headings of this Escrow Agreement
have been inserted for convenience of reference only and shall in no way
restrict or otherwise modify any of the terms or provisions of this Escrow
Agreement.

 

Section 4.9.            Counterparts.  This Escrow Agreement may be executed in
one or more counterparts, each of which when executed shall be deemed to be an
original, and such counterparts shall together constitute one and the same
instrument.

 

[The remainder of this page left intentionally blank.]

 

8

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IN WITNESS WHEREOF, this Escrow Agreement has been duly executed as of the date
first written above.

 

 

PIONEER NATURAL RESOURCES USA, INC.

 

 

 

By:

 

 

Name: Richard P. Dealy

 

Title: EVP & CFO

 

 

 

 

 

[insert name of Buyer]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Escrow Agent

 

 

 

By:

 

 

Name:

John C. Stohlmann

 

Title:

Vice President

 

9

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EXHIBIT A

 

Form of Escrow Release Letter

 

Wells Fargo Bank, National Association

201 Main Street, Suite 301

Fort Worth, Texas 76102

Attention:  John C. Stohlmann, Corporate, Municipal and Escrow Services

 

Re:

 

Escrow Agreement dated as of              , 2009 by and

 

 

among Pioneer Natural Resources USA, Inc.,

 

 

                  (“Buyer”) and Wells Fargo Bank,

 

 

National Association, as Escrow Agent

 

Ladies and Gentlemen:

 

This Escrow Release Letter is delivered to you pursuant to Section 1.3 of the
above-referenced Escrow Agreement.  The undersigned [party or parties] hereby
authorize and direct you to disburse the Escrow Property to [Buyer or Pioneer,
as applicable] to such account as the undersigned may specify in writing below.

 

[Pioneer and Buyer to insert the joint instructions or, if applicable, Pioneer
to insert the sole instructions, as set forth or contemplated in Section 1.3
referenced above.]

 

The undersigned hereby authorize and direct you to disburse the Escrow Property
to the following account:

 

[insert wire transfer instructions]

 

Dated this            day of                     , 200    .

 

 

PIONEER NATURAL RESOURCES USA, INC.

 

 

 

By

 

 

Name: Richard P. Dealy

 

Title: EVP & CFO

 

 

 

[or]

 

 

 

 

[Buyer]

 

 

 

 

By

 

 

Name:

 

Title:

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

Agency and Custody Account Direction

For Cash Balances

 

Direction to use Wells Fargo Advantage Funds for Cash Balances for the escrow
account or accounts (the “Account”) established under the Escrow Agreement to
which this Exhibit B is attached.

 

You are hereby directed to invest, as indicated below or as I shall direct
further from time to time, all cash in the Account in the following money market
portfolio of Wells Fargo Advantage Funds (the “Fund”) or another permitted
investment of my choice (Check One):

 

o Wells Fargo Advantage Funds, 100% Treasury Money Market Fund

o Wells Fargo Advantage Funds, Government Money Market Fund

o Wells Fargo Advantage Funds, Cash Investment Money Market Fund

o Wells Fargo Advantage Funds, Prime Investment Money Market Fund

o Wells Fargo Advantage Funds, Treasury Plus Money Market Fund

x Wells Fargo Advantage Funds, Heritage Money Market Fund

o Wells Fargo Advantage Funds, National Tax-Free Money Market Fund

 

I acknowledge that I have received, at my request, and reviewed the Fund’s
prospectus and have determined that the Fund is an appropriate investment for
the Account.

 

I understand from reading the Fund’s prospectus that Wells Fargo Funds
Management, LLC (“Wells Fargo Funds Management”), a wholly-owned subsidiary of
Wells Fargo & Company, provides investment advisory and other administrative
services for the Wells Fargo Advantage Funds.  Other affiliates of Wells Fargo &
Company provide sub-advisory and other services for the Funds.  Boston Financial
Data Services serves as transfer agent for the Funds.  The Funds are distributed
by Wells Fargo Funds Distributor, LLC, Member NASD/SIPC, an affiliate of Wells
Fargo & Company.  I also understand that Wells Fargo & Company will be paid, and
its bank affiliates may be paid, fees for services to the Funds and that those
fees may include Processing Organization fees as described in the Fund’s
prospectus.

 

I understand that you will not exclude amounts invested in the Fund from Account
assets subject to fees under the Account agreement between us.

 

I understand that investments in the Fund are not obligations of, or endorsed or
guaranteed by, Wells Fargo Bank or its affiliates and are not insured by the
Federal Deposit Insurance Corporation.

 

I acknowledge that I have full power to direct investments of the Account.

 

I understand that I may change this direction at any time and that it shall
continue in effect until revoked or modified by me by written notice to you.

 

I understand that if I choose to communicate this investment direction solely
via facsimile, then the investment direction will be understood to be
enforceable and binding.

 

 

 

 

Authorized Representative

 

PIONEER NATURAL RESOURCES USA, INC.

 

 

 

 

 

Date

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C-1

CERTIFICATE AS TO AUTHORIZED SIGNATURES

 

The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as authorized representatives of PIONEER
NATURAL RESOURCES USA, INC.  and are authorized to initiate and approve
transactions of all types for the escrow account or accounts established under
the Escrow Agreement to which this Exhibit C-1 is attached, on behalf of PIONEER
NATURAL RESOURCES USA, INC.

 

 

NAME / TITLE

 

SPECIMEN SIGNATURE

 

 

 

 

 

 

Richard P. Dealy

 

 

 

 

Signature

EVP & CFO

 

 

 

 

 

Mark S. Berg

 

 

 

 

Signature

EVP & General Counsel

 

 

 

 

 

Keith H. Pickett

 

 

 

 

Signature

Director - Treasury

 

 

 

 

 

Lisa Kunkel

 

 

 

 

Signature

Manager - Treasury

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C-2

CERTIFICATE AS TO AUTHORIZED SIGNATURES

 

The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as authorized representatives of [BUYER]
and are authorized to initiate and approve transactions of all types for the
escrow account or accounts established under the Escrow Agreement to which this
Exhibit C-2 is attached, on behalf of [BUYER].

 

 

NAME / TITLE

 

SPECIMEN SIGNATURE

 

 

 

 

 

 

Name

 

Signature

 

 

 

 

 

 

Title

 

 

 

 

 

 

 

 

Name

 

Signature

 

 

 

 

 

 

Title

 

 

 

 

 

 

 

 

Name

 

Signature

 

 

 

 

 

 

Title

 

 

 

 

 

 

 

 

Name

 

Signature

 

 

 

 

 

 

Title

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT D

FEES OF ESCROW AGENT

 

SCHEDULE OF FEES

 

$1,600,000

Pioneer Natural Resources and Party To Be Named

Escrow Fee Schedule

 

To Act As Escrow Agent

 

Acceptance Fee:

 

$

0.00

 

 

Initial Fees as they relate to Wells Fargo Bank acting in the capacity of Escrow
Agent — includes creation and examination of the Escrow Agreement; acceptance of
the Escrow appointment; setting up of Escrow Account(s) and accounting records;
and coordination of receipt of funds for deposit to the Escrow Account.

 

Acceptance Fee payable at time of Escrow Agreement execution.

 

Escrow Annual Administration Fee:

 

$

2,500.00

 

 

For ordinary administration services by Escrow Agent — includes daily routine
account management; investment transactions; cash transaction processing in
accordance with the agreement; and mailing of trust account statements to all
applicable parties. Tax reporting is included for up to Two (2) entities.   
Float credit received by the bank for receiving funds that remain uninvested are
deemed part of the Escrow Agent’s compensation.

 

The Annual Administration fees, if any, are payable in advance, with the first
installment due at the time of Escrow Agreement execution. Fee, if any, will not
be prorated in case of early termination.

 

Wells Fargo’s bid is based on the following assumptions:

·                  Number of Escrow Receipts:  2

·                  Number of Escrow Accounts:  1

·                  Number of Disbursements from Escrow Account: 1-2 monthly

·                  Term of Escrow: TBD

·                  THIS FEE SCHEDULE ASSUMES THAT BALANCES IN THE ESCROW ACCOUNT
WILL BE INVESTED IN MONEY MARKET MUTUAL FUNDS

·                  ALL FUNDS WILL BE  RECEIVED FROM OR DISTRIBUTED TO A DOMESTIC
ENTITY

 

--------------------------------------------------------------------------------

 

Out of Pocket Expenses:

 

We only charge for out of pocket expenses in response to specific tasks assigned
by the client.  Therefore, we cannot anticipate what specific out of pocket
items will be needed or what corresponding expenses will be incurred. Possible
expenses would be, but are not limited to, express mail and messenger charges,
travel expenses to attend closing or other meetings.   There are no charges for
indirect out of pocket expenses.

 

This fee schedule is based upon the assumptions listed above which pertain to
the responsibilities and risks involved in Wells Fargo undertaking the role of
Escrow Agent.  These assumptions are based on information provided to us as of
the date of this fee schedule.  Our fee schedule is subject to review and
acceptance of the final documents.  Should any of the assumptions, duties or
responsibilities change, we reserve the right to affirm, modify or rescind our
fee schedule.

 

 

Submitted by:

Gregory M. Hasty — February 10, 2009

 

 

Vice President/Business Development

 

 

Wells Fargo Bank

 

 

(214) 740-1548

 

 

P: 66424

 

--------------------------------------------------------------------------------

 

Exhibit F

 

Right of First Refusal Agreement

 

THIS RIGHT OF FIRST REFUSAL AGREEMENT (this “Agreement”) is made as of the     
day of                   , 2009, between Pioneer Natural Resources USA, Inc.
(“Pioneer”), individually and on behalf of the Mesa Offshore Royalty Partnership
(“Partnership”) in its capacity as Managing General Partner, and
                          , as the “Qualified Bidder”.

 

WHEREAS, reference is made to that certain Final Settlement Agreement, dated
effective as of                     , 2009 (the “Settlement Agreement”), in
Cause No. 2006-01984, in the 334th Judicial District Court of Harris County,
Texas, styled MOSH Holding, L.P. et al. vs. Pioneer Natural Resources Company et
al. (the “Lawsuit”);

 

WHEREAS, as a condition of the Settlement Agreement, certain assets as more
fully described in the Assignments and Bills of Sale attached hereto as Exhibits
“A” and “B” (the “Assets”), of Pioneer and the Partnership are to be offered for
sale by public auction in Sale No. 231 (July 8, 2009) in The Oil & Gas Asset
Clearinghouse (“Clearinghouse”) auction (the “Auction”);

 

WHEREAS, pursuant to the Settlement Agreement, Mosh Holding, L.P. and
Dagger-Spine Hedgehog Corporation (collectively, the “Plaintiffs”) have the
right to designate a “Qualified Bidder” for the Brazos A-39 Lot and the West
Delta 61 Lot (each a “Sales Lot”, collectively “Sales Lots”) and have timely
designated as the Qualified Bidder                                   ;

 

WHEREAS, pursuant to the Settlement Agreement, the Qualified Bidder is entitled
to execute this Right of First Refusal Agreement (“ROFR Agreement” or
“Agreement”) provided that the Qualified Bidder (a) places in escrow pursuant to
the escrow agreement attached hereto as Exhibit “C” (the “Escrow Agreement”) a
total of $750,000 (“Escrow Sum”)  earmarked for two minimum bids in the amount
of $375,000 for each of two specified Sales Lots, on or before (but not after)
the close of the fifth (5th) business day following the date the trial court
enters the Agreed Final Judgment approving the terms of the Final Settlement in
the Lawsuit, and (b) demonstrates, with respect to the Brazos A-39 Lot, its
qualification with the Minerals Management Service of the US Department of the
Interior (“MMS”) to hold record title and operating rights in, and to be a
qualified and bonded operator for offshore interests pursuant to the regulations
and requirements of the MMS;

 

WHEREAS, the Qualified Bidder has satisfied the requirements of the Settlement
Agreement described above and is entitled to enter into this Right of First
Refusal Agreement under the terms specified below;

 

THEREFORE, Pioneer and the Qualified Bidder covenant and agree as follows.

 

1.             The Qualified Bidder’s election to enter into this Right of First
Refusal Agreement will irrevocably obligate the Qualified Bidder to bid at the
Auction, pursuant to the sales documents under the Settlement Agreement and the
terms

 

--------------------------------------------------------------------------------

 

and provisions of the Auction, $375,000 on each Sales Lot.  The $375,000 bid is
referred to herein as the “Minimum Bid.”  The Qualified Bidder must, on or
before the close of the fifth (5th) business day following the date of execution
of this Agreement: (a) execute any documentation reasonably required by
Clearinghouse constituting/evidencing the Qualified Bidder’s Minimum Bid so that
the auction on both Sales Lots can be opened automatically (without the
Qualified Bidder taking further action) with the Qualified Bidder’s Minimum Bid
of $375,000 being placed on each Sales Lot; and (b) execute all sales
documentation reasonably required by Clearinghouse to close the purchase of the
Sales Lots in accordance with the terms and conditions of Clearinghouse that are
applicable to buyers based upon the Minimum Bid sales price of $375,000 on both
Sales Lots.  If the Qualified Bidder, by virtue of its Minimum Bid(s) is in fact
the high bidder on either or both of the Sales Lots, after all consents and
approvals are obtained the sales documentation will then be executed by sellers,
Pioneer shall instruct the escrow agent under the Escrow Agreement to release
the funds by wire transfer to Clearinghouse, and the sales of both Sales Lots
will promptly close.

 

2.             Bids may be received during the Auction for each of the Sales
Lots that exceed the $375,000 bid by the Qualified Bidder.  These bids will be
referred to hereafter as “Higher Bids,” and the highest of the Higher Bids
received on each Sales Lot is referred to as the “Successful Bid.”  If Higher
Bids are received during the Auction, the Qualified Bidder shall have the right,
but not the obligation, to meet the Successful Bid on each Sales Lot and to
purchase the Sales Lot or Sales Lots on the same terms as those offered in the
Successful Bid (or Successful Bids in the event a Successful Bid is made on each
Sales Lot).  In order to exercise this right, the Qualified Bidder must, on or
before the close of the seventh (7th) calendar day following the day of the
Auction: (a) deposit additional funds in escrow pursuant to the Escrow Agreement
sufficient, when added to the $375,000 sum for each Sales Lot placed into
escrow, to meet the cash terms of the Successful Bid (plus any fees or taxes, if
applicable) for each Sales Lot with respect to which the Qualified Bidder
exercises said right (this additional amount referred to as “Additional Escrow
Sum”), and (b) agree to meet any other terms in the form of other consideration
offered pursuant to the Successful Bid (if any), all in accordance with the
Sales Documents under the Settlement Agreement and the further terms and
provisions of the Auction.  If the Qualified Bidder fails in any respect to meet
these requirements with respect to either or both of the Sales Lots, then its
rights under this Right of First Refusal Agreement will be extinguished and
become void and of no further effect as to all Sales Lots.  In such event, the
balance of the Escrow Sum not otherwise committed towards the purchase of either
or both of the Sales Lots will be returned to the Qualified Bidder after the
passage of ten business days pursuant to the Escrow Agreement.  The Qualified
Bidder’s right to be reimbursed the balance of the Escrow Sum after the passage
of ten business days, however, is conditioned upon the Sales Lots closing for
amounts in excess of the Minimum Bids as more fully described in Paragraph 4
below.

 

2

--------------------------------------------------------------------------------

 

3.             If the Qualified Bidder has elected to exercise its Right of
First Refusal on either or both Sales Lots by meeting the requirements set forth
in paragraph 2 above, the Qualified Bidder must execute and deliver all
instruments and assignments and other sales documentation in accordance with the
terms and conditions of the Clearinghouse that are applicable to buyers based
upon the final sales price and otherwise take all actions to close the purchase
of the Sales Lot or Sales Lots within three (3) business days after exercising
the aforementioned right.  After all consents and approvals are obtained, the
sales documentation will be executed by sellers, and Pioneer shall instruct the
escrow agent under the Escrow Agreement to release the funds by wire transfer to
Clearinghouse, and the sale of the Sales Lot or Lots will promptly close. 
Should the Qualified Bidder fail to execute and deliver all instruments and
assignments and other sales documentation in accordance with the terms and
conditions of Clearinghouse for either or both Sales Lots, within the timeframe
provided herein, all amounts held in escrow earmarked for the particular Sales
Lot (or Lots) that are not closed will be released by the Escrow Agent to
Pioneer for the benefit of the Mesa Offshore Trust (the “Trust”).

 

4.             If Higher Bids are obtained from a third party at the Auction for
one or both of the Sales Lots for which the Qualified Bidder had previously
declined to exercise its rights under paragraph 2 above as to one or both of the
Sales Lots, but the sale or sales are not fully funded within ten (10) business
days following the sale at a price in excess of the Minimum Bid, Pioneer may
elect to require (but is not obligated to require) the Qualified Bidder to
purchase the Sales Lot (or Sales Lots) for the Minimum Bid as provided in
paragraph 1 above and pursuant to Sales Documents under the Settlement Agreement
and the terms and provisions of the Auction terms.  In such event, the Escrow
Sum will not be reimbursed to the Qualified Bidder.  Should Pioneer make such an
election, and should the Qualified Bidder fail to execute and deliver all
instruments and assignments and other sales documentation in accordance with the
terms and conditions of Clearinghouse, then all amounts held in Escrow will be
released to Pioneer for the benefit of the Trust.   Should Pioneer not make such
an election within ten (10) business days, all obligations owed by the Qualified
Bidder under this Right of First Refusal Agreement will be extinguished and all
amounts held in escrow will be returned to the Qualified Bidder.

 

The enforcement, application, and interpretation of this Agreement is subject to
the laws of the State of Texas, without regard to any conflicts of law
principles.  Any dispute arising out of this Agreement will be arbitrated before
a single arbitrator.  The arbitration will be administered by the American
Arbitration Association, and will be subject to the American Arbitration
Association’s commercial arbitration rules.

 

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

 

3

--------------------------------------------------------------------------------

 

This Agreement supersedes all prior written and/or oral agreements, promises and
representations and can only be modified by a written amendment, designated as
such, executed by the party (or parties) to be charged.

 

Each party to this Agreement represents that such party has been duly authorized
to execute and deliver this Agreement and that this Agreement is a valid and
binding obligation of such party, enforceable against such party in accordance
with its terms.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the first
date above written.

 

WITNESSES:

 

Pioneer Natural Resources USA, Inc.

individually and on behalf of the

Mesa Offshore Royalty Partnership in its capacity

as Managing General Partner

 

 

 

 

 

 

 

 

By:

 

Print Name:

 

Name:

 

 

 

Title:

 

Print Name:

 

 

 

 

 

 

 

 

WITNESSES:

 

[Insert Qualified Bidder Name]

 

 

 

 

 

 

 

 

By:

 

Print Name:

 

Name:

 

 

 

Title:

 

Print Name:

 

 

 

4

--------------------------------------------------------------------------------

 

ACKNOWLEDGMENTS

 

STATE OF TEXAS

§

 

§

COUNTY OF

§

 

This instrument was acknowledged before me on the        day of         , 2009,
                                    , as                                   , of
a                          corporation, on behalf of said corporation.

 

I have hereunto set my hand and official seal this        day of           ,
2009.

 

 

 

 

 

Notary Public, State of Texas

 

My Commission expires on

 

STATE OF TEXAS

§

 

§

COUNTY OF

§

 

This instrument was acknowledged before me on the        day of         , 2009,
                                    , as                                   , of
a                          corporation, on behalf of said corporation.

 

I have hereunto set my hand and official seal this        day of           ,
2009.

 

 

 

 

 

Notary Public, State of Texas

 

My Commission expires on

 

5

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Exhibit G

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT (as the same may be amended or modified from time to time
pursuant hereto, this “Escrow Agreement”) is made and entered into as of
                              , 2009, by and among Pioneer Natural Resources
USA, Inc., a Delaware corporation, individually and on behalf of the Mesa
Offshore Royalty Partnership in its capacity as Managing General Partner,
(“Pioneer”), MOSH, LLC, an Oklahoma limited liability company (the “Qualified
Bidder”, and together with Pioneer, sometimes referred to individually as
“Party” or collectively as the “Parties”), and JPMorgan Chase Bank, National
Association (the “Escrow Agent”).

 

WHEREAS, the Parties have entered into that certain Right of First Refusal
Agreement of even date, executed simultaneously with this Escrow Agreement;

 

WHEREAS, the Parties have agreed to the deposit in escrow by Qualified Bidder of
certain funds and wish such deposit to be subject to the terms and conditions
set forth herein.

 

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:

 

1.             Appointment.  The Parties hereby appoint the Escrow Agent as
their escrow agent for the purposes set forth herein, and the Escrow Agent
hereby accepts such appointment under the terms and conditions set forth herein.

 

2.             Fund.  The Qualified Bidder, immediately upon execution of this
Escrow Agreement, will deposit with the Escrow Agent the sum of $375,000 for
each Sales Lot, as described in the ROFR, being $750,000 in the aggregate, with
the right to deposit additional funds as provided for in paragraph number 2(a).
of the ROFR (the “Escrow Deposit”).  Escrow Agent will not be responsible for
investigating, inquiring or examining that the appropriate deposits have been
made pursuant to the ROFR.  The Escrow Agent shall hold the Escrow Deposit and,
subject to the terms and conditions hereof, shall invest and reinvest the Escrow
Deposit and the proceeds thereof (the “Fund”) as directed in Section 3.

 

3.             Investment of Fund.  During the term of this Escrow Agreement,
the Fund shall be invested in a JPMorgan Chase Bank, N.A. money market deposit
account (“MMDA”) or a successor or similar investment offered by the Escrow
Agent, unless otherwise instructed in writing by the Parties and as shall be
acceptable to the Escrow Agent.  The rate of return on an MMDA varies from time
to time based upon market conditions.  Written investment instructions, if any,
shall specify the type and identity of the investments to be purchased and/or
sold.  The Escrow Agent is hereby authorized to execute purchases and sales of
investments through the facilities of its own trading or capital markets
operations or those of any affiliated entity.  The Escrow Agent or any of its
affiliates may receive compensation with respect to any investment directed
hereunder including without limitation charging an agency fee in connection with
each transaction.  The Parties recognize and agree that the Escrow Agent will
not provide supervision, recommendations or advice relating to either the
investment of moneys held in the Fund or the

 

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purchase, sale, retention or other disposition of any investment described
herein. The Escrow Agent shall not have any liability for any loss sustained as
a result of any investment in an investment made pursuant to the terms of this
Escrow Agreement or as a result of any liquidation of any investment prior to
its maturity or for the failure of the Parties to give the Escrow Agent
instructions to invest or reinvest the Escrow Fund.  The Escrow Agent shall have
the right to liquidate any investments held in order to provide funds necessary
to make required payments under this Escrow Agreement.

 

4.             Disposition and Termination. The Escrow Agent is hereby
authorized to make disbursements of the Fund only in accordance with written
instructions signed by Pioneer substantially in the form attached hereto as
Exhibit B (the “Notice”).  If there is any question as to a person’s entitlement
to the Fund, the Escrow Agent shall continue to hold the Fund in accordance with
the terms of this Escrow Agreement until (i) receipt of a Notice or (ii) the
question of any person’s entitlement to the Fund shall have been determined
pursuant to a final non-appealable order or judgment of a court of competent
jurisdiction and accompanied by a letter or other written evidence from the law
firm of the prevailing Party certifying the finality of the order.

 

    Upon delivery of the Fund by the Escrow Agent, this Escrow Agreement shall
terminate, subject to the provisions of Sections 7 and 8 which shall survive
such termination.

 

5.             Escrow Agent.

 

(a)           The Escrow Agent shall have only those duties as are specifically
and expressly provided herein, which shall be deemed purely ministerial in
nature, and no other duties shall be implied.  The Escrow Agent shall neither be
responsible for, nor chargeable with, knowledge of, nor have any requirements to
comply with, the terms and conditions of any other agreement, instrument or
document between the Parties, in connection herewith, if any, including without
limitation the ROFR (the “Underlying Agreement”), nor shall the Escrow Agent be
required to determine if any person or entity has complied with any such 
agreements, nor shall any additional obligations of the Escrow Agent be inferred
from the terms of such agreements, even though reference thereto may be made in
this Escrow Agreement.  In the event of any conflict between the terms and
provisions of this Escrow Agreement, those of the Underlying Agreement, any
schedule or exhibit attached to the Escrow Agreement, or any other agreement
among the Parties, the terms and conditions of this Escrow Agreement shall
control.  The Escrow Agent may rely upon and shall not be liable for acting or
refraining from acting upon any written notice, document, instruction or request
furnished to it hereunder and believed by it to be genuine and to have been
signed or presented by the proper Party or Parties without inquiry and without
requiring substantiating evidence of any kind.  The Escrow Agent shall be under
no duty to inquire into or investigate the validity, accuracy or content of any
such document, notice, instruction or request.  The Escrow Agent shall have no
duty to solicit any payments which may be due it or the Fund, including, without
limitation, the Escrow Deposit nor shall

 

2

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the Escrow Agent have any duty or obligation to confirm or verify the accuracy
or correctness of any amounts deposited with it hereunder.

 

(b)           The Escrow Agent shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith except to the extent that a
final adjudication of a court of competent jurisdiction determines that the
Escrow Agent’s gross negligence or willful misconduct was the primary cause of
any loss to either Party.  The Escrow Agent may execute any of its powers and
perform any of its duties hereunder directly or through attorneys, and shall be
liable only for its gross negligence or willful misconduct (as finally
adjudicated in a court of competent jurisdiction) in the selection of any such
attorney.  The Escrow Agent may consult with counsel, accountants and other
skilled persons to be selected and retained by it.  The Escrow Agent shall not
be liable for any action taken, suffered or omitted to be taken by it in
accordance with, or in reliance upon, the advice or opinion of any such counsel,
accountants or other skilled persons.  In the event that the Escrow Agent shall
be uncertain or believe there is some ambiguity as to its duties or rights
hereunder or shall receive instructions, claims or demands from any party hereto
which, in its opinion, conflict with any of the provisions of this Escrow
Agreement, it shall be entitled to refrain from taking any action and its sole
obligation shall be to keep safely all property held in escrow until it shall be
given a direction in writing by the Parties which eliminates such ambiguity or
uncertainty to the satisfaction of Escrow Agent or by a final and non-appealable
order or judgment of a court of competent jurisdiction.  The Parties agree to
pursue any redress or recourse in connection with any dispute without making the
Escrow Agent a party to the same.  Anything in this Escrow Agreement to the
contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, incidental, punitive, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Escrow
Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action.

 

6.             Succession.

 

(a)           The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving thirty (30) days advance notice in writing of
such resignation to the Parties specifying a date when such resignation shall
take effect.  If the Parties have failed to appoint a successor escrow agent
prior to the expiration of thirty (30) days following receipt of the notice of
resignation, the Escrow Agent may petition any court of competent jurisdiction
for the appointment of a successor escrow agent or for other appropriate relief,
and any such resulting appointment shall be binding upon all of the parties
hereto.  Escrow Agent’s sole responsibility after such thirty (30) day notice
period expires shall be to hold the Fund (without any obligation to reinvest the
same) and to deliver the same to a designated substitute escrow agent, if any,
or in accordance with the directions of a final order or judgment of a court of
competent jurisdiction, at which time of delivery Escrow Agent’s obligations
hereunder shall cease and terminate, subject

 

3

--------------------------------------------------------------------------------

 

to the provisions of Sections 7 and 8 hereunder.  The Escrow Agent shall have
the right to withhold an amount equal to any amount due and owing to the Escrow
Agent, plus any costs and expenses the Escrow Agent shall reasonably believe may
be incurred by the Escrow Agent in connection with the termination of the Escrow
Agreement.

 

(b)           Any entity into which the Escrow Agent may be merged or converted
or with which it may be consolidated, or any entity to which all or
substantially all the escrow business may be transferred, shall be the Escrow
Agent under this Escrow Agreement without further act.

 

7.             Compensation and Reimbursement.  The Qualified Bidder agrees to
(a) pay the Escrow Agent for the services to be rendered hereunder, which unless
otherwise agreed in writing shall be as described in Schedule 2 attached hereto,
and (b) pay or reimburse the Escrow Agent upon request for all expenses,
disbursements and advances, including, without limitation reasonable attorney’s
fees and expenses, incurred or made by it in connection with the performance of
this Escrow Agreement.

 

8.             Indemnity.  The Parties shall jointly and severally indemnify,
defend and hold harmless the Escrow Agent and its affiliates and their
respective successors, assigns, directors, agents and employees (the
“Indemnitees”) from and against any and all losses, damages, claims,
liabilities, penalties, judgments, settlements, litigation, investigations,
costs or expenses (including, without limitation, the fees and expenses of
outside counsel) (collectively “Losses”) arising out of or in connection with
(a) the Escrow Agent’s execution and performance of this Escrow Agreement, tax
reporting or withholding, the enforcement of any rights or remedies under or in
connection with this Escrow Agreement, or as may arise by reason of any act,
omission or error of the Indemnitee, except in the case of any Indemnitee to the
extent that such Losses are finally adjudicated by a court of competent
jurisdiction to have been primarily caused by the gross negligence or willful
misconduct of such Indemnitee, or (b) its following any instructions or
directions, whether joint or singular, from the Parties, except to the extent
that its following any such instruction or direction is expressly forbidden by
the terms hereof.  The Parties hereto acknowledge that the foregoing indemnities
shall survive the resignation, replacement or removal of the Escrow Agent or the
termination of this Escrow Agreement.  The Parties hereby grant the Escrow Agent
a lien on, right of set-off against and security interest in, the Fund for the
payment of any claim for indemnification, fees, expenses and amounts due
hereunder.  In furtherance of the foregoing, the Escrow Agent is expressly
authorized and directed, but shall not be obligated, to charge against and
withdraw from the Fund for its own account or for the account of an Indemnitee
any amounts due to the Escrow Agent or to an Indemnitee under this Section 8.

 

4

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9.             Patriot Act Disclosure/Taxpayer Identification Numbers/Tax
Reporting.

 

(a)           Patriot Act Disclosure.

 

Section 326 of the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT
Act”) requires the Escrow Agent to implement reasonable procedures to verify the
identity of any person that opens a new account with it.  Accordingly, the
Parties acknowledge that Section 326 of the USA PATRIOT Act and the Escrow
Agent’s identity verification procedures require the Escrow Agent to obtain
information which may be used to confirm the Parties identity including without
limitation name, address and organizational documents (“identifying
information”). The Parties agree to provide the Escrow Agent with and consent to
the Escrow Agent obtaining from third parties any such identifying information
required as a condition of opening an account with or using any service provided
by the Escrow Agent.

 

(b)           Taxpayer Identification Numbers (“TIN”).

 

The Parties have provided the Escrow Agent with their respective fully executed
Internal Revenue Service (“IRS”) Form W-8, or W-9 and/or other required
documentation.  The Parties each represent that its correct TIN  assigned by the
IRS, or any other taxing authority, is set forth in the delivered forms.

 

(c)           Tax Reporting.

 

All interest or other income earned under the Escrow Agreement shall be
allocated to the Qualified Bidder and reported, as and to the extent required by
law, by the Escrow Agent to the IRS, or any other taxing authority, on IRS
Form 1099 or 1042S (or other appropriate form) as income earned from the Escrow
Deposit by the Qualified Bidder whether or not said income has been distributed
during such year.  Any other tax returns required to be filed will be prepared
and filed by the Qualified Bidder with the IRS and any other taxing authority as
required by law.  The Parties acknowledge and agree that Escrow Agent shall have
no responsibility for the preparation and/or filing of any income, franchise or
any other tax return with respect to the Fund or any income earned by the Escrow
Deposit.  The Parties further acknowledge and agree that any taxes payable from
the income earned on the investment of any sums held in the Escrow Deposit shall
be paid by the Qualified Bidder. In the absence of written direction from the
Parties, all proceeds of the Fund shall be retained in the Fund and reinvested
from time to time by the Escrow Agent as provided in this Escrow Agreement. 
Escrow Agent shall withhold any taxes it deems appropriate, including but not
limited to required withholding in the absence of proper tax documentation, and
shall remit such taxes to the appropriate authorities.

 

10.           Notices. All communications hereunder shall be in writing and
shall be deemed to be duly given and received:

 

5

--------------------------------------------------------------------------------

 

(a)           upon delivery, if delivered personally, or upon confirmed
transmittal, if by facsimile;

 

(b)           on the next Business Day (as hereinafter defined) if sent by
overnight courier; or

 

(c)           four (4) Business Days after mailing if mailed by prepaid
registered mail, return receipt requested, to the appropriate notice address set
forth below or at such other address as any party hereto may have furnished to
the other parties in writing by registered mail, return receipt requested.

 

If to Pioneer Natural Resources USA, Inc.:

With a copy to:

5205 N. O’Connor Boulevard., Suite 200

Pioneer Natural Resources USA, Inc.

Irving, Texas 75039-3746

5205 N. O’Connor Boulevard., Suite 200

 Attention: Mark Berg, General Counsel

Irving, Texas 75039-3746

 Tel No.: 972-969-4090

 Attention: Rich Dealy, EVP & CFO

 Fax No.: 972-969-3584

 Tel No.: 972-969-4054

 

 Fax No.: 972-969-3572

 

If to Qualified Bidder

 

(street address)

(City, state [country], zip [postal code])

 Attention:

 Tel No.:

Fax No.:

 

If to the Escrow Agent:

 

JPMorgan Chase Bank, N.A.

712 Main Street, 5th Floor South

Houston, Texas  77002

Attn:  Paul Gilliam, Escrow Services

Fax No.: (713) 216-6927

 

Notwithstanding the above, in the case of communications delivered to the Escrow
Agent pursuant to (a), (b) and (c) of this Section 10, such communications shall
be deemed to have been given on the date received by an officer of the Escrow
Agent or any employee of the Escrow Agent who reports directly to any such
officer at the above-referenced office.  In the event that the Escrow Agent, in
its sole discretion, shall determine that an emergency exists, the Escrow Agent
may use such other means of communication as the Escrow Agent deems
appropriate.  “Business Day” shall mean any day other than a Saturday, Sunday or
any other day on which the Escrow Agent located at the notice address set forth
above is authorized or required by law or executive order to remain closed.

 

6

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11.           Security Procedures.   In the event funds transfer instructions
are given (other than in writing at the time of execution of this Escrow
Agreement), whether in writing, by facsimile or otherwise, the Escrow Agent is
authorized to seek confirmation of such instructions by telephone call-back to
the person or persons designated on schedule 1 hereto (“Schedule 1”), and the
Escrow Agent may rely upon the confirmation of anyone purporting to be the
person or persons so designated.  The persons and telephone numbers for
call-backs may be changed only in a writing actually received and acknowledged
by the Escrow Agent. If the Escrow Agent is unable to contact any of the
authorized representatives identified in Schedule 1, the Escrow Agent is hereby
authorized to seek confirmation of such instructions by telephone call-back to
any one or more of Party A or Party B’s executive officers, (“Executive
Officers”), as the case may be, which shall include the titles of , as the
Escrow Agent may select. Such “Executive Officer” shall deliver to the Escrow
Agent a fully executed incumbency certificate, and the Escrow Agent may rely
upon the confirmation of anyone purporting to be any such officer. The Escrow
Agent and the beneficiary’s bank in any funds transfer may rely solely upon any
account numbers or similar identifying numbers provided by Party A or Party B to
identify (a) the beneficiary, (b) the beneficiary’s bank, or (c) an intermediary
bank.  The Escrow Agent may apply any of the escrowed funds for any payment
order it executes using any such identifying number, even when its use may
result in a person other than the beneficiary being paid, or the transfer of
funds to a bank other than the beneficiary’s bank or an intermediary bank
designated. The Parties acknowledge that these security procedures are
commercially reasonable.

 

12.           Compliance with Court Orders.  In the event that any escrow
property shall be attached, garnished or levied upon by any court order, or the
delivery thereof shall be stayed or enjoined by an order of a court, or any
order, judgment or decree shall be made or entered by any court order affecting
the property deposited under this Escrow Agreement, the Escrow Agent is hereby
expressly authorized, in its sole discretion, to obey and comply with all writs,
orders or decrees so entered or issued, which it is advised by legal counsel of
its own choosing is binding upon it, whether with or without jurisdiction, and
in the event that the Escrow Agent obeys or complies with any such writ, order
or decree it shall not be liable to any of the parties hereto or to any other
person, entity, firm or corporation, by reason of such compliance
notwithstanding such writ, order or decree be subsequently reversed, modified,
annulled, set aside or vacated.

 

13.           Miscellaneous.  The provisions of this Escrow Agreement may be
waived, altered, amended or supplemented, in whole or in part, only by a writing
signed by the Escrow Agent and the Parties.  Neither this Escrow Agreement nor
any right or interest hereunder may be assigned in whole or in part by the
Escrow Agent or any of the Parties, except as provided in Section 6, without the
prior consent of the Escrow Agent and the other parties.  Each Party irrevocably
waives any objection on the grounds of venue, forum non-conveniens or any
similar grounds and irrevocably consents to service of process by mail or in any
other manner permitted by applicable law and consents to the jurisdiction of the
courts located in the State of Texas. The Parties further hereby waive any right
to a trial by jury with respect to any lawsuit or judicial proceeding arising or
relating to this Escrow Agreement.  No party to this Escrow Agreement is liable
to any other party for losses due to, or if it is unable to perform its
obligations under the terms of this Escrow Agreement because of, acts of God,
fire, war, terrorism, floods, strikes, electrical outages, equipment or
transmission failure, or other causes reasonably beyond its control.  This
Escrow Agreement may be executed in one or more counterparts, each of which

 

7

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shall be deemed an original, but all of which together shall constitute one and
the same instrument. All signatures of the parties to this Escrow Agreement may
be transmitted by facsimile, and such facsimile will, for all purposes, be
deemed to be the original signature of such party whose signature it reproduces,
and will be binding upon such party.  If any provision of this Escrow Agreement
is determined to be prohibited or unenforceable by reason of any applicable law
of a jurisdiction, then such provision shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof, and any such prohibition or
unenforceability in such jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction.  A person who is not a
party to this Escrow Agreement shall have no right to enforce any term of this
Escrow Agreement. The parties represent, warrant and covenant that each
document, notice, instruction or request provided by such Party to Escrow Agent
shall comply with applicable laws and regulations.  Where, however, the
conflicting provisions of any such applicable law may be waived, they are hereby
irrevocably waived by the parties hereto to the fullest extent permitted by law,
to the end that this Escrow Agreement shall be enforced as written.  Except as
expressly provided in Section 8 above, nothing in this Escrow Agreement, whether
express or implied, shall be construed to give to any person or entity other
than the Escrow Agent and the Parties any legal or equitable right, remedy,
interest or claim under or in respect of this Escrow Agreement or any funds
escrowed hereunder.

 

8

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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of
the date set forth above.

 

Pioneer Natural Resources USA, Inc.

 

individually and on behalf of the

 

Mesa Offshore Royalty Partnership

 

in its capacity

 

as Managing General Partner

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

[Insert Name of Qualified Bidder]

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

 

 

 

as Escrow Agent

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

9

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Exhibit G

 

SCHEDULE 1

 

Telephone Number(s) and authorized signature(s) for

 Person(s) Designated to give Funds Transfer Instructions

 

Pioneer:

 

 

 

Name

 

Telephone Number

 

Signature

 

 

 

 

 

 

 

1.

 

 

 

 

 

 

2.

 

 

 

 

 

 

3.

 

 

 

 

 

 

 

Qualified Bidder:

 

 

 

Name

 

Telephone Number

 

Signature

 

 

 

 

 

 

 

1.

 

 

 

 

 

 

2.

 

 

 

 

 

 

3.

 

 

 

 

 

 

 

Telephone Number(s) for Call-Backs and

Person(s) Designated to Confirm Funds Transfer Instructions

 

Pioneer:

 

 

 

Name

 

Telephone Number

 

 

 

 

 

 

 

 

 

1.

 

 

 

 

 

 

2.

 

 

 

 

 

 

3.

 

 

 

 

 

 

 

 

Qualified Bidder:

 

 

 

Name

 

Telephone Number

 

 

 

 

 

 

 

 

 

1.

 

 

 

 

 

 

2.

 

 

 

 

 

 

3.

 

 

 

 

 

 

 

Inasmuch as you are the only individual who can confirm wire transfers, we will
call you to confirm any federal funds wire transfer payment order purportedly
issued by you. Your continued issuance of payment orders to us and confirmation
in accordance with this procedure will constitute your agreement (1) to the
callback security procedure outlined herein and (2) that the security procedure
outlined herein constitutes a commercially reasonable method of verifying the
authenticity of payment orders. Moreover, you agree to accept any risk
associated with a deviation from this bank policy.

 

All funds transfer instructions must include the signature of the
person(s) authorizing said funds transfer and must not be the same person
confirming said transfer.

 

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Exhibit G

 

SCHEDULE 2

 

Escrow Agent’s Compensation:

 

[Note:  Obtain Compensation Schedule from Escrow Agent.]

 

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Exhibit G

 

EXHIBIT A

Notice

 

JPMorgan Chase Bank, National Association

712 Main Street, 5th Floor South

Houston, Texas  77002

Attn:  Paul Gilliam, Escrow Services

Fax No.: (713) 216-6927

 

Re:

Escrow Agreement dated as of                    by and among

 

Pioneer Natural Resources USA, Inc. (“Pioneer”),

 

(“Qualified Bidder”) and

 

JPMorgan Chase Bank, National Association, as Escrow Agent

 

Ladies and Gentlemen:

 

This Notice is delivered to you by Pioneer pursuant to Section 4 of the
above-referenced Escrow Agreement.  Pioneer hereby authorizes and directs Escrow
Agent to disperse from the Fund the amount of $ [See Note below]   to [The Oil &
Gas Asset Clearinghouse, the Trustee of the Mesa Offshore Trust (“Trustee”), or
Qualified Bidder] by wire transfer to the following account:

 

[Wire transfer instructions for The Oil & Gas Asset Clearinghouse, the Trustee,
or Qualified Bidder are to be inserted here.]

 

Dated this         day of                 , 200    .

 

 

Pioneer Natural Resources USA, Inc.

 

individually and on behalf of the

 

Mesa Offshore Royalty Partnership

 

in its capacity

 

as Managing General Partner

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[Note:  Pursuant to the ROFR, the Qualified Bidder has deposited with Escrow
Agent the sum of $375,000 for each Sales Lot, as defined in the ROFR, and such
additional amount as may be required under paragraph number 2(a) of the ROFR if
the Qualified Bidder elects to acquire one or more of the Sales Lots for a price
in excess of $375,000 for each such lot.  Subject to Qualified Bidder’s
additional funding obligations set forth in paragraph number 2(a) of the ROFR,
if Qualified Bidder purchases one or both of the Sales Lots at the Auction
pursuant to and/or as required by the ROFR, then this Notice will authorize the
distribution from the Fund to Clearinghouse of such amount(s), or alternatively,
the Trustee, as is required for such purchase and by separate Notice any
remaining sums in the

 

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Fund not required to comply with the purchase provisions of the ROFR will be
distributed to Qualified Bidder.]

 

2

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