Unassociated Document


    COLLATERAL AGENT
AGREEMENT

    


    COLLATERAL
AGENT AGREEMENT (this “Agreement”) dated as
of August 31, 2009, among Collateral Agents, LLC (the “Collateral Agent”),
and the parties identified on Schedule A hereto (each, individually, a “Lender” and
collectively, the “Lenders”), who hold
or will acquire promissory Notes issued or to be issued by Mesa Energy Holdings,
Inc., a Delaware corporation (“Parent”), and Mesa
Energy, Inc., a Nevada corporation, Mesa Energy Operating LLC, a Texas limited
liability company (each a “Guarantor” and
together with Parent, each a “Debtor” and
collectively, “Debtors”), on the
dates set forth on Schedule A hereto and at, about or after the date of this
Agreement as described in the Security Agreement referred to in Section 1(a)
below (collectively herein the “Notes”).

    


    WHEREAS,
the Lenders have made, are making and will be making loans to Parent to be
secured by certain collateral; and

     

    WHEREAS,
it is desirable to provide for the orderly administration of such collateral by
requiring each Lender to appoint the Collateral Agent, and the Collateral Agent
has agreed to accept such appointment and to receive, hold and deliver such
collateral, all upon the terms and subject to the conditions hereinafter set
forth; and

    


    WHEREAS,
it is desirable to allocate the enforcement of certain rights of the Lenders
under the Notes for the orderly administration thereof.

    


    NOW,
THEREFORE, in consideration of the premises set forth herein and for other good
and valuable consideration, the parties hereto agree as follows:

    


    1.           Collateral.

    


    (a)           Prior
to or contemporaneously with the execution and delivery of this Agreement by the
Collateral Agent and the Lenders, (i) the Collateral Agent has or will have
entered into a Security Agreement with Parent and Guarantors (“Security Agreement”),
regarding the grant of a security interest in the assets of Parent and
Guarantors (such assets are referred to herein and in the Security Agreement as
the “Collateral”) to the
Collateral Agent, for the benefit of the Lenders, (ii) Guarantor will have
executed and delivered a “Guaranty” in favor of Lenders in connection with the
Obligations (as defined in the Security Agreements), and (iii) Parent is issuing
the Notes to the Lenders pursuant to Subscription Agreements dated at or about
August 31, 2009 and the date of this Agreement (collectively, each a
“Subscription Agreement”).  Collectively, the Security Agreement, the
Notes and Subscription Agreement and other agreements referred to therein are
referred to herein as “Borrower Documents”.  All
defined terms not otherwise defined herein shall have the meanings attributed to
them in the Security Agreement.

    


    (b)           The
Collateral Agent hereby acknowledges that any Collateral held by the Collateral
Agent is held for the benefit of the Lenders in accordance with this Agreement
and the Borrower Documents.  No reference to the Borrower Documents or
any other instrument or document shall be deemed to incorporate any term or
provision thereof into this Agreement unless expressly so provided.

     

    (c)           The
Collateral Agent is to distribute in accordance with the Borrower Documents any
proceeds received from the Collateral which are distributable to the Lenders as
set forth in Section 10.4 of the Security Agreement.

     

    
      
        
        

      

      
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    2.           Appointment of the
Collateral
Agent.

    


    The
Lenders hereby appoint the Collateral Agent (and the Collateral Agent hereby
accepts such appointment) to take any action including, without limitation, the
registration of any Collateral in the name of the Collateral Agent or its
nominees prior to or during the continuance of an Event of Default (as defined
in the Borrower Documents), the exercise of voting rights, if any, upon the
occurrence and during the continuance of an Event of Default, the application of
any cash collateral received by the Collateral Agent to the payment of the
Obligations, the making of any demand under the Borrower Documents, the exercise
of any remedies given to the Collateral Agent pursuant to the Borrower Documents
and the exercise of any authority pursuant to the appointment of the Collateral
Agent as an attorney-in-fact pursuant to the Security Agreement that the
Collateral Agent deems necessary or proper for the administration of the
Collateral pursuant to the Security Agreement.  Upon disposition of
the Collateral in accordance with the Borrower Documents, the Collateral Agent
shall promptly distribute any cash or Collateral in accordance with Section 10.4
of the Security Agreement.  Parent and Lenders must notify Collateral
Agent in writing of the issuance of Notes to Lenders by
Parent.  Additional Lenders may become subject to the rights and
benefits of this Agreement by participating in the Offering and executing and
delivering a copy of this Agreement to the Collateral Agent and
Company.  Schedule A may be amended from time to time to include such
additional Lenders.  The Collateral Agent will not be required to act
hereunder in connection with Notes the issuance of which was not disclosed in
writing to the Collateral Agent nor will the Collateral Agent be required to act
on behalf of any assignee of Notes without the written consent of Collateral
Agent.

    


    3.           Action by the Majority in
Interest.

    


    (a)           Certain
Actions.  Each of the Lenders covenants and agrees that only a
Majority in Interest shall have the right, but not the obligation, to undertake
the following actions (it being expressly understood that less than a Majority
in Interest hereby expressly waive the following rights that they may otherwise
have under the Borrower Documents):

    


    (i)           Acceleration.  If
an Event of Default occurs, after the applicable cure period, if any, a Majority
in Interest may, on behalf of all the Lenders, instruct the Collateral Agent to
provide to Parent and/or Guarantor notice to cure such default and/or declare
the unpaid principal amount of the Notes to be due and payable, together with
any and all accrued interest thereon and all costs payable pursuant to such
Notes;

    


    (ii)          Enforcement.  Upon
the occurrence of any Event of Default after the applicable cure period, if any,
a Majority in Interest may instruct the Collateral Agent to proceed to protect,
exercise and enforce, on behalf of all the Lenders, their rights and remedies
under the Borrower Documents against Parent and/or Guarantor, and such other
rights and remedies as are provided by law or equity; and

    


    (iii)         Waiver of Past
Defaults.  A Majority in Interest may instruct the Collateral
Agent to waive any Event of Default by written notice to Parent and/or
Guarantor, and the other Lenders, but not waive damages accrued or accruing
until the effective date of such waiver.

    


    (b)           Permitted Subordination and
Release.  A Majority in Interest may instruct the Collateral
Agent to agree to release in whole or in part or to subordinate any Collateral
to any claim or other actual or proposed security interest and may enter into
any agreement with Parent and/or Guarantor to evidence such subordination; provided, however, that
subsequent to any such release or subordination, each Note shall remain pari passu with the other
Notes held by the Lenders.

    


    (c)           Further
Actions.  A Majority in Interest may instruct the Collateral
Agent to take any other action described in Section 13(j) of the Subscription
Agreement and subject to the conditions described in Section 13(j) of the
Subscription Agreement by instructing the Collateral Agent in writing to take
such action on behalf of all the Lenders.

     

    
      
        
        

      

      
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    (d)           Majority in
Interest.  For so long as ____________________ and
____________________ collectively hold not less than $300,000 of Note
Principal, a Majority in Interest for the purposes of this Agreement and the
Borrower Documents shall mean the approval of holders of a majority of
outstanding Note Principal held by ____________________ and
____________________.  From and after the date that
____________________ and ____________________ hold collectively less than
$300,000 in outstanding Note Principal, a Majority in Interest shall mean
Lenders who hold not less than seventy percent (70%) of the outstanding
principal amount of the Notes on the date such Majority in Interest instructs
the Collateral Agent and must include each of ____________________ and
____________________ for so long as such Lenders hold not less than $100,000 of
Note Principal.

    


    4.           Power of Attorney.

    


    (a)           To
effectuate the terms and provisions hereof, the Lenders hereby appoint the
Collateral Agent as their attorney-in-fact (and the Collateral Agent hereby
accepts such appointment) for the purpose of carrying out the provisions of this
Agreement including, without limitation, taking any action on behalf of, or at
the instruction of, the Majority in Interest at the written direction of the
Majority in Interest and executing any consent authorized pursuant to this
Agreement and taking any action and executing any instrument that the Collateral
Agent may deem necessary or advisable (and lawful) to accomplish the purposes
hereof.

    


    (b)           All
acts done under the foregoing authorization are hereby ratified and approved and
neither the Collateral Agent nor any designee nor agent thereof shall be liable
for any acts of commission or omission, for any error of judgment, for any
mistake of fact or law except for acts of gross negligence or willful
misconduct.

    


    (c)           This
power of attorney, being coupled with an interest, is irrevocable while this
Agreement remains in effect.

    


    5.           Expenses of the Collateral
Agent.  The Lenders shall pay any and all reasonable costs and
expenses incurred by the Collateral Agent, including, without limitation,
reasonable costs and expenses relating to all waivers, releases, discharges,
satisfactions, modifications and amendments of this Agreement, the
administration and holding of the Collateral, insurance expenses, and the
enforcement, protection and adjudication of the parties’ rights hereunder by the
Collateral Agent, including, without limitation, the reasonable disbursements,
expenses and fees of the attorneys the Collateral Agent may retain, if any, each
of the foregoing in proportion to their holdings of the Notes.

    


    6.           Reliance on Documents and
Experts.  The Collateral Agent shall be entitled to rely upon
any notice, consent, certificate, affidavit, statement, paper, document, writing
or communication (which may be by telegram, cable, telex, telecopier, or
telephone) reasonably believed by it to be genuine and to have been signed, sent
or made by the proper person or persons, and upon opinions and advice of its own
legal counsel, independent public accountants and other experts selected by the
Collateral Agent.

    


    7.           Duties of the Collateral Agent; Standard
of Care.

    


    (a)           The
Collateral Agent’s only duties are those expressly set forth in this Agreement,
and the Collateral Agent hereby is authorized to perform those duties in
accordance with commercially reasonable practices.  The Collateral
Agent may exercise or otherwise enforce any of its rights, powers, privileges,
remedies and interests under this Agreement and applicable law or perform any of
its duties under this Agreement by or through its officers, employees,
attorneys, or agents.

     

    
      
        
        

      

      
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    (b)           The
Collateral Agent shall act in good faith and with that degree of care that an
ordinarily prudent person in a like position would use under similar
circumstances.

    


    (c)           Any
funds held by the Collateral Agent hereunder need not be segregated from other
funds except to the extent required by law.  The Collateral Agent
shall be under no liability for interest on any funds received by it
hereunder.

    


    8.           Resignation.  The
Collateral Agent may resign and be discharged of its duties hereunder at any
time by giving written notice of such resignation to the other parties hereto,
stating the date such resignation is to take effect.  Within five (5)
days of the giving of such notice, a successor collateral agent shall be
appointed by the Majority in Interest; provided, however, that if the
Lenders are unable so to agree upon a successor within such time period, and
notify the Collateral Agent during such period of the identity of the successor
collateral agent, the successor collateral agent may be a person designated by
the Collateral Agent, and any and all fees of such successor collateral agent
shall be the joint and several obligation of the Lenders.  The
Collateral Agent shall continue to serve until the effective date of the
resignation or until its successor accepts the appointment and receives the
Collateral held by the Collateral Agent but shall not be obligated to take any
action hereunder.  The Collateral Agent may deposit any Collateral
with the Supreme Court of the State of New York for New York County or any
such other court in New York State that accepts such
Collateral.

    


    9.           Exculpation.  The
Collateral Agent and its officers, employees, attorneys and agents, shall not
incur any liability whatsoever for the holding or delivery of documents or the
taking of any other action in accordance with the terms and provisions of this
Agreement, for any mistake or error in judgment, for compliance with any
applicable law or any attachment, order or other directive of any court or other
authority (irrespective of any conflicting term or provision of this Agreement),
or for any act or omission of any other person engaged by the Collateral Agent
in connection with this Agreement, unless occasioned by the exculpated person’s
own gross negligence or willful misconduct; and each party hereto hereby waives
any and all claims and actions whatsoever against the Collateral Agent and its
officers, employees, attorneys and agents, arising out of or related directly or
indirectly to any or all of the foregoing acts, omissions and
circumstances.

    


    10.         Indemnification.  The
Lenders hereby agree to indemnify, reimburse and hold harmless the Collateral
Agent and its directors, officers, employees, attorneys and agents, jointly and
severally, from and against any and all claims, liabilities, losses and expenses
that may be imposed upon, incurred by, or asserted against any of them, arising
out of or related directly or indirectly to this Agreement or the Collateral,
except such as are occasioned by the indemnified person’s own gross negligence
or willful misconduct.

    


    11.         Miscellaneous.

    


    (a)           Rights and Remedies Not
Waived.  No act, omission or delay by the Collateral Agent
shall constitute a waiver of the Collateral Agent’s rights and remedies
hereunder or otherwise.  No single or partial waiver by the Collateral
Agent of any default hereunder or right or remedy that it may have shall operate
as a waiver of any other default, right or remedy or of the same default, right
or remedy on a future occasion.

    


    (b)           Governing
Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to conflicts of laws that would result in the application of the substantive laws
of another jurisdiction.

    


    (c)           Waiver of Jury Trial and
Setoff; Consent
to Jurisdiction; Etc.

     

    
      
        
        

      

      
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    (i)           In
any litigation in any court with respect to, in connection with, or arising out
of this Agreement or any instrument or document delivered pursuant to this
Agreement, or the validity, protection, interpretation, collection or
enforcement hereof or thereof, or any other claim or dispute howsoever arising,
between the Collateral Agent and the Lenders or any Lender, then each Lender, to
the fullest extent it may legally do so, (A) waives the right to interpose any
setoff, recoupment, counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of such setoff, recoupment, counterclaim
or cross-claim, unless such setoff, recoupment, counterclaim or cross-claim
could not, by reason of any applicable federal or state procedural laws, be
interposed, pleaded or alleged in any other action; and (B) WAIVES TRIAL BY JURY IN CONNECTION
WITH ANY SUCH LITIGATION AND ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH
LENDER AGREES THAT THIS SECTION 11(c) IS A SPECIFIC AND MATERIAL ASPECT OF THIS
AGREEMENT AND ACKNOWLEDGE THAT THE COLLATERAL AGENT WOULD NOT ENTER
THIS AGREEMENT IF THIS SECTION 11(c) WERE
NOT PART OF THIS AGREEMENT.

    


    (ii)           Each
Lender irrevocably consents to the exclusive jurisdiction of any State or
Federal Court located within the County of New York, State of New York, in
connection with any action or proceeding arising out of or relating to this
Agreement or any document or instrument delivered pursuant to this Agreement or
otherwise.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law.  Each Lender hereby waives, to the
fullest extent it may effectively do so, the defenses of forum non conveniens
and improper venue.

    


    (d)           Admissibility of this
Agreement.  Each of the Lenders agrees that any copy of this
Agreement signed by it and transmitted by telecopier for delivery to the
Collateral Agent shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence.

    


    (e)           Address for Notices.
Any notice or other communication under the provisions of this Agreement shall
be given in writing and delivered in person, by reputable overnight courier or
delivery service, by facsimile machine (receipt confirmed) with a copy sent by
first class mail on the date of transmissions, or by registered or certified
mail, return receipt requested, directed to such party’s addresses set forth
below (or to any new address of which any party hereto shall have informed the
others by the giving of notice in the manner provided herein):

    


    In the
case of the Collateral Agent, to:

    


    Collateral
Agents, LLC

    111 West
57th
Street, Suite 1416

    New York,
NY 10019

    Attn:
General Counsel

    Fax:
(212) 245-9101

     

    
      
        
        

      

      
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    In the
case of the Lenders, to:

    


    To the
address and telecopier number set forth on

    Schedule
A hereto.

    


    In the
case of Parent and Guarantor, to:

    


    Mesa Energy Holdings, Inc.

    5220 Spring Valley Road, Suite
525

    Dallas, TX 75254

    Attn: Randy M. Griffin,
CEO

    Fax: (760) ___________

    


    With a copy by facsimile only
to:

    


    Gottbetter & Partners,
LLP

    488 Madison Avenue, 12th
Floor

    New York, NY 10022

    Attn: Adam S. Gottbetter,
Esq.

    Fax: (212) 400-6901

    


    If to
Parent, Guarantor, Lender or Collateral Agent,

    with a
copy by telecopier only to:

    


    Grushko
& Mittman, P.C.

    551 Fifth
Avenue, Suite 1601

    New York,
New York 10176

    Fax: (212) 697-3575

    


    (f)           Amendments and Modification;
Additional Lender.  No provision hereof shall be modified,
altered, waived or limited except by written instrument expressly referring to
this Agreement and to such provision, and executed by the parties
hereto.  Any transferee of a Note who acquires a Note after the date
hereof will become a party hereto by signing the signature page and sending an
executed copy of this Agreement to the Collateral Agent and receiving a signed
acknowledgement from the Collateral Agent.

    


    (g)           Fee.   Upon
the execution of this agreement, Parent will pay the Collateral Agent a fee of
$7,000 for agreeing to act as Collateral Agent hereunder and for reading and
becoming familiar with the Borrower Documents.  Upon the occurrence of
an Event of Default, the Lenders collectively shall pay the Collateral Agent the
sum of $10,000 on account, to apply against an hourly fee of $500 to be paid to
the Collateral Agent by the Lenders for services rendered pursuant to this
Agreement.  All payments due to the Collateral Agent under this
Agreement including reimbursements must be paid when billed.  The
Collateral Agent may refuse to act on behalf of or make a distribution to any
Investor who is not current in payments to the Collateral Agent.  Payments
required pursuant to this Agreement shall be pari passu to the
Investors’ interests in the Notes.  The Collateral Agent is hereby
authorized to deduct any sums due the Collateral Agent from Collateral in the
Collateral Agent’s possession. Parent and Guarantor agree to
promptly reimburse Investors for all payments made by Investor to Collateral
Agent hereunder.  Failure to promptly reimburse Investors is an Event
of default under the Notes.

    


    (h)            Collateral
Agent may generally engage in any kind of business with any party hereto or any
subsidiary, representative, agent or affiliate thereof as if it had not entered
into this Agreement. Collateral Agent and its affiliates and their officers,
directors, employees, and agents (including legal counsel) may now or hereafter
be engaged in one or more other transactions with any party hereto or act as
trustee, agent or representative of any party hereto (collectively, the "Other Activities")
not the subject of the Borrower Documents. Without limiting the forgoing,
Collateral Agent and its affiliates and their officers, directors, employees,
and agents (including legal counsel) shall not be responsible to account to any
party hereto for such other activities.

     

    
      
        
        

      

      
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    (i)           Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.

    


    (j)           Successors and
Assigns.  Whenever in this Agreement reference is made to any
party, such reference shall be deemed to include the successors, assigns, heirs
and legal representatives of such party.  No party hereto may transfer
any rights under this Agreement, unless the transferee agrees to be bound by,
and comply with all of the terms and provisions of this Agreement, as if an
original signatory hereto on the date hereof.

    


    (k)           Captions: Certain
Definitions.  The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.  As used in this Agreement the term
“person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.

    


    (l)           Severability.  In
the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.

    


    (m)                      Entire
Agreement.  This Agreement contains the entire agreement of the
parties and supersedes all other agreements and understandings, oral or written,
with respect to the matters contained herein.

    


    (n)           Schedules.  The
Collateral Agent is authorized to annex hereto any schedules referred to
herein.

    


    


    


    [THIS
SPACE INTENTIONALLY LEFT BLANK]

    


    
      
        
        

      

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

    


    “PARENT”

    MESA
ENERGY HOLDINGS, INC.

    
 

    
      
        
          	
                  By:

                	
                  /s/
      Randy M. Griffin

                	 
	 
      	
                  Name:
      Randy M. Griffin

                	 
	 
      	
                  Title:
      Chief Executive Officer

                	 


        

      

    

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      “GUARANTOR”

                                    	 	
                                      “GUARANTOR”

                                    	 
	
                                      MESA
      ENERGY, INC.

                                    	 	
                                      MESA
      ENERGY OPERATING, LLC

                                    	 
	
                                      a
      Nevada corporation

                                    	 	
                                      a
      Texas limited liability company

                                    	 
	 
      	 
      	 	 
      	 
      	 
	 
      	 
      	 	 
      	 
      	 
	
                                      By:

                                    	
                                      /s/
      Randy M. Griffin

                                    	 	
                                      By:

                                    	
                                      /s/
      Randy M. Griffin

                                    	 
	 
      	 
      	 	 
      	 
      	 
	
                                      Its:

                                    	
                                      Chief
      Executive Officer

                                    	 	
                                      Its:

                                    	
                                      Chief
      Executive Officer

                                    	 


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


    


    


    “LENDERS”

    
 

    


    
      
        
          
            
              	
                       
      

                    	 	
                       
      

                    	 
	
                       
      

                    	 	
                       
      

                    	 


            

          

        

      

    

    


    


    
 

    


    
      
        
          	 
      	
                  COLLATERAL
      AGENTS, LLC

                	 
	 
      	
                  “Collateral
      Agent”

                	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	
                    
      

                	 


        

      

    

    


    


    


     

    
      
        
        

      

      
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