ESCROW
AGREEMENT

     

    This Agreement is dated as of the
31st
day of August, 2009 among Mesa Energy Holdings, Inc., a Delaware corporation
(the "Company"), the subscribers listed on Schedule I hereto
(“Subscribers”), and Grushko & Mittman, P.C. (the "Escrow
Agent"):

     

    WITNESSETH:

     

    WHEREAS, the Company and Subscribers
have entered into a Subscription Agreement calling for the sale by the Company
to the Subscribers of  secured convertible Notes for an aggregate purchase price
of $750,000; and

     

    WHEREAS, the parties hereto require the
Company to deliver the Notes against payment therefor, with such Notes and the
Escrowed Funds to be delivered to the Escrow Agent, along with the other
documents, instruments and payments hereinafter described, to be held in escrow
and released by the Escrow Agent in accordance with the terms and conditions of
this Agreement; and

     

    WHEREAS, the Escrow Agent is willing to
serve as escrow agent pursuant to the terms and conditions of this
Agreement;

     

    NOW THEREFORE, the parties agree as
follows:

     

    ARTICLE
I

     

    INTERPRETATION

     

    1.1.
       Definitions.  Capitalized
terms used and not otherwise defined herein that are defined in the Subscription
Agreement shall have the meanings given to such terms in the Subscription
Agreement.  Whenever used in this Agreement, the following terms shall
have the following respective meanings:

     

    §           "Agreement"
means this Agreement and all amendments made hereto and thereto by written
agreement between the parties;

     

    §           “Closing
Date” shall have the meaning set forth in Section 1 of the Subscription
Agreement;

     

    §           "Escrowed
Payment" means an aggregate cash payment of $750,000 which is the Purchase
Price;

     

    §           “Guaranty”
shall have the meaning set forth in Section 3 of the Subscription
Agreement;

     

    §            “Legal
Opinion” means the original signed legal opinion referred to in Section 6 of the
Subscription Agreement;

     

    §           “Note”
shall have the meaning set forth in the second recital to the Subscription
Agreement;

     

    §            “Principal
Amount” shall mean an aggregate of $750,000;


    
      
         


      

      
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    §           “Security
Agreement” shall have the meaning set forth in Section 3 of the Subscription
Agreement;

     

    §           “Subscriber
Legal Fees” shall have the meaning set forth in Section 8(b) of the Subscription
Agreement;

     

    §           "Subscription
Agreement" means the Subscription Agreement (and the exhibits and schedules
thereto) entered into or to be entered into by the Company and Subscribers in
reference to the sale and purchase of the Notes;

     

    §           “Working
Interest Documents” shall have the meaning set forth in Section 2 of the
Subscription Agreement:

     

    §           “Working
Interest Security Documents” shall have the meaning set forth in Section 3 of
the Subscription Agreement;

     

    §           Collectively,
Legal Opinion, Notes, Security Agreement, Guaranty, Working Interest
Documents, Working Interest Security Documents, the executed Subscription
Agreement and Subscriber Legal Fees are referred to as "Company Documents";
and

     

    §           Collectively,
the Escrowed Payment and the Subscribers executed Subscription Agreements and
Security Agreement are referred to as "Subscriber Documents".

     

    1.2.        Entire
Agreement.  This Agreement along with the Company Documents and
the Subscriber Documents constitute the entire agreement between the parties
hereto pertaining to the Company Documents and Subscriber Documents and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties.  There are no warranties,
representations and other agreements made by the parties in connection with the
subject matter hereof, except as specifically set forth in this Agreement, the
Company Documents and the Subscriber Documents.

     

    1.3.        Extended
Meanings.  In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders.  The word "person" includes
an individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.

     

    1.4.        Waivers and
Amendments.  This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party waiving compliance.  Except as
expressly stated herein, no delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder
preclude any other or future exercise of any other right, power or privilege
hereunder.

     

    1.5.        Headings.  The
division of this Agreement into articles, sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this
Agreement.


    
      
         


      

      
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    1.6.           Law Governing this
Agreement.  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 principles that would result in the application of the substantive laws
of another jurisdiction.  Any action brought by either party against
the other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York.  Both parties and the individuals executing
this Agreement and other agreements on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury.  The
prevailing party (which shall be the party which receives an award most closely
resembling the remedy or action sought) shall be entitled to recover from the
other party its reasonable attorney's fees and costs.  In the event
that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.

     

    1.7.           Specific Enforcement,
Consent to Jurisdiction.  The Company and Subscribers
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.  It is accordingly agreed
that the parties shall be entitled to an injuction or injunctions to prevent or
cure breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.  Subject
to Section 1.6
hereof, each of the Company and Subscribers hereby waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper.  Nothing in this Section shall
affect or limit any right to serve process in any other manner permitted by
law.

     

    ARTICLE
II

     

    DELIVERIES
TO THE ESCROW AGENT

     

    2.1.           Company
Deliveries.  On or before the Closing Date, the Company shall
deliver the Company Documents to the Escrow Agent.

     

    2.2.           Subscriber
Deliveries.  On or before the Closing Date, Subscribers shall
deliver to the Escrow Agent the Purchase Price, the executed Subscription
Agreements and Security Agreement.  The Escrowed Payment will be
delivered pursuant to the following wire transfer instructions:

    


    Citibank,
N.A.

    1155
6th
Avenue

    New York,
NY 10036

    ABA
Number: 0210-00089

    For
Credit to: Grushko & Mittman, IOLA Trust Account

    Account
Number: 45208884

     

    2.3.           Intention to Create Escrow
Over Company Documents and Subscriber Documents.  The
Subscribers and Company intend that the Company Documents and Subscriber
Documents shall be held in escrow by the Escrow Agent pursuant to this Agreement
for their benefit as set forth herein.

     

    2.4.           Escrow Agent to Deliver
Company Documents and Subscriber Documents.  The Escrow Agent
shall hold and release the Company Documents and Subscriber Documents only in
accordance with the terms and conditions of this Agreement.


    
      
         


      

      
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    ARTICLE
III

     

    RELEASE
OF COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS

     

    3.1.         Release of
Escrow.  Subject to the provisions of Section 4.2, the Escrow
Agent shall release the Company Documents and Subscriber Documents as
follows:

     

    (a)           On
the Closing Date, the Escrow Agent will simultaneously release the Company
Documents to the Subscribers and release the Subscriber Documents to the
Company, except that: (i) Subscriber Legal Fees will be released directly to the
Subscriber’s attorneys, (ii) the Collateral Agent Fee will be released to the
Collateral Agent as described in the Collateral Agent Agreement, and (iii) the
Security Agreement, Subsidiary Guaranty, Collateral Agent Agreement and Working
Interest Security Documents will also be released to the Collateral
Agent.

     

    (b)           Notwithstanding
the above, upon receipt by the Escrow Agent of joint written instructions
("Joint Instructions") signed by the Company and the Subscribers, it shall
deliver the Company Documents and Subscriber Documents in accordance with the
terms of the Joint Instructions.

     

    (c)           Anything
herein to the contrary notwithstanding, upon receipt by the Escrow Agent of a
final and non-appealable judgment, order, decree or award of a court of
competent jurisdiction (a "Court Order"), the Escrow Agent shall deliver the
Company Documents and Subscriber Documents in accordance with the Court
Order.  Any Court Order shall be accompanied by an opinion of counsel
for the party presenting the Court Order to the Escrow Agent (which opinion
shall be satisfactory to the Escrow Agent) to the effect that the court issuing
the Court Order has competent jurisdiction and that the Court Order is final and
non-appealable.

     

    3.2.           If
a Closing does not take place on or before September 30, 2009, the Escrow Agent
will promptly return the applicable Company Documents to the Company and return
the Subscriber Documents to the Subscriber.

     

    3.3.          
Acknowledgement of
Company and Subscriber; Disputes.  The Company and the
Subscribers acknowledge that the only terms and conditions upon which the
Company Documents and Subscriber Documents are to be released are set forth in
Sections 3 and 4 of this Agreement.  The Company and the Subscribers
reaffirm their agreement to abide by the terms and conditions of this Agreement
with respect to the release of the Company Documents and Subscriber
Documents.  Any dispute with respect to the release of the Company
Documents and Subscriber Documents shall be resolved pursuant to Section 4.2 or
by agreement between the Company and Subscribers.

     

    ARTICLE
IV

     

    CONCERNING
THE ESCROW AGENT

     

    4.1.        Duties and Responsibilities
of the Escrow Agent.  The Escrow Agent's duties and
responsibilities shall be subject to the following terms and
conditions:

     

    (a)           The
Subscribers and Company acknowledge and agree that the Escrow Agent (i) shall
not be responsible for or bound by, and shall not be required to inquire into
whether either the Subscribers or Company is entitled to receipt of the Company
Documents and Subscriber Documents pursuant to any other agreement or otherwise;
(ii) shall be obligated only for the performance of such duties as are
specifically assumed by the Escrow Agent pursuant to this Agreement; (iii) may
rely on and shall be protected in acting or refraining from acting upon any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith to be
genuine and to have been signed or presented by the proper person or party,
without being required to determine the authenticity or correctness of any fact
stated therein or the propriety or validity or the service thereof; (iv) may
assume that any person believed by the Escrow Agent in good faith to be
authorized to give notice or make any statement or execute any document in
connection with the provisions hereof is so authorized; (v) shall not be under
any duty to give the property held by Escrow Agent hereunder any greater degree
of care than Escrow Agent gives its own similar property; and (vi) may consult
counsel satisfactory to Escrow Agent, the opinion of such counsel to be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by Escrow Agent hereunder in good faith and in accordance with the
opinion of such counsel.


    
      
         


      

      
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    (b)           The
Subscribers and Company acknowledge that the Escrow Agent is acting solely as a
stakeholder at their request and that the Escrow Agent shall not be liable for
any action taken by Escrow Agent in good faith and believed by Escrow Agent to
be authorized or within the rights or powers conferred upon Escrow Agent by this
Agreement.  The Subscribers and Company, jointly and severally, agree
to indemnify and hold harmless the Escrow Agent and any of Escrow Agent's
partners, employees, agents and representatives for any action taken or omitted
to be taken by Escrow Agent or any of them hereunder, including the fees of
outside counsel and other costs and expenses of defending itself against any
claim or liability under this Agreement, except in the case of gross negligence
or willful misconduct on Escrow Agent's part committed in its capacity as Escrow
Agent under this Agreement.  The Escrow Agent shall owe a duty only to
the Subscribers and Company under this Agreement and to no other
person.

     

    (c)           The
Subscribers and Company jointly and severally agree to reimburse the Escrow
Agent for outside counsel fees, to the extent authorized hereunder and incurred
in connection with the performance of its duties and responsibilities
hereunder.

     

    (d)           The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five (5)
days prior written notice of resignation to the Subscribers and the
Company.  Prior to the effective date of the resignation as specified
in such notice, the Subscribers and Company will issue to the Escrow Agent a
Joint Instruction authorizing delivery of the Company Documents and Subscriber
Documents to a substitute Escrow Agent selected by the Subscribers and
Company.  If no successor Escrow Agent is named by the Subscribers and
Company, the Escrow Agent may apply to a court of competent jurisdiction in the
State of New York for appointment of a successor Escrow Agent, and to deposit
the Company Documents and Subscriber Documents with the clerk of any such
court.

     

    (e)           Other
than in connection with the Subscriber Legal Fees, the Escrow Agent does not
have and will not have any interest in the Company Documents and Subscriber
Documents, but is serving only as escrow agent, having only possession
thereof.  The Escrow Agent shall not be liable for any loss resulting
from the making or retention of any investment in accordance with this Escrow
Agreement.

     

    (f)           This
Agreement sets forth exclusively the duties of the Escrow Agent with respect to
any and all matters pertinent thereto and no implied duties or obligations shall
be read into this Agreement.

     

    (g)           The
Escrow Agent shall be permitted to act as counsel for the Subscribers in any
dispute as to the disposition of the Company Documents and Subscriber Documents,
in any other dispute between the Subscribers and Company, whether or not
the Escrow Agent is then holding the Company Documents and Subscriber Documents
and continues to act as the Escrow Agent hereunder.

     

    (h)           The
provisions of this Section 4.1 shall
survive the resignation of the Escrow Agent or the termination of this
Agreement.


    
      
         


      

      
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    4.2.        Dispute Resolution:
Judgments.  Resolution of disputes arising under this Agreement
shall be subject to the following terms and conditions:

     

    (a)           If
any dispute shall arise with respect to the delivery, ownership, right of
possession or disposition of the Company Documents and Subscriber Documents, or
if the Escrow Agent shall in good faith be uncertain as to its duties or rights
hereunder, the Escrow Agent shall be authorized, without liability to anyone, to
(i) refrain from taking any action other than to continue to hold the Company
Documents and Subscriber Documents pending receipt of a Joint Instruction from
the Subscribers and Company, or (ii) deposit the Company Documents and
Subscriber Documents with any court of competent jurisdiction in the State of
New York, in which event the Escrow Agent shall give written notice thereof to
the Subscribers and the Company and shall thereupon be relieved and discharged
from all further obligations pursuant to this Agreement.  The Escrow
Agent may, but shall be under no duty to, institute or defend any legal
proceedings which relate to the Company Documents and Subscriber
Documents.  The Escrow Agent shall have the right to retain counsel if
it becomes involved in any disagreement, dispute or litigation on account of
this Agreement or otherwise determines that it is necessary to consult
counsel.

     

    (b)           The
Escrow Agent is hereby expressly authorized to comply with and obey any Court
Order.  In case the Escrow Agent obeys or complies with a Court Order,
the Escrow Agent shall not be liable to the Subscribers and Company or to any
other person, firm, corporation or entity by reason of such
compliance.

     

    ARTICLE
V

     

    GENERAL
MATTERS

     

    5.1.        Termination.  This
escrow shall terminate upon the release of all of the Company Documents and
Subscriber Documents or at any time upon the agreement in writing of the
Subscribers and Company.

     

    5.2.        Notices.   All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first
occur.  The addresses for such communications shall be:

     

    (a)           If
to the Company, to:

    


    Mesa Energy Holdings, Inc.

    5220 Spring Valley Road, Suite
525

    Dallas, TX 75254

    Attn: Randy M. Griffin,
CEO

    Fax: (760) ___________


    
      
         


      

      
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    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

    


    (b)           If
to the Subscribers: to the addresses set forth on Schedule I

    


    With a copy by facsimile only
to:

     

    Grushko
& Mittman, P.C.

    551 Fifth
Avenue, Suite 1601

    New York,
New York 10176

    Fax:
212-697-3575

     

    
      	
              (c)

            	
              If
      to the Escrow Agent, to:

            


    

     

    Grushko
& Mittman, P.C.

    551 Fifth
Avenue, Suite 1601

    New York,
New York 10176

    Fax:
212-697-3575

     

    or to
such other address as any of them shall give to the others by notice made
pursuant to this Section
5.2.

     

    5.3.         Interest.  The
Escrowed Payment shall not be held in an interest bearing account nor will
interest be payable in connection therewith.  In the event the
Escrowed Payment is deposited in an interest bearing account, the Subscribers
shall be entitled to receive any accrued interest thereon, but only if the
Escrow Agent receives from the Subscriber the Subscribers’ United States
taxpayer identification number and other requested information and
forms.

     

    5.4.         Assignment; Binding
Agreement.  Neither this Agreement nor any right or obligation
hereunder shall be assignable by any party without the prior written consent of
the other parties hereto.  This Agreement shall enure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.

     

    5.5.         Invalidity.  In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.

     

    5.6.         Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by 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
transmission and delivered by facsimile transmission.


    
      
         


      

      
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    5.7.         Agreement.  Each
of the undersigned states that he has read the foregoing Escrow Agreement and
understands and agrees to it.

    


    “COMPANY”

    MESA
ENERGY HOLDINGS, INC.

    a
Delaware corporation

     

    
      
        	
                By:

              	
                /s/ Randy M.
      Griffin

              	 
      
	 
      	 
      	 
      
	
                Its:

              	
                Chief Executive Officer

              	 
      


      

    

     

    “SUBSCRIBERS”

     

    
      
        
          	
                      

                	 
      	
                      

                


        

      

    

     

     

    
      
        	 
      	
                ESCROW
      AGENT:

              
	 
      	 
      
	 
      	
                GRUSHKO
      & MITTMAN, P.C.

              
	 
      	 
      
	 
      	 
      
	 
      	
                By:

              	
                   

              
	 
      	 
      	
                Name:

              


      

    

     

    
      
         


      

      
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