Exhibit
10.2


 


PLEDGE AGREEMENT


 


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


RECITALS


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


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


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


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


1                                          DEFINITIONS


 


1.1                                 Certain Defined
Terms.


(a)                                  Each
capitalized term used and not otherwise defined herein shall have the meaning
assigned to such term in Note.


(b)                                 For purposes of
this Agreement, the following terms shall have the following meanings:


“Collateral”
shall mean:


(a)                                  all of the
issued and outstanding general partnership interests now or hereafter owned by
Pledgor in the Partnership, together with any cash or property received in
exchange or in substitution for such interests (the aforesaid general
partnership interests and any income, 


 





















 


proceeds,
cash or other property received in exchange or in substitution therefor is
hereinafter referred to as the “Pledged Interests”); all distributions
which may be made on, or distributed in consequence of the ownership of, the
Pledged Interests; and all investment property, financial assets, securities,
securities entitlements, instruments or distributions of any kind issuable,
issued or received upon conversion of, in respect of, or in exchange for the
Pledged Interests;


(b)                                 all investment
property, financial assets, securities, securities entitlements, equity
interests, subscriptions, warrants, options or other rights issued by the
Partnership, if any, which are now or hereafter owned by the Pledgor (the “Other
Collateral”); and


(c)                                  all proceeds of
any of the foregoing.


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


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


(d)                                 An occurrence
of an event of default as defined or referenced in Note, or in any agreement,
document or instrument incidental to or executed pursuant thereto, or as an
amendment or modification to, or in substitution therefor; or


(e)                                  A default in
the due performance or observance of any term, covenant or agreement required
to be performed or observed pursuant to this Agreement.


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


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


2                                          CREATION OF SECURITY INTEREST


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


 


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3                                          REPRESENTATIONS AND WARRANTIES OF PLEDGOR


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


3.1                                 The Collateral
is owned by the Trust as set forth on Exhibit A hereto and is free and
clear of any and all options, claims, security interests, liens, pledges and
encumbrances except those in favor of the Secured Party being granted hereby.


3.2                                 Pledgor has the
full power and legal authority to enter into this Agreement and to consummate
the transactions contemplated hereby (including the right and power to pledge
and transfer the Collateral), and this Agreement constitutes the authorized,
valid and legally binding obligation thereof enforceable in accordance with its
terms, except that the enforceability of the remedies set forth in this
Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws now or hereafter in effect affecting creditor’s rights
generally.


3.3                                 The Collateral
now constitutes and at all times shall constitute (a) all of the Pledged
Interests owned by the Trust and (b) all of the Other Collateral owned by
the Trust.


3.4                                 There are no
outstanding options, warrants or other rights to purchase, or contracts or
commitments to issue, or any interests, instruments or evidences of
indebtedness convertible in any manner into equity interests of the
Partnership.


3.5                                 The execution
and delivery of this Agreement, the consummation of the transactions provided
for herein, and the fulfillment of the terms hereof, will not result in the
breach of any of the terms, conditions or provisions of, or constitute a
default under, or conflict with, or cause any acceleration of any obligation
under, any agreement or other instrument to which Pledgor is a party or by
which it is bound, or any provision of the Partnership Agreement, as
applicable, or any judgment, decree, order or award of any court, governmental
body or arbitrator or any applicable law, rule or regulation.


3.6                                 No approvals of
any nature are required by any governmental or regulatory body in connection
with the pledge of the Collateral provided for herein and no such approvals are
required to be obtained by Pledgor in connection with the transfer of the
Collateral upon the exercise of Secured Party’s rights hereunder.


4                                          EXERCISE OF PLEDGOR’S RIGHTS


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


 


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


5                                          COVENANTS OF PLEDGOR


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


5.1                                 Pledgor shall
perform fully and timely its obligations, covenants and agreements hereunder
(including the performance of the Obligations).


5.2                                 Pledgor shall
execute and deliver, upon request of Secured Party, from time to time, such
financing statements, continuation statements, assignments, security agreements
and such other instruments or documents as Secured Party may request to
perfect, and to keep and continue perfected at all times, Secured Party’s
security interest in the Collateral.


5.3                                 Pledgor hereby
covenants and agrees with Secured Party that notwithstanding anything to the
contrary in the Partnership Agreement, any payments which would have been paid
to Pledgor pursuant to the Partnership Agreement or by law in connection with
any liquidation of the Partnership shall be paid to Secured Party and applied
to the repayment of the Obligations prior to being paid to Pledgor.


5.4                                 Pledgor shall
not permit the Partnership, except with the prior written consent of Secured
Party, to (a) issue any securities or interests of any kind or any
options, warrants or other rights entitling any person or entity to acquire any
member interests, (b) make any commitment to purchase, liquidate or
otherwise acquire any such securities or interests, (c) amend the
Partnership Agreement, or (d) authorize or cause any change in its capital
structure.


5.5                                 Pledgor shall
not transfer, sell, encumber or otherwise dispose of the Collateral, and shall
not create, assume or suffer to exist any security interest, lien, charge or
other encumbrance in favor of any individual or entity in, on or to any of the
Collateral, except as created hereunder.


 


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6                                          RIGHTS AND REMEDIES OF SECURED PARTY


6.1                                 In addition to
any other rights accorded to Secured Party hereunder, upon the occurrence and
during the continuance of any Event of Default:


6.1.1                        Secured Party
shall be entitled to receive any cash distributions or payments on the
Collateral and to exercise in Secured Party’s discretion all rights pertaining
to the Collateral.


6.1.2                        Secured Party
shall have the right to exercise all rights with respect to the Collateral as
if it were the sole and absolute owner thereof, including, without limitation,
to exercise decision-making or consent rights with respect to and/or to
exchange, at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or other
readjustment concerning or involving the Collateral or Pledgor.


6.1.3                        Pledgor shall
take any action necessary or required or requested by Secured Party in order to
allow Secured Party fully to enforce its security interest in the Collateral
hereunder and to realize thereon to the fullest extent possible, including, but
not limited to, the filing of any claims with any court, liquidator, trustee,
guardian, receiver or other like person or party.


6.1.4                        Secured Party
shall have all of the rights of a secured party under the Uniform Commercial
Code of the State of Texas, as amended, and any other applicable law including
the right to sell any or all of the Collateral at one or more public or private
sales upon at least ten (10) days’ written notice to Pledgor (at the address
set forth in or designated pursuant to Section 11.1 hereof) of the time
and place of any public sale and of the date on which the Collateral will first
be offered for sale in the case of any private sale and to bid thereat or
purchase any part or all thereof in its own or a nominee’s name, free and clear
of any equity of redemption; and to apply the net proceeds of the sale, after
deduction for any costs and expenses of sale (including any liabilities
incurred in connection therewith) including reasonable attorneys’ fees, to the
payment of the Obligations in any manner or order which Secured Party, in its
sole discretion, may elect, to the payment of any other amount required by law,
and to pay any remaining net proceeds (if any) to Pledgor or its successors or
assigns or to whomsoever may lawfully be entitled to receive the same or as a
court of competent jurisdiction may direct, without further notice to or
consent of Pledgor and without regard to any equitable principles of
marshalling or other like equitable doctrines. 
Pledgor hereby acknowledges and agrees that the notice provided for
above is reasonable.  Pledgor hereby
waives any rights it may have of equity, redemption, stay or appraisal with
respect to the Collateral.


 


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6.2                                 In the event
that after the occurrence and during the continuance of any Event of Default,
the Secured Party shall sell all or any of the Collateral to another party or
parties (herein called “Purchaser”) or shall purchase all or any of the
Collateral or retain the Collateral pursuant to its rights so to do, Pledgor
shall use its best efforts to:


(i)                                     Deliver to the
Secured Party or Purchaser, as the case may be, the books of account, deeds,
leases, indentures, agreements, evidences of indebtedness and financial records
and all other documents and records of the Partnership;


(ii)                                  Obtain
resignations of the persons then serving as officers or managers, if any, of
the Partnership; and


(iii)                               Use all
reasonable efforts to obtain any approvals (other than for a registration under
federal or state securities laws) that are required by any governmental or
regulatory body, if any, in order to permit the sale of the Collateral to the Purchaser
and allow Purchaser to continue the business of the Partnership.


6.3                                 To induce
Secured Party to enter into the Note, Pledgor agrees that in the event Pledgor
becomes the debtor in a bankruptcy proceeding, receivership, or similar
proceeding:


(a)                                  Secured Party
shall be entitled to seek immediate relief from any stay in order that Secured
Party may exercise its rights and remedies with respect to the Collateral.


(b)                                 Pledgor admits
that the Collateral is not necessary to a plan of reorganization or liquidation,
and that Secured Party may not have adequate protection absent foreclosure and
the exercise of Secured Party’s other remedies as to the Collateral.


(c)                                  Pledgor agrees
that the rights, powers and remedies given to Secured Party under this Agreement
and the Note  are cumulative and not exclusive
of any thereof or of any other powers, rights or remedies available to Secured
Party.


7                                          POWER OF ATTORNEY


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


8                                          DELAY AND NON-WAIVER


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


9                                          OBLIGATION OF PLEDGOR UNCONDITIONAL


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


 


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


10                                    TERMINATION OF SECURITY INTEREST


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


11                                    MISCELLANEOUS PROVISIONS


11.1                           Notices


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


If
to Secured Party:


                                                JP Morgan Chase
Bank, N.A.


                                                4 New York
Plaza — Floor 15


New Yew, New York 10004-2413


                                                Attention:
Thomas J. Foley


 


If
to Pledgor:


                                                Mesa Offshore
Trust


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


                                                919 Congress
Avenue


                                                Suite 500


                                                Austin, Texas
78701


                                                United States
of America


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


 


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With
copies to:


David
C. Buck 

Andrews Kurth LLP

600 Travis Street, Suite 4200

Houston, Texas 77002


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


11.2                           Successors and
Assigns


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


11.3                           Entire
Agreement


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


11.4                           Governing Law


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


11.5                           Consent to
Jurisdiction Service and Venue


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


 


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


11.6                           WAIVER OF JURY
TRIAL


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


11.7                           Severability


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


11.8                           Counterparts


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


 


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


	
   

  	
  PLEDGOR:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MESA OFFSHORE TRUST, a
  Texas trust

  
	
   

  	
   

  
	
   

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

  
	
   

  
	
   

  	
  By:

  	
  /s/ Mike Ulrich

  
	
   

  	
  Name:

  	
  Mike Ulrich

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


Signature
Page to Pledge Agreement


 

















 


	
   

  	
  SECURED PARTY:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JP MORGAN CHASE BANK, N.A.

  
	
   

  	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ Paul Zink

  
	
   

  	
  Name:

  	
  Paul Zink

  
	
   

  	
  Title:

  	
  Vice President

  
				



 


Signature Page to Pledge
Agreement


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EXHIBIT
A


Ownership
of Collateral


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