Document:

Exhibit 10.3

 

AMENDED AND RESTATED PROMISSORY NOTE

 

	
  $3,000,000.00

  	
  December 3,
  2007

  

 

FOR VALUE
RECEIVED, MESA OFFSHORE TRUST, a trust formed under the laws of the State of
Texas and having an address at 919 Congress Avenue, Austin, Texas 78701, by and
through JPMORGAN CHASE BANK, N.A (as successor to Texas Commerce Bank National
Association), solely in its capacity as Trustee (in such capacity, the “Trustee”)
for MESA OFFSHORE TRUST (the “Borrower”) pursuant to the Royalty Trust
Indenture dated as of December 1, 1982 (the “Trust Indenture”), by
and between Mesa Petroleum Co., as Trustor, and the Trustee, promises to pay on
the Maturity Date (as defined below), to the order of  JPMORGAN CHASE BANK,
N.A.  (the “Lender”),
whose address is 1111 Polaris Parkway, Columbus, Ohio 43240, at said address or
such other address as may be designated in writing by the holder hereof from
time to time, the principal sum of  THREE
MILLION AND No/100 Dollars ($3,000,000.00), or, if less, the aggregate unpaid
principal amount of all loans (collectively, the “Loans”, and each a “Loan”)
made by the Lender to the Borrower, together with interest on said principal,
at a rate per annum equal to Prime Rate plus two percent (2%); provided, however, that in no event shall such rate exceed
the maximum legal rate of interest permitted by applicable law.  The Borrower promises to pay interest on the
unpaid principal amount of each Loan from the date such Loan is made until such
principal amount is paid in full, in arrears, at the interest rate specified
herein.  As used herein the term “Prime
Rate” means the rate of interest from time to time announced publicly by
the Lender at its principal office as its prime commercial lending rate, it
being understood that such rate is not necessarily the lowest or best rate
actually charged to any customer and that the Lender may make various
commercial or other loans at rates of interest having no relationship to such
rate.

 

This Amended
and Restated Promissory Note (the “Note”) evidences an extension of credit
for borrowed money authorized under Section 3.07 of the Trust Indenture,
and amends, restates, renews and extends the Demand Promissory Note dated September 28,
2007 executed by the Borrower to the order of the Lender (the “Original Note”).  On the date hereof, the outstanding principal
amount of Demand Loans, under and as defined in the Original Note, is ONE
MILLION SEVEN HUNDRED SEVENTY THOUSAND NINE HUNDRED SEVENTY SIX DOLLARS AND
SIXTY CENTS ($1,770,976.60), and all such Demand Loans shall be Loans
hereunder.  This Note shall have the
priority with regard to payments set forth in Section 3.07 of the Trust
Indenture, and the Borrower agrees to comply with Section 3.07 of the
Trust Indenture with regards to distributions to its unitholders.

 

The Borrower
may prepay all or any portion of the outstanding principal under this Note
together with accrued and unpaid interest on such principal, at any time
without premium or penalty; provided, however,
that any principal amount so repaid may not be reborrowed.

 

Except with
respect to interest on the principal amount of the Loans prepaid hereunder,
interest on the Loans shall be due and payable on the Maturity Date.  Interest on the outstanding principal as well
as the outstanding principal balance of the Loans shall be recorded by the
Lender on its books and records (which may be electronic in nature) and at any
time and 

 

1

 

from time to time and may be entered by the Lender on the schedule
attached or any continuation of the schedule attached hereto by the Lender; provided, however, at the discretion of the Lender, any
such entries may aggregate Loans (and payments thereon) with the same interest
rate and tenor and, if made on a given date, may show only the Loans
outstanding on such date.

 

Until the
Maturity Date has occurred and so long as no Event of Default exists, the
Borrower may obtain Loans under this Note; provided, however,
the amount of Loans made hereunder (without regard to any repayment or prepayment
thereof) shall not exceed $3,000,000.00. 
As used herein, the term “Event of Default” means the occurrence
of any one or more of the following events: (1) the Borrower fails to pay
any amount of principal or interest when due hereunder, (2) the Borrower
or the Trustee is declared insolvent or is the subject of any proceeding in
bankruptcy, (3) the sale of all or substantially all of the assets of Mesa
Offshore Royalty Partnership (the “Partnership”), and (4) the
commencement of any litigation (other than the Lawsuit, defined below,),
directly or indirectly, by any Trustee or any current Plaintiff or Intervenor
in the Lawsuit, defined below, including successors or assigns, against the
Lender in its individual capacity for any claim arising out of or relating to
the Mesa Offshore Trust.  As used herein,
the term “Maturity Date” means the earliest to occur of: (1) December 31,
2009 (the “Stated Maturity Date”), (2) the date that is thirty-one
(31) calendar days  after the
Borrower receives any settlement proceeds, recovery or judgment proceeds
arising out of Cause No. 2006-01984, MOSH Holding, L.P. et al.
(the “Plaintiffs and the Intervenors”) 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,
filed in the 334th District Court of Harris County, Texas (the “Lawsuit”),
(3) the final liquidation of the Borrower’s assets or the assets of the
Partnership, (4) except for the liens securing this Note or any contingent
fee agreement with an attorney, the Borrower grants or permits to exist any
mortgage, pledge or security interest in, or other encumbrance on, its assets
without the prior written consent of the Lender, (5) the occurrence of the
Approval Event (as defined below) and (6) the acceleration of the maturity
of this Note by the Lender as a result of the existence of an Event of Default.
As used herein, the term “Approval Event” means that the settlement
agreement and mutual release (the “Settlement”) between Trustee and the
Plaintiffs and Intervenors in the Lawsuit is not approved by the court in which
the Lawsuit is pending or any such approval of the Settlement is found improper
or unenforceable for any reason by any court.

 

If either (1) an
Event of Default exists or (2) the Maturity Date has occurred, the Lender
shall have no further obligation to advance any additional Loans to the
Borrower hereunder.

 

In the event
that the Lawsuit has not been resolved by settlement or final adjudication by December 31,
2009, and neither (1) an Event of Default exists nor (2) none of the
events referred to in clauses (2) through (6) of the definition of
Maturity Date has occurred, the Borrower may request an extension of the Stated
Maturity Date, and the Lender shall exercise its reasonable discretion in
considering such extension request.

 

In the event
the maturity of this Note may be brought about (whether by acceleration or
otherwise) and it is placed in the hands of an attorney for collection, or is
collected through probate, bankruptcy or other proceedings, the Borrower
promises to pay all 

 

2

 

reasonable amounts actually incurred by the Lender for court costs and
attorneys’ fees in connection therewith.

 

The Borrower
waives grace, notice, demand, presentment for payment, notice of non-payment,
protest, notice of protest, notice of intention to accelerate the indebtedness
due hereunder and all other notice, filing of suit and diligence in collecting
this Note, and the enforcing of any of the security rights of the Lender, and
consents and agrees that the time of payment hereof may be extended without
notice at any time and from time to time, and for periods of time, whether or
not for a term or terms in excess of the original term hereof, without notice
or consideration to, or consent from, the Borrower.  Time is of the essence hereof.

 

The
indebtedness evidenced by this Note, as an amendment, restatement,  renewal and extension of the Original Note,
and is secured by a pledge of the Trust Estate, as that term is defined in the
Trust Indenture, including, without limitation, the 99.99% general partnership
interest in the Mesa Offshore Royalty Partnership owned by the Mesa Offshore
Trust, pursuant to that one certain pledge agreement dated September 28,
2007, executed by the Borrower for the benefit of the Lender, as amended by the
First Amendment to Pledge Agreement dated 
the date hereof.

 

This Note is
not assignable or transferable.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

 

EXECUTED by
the parties hereto as of the date first written above.

 

 

	
   

  	
  MESA OFFSHORE TRUST,

  
	
   

  	
  a Texas trust

  
	
   

  	
   

  
	
   

  	
  By: The Bank of New York Trust Company, N.
  A.

  as attorney-in-fact for JPMORGAN CHASE

  BANK, N.A. Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   Mike
  Ulrich

  
	
   

  	
  Name: 

  	
   Mike
  Ulrich

  
	
   

  	
  Title:

  	
   Vice
  President

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  a national banking association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Karen May Sharf

  
	
   

  	
  Name: Karen May Sharf

  
	
   

  	
  Title: Vice President

  
				

 

3

 

LOANS AND PAYMENTS OF PRINCIPAL

 

	
  Date

  	
   

  	
  Amount of Loan

  	
   

  	
  Amount of

  Principal Paid

  or Prepaid

  	
   

  	
  Unpaid

  Principal

  Balance

  	
   

  	
  Notation Made

  By

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

4Exhibit 10.4

 

FIRST
AMENDMENT TO PLEDGE AGREEMENT

 

This
FIRST AMENDMENT TO PLEDGE AGREEMENT, dated as of November [  ], 2007 (this “Amendment”), is by and
between JPMORGAN 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 (“Pledgor”) and
JPMORGAN CHASE BANK, N.A., having an address at 1111 Polaris Parkway, Columbus,
Ohio 43240 (“Secured Party”).

 

RECITALS

 

A.            Pledgor
and Secured Party (collectively, the “Parties”) entered into the Pledge
Agreement, dated as of September 28, 2007 (the “Original Pledge
Agreement”; capitalized terms used but not defined in this Amendment have
the meanings ascribed to them in the Original Pledge Agreement, as amended
hereby).

 

B.            The
Parties entered into an Amended and Restated Promissory Note (the “Note”),
dated November [  ], 2007, that amends, restates, renews and extends the
Demand Promissory Note (the “Original Note”), dated September 28,
2007, executed by Pledgor to the order of Secured Party.

 

C.            The
Parties wish to provide for the amendment of certain provisions of the Original
Pledge Agreement, all on the terms and conditions set forth in this Amendment.

 

NOW, THEREFORE, in consideration
of the premises set forth above, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Parties hereto
hereby agree as follows:

 

1.1          AMENDMENT

 

1.1.1        Certain
Provisions.  The Parties hereby agree
to amend the Original Pledge Agreement as follows:

 

(a)           As used in the
Original Pledge Agreement, as amended hereby, the term “Note” shall have the
meaning given to such term in Recital B of this Amendment.

 

(b)           The definition of “Collateral”
in Section 1.1 (b) of the Original Pledge Agreement is hereby deleted
in its entirety and replaced with the following:

 

“All
assets that constitute the Trust Estate (as defined in the Indenture),
including, but not limited to the following:

 

(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 Pledgor (the“Additional
Collateral”);

 

(c)           all deposit accounts,
together with all of Pledgor’s right, title, and interest in and to all sums of
property (including cash equivalents and other investments) now or at any time
hereafter on deposit therein, credited thereto or payable thereon, and all
instruments, documents, and other writing evidencing such deposit accounts;

 

(d)           any consideration
received or due to Pledgor, including any settlement, resolution or judgment
obtained by or for the benefit of Pledgor, arising from or related to any
claims or choses in action owned by Pledgor, including claims that arise from
or relate to the Partnership, the assets of the Partnership, or the Pledged
Interests; and

 

(e)           all proceeds of any
and all of the foregoing.

 

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

 

(c)           The reference in Section 3.3(b) of
the Original Pledge Agreement to “Other Collateral” is hereby deleted in its
entirety  and replaced with the term “Additional
Collateral”, as such term is defined in Section 1.1.1(b)(b) of this
Amendment

 

(d)           Section 6.1 of the Original Pledge
Agreement is hereby deleted in its entirety and replaced with the following:

 

“In
addition to any other rights accorded to Secured Party hereunder, upon the
occurrence and during the continuance of any Event of Default or the maturity
of the Note has occurred by acceleration or otherwise:”

 

1.2          MISCELLANEOUS

 

1.2.1        Headings
Descriptive.  The headings of the
several sections and subsections of this Amendment are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Amendment.

 

2

 

1.2.2        Counterparts.  This Amendment may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.

 

1.2.3        Effect of Amendment.  The Original Pledge Agreement, as modified by
this Amendment, is hereby ratified and confirmed by Pledgor and Secured Party
in all respects and constitutes the legal, valid and binding obligation of the
Parties, enforceable against the Parties in accordance with its terms.

 

1.2.4        Governing
Law.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

 

[Signature pages follow]

 

3

 

IN WITNESS WHEREOF, the Parties have caused this
Amendment to be duly executed and delivered by their respective authorized
officers as of the date first written above.

 

	
   

  	
   

  	
  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

  	
   

  
								

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  SECURED
  PARTY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  JPMORGAN
  CHASE BANK, N.A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Karen May Sharf

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Karen
  May Sharf

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

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