Document:

exhibit_4-5.htm

    
 

    
      

      

    

    
 EXHIBIT 4.5

    OVERHILL
FARMS, INC.

     

    AMENDED
AND RESTATED 2002 EMPLOYEE STOCK OPTION PLAN

     

    STOCK
OPTION AGREEMENT

     

        Unless
otherwise defined herein, the terms defined in the Amended and Restated 2002
Employee Stock Option Plan of Overhill Farms, Inc. (“Plan”) shall have the
same defined meanings in this Stock Option Agreement (“Option
Agreement”).

    

    
      	
              I.

            	
              NOTICE
      OF GRANT OF STOCK PURCHASE RIGHT

            

    

    

    
      	 
      	
              Name:

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              Address:

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

     

        The
undersigned Optionee has been granted an Option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:

    

    
      	 
      	
              Grant
      Number

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              Date
      of Grant

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              Exercise
      Price per Share

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              Total
      Number of Shares

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              Total
      Exercise Price

            	 
      	 
      	 
      

    

    

    
      	 
      	
              Type
      of Option:

            	 
      	 
      	 
      	
              Incentive
      Stock Option

            
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	
              Nonqualified
      Stock Option

            

    

    

    
      	 
      	
              Term/Expiration
      Date:

            	 
      	 
      

    

     

        Vesting
Schedule:

     

        Subject to
the terms and conditions of the Plan, this Option shall vest and become
exercisable according to the following schedule:

     

        [insert
vesting schedule].

    
      
         

      

      
         

        
          

        

      

      
         

      

    

        Termination
Period:

     

        Any
unexercised portion of this Option shall automatically and without notice
terminate and become null and void, after the earliest to occur of the
following:

     

                (a) six (6) months
following the death or Disability of the Optionee;

     

                (b) thirty (30) days
following the date on which the Optionee ceases to be an Eligible Person for any
reason other than death, Disability, or 

        termination
for Cause; or

     

                (c) immediately upon
the termination of an Optionee as an Eligible Person for Cause.

     

        In no event,
however, shall the periods described above extend beyond the Term/Expiration
Date provided above or beyond the expiration of ten (10) years from the Date of
Grant.

    

    
      
        	
                II.

              	
                AGREEMENT

              

      

    

    

        1.  Grant of Option. The
Committee (or the Disinterested Committee, if applicable) hereby grants to the
Optionee named in the Notice of Grant (the “Optionee”), an option
(this “Option”)
to purchase the number of Shares set forth in the Notice of Grant, at the
exercise price per Share set forth in the Notice of Grant (the “Exercise Price”), and
subject to the terms and conditions of the Plan, which is incorporated herein by
reference, and this Option Agreement. In the event of a conflict between the
terms and conditions of the Plan and this Option Agreement, the terms and
conditions of the Plan shall prevail.

     

        If designated
in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422
of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of
Code Section 422(d), this Option shall be treated as a Nonqualified Stock Option
(“NSO”).

     

        2.      Exercise of
Option.

     

                (a) Right to Exercise. This Option
shall vest and become exercisable during its term in accordance with the Vesting
Schedule set out in the Notice of Grant and with the applicable provisions of
the Plan and this Option Agreement.

     

                (b) Method of Exercise. This Option
shall be exercisable by delivery of an exercise notice in the form attached as
Exhibit A
(the “Exercise
Notice”), which shall state the election to exercise this Option, the
number of Shares with respect to which this Option is being exercised (“Exercised Shares”),
and such other representations and agreements as may be required by the Company.
The Exercise Notice shall be accompanied by payment of the aggregate Exercise
Price as to all Exercised Shares. This Option shall be deemed to be exercised
when (i) the Company has received a fully executed Exercise Notice, (ii) full
payment of the aggregate Exercise Price for the Exercised Shares has been made,
and (iii) arrangements that are satisfactory to the Committee (or the
Disinterested Committee, if applicable) in its sole discretion

    
      
        
          
            	
                     

                  	
                    -2-

                  	 
      	 
      

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

     

     have
been made for the Optionee’s payment to the Company of the amount, if any, that
the Committee (or the Disinterested Committee, if applicable) determines to be
necessary for the Company or a Subsidiary to withhold in accordance with
applicable federal or state income tax withholding requirements.

     

        No Shares
shall be issued pursuant to the exercise of an Option unless the issuance and
the exercise complies with all applicable laws, as determined by the Committee
(or the Disinterested Committee, if applicable) in its sole discretion. Assuming
such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to the Shares.

     

        3.      Optionee’s
Representations.  If the issuance of the Shares is not
registered under the Securities Act of 1933 (“Securities Act”) at
the time this Option is exercised, then the Optionee shall, if requested by the
Company, deliver to the Company his or her Investment Representation Statement
in the form attached hereto as Exhibit
B.

     

        4.     
Method of Payment.
Payment of the aggregate Exercise Price shall be by any of the following, or a
combination thereof, at the election of the Optionee:

     

                (a)
cash;

     

                (b) certified or
cashier’s check payable to the order of the Company;

     

                (c) other Shares
which have a Fair Market Value on the date of surrender equal to the aggregate
Exercise Price of the Shares as to which 

        this Option
will be exercised; or

     

                (d) any other
consideration and method of payment for the issuance of Shares to the extent
permitted by applicable laws and authorized by 

        the Committee
(or the Disinterested Committee, if applicable).

     

        5.     
Restrictions on Exercise.
This Option may not be exercised until such time as the Plan has been approved
by the stockholders of the Company, or if the issuance of the Shares upon
exercise or the method of payment of consideration for the Shares would
constitute a violation of any applicable law.

     

        6.     
Non-Transferability of
Option. This Option may not be transferred in any manner otherwise
than by will or by the laws of descent or distribution and may be exercised
during the lifetime of Optionee only by Optionee or his guardian or legal
representative. The terms of the Plan and this Option Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.

     

        7.     
Term of Option. This
Option may be exercised only within the term set out in the Notice of Grant, and
may be exercised during such term only in accordance with the Plan and the terms
of this Option Agreement.

    
      
        
          
            	
                     

                  	
                    -3-

                  	 
      	 
      

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

        8.      Tax
Obligations.

     

                (a) Withholding Taxes. The Optionee
agrees to make appropriate arrangements with the Company (or the Subsidiary
employing or retaining Optionee) for the satisfaction of all federal, state,
local and foreign income and employment tax withholding requirements applicable
to the Option exercise. The Optionee acknowledges and agrees that the Company
may refuse to honor the exercise and refuse to deliver Shares if the withholding
amounts are not delivered at the time of exercise.

     

                (b) Notice of Disqualifying Disposition of ISO
Shares. If this Option is an ISO, and if the Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (i) the date two (2) years after the Date of Grant, or
(ii) the date one (1) year after the date of exercise, the Optionee shall
immediately notify the Company in writing of the disposition. The Optionee
agrees that the Optionee may be subject to income tax withholding by the Company
on the compensation income recognized by the Optionee.

     

        9.     
Entire Agreement. The
Plan is incorporated herein by reference. The Plan and this Option Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by
means of a writing signed by the Company and the Optionee.

     

        10.   Governing Law. The corporate
laws of the State of Nevada shall govern all issues concerning the relative
rights of the Company and its security holders under this Stock Option
Agreement. All other questions and obligations under this Option Agreement shall
be construed and enforced in accordance with the internal laws of the State of
California, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of California or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of California. In any action, dispute, litigation or other proceeding
concerning this Option Agreement (including arbitration), exclusive jurisdiction
shall be with the courts of California, with the County of Los Angeles being the
sole venue for the bringing of the action or proceeding.

     

        11.   
No Guarantee of Continued
Service. THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF
SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS
AN ELIGIBLE PERSON AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). THE OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN ELIGIBLE
PERSON FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH THE OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO
TERMINATE THE OPTIONEE’S RELATIONSHIP AS AN ELIGIBLE PERSON AT ANY TIME, WITH OR
WITHOUT CAUSE.

    
      
        
          
            	
                     

                  	
                    -4-

                  	 
      	 
      

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

        The Optionee
acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof. The Optionee has reviewed
the Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of this Option. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Committee (or the
Disinterested Committee, if applicable) upon any questions arising under the
Plan or this Option. The Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

        

        IN WITNESS
WHEREOF, the Company has caused this Option Agreement to be duly executed by its
officer thereunto duly authorized, and the Optionee has hereunto set his or her
hand, on the respective dates set forth below, to memorialize the grant of the
Option that occurred as of the Date of Grant set forth in the above Notice of
Grant.

    

    
      	
              OPTIONEE

            	 
      	
              OVERHILL
      FARMS, INC.

            

    

    

    
      
        
          	 
      	 
      	
                  By:

                	 
      
	
                  Signature

                	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
                  Title:

                	 
      
	
                  Print
      Name

                	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
                  Date:

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                  Residence
      Address

                	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                  Social
      Security Number/Taxpayer ID

                	 
      	 
      	 
      

        

      

    

    

    

    
      	
              Date:

            	 
      	 
      

    

    

    

    

    
      
        
          
            	
                     

                  	
                    -5-

                  	 
      	 
      

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    AMENDED
AND RESTATED 2002 EMPLOYEE STOCK OPTION PLAN

     

    EXERCISE
NOTICE

    

    Overhill
Farms, Inc.

    2727 East
Vernon Avenue

    Vernon,
California 90058

    Attention:
Corporate Secretary

     

        1.  Exercise of Option.
The undersigned (“Optionee”) hereby
elects to exercise Optionee’s option (the “Option”) by
purchasing _________ shares of the common stock (the “Shares”) of Overhill
Farms, Inc. (the “Company”) under and
pursuant to the Amended and Restated 2002 Employee Stock Option Plan (the
“Plan”) and the
Stock Option Agreement dated ____________, 20___ (the “Option Agreement”).
Capitalized terms not otherwise defined in this Exercise Notice shall have the
meanings ascribed thereto in the Option Agreement.

     

        2.  Delivery of Payment.
Optionee herewith delivers to the Company the full purchase price of the Shares,
as set forth in the Option Agreement, and any and all withholding taxes due in
connection with the exercise of the Option.

     

        3.  Representations of
Optionee. Optionee acknowledges that Optionee has received, read and
understood the Plan and the Option Agreement and agrees to abide by and be bound
by their terms and conditions.

     

        4.  Rights as
Stockholder. Until the issuance of the Shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the Shares subject to the Option,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised in accordance with
the Option Agreement. No adjustment shall be made for a dividend or other right
for which the record date is prior to the date of issuance except as provided in
the Plan.

     

        5.  Tax Consultation.
Optionee understands that Optionee may suffer adverse tax consequences as a
result of Optionee’s purchase or disposition of the Shares. Optionee represents
that Optionee has consulted with any tax consultants Optionee deems advisable in
connection with the purchase or disposition of the Shares and that Optionee is
not relying on the Company for any tax advice.

     

        6.  Successors and
Assigns. The Company may assign any of its rights under this Exercise
Notice to single or multiple assignees, and this Exercise Notice shall inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Exercise Notice shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.

    
      
        
          
            	
                     

                  	
                    A-1

                  	 
      	 
      

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

     

        7.  Interpretation. Any
dispute regarding the interpretation of this Exercise Notice shall be submitted
by Optionee or by the Company forthwith to the Committee (or the Disinterested
Committee, if applicable), which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee (or the Disinterested
Committee, if applicable) shall be final and binding on all
parties.

     

        8.  Governing Law;
Severability. The corporate laws of the State of Nevada shall govern all
issues concerning the relative rights of the Company and its security holders
under this Exercise Notice. All other questions and obligations under this
Exercise Notice shall be construed and enforced in accordance with the internal
laws of the State of California, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of California or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California. In any action, dispute,
litigation or other proceeding concerning this Exercise Notice (including
arbitration), exclusive jurisdiction shall be with the courts of California,
with the County of Los Angeles being the sole venue for the bringing of the
action or proceeding. If any provision hereof becomes or is declared by a court
of competent jurisdiction to be illegal, unenforceable or void, this Exercise
Notice will continue in full force and effect.

     

        9.  Entire Agreement. The
Plan and the Option Agreement are incorporated herein by reference. This
Exercise Notice, the Plan and the Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee’s interest, or modified by the Optionee, except by
means of a writing signed by the Company and Optionee.

    

    
      	
              Submitted
      by:

            	 
      	
              Accepted
      by:

            
	
              OPTIONEE

            	 
      	
              OVERHILL
      FARMS, INC.

            

    

    

    
      	 
      	 
      	
              By:

            	 
      
	
              Signature

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              Title:

            	 
      
	
              Print
      Name

            	 
      	 
      	 
      

    

    

    
      
        
          	
                  Address:

                	 
      	
                  Address:

                
	 
      	 
      	 
      
	 
      	 
      	
                  2727
      East Vernon Avenue

                
	 
      	 
      	
                  Vernon,
      California 90058

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                  Date
      Received

                

        

      

    

    

    

    
      
        
          
            	
                     

                  	
                    A-2

                  	 
      	 
      

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
B

     

    AMENDED
AND RESTATED 2002 EMPLOYEE STOCK OPTION PLAN

     

    INVESTMENT
REPRESENTATION STATEMENT

     

    
      	
              OPTIONEE:

            	 
      	 
      
	 
      	 
      	 
      
	
              COMPANY:

            	 
      	
              OVERHILL
      FARMS, INC.

            
	 
      	 
      	 
      
	
              SECURITY:

            	 
      	
              COMMON
      STOCK

            
	 
      	 
      	 
      
	
              AMOUNT:

            	 
      	 
      

    

     

        In connection
with the purchase of the above-referenced Securities, the undersigned Optionee
represents to the Company as follows:

     

        (a) Optionee
is aware of the Company’s business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. Optionee is acquiring these
Securities for investment for Optionee’s own account only and not with a view
to, or for resale in connection with, any “distribution” thereof within the
meaning of the Securities Act of 1933 (the “Securities
Act”).

     

        (b) Optionee
acknowledges and understands that the Securities constitute “restricted
securities” under the Securities Act and have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of Optionee’s investment
intent as expressed herein. In this connection, Optionee understands that, in
the view of the Securities and Exchange Commission, the statutory basis for the
exemption may be unavailable if Optionee’s representation was predicated solely
upon a present intention to hold these Securities for the minimum capital gains
period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
six (6) months, one (1) year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities may be imprinted with
any legend required under applicable federal or state securities
laws.

     

        (c) Optionee
is familiar with the provisions of Rule 144 promulgated under the
Securities Act, which, in substance, permits limited public resale of
“restricted securities” acquired, directly or indirectly from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.

     

        (d) Optionee
further understands that if all of the applicable requirements of Rule 144
are not satisfied, registration under the Securities Act or some other
registration exemption will be

    
      
        
          
            	
                     

                  	
                    B-1

                  	 
      	 
      

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

     

     required;
and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the Securities and Exchange Commission has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for the offers or sales, and that persons and their respective
brokers who participate in these transactions do so at their own risk. Optionee
understands that no assurances can be given that any other registration
exemption will be available in that event.

    

    
      
        	 
      	
                Signature
      of Optionee:

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                Date:                                                                            
      , 20    
      

              

      

    

    

     

    

    
      
        
          
            	
                     

                  	
                    B-2Exhibit 10.1

 

Final Settlement Agreement

 

A.                                    Background
and Parties

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

B.                                    Consideration

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

C.                                    Conditions
Precedent

 

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

 

6

 

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

 

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

 

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

 

D.                                    Liquidation
and Funding Process

 

1.                                       Sale
of Partnership Assets and Pioneer Settlement Interests:

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

E.                                      Miscellaneous
Terms

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Executed by

  	
  /s/ William F. Hannes

  	
   

  
	
  Printed

  	
  William F. Hannes

  	
   

  
	
  Date

  	
  May 18,
  2009

  	
   

  

 

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

 

11

 

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

 

	
  Executed by

  	
  /s/ Timothy M. Roberson

  	
   

  
	
  Printed

  	
  Timothy M.
  Roberson

  	
   

  
	
  Date

  	
  May 18,
  2009

  	
   

  

 

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

 

	
  Executed by

  	
  /s/ Loyd W. Powell, Jr.

  	
   

  
	
  Printed

  	
  Loyd W.
  Powell, Jr.

  	
   

  
	
  Date

  	
  May 18,
  2009

  	
   

  

 

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

 

	
  Executed by

  	
  /s/ T.J. Foley

  	
   

  
	
  Printed

  	
  T.J. Foley

  	
   

  
	
  Date

  	
  May 18, 2009

  	
   

  

 

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

 

	
  Executed by

  	
  /s/ Richard O’Loughlin

  	
   

  
	
  Printed

  	
  Richard O’Loughlin

  	
   

  
	
  Date

  	
  May 18, 2009

  	
   

  

 

On behalf of Woodside Energy (USA) Inc.

 

12

 

Exhibit A-1

 

This Assignment and Bill of Sale contains provisions requiring one
party to be responsible

for the negligence, strict liability or other fault of the other party.

 

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

 

ASSIGNMENT AND BILL OF SALE

(West Delta)

 

	
  OFFSHORE
  LOUISIANA

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PARISH
  OF PLAQUEMINES

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  STATE
  OF LOUISIANA

  	
  §

  	
   

  

 

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

 

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

 

I.

 

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

 

 

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

 

II.

 

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

 

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

 

2

 

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

 

III.

 

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

 

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

 

3

 

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

 

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

 

IV.

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

7

 

V.

 

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

 

VI.

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

[REMAINDER
OF PAGE LEFT BLANK]

 

 

	
   

  	
   

  	
  ASSIGNOR:

  
	
  WITNESSES:

  	
   

  	
  Pioneer Natural Resources USA, Inc., individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  William F.
  Hannes

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President

  
	
  Print Name:

  	
   

  	
   

  	
  Business
  Development

  

 

11

 

	
   

  	
   

  	
  ASSIGNOR:

  
	
  WITNESSES:

  	
   

  	
  Mesa Offshore Royalty Partnership

  
	
   

  	
   

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

  
	
   

  	
   

  	
  Managing General Partner

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  William F.
  Hannes

  
	
  Print Name:

  	
   

  	
  Executive Vice
  President

  
	
   

  	
   

  	
  Business
  Development

  

 

 

ACKNOWLEDGMENT

 

 

	
  STATE
  OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY
  OF DALLAS

  	
  §

  

 

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

 

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

 

	
   

  	
   

  
	
   

  	
  Notary
  Public, State of Texas

  
	
   

  	
  My
  Commission expires on

  

 

12

 

ACKNOWLEDGMENT

 

	
  STATE
  OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY
  OF DALLAS

  	
  §

  

 

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

 

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

 

	
   

  	
   

  
	
   

  	
  Notary
  Public, State of Texas

  
	
   

  	
  My
  Commission expires on

  

 

13

 

SIGNATURE
PAGE OF ASSIGNEE

 

 

	
   

  	
   

  	
  ASSIGNEE:

  
	
  WITNESSES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

ACKNOWLEDGMENT

 

	
  STATE
  OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY
  OF

  	
  §

  

 

 

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

 

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

 

	
   

  	
   

  
	
   

  	
  Notary
  Public, State of Texas

  
	
   

  	
  My
  Commission expires on

  

 

14

 

EXHIBIT “A”

 

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

 

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

 

 

EXHIBIT “B”

 

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

 

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

 

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

 

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

 

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

 

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

 

 

Exhibit A-2

 

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

 

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

 

ASSIGNMENT AND BILL OF SALE

(Brazos
A-39)

 

OFFSHORE TEXAS

 

	
  COUNTY OF MATAGORDA

  	
  §

  
	
   

  	
  §

  
	
  STATE OF TEXAS

  	
  §

  

 

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

 

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

 

I.

 

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

 

 

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

 

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

 

2

 

II.

 

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

 

III.

 

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

 

3

 

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

 

4

 

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

 

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

 

IV.

 

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

 

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

 

5

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

9

 

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

 

V.

 

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

 

VI.

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

14

 

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

 

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

 

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

 

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

 

 

	
   

  	
   

  	
  ASSIGNOR:

  
	
  WITNESSES:

  	
   

  	
  Pioneer
  Natural Resources USA, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Print Name:

  	
   

  	
   

  	
  William
  F. Hannes 

  
	
   

  	
   

  	
   

  	
  Executive
  Vice President 

  
	
   

  	
   

  	
   

  	
  Business
  Development

  
	
  Print Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ASSIGNOR:

  
	
  WITNESSES:

  	
   

  	
  Mesa
  Offshore Royalty Partnership 

  
	
   

  	
   

  	
  by:
  Pioneer Natural Resources USA, Inc.,

  
	
   

  	
   

  	
  in
  its capacity as Managing General Partner 

  
	
  Print Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
   

  
	
   

  	
   

  	
   

  	
  William
  F. Hannes 

  
	
  Print Name:

  	
   

  	
   

  	
  Executive
  Vice President 

  
	
   

  	
   

  	
   

  	
  Business
  Development

  

 

15

 

ACKNOWLEDGMENT

 

	
  STATE
  OF TEXAS

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY
  OF DALLAS

  	
   

  	
  §

  

 

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

 

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

 

 

	
   

  	
   

  
	
   

  	
  Notary
  Public, State of Texas

  
	
   

  	
  My
  Commission expires on
                                                              

  

 

	
  STATE
  OF TEXAS

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY
  OF DALLAS

  	
   

  	
  §

  

 

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

 

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

 

 

	
   

  	
   

  
	
   

  	
  Notary
  Public, State of Texas

  
	
   

  	
  My
  Commission expires on
                                                              

  

 

16

 

SIGNATURE PAGE OF ASSIGNEE

 

	
  WITNESSES:

  	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

ACKNOWLEDGMENT

 

 

	
  STATE
  OF TEXAS

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY
  OF                

  	
   

  	
  §

  

 

 

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

 

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

 

 

	
   

  	
   

  
	
   

  	
  Notary
  Public, State of Texas

  
	
   

  	
  My
  Commission expires on
                                                              

  

 

17

 

EXHIBIT “A”

 

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

 

PART I

 

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

 

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

 

NONE

 

PART II

 

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

 

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

 

 

EXHIBIT “B”

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

 

Exhibit B

 

NO. 2006-01984

 

	
  MOSH HOLDING, L.P., and DAGGER-

  	
  §

  	
  IN THE DISTRICT COURT

  
	
  SPINE HEDGEHOG CORPORATION,

  	
  §

  	
   

  
	
  Plaintiffs,

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  v.

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  PIONEER NATURAL RESOURCES

  	
  §

  	
  HARRIS COUNTY, TEXAS

  
	
  COMPANY; PIONEER NATURAL

  	
  §

  	
   

  
	
  RESOURCES USA, INC.; WOODSIDE

  	
  §

  	
   

  
	
  ENERGY (USA) INC.; AND

  	
  §

  	
   

  
	
  JPMORGAN CHASE BANK, N.A.

  	
  §

  	
   

  
	
  AS TRUSTEE OF THE

  	
  §

  	
   

  
	
  MESA OFFSHORE TRUST,

  	
  §

  	
   

  
	
  Defendants

  	
  §

  	
  334th JUDICIAL DISTRICT

  

 

FINAL AGREED JUDGMENT

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

Each
party shall bear its own costs.

 

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

 

Signed
on                                                ,
2009.

 

 

	
   

  	
   

  
	
   

  	
  The
  Honorable Sharon McCally

  

 

 

APPROVED
AS TO FORM AND SUBSTANCE:

 

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

 

THE KIM LAW FIRM

 

 

	
   

  	
   

  
	
  John H. Kim

  	
   

  
	
  State Bar No. 00784393

  	
   

  
	
  The Kim Law Firm

  	
   

  
	
  4309 Yoakum Boulevard, Suite 2000

  	
   

  
	
  Houston, Texas 77006

  	
   

  
	
  (713) 522-1177

  	
   

  
	
  (888) 809-6793 Fax

  	
   

  
	
   

  	
   

  
	
  SPAGNOLETTI &
  CO.

  	
   

  
	
  Francis I. Spagnoletti

  	
   

  
	
  State Bar No. 18869600

  	
   

  
	
  David S. Toy

  	
   

  
	
  State Bar
  No. 24048029

  	
   

  
	
  Spagnoletti & Co.

  	
   

  
	
  917 Franklin, 6th Floor

  	
   

  
	
  Houston, Texas 77002

  	
   

  
	
  (713) 653-5600

  	
   

  
	
  (713) 653-5656 Fax

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Charles A. Sharman

  	
   

  
	
  State Bar No. 18114440

  	
   

  

 

5

 

6575 West Loop South, Suite 455

Bellaire TX 77401

(713) 655-1195

(713) 655-1197 Fax

 

THE BUZBEE LAW FIRM

Anthony G. 
Buzbee

600 Travis Street, Suite 7800

Houston, Texas 77002

 

ATTORNEYS FOR
PLAINTIFF-INTERVENOR,

DAGGER-SPINE HEDGEHOG CORPORATION

 

BOYER & KETCHAND

 

 

	
   

  	
   

  
	
  Robert L. Ketchand

  	
   

  
	
  State Bar No. 11362500

  	
   

  
	
  Constance O’Doherty Barnes

  	
   

  
	
  State Bar No. 01763200

  	
   

  
	
  Boyer & Ketchand

  	
   

  
	
  Nine Greenway Plaza, Suite 3100

  	
   

  
	
  Houston, Texas 77046

  	
   

  
	
  (713) 871-2025

  	
   

  
	
  (713) 871-2024 Fax

  	
   

  
	
   

  	
   

  
	
  MELVYN L. DOUGLAS P.C.

  	
   

  
	
  Melvyn L. Douglas

  	
   

  
	
  Melvyn L. Douglas P.C.

  	
   

  
	
  5500 Preston Road, Suite 393

  	
   

  
	
  Dallas, Texas 75205-2676

  	
   

  
	
  (214) 520-1300

  	
   

  
	
  (214) 520-6422 Fax

  	
   

  

 

6

 

ATTORNEYS
FOR PIONEER NATURAL RESOURCES COMPANY

&
PIONEER NATURAL RESOURCES USA, INC.:

 

GIBBS & BRUNS, L.L.P.

 

 

	
   

  	
   

  
	
  Robin C. Gibbs

  	
   

  
	
  State Bar No. 07853000

  	
   

  
	
  Grant J. Harvey

  	
   

  
	
  State Bar No. 09177700

  	
   

  
	
  Jennifer Horan Greer

  	
   

  
	
  State Bar No. 00785611

  	
   

  
	
  Sam W. Cruse III

  	
   

  
	
  State Bar No. 24036423

  	
   

  
	
  GIBBS & BRUNS, L.L.P.

  	
   

  
	
  1100 Louisiana, Suite 5300

  	
   

  
	
  Houston, Texas 77002

  	
   

  
	
  (713) 751-5217

  	
   

  
	
  (713) 650-8805 (Facsimile)

  	
   

  
	
   

  	
   

  
	
  LAW OFFICE OF ANDREW
  MCCOLLAM

  	
   

  
	
  Andrew McCollam, III

  	
   

  
	
  State Bar No. 13431812

  	
   

  
	
  Law Office of Andrew McCollam

  	
   

  
	
  2777 Allen Parkway, Suite 977

  	
   

  
	
  Houston, TX 77019

  	
   

  
	
  (713) 640-5020

  	
   

  
	
   

  	
   

  
	
  LAW OFFICE OF HARRELL FELDT

  	
   

  
	
  Harrell Feldt

  	
   

  
	
  State Bar No. 06888000

  	
   

  
	
  Law Offices of Harrell Feldt

  	
   

  
	
  241 Earl Garrett

  	
   

  
	
  Kerrville, Texas 78028

  	
   

  
	
  (830) 792-8888

  	
   

  
	
  (830) 792-8887 (Facsimile)

  	
   

  

 

7

 

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

  
	
  AS TRUSTEE OF THE MESA OFFSHORE TRUST:

  	
   

  
	
   

  	
   

  
	
  ANDREWS KURTH LLP

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Craig L. Stahl

  	
   

  
	
  State Bar No. 19006700

  	
   

  
	
  Andrews Kurth LLP

  	
   

  
	
  10001 Woodloch Forest Drive, Suite 200

  	
   

  
	
  The Woodlands, Texas 77380

  	
   

  
	
  (713) 220-4834

  	
   

  
	
  (713) 238-7478 Fax

  	
   

  
	
   

  	
   

  
	
  BECK REDDEN & SECREST

  	
   

  
	
  David J. Beck

  	
   

  
	
  State Bar No. 00000070

  	
   

  
	
  Alistair B. Dawson

  	
   

  
	
  State Bar No. 05596100

  	
   

  
	
  Beck Redden & Secrest

  	
   

  
	
  1221 McKinney St., Ste. 4500

  	
   

  
	
  Houston, Texas 77010

  	
   

  
	
  State Bar No. 00000070

  	
   

  
	
  (713) 951-6209

  	
   

  
	
  (713) 951-3720 Fax

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTORNEYS FOR DEFENDANT, WOODSIDE ENERGY (USA)
  INC.

  
	
   

  
	
   

  
	
   

  	
   

  
	
  GORDON, ARATA, MCCOLLAM, DUPLANTIS &
  EAGAN LLP

  
	
  Charles L. Stinneford

  	
   

  
	
  State Bar No.  00785057

  	
   

  
	
  David V. Bryce

  	
   

  
	
  State Bar No.  24052876

  	
   

  
	
  Gordon, Arata, McCollam, Duplantis & Eagan LLP

  	
   

  
	
  777 South Post Oak Lane, Suite 1300

  	
   

  
	
  Houston 77056

  	
   

  
	
  (713) 333-5500

  	
   

  
	
  (713) 333-5501 Fax

  	
   

  

 

8

 

Exhibit C

 

NO. 2006-01984

 

	
  MOSH HOLDING, L.P., AND DAGGER-

  	
  §

  	
   

  	
  IN THE DISTRICT COURT

  
	
  SPINE HEDGEHOG CORPORATION,

  	
  §

  	
   

  	
   

  
	
  Plaintiffs,

  	
  §

  	
   

  	
   

  
	
   

  	
  §

  	
   

  	
   

  
	
  v.

  	
  §

  	
   

  	
   

  
	
   

  	
  §

  	
   

  	
   

  
	
  PIONEER NATURAL RESOURCES

  	
  §

  	
   

  	
  HARRIS COUNTY, TEXAS

  
	
  COMPANY; PIONEER NATURAL

  	
  §

  	
   

  	
   

  
	
  RESOURCES USA, INC.; WOODSIDE

  	
  §

  	
   

  	
   

  
	
  ENERGY (USA) INC.; AND

  	
  §

  	
   

  	
   

  
	
  JPMORGAN CHASE BANK, N.A.

  	
  §

  	
   

  	
   

  
	
  AS TRUSTEE OF THE

  	
  §

  	
   

  	
   

  
	
  MESA OFFSHORE TRUST,

  	
  §

  	
   

  	
   

  
	
  Defendants

  	
  §

  	
   

  	
  334th JUDICIAL DISTRICT

  

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

WITH RESPECT TO FINAL SETTLEMENT AGREEMENT

 

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

 

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

 

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

 

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

 

(4)           Defendant
Woodside Energy (USA) Inc.

 

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

 

 

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

 

I.              This
Court Has Jurisdiction

 

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

 

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

 

II             The
Trustee Has the Authority to Settle

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

Trust Indenture § 3.05.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

(a)           the
probable validity of the claims;

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

(c)           the
collectibility of any judgment recovered;

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

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

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

VII.                            Other Potentially
Applicable Fairness Considerations Support Approval

 

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

 

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

 

13

 

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

 

	
  (a)

  	
   

  	
  whether
  there was full disclosure regarding the transaction;

  
	
  (b)

  	
   

  	
  whether
  the consideration (if any) was adequate;

  
	
  (c)

  	
   

  	
  whether
  the beneficiary had the benefit of independent advice;

  
	
  (d)

  	
   

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

  
	
  (e)

  	
   

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

  

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

A.                                    Conclusions
of Law with Respect to Interventions

 

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

 

B.                                    Findings
of Fact with Respect to Interventions

 

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

 

20

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

X.                                    Conclusion

 

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

 

All
objections to the Settlement Agreement are hereby DENIED.

 

Signed
on                                            ,
2009.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Honorable Sharon McCally

  

 

22

 

Exhibit D

 

ABANDONMENT AGREEMENT

 

(Gulf
of Mexico)

 

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

 

WITNESSETH:

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

2

 

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

 

4.             In accordance with the ABOS, all Environmental Laws (as
defined below) and all applicable agreements, Buyer shall timely commence and
diligently pursue to completion the proper and prudent plugging, abandonment
and decommissioning (or replugging and reabandonment) and/or removal of each
well, platform, pilings, jacket, flowline, pipeline, dock, compressor station,
production facility, structure, quarters or other building, equipment or
facility on or under or comprising the Assets or associated therewith when
required by such Environmental Laws, lease terms or the terms of any applicable
agreement. For purposes of this Agreement and the Escrow Agreement, the
foregoing are the “Plugging and Abandonment Operations.” The premises and
surface area surrounding or under each such well, platform, pilings, jacket,
flowline, pipeline, dock, compressor station, production facility, structure,
quarters or other building, equipment or facility, shall also be restored,
cleared, remediated and reclamated by Buyer as part of the Plugging and
Abandonment Operations pursuant to all Environmental Laws as well as pursuant to
lease terms or the terms of any applicable agreement, including but not limited
to, removal of wellheads, platforms, tank batteries, compressor station,
facilities, structures, production facilities, pipelines, and flowlines. “Environmental
Laws” means all applicable local, state, and federal laws, rules,
regulations, and orders regulating or otherwise pertaining to:  (i) the use, generation, migration,
storage, removal, treatment, remedy, discharge, release, transportation,
disposal, or cleanup of pollutants, contamination, hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic pollutants; (ii) surface
waters, ground waters, ambient air and any other environmental medium on or off
any Lease; (iii) the environment or health and safety-related matters; (iv) the
prevention of pollution or environmental damages, (v) the abatement,
remediation or elimination of pollution or environmental damage, (vi) the
protection of the environment generally, and/or (vii) the protection of
persons or property from actual or potential exposure (or the effects of
exposure) to pollution or environmental  damage,
or (viii) platform, well, equipment, facility or pipeline removal,
abandonment, decommissioning or plugging, including without limitation the
following as from time to time amended and all others whether similar or
dissimilar: the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, the Resource Conservation and

 

3

 

Recovery Act of 1976, as amended
by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments
of 1980, and the Hazardous and Solid Waste Amendments of 1984, the Hazardous Materials
Transportation Act, as amended, the Toxic Substance Control Act, as amended,
the Clean Air Act, as amended, the Clean Water Act, as amended, the Oil
Pollution Act of 1990, as amended, the Marine Protection, Research, and
Sanctuaries Act, and all regulations promulgated pursuant thereto.

 

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

 

4

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  General Counsel

  
	
   

  	
   

  
	
   

  	
  Pioneer Natural Resources USA, Inc.

  
	
   

  	
  5205 N. O’Connor Blvd., Ste. 200

  
	
   

  	
  Irving, Texas 75039-3746

  

 

6

 

	
  with a copy to:

  	
  Vice President, Land

  
	
   

  	
  Pioneer Natural Resources USA, Inc.

  
	
   

  	
  5205 N. O’Connor Blvd., Ste. 200

  
	
   

  	
  Irving, Texas 75039-3746

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  Attention:

  

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

8

 

	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PIONEER NATURAL RESOURCES USA, INC.

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
							

 

9

 

	
  STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF DALLAS

  	
  §

  

 

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

 

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

 

	
   

  	
   

  
	
   

  	
  Notary Public, State of Texas

  
	
   

  	
  My Commission expires on                                                             

  

 

	
  STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF                      

  	
  §

  

 

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

 

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

 

	
   

  	
   

  
	
   

  	
  Notary Public, State of Texas

  
	
   

  	
  My Commission expires on                                                             

  

 

10

 

Exhibit E

 

ESCROW AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 1

ESCROW DEPOSIT

 

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

 

Section 1.2.            Investments.

 

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

 

 

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

 

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

 

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

 

Section 1.4.            Income Tax Allocation and
Reporting.

 

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

 

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

 

2

 

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

 

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

 

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

 

ARTICLE 2

DUTIES OF THE ESCROW AGENT

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

ARTICLE 3

PROVISIONS CONCERNING THE ESCROW AGENT

 

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

 

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

 

4

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

ARTICLE 4

MISCELLANEOUS

 

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

 

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

 

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

 

6

 

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

 

	
  If to Pioneer:

  	
   

  	
  With Copy to:

  
	
  Pioneer Natural Resources USA, Inc.

  	
   

  	
  Pioneer Natural Resources USA, Inc.

  
	
  5205 North O’Connor Suite 200

  	
   

  	
  5205 North O’Connor Suite 200

  
	
  Irving, Texas 75039-3746

  	
   

  	
  Irving, Texas 75039-3746

  
	
  Attention:
  Mark Berg, General Counsel

  	
   

  	
  Attention:
  Rich Dealy, EVP & CFO

  
	
  Telephone:

  	
  972-969-4090

  	
   

  	
  Telephone:

  	
  972-969-4054

  
	
  Facsimile:

  	
  972-969-3584

  	
   

  	
  Facsimile:

  	
  972-969-3572

  

 

If to [     ]:

 

 

Attention:

Telephone:

Facsimile:

 

If to the Escrow Agent:

 

Wells
Fargo Bank, National Association

201 Main Street, Suite 301

Fort Worth, Texas 76102

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

Telephone:
817-732-8356

Facsimile:     817-885-8650

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

[The remainder of this page left intentionally blank.]

 

8

 

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

 

	
   

  	
  PIONEER
  NATURAL RESOURCES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Richard P. Dealy

  
	
   

  	
  Title:
  EVP & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [insert
  name of Buyer]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION, as Escrow Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  John
  C. Stohlmann

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

9

 

EXHIBIT A

 

Form of Escrow Release Letter

 

Wells
Fargo Bank, National Association

201 Main Street, Suite 301

Fort Worth, Texas 76102

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

 

	
  Re:

  	
   

  	
  Escrow
  Agreement dated as of         
      , 2009 by and

  
	
   

  	
   

  	
  among
  Pioneer Natural Resources USA, Inc.,

  
	
   

  	
   

  	
                    (“Buyer”) and Wells Fargo Bank,

  
	
   

  	
   

  	
  National
  Association, as Escrow Agent

  

 

Ladies
and Gentlemen:

 

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

 

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

 

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

 

[insert wire transfer
instructions]

 

Dated this           
day of                     ,
200    .

 

	
   

  	
  PIONEER
  NATURAL RESOURCES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:
  Richard P. Dealy

  
	
   

  	
  Title:
  EVP & CFO

  
	
   

  	
   

  
	
   

  	
  [or]

  
	
   

  	
   

  
	
   

  	
   

  	
  [Buyer]

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

 

EXHIBIT B

 

Agency
and Custody Account Direction

For Cash
Balances

 

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

 

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

 

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

o Wells Fargo Advantage Funds, Government
Money Market Fund

o Wells Fargo Advantage Funds, Cash
Investment Money Market Fund

o Wells Fargo Advantage Funds, Prime
Investment Money Market Fund

o Wells Fargo Advantage Funds, Treasury
Plus Money Market Fund

x Wells Fargo Advantage Funds, Heritage
Money Market Fund

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

	
   

  	
   

  
	
  Authorized
  Representative

  	
   

  
	
  PIONEER NATURAL
  RESOURCES USA, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date

  	
   

  

 

 

EXHIBIT C-1

CERTIFICATE AS TO
AUTHORIZED SIGNATURES

 

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

 

 

	
  Name / Title

  	
   

  	
  Specimen Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Richard P. Dealy

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
  EVP & CFO

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Mark S. Berg

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
  EVP & General Counsel

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Keith H. Pickett

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
  Director - Treasury

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Lisa Kunkel 

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
  Manager - Treasury

  	
   

  	
   

  

 

 

EXHIBIT C-2

CERTIFICATE AS TO
AUTHORIZED SIGNATURES

 

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

 

 

	
  Name / Title

  	
   

  	
  Specimen Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  

 

 

EXHIBIT D

FEES OF ESCROW AGENT

 

SCHEDULE OF FEES

 

$1,600,000

Pioneer Natural Resources and Party To Be Named

Escrow Fee Schedule

 

To Act As Escrow Agent

 

	
  Acceptance
  Fee:

  	
   

  	
  $

  	
  0.00

  	
   

  

 

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

 

Acceptance Fee payable at time of Escrow Agreement
execution.

 

	
  Escrow
  Annual Administration Fee:

  	
   

  	
  $

  	
  2,500.00

  	
   

  

 

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

 

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

 

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

·                  Number of Escrow Receipts:  2

·                  Number of Escrow Accounts:  1

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

·                  Term of Escrow: TBD

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

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

 

 

Out of Pocket Expenses:

 

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

 

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

 

	
   

  	
  Submitted by:

  	
  Gregory
  M. Hasty — February 10, 2009

  
	
   

  	
   

  	
  Vice
  President/Business Development

  
	
   

  	
   

  	
  Wells
  Fargo Bank

  
	
   

  	
   

  	
  (214)
  740-1548

  
	
   

  	
   

  	
  P:
  66424

  

 

 

Exhibit F

 

Right of First Refusal Agreement

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

	
  WITNESSES:

  	
   

  	
  Pioneer Natural Resources USA, Inc.

  individually and on behalf of the

  Mesa Offshore Royalty Partnership in its capacity

  as Managing General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Print Name:

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESSES:

  	
   

  	
  [Insert Qualified Bidder Name]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Print Name:

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
  Print Name:

  	
   

  	
   

  

 

4

 

ACKNOWLEDGMENTS

 

	
  STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
  §

  

 

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

 

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

 

 

	
   

  	
   

  
	
   

  	
  Notary Public, State of Texas

  
	
   

  	
  My
  Commission expires on

  

 

	
  STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
  §

  

 

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

 

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

 

 

	
   

  	
   

  
	
   

  	
  Notary Public, State of Texas

  
	
   

  	
  My
  Commission expires on

  

 

5

 

Exhibit G

 

ESCROW
AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

5.             Escrow
Agent.

 

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

 

2

 

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

 

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

 

6.             Succession.

 

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

 

3

 

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

 

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

 

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

 

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

 

4

 

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

 

(a)           Patriot Act
Disclosure.

 

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

 

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

 

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

 

(c)           Tax
Reporting.

 

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

 

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

 

5

 

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

 

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

 

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

 

	
  If to Pioneer Natural
  Resources USA, Inc.:

  	
  With a copy to:

  
	
  5205 N. O’Connor
  Boulevard., Suite 200

  	
  Pioneer Natural Resources
  USA, Inc.

  
	
  Irving, Texas 75039-3746

  	
  5205 N. O’Connor
  Boulevard., Suite 200

  
	
   Attention: Mark
  Berg, General Counsel

  	
  Irving, Texas 75039-3746

  
	
   Tel No.: 972-969-4090

  	
   Attention: Rich
  Dealy, EVP & CFO

  
	
   Fax No.:
  972-969-3584

  	
   Tel No.:
  972-969-4054

  
	
   

  	
   Fax No.:
  972-969-3572

  

 

If to Qualified Bidder

 

(street address)

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

 Attention:

 Tel No.:

Fax No.:

 

If to the Escrow Agent:

 

JPMorgan Chase Bank, N.A.

712 Main Street, 5th Floor
South

Houston, Texas  77002

Attn:  Paul Gilliam, Escrow Services

Fax No.:  (713) 216-6927

 

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

 

6

 

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

 

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

 

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

 

7

 

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

 

8

 

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

 

	
  Pioneer
  Natural Resources USA, Inc.

  	
   

  
	
  individually and on behalf of the

  	
   

  
	
  Mesa
  Offshore Royalty Partnership

  	
   

  
	
  in its capacity

  	
   

  
	
  as Managing General Partner

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  [Insert
  Name of Qualified Bidder]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  JPMORGAN
  CHASE BANK, NATIONAL ASSOCIATION

  	
   

  
	
   

  	
   

  
	
  as Escrow
  Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

9

 

Exhibit G

 

SCHEDULE 1

 

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

 Person(s) Designated
to give Funds Transfer Instructions

 

Pioneer:

 

	
   

  	
   

  	
  Name

  	
   

  	
  Telephone
  Number

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Qualified Bidder:

 

	
   

  	
   

  	
  Name

  	
   

  	
  Telephone
  Number

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Telephone Number(s) for Call-Backs and

Person(s) Designated to Confirm Funds Transfer
Instructions

 

Pioneer:

 

	
   

  	
   

  	
  Name

  	
   

  	
  Telephone
  Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Qualified Bidder:

 

	
   

  	
   

  	
  Name

  	
   

  	
  Telephone
  Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

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

 

 

Exhibit G

 

SCHEDULE 2

 

Escrow Agent’s Compensation:

 

[Note:  Obtain
Compensation Schedule from Escrow Agent.]

 

 

Exhibit G

 

EXHIBIT A

Notice

 

JPMorgan
Chase Bank, National Association

712 Main Street, 5th Floor
South

Houston, Texas  77002

Attn:  Paul Gilliam, Escrow Services

Fax No.:  (713) 216-6927

 

	
  Re:

  	
  Escrow
  Agreement dated as of
                    
  by and among

  
	
   

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

  
	
   

  	
  (“Qualified
  Bidder”) and

  
	
   

  	
  JPMorgan
  Chase Bank, National Association, as Escrow Agent

  

 

Ladies
and Gentlemen:

 

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

 

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

 

Dated this        
day of
                ,
200    .

 

	
   

  	
  Pioneer
  Natural Resources USA, Inc.

  
	
   

  	
  individually and on behalf of the

  
	
   

  	
  Mesa
  Offshore Royalty Partnership

  
	
   

  	
  in its capacity

  
	
   

  	
  as Managing General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

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

 

 

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

 

2

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