COLLATERAL AGENT
AGREEMENT
COLLATERAL AGENT AGREEMENT (this “
Agreement ”) dated as of August 31, 2009, among
Collateral Agents, LLC (the “ Collateral Agent
”), and the parties identified on Schedule A hereto (each,
individually, a “ Lender ” and collectively, the
“ Lenders ”), who hold or will acquire
promissory Notes issued or to be issued by Mesa Energy Holdings,
Inc., a Delaware corporation (“ Parent ”),
and Mesa Energy, Inc., a Nevada corporation, Mesa Energy Operating
LLC, a Texas limited liability company (each a “
Guarantor ” and together with Parent, each a “
Debtor ” and collectively, “ Debtors
”), on the dates set forth on Schedule A hereto and at, about
or after the date of this Agreement as described in the Security
Agreement referred to in Section 1(a) below (collectively herein
the “ Notes ”).
WHEREAS, the Lenders have made, are making and
will be making loans to Parent to be secured by certain collateral;
and
WHEREAS, it is desirable to provide for the
orderly administration of such collateral by requiring each Lender
to appoint the Collateral Agent, and the Collateral Agent has
agreed to accept such appointment and to receive, hold and deliver
such collateral, all upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, it is desirable to allocate the
enforcement of certain rights of the Lenders under the Notes for
the orderly administration thereof.
NOW, THEREFORE, in consideration of the premises
set forth herein and for other good and valuable consideration, the
parties hereto agree as follows:
1.
Collateral .
(a) Prior
to or contemporaneously with the execution and delivery of this
Agreement by the Collateral Agent and the Lenders, (i) the
Collateral Agent has or will have entered into a Security Agreement
with Parent and Guarantors (“ Security Agreement
”), regarding the grant of a security interest in the assets
of Parent and Guarantors (such assets are referred to herein and in
the Security Agreement as the “ Collateral ”) to
the Collateral Agent, for the benefit of the Lenders, (ii)
Guarantor will have executed and delivered a “Guaranty”
in favor of Lenders in connection with the Obligations (as defined
in the Security Agreements), and (iii) Parent is issuing the Notes
to the Lenders pursuant to Subscription Agreements dated at or
about August 31, 2009 and the date of this Agreement (collectively,
each a “Subscription
Agreement”). Collectively, the Security Agreement,
the Notes and Subscription Agreement and other agreements referred
to therein are referred to herein as “ Borrower
Documents ”. All defined terms not otherwise
defined herein shall have the meanings attributed to them in the
Security Agreement.
(b) The
Collateral Agent hereby acknowledges that any Collateral held by
the Collateral Agent is held for the benefit of the Lenders in
accordance with this Agreement and the Borrower
Documents. No reference to the Borrower Documents or any
other instrument or document shall be deemed to incorporate any
term or provision thereof into this Agreement unless expressly so
provided.
(c) The
Collateral Agent is to distribute in accordance with the Borrower
Documents any proceeds received from the Collateral which are
distributable to the Lenders as set forth in Section 10.4 of the
Security Agreement.
2.
Appointment of the Collateral Agent .
The Lenders hereby appoint the Collateral Agent
(and the Collateral Agent hereby accepts such appointment) to take
any action including, without limitation, the registration of any
Collateral in the name of the Collateral Agent or its nominees
prior to or during the continuance of an Event of Default (as
defined in the Borrower Documents), the exercise of voting rights,
if any, upon the occurrence and during the continuance of an Event
of Default, the application of any cash collateral received by the
Collateral Agent to the payment of the Obligations, the making of
any demand under the Borrower Documents, the exercise of any
remedies given to the Collateral Agent pursuant to the Borrower
Documents and the exercise of any authority pursuant to the
appointment of the Collateral Agent as an attorney-in-fact pursuant
to the Security Agreement that the Collateral Agent deems necessary
or proper for the administration of the Collateral pursuant to the
Security Agreement. Upon disposition of the Collateral
in accordance with the Borrower Documents, the Collateral Agent
shall promptly distribute any cash or Collateral in accordance with
Section 10.4 of the Security Agreement. Parent and
Lenders must notify Collateral Agent in writing of the issuance of
Notes to Lenders by Parent. Additional Lenders may
become subject to the rights and benefits of this Agreement by
participating in the Offering and executing and delivering a copy
of this Agreement to the Collateral Agent and
Company. Schedule A may be amended from time to time to
include such additional Lenders. The Collateral Agent
will not be required to act hereunder in connection with Notes the
issuance of which was not disclosed in writing to the Collateral
Agent nor will the Collateral Agent be required to act on behalf of
any assignee of Notes without the written consent of Collateral
Agent.
3.
Action by the Majority in Interest .
(a)
Certain Actions . Each of the Lenders covenants
and agrees that only a Majority in Interest shall have the right,
but not the obligation, to undertake the following actions (it
being expressly understood that less than a Majority in Interest
hereby expressly waive the following rights that they may otherwise
have under the Borrower Documents):
(i)
Acceleration . If an Event of Default occurs,
after the applicable cure period, if any, a Majority in Interest
may, on behalf of all the Lenders, instruct the Collateral Agent to
provide to Parent and/or Guarantor notice to cure such default
and/or declare the unpaid principal amount of the Notes to be due
and payable, together with any and all accrued interest thereon and
all costs payable pursuant to such Notes;
(ii)
Enforcement . Upon the occurrence of any
Event