SECURITY AGREEMENT


1.           Identification.


This Security Agreement (the “Agreement”), dated as of August 31, 2009, is
entered into by and between Mesa Energy Holdings, Inc., a Delaware corporation
(“Parent”), 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 the “Debtors”), the Subscribers party to the
Subscription Agreement dated as of August 31, 2009  (the “Subscription
Agreement”), by and between Parent, and the subscribers set forth on the
signature pages affixed thereto (the “Subscribers”) and Collateral Agents, LLC
(“Collateral Agent”).


2.           Recitals.


2.1           At or about the date hereof, each of the Subscribers is making a
loan (the “Loan”) to Parent.  Each Guarantor is a direct or indirect Subsidiary
(as defined in Section 6.12) of Parent.  It is beneficial to each Debtor that
the Loan is made.  Guarantor has or will deliver a “Guaranty” of Parent’s
obligations to Subscribers.


2.2           The Loan will be evidenced by one or more promissory notes (each a
“Note”) issued by Parent on or about the date of this Agreement pursuant to the
Subscription Agreement.  The Note was or will be executed by Parent as
“Borrower” or “Debtor” for the benefit of each Subscriber as the “Holder” or
“Subscriber” thereof.


2.3           In consideration of the Loans made and to be made by Subscribers
to Parent and for other good and valuable consideration, and as security for the
performance by Parent of its obligations under the Note, by Guarantor of its
obligations under the Guaranty, and as security for the repayment of the Loan
and all other sums due from Debtor to Subscribers arising under the Transaction
Documents (as defined in the Subscription Agreement) and any other agreement
between or among them (collectively, the “Obligations”), each Debtor, for good
and valuable consideration, receipt of which is acknowledged, has agreed to
grant to the Subscribers and to the Collateral Agent on behalf of the
Subscribers a security interest in the Collateral (as such term is hereinafter
defined), on the terms and conditions hereinafter set forth.  Obligations
include all future advances and loans by Subscribers to Debtor that may be made
pursuant to the Subscription Agreement.


2.4           The following defined terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined:  Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory and Proceeds.  Other capitalized terms
employed herein shall have the meanings attributed to them in the Subscription
Agreement.


3.           Grant of General Security Interest in Collateral.


3.1           As security for the Obligations of Debtors, each Debtor hereby
grants each of the Subscribers, a security interest in the Collateral.


3.2           “Collateral” shall mean all of the following property of Debtors:


(A)           All now owned and hereafter acquired right, title and interest of
Debtors in, to and in respect of all Accounts, Goods, real or personal property,
all present and future books and records relating to the foregoing and all
products and Proceeds of the foregoing, and as set forth below:
 
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(i)         All now owned and hereafter acquired right, title and interest of
Debtors in, to and in respect of all: Accounts, interests in goods represented
by Accounts, returned, reclaimed or repossessed goods with respect thereto and
rights as an unpaid vendor; contract rights; Chattel Paper; investment property;
General Intangibles (including but not limited to, tax and duty claims and
refunds, registered and unregistered patents, trademarks, service marks,
certificates, copyrights trade names, applications for the foregoing, trade
secrets, goodwill, processes, drawings, blueprints, customer lists, licenses,
whether as licensor or licensee, choses in action and other claims, and existing
and future leasehold interests and claims in and to equipment, real estate and
fixtures); Documents; Instruments; letters of credit, bankers’ acceptances or
guaranties; cash moneys, deposits; securities, bank accounts, deposit accounts,
credits and other property now or hereafter owned or held in any capacity by
Debtors, as well as agreements or property securing or relating to any of the
items referred to above;


(ii)         Goods:  All now owned and hereafter acquired right, title and
interest of Debtors in, to and in respect of goods, including, but not limited
to:


(a)           All Inventory, wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description, including all raw materials,
work-in-process, finished goods, and materials to be used or consumed in
Debtors’ business; finished goods, timber cut or to be cut, oil, gas,
hydrocarbons, and minerals extracted or to be extracted, and all names or marks
affixed to or to be affixed thereto for purposes of selling same by the seller,
manufacturer, lessor or licensor thereof and all Inventory which may be returned
to any Debtor by its customers or repossessed by any Debtor and all of Debtors’
right, title and interest in and to the foregoing (including all of a Debtor’s
rights as a seller of goods);


(b)           All Equipment and fixtures, wherever located, whether now owned or
hereafter acquired, including, without limitation, all machinery, furniture and
fixtures, and any and all additions, substitutions, replacements (including
spare parts), and accessions thereof and thereto (including, but not limited to
Debtors’ rights to acquire any of the foregoing, whether by exercise of a
purchase option or otherwise);


(iii)         Property:  All now owned and hereafter acquired right, title and
interests of Debtors in, to and in respect of any other personal property in or
upon which a Debtor has or may hereafter have a security interest, lien or right
of setoff;


(iv)         Books and Records:  All present and future books and records
relating to any of the above including, without limitation, all computer
programs, printed output and computer readable data in the possession or control
of the Debtors, any computer service bureau or other third party; and


(v)         Products and Proceeds:  All products and Proceeds of the foregoing
in whatever form and wherever located, including, without limitation, all
insurance proceeds and all claims against third parties for loss or destruction
of or damage to any of the foregoing.


(B)         All now owned and hereafter acquired right, title and interest of
Debtors in, to and in respect of the following:


(i)         the shares of stock of each Guarantor, which the Debtor represents,
equal 100% of the equity ownership and right to receive equity of each
Guarantor, the certificates representing such shares together with an executed
stock power, and other rights, contractual or otherwise, in respect thereof and
all dividends, distributions, cash, instruments, investment property and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares;
 
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(ii)           all additional shares of stock, partnership interests, member
interests or other equity interests from time to time acquired by Debtor, in any
Subsidiary that is not a Subsidiary of the Debtor on the date hereof (“Future
Subsidiaries”), the certificates representing such additional shares, and other
rights, contractual or otherwise, in respect thereof and all dividends,
distributions, cash, instruments, investment property and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such additional shares, interests or equity; and


(iii)           all security entitlements of Debtor in, and all Proceeds of any
and all of the foregoing in each case, whether now owned or hereafter acquired
by Debtor and howsoever its interest therein may arise or appear (whether by
ownership, security interest, lien, claim or otherwise).


3.3           The Subscribers are hereby specifically authorized, after the
Maturity Date (defined in the Note) accelerated or otherwise, and after the
occurrence of an Event of Default (as defined herein) and the expiration of any
applicable cure period, to transfer any Collateral into the name of the
Subscriber and to take any and all action deemed advisable to the Subscriber to
remove any transfer restrictions affecting the Collateral.


4.           Perfection of Security Interest.


4.1           Each Debtor shall prepare, execute and deliver to the Subscribers
UCC-1 Financing Statements.  The Subscribers are instructed to prepare and file
at each Debtor’s cost and expense, financing statements in such jurisdictions
deemed advisable to Subscribers, including but not limited to the States of
Nevada, Delaware, New York and Oklahoma.


4.2           Upon the execution of this Agreement, Parent shall deliver to
Subscribers stock certificates representing all of the shares of outstanding
capital stock of each Guarantor (the “Securities”).  All such certificates shall
be held by or on behalf of Subscribers pursuant hereto and shall be delivered in
suitable form for transfer by delivery, and shall be accompanied by duly
executed instruments of transfer or assignment or undated stock powers executed
in blank, all in form and substance satisfactory to Subscribers.


4.3           All other certificates and instruments constituting Collateral
from time to time required to be pledged to Subscribers pursuant to the terms
hereof (the “Additional Collateral”) shall be delivered to Subscribers promptly
upon receipt thereof by or on behalf of Debtors.  All such certificates and
instruments shall be held by or on behalf of Subscribers pursuant hereto and
shall be delivered in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment or undated
stock powers executed in blank, all in form and substance satisfactory to
Subscribers.  If any Collateral consists of uncertificated securities, unless
the immediately following sentence is applicable thereto, Debtors shall cause
Subscribers (or its custodian, nominee or other designee) to become the
registered holder thereof, or cause each issuer of such securities to agree that
it will comply with instructions originated by Subscribers with respect to such
securities without further consent by Debtors.  If any Collateral consists of
security entitlements, Debtors shall transfer such security entitlements to
Subscribers (or its custodian, nominee or other designee) or cause the
applicable securities intermediary to agree that it will comply with entitlement
orders by Subscribers without further consent by Debtors.
 
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4.4           Within five (5) business days after the receipt by a Debtor of any
Additional Collateral, a Pledge Amendment, duly executed by such Debtor, in
substantially the form of Annex I hereto (a “Pledge Amendment”), shall be
delivered to Subscribers in respect of the Additional Collateral to be pledged
pursuant to this Agreement. Each Debtor hereby authorizes Subscribers to attach
each Pledge Amendment to this Agreement and agrees that all certificates or
instruments listed on any Pledge Amendment delivered to Subscribers shall for
all purposes hereunder constitute Collateral.


4.5           If Debtor shall receive, by virtue of Debtor being or having been
an owner of any Collateral, any (i) stock certificate (including, without
limitation, any certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off or
split-off), promissory note or other instrument, (ii) option or right, whether
as an addition to, substitution for, or in exchange for, any Collateral, or
otherwise, (iii) dividends payable in cash (except such dividends permitted to
be retained by Debtor pursuant to Section 5.2 hereof) or in securities or other
property or (iv) dividends or other distributions in connection with a partial
or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, Debtor shall receive such stock
certificate, promissory note, instrument, option, right, payment or distribution
in trust for the benefit of Subscribers, shall segregate it from Debtor’s other
property and shall deliver it forthwith to Subscribers, in the exact form
received, with any necessary endorsement and/or appropriate stock powers duly
executed in blank, to be held by Subscribers as Collateral and as further
collateral security for the Obligations.


5.           Distribution.


5.1           So long as an Event of Default does not exist, Debtors shall be
entitled to exercise all voting power pertaining to any of the Collateral,
provided such exercise is not contrary to the interests of the Subscribers and
does not impair the Collateral.


5.2.          At any time an Event of Default exists or has occurred and is
continuing, all rights of Debtors, upon notice given by Subscribers, to exercise
the voting power and receive payments, which it would otherwise be entitled to
pursuant to Section 5.1, shall cease and all such rights shall thereupon become
vested in Subscribers, which shall thereupon have the sole right to exercise
such voting power and receive such payments.


5.3           All dividends, distributions, interest and other payments which
are received by Debtors contrary to the provisions of Section 5.2 shall be
received in trust for the benefit of Subscribers as security and Collateral for
payment of the Obligations shall be segregated from other funds of Debtors, and
shall be forthwith paid over to Subscribers as Collateral in the exact form
received with any necessary endorsement and/or appropriate stock powers duly
executed in blank, to be held by Subscribers as Collateral and as further
collateral security for the Obligations.


6.           Further Action By Debtors; Covenants and Warranties.


6.1           Subscribers at all times shall have a perfected security interest
in the Collateral.  Each Debtor represents that, other than the security
interests described on Schedule 6.1, it has and will continue to have full title
to the Collateral free from any liens, leases, encumbrances, judgments or other
claims.  The Subscribers’ security interest in the Collateral constitutes and
will continue to constitute a first, prior and indefeasible security interest in
favor of Subscribers, subject only to the security interests described on
Schedule 6.1.  Each Debtor will do all acts and things, and will execute and
file all instruments (including, but not limited to, security agreements,
financing statements, continuation statements, etc.) reasonably requested by
Subscribers to establish, maintain and continue the perfected security interest
of Subscribers in the perfected Collateral, and will promptly on demand, pay all
costs and expenses of filing and recording, including the costs of any searches
reasonably deemed necessary by Subscribers from time to time to establish and
determine the validity and the continuing priority of the security interest of
Subscribers, and also pay all other claims and charges that, in the opinion of
Subscribers are reasonably likely to materially prejudice, imperil or otherwise
affect the Collateral or Subscribers’ security interests therein.
 
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6.2           Except in connection with sales of Collateral, in the ordinary
course of business, for fair value and in cash, and except for Collateral which
is substituted by assets of identical or greater value (subject to the consent
of the Subscribers) or which is inconsequential in value, each Debtor will not
sell, transfer, assign or pledge those items of Collateral (or allow any such
items to be sold, transferred, assigned or pledged), without the prior written
consent of Subscribers other than a transfer of the Collateral to a wholly-owned
United States formed and located subsidiary or to another Debtor on prior notice
to Subscribers, and provided the Collateral remains subject to the security
interest herein described.  Although Proceeds of Collateral are covered by this
Agreement, this shall not be construed to mean that Subscribers consents to any
sale of the Collateral, except as provided herein.  Sales of Collateral in the
ordinary course of business as described above shall be free of the security
interest of Subscribers and Subscribers shall promptly execute such documents
(including without limitation releases and termination statements) as may be
required by Debtors to evidence or effectuate the same.


6.3           Each Debtor will, at all reasonable times during regular business
hours and upon reasonable notice, allow Subscribers or its representatives free
and complete access to the Collateral and all of such Debtor’s records that in
any way relate to the Collateral, for such inspection and examination as
Subscribers reasonably deem necessary.


6.4           Each Debtor, at its sole cost and expense, will protect and defend
this Security Agreement, all of the rights of Subscribers hereunder, and the
Collateral against the claims and demands of all other persons.


6.5           Debtors will promptly notify Subscribers of any levy, distraint or
other seizure by legal process or otherwise of any part of the Collateral, and
of any threatened or filed claims or proceedings that are reasonably likely to
affect or impair any of the rights of Subscribers under this Security Agreement
in any material respect.


6.6           Each Debtor, at its own expense, will obtain and maintain in force
insurance policies covering losses or damage to those items of Collateral which
constitute physical personal property, which insurance shall be of the types
customarily insured against by companies in the same or similar business,
similarly situated, in such amounts (with such deductible amounts) as is
customary for such companies under the same or similar circumstances, similarly
situated.  Debtors shall make the Subscribers loss payee thereon to the extent
of its interest in the Collateral. Subscribers are hereby irrevocably (until the
Obligations are indefeasibly paid in full) appointed each Debtor’s
attorney-in-fact to endorse any check or draft that may be payable to such
Debtor so that Subscribers may collect the proceeds payable for any loss under
such insurance.  The proceeds of such insurance, less any costs and expenses
incurred or paid by Subscribers in the collection thereof, shall be applied
either toward the cost of the repair or replacement of the items damaged or
destroyed, or on account of any sums secured hereby, whether or not then due or
payable.


6.7           In order to protect the Collateral and Subscribers’ interest
therein, Subscribers may, at Subscribers’s option, and without any obligation to
do so, pay, perform and discharge any and all amounts, costs, expenses and
liabilities herein agreed to be paid or performed by Debtor upon Debtor’s
failure to do so.  All amounts expended by Subscribers in so doing shall become
part of the Obligations secured hereby, and shall be immediately due and payable
by Debtor to Subscribers upon demand and shall bear interest at the lesser of
15% per annum or the highest legal amount allowed from the dates of such
expenditures until paid.
 
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6.8           Upon the request of Subscribers, Debtors will furnish to
Subscribers within five (5) business days thereafter, or to any proposed
assignee of this Security Agreement, a written statement in form reasonably
satisfactory to Subscribers, duly acknowledged, certifying the amount of the
principal and interest and any other sum then owing under the Obligations,
whether to its knowledge any claims, offsets or defenses exist against the
Obligations or against this Security Agreement, or any of the terms and
provisions of any other agreement of Debtors securing the Obligations.  In
connection with any assignment by Subscribers of this Security Agreement, each
Debtor hereby agrees to cause the insurance policies required hereby to be
carried by such Debtor, if any, to be endorsed in form satisfactory to
Subscribers or to such assignee, with loss payable clauses in favor of such
assignee, and to cause such endorsements to be delivered to Subscribers within
ten (10) calendar days after request therefor by Subscribers.


6.9           Each Debtor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Subscribers from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other reasonable assurances or instruments and take further steps relating to
the Collateral and other property or rights covered by the security interest
hereby granted, as the Subscribers may reasonably require to perfect its
security interest hereunder.


6.10         Debtors represent and warrant that they are the true and lawful
exclusive owners of the Collateral, free and clear of any liens, encumbrances
and claims other than those listed on Schedule 6.1.


6.11         Each Debtor hereby agrees not to divest itself of any right under
the Collateral except as permitted herein absent prior written approval of the
Subscribers, except to a subsidiary organized and located in the United States
on prior notice to Subscribers provided the Collateral remains subject to the
security interest herein described.


6.12         Each Debtor shall cause each Subsidiary of such Debtor in existence
on the date hereof and each future Subsidiary to execute and deliver to
Subscribers promptly and in any event within ten (10) days after the formation,
acquisition or change in status thereof (A) a guaranty guaranteeing the
Obligations and (B) if requested by Subscribers, a security and pledge agreement
substantially in the form of this Agreement together with (x) certificates
evidencing all of the capital stock of each Subsidiary of and any entity owned
by such Subsidiary, (y) undated stock powers executed in blank with signatures
guaranteed, and (z) such opinion of counsel and such approving certificate of
such Subsidiary as Subscribers may reasonably request in respect of complying
with any legend on any such certificate or any other matter relating to such
shares and (C) such other agreements, instruments, approvals, legal opinions or
other documents reasonably requested by Subscribers in order to create, perfect,
establish the first priority of or otherwise protect any lien purported to be
covered by any such pledge and security agreement or otherwise to effect the
intent that all property and assets of such Subsidiary shall become Collateral
for the Obligations.  For purposes of this Agreement, “Subsidiary” means, with
respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity) of which more than 30% of (A) the outstanding
capital stock having (in the absence of contingencies) ordinary voting power to
elect a majority of the board of directors or other managing body of such
entity, (B) in the case of a partnership or limited liability company, the
interest in the capital or profits of such partnership or limited liability
company or (C) in the case of a trust, estate, association, joint venture or
other entity, the beneficial interest in such trust, estate, association or
other entity business is, at the time of determination, owned or controlled
directly or indirectly through one or more intermediaries, by such
entity.  Schedule 6.12 annexed hereto contains a list of all Subsidiaries of the
Debtors as of the date of this Agreement.
 
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6.13           Debtor will notify Subscribers within ten days of the occurrence
of any change of Debtor’s name, domicile, address or jurisdiction of
incorporation.  The timely giving of this notice is a material obligation of
Debtor.


7.           Power of Attorney.


At any time an Event of Default has occurred, and only after the applicable cure
period as set forth in this Agreement and the other Transaction Documents, and
is continuing, each Debtor hereby irrevocably constitutes and appoints
Subscribers as the true and lawful attorney of such Debtor, with full power of
substitution, in the place and stead of such Debtor and in the name of such
Debtor or otherwise, at any time or times, in the discretion of the Subscribers,
to take any action and to execute any instrument or document which the
Subscribers may deem necessary or advisable to accomplish the purposes of this
Agreement.  This power of attorney is coupled with an interest and is
irrevocable until the Obligations are satisfied.


8.           Performance By The Subscribers.


If a Debtor fails to perform any material covenant, agreement, duty or
obligation of such Debtor under this Agreement, Subscribers may, after any
applicable cure period, at any time or times in its discretion, take action to
effect performance of such obligation.  All reasonable expenses of the
Subscribers incurred in connection with the foregoing authorization shall be
payable by Debtors as provided in Paragraph 12.1 hereof.  No discretionary
right, remedy or power granted to the Subscribers under any part of this
Agreement shall be deemed to impose any obligation whatsoever on the Subscribers
with respect thereto, such rights, remedies and powers being solely for the
protection of the Subscribers.


9.           Event of Default.


An event of default (“Event of Default”) shall be deemed to have occurred
hereunder upon the occurrence of any event of default as defined and described
in this Agreement, in the Note, the Subscription Agreement, Transaction
Documents (as defined in the Subscription Agreement), and any other agreement to
which one or more Debtors and Subscribers are parties.   Upon and after any
Event of Default, after the applicable cure period, if any, any or all of the
Obligations shall become immediately due and payable at the option of the
Subscribers, and the Subscribers may dispose of Collateral as provided below.  A
default by Debtor of any of its material obligations pursuant to this Agreement
and any of the Transaction Documents shall be an Event of Default hereunder and
an “Event of Default” as defined in the Note, and Subscription Agreement.


10.         Disposition of Collateral.


Upon and after any Event of Default which is then continuing,


10.1           The Subscribers may exercise its rights with respect to each and
every component of the Collateral, without regard to the existence of any other
security or source of payment for, in order to satisfy the Obligations.  In
addition to other rights and remedies provided for herein or otherwise available
to it, the Subscribers shall have all of the rights and remedies of a Subscriber
on default under the Uniform Commercial Code then in effect in the State of New
York.


10.2           If any notice to Debtors of the sale or other disposition of
Collateral is required by then applicable law, five (5) business days prior
written notice (which Debtors agree is reasonable notice within the meaning of
Section 9.612(a) of the Uniform Commercial Code) shall be given to Debtors of
the time and place of any sale of Collateral which Debtors hereby agree may be
by private sale.  The rights granted in this Section are in addition to any and
all rights available to Subscribers under the Uniform Commercial Code.
 
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10.3           The Subscribers is authorized, at any such sale, if the
Subscribers deems it advisable to do so, in order to comply with any applicable
securities laws, to restrict the prospective bidders or purchasers to persons
who will represent and agree, among other things, that they are purchasing the
Collateral for their own account for investment, and not with a view to the
distribution or resale thereof, or otherwise to restrict such sale in such other
manner as the Subscribers deem advisable to ensure such compliance.  Sales made
subject to such restrictions shall be deemed to have been made in a commercially
reasonable manner.


10.4           All proceeds received by the Subscribers in respect of any sale,
collection or other enforcement or disposition of Collateral, shall be applied
(after deduction of any amounts payable to the Subscribers pursuant to Paragraph
12.1 hereof) against the Obligations.   Upon payment in full of all Obligations,
Debtors shall be entitled to the return of all Collateral, including cash, which
has not been used or applied toward the payment of Obligations or used or
applied to any and all costs or expenses of the Subscribers incurred in
connection with the liquidation of the Collateral (unless another person is
legally entitled thereto).  Any assignment of Collateral by the Subscribers to
Debtors shall be without representation or warranty of any nature whatsoever and
wholly without recourse.  To the extent allowed by law, Subscribers may purchase
the Collateral and pay for such purchase by offsetting the purchase price with
sums owed to Subscribers by Debtors arising under the Obligations or any other
source.


10.5           Rights of Subscribers to Appoint Receiver.   Without limiting,
and in addition to, any other rights, options and remedies Subscribers has under
the Transaction Documents, the UCC, at law or in equity, or otherwise, upon the
occurrence and continuation of an Event of Default, Subscribers shall have the
right to apply for and have a receiver appointed by a court of competent
jurisdiction.  Debtors expressly agrees that such a receiver will be able to
manage, protect and preserve the Collateral and continue the operation of the
business of Debtors to the extent necessary to collect all revenues and profits
thereof and to apply the same to the payment of all expenses and other charges
of such receivership, including the compensation of the receiver, until a sale
or other disposition of such Collateral shall be finally made and
consummated.  Debtors waive any right to require a bond to be posted by or on
behalf of any such receiver.


11.           Waiver of Automatic Stay.   Debtor acknowledges and agrees that
should a proceeding under any bankruptcy or insolvency law be commenced by or
against Debtor, or if any of the Collateral should become the subject of any
bankruptcy or insolvency proceeding, then the Subscribers should be entitled to,
among other relief to which the Subscribers may be entitled under the Note,
Subscription Agreement, Transaction Documents, and any other agreement to which
the Debtor and Subscribers are parties, (collectively “Loan Documents”) and/or
applicable law, an order from the court granting immediate relief from the
automatic stay pursuant to 11 U.S.C. Section 362 to permit the Subscribers to
exercise all of its rights and remedies pursuant to the Loan Documents and/or
applicable law.  DEBTOR EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION 362.  FURTHERMORE, DEBTOR EXPRESSLY ACKNOWLEDGES
AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE
BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11
U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY
WAY THE ABILITY OF THE SUBSCRIBERS TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES
UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.   Debtor hereby consents to any
motion for relief from stay which may be filed by the Subscribers in any
bankruptcy or insolvency proceeding initiated by or against Debtor, and further
agrees not to file any opposition to any motion for relief from stay filed by
the Subscribers.  Debtor represents, acknowledges and agrees that this provision
is a specific and material aspect of this Agreement, and that the Subscribers
would not agree to the terms of this Agreement if this waiver were not a part of
this Agreement.  Debtor further represents, acknowledges and agrees that this
waiver is knowingly, intelligently and voluntarily made, that neither the
Subscribers nor any person acting on behalf of the Subscribers has made any
representations to induce this waiver, that Debtor has been represented (or has
had the opportunity to be represented) in the signing of this Agreement and in
the making of this waiver by independent legal counsel selected by Debtor and
that Debtor has had the opportunity to discuss this waiver with
counsel.   Debtor further agrees that any bankruptcy or insolvency proceeding
initiated by Debtor will only be brought in the Federal Court within the
Southern District of New York.
 
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12.           Miscellaneous.


12.1         Expenses.  Debtors shall pay to the Subscribers, on demand, the
amount of any and all reasonable expenses, including, without limitation,
attorneys’ fees, legal expenses and brokers’ fees, which the Subscribers may
incur in connection with (a) sale, collection or other enforcement or
disposition of Collateral; (b) exercise or enforcement of any the rights,
remedies or powers of the Subscribers hereunder or with respect to any or all of
the Obligations upon breach or threatened breach; or (c) failure by Debtors to
perform and observe any agreements of Debtors contained herein which are
performed by Subscribers.


12.2         Waivers, Amendment and Remedies.  No course of dealing by the
Subscribers and no failure by the Subscribers to exercise, or delay by the
Subscribers in exercising, any right, remedy or power hereunder shall operate as
a waiver thereof, and no single or partial exercise thereof shall preclude any
other or further exercise thereof or the exercise of any other right, remedy or
power of the Subscribers.  No amendment, modification or waiver of any provision
of this Agreement and no consent to any departure by Debtors therefrom shall, in
any event, be effective unless contained in a writing signed by the Subscribers,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. The rights, remedies and powers of
the Subscribers, not only hereunder, but also under any instruments and
agreements evidencing or securing the Obligations and under applicable law are
cumulative, and may be exercised by the Subscribers from time to time in such
order as the Subscribers may elect.


12.3         Notices.  All notices or other communications given or made
hereunder shall be in writing and shall be personally delivered or deemed
delivered the first business day after being faxed (provided that a copy is
delivered by first class mail) to the party to receive the same at its address
set forth below or to such other address as either party shall hereafter give to
the other by notice duly made under this Section:



  
To Debtors:
Mesa Energy Holdings, Inc.

5220 Spring Valley Road, Suite 525
Dallas, TX 75254
Attn: Randy M. Griffin, CEO
Fax: (760) ___________
 
With a copy by facsimile

 
only to:
Gottbetter & Partners, LLP

488 Madison Avenue, 12th Floor
New York, NY 10022
Attn: Adam S. Gottbetter, Esq.
Fax: 928-426-5166
 

 
To Subscribers:
As specified in the Subscription Agreement

 
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To Collateral Agent:
Collateral Agents, LLC

111 West 57th Street, Suite 1416
New York, NY 10019
Attn: General Counsel
Fax: 928-426-5166


If to Debtors or Subscribers,
or Collateral Agent
with a copy by telecopier only to:


Grushko & Mittman, P.C.
551 Fifth Avenue, Suite 1601
New York, New York 10176
Fax: 928-426-5166


Any party may change its address by written notice in accordance with this
paragraph.


12.4         Term; Binding Effect.  This Agreement shall (a) remain in full
force and effect until payment and satisfaction in full of all of the
Obligations; (b) be binding upon each Debtor, and its successors and permitted
assigns; and (c) inure to the benefit of the Subscribers and its successors and
assigns.


12.5         Captions.  The captions of Paragraphs, Articles and Sections in
this Agreement have been included for convenience of reference only, and shall
not define or limit the provisions of this agreement and have no legal or other
significance whatsoever.


12.6         Governing Law; Venue; Severability.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to conflicts of laws principles that would result in the
application of the substantive laws of another jurisdiction, except to the
extent that the perfection of the security interest granted hereby in respect of
any item of Collateral may be governed by the law of another jurisdiction.  Any
legal action or proceeding against a Debtor with respect to this Agreement must
be brought only in the courts in the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, each Debtor hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts.  Each Debtor hereby irrevocably waives any objection which they may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement brought in the
aforesaid courts and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.  If any provision of this
Agreement, or the application thereof to any person or circumstance, is held
invalid, such invalidity shall not affect any other provisions which can be
given effect without the invalid provision or application, and to this end the
provisions hereof shall be severable and the remaining, valid provisions shall
remain of full force and effect.


12.7         Entire Agreement.  This Agreement contains the entire agreement of
the parties and supersedes all other agreements and understandings, oral or
written, with respect to the matters contained herein.


12.8         Counterparts/Execution.  This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.  This
Agreement may be executed by facsimile signature and delivered by electronic
transmission.
 
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13.           Termination; Release.  When the Obligations have been indefeasibly
paid and performed in full or all outstanding Note have been converted to common
stock pursuant to the terms of the Note and the Subscription Agreements, this
Agreement shall terminated, and the Subscribers, at the request and sole expense
of the Debtors, will execute and deliver to the Debtors the proper instruments
(including UCC termination statements) acknowledging the termination of the
Security Agreement, and duly assign, transfer and deliver to the Debtors,
without recourse, representation or warranty of any kind whatsoever, such of the
Collateral, including, without limitation, Securities and any Additional
Collateral, as may be in the possession of the Subscribers.


14.           Subscribers Powers.


14.1         Subscribers Powers.  The powers conferred on the Subscribers
hereunder are solely to protect Subscribers’ interest in the Collateral and
shall not impose any duty on it to exercise any such powers.


14.2         Reasonable Care.  The Subscribers is required to exercise
reasonable care in the custody and preservation of any Collateral in its
possession; provided, however, that the Subscribers shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral if it takes such action for that purposes as any owner thereof
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Subscribers,
to comply with any such request at any time shall not in itself be deemed a
failure to exercise reasonable care.


14.3         Majority in Interest.   The rights of the Subscribers hereunder,
except as otherwise set forth herein shall be exercised upon the approval of
Subscribers holding 70% of the outstanding Obligations (“Majority in Interest”)
at the time such approval is sought or given and must include each
of ____________________ and ____________________ for so long as such Subscribers
holds not less than $100,000 of Note Principal.  Any tangible or physical
Collateral shall be delivered to and be held by the Collateral Agent pursuant to
this Agreement and on behalf of all Subscribers as to their respective
rights.  The Collateral, to the extent it may be transferred to Subscribers, may
be held in the name of ____________________ or in “street name”.  Unless agreed
to otherwise by a Majority in Interest, ____________________ is authorized to
act on behalf of all the Subscribers in connection with the Subscribers rights
under this Agreement.


14.4         Authority of Collateral Agent.  The Collateral Agent was appointed
by the Subscribers pursuant to a Collateral Agent Agreement of even date
herewith.  All of the rights and benefits granted to the Subscribers pursuant to
this Agreement, including the security interest and enforcement rights are also
granted to the Collateral Agent and may be exercised by Collateral Agent on
behalf of Subscribers.
 
[THIS SPACE INTENTIONALLY LEFT BLANK]
 
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IN WITNESS WHEREOF, the undersigned have executed and delivered this Security
Agreement, as of the date first written above.
 
“DEBTOR”
   
MESA ENERGY HOLDINGS, INC.
   
A Delaware corporation
               
By:
/s/ Randy M. Griffin
   
Its:
Chief Executive Officer
               
“SUBSIDIARY”
 
“SUBSIDIARY”
MESA ENERGY, INC.
 
MESA ENERGY OPERATING, LLC
a Nevada corporation
 
a Texas limited liability company
           
By:
 /s/ Randy M. Griffin
 
By:
/s/ Randy M. Griffin
     
Its:
Chief Executive Officer
 
Its:
Chief Executive Officer
           
Agreed and Accepted by:
         
COLLATERAL AGENT:
         
COLLATERAL AGENTS, LLC
               
By:
   
   
Name:
   
Title:
   

 
This Security Agreement may be signed by facsimile signature and
delivered by confirmed facsimile transmission.


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