Exhibit 10.03

SECOND AMENDMENT TO RENEWAL PROMISSORY NOTE
AND LOAN MODIFICATION AGREEMENT

This Second Amendment to Renewal Promissory Note and Loan Modification Agreement
(the “Second Amendment”) dated March 3, 2009, amends that certain Renewal
Promissory Note dated May 21, 2007, in the original stated amount of
$5,579,847.00, executed by Pegasi Energy Resources Corporation, a Texas
corporation; (ii) Pegasi Operating Inc., a Texas corporation (“POI”); (iii) TR
Rodessa, Inc., a Texas corporation; and (iv) 59 Disposal, Inc., a Texas
corporation (each, an "Original Maker”), in favor of Teton, Ltd., a Texas
limited partnership (“Payee”).

RECITALS

WHEREAS, each of the Original Makers executed a certain Renewal Promissory Note
(the “Original Note”) dated May 21, 2007, in the stated amount of $5,579,847.00,
payable to Teton, Ltd., a Texas limited partnership, to evidence their agreement
to repay certain working capital loans Teton Ltd. had made to the Original
Makers and to their predecessor entities (the “Loan”);

WHEREAS, the Original Note was amended by Amendment to Renewal Promissory Note
dated May 21, 2008 (the “First Amendment”), to eliminate a required interest
payment.  (The Original Note, as previously amended by the First Amendment, is
hereinafter referred to as the “Note”);

WHEREAS, Pegasi Energy Resources Corporation, a Texas corporation (“PERC-TX”),
became a wholly-owned subsidiary of Pegasi Energy Resources Corporation, a
Nevada corporation f/n/a Maple Mountain Explorations Inc. (“PERC–NV”) in
approximately January of 2008; and PERC-NV is now a publicly-traded corporation;

WHEREAS, PERC-NV is executing this Second Amendment to evidence its agreement to
repay the Additional Funds (as defined below) and to acknowledge that it is now
a co-maker and joint obligor of the Note (PERC-NV, together with the Original
Makers, are hereinafter collectively referred to as “Makers”);

WHEREAS, on January 4, 2008, one or more of the Makers made a voluntary partial
prepayment of $1,000,000.00 on the Note, which payment was allocated to pay (i)
$277,456.00 in interest that had accrued as of such date (thus paying all
accrued interest to the date of payment), and (ii) $722,544.00 in outstanding
principal.  Consequently, excluding the Additional Funds (as hereinafter
defined), the Note’s current outstanding principal balance is $4,857,303.00; and
interest has accrued on this amount under the terms of the Note since January 4,
2008;

WHEREAS, the following additional monies (the “Additional Funds”) have been or
are being advanced to Makers by Payee and are now part of the Loan:  (i) on
August 28, 2007, $10,000.00 was advanced to a third-party accounting firm on
Maker’s behalf for accounting services provided to Maker, (ii) on August 30,
2007, $10,000.00 was advanced to Maker/POI for working capital, (iii) on January
13, 2009, $150,000.00 was advanced to Petrocapital on Maker’s behalf for
investment advisory services to be provided to Maker/PERC-NV; (iv) on February
23, 2009, $100,000.00 was advanced to Maker/PERC-TX to provide funds to pay
amounts due under the Haggard mineral lease; and (v) on the date hereof,
$300,000.00 was advanced to Maker/PERV-NC and/or PERC/TX to provide working
capital.
 
 
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WHEREAS, Makers and Payee desire to amend the Note to document the additional
advances and to document certain related agreements between Makers and Payee.

NOW, THEREFORE, in consideration of the premises and the mutual promises
contained in this Amendment, Makers and Payee hereby agree as follows:

AGREEMENT

I.

Amendments and Related Agreements

1.           Amendment to Note to Add the Additional Funds.  The Note is hereby
amended to confirm that the Additional Funds have been added to the outstanding
principal balance of the Loan and shall be repaid under the terms of the
Note.  Consequently, the total outstanding principal balance of the Note is now
$5,427,303.00, of which (i) $4,857,303.00 is accruing interest at eight percent
(8%) per annum from January 4, 2008, and (ii) $570,000.00 in Additional Funds
have been advanced and are accruing interest at eight percent (8%) per annum
from the date of each additional advance, to-wit:
 
Date of Advance:
Additional Funds Advanced:
   
8/28/07
$  10,000.00
8/30/07
10,000.00
1/13/09
150,000.00
2/23/09
100,000.00
3/3/09
300,000.00
 
$  570,000.00

 
Notwithstanding the foregoing, for the $10,000.00 advances made on 8/28/07 and
8/30/07, interest shall begin to accrue on the date of this Second Amendment;
and no interest shall be charged on these Additional Funds for any prior period
of time.

2.           Pledge of Assets.  Makers hereby pledge their respective assets to
secure repayment of the Loan.  Payee is authorized to file one or more UCC-1
financing statements to reflect such pledge.  Makers also agree to execute all
additional documentation deemed necessary by Payee to perfect such pledge,
including one or more deeds of trust to establish liens on all of Makers’ real
property interests and a pledge agreement whereby PERC-NV pledges 100% of the
issued and outstanding stock in PERC-TX.  Failure to execute such documentation
on request shall at Payee’s option constitute a default on the Note.  The Loan
is hereby amended to provide that the Note is no longer unsecured.
 
 
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3.           Confirmation of Strike Price stated in the Memorandum of
Understanding;  Anti-Dilution Provision.  (a) The parties hereby acknowledge
that a Memorandum of Understanding (the “M of O”) dated May 21, 2007, was
executed in conjunction with the Loan and that the M of U gave or evidenced
Payee’s option (the “Option”) to convert all or a portion of the indebtedness
evidenced by the Note into the common stock of PERC-NV.  The M of U also set
forth a “strike price” (the “Strike Price”) at which Payee could convert the
Note balance into the common stock of PERC-NV (the “Option Shares”); namely, the
M of U provided that “[t]he strike price at which Teton may exercise its option
shall be the offering price for PERC/Pubco’s stock set forth in the PPM.”

(b)           PERC-NV and Payee hereby confirm that the Strike Price is $1.20
per share for any Option Shares acquired by conversion of the portion of the
Note balance that existed prior to the date of this Second Amendment (i.e.,
$4,857,303.00, plus accrued interest).

(c)           PERC-NV and Payee hereby agree that the Strike Price shall be
$1.60 per share for any Option Shares acquired by conversion of the portion of
the Note balance that consists of the Additional Funds (i.e., $570,000.00, plus
accrued interest).

(d)           PERC-NV agrees not to issue additional stock in PERC-NV without
first reaching a definitive agreement with Payee that will protect Payee’s
Option from dilution (the “Anti-Dilution Agreement”).  If, between the date of
this Second Amendment and the date of exercise of the Option, the outstanding
shares of PERC-NV shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, or other similar change in capitalization, an
appropriate and proportionate adjustment shall be made to the Option.

II.

Miscellaneous

1.           Makers expressly acknowledge and agree that except as expressly
amended in this Second Amendment, the Note, as previously amended, remains in
full force and effect and is ratified and confirmed.  This Second Amendment
shall neither extinguish nor constitute a novation of the Note or indebtedness
evidenced thereby.

2.           The Note and this Second Amendment were negotiated and executed in
Houston, Texas, and the Loan was funded in Texas.  The Loan shall be governed by
Texas law.  The parties agree that the exclusive venue for any enforcement
action involving the Loan shall be in Harris County, Texas.

3.           The parties covenant and agree as follows:
 
 
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(1)       The rights and obligations of the parties shall be determined solely
from the written “Loan Agreement” (as such term is defined in Section
26.02(a)(2) of the Texas Business and Commerce Code) executed and delivered in
connection with the Loan, and any oral agreements between or among the parties
are superseded by and merged into the Loan Agreement.

(2)       The Loan Agreement has not been and may not be varied by any oral
agreements or discussions that have or may occur before, contemporaneously with,
or subsequent thereto.

(3)       THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.

Executed to be effective as of March 3, 2009.
 

 Makers:        Payee:              
Pegasi Energy Resources Corporation, 
a Nevada corporation f/n/a      
Maple Mountain Explorations Inc. 
   
Teton, Ltd., a Texas limited partnership
By: Notet Corp., a Texas corporation,
its general partner
                 By:
/s/
      By:
/s/
    Richard Lindermanis, Senior Vice President and CFO       W.L. Sudderth,
Secretary    
 
     
 
 

 

                     
Pegasi Energy Resources Corporation,
a Texas corporation (and wholly-owned
subsidiary of Pegasi Energy Resources Corporation,
a Nevada corporation f/n/a Maple Mountain Explorations Inc.)
                       By:
/s/
            Richard Lindermanis, Vice President            
 
     
 
 

                     
Pegasi Operating Inc., a Texas corporation (and wholly-owned
subsidiary of Pegasi Energy Resources Corporation,
a Texas corporation)
                       By:
/s/
           
Richard Lindermanis, Vice President
           
 
     
 
 

 
(signatures continued on next page)
 
 
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TR Rodessa, Inc., a Texas corporation (and wholly-owned
subsidiary of Pegasi Energy Resources Corporation,
a Texas corporation)
                       By:
/s/
           
Richard Lindermanis, Vice President
           
 
     
 
 

                     
59 Disposal, Inc., a Texas corporation (and wholly-owned
subsidiary of Pegasi Energy Resources Corporation,
a Texas corporation)
                       By:
/s/
           
Richard Lindermanis, Vice President
           
 
     
 
 

             

 

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