ex101.htm


    Exhibit
10.01

    


    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/PERV­NC and/or PERC/TX to provide working
capital.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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.

    


    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:

            


    

    


    (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,  	 	 	Teton,
      Ltd., a Texas limited partnership	 
	a
      Nevada corporation f/n/a	 	 	By: Notet
      Corp., a Texas corporation,	 


                  

                

              

            

          

        

      

    

    
      
        
          	

                  Maple
      Mountain Explorations Inc.

                	 	 	

                  its
      general partner

                	 
	
                   

                	 	 	
                   

                	 


        

      

    

    

      
        	 	 	 	 	 
	
                /s/
      RICHARD LINDERMANIS  

              	 	 	
                /s/
      W.L. SUDDERTH

              	 
	
                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.)

     

    
      
        
          
            	 	 	 	 	 
	
                    /s/
      RICHARD LINDERMANIS  

                  	 	 	
                     

                  	 
	
                    Richard
      Lindermanis, Vice President

                  	 	 	
                     

                  	 
	
                     

                  	 	 	
                     

                  	 


          

        

      

                                    


    

    Pegasi
Operating Inc., a Texas corporation (and wholly-owned subsidiary of Pegasi
Energy Resources Corporation, a Texas corporation)

     

    
      
        
          
            
              	 	 	 	 	 
	
                      /s/
      RICHARD LINDERMANIS  

                    	 	 	
                       

                    	 
	
                      Richard
      Lindermanis, Vice President

                    	 	 	
                       

                    	 
	
                       

                    	 	 	
                       

                    	 


            

          

        

                                     


      

    

    TR
Rodessa, Inc., a Texas corporation (and wholly-owned subsidiary of Pegasi Energy
Resources Corporation, a Texas corporation)

     

    
      
        
          
            
              	 	 	 	 	 
	
                      /s/
      RICHARD LINDERMANIS  

                    	 	 	
                       

                    	 
	
                      Richard
      Lindermanis, Vice President

                    	 	 	
                       

                    	 
	
                       

                    	 	 	
                       

                    	 


            

          

        

                                     

      

    

    59
Disposal, Inc., a Texas corporation (and wholly-owned subsidiary of Pegasi
Energy Resources Corporation, a Texas corporation)

     

    
      
        
          
            
              	 	 	 	 	 
	
                      /s/
      RICHARD LINDERMANIS  

                    	 	 	
                       

                    	 
	
                      Richard
      Lindermanis, Vice President