EX-10.42






Haskell County, Texas Jones County, Texas


Nolan County, Texas Reagan County, Texas


Runnels County, Texas Taylor County, Texas



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 THE PUBLIC RECORDS:
YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.



FIRST AMENDMENT TO DEEDS OF TRUST, MORTGAGES,

SECURITY AGREEMENTS, ASSIGNMENTS OF PRODUCTION,

AND FINANCING STATEMENTS




THIS FIRST AMENDMENT TO DEEDS OF TRUST, MORTGAGES, SECURITY AGREEMENTS, ASSIGNMENTS OF
PRODUCTION, AND FINANCING STATEMENTS (this “Amendment”), dated as of August 1, 2008, is executed by
and between Permian Legend Petroleum, LP, a Texas limited partnership, whose address is 3327 West
Wadley Avenue, Suite 3, #267, Midland, Texas 79707 (the “Grantor”), and AMERICAN STATE BANK, whose
address is 620 North Grant, Odessa, Texas 79761-4797 (the “Bank”).



NOTICE IS TAKEN OF THE FOLLOWING:




	A.	 	Reference is made to that certain Loan Agreement, dated August 1, 2007, by and between
Grantor; Guarantors, as Borrowers; and Bank, as Lender (as so amended, the “Existing Loan
Agreement”). Pursuant to the terms of the Existing Loan Agreement, Grantor previously
executed that certain Term Loan, dated May 15, 2008, in the original principal amount of
$250,000.00, and that certain Revolver Loan, dated August 1, 2007, in the original principal
amount of $1,600,000.00, in favor of the Bank (the “Existing Notes”).






	B.	 	Reference is further made to those Deeds of Trust, Mortgages, Security Agreements,
Assignments of Production, and Financing Statements, and modifications thereto, described by
reference to their dates of execution and the recordation data pertaining thereto on the
Schedule “1”attached hereto and made a part hereof for all purposes, each of which is from the
Grantor to Mike Marshall, as Trustee for the benefit of the Bank (collectively, as so amended,
the “Deeds of Trust”). The Deeds of Trust secure Grantor’s performance under the Existing
Notes.






	C.	 	Grantor and the Bank have now entered into a new Loan Agreement, dated as of August 1, 2008
(the “Loan Agreement”). Pursuant to the terms of the Loan Agreement, at the request of the
Grantor, the Bank has agreed to extend to the Grantor a new term loan in the amount of One
Million Six Hundred Seventy-Five Thousand and No/100 Dollars ($1,675,000.00) (the “Loan"),
which renews and extends, the indebtedness evidenced by the Existing Note. To evidence the
Loan, Grantor has executed a term note, in the original principal amount of One Million Six
Hundred Seventy-Five Thousand and No/100 Dollars ($1,675,000.00) (the “Note”). By its term,
the Note will fully and finally mature on October 15, 2008.






	D.	 	In order to confirm that the lien granted under the Deeds of Trust secures the Grantor’s
performance under the Notes, to add certain oil and gas properties owned by the Grantor to
those properties defined below as “Mortgaged Properties”, and to correct and amend certain of
the descriptions of those Mortgaged Properties previously described, the Grantor and the Bank
have agreed to execute this Amendment.





NOW, THEREFORE, for and in consideration of the sum of Ten Dollars and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Grantor and the Bank,
for themselves and their respective heirs, personal representatives, successors, and assigns, have
agreed and by the execution hereof do evidence their agreement to the following:




	 	1.	 	Definitions. Except where provided otherwise herein, all terms defined
in the Deeds of Trust shall have the same meaning in this Amendment.






	 	2.	 	Structure. The parties confirm that pursuant to the terms of the Loan
Agreement, the Bank has agreed to advance the Loan to the Grantor. Grantor agrees that
the amounts owed pursuant to the terms of the Note shall be added to the obligations
secured by the Deeds of Trust, with the understanding that final maturity will occur
under the Note on October 15, 2008. In consideration of the Bank’s agreement to
advance of the Loan, Grantor has agreed to confirm its conveyance to the Bank of those
oil and gas properties described on the Exhibit “A” attached hereto and made a part
hereof for all purposes (the “Original Mortgaged Properties”) and those additional oil
and gas properties that are now also described on the same Exhibit “A” (the “Additional
Mortgaged Properties.”) The Original Mortgaged Properties and the Additional Mortgaged
Properties are collectively referred to herein as the “Mortgaged Properties”.






	 	3.	 	Lien Against Mortgaged Properties. To confirm that the Deeds of Trust
cover the Mortgaged Properties and secure the Grantor’s performance under the Note,
Grantor does hereby grant, bargain, sell, convey, transfer, assign, and set over to the
Trustee designated in the Deeds of Trust the following:






	 	a.	 	Those Mortgaged Properties that are described on the Exhibit “A” that
is attached hereto and made a part hereof for all purposes, including not only the
Original Mortgaged Properties, but also the Additional Mortgaged Properties, all
as more fully completely described on Exhibit “A.”;






	 	b.	 	Without limitation of the foregoing, all other right, title and
interest of Grantor of whatever kind or character (whether now owned or hereafter
acquired by operation of law or otherwise) in and to the lands which are described
or referred to in Exhibit “A” as a part of the descriptions (contained in such
Exhibit “A”) of oil, gas and other mineral properties, or which are otherwise
described in any of the leases or other instruments described in Exhibit “A”, even
though the interest of Grantor in such lands may be incorrectly described in, or
omitted from, Exhibit “A”;






	 	c.	 	All of Grantor’s interest (whether now owned or hereafter acquired by
operation of law or otherwise) in and to all presently existing and hereafter
created oil, gas, and mineral unitization, pooling and communitization agreements,
declarations or orders, and in and to the properties covered and the units created
thereby (including, without limitation, units formed under orders, rules,
regulations or other official acts of any federal, state or other authority having
jurisdiction and so-called “working interest units” created under operating
agreements or otherwise), which cover, affect or otherwise relate to the
properties described in subparagraphs (a) and (b) above;






	 	d.	 	All of Grantor’s interest in and under (whether now owned or
hereafter acquired by operation of law or otherwise) all presently existing and
hereafter created agreements, equipment leases, production sales, purchase,
exchange and/or processing agreements, transportation agreements, farmout and/or
farm-in agreements, salt water disposal agreements, area of mutual interest
agreements, and other contracts and/or agreements which cover, affect, or
otherwise relate to the properties described in subparagraphs (a), (b), or (c)
above or to the operation of such properties or to the treating, handling,
storing, transporting or marketing of oil, gas, other hydrocarbons, or other
minerals produced from (or allocated to) such properties, including, but not
limited to, those contracts listed in Exhibit “A”, as same may be amended or
supplemented from time to time; and






	 	e.	 	All of Grantor’s interest (whether now owned or hereafter acquired by
operation of law or otherwise) in and to all equipment, improvements, materials,
supplies, fixtures and other property (including, without limitation, all wells,
pumping units, wellhead equipment, tanks, pipelines, flow lines, gathering lines,
compressors, dehydration units, separators, meters, buildings, injection
facilities, salt water disposal facilities, and power, telephone and telegraph
lines) and all easements, servitudes, rights-of-way, surface leases and other
surface rights, which are now or hereafter used, or held for use, in connection
with the properties described in subparagraphs (a), (b), and (c) above, or in
connection with the operation of such properties, or in connection with the
treating, handling, storing, transporting or marketing of oil, gas other
hydrocarbons, or other minerals produced from (or allocated to) such properties.





IN ADDITION TO THE REAL AND PERSONAL PROPERTIES, RIGHTS, TITLES, INTERESTS, AND
ESTATES DESCRIBED OR TO WHICH REFERENCE IS MADE IN PARAGRAPHS (a) THROUGH (e),
INCLUSIVE, ABOVE, IF GRANTOR CURRENTLY OWNS OR HEREAFTER ACQUIRES AN INTEREST IN ANY
OTHER OIL, GAS, OR OTHER MINERAL INTEREST (INCLUDING, BUT NOT LIMITED TO, ANY AND
ALL LEASEHOLD INTERESTS, WORKING, INTERESTS, OVERRIDING ROYALTY INTERESTS,
PARTICIPATING AND NON-PARTICIPATING ROYALTY INTERESTS, NET PROFITS INTERESTS,
PRODUCTION PAYMENT INTERESTS, UNLEASED MINERAL INTERESTS, AND ANY OTHER INTEREST IN
MINERALS) IN ANY OF THE COUNTIES SET FORTH ON THE COVER PAGE OF THIS INSTRUMENT OR
IN THE PREFACE TO THE EXHIBIT “A” THAT IS ATTACHED HERETO (COLLECTIVELY, THE
“SUBJECT COUNTIES”), THE TITLE TO WHICH EITHER CURRENTLY OR HEREAFTER STANDS IN
GRANTOR’S NAME, GRANTOR DOES GRANT, BARGAIN, SELL, ASSIGN, TRANSFER, AND CONVEY THAT
INTEREST TO THE TRUSTEE, FOR THE BENEFIT OF THE BENEFICIARY. GRANTOR SPECIFICALLY
AFFIRMS THAT IT INTENDS THAT ANY SUCH INTEREST IS TO BE INCLUDED WITHIN THE
DEFINITION OF THE MORTGAGED PROPERTY, AND FURTHER INTENDS TO CONVEY TO THE TRUSTEE,
FOR THE BENEFIT OF THE BENEFICIARY, AS A PART OF THE MORTGAGED PROPERTY, EVERY
POSSIBLE PRESENT INTEREST THAT GRANTOR HAS TO ANY OIL, GAS, OR MINERAL PROPERTY
LOCATED IN ANY OF THE SUBJECT COUNTIES, WHETHER ACTUALLY OR PROPERLY DESCRIBED
HEREIN OR NOT, AND ALL OF SAID OIL, GAS, AND MINERAL INTERESTS ARE COVERED AND
INCLUDED HEREIN AS FULLY IN ALL RESPECTS AS IF THEY HAD BEEN ACTUALLY AND PROPERLY
DESCRIBED HEREIN. IN LIGHT OF THE DECISION IN GREER V. J. HIRAM MOORE, LTD., 72
S.W.3D 436 (TEX. APP.–CORPUS CHRISTI 2002, PET. DENIED, GRANTED ON REHEARING),
GRANTOR INTENDS FOR THIS PARAGRAPH, WHEN READ IN CONJUNCTION WITH THE ENTIRETY OF
THIS INSTRUMENT, TO CLEARLY EXPRESS GRANTOR’S INTENTIONS BEYOND A REASONABLE LEVEL
OF CERTAINTY. GRANTOR DOES NOT INTEND TO LIMIT THE OIL, GAS, AND MINERAL INTERESTS
IN LANDS IDENTIFIED BY THIS PROVISION TO SMALL PIECES OR STRIPS OF LAND THAT MAY
EXIST WITHOUT THE KNOWLEDGE OF ANY ONE OF THE PARTIES TO THIS INSTRUMENT BY REASON
OF INCORRECT SURVEYING, CARELESS LOCATION OF FENCES, OR OTHER MISTAKES. RATHER,
GRANTOR SPECIFICALLY INTENDS FOR THIS DEED OF TRUST TO INCLUDE ALL OIL, GAS, AND
MINERAL INTERESTS IN THOSE LANDS OWNED BY GRANTOR IN THE SUBJECT COUNTIES,
INCLUDING SPECIFICALLY ANY OIL, GAS, OR MINERAL INTEREST THAT GRANTOR MAY OWN IN
SAID COUNTY, WHETHER ACTUALLY AND PROPERLY DESCRIBED HEREIN OR NOT.




	 	4.	 	Security Interest in Personal Properties: In order to further secure
the payment of the secured indebtedness and the performance of the obligations,
covenants, agreements, warranties, and undertakings of Grantor hereinafter described,
Grantor hereby grants to the Bank a security interest in the entire interest of Grantor
(whether now owned or hereafter acquired by operation of law or otherwise) in and to:






a. The Mortgaged Properties;




	 	b.	 	All oil, gas, other hydrocarbons, as-extracted collateral, and other minerals
produced from or allocated to the Mortgaged Properties, and any products processed or
obtained therefrom (herein collectively called the “Production”), and all liens and
security interests in the Production securing payment of the proceeds of the Production
including, but not limited to, those liens and security interests provided under
statutes enacted in the jurisdictions in which the Mortgaged Properties are located;






	 	c.	 	All equipment, inventory, improvements, fixtures, accessions, goods and other
personal property of whatever nature now or hereafter located on or used or held for
use in connection with the Mortgaged Properties (or in connection with the operation
thereof or the treating, handling, storing, transporting, processing, or marketing of
Production) and all renewals or replacements thereof or substitutions therefore;






	 	d.	 	All contract rights, contractual rights, and other general intangibles related
to the Mortgaged Properties, the operation thereof (whether Grantor is operator or
non-operator), or the treating, handling, storing, transporting, processing, or
marketing of Production, or under which the proceeds of Production arise or are
evidenced or governed;






	 	e.	 	All geological, geophysical, engineering, accounting, title, legal, and other
technical or business data concerning the Mortgaged Properties, the Production, or any
other item of Property (as hereinafter defined) which are in the possession of Grantor
or in which Grantor can otherwise grant a security interest, and all books, files,
records, magnetic media, computer records, and other forms of recording or obtaining
access to such data;






	 	f.	 	All money, documents, instruments, chattel paper, securities, accounts, or
general intangibles arising from or by virtue of any transaction related to the
Mortgaged Properties or the Production (all of the properties, rights and interests
described in Paragraph 3, subparagraphs (a), (b), (c), (d) and (e) above and this
Paragraph 5, subparagraph (f) being herein sometimes collectively called the
“Collateral”); and






	 	g.	 	All proceeds of the Collateral or payments in lieu of Production (such as “take
or pay” payments), whether such proceeds or payments are goods, money, documents,
instruments, chattel paper, securities, accounts, general intangibles, fixtures, real
property, or other assets (the Mortgaged Properties, the Collateral and the proceeds of
the Collateral and payments in lieu of Production being herein sometimes collectively
called the “Property”).






	 	5.	 	Financing Statement






	 	a.	 	This Amendment covers goods which are or are to become fixtures on
the real property described herein. This Amendment shall be effective as a
financing statement filed as a fixture filing with respect to all fixtures
included within the Property and is to be filed for record in the real property
records of each county in which any part of the Mortgaged Properties (including
said fixtures) is situated. This Amendment shall also be effective as a financing
statement covering as-extracted collateral, minerals or the like (including oil
and gas) and accounts arising out of the sale at the wellhead or minehead of the
wells or mines located on the Mortgaged Properties of oil, gas, or other minerals
in which Grantor has an interest before extraction, and is to be filed for record
in the real property records of each county in which any part of the Mortgaged
Properties is situated. The Grantor is the debtor. This Amendment shall also be
effective as a financing statement covering any other Property and may be filed in
any other appropriate filing or recording office. The mailing address of Grantor
from which information concerning the security interests hereunder may be obtained
is the address of the Grantor set forth below. Grantor is a Texas limited
partnership with its principal office in Midland County, Texas.






	 	b.	 	A photographic or other reproduction of this Amendment or of any
financing statement relating to this Amendment shall be sufficient as a financing
statement for any of the purposes referred to in paragraph 6.a. above.






	 	c.	 	The Bank may at any time notify the account debtors or obligors of
any accounts, chattel paper, negotiable instruments or other evidences of
indebtedness included in the Collateral to pay the Bank directly.






	 	d.	 	The Bank shall have the right, without the consent or joinder of the
Grantor, to execute and file with any governmental authority such financing
statements, financing statement amendments and continuation statements as may, in
the sole discretion of the Bank, be necessary or advisable to maintain, perfect or
otherwise evidence the Lien of the Bank in and to any of the Mortgaged Property.
The Grantor, as Debtor, hereby expressly authorizes the Bank, as Secured Party, to
file any such financing statement without the signature of the Grantor to the
extent permitted by applicable law.






	 	6.	 	Continuation of Deed of Trust. None of the rights, titles, liens,
interests, securities or equities existing or to exist under the Deed of Trust or any
other instrument executed in connection with or as security for any of the secured
indebtedness shall be released, diminished, or impaired hereby. The Deed of Trust, as
amended hereby, is recognized to be in force and effect, subsisting and valid, covering
all of the Mortgaged Properties and Collateral; and Grantor does hereby convey the
Mortgaged Properties, to the extent the same have not been previously released, to the
Trustee to secure and enforce payment of the secured indebtedness (which includes the
Notes and grants to Bank a security interest in the Mortgaged Properties and all
proceeds thereof to secure the secured indebtedness (which includes the Note), all in
accordance with the terms of the Deed of Trust, as amended by this Amendment. All
rights and liens existing and to exist under the Deed of Trust, as amended hereby, are
renewed, extended, carried forward, and conveyed to secure all of the secured
indebtedness.






	 	 	 	7. Representations and Warranties: By the execution of this instrument,
Grantor represents and warrants that (a) the representations and warranties stated in
the Deed of Trust and in this Amendment are true and correct as of the date hereof and
apply with equal force and effect to the Mortgaged Properties, as described in Exhibit
“A” attached hereto; and (b) neither an Event of Default, as described in the Deed of
Trust, as so amended, nor any event which with the lapse of time or notice, or both,
could become an Event of Default, has occurred as of the date hereof.





THIS AMENDMENT TO DEEDS OF TRUST, THE NOTES, THE LOAN AGREEMENT, AND ALL OTHER
LOAN PAPERS EXECUTED SUBSTANTIALLY CONCURRENTLY HEREWITH TOGETHER CONSTITUTE A
WRITTEN LOAN AGREEMENT WHICH 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 BETWEEN THE PARTIES.



{The remainder of this page is intentionally blank. Signature page follows.}





Effective as of August 1, 2008, but executed the day of acknowledgment.




PERMIAN LEGEND PETROLEUM LP, a Texas limited
partnership



	 	 	 	 	 
	3327 West Wadley Avenue, Suite 3, #267	 	 	 	 
	Midland, Texas 79707	 	By:	 	Permian Legend LLC, its general partner
	 	 	 	 	By:       /s/ Lisa P. Hamilton—

	 	 	 	 	 

	 	 	 	 	Lisa P. Hamilton, Manager







By:      /s/ Ronnie L. Steinocher—


Ronnie L. Steinocher, Manager



GRANTOR




AMERICAN STATE BANK



620 North Grant Avenue


Odessa, Texas 79761




By:      /s/ Mike
Marshall      








Mike Marshall



Executive Vice President




BENEFICIARY



	 	 	 
	THE STATE OF TEXAS

COUNTY OF ECTOR

	 	§

§

§






This instrument was acknowledged before me on the        day of August 2008, by Lisa P. Hamilton,
Manager of Permian Legend LLC, a Texas limited liability company, acting as the General Partner of
PERMIAN LEGEND PETROLEUM LP, a Texas limited partnership, on behalf of said limited liability
company and limited partnership.



      



Notary Public, State of Texas



	 	 	 
	THE STATE OF TEXAS

COUNTY OF ECTOR

	 	§

§

§






This instrument was acknowledged before me on the        day of August 2008, by Ronnie L.
Steinocher, Manager of Permian Legend LLC, a Texas limited liability company, acting as the General
Partner of PERMIAN LEGEND PETROLEUM LP, a Texas limited partnership, on behalf of said limited
liability company and limited partnership.




      



Notary Public, State of Texas



	 	 	 
	THE STATE OF TEXAS

COUNTY OF ECTOR

	 	§

§

§






This instrument was acknowledged before me on the        day of August 2008, by Mike Marshall,
Executive Vice President of American State Bank, a Texas banking association, on behalf of said
association.




      




Notary Public, State of Texas