EX-10.25






FIFTH AMENDMENT TO LOAN AGREEMENT




THIS FIFTH AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is entered into as of the
15th day of October 2009, to be effective for all purposes as of July 15, 2009 (the
“Effective Date”), by and among PERMIAN LEGEND PETROLEUM, LP, a Texas limited partnership, whose
address 3327 West Wadley Avenue, Suite 3, No. 267, Midland, Texas 79707 (the “Borrower”); PERMIAN
LEGEND, LLC, a Texas limited liability company, whose address is also 3327 West Wadley Avenue,
Suite 3, No. 267, Midland, Texas 79707 (“Permian LLC”); LISA P. HAMILTON, an individual, whose
address is 3327 West Wadley Avenue, Suite 3, No. 267, Midland, Texas 79707 (“Hamilton”); RONNIE L.
STEINOCHER, also an individual, whose address is 2100 West Wadley Avenue, No. 21, Midland, Texas
79701 (“Steinocher”); and AMERICAN STATE BANK, a Texas banking association, whose address is 620
North Grant, Odessa, Texas 79764-4797 (alternatively “American State”, the “Bank” or the
“Lender”). Permian LLC, Hamilton, and Steinocher are collectively referred to herein as the
“Guarantors”.



NOTICE IS TAKEN OF THE FOLLOWING:




	A.	 	Borrower, Guarantors, and Lender have previously entered into that certain Loan Agreement,
dated as of August 1, 2008; as modified and amended by that certain First Amendment to Loan
Agreement, dated as of October 15, 2008; as further modified and amended by that certain
Second Amendment to Loan Agreement dated as of January 2, 2009; as further modified and
amended under that certain Third Amendment to Loan Agreement, dated as of March 17, 2009, to
be effective for all purposes as of February 15, 2009; and as further modified and amended
under that certain Fourth Amendment to Loan Agreement, dated as of May 15, 2009, to be
effective for all purposes as of May 1, 2009 (as so amended, the “Existing Loan Agreement”).
The Existing Loan Agreement amended and superseded previously existing loan agreements by and
among the same parties.






	B.	 	The Existing Loan Agreement provided for a term loan in the amount of One Million Six Hundred
and Seventy-Five Thousand and No/100 Dollars ($1,675,000.00) (the “Existing Loan”). The
Existing Loan is evidenced by a Term Note, dated as of August 1, 2008, in the original
principal amount of One Million Six Hundred and Seventy-Five Thousand and No/100 Dollars
($1,675,000.00), executed by the Borrower in favor of the Lender, as modified and amended by
that certain Modification and Amendment of Term Note, dated as of October 15, 2008; as further
modified and amendment by that certain Second Modification and Amendment of Term Note, dated
as of January 2, 2009; as further modified and amended by that certain Third Modification and
Amendment of Term Note, dated as of March 17, 2009, effective as of February 15, 2009; and as
further modified and amended by that certain Fourth Modification and Amendment of Term Note,
dated as of May 15, 2009, effective as of May 1, 2009 (as so modified, the “Existing Note”).
The Existing Note matures on July 15, 2009 (the “Existing Maturity Date”). The current
principal balance outstanding under the Existing Note is One Million Four Thousand Seven
Hundred Forty-Six and Sixty-Five/100 Dollars ($1,004,746.65).






	C.	 	The Existing Note is collateralized by Deeds of Trust, and amendments thereto, covering oil
and gas properties owned by the Borrower in Haskell, Jones, Nolan, Reagan, Runnels, and Taylor
Counties, in the State of Texas (as modified or amended, collectively, the “Deeds of Trust”).
In addition, Borrower’s performance under the Existing Note is collateralized by Guaranty
Agreements, dated as of August 1, 2008, under each of which each Guarantor agrees to guaranty
the Borrower’s indebtedness evidenced by the Existing Note (collectively, the “Existing
Guaranty Agreements”).






	D.	 	The Borrower and the Guarantors have now asked the Bank to extend the Existing Maturity Date
until December 15, 2009 (the “Extended Maturity Date”), and to provide additional funding in
the form of a new term loan, in the original principal amount of Fifty Thousand and No/100
Dollars ($50,000.00) (the “Second Term Loan”). The Existing Loan and the Second Term Loan are
referred to herein as the “Loans”. The Second Term Loan shall be evidenced by a new term
note, of even date herewith, in the original principal amount of Fifty Thousand and No/100
Dollars ($50,000.00), to be executed by the Borrower and payable to the Bank (the “Second Term
Note”). The Existing Note and the Second Term Note are referred to herein as the “Notes”.
The Second Term Note will be secured by the future advances provisions contained in the
Existing Deeds of Trust. In addition, the Guarantors have agreed to execute unlimited
Guaranty Agreements, of even date herewith, under which they agree to continue to guarantee
the obligations of the Borrower under the Loans (the “Guaranty Agreements”).






	E.	 	American State has agreed to extend the final maturity date of the Existing Note until the
Extended Maturity Date and to provide additional funding under the Second Term Note. As
consideration for the Bank’s agreement to extend and renew the maturity date of the Existing
Note from the Existing Maturity Date until the Extended Maturity Date, and for its agreement
to advance the Second Term Loan to the Borrower, the Borrower and the Guarantors have agreed
that such interest will be calculated by the Bank at a higher rate. As further consideration
for the Bank’s agreements, the Borrower and the Guarantors have agreed to include in this
Amendment the covenants detailed below.






	F.	 	The Borrower, the Guarantors, and the Lender have agreed to execute this Amendment in order
to confirm the terms of their agreement.





NOW, THEREFORE, for and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend the terms of the Existing Loan Agreement as follows:




	1.	 	Definitions.






Unless otherwise specifically defined herein, all defined terms used in this Amendment shall
have their respective meanings set forth in the Existing Loan Agreement.



2. Amendments.




	A.	 	The term “Rate” is hereby amended by deleting it in its entirety and substituting the
following:






Rate



Interest under the Notes shall accrue at an annual rate equal to the American State
Bank Base Rate, plus two and one-half percentage points (2.5%), and in no event to
be less than six and one-half percentage points (6.5%), but in no event to exceed
the “Highest Lawful Rate”, as defined in the Notes. For purposes of this Agreement,
the “American State Bank Base Rate” shall mean the rate announced by Bank as its
base lending rate as of the beginning of each Business Day, as hereinafter defined,
(and for holidays or weekends, the American State Bank Base Rate shall be the
American State Bank Base Rate as of the close of business on the most recent
Business Day immediately preceding such weekend or holiday) before all sums payable
hereunder have been paid in full. Without notice to the Borrower or any other
person, the American State Bank Base Rate may change from time to time pursuant to
the preceding sentence. The American State Bank Base Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. The Bank may make commercial loans or other loans at rates of interest
at, above, or below the American State Bank Base Rate. “Business Day” shall mean
any day other than a Saturday, Sunday or legal holiday for commercial banks under
the laws of the State of Texas.




	B.	 	The term “Structure” is hereby amended by deleting it in its entirety and substituting the
following:





Structure



Maker shall tender the monthly accrued interest payments due under the Notes on the
fifteenth day of each month, with the next such payment to be due on October 15,
2009, and subsequent payments of interest to be due on the fifteenth day of each
subsequent month until maturity on December 15, 2009, when all of the outstanding
principal and accrued, but unpaid, interest due under the terms of the Notes shall
be due and payable.




	C.	 	The term “Maturity Date” is hereby amended by deleting it in its entirety and substituting
the following:






Maturity Date



As stated, the Maturity Date of the Loans shall be December 15, 2009. Upon the
occurrence of the Maturity Date, all of the outstanding principal, and accrued, but
unpaid principal, due under the Loans shall be due and paid in full. In no event
shall the Bank be obligated to extend and renew the Loans as of the Extended
Maturity Date, and nothing in this Amendment shall be construed to require the
Lender to extend and the renew the Loans upon the occurrence of the Extended
Maturity Date.




	D.	 	Subparagraph II (F) of the Existing Loan Agreement shall be amended by deleting it in its
entirety and substituting the following section:





   F. Financial Statements.  The books and records of the Borrower
properly reflect the financial condition of the Borrower in all material respects,
and there has been no material change in the financial condition of the Borrower or
any of the Guarantors, except as previously disclosed in writing to ASB, and as
represented in their most recent financial statements.



E. Section III of the Existing Loan Agreement shall be amended by deleting it in its entirety and
substituting the following section:



III. CONDITIONS PRECEDENT



The provisions of the Existing Loan Agreement, as amended by this Amendment (as so
amended, the “Loan Agreement”), will serve as the proposed terms of the borrowing
arrangement. Prior to any funds being made available under the Second Term Loan,
Borrower will execute and deliver to the Bank, in form and substance satisfactory to
the Bank, this Amendment, the Fifth Modification and Amendment to Term Note (the
“Note Modification”), the Second Term Note, and such other documentation as the Bank
may require (collectively, the “Amended Loan Documents”).




	F.	 	The following affirmative covenant is hereby added as subparagraph IV(A)(12) to the Loan
Agreement:






	 	12.	 	On or before December 1, 2009, the Borrower shall either (a) provide to the
Bank documentary evidence in the form of a written commitment from another financial
institution, venture capitalist, or other financing agency of an offer to provide
financing to the Borrower in an amount sufficient to pay off all of the Borrower’s
indebtedness to the Bank, including any and all outstanding principal, accrued
interest, and fees and expenses, on or before the Extended Maturity Date; or (b) pay
down the outstanding indebtedness owed by the Borrower to the Bank by at least fifty
percent (50%) of that amount. The Bank shall be entitled to act in its sole and
absolute discretion in evaluating the sufficiency of the documentary evidence to be
provided by the Borrower pursuant to (a) above, should the Borrower elect to pursue
that particular option. If the Borrower successfully pursues the option set forth
under (b) above, and if no other Events of Default have occurred, the Bank will agree
to extend to and renew the Loans for an additional sixty (60) days in order to the
Borrower and the Guarantors further time within which to pay off the remaining
indebtedness owed to the Bank.






	G.	 	The negative covenant found under subparagraph IV(B)(3) to the Loan Agreement is hereby
amended by deleting it in its entirety and substituting the following:






3. The Borrower and Guarantors will not sell, contract to sell, convey, assign,
transfer, mortgage, pledge, hypothecate, encumber, or in any way alienate their interest in
any of the properties covered by the Deeds of Trust, without the consent of the Bank. The
Bank acknowledges and agrees that the Borrower may elect to sell some or all of the
properties covered by the Deeds of Trust in order to fulfill the terms of subparagraph
IV(A)(12)(b) above. In order to enable the Borrower to market its properties for such
purposes, the Bank agrees to consent to any such sale, and to execute a partial release of
the lien created against such properties under the Deeds of Trust. As consideration for
such a partial release, the Borrower agrees to tender to the Bank that portion of the
proceeds of the sale that is equivalent to the sum of the loan value assigned to the
property sold by the Bank under the terms of its most current reservoir engineering report,
plus eighty percent (80%) of any sales proceeds received by the Borrower in excess of such
loan value. The Bank agrees to provide the Borrower with the loan value assigned to any
property upon the Borrower’s request, to execute a partial release covering any property
sold, and to deliver the original of such a partial release to Borrower or any purchaser
designated by Borrower following the Bank’s receipt of the share of the sales proceeds
delineated above. The Bank expressly agrees that the Borrower may use any sales proceeds in
excess of those to be tendered to the Bank to pay down the indebtedness due to Baseline, or
for such other purposes as the Borrower wishes in order to consummate one or more of the
sales, as described above. The Bank further agrees that it will apply any sales proceeds
that it receives to the pay down of the indebtedness owed to it by the Borrower, in keeping
with the terms of subparagraph IV(A)(12)(b) above.




	H.	 	The following Event of Default is added as paragraph V(G):






G. An Event of Default occurs under Borrower’s agreement with Baseline.



3. Effectiveness.




	 	A.	 	Except to the extent specifically amended and supplemented hereby, all of the
terms, conditions and provisions of the Existing Loan Agreement shall remain
unmodified, and the Existing Loan Agreement, as amended and supplemented by this
Amendment, is ratified and confirmed as being in full force and effect.






	 	B.	 	All references to the Existing Loan Agreement herein or in any other document
or instrument among Borrower, Guarantors, and Lender shall hereafter be construed to be
references to the Loan Agreement, as that term is now defined.






	 	C.	 	Borrower and Guarantors expressly acknowledge and agree that until such time as
they have tendered full and final payment of all fees and expenses (including
attorneys’ fees) incurred by the Bank down to the date of this Amendment, the extension
granted by the Bank under this Amendment shall be invalid and of no force and effect.






	4.	 	Deeds of Trust. By joining in the execution of this Amendment, the Borrower, and
Guarantors, as applicable, do hereby: (a) consent to the execution, delivery, and performance
by the Borrower and Guarantors of this Amendment and all other documents executed in
connection herewith and the transactions contemplated hereby; (b) ratify and reaffirm those
certain Deeds of Trust, Mortgages, Security Agreements, Assignments of Production and
Financing Statements, dated as of May 15, 2008, and any amendments thereto, executed by the
Borrower in favor of Lender, and duly recorded in Haskell, Jones, Nolan, Reagan, Runnels, and
Taylor Counties, in the State of Texas (collectively, the “Deeds of Trust”), in all respects,
and agree that such Deeds of Trust are, and shall remain, in full force and effect; (iii)
acknowledge and agree that this Amendment shall not serve as a waiver, modification,
impairment, or release of any of Borrower’s obligations under the Deeds of Trust; (iv)
acknowledge and agree that each of the Bank Liens created under the Deeds of Trust securing
the obligations under the Loans are hereby ratified, affirmed, and extended to secure the
obligations under the Loans as amended by this Amendment; and (v) acknowledge and agree that
any amounts owed pursuant to the terms of the Second Term Note shall be added to the
obligation secured by the Deeds of Trust.






	5.	 	Counterparts: This Amendment may be executed in any number of counterparts, each of
which when executed and delivered shall be deemed an original, but all of which constitute one
instrument. In making proof of this Amendment, it shall not be necessary to produce or
account for more than one counterpart thereof signed by each of the parties hereto.






	6.	 	Notice of Final Agreement:





THIS AMENDMENT, THE NOTE MODIFICATION, AND ANY OTHER INSTRUMENTS EXECUTED BY THE
PARTIES CONTEMPORANEOUSLY HEREWITH REPRESENT 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.



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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date and year first above written.



BORROWER:



PERMIAN LEGEND PETROLEUM LP,



A Texas Limited Partnership



	 	 	 
	By:	 	Permian Legend, LLC
	 	 	General Partner
	By:
	 	      /s/ Lisa P. Hamilton—

	 	 	 

	 	 	Lisa P. Hamilton

Manager







By:       /s/ Ronnie L. Steinocher—


Ronnie L. Steinocher



Manager



GUARANTORS:



	 	 	 
	By:	 	Permian Legend, LLC
	 	 	General Partner
	By:	 	_/s/ Lisa P. Hamilton_______________
	 	 	Lisa P. Hamilton
	 	 	Manager
	By:
	 	      /s/ Ronnie L. Steinocher—

	 	 	 

	 	 	Ronnie L. Steinocher

Manager







      /s/ Lisa P. Hamilton—

Lisa P. Hamilton, Individually



      /s/ Ronnie L. Steinocher—



Ronnie L. Steinocher, Individually



LENDER:



AMERICAN STATE BANK



By:       /s/        Mike Marshall—

Mike Marshall

Executive Vice President





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