EX-10.34






AMERICAN STATE BANK




TERM NOTE




$50,000.00 Midland, Texas October 15, 2009




1. For value received, PERMIAN LEGEND PETROLEUM LP, a Texas limited partnership (the “Maker”),
promises to pay to the order of AMERICAN STATE BANK, a state banking association (the “Bank”), at
its offices at 620 N. Grant Avenue, Odessa, Texas 79761, in lawful money of the United States of
America, the sum of FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00), together with interest on the
principal amount from time to time outstanding hereunder, from the date of disbursement of such
principal until maturity, at a variable rate of interest per annum (the “Variable Rate") equal to
the “American State Bank Base Rate,” as defined below, plus two and one-half percentage points
(2.5%), in no event to be less than six and one-half percent (6.5%), but in no event to exceed the
"Highest Lawful Rate,” as defined below, with adjustments to the Variable Rate to be made on the
same date as the effective date of any change in the American State Bank Base Rate and adjustments
due to changes in the Highest Lawful Rate to be made on the effective date of any change in the
Highest Lawful Rate.



2. This Note is executed pursuant to the terms of 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, by and
among Maker, as Borrower; Permian Legend LLC, Ronnie L. Steinocher, and Lisa P. Hamilton, as
Guarantors; and Bank, as Lender (as so amended, the “Loan Agreement”). This Note incorporates by
reference the terms of the Loan Agreement. In the event of a conflict between the terms of this
Note and the terms of the Loan Agreement, the terms of the Loan Agreement shall be deemed to be
controlling.



3. Notwithstanding the foregoing, if at any time the Variable Rate exceeds the Highest Lawful Rate,
the rate of interest to accrue on this Note shall be limited to the Highest Lawful Rate, but any
subsequent reductions in such Variable Rate shall not reduce the rate of interest to accrue on this
Note below the Highest Lawful Rate until the total amount of interest accrued on this Note equals
the amount of interest which would have accrued if the Variable Rate had at all times been in
effect.



4. If at maturity or final payment of this Note the total amount of interest paid or accrued under
the foregoing provisions is less than the total amount of interest which would have accrued if the
Variable Rate had at all times been in effect, then Maker agrees to pay to Bank, to the extent
permitted by law, an amount equal to the difference between (a) the lesser of (i) the amount of
interest which would have accrued on this Note if the Highest Lawful Rate had at all times been in
effect, or (ii) the amount of interest which would have accrued if the Variable Rate had at all
times been in effect, and (b) the amount of interest accrued in accordance with the other
provisions of this Note.



5. The term “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 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 Maker or any other person, the Base Rate
may change from time to time pursuant to the preceding sentence. The Base Rate is a reference rate
and does not necessarily represent the lowest or best rate actually charged to any customer. Bank
may make commercial loans or other loans at rates of interest at, above or below the Base Rate.
Business Day shall mean a day other than a Saturday, Sunday, or legal holiday for commercial banks
under the laws of the State of Texas.



6. The term “Highest Lawful Rate” shall mean the maximum nonusurious interest rate, if any, that at
any time or from time to time may be contracted for, taken, reserved, charged, collected or
received by the Bank in connection with this Note under laws applicable to the Bank which are
presently in effect or, to the extent allowed by law, under applicable laws which may hereafter be
in effect and which allow a higher maximum nonusurious interest rate than applicable laws now
allow.



7. The principal balance of this Note shall be due and payable on or before December 15, 2009.



8. Interest, computed on the unpaid principal balance of this Note shall be due and payable as it
accrues monthly, commencing on November 15, 2009, and thereafter on the fifteenth day of each and
every succeeding month during the term hereof, until maturity, December 15, 2009, when the entire
amount of this Note, principal and accrued, unpaid interest, shall be due and payable.



9. All past due principal and interest on this Note shall bear interest from the maturity thereof
until paid, at the Highest Lawful Rate. Interest on this Note shall be computed on a 365/360 simple
interest basis; that is, by applying the ratio of the annual interest over a year of 360 days,
times the outstanding principal balance, times the actual number of days the principal is
outstanding, unless such calculation would result in a usurious rate, in which case interest shall
be calculated on a per diem basis of 360 days.



10. If an Event of Default should occur under the Loan Agreement, thereupon, following any
applicable notice and cure provisions, at the option of Bank, the principal balance and accrued
interest of the Note, and any and all other indebtedness of Maker to Bank shall become and be due
and payable forthwith without demand, notice of default, notice of acceleration, notice of intent
to accelerate the maturity hereof, notice of nonpayment, presentment, protest or notice of
dishonor, all of which are hereby expressly waived by Maker and each other liable party. Bank may
waive any default without waiving any prior or subsequent default.



11. If a payment is ten (10) days or more late, Maker will be charged five percent (5%) of the
regularly scheduled payment or $100.00, whichever is less.



12. To the extent not prohibited by applicable law, Maker will pay all reasonable costs and
expenses and reimburse Bank for any and all expenditures of every character incurred or expended
from time to time, regardless of whether an Event of Default shall have occurred, in connection
with (a) Bank’s evaluating, monitoring, administering and protecting the Mortgaged Property, as
hereinafter defined, and (b) Bank’s creating, perfecting or realizing upon Bank’s security interest
in and liens on the Mortgaged Property, and all reasonable costs and expenses relating to Bank’s
exercising any of its rights and remedies under this or any other instrument now or hereafter
securing any indebtedness owed by Maker to Bank or at law, including, without limitation, all
filing fees, taxes, brokerage fees and commissions, title review and abstract fees, Uniform
Commercial Code search fees, other fees and expenses incident to title searches, reports and
security interests, escrow fees, attorneys’ fees, legal expenses, court costs, fees and expenses
incurred in connection with any complete or partial liquidation of the Mortgaged Property, and all
fees and expenses for any professional services relating to the Mortgaged Property or any
operations conducted in connection with it; provided, however, that no right or option granted by
Maker or Bank or otherwise arising pursuant to any provision of this or any other instrument shall
be deemed to impose or admit a duty on the Bank to supervise, monitor or control any aspect of the
character or condition of the Mortgaged Property or any operations conducted in connection with it
for the benefit of Maker or any other person or entity other than the Bank.



13. If this Note is not paid at maturity whether by acceleration or otherwise and is placed in the
hands of an attorney for collection, or suit is filed hereon, or proceedings are had in probate,
bankruptcy, receivership, reorganization, arrangement or other legal proceedings for collection
hereof, Maker and each other liable party agree to pay Bank their collection costs, including a
reasonable amount for attorney’s fees, but in no event to exceed the maximum amount permitted by
law. Maker and each other liable party are and shall be directly and primarily, jointly and
severally, liable for the payment of all sums called for hereunder, and Maker and each other liable
party hereby expressly waive bringing of suit and diligence in taking any action to collect any
sums owing hereon and in the handling of any security, and Maker and each other liable party hereby
consent to and agree to remain liable hereon regardless of any renewals, extensions for any period
or rearrangements hereof, or partial prepayments hereon, or any release or substitution of security
hereof, in whole or in part, with or without notice, from time to time, before or after maturity.



14. It is the intent of the Maker and Bank in the execution and performance of this note to
contract in strict compliance with the usury laws of the State of Texas and the United States of
America from time to time in effect. For purposes hereof, “interest” shall include the aggregate
of all charges which constitute interest under such laws that are contracted for, reserved, taken,
charged or received under this note. In furtherance thereof, the Bank and the Maker stipulate and
agree that none of the terms and provisions contained in this note, shall ever be construed to
create a contract to pay for the use, forbearance or detention of money with interest at a rate in
excess of the Highest Lawful Rate. In the event the Bank or any other holder of the note ever
charges or contracts for any amount in excess of lawful interest, the documents or instruments
constituting such charge or contract shall be ipso facto modified without any further action by any
party so that no amount in excess of lawful interest shall be charged or contracted for. If the
Bank or any other holder of the note ever receives, collects or applies as interest any amount in
excess of lawful interest, such amount which would be excessive interest shall be applied to the
reduction of the unpaid principal balance of the note, and, if upon such application the principal
balance of the note is paid in full, any remaining excess shall be forthwith paid to the Maker. In
determining whether or not the interest paid or payable under any specific contingency exceeds the
Highest Lawful Rate, the Maker and the Bank shall, to the maximum extent permitted under applicable
law, (a) treat all advances as but a single extension of credit (and the Maker and the Bank agree
that such is the case and that provision herein for multiple advances is for convenience only), (b)
characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (c)
exclude voluntary prepayments and the effects thereof, and (d) “spread” the total amount of
interest throughout the entire contemplated term of the note. The provisions of this paragraph
shall control over all other provisions of the note or other documents executed in connection with
this note which may be in apparent conflict herewith.



15. Maker reserves the option of prepaying the principal of this Note, in whole or in part, at any
time after the date hereof without penalty. At the option of Bank, it may demand (at any time at
or after prepayment) all accrued and unpaid interest with respect to the principal amount prepaid
through the date of prepayment. All amounts of principal so prepaid and received by the owner and
holder of this Note shall be applied to the last maturing installments of this Note in their
inverse order of maturity.



16. Unless otherwise specified below, this Note shall be construed under and governed by the laws
of the State of Texas (including applicable federal law), but in any event TEX. FIN. CODE ANN.
SECTION 346.001 et. seq. (which regulates certain revolving loan accounts and revolving tripartite
accounts) shall not apply to the loan evidenced by this Note.



17. Unless changed in accordance with the law, the applicable rate ceiling under Texas law shall be
the indicated (weekly) rate ceiling from time to time in effect as provided in TEX. FIN. CODE ANN.
Section 303.001 et seq., as amended.



18. Maker warrants and represents to the Bank, and to all other holders of this note that all loans
evidenced by this Note are and will be for business, commercial, investment or other similar
purposes and not primarily for personal, family, household or agricultural use, as such terms are
used in TEX. REV. CIV. STAT. ANN. ART. 5069-1D. 201, as amended.



19. This Note is secured by the pledge of the following property, being referred to herein as the
“Collateral”:




	 	a.	 	all present and future interests now owned or hereafter acquired by the Maker
in those oil, gas, and mineral properties identified in those certain Deeds of Trust,
Mortgages, Security Agreements, and Financing Statements, or amendments thereto, dated
as of May 15, 2008, covering oil and gas properties located in Haskell, Jones, Nolan,
Reagan, Runnels, and Taylor Counties, in the State of Texas, together with all proceeds
of production therefrom;






	 	b.	 	all present and future increases, profits, combinations, reclassifications,
improvements and products of, accessions, attachments, and other additions to, and
substitutes and replacements for, any of the Collateral;






	 	c.	 	all cash and noncash proceeds and other rights arising from or by virtue of, or
from the voluntary or involuntary sale, lease or other disposition of, or collections
with respect to, or insurance proceeds payable with respect to, or proceeds payable by
virtue of warranty or other claims against manufacturers of, or claims against any
other persons with respect to, any of the Collateral;






	 	d.	 	all present and future security for the payment to Maker for any of the
Collateral;






	 	e.	 	all goods which gave or will give rise to any of the Collateral or are
evidenced, identified or represented therein or thereby; and






	 	f.	 	all certificates of title, manufacturer’s statements of origin, or other
documents, accounts and chattel paper arising from or related to any of the Collateral.





The Maker’s performance under this Note is further secured by those certain Guaranty Agreements, of
even date herewith, executed by Permian Legend LLC, Ronnie L. Steinocher, and Lisa P. Hamilton.
Failure to describe all or part of the security shall not be considered as a waiver of such
security.



20. Bank reserves the right, exercisable in Bank’s sole discretion and without notice to Maker or
any other person, to sell participations, to assign its interest or both, in all or any part of the
Note or the debt evidenced by the Note.



21. By execution of this Note, Maker acknowledges the receipt of the following notices from Bank:



THIS NOTE, 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.



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Address:




	3327	 	West Wadley Avenue, Suite 3, #267 PERMIAN LEGEND PETROLEUM LP,






	 	 	Midland, Texas 79707 a Texas Limited Partnership






	 	 	 	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




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