Document:

Exhibit 10.3

                                 PROMISSORY NOTE

$100,000.00                        MIDLAND, TEXAS                 APRIL 27, 2011

     FOR VALUE RECEIVED, BARON ENERGY, INC. (the "BORROWER") (as successor in
interest to Permian Legend Petroleum LP) whose principal address is 392 West
Mill Street, New Braunfels, Texas 78130, promises to pay to the order of
BASELINE CAPITAL, INC. (the "LENDER") at 310 West Wall, Suite 803, Midland,
Midland County, Texas 79701 the sum of ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00), together with interest from the date hereof until maturity on the
unpaid principal balance thereof from time to time outstanding at the Stated
Rate and with interest on all past due amounts, both principal and accrued
interest, at the Past Due Rate, provided, that for the full term of this Note
the interest rate produced by the aggregate of all sums paid or agreed to be
paid to the holder of this Note for the use, forbearance or detention of the
debt evidenced hereby shall not exceed the Ceiling Rate.

     This Note is also described in and is subject to the terms and provisions
of that certain First Amended and Restated Loan Agreement dated as of April 27,
2011 by and among Borrower and Lender, as amended (the "AGREEMENT"). This Note
is subject to the terms and conditions of the Agreement. Capitalized terms used
but not defined herein shall have the meanings assigned thereto in the
Agreement.

     This Note is also subject to the terms and conditions of that certain First
Amended and Restated Subordination Agreement of even date herewith, by and among
Borrower, Lender, as subordinated creditor, and Newton Energy, Inc., as senior
creditor.

     "STATED RATE" means, on any day, a rate per annum equal to eight percent
(8.0%) per annum; provided, that if at any time the Stated Rate plus the
aggregate of all other sums paid or agreed to be paid to the Lender for the use
forbearance or detention of the debt evidenced hereby shall exceed the Ceiling
Rate, then the Stated Rate shall be fixed at the Ceiling Rate.

     "PAST DUE RATE" means, on any day, a rate per annum equal to eighteen
percent (18.0%). All past due payments shall bear interest from the due date
thereof until paid at the Past Due Rate; provided, that if at any time the
Stated Rate plus the aggregate of all other sums paid or agreed to be paid to
the Lender for the use forbearance or detention of the debt evidenced hereby
shall exceed the Ceiling Rate, then the Stated Rate shall be fixed at the
Ceiling Rate.

     "CEILING RATE" means, on any day, the maximum nonusurious rate of interest
permitted for that day by whichever of applicable federal or Texas law permits
the higher interest rate, stated as a rate per annum. Without notice to the
Borrower or any other person or entity, the Ceiling Rate shall automatically
fluctuate upward and downward as and in the amount by which the maximum
nonusurious rate of interest fluctuates.

     Interest on the amount of each advance against this Note shall be computed
on the amount of each advance and from the date of each advance. Interest shall
be computed for the actual number of days elapsed and on the basis of a year
consisting of 365 or 366 days, as the case may be.

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<PAGE>
     If, for any reason whatever, the interest and any and all other amounts
paid or agreed to be paid to Lender during the full term of this Note and for
any time thereafter shall produce a rate which exceeds the Ceiling Rate, Lender
shall, at the Lender's option, credit against the principal of this Note and any
other amounts owed by Borrower to Lender such portion of said interest and/or
other payments as shall be necessary to cause the interest and/or other amounts
paid on this Note to produce a rate equal to the Ceiling Rate, or refund any
excess amount to Borrower. All interest paid or agreed to be paid to Lender
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment in full of all
obligations of Borrower to Lender (including the period of any renewal or
extension).

     The above sum and accrued interest shall be due and payable as follows:

     (a)  Principal and interest shall be due and payable in FORTY-SEVEN (47)
          monthly installments, each in the amount of $2,442.00 beginning JUNE
          1, 2011, and continuing on the 1st day of each month thereafter until
          and including APRIL 1, 2015.

     (b)  On MAY 1, 2015, (the "MATURITY DATE"), the remaining balance,
          including principal and accrued and unpaid interest, then remaining
          unpaid on this Note shall be due and payable.

     (c)  Notwithstanding the foregoing, if $60,000.00 of principal amount and
          all accrued and unpaid interest on this Note is paid on or before
          October 27, 2011, the remaining $40,000.00 in principal amount shall
          be forgiven and this Note will be deemed paid in full.

     The unpaid principal balance of this Note at any time shall be the total of
all amounts loaned or advanced by the holder hereof less the amount of all
payments or prepayments of principal made hereon by or for Borrower.
Notwithstanding anything hereto to the contrary, the entire remaining principal
balance of this Note, plus all accrued unpaid interest, shall be due and payable
in its entirety on the Maturity Date, unless such maturity is accelerated in
accordance with the Agreement and the other Loan Documents.

     Unless otherwise agreed to, in writing, or otherwise required by applicable
law, payments will be applied first to accrued, unpaid interest, then to current
principal due and owing, and any remaining amount to any unpaid collection
costs, late charges and other charges and the balance to the principal in
inverse order of maturity; provided, however, upon delinquency or other default,
Lender reserves the right to apply payments among principal, interest, late
charges, collection costs and other charges at its discretion. The Borrower may
at any time pay the full amount or any part of this Note without the payment of
any premium or fee except as provided in the Agreement.

     In addition to all principal and accrued interest on this Note, the
Borrower agrees to pay (a) all reasonable costs and expenses actually incurred
by Lender in any probate, reorganization, bankruptcy or any other proceedings

                                       2
<PAGE>
for the establishment or collection or any amount hereunder, or in collecting
this Note through any such proceedings, and (b) reasonable attorney's fees when
and if this Note is placed in the hands of an attorney for collection after
default.

     The Borrower and all co-borrowers, sureties and guarantors severally waive
notice (including, but not limited to, notice of intent to accelerate and notice
of acceleration), demand, presentment for payment, protest and the filing of
suit for the purpose of fixing liability and consent that the time of payment
hereof may be extended and re-extended from time to time without notice to it,
and agree that its liability on or with respect to this Note shall not be
affected by any release of or change in any security at any time existing or by
any failure to perfect or to maintain perfection of any lien on or security
interest in any such security.

     Lender reserves the right, exercisable in Lender's sole discretion and
without notice to Borrower or any other person, to sell participations, to
assign its interest or both, in all or any part of this Note or the debt
evidenced by this Note.

     This Note is given as a renewal, extension and modification of that certain
Promissory Note dated August 1, 2007 executed by Permian Legend Petroleum LP,
predecessor in interest to Borrower, and made payable to Lender in the original
principal amount of $500,000.00.

     This Note shall be construed under and governed by the laws of the State of
Texas.

     THE AGREEMENT, THIS NOTE, THE SECURITY DOCUMENTS, THE GUARANTY AND/OR ANY
AND ALL OTHER DOCUMENTS EXECUTED AT OR NEAR THE TIME OF EXECUTION OF THIS
DOCUMENT CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE
TEXAS BUSINESS & COMMERCE CODE, AND 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.

                  [Remainder of Page Intentionally Left Blank]

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<PAGE>
     DATED the 27th day of April, 2011.

                              BARON ENERGY, INC.

                              By: /s/ Lisa P. Hamilton
                                 -----------------------------------------------
                              Name:  Lisa P. Hamilton
                              Title: Executive Vice President and CFO

                              THE LENDER: (THE LENDER'S SIGNATURE IS PROVIDED AS
                              ITS ACKNOWLEDGMENT OF THE ABOVE AS THE FINAL
                              WRITTEN AGREEMENT BETWEEN THE PARTIES.)

                              BASELINE CAPITAL, INC.

                              By: /s/ Karl J. Reiter
                                 -----------------------------------------------
                                 Karl J. Reiter, President

                                       4Exhibit 10.4

                                FIRST AMENDED AND
                        RESTATED SUBORDINATION AGREEMENT

     THIS FIRST AMENDED AND RESTATED SUBORDINATION AGREEMENT (this "AGREEMENT")
is made and entered into as of April 27, 2011 by and among BaseLine Capital,
Inc. ("SUBORDINATED LENDER"), Baron Energy, Inc. ("BORROWER"), as successor in
interest to Permian Legend Petroleum LP, and Newton Energy, Inc. ("SENIOR
LENDER"), with reference to the following facts:

     A. Borrower's predecessor, Permian Legend Petroleum LP ("PERMIAN"), and
Subordinated Lender entered into that certain Loan Agreement dated as of August
1, 2007, as amended by that certain Consent and First Amendment to Loan
Agreement dated October 31, 2008, and as further amended by that certain Second
Amendment to Loan Agreement dated as of September 30, 2009 (collectively, the
"ORIGINAL SUBORDINATED LOAN AGREEMENT").

     B. In connection with the Original Loan Agreement, Permian, Subordinated
Lender and American State Bank ("ASB") entered into that certain Subordination
Agreement dated as of August 1, 2007 (the "ORIGINAL SUBORDINATION AGREEMENT").

     C. ASB has transferred the Senior Debt to Senior Lender.

     D. Through a series of corporate transactions, Borrower is the successor in
interest to Permian and is obligated to the Subordinated Lender and Senior
Lender under the Original Subordination Agreement and the related loan
documents.

     E. Subordinated Lender and Borrower have entered into that certain First
Amended and Restated Loan Agreement of even date herewith (the "SUBORDINATED
LOAN AGREEMENT"), amending and restating the Subordinated Original Loan
Agreement.

     F. Senior Lender, Subordinated Lender and Borrower have agreed to amend and
restate the Original Subordination Agreement as set forth herein.

     NOW, THEREFORE, for and in consideration of the mutual covenants and
promises of this Agreement, and for other consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower, Subordinated Lender and
Senior Lender agree as follows:

     1. Definitions. As used in this Agreement the following terms have the
following meanings (other terms are defined above or elsewhere herein):

     "DEBTOR RELIEF LAWS" means Title 11 of the United States Code, as amended
from time to time, and any and all applicable laws regarding liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, suspension of payments, insolvency,
reorganization, or similar laws affecting the rights of creditors generally, as
in effect from time to time and as hereafter amended.

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<PAGE>
     "EQUIPMENT COLLATERAL" means the equipment, inventory, pipe and other
personal property assets of Borrower pledged to Subordinated Lender under the
Subordinated Loan Documents.

     "EVENT OF DEFAULT" means an "Event of Default" for failure to make a
payment under and as defined in the Senior Loan Documents.

     "PERSON" means any individual, partnership, limited partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, syndicate, or other entity or
organization of whatever nature.

     "SENIOR DEBT" means the principal, interest, fees, and any and all costs
and expenses owed by Borrower to Senior Lender under the Senior Loan Documents,
and all extensions and renewals thereof, as well as any additions thereto,
including, but not limited to, any future advances to be extended by Senior
Lender to Borrower up to the maximum amount of $1,000,000.00, plus accrued
interest and amounts owed for fees, costs and expenses.

     "SENIOR LOAN DOCUMENTS" means that certain Amended, Restated and
Consolidated Term Note dated August 31, 2010 executed by Borrower and made
payable to Senior Lender, together with all of the loan documents referred to
therein and executed in connection therewith.

     "SUBORDINATED DEBT" means the principal of and interest on the Subordinated
Loan Documents and all other debt of Borrower to Subordinated Lender up to the
maximum principal amount of $500,000.00, plus accrued interest and amounts owed
for fees, costs and expenses.

     "SUBORDINATED LOAN DOCUMENTS" means the Subordinated Loan Agreement and all
related agreements, documents and instruments.

     2. Subordination. Until the Senior Debt is paid in full, (a) any payment in
respect of the Subordinated Debt is and shall be expressly junior and
subordinated in right of payment to all amounts due and owing upon all Senior
Debt outstanding from time to time, (b) except as expressly provided in SECTION
3 hereof, Subordinated Lender may not receive or accept any payment in any form
with respect to the Subordinated Debt and (c) any liens or security interests
now or hereafter securing payment of any and all Subordinated Debt are expressly
subordinated to the liens and security interests now or hereafter securing the
Senior Debt; in each case, including all other notes and security instruments
executed in connection therewith, and each amendment, extension, refinancing,
restatement or other modification thereof. Subordinated Lender may require
Borrower to pledge, mortgage or grant liens on their properties to Subordinated
Lender so long as Senior Lender also has a lien on or security interest in such
property or has determined in its discretion not to have such lien or security
interest. Senior Lender acknowledges and agrees that it has determined not to
have and does not have a lien on or security interest in any of the Equipment
Collateral, and that the Subordinated Lender's lien on and security interest in
the Equipment Collateral is not subject to the subordination provided in this
Agreement.

                                       2
<PAGE>
     3. Payment on Subordinated Debt. If the Payment Conditions (as hereinafter
defined in this SECTION 3) are satisfied, Borrower may pay Subordinated Lender
on the Subordinated Loan Agreement pursuant to the terms thereof (the "PERMITTED
PAYMENTS"). The term "PAYMENT CONDITIONS," means that: (i) no Event of Default
has occurred and is continuing under the Senior Loan Documents, and (ii) no
Event of Default would result under the Senior Loan Documents from the making of
any such Permitted Payments. If the Payment Conditions are not satisfied with
respect to any calendar month, such that the Permitted Payments attributable to
such calendar month may not be made pursuant to this Agreement, then such
Permitted Payments shall continue to be an obligation of Borrower to
Subordinated Lender, expressly subject to the rights of the Senior Lender, and
subject to the terms of this Agreement. If the Payment Conditions are not
satisfied with respect to any calendar month, resulting in the Permitted
Payments for that month not being made, then at the end of any subsequent
calendar month, if the Payment Conditions are satisfied based on a cumulative
calculation that includes all unpaid Permitted Payments, then the sum of the
unpaid Permitted Payments for all such previous calendar months may be paid.

     4. Proceedings Against Borrower. Until the Senior Debt is paid in full,
Subordinated Lender may not, without the consent of the Senior Lender (which
consent will not be unreasonably withheld):

          (a) exercise any remedies (other than the acceleration of the
     Subordinated Debt, which the Subordinated Lender may do at its discretion
     in accordance with the Subordinated Loan Documents), or commence any action
     or proceeding (or join with any other creditor in commencing any action or
     proceeding, including an action or proceeding under any Debtor Relief Law)
     to recover all or any part of the Subordinated Debt from Borrower, or

          (b) exercise any remedies, or commence any action or proceeding
     against Borrower or any assets of Borrower to foreclose, levy or realize
     against any assets of Borrower;

provided, that the foregoing limitations shall not apply to any right, action or
remedy of the Subordinated Lender (i) relating to the Assignments under and as
defined in the Subordinated Loan Agreement, (ii) concerning the Equipment
Collateral, (iii) to collect any Permitted Payments, or (iv) taken within one
hundred eighty (180) days prior to the expiration of any limitations period
related to the Subordinated Debt or to any right or remedy under the
Subordinated Loan Documents.

     5. Waiver and Subrogation. Subordinated Lender hereby waives and agrees not
to assert against Senior Lender any rights which a guarantor or surety of debt
of Borrower might assert. Notwithstanding the immediately preceding sentence,
nothing in this Agreement shall cause Subordinated Lender to be deemed or
treated as a guarantor or surety. Subordinated Lender shall be subrogated, to
the extent of any amounts required to be paid over to Senior Lender pursuant to
the terms of this Agreement, to all rights of Senior Lender to receive any
payments or distributions applicable to the Senior Debt.

                                       3
<PAGE>
     6. Debtor Relief Laws. In the event of any proceedings under any Debtor
Relief Laws involving Borrower (other than in the capacity of a creditor),
Subordinated Lender may, to the extent applicable, file any claims, proofs of
claim, motions, responses, pleadings or other instruments of similar character
necessary to (a) have its claim allowed with respect to the Subordinated Debt,
(b) vote on any plan or other matter proposed, or (c) enforce the obligation of
Borrower with respect to the Subordinated Debt. Notwithstanding anything set
forth herein to the contrary, Subordinated Lender shall be entitled to payments
and other rights and remedies as may be provided under or in connection with any
plan or other procedure approved by a court or other authorized Person(s) under
any Debtor Relief Laws.

     7. Subordinated Lender's Rights. Except as expressly limited herein,
Subordinated Lender shall have the right to enforce the obligations of Borrower
under the Subordinated Loan Documents.

     8. No Impairment. Except as otherwise provided herein, Senior Lender may,
at any time and from time to time, without the consent of or notice to
Subordinated Lender, without incurring responsibility to Subordinated Lender,
and without impairing or releasing any of Senior Lender's rights, or any of the
obligations of Subordinated Lender under this Agreement:

          (a) change the amount, manner, place, or terms of payment, or change
     or extend the time of payment of or renew or alter all or any part of the
     Senior Debt or amend, modify, supplement, or restate, any of the Senior
     Loan Documents in any manner whatsoever, except that the amount of the
     Senior Debt secured by the Mortgaged Properties (as defined in the
     Subordinated Loan Agreement) shall not exceed $1,000,000.00;

          (b) sell, exchange, release, or otherwise deal with all or any part of
     any property pledged or mortgaged to secure all or any part of the Senior
     Debt;

          (c) release anyone liable in any manner for the payment or collection
     of all or any part of the Senior Debt;

          (d) exercise or refrain from exercising any rights against the
     Borrower, Guarantor and others; and

          (e) apply any sums, by whomsoever paid or however realized, to the
     Senior Debt.

     Subordinated Lender agrees that if Senior Lender agrees to any sale,
exchange, release, or transfer of all or any part of any property pledged or
mortgaged to secure all or any part of the Senior Debt, and Subordinated Lender
will receive payment receive payment in full of all obligations owed to it by
Borrower in connection with such transaction (after payment in full of the
Senior Lender), such sale, exchange, release, or transfer shall be made free of
any liens or security interests securing the Subordinated Debt. Upon receipt of
such payment in full of all obligations owed to it by Borrower, Subordinated
Lender further agrees to execute any and all documents or instruments requested
by Borrower or Senior Lender to evidence the release of any such liens and
security interests of Subordinated Lender.

                                       4
<PAGE>
     9. Other Agreements. Notwithstanding anything to the contrary set forth in
this Agreement or in the Senior Loan Documents, (i) Borrower shall execute and
deliver the Assignment, and the related Memorandum of Assignment and the Limited
Power of Attorney, to Subordinated Lender upon execution of this Agreement to be
held, delivered and filed in accordance with the Subordinated Loan Agreement,
(ii) Subordinated Lender may accept and file the Assignment in accordance with
the Subordinated Loan Agreement, (iii) Senior Lender hereby consents to the
Assignment and to the above-described actions, and waives any and all breaches,
defaults or Events of Default that such items or actions may cause under the
Senior Loan Documents, (iv) Senior Lender shall execute and deliver to the
Subordinated Lender a full release of the property interest covered by the
Assignment and all production and proceeds related thereto upon notice from
Subordinated Lender that it is entitled to the Assignment in accordance with the
Subordinated Loan Agreement, (v) the debt, liens and security interests
evidenced by the Subordinated Security Documents are hereby approved and
consented to by Senior Lender under the Senior Loan Documents, and Senior Lender
waives any and all breaches, defaults or Events of Default such debt, liens or
security interests my cause under any of the Senior Loan Documents, (vi) Senior
Lender and Subordinated Lender shall promptly give notice to each other Lender
upon the occurrence of any breach, default or Event of Default under the
respective loan documents or any change, event or occurrence regarding Borrower,
Guarantor or their respective properties about which either becomes aware, and
(vii) Senior Lender and Borrower and Guarantor shall not enter into any
agreements or other documents (including without limitation amendments or
modifications of the Senior Loan Documents) which conflict or interfere with or
reduce any right or interest of Subordinated Lender set forth in this Agreement,
the Assignment or the Subordinated Loan Documents.

     10. Attorneys' Fees. If either Subordinated Lender or Senior Lender employs
an attorney or attorneys to enforce or defend its rights under this Agreement,
such Lender shall be entitled to recover from Borrower its court costs,
reasonable attorneys' fees, and other costs of enforcement.

     11. Amendment of Subordinated Loan Documents. The Subordinated Loan
Documents may be amended, extended, renewed, or replaced without the prior
written consent of the Senior Lender so long as the total principal amount does
not exceed $500,000.00.

     12. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one and the
same instrument. This Agreement may be transmitted and signed by facsimile or
other electronic transmission and shall have the same effect as manually-signed
originals and shall be binding on all parties. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.

     13. Binding Effect. This Agreement is binding upon the parties hereto and
their respective successors and assigns.

     14. Choice of Law. THIS AGREEMENT MUST BE CONSTRUED, AND ITS PERFORMANCE
ENFORCED, UNDER TEXAS LAW, WITHOUT REGARD TO THE CHOISE OF LAW RULES OF SUCH
STATE.

                                       5
<PAGE>
     15. Subordinated Lender's Option. Effective on the first date (i) the
Senior Lender institutes judicial proceedings seeking payment of, or an account
of, the Senior Debt or enforcement of any rights or remedies against Borrower or
any collateral securing payment of the Senior Debt or the performance of
Borrower's obligations under the Senior Loan Documents, or (ii) the Senior
Lender initiates any foreclosure proceedings for the purpose of realizing upon
any of the collateral securing payment of the Senior Debt (any such event in
clause (i) or this clause (ii), herein an "OPTION EVENT"), the Subordinated
Lender shall have the right and option (but not the obligation) for each Option
Event for a period of ten days (the "OPTION EXERCISE PERIOD") to purchase all
(but not less than all) of the Senior Debt and Senior Loan Documents. The Option
Exercise Period shall commence upon the Subordinated Lender's receipt of written
notice from the Senior Lender stating that an Option Event has occurred. If the
Subordinated Lender elects to purchase the Senior Debt, the Subordinated Lender
shall deliver to the Senior Lender, not later than the expiration of the Option
Exercise Period, a written notice (the "Notice", the date of such notice being
herein referred to as the "NOTICE DATE") specifying (i) the Subordinated
Lender's desire to irrevocably exercise the option and (ii) a place and date not
later than ten (10) days after the Notice Date for the closing (the "CLOSING
DATE"). On the Closing Date, the Subordinated Lender shall pay to the Senior
Lender in immediately available funds an amount equal to the Senior Debt (the
"PURCHASE PRICE"). At the closing, simultaneously with the delivery of the
Purchase Price, the Senior Lender shall assign to the Subordinated Lender all of
the Senior Loan Documents by instruments containing mutually agreeable and
customary terms for such a transaction.

     16. Borrower's Acknowledgment. Borrower hereby acknowledges and agrees to
the terms of this Agreement.

                   [SIGNATURES APPEAR ON THE FOLLOWING PAGES.]

                                       6
<PAGE>
     EXECUTED as of the date set out in the Preamble.

                                 SENIOR LENDER:

                                 NEWTON ENERGY, INC.

                                 By: /s/ James J. Cerna
                                    -------------------------------------------
                                 Name:  James J. Cerna
                                 Title: Manager

                                 SUBORDINATED LENDER:

                                 BASELINE CAPITAL, INC.

                                 By: /s/ Karl J. Reiter
                                    -------------------------------------------
                                    Karl J. Reiter, President

                                 BORROWER:

                                 BARON ENERGY, INC.

                                 By: /s/ Lisa P. Hamilton
                                    -------------------------------------------
                                 Name:  Lisa P. Hamilton
                                 Title: Executive Vice President and CFO

                    Signature Page to Subordination Agreement

                                       7

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