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Exhibit 10.1
 
 
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February 25, 2010
 
Glen Landry (“Landry”)
1011 S. Jefferson St.
Spokane, WA 99204

And

Ray Jefferd (“Jefferd”)
12922 – 19A Avenue
Surrey, BC, V4A 8P1
(Landry and Jefferd together referred to as “the Sellers”)
 
Dear Sirs:
 
Re:           Letter Agreement
 
This letter is further to our recent discussions regarding the acquisition of
Elk Hills Heavy Oil, LLC (“EHHO”) a Washington State limited liability company
and a to be created limited liability company to be named Four Bear Heavy Oil,
LLC (“FBHO”).  Stellar Resources Ltd. (“Stellar”) shall acquire 100% of EHHO and
FBHO from the Sellers upon the following terms and conditions.
 
EHHO has approximately 20,000 acres of oil and gas leases in Carbon County,
Montana attached as Schedule “A”.
 
FBHO has approximately 6,400 acres of oil and gas leases in Park County, Wyoming
attached as Schedule “B”.
 
The oil and gas leases owned by EHHO and FBHO are referred to as the
“Properties”.
 
Stellar shall pay to the Sellers the following consideration to acquire a 100%
interest in EHHO and FBHO:
 
(a)  
Stellar will issue a total of three (3) million fully paid and non-assessable
common shares to the Sellers as follows:

 
i.    
1,500,000 to Glen Landry

 
ii.    
1,500,000 to Ray Jefferd

 
(b)  
Stellar will grant to the Sellers a Net Profits Interest (NPI) of five percent
(5%).  The NPI is that share of production measured according to the net profits
from operations of the Property.  Created out of a working interest, it is
similar to an overriding royalty in that it is effective throughout the life of
the working interest and does not pay or contribute to development or operating
costs.  Income from the NPI is equal to its share of net revenues

 
 
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reduced by its share of specified development and operating costs (income = net
revenues - development and operating costs.)  The Sellers, owners of the net
profits interest, shall receive no income unless the property generates a net
profit. This NRI will be paid on a quarterly basis; and

 
(c)  
Mr. Raymond Jefferd will be appointed to the board of Stellar; and

 
(d)  
A cash payment totalling US$250,000 shall be paid to the Sellers upon Stellar
obtaining future financing for the development of the Properties on or before
December 31, 2011; and

 
An Area of Mutual Interest (AMI) shall be as follows: Any additional properties
within one mile of the existing borders of all Properties pertaining to this
Agreement, but shall not include any properties in Big Horn County, Montana,
which shall form part of this agreement if acquired in the future by Stellar or
the Sellers or any affiliate of any of them.
 
1.  
Letter Agreement

 
This Letter Agreement when executed will be binding upon Stellar and the
Sellers. The parties may elect to work towards the preparation of a more
definitive agreement (the “Definitive Agreement”) in respect of the transaction
that may add clarity and certainty to provisions of this Letter Agreement.
 
2.  
Representations and Warranties

The Sellers represents and warrants the following:
 
(i)   
EHHO and FBHO are to be properly registered and in good standing by the closing
date;

 
(ii)   
EHHO and FBHO have no liabilities other than future lease rentals due under the
terms of the oil and gas leases owned by EHHO and FBHO respectively;

 
(iii)   
EHHO and FBHO are the registered owners of their respective oil and gas leases
and all leases are free and clear of liens or encumbrances except 20% royalty on
the production of oil, gas and other hydrocarbons.

 
Stellar represents and warrants the following:
 
(i)   
Stellar is duly incorporated, registered and in good standing in regards to all
filings;

 
(ii)   
Stellar’s total liabilities contingent or otherwise do not exceed US$200,000;

 
 
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3.  
Definitive Agreement

If the parties mutually agree to enter into a further agreement (the “Definitive
Agreement”) is shall be subject to commercial arbitration which shall be
concluded March 10, 2010.  If the Definitive Agreement is not mutually agreed by
the Closing Date then this Letter Agreement shall remain binding and
enforceable. The Definitive Agreement shall be in form and substance
satisfactory to each of Stellar and the Sellers and shall include customary
terms and conditions, including representations and warranties, covenants,
conditions and completion mechanics (including without limitation, the
representation of warranties, covenants, conditions and completion of mechanics
contained in this agreement to the extent still applicable), for a transaction
of this nature.  In addition, the Definitive Agreement may include the following
mutual conditions precedent to the consummation of the Transaction:
 
(a)  
all governmental, court, regulatory, third person and other approvals, consents,
waivers, orders, exemptions, agreements and all amendments and modifications to
agreements which either Stellar or the Sellers, acting reasonably, shall
consider necessary or desirable in connection with the Transaction shall have
been obtained or entered into, as applicable, in form and substance satisfactory
to Stellar and the Sellers;

 
(b)  
there shall have been no action taken under any applicable law or by any
government or governmental or regulatory authority which:

 
(i)   
makes it illegal or otherwise directly or indirectly enjoins or prohibits the
completion of the Transaction; or

 
(ii)   
results or could reasonably be expected to result in a judgment, order, decree
or assessment of damages directly or indirectly relating to the Transaction
which is or could be, materially adverse to Stellar or the Sellers respectively,
on a consolidated basis;

 
(c)  
Stellar shall have received a title chain report on the Properties;

 
(d)  
the Sellers shall have obtained a satisfactory understanding of the short and
long term obligations of Stellar and shall have confirmed to its satisfaction
that such obligations are reasonable.

 
4.  
Due Diligence

 
The obligation to close the transaction shall be subject to each party being
satisfied with their due diligence review of the other party.  Each party and
their respective accountants, legal counsel, technical and financial advisors
and other representatives thereof shall be entitled to perform a due diligence
review and examination of the other of them and the business and affairs
thereof.
 
 
 
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5.  
Confidentiality

 
Whereas the parties have previously entered into a confidentiality agreement,
the Transaction and this Letter Agreement shall be considered confidential in
its entirety pursuant to the provisions of that confidentiality
agreement.  Subject to applicable law, the parties shall agree with each other
on the form, content and timing of any public announcement regarding the
Transaction.
 
6.  
Governing Law

 
This Letter of Intent and all matters arising hereunder shall be governed by,
construed and enforced in accordance with the laws of the state of Nevada and
the parties hereby irrevocably submit to the exclusive jurisdiction of the
courts of Nevada.
 
7.  
Counterparts and Facsimile

 
This Letter of Intent may be executed by each of the parties in counterparts and
by facsimile or other electronic means, each of which when so executed and
delivered will be an original, but both such counterparts, whether executed and
delivered in the original or by facsimile or other electronic means, will
together constitute one and the same agreement.
 
8.  
Time of the Essence

 
Time shall be of the essence with respect to this Letter Agreement.
 
9.  
Successors and Assigns

 
This Letter Agreement shall enure to the benefit of and are binding upon the
parties hereto and their respective successors and permitted assigns.  Neither
party may assign this Letter Agreement to other than an affiliate without the
prior written consent of the other party.  An assignment by a party hereto to an
affiliate will not relieve the assigning party of its rights and obligations
hereunder.
 
10.  
Entire Agreement

 
This Letter Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof, and supersedes and replaces
all negotiations, correspondence, letters of intent and prior agreements or
understandings relating thereto, whether written or oral.
 
11.  
Severability/Illegality

 
The invalidity or unenforceability of any provision or part of any provision of
this Letter Agreement shall not affect the validity or enforceability of any
other provision or part thereof, and any such invalid or unenforceable provision
or party thereof will be deemed to be separate, severable and distinct, and no
provision or part thereof will be deemed dependent upon any other provision or
part thereof unless expressly provided for herein.
 
 

 
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12.  
Costs

 
Each party will be responsible for their own costs of completing the negotiation
of this Letter Agreement and performing their respective obligations under this
Letter Agreement.
 
13.  
Notice

 
Any notice or other writing required or permitted to be given hereunder or for
the purposes hereof shall be sufficiently given if delivered personally, or if
sent by prepaid mail or transmitted by facsimile to such party:
 
(a)       in the case of a notice to the Sellers at:
 
Glen Landry                                           Ray Jefferd
1011 S. Jefferson St.                              12922 – 19A Avenue
Spokane, WA 99204                             Surrey, BC, V4A 8P1
 
(b)       in the case of a notice to Stellar at:
 
Stellar Resources Ltd.
375 N. Stephanie Street, Suite 1411,
Henderson, Nevada 89014-8909
 
Attention: Luigi Rispoli
 
Or at such other address or addresses as the party to whom such notice or other
writing is to be given shall have last notified the party giving the same in the
manner provided in this section. Any notice or other writing delivered to the
party to whom it is addressed hereinbefore provided shall be deemed to have been
given and received on the day it is so delivered at such address, provided that
if such day is not a business day in the city where the notice is delivered,
then such notice or other writing shall be deemed to have been given and
received on the next following business day.  Any notice or other writing
transmitted by facsimile or other form of recorded communication shall be deemed
to have been given and received on the first business day after its
transmission.
 
14.  
Additional Assurances

 
Each of the parties shall provide such further documents or instruments required
by the other party as may reasonably be necessary or desirable in order to give
effect to the terms and conditions of this Letter Agreement and carry out its
provisions.
 
 
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15.  
Binding Nature of Agreement

 
This Letter Agreement is subject to the terms and conditions hereof and shall be
binding upon the parties following execution of this Letter Agreement.
 
16.  
Closing

 
This Letter Agreement shall close on or before March 15, 2010.
 
17.  
Independent Legal Advice

 
The parties to this Agreement have obtained or have chosen not to seek
independent legal advice prior to entering this Agreement.
 
To confirm your acceptance to the terms of this Letter Agreement, please sign
below where indicated and return the signed copy to the undersigned as soon as
possible.  If you have any questions or would like to discuss this Letter
Agreement further, please feel free to call me at 778-288-8970.
 
Yours sincerely,
 
STELLAR RESOURCES LTD.
 
By: Luigi Rispoli
 
 
_____________________
President
 
Accepted on behalf of the Sellers this 25 day of February, 2010.
 
 
By:                                            
Glen Landry
 
 
By:                                            
Ray Jefferd
 
 
 
 

 
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SCHEDULE 'A'
ASSIGNMENT OF OIL AND GAS LEASES
LEASE SCHEDULE

TOWNSHIPS 4 SOUTH, 5 SOUTH, RANGE24 EAST,25 EAST
COUNTY: CARBON
STATE:MONTANA

LESSOR
DOCUMENT NUMBER
Loyd E. Schumm
333157
Northwest Farm Credit Services, FLCA
333162 & 333163
State of Montana
OG-39177-09
Paugh Land, LLC
333146
Steven Wetstein
333152
Richard McClintock
333145
Virginia Downer
333147
H. Allen Keebler Family Trust
335899
H. Allen Keebler Family Trust
335897
Les Keebler
335898
Timothy and Cindy Thompson
333148
Kayrene Higgins
333144
Kathryn Martin
333143
Allen Taylor
333159
David Taylor
333160
James Taylor
333158
David Bequette
333156
Morris and Jody Bauwens
333958
James and Sharon Bauwens
333959
James and Sharon Bauwens
333960
J Bar F Ranch
333957
Thomas M. Tebbs
333149
Drue T. Meek
333150
Helen T. Schwartz
333154
MarionT. Nelson
333151
Sidney T. Whalen
333155
Constance Schuman
335895
Etaenor Gradwohl
335896
Ruth V. Harper
335890
James L. Harper
335891
Phyllis Schwartz
335892
Warren Giese
335893
Warren Vaughn
335889
Daniel and Ginger Barber
333153
Katherine Thornton Sibley
333479
BLM
97824
BLM
97825
BLM
97826
BLM
97828
BLM
98752
BLM
98753

 
 
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SCHEDULE “B”
Four Bear Heavy Oil, LLc.
Oil and Gas Leases
Park County, Wyoming, USA
 
 
LEASE #
ACRES
08-00097
639.77
08-00098
640.00
08-00099
480.00
08-00100
640.00
08-00531
558.64
08-00532
400.99
08-00534
160.00
08-00535
320.00
08-00536
600.00
08-00537
600.00
08-00538
640.00
08-00539
640.00
08-00540
160.00
    TOTAL 6,479.40

 
 
 
 
 
 
 
 
 

 

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