Unassociated Document


     

    Exhibit 10.1

     

    PURCHASE AND SALE
AGREEMENT

     

    This
Purchase and Sale Agreement (this “Agreement”)
dated October 7, 2008 and effective as of October 1, 2008, is by and among TR
Energy, Inc., a Nevada corporation, whose address is P.O. Box 2033, Tyler, Texas
75710, as “Seller,”
and Pegasi Energy Resources Corp., a Nevada corporation, whose address is P. O.
Box 2033, Tyler, TX  75710-2033, as “Buyer.”

     

    WHEREAS,
Seller owns 30% and Buyer owns 70% of the working interest in certain oil and
gas properties including oil and gas leases, pipeline rights-of-way and surface
easements, and a saltwater disposal facility located in Marion and Cass
Counties, Texas, all as more particularly described in Exhibits “A”, “B”, and
“C” attached hereto (collectively, the “Assets”);

     

    WHEREAS,
Michael Neufeld and William Sudderth, Buyer’s Chief Executive Officer and
Executive Vice President, respectively, are the sole owners of Seller;
and

     

    WHEREAS,
Buyer desires to increase its ownership in the Assets to 80% by buying from
Seller a portion of its share in the Assets;

     

    NOW THEREFORE, in consideration
of the mutual covenants, conditions and considerations provided below, Buyer and
Seller agree as follows:

     

    A.           The
Properties.  Seller shall assign and convey to Buyer a 10%
interest (the “Transferred Interest”) in and to the following, all of which are
collectively referred to in this Agreement as (the "Properties"):

     

    
      	
              1.

            	
              10%
      right, title, and interest in and to the lands, oil and gas leases and
      leasehold interests of Assignee (sometimes hereinafter collectively
      referred to as the "Leases") as outlined in Exhibit “A”, as well as 10%
      right, title, and interest in the equipment, materials, personal property,
      fixtures and improvements associated with the
  Leases.

            


    

     

    
      	
              2.  

            	
              10%
      right, title, and interest in the assets of TR Rodessa, Inc., including,
      but not limited to, the pipe and associated compressor stations and
      production equipment associated with the Pipeline Rights-of-Way and
      Surface Agreements outlined in Exhibit
“B”.

            


    

    


    
      	
              3.  

            	
              10%
      right, title, and interest in the Saltwater Disposal Facility known as 59
      Disposal, Inc, as described in Exhibit “C”; and 10%  right,
      title, and interest in all equipment, both surface and subsurface,
      appurtenant thereto or used  in connection with the disposal of
      saltwater and other water from production or any other oilfield related
      activities.

            


    

    


     

    B.           Purchase
Price.   Four million two hundred thousand (4,200,000)
shares of common stock of the Buyer (the "Purchase Price") to be issued at time
of Closing.

     

    
      
         

      

      
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    C.           Representations
and Warranties.

     

    a.           Authorization.  Seller
has all requisite power, authority and legal capacity to execute and deliver
this Agreement, and each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by the Seller in connection
with the consummation of the transactions contemplated by this Agreement. This
Agreement constitutes the legal, valid, and binding obligation of Seller
enforceable in accordance with its terms, except to the extent limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application related to the enforcement of creditors’ rights generally
and (b) general principles of equity, and except that enforcement of rights to
indemnification contained herein may be limited by applicable federal or state
laws or the public policy underlying such laws, regardless of whether
enforcement is considered in a proceeding in equity or at law.

     

    b.           No
Conflict.  The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under any provision of any mortgage, indenture, lease or other agreement
or instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Seller or his
properties or assets.  Neither the execution and delivery of this
Agreement by Seller, nor the consummation of the transaction contemplated
hereby, will result in the imposition of any security interest upon the
Transferred Interest.

     

    c           Litigation and
Claims.  No claim, demand, filing, cause of action,
administrative proceeding, lawsuit, or other litigation is pending, or to the
best knowledge of Seller, threatened, that could now or later adversely affect
the ownership or operation of any of the Properties, other than proceedings
relating to the industry generally and to which Seller is not a named
party.  No written or oral notice from any governmental agency or any
other person has been received by Seller:  (a) claiming any violation
or repudiation of all or any part of the Properties or any violation of any law
or any environmental, conservation or other ordinance, code, rule or regulation;
or, (b) require or calling attention to the need for any work, repairs,
construction, alterations, or installations on or in connection with the
Properties, with which Seller has not complied.

     

    


     

    D.           Closing.  The
sale and purchase of the Properties (the "Closing") shall be on or before
October 15, 2008 at Seller's offices in Tyler, Texas, or such other place as
Buyer and Seller shall mutually agree.  The closing is subject to
final due diligence by the Buyer which due diligence must be completed on or
before October 13, 2008.

     

     

    
      
         

      

      
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    E.           Indemnity.  Seller
shall indemnify and hold Buyer, its directors, officers, employees, and agents
harmless from and against any and all liability, liens, demands, judgments,
suits, and claims of any kind or character arising out of, in connection with,
or resulting from Seller's (i) ownership of the Properties, for all periods
prior to the Effective Date and (ii) breach of any of Seller’s representations
and warranties made herein.  Seller shall remain responsible for all
claims relating to the drilling, operating, production, and sale of hydrocarbons
from the Properties and the proper accounting and payment to parties for their
interests and any retroactive payments, refunds, or penalties to any party or
entity, insofar as any claims relate to periods of time prior to the Effective
Date.

     

    Buyer shall indemnify and hold Seller
harmless from and against any and all liability, liens, demands, judgments,
suits, and claims of any kind or character arising out of, in connection with,
or resulting from Buyer's ownership of the Properties, for periods from and
after the Effective Date.  Buyer shall be responsible for all claims
relating to the drilling, operating, production, and sale of hydrocarbons from
the Properties and the proper accounting and payment to parties for their
interests, and any retroactive payments, refunds, or penalties to any party or
entity as such claims relate to periods from and after the Effective
Date.

     

    Buyer and Seller shall have the right
to participate in the defense of any suit in which one of them may be a party
without relieving the other party of the obligation to defend the
suit.

     

    F.  Apportionment of Tax
Liability.  Ad valorem taxes for 2008 shall be prorated on a
daily basis, with Buyer liable for the portion allocated to the period on and
after the Closing Date and Seller liable for the portion allocated to the period
before the Closing Date.  If the amount of such taxes for part, or
all, of the Assets is not available on the Closing Date, proration of taxes
shall be made on the basis of the best current information available, with a
subsequent cash adjustment of such proration to be made between Seller and Buyer
when actual tax figures are available. All Taxes based on or attributable to the
ownership of, or based on production of hydrocarbons, other than ad valorem
taxes, shall be deemed attributable to the period during which the hydrocarbons
are produced.  All Taxes imposed on or with respect to the Assets
shall be prorated between Buyer and Seller as of the Effective Date, September
1, 2008.  The apportionment of Taxes between the Parties shall take
place in the Preliminary Settlement Statement and Final Settlement Statement,
using estimates of such Taxes if actual numbers are not
available.  

     

    G.           Warranty:                                Except
for the representations in Sections D and E above, this Purchase and Sale
Agreement is executed, delivered, and accepted without any representation,
warranty or covenant of title of any kind or nature, either express, implied or
statutory.  The interests are being conveyed and assigned to and
accepted by the Buyer in their “As is, Where is” condition and state of repair,
and with any faults and defects.

     

    H.           Complete
Agreement.  This Agreement constitutes the complete agreement
between the parties regarding the purchase and sale of the
Properties.  Where applicable, all of the terms of this Agreement
shall survive the Closing.

     

    


     

    
      
         

      

      
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        	 	SELLER	 
	 	 	 
	 	TR
      ENERGY, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	By:
      W.L. Sudderth	 
	 	 	Title:
      Vice President	 
	 	 	 	 


      

    

     

     

    
      
        	 	BUYER	 
	 	 	 
	 	PEGASI
      ENERGY RESOURCES CORP.	 
	 	 	 	 
	
                 

              	
                 

              	 	 
	 	 	By:
      Richard A, Lindermanis	 
	 	 	Title:
      Sr. VP and CFO	 
	 	 	 	 


      



     

     

     

     

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