REOSTAR ENERGY CORP - Exhibit 10.1






EXHIBIT 10.1










  

PURCHASE AND SALE AGREEMENT 

  

  

  Between 

  

  REOSTAR ENERGY CORPORATION 

  

  (Buyer) 

  

  And 

  

  VERN WILSON ENERGY, INC. 

  

  (Seller) 

  

  With respect to the 

  

  

  OIL AND GAS PROPERTIES, DRILLING RIG, AND OTHER TANGIBLE EQUIPMENT 

  

  

  

  

  

  

  

  

  

  Dated as of September 28, 2007  

  

  

   



  

 

PURCHASE AND SALE AGREEMENT





                      PURCHASE
AND SALE AGREEMENT, dated as of September 28, 2007 (the "Agreement"), by and among
ReoStar Energy Corporation., a Nevada corporation ("REOS", or "Buyer"), and Vern
Wilson Energy, Inc., a Texas corporation ("WEI", or "Seller"). REOS and WEI are
referred to herein each as a "Party" and collectively as the "Parties". 






W I T N E S E
  T H :





                      WHEREAS,
Seller is the owner of working interests in certain oil and gas wells and leases
located in Texas and Louisiana, a service rig, and other tangible equipment as
set forth on Schedule A attached hereto ("WEI Properties"). 



                      WHEREAS,
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
WEI Properties on the terms, subject to the conditions, and for the consideration
described herein. 



                      NOW,
THEREFORE, in consideration of the mutual promises made herein and of the mutual
benefits to be derived here from the Parties hereto agree as follows: 



ARTICLE 1.  SALE AND PURCHASE OF THE WEI PROPERTIES 



                      SECTION
1.01. Sale and Purchase of the WEI Properties. 



                      Subject
to the terms and conditions contained herein and in reliance upon the representations
and warranties contained herein, at the Closing provided for in Section 1.02 hereof,
Seller will sell to Buyer the WEI Properties, and Buyer will purchase the WEI
Properties, for the Consideration hereinafter defined in Article 2. 



                      SECTION
1.02. Effective Date. 



                      The
Effective Date of this Agreement shall be August 1, 2007. 



                      SECTION
1.03. Closing. 



                      Closing
of the purchase and sale of the WEI Properties ("Closing") will take place at
the offices of the Buyer, or such other place as may be mutually acceptable, simultaneously
with the execution of this Agreement. 



                      SECTION
1.04. Delivery of the WEI Properties and Consideration. 



                      At
Closing, Seller shall deliver to Buyer, against delivery of the Consideration
as provided in Article 2 hereof, good and marketable title to the WEI Properties
free and clear of any liens, charges, encumbrances, imperfections of title, security
interest, options or rights or claims of others with respect thereto (collectively,
"Encumbrances"), by delivering to Buyer assignments of interest for the WEI oil
and gas properties and bills of sale for the service rig and other tangible equipment.





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ARTICLE 2. CONSIDERATION 



                      As
consideration for the sale of the WEI Properties (the "Consideration"), Buyer
shall pay to Seller at Closing US$159,000.00 (one hundred fifty-nine thousand
dollars) in immediately available funds by check. Buyer shall also issue to Seller
240,000 (two hundred forty thousand) shares of Buyer's common stock. 



                      WEI
agrees to have all liabilities associated with WEI Properties (referenced in schedule
in Schedule A) paid in full and agrees to be responsible for the present liabilities,
as referenced in Schedule B. In the event additional liabilities arise that were
incurred before the effective purchase date of August 1, 2007, WEI hereby agrees
to satisfy said obligations in a timely manner and hold REOS free from any and
all liability arising from the same. 



ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER TO BUYER 



                      Seller
hereby represents and warrant to Buyer as of the Initial Closing Date as follows:




                      SECTION
3.01. Organization, Qualification and Corporate Power of WEI. 



                      WEI
is a company duly incorporated, validly existing and in good standing under the
laws of Texas and is duly licensed or qualified to transact business as a corporation,
and is in good standing, in each jurisdiction in which the nature of its business
or the ownership of its properties makes such licensing or qualification necessary
and where the failure be so licensed or qualified would have a material adverse
effect on the business, operations, assets, financial condition, value or prospects
of WEI (a "Material Adverse Effect"). WEI has the corporate power and authority
to own, lease, or sell its properties and to carry on its business as currently
conducted. 



                      SECTION
3.02 Authorization of Agreement; No Conflicts. 



                      The
execution and delivery by Seller of this Agreement and the performance by Seller
of their obligations hereunder have been duly authorized by all requisite action
on the part of Seller and will not violate any provision of law, any order of
any court or other agency of government, the organizational document or by-laws
of Seller, or any provision of any indenture, agreement or other instrument to
which it is a party or by which it or any of its properties is bound or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or result
in the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of Seller. 



                      SECTION
3.03. Validity. 



                      This
Agreement and each other agreement entered into in connection herewith to which
Seller is a party have been duly executed and delivered by Seller and constitute
the legal, valid and binding obligation of Seller, enforceable in accordance with
their respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights generally
now or hereafter in effect and subject to the application of equitable principles
and the availability of equitable remedies. 





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                      SECTION
3.04. Consents and Approvals. 



                      No
registration or filing with, or consent or approval of, or other action by, any
Federal, state or other governmental agency or instrumentality or any other person
or entity is or will be necessary on the part of Seller for the valid execution,
delivery and performance by Seller of this Agreement and each other agreement
entered into in connection herewith to which Seller are a party. 



                      SECTION
3.05 Litigation. 



                      There
is no action, suit, investigation or proceeding pending, or to the knowledge of
Seller, threatened against or affecting WEI with regard to the WEI Properties
before any court or by or before any governmental body or arbitration board or
tribunal. 



                      SECTIONS
3.06 No Brokers. 



                      Seller
has not retained any broker or finder in connection with the transactions contemplated
herein so as to give rise to any valid claim against Seller or Buyer for any brokerage
or finder's commission, fee or similar compensation. 



                      SECTION
3.07 Accuracy of Information. 



                      None
of the representations and warranties of Seller contained herein or in any Schedule
hereto contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein and therein not misleading
in light of the circumstances in which made. 



                      SECTIONS
3.08. Indemnification 



                      Subsequent
to (after) August 1, 2007, REOS assumes all liability for and shall be solely
responsible for any and all losses, including without limitation, damages, claims,
expenses, charges, costs and all other matters (collectively "Losses") of any
nature whatsoever in connection with the ownership, use, operation, maintenance
or existence of the WEI Properties. REOS agrees to hold harmless, defend and indemnify
WEI, its officers, directors, employees, agents, successors, legal representatives,
and assigns from any and all liabilities, regardless of the presence or lack of
insurance from the date of this agreement going forward. 



ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER 



                      Buyer
hereby represents and warrants to the Seller as of the date hereof and as of the
Closing Date as follows: 



                      SECTION
4.01. Organization, Qualification and Corporate Power. 



                      Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of Nevada, and is duly licensed or qualified to transact business as a limited
liability company and, is in good standing, in each jurisdiction in which the
nature of its business or the ownership of its properties makes such licensing
or qualification necessary and where the failure to be so licensed or qualified
would have a material adverse effect on the business, operations, assets, results
of operation, financial condition, value or prospects of Buyer. Buyer has the
power and authority to own or lease its properties and to carry on its business
as currently conducted and to execute, deliver 





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and perform this Agreement. 



                      SECTION
4.02. Authorization of Agreement; No Conflicts. 



                      The
execution and delivery by Buyer of this Agreement and the performance by Buyer
of its obligations hereunder have been duly authorized by all requisite corporate
action on the part of Buyer and will not violate any provision of law, any order
of any court or other agency of government, the organizational document or by-laws
of Buyer, or any provision of any indenture, agreement or other instrument to
which it is a party or by which it or any of its properties is bound or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or result
in the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties of assets of Buyer. 



                      SECTION
4.03. Validity. 



                      This
Agreement and each other agreement entered into in connection herewith to which
Buyer is a party have been duly executed and delivered by Buyer and constitute
the legal, valid and binding obligation of Buyer, enforceable in accordance with
their respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights generally
now or hereafter in effect and subject to the application of equitable principles
and the availability of equitable remedies. 



                      SECTION
4.04. Consents and Approvals. 



                      No
registration or filing with, or consent or approval of, or other action by, any
Federal, state or other governmental agency or instrumentality or any other person
or entity is or will be necessary on the part of Buyer for the valid execution,
delivery and performance by Buyer of this Agreement and each other agreement entered
into in connection herewith to which Buyer is a party. 



                      SECTION
4.05. Investment Representations. 



                      Buyer
is acquiring the WEI Properties being purchased by it hereunder for the purpose
of investment. Buyer has, with respect to its investment: (i) had an opportunity
to ask all questions of, and receive satisfactory answers from, Seller and the
officers of WEI, (ii) received and reviewed all information, including without
limitation relevant documents, contracts and other instruments, in the each case
deemed necessary or desirable by Buyer, and (iii) as a result of the foregoing,
has satisfactorily performed its due diligence with respect to the WEI Properties
and such investment; provided the foregoing does not in any way relieve WEI of
its representations and warranties set forth in this Agreement and shall not limit
Buyer's ability to rely thereon. 



                      SECTION
4.06 Litigation. 



                      There
is no action, suit, investigation or proceeding pending, or to the knowledge of
Buyer, threatened against or affecting Buyer before any court or by or before
any governmental body or arbitration board or tribunal which questions the validity
of this Agreement or which questions the validity of or seeks to rescind or prevent
the taking of action taken or to be taken in connection herewith or the consummation
of the transactions contemplated hereby. 



                      SECTIONS
4.07. No Brokers. 



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Buyer has not retained any broker or finder in connection with the transactions
contemplated herein so as to give rise to any valid claim against Seller for any
brokerage or finder's commission, fee or similar compensation. 



                      SECTIONS
4.08. Indemnification 



                      WEI
hereby assumes all liability for any and all losses, liabilities or damages incurred
of any nature whatsoever (including, without limitation, claims, causes of action,
liabilities, costs, damages, expenses, attorneys' fees and costs of court arising
prior to August 1, 2007 in connection with the ownership, use, operation, maintenance,
or existence of the Property ("Pre-Effective Date Liabilities"). WEI agrees to
hold harmless, defend and indemnify REOS, and its officers, employees, agents,
successors, legal representatives, and assigns (the "REOS Affiliates") from any
and all Liabilities prior to August 1, 2007, regardless of the presence or lack
of insurance. 



ARTICLE 5. COVENANTS OF SELLER 



                      At
Buyer's request and without further consideration, Seller will execute and deliver
to Buyer such other documents and take such other action as Buyer may reasonably
request in order to consummate more effectively the transactions contemplated
hereby and to vest in Buyer good and marketable title to the WEI Properties. Furthermore,
WEI covenants that will remain the operator of record for all of the properties
located in Louisiana and shall extend to any subsequent properties acquired in
the same domain. 



ARTICLE 6. COVENANTS OF BUYER 



                      At
Seller' request, and without further consideration, Buyer will execute and deliver
to Seller and take such other action as Seller may reasonably request in order
to consummate more effectively the transactions contemplated hereby. 



ARTICLE 7. FEES AND EXPENSES 



                      Except
as otherwise provided herein, each of the Parties hereto shall assume, bear and
pay its own expenses in connection with the preparation, execution, delivery and
performance of this Agreement. 



ARTICLE 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES 



The representations and warranties set forth in Articles 3 and 4 shall survive
the Closing hereunder and shall expire on the third anniversary of the Closing
Date. 



ARTICLE 9. MISCELLANEOUS 



                      SECTION
9.01. Assignment; Successors. 



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                      This
Agreement may be assigned by REOS to an affiliated company or designee in its
sole discretion and without the consent of WEI. 



                      SECTION
9.02. Amendment, Modification and Waivers. 



                      
Neither this Agreement nor any term hereof may be changed, waived, discharged
or terminated orally, but only by written consent signed by Buyer and by Seller.




                      SECTION
9.03. Notices. 



                      Any
notice, payment, demand or communication required or permitted to be given by
an provision of this Agreement will be in writing and will be deemed to have been
given when delivered personally or by facsimile to the party designated to receive
such notice, or on the date following the date sent by overnight courier, or on
the third (3rd) business day after the same is sent by certified mail, postage
and charges prepaid, directed to the following address or to such other or additional
addresses as any party might designate by written notice to the other party: 




	 	To Buyer: 

      	ReoStar Energy Corporation. 
	 	 	3880 Hulen, Suite 500 
	 	 	Fort Worth, TX 76107 
	 	 	Tel: 817-989-7367 
	 	 	Fax: 817-989-7368 
	 	 	Attn: Mark Zouvas
	 	 	 
	 	 	 
	 	To Seller: 	Vern Wilson Energy, Inc.
	 	 	___________________ 
	 	 	___________________ 
	 	 	Tel: 
	 	 	Fax: 
	 	 	Attn:
	 	 	 




                      SECTION
9.04. Interpretation and Severance. 



                      Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Agreement, unless the prohibited or invalid provision is a material provision
the omission of which would result in the frustration of the parties' economic
objectives. 



                      SECTION
9.05. Headings and Captions. 



                      The
headings and captions herein are for convenience only and cannot be used to construe
the text of the sectioned paragraphs in which they appear. References herein to
this Agreement include references to the exhibits and the schedules referred to
herein. 



                      SECTION
9.06. No Third-Party Reliance. 





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                      No
third party is entitled to rely on any of the representations, warranties and
agreements of Buyer and the Seller contained in this Agreement. Seller and Buyer
assume no liability to any third party because of any reliance on the representations,
warranties and agreements of Seller and Buyer contained in this Agreement. 



                      SECTION
9.07. Supersedes Prior Agreements. 



                      This
Agreement supersedes any and all prior agreements or understandings, written or
oral, of Seller or Buyer relating to the acquisition of the WEI Properties by
Buyer and incorporates the entire understanding of the parties with respect to
the subject matter hereof. 



                      SECTION
9.08. Governing Law. 



                      This
Agreement shall be governed by, construed, interpreted and enforced in accordance
with the laws of the State of Texas without regard to its conflicts of law rules.




                      SECTION
9.09. Counterparts. 



                      Two
or more duplicate originals of the written instruments containing this Agreement
may be signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same agreement, and all signatures need
not appear on any one counterpart. 



                      IN
WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the
date first written above. 




	 	SELLER: 
	 	 
	 	Vern Wilson Energy, Inc., 
	 	A Texas corporation 
	 	 
	 	 
	 	By: /s/ Vern Wilson                         
	 	Name: 
	 	Title: 
	 	 
	 	BUYER: 
	 	 
	 	ReoStar Energy Corporation.,
	 	 A Nevada corporation 
	 	 
	 	 
	 	By: /s/ Mark Zouvas                       
	 	Name: 
	 	Title: 






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  SCHEDULE A






	 	 	 	 	
      Value

    	 
	Oil and Gas Properties: 	 	 	 	 
	 	Alford Lease    __________________
      County, Texas 	 	
      25,000

    	 
	 	Soniat Lease     __________________
      Parrish, Louisiana 	 	
      5,000

    	 
	 	Simpson Lease __________________
      Parrish, Louisiana 	 	
      100,000

    	 
	 	 	 	 	 	 
	Service Rig 200,000 	 	 	 	 
	 	 	 	 	 	 
	Other Tangible Equipment 	 	 	 	 
	 	Ford F450 	VIN:_______________________________	 	
      45,000

    	 
	 	 	 	 	
      

    	 
	 	Ford F350 	VIN:_______________________________
      	 	
      9,000

    	 
	 	 	 	 	
      

    	 
	 	Backhoe 	 	 	
      20,000

    	 
	 	 	 	 	
      

    	 
	 	200 Bbl Test Tank 	 	 	
      3,000

    	 
	 	 	 	 	
      

    	 
	 	Threading Machine 	 	 	
      4,500

    	 
	 	 	 	 	
      

    	 
	 	Welder	 	 	
       2,800

    	 
	 	 	 	 	
      

    	 
	 	Assorted Tools 	 	 	
      36,200

    	 
	 	 	 	 	 	 
	 	Trailers 	VIN:_______________________________
      	 	
      8,500

    	 
	 	 	 	 	 	 
	 Total 	 	 	 	
      459,000

    	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 






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  SCHEDULE B

  

  LIST OF LIABILITIES AS OF AUGUST 1, 2007. 



	LIABILITIES: 	 	 
	

      Bank Debt 

      

                      Back
      Hoe 

      

                      Trucks
      

                      Credit
      line 

      

      

      Trade debt 

      

      Rig debt 

      Jerry Rawlinson 

      Fred Peel 	 	

      

      

      $     9,000

      

      $   11,000 

      $   42,000

      

      

      $   63,380 

      

      $   30,000 

      $     1,000

      $     3,000 
	TOTAL

      LIABILITIES	 	 $ 159,380




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