Document:

f10q0609ex10i_chinavalve.htm

    Exhibit
10.1

     

    
      AMENDMENT
NUMBER 1 TO THE MAKE GOOD ESCROW AGREEMENT

      

      THIS AMENDMENT NUMBER 1 TO THE MAKE
GOOD ESCROW AGREEMENT, dated as of August 14, 2009 (this “Amendment”),
is entered into by and among China Valves Technology, Inc. (f/k/a
Intercontinental Resources, Inc.), a Nevada corporation (the "Company"), Bin Li (the "Make Good Pledgor"), Brean
Murray Carret & Co., LLC as Investor agent (“Investor Agent”), the
undersigned, who constitute at least a majority in interest of the investors in
the Company’s August 2008 private placement (the “Investors”)
and Escrow, LLC, as escrow agent ("Escrow
Agent").  Capitalized terms used herein but not otherwise
defined herein shall have the respective meanings set forth in the Make Good
Agreement (as defined below).

      

      BACKGROUND

       

      The Company and the Investors
(including the Purchasers) are parties to that certain Make Good Escrow
Agreement, dated as of August 26, 2008 (the “Make Good
Agreement”).  The parties to this Amendment wish to amend
certain provisions of the Make Good Agreement as set forth in this
Amendment.  Section 14 of the Make Good Agreement provides that the
Make Good Agreement may not be changed orally or modified, amended or
supplemented without an express written agreement executed by the Escrow Agent,
the Company, the Make Good Pledgor and the Investor Agent (upon consent of the
Investors holding a majority of the Shares issued at Closing under the
Securities Purchase Agreement (“Major
Investors”)).  This Amendment constitutes a written agreement
signed by the necessary parties in order to effectuate the amendments to the
Make Good Agreement specified below.

       

      NOW,
THEREFORE, in consideration of the foregoing and the respective covenants and
agreements set forth herein, the parties hereto agree as follows:

       

      ARTICLE
I

       

      AMENDMENTS

       

      SECTION
1.1.   Amendment.  The
parties hereto agree that the Make Good Agreement shall be amended as set forth
in this Section 1.1.

       

      The second and third paragraphs in
Section 4(a) of the Make Good Agreement are each hereby amended and restated in
their entirety as follows:

       

       

      “In the
event that either (i) the Earnings Per Share (as defined below) reported in the
Annual Report of the Company for the fiscal year ending December 31, 2009, as
filed with the Commission on Form 10-K (or such other form appropriate for such
purpose as promulgated by the Commission) (the “2009 Annual Report”) is less
than $0.334 per share on a fully diluted basis (as equitably adjusted for any
stock splits, stock combinations, stock dividends or similar transactions) (the
“2009 Guaranteed EPS”)
or (ii) the After Tax Net Income reported in the 2009 Annual Report is less than
$21,000,000 (the “2009
Guaranteed ATNI”), the Escrow Agent (on behalf of the Make Good Pledgor)
will transfer the 2009 Make Good Shares to the
Investors on a pro rata basis (determined
by dividing each Investor’s Investment Amount by the aggregate of all Investment
Amounts delivered to the Company by the Investors under the Securities Purchase
Agreement) as specified in Exhibit A to this Agreement for no consideration
other than payment of their respective Investment Amount paid to the Company at
Closing and without any need for action or
notice by or on behalf of any Investor.  The “2009 Make Good Shares” means 8,388,688 shares of Common Stock, as equitably
adjusted for any stock splits, stock combinations, stock dividends or similar
transactions.  

       

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      In the
event that either (i) the Earnings Per Share reported in the Annual Report of
the Company for the fiscal year ending December 31, 2010, as filed with the
Commission on Form 10-K (or such other form appropriate for such purpose as
promulgated by the Commission) (the “2010 Annual Report”) is less
than $0.541 per share on a fully diluted basis (as equitably adjusted for any
stock splits, stock combinations, stock dividends or similar transactions) (the
“2010 Guaranteed EPS”)
or (ii) the After Tax Net Income reported in the 2010 Annual Report is less than
$34,000,000 (the “2010
Guaranteed ATNI”), the Escrow Agent (on behalf of the Make Good Pledgor)
will transfer the 2010 Make Good Shares to the Investors on a pro rata basis
(determined by dividing each Investor’s Investment
Amount by the aggregate of all Investment Amounts delivered to the Company by
the Investors under the Securities Purchase Agreement) as specified in
Exhibit A to this Agreement for no consideration other than
payment of their respective Investment Amount paid to the Company at Closing and
without any need for action or notice by or on behalf of any
Investor.  The “2010 Make Good Shares” means 8,388,688 shares of Common Stock, as equitably adjusted for any stock
splits, stock combinations, stock dividends or similar
transactions.”

       

      SECTION
1.2.   Full Force and
Effect.  For the avoidance of doubt, all other provisions of
the Make Good Agreement shall remain in full force and effect.

       

      

      ARTICLE
II

       

      MISCELLANEOUS

       

      SECTION
2.1.   Governing
Law.  This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.

       

      SECTION
2.2.   Entire Agreement.
This Amendment along with the Make Good Agreement and the other Transaction
Documents contains the entire understanding of the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings,
discussions and representations, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this Amendment.

       

      SECTION
2.3.   Counterparts.  This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

       

      IN WITNESS WHEREOF, the parties hereto
have caused this Amendment to be duly executed by their respective authorized
signatories as of the date first indicated above.

       

       

      COMPANY:

       

       

      CHINA
VALVES TECHNOLOGY, INC.

       

      

      By:_______________________________

           Name:
Siping Fang

           Title:  Chief
Executive Officer

      

      Address:  
No. 93 West Xinsong Road

         Kaifeng, Henan
Province

         China
475002

       

      
        Facsimile:  86-378-2924630

        
          Attn.:  Siping
Fang

        

      

      

       

      MAKE GOOD
PLEDGOR:

       

       

      Bin
Li

       

      ___________________________________

       

      

      Address:   
1165 Rugglestone Way

          Duluth, GA
30097

      

      Facsimile:  (770)
888-0589

      Attn.:
Bin Li

       

      

       

      [REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK -

       Signature
page for other parties follows]

       

      
        Signature
Page to the Amendment to Make Good Escrow Agreement

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      IN WITNESS WHEREOF, the parties hereto
have caused this Amendment to be duly executed by their respective authorized
signatories as of the date first indicated above.

       

      

       

      FOR
ENTITIES:

      

      _______________________

      (Name of
Entity)

      

      

      By:____________________

      Name:

      Title:

      

      _______________________

      (Number
of Shares)

      

      

      FOR
INDIVIDUALS:

      

      _______________________

      Name:

      

      

      _______________________

      (Number
of Shares)

       

      

        Signature
Page to the Amendment to Make Good Escrow Agreement

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      IN WITNESS WHEREOF, the parties hereto
have caused this Amendment to be duly executed by their respective authorized
signatories as of the date first indicated above.

       

       

      ESCROW
AGENT:

       

      ESCROW, LLC, as
Escrow Agent

       

       

       

      By:_______________________________

            Name:

            Title:

      

      Address:   360 Main
St.,

         Washington, VA
22747

      Facsimile:  (540)
347-2291

      Attn.:

       

       

      INVESTOR
AGENT

       

      BREAN
MURRAY CARRET & CO., LLC, as Investor Agent

      
 

       

      By:_______________________________

           Name:

           Title:

      

      Address:

      

      

      Facsimile:

      Attn.:

       

      
        Signature
Page to the Amendment to Make Good Escrow AgreementREOSTAR ENERGY CORP - Exhibit 10.1

EXHIBIT 10.1

   

PURCHASE AND SALE AGREEMENT 

                 This
PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into as of May 20, 2009
by and between REOSTAR ENERGY CORPORATION, a Nevada corporation (the "Purchaser"
or "REOS"), and ZAZA ENERGY, LLC, a Texas limited liability company ("ZaZa"),
and Eli Smith and Associates (collectively, the "Sellers"). 

                WHEREAS,
the Sellers desire to sell the properties listed in Exhibit A attached hereto
(the "Properties") containing approximately 13,000 gross mineral acres located
in Lavaca County, Texas, to the Purchaser in exchange for cash, while retaining
certain overriding royalty interests, and back-in after prospect payout rights.

                WHEREAS,
ZaZa and REOS desire to act as the "Operator of Record" and "Contract Operator,"
respectively, in connection with the development of and subsequent operations
of the Properties for the benefit of the owners thereof; 

                WHEREAS,
concurrent with or prior to the Closing of the transaction contemplated by this
Agreement, the Purchaser shall have consummated a debt or equity financing (or
a combination thereof) for a minimum aggregate amount of Fifteen Million Dollars
($15,000,000) (the "Financing"); 

                WHEREAS,
the parties desire to complete the transaction contemplated by this Agreement
on the terms set forth herein. 

                NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and conditions
set forth below, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement agree
as follows: 

                1.
             DEFINITIONS.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, the terms defined above in the Recitals
and in this Section 1 have the meaning herein and assigned to them in the capitalized
terms defined by inclusion in quotation marks and parenthesis elsewhere in the
Agreement have the meaning so ascribed to them. 

                                 a.
        "Acquired Assets" means
the Properties and the Related Records of the Sellers. 

                                 b.
        "Area" means the lands covered
by the sketch attached as Schedule 1(b) and is also called the Hackberry Creek
Project by the parties. 

                                 c.
        "Area of Mutual Interest" has
the meaning ascribed to it in Section 7(b). 

                                 d.
        "Back-In After Prospect Pay Out
Interest" has the meaning ascribed to it in Section 4(a)(ii). 

                                 e.
        "Basic Documents" means all
of the oil, gas and other mineral leases and assignments of other interests which
evidence the Properties and all contractually binding arrangements to which the
Properties may be subject and which will be binding on the Properties or the Purchaser
after the Closing (including without limitation, overriding royalty assignments,
farmout and farmin 

 

  

agreements, option agreements, forced pooling orders, assignments
of production payments, unit agreements, and joint operating agreements). 

                                 f.
        "Closing Date" has the meaning
ascribed to it in Section 3(b). 

                                 g
        "Closing" has the meaning ascribed
to it in Section 3(b). 

                                 h.
       "Contract Operator" means the
entity that operates the Hackberry Creek Prospect through the functions and responsibilities
defined in the Joint Operating Agreement ("JOA") and related documents executed
on its behalf, defined herein as REOS. 

                                 i.
        "Existing Burdens" means (i)
any royalty, overriding royalty, production payment, and other similar burdens
on production which burden the Subject Leases at the time of acquisition, and
(ii) the Reserved Overriding Royalty Interest. 

                                 j.
        "Financing" has the meaning
ascribed to it in the Recitals. 

                                 k.
        "Operator of Record" means the
entity that is a registered operator with the Railroad Commission of the State
of Texas ("RRC") and files the necessary information with the RRC as it relates
to the operation and reporting of the Hackberry Creek Prospect on its behalf for
the benefit of all working interest and royalty owners in the same, defined herein
as ZAZA. 

                                 l.
        "Overriding Royalty Interest" has
the meaning ascribed to it in Section 4(a)(i). 

                                 m.
        "Properties" means all of the
oil, gas and other mineral properties, leases, rights and undivided interests
listed on Exhibit A. 

                                 n.
        "Prospect Payout" means, that
point in time when the cumulative Proceeds received from the Wells drilled on
the Hackberry Creek Project equal the cumulative Acquisition Costs, Seismic Costs,
Exploration and Development Costs, and Operating Costs attributable to all such
Wells incurred and paid pursuant to the Hackberry Creek Project. 

                                 For
purposes hereof, the following terms will have the meaning set out below, 

	 	                                 i.
              "Proceeds" means the sum
      of (a) the proceeds realized from the sale of production from all Wells,
      after excluding the Existing Burdens attributable thereto, (b) any sales
      proceeds realized from the sale or other disposition of part, or all, of
      an interest in the Wells, or the Subject Leases, (c) any insurance proceeds
      received in respect of loss or damage to Wells, or the Subject Leases, and
      (d) proceeds received in respect of damages pursuant to any settlement or
      judgment in legal proceedings affecting the Wells, Subject Leases or operations
      thereon. 

      

                                       ii.
              "Exploration and Development
      Costs" of the Wells means all actual third party direct costs and expenses
      incurred or paid with respect thereto, including but not limited to (a)
      costs of drilling, re-entering, logging, testing, completing, and equipping
      such Well(s) for production, (b) that portion of drilling rate overhead
      charges allocated to such 

2 

	 	Well(s) under the applicable JOA, and (c) costs
      of plugging and abandoning and surface restoration for any such well completed
      as a dryhole. 

      

                                       iii.
              "Operating Costs" of a
      Well means all costs incurred in producing such Well and disposing of such
      production including, but not limited to: 

      

                                                    (1)
              Labor and other services necessary
      for the maintenance and operations of such Well; 

      

                                                    (2)
              Materials, supplies, transportation,
      repairs, and replacements used in the maintenance and operation of such
      Well, including replacements for all parts of machinery, equipment, tanks,
      or other equipment to replace and/or repair original Well and/or lease equipment;
      

      

                                                    (3)
              Reworking or re-equipping such
      Well; 

      

                                                    (4)
             Gathering, treating, processing,
      transporting, and marketing of production from such Well; and ad valorem,
      severance, gathering, windfall profits, or other applicable taxes; and 

      

                                                    (5)
             That portion allocated to such
      Well in accordance with the usual and customary accounting practices of
      all other costs (including, but not limited to, overhead costs of the Contract
      Operator as set out in the JOA) which, pursuant to such accounting practices,
      are determined to be Operating Costs. 

      

                                       iv.
             "Acquisition Costs" means
      the sum of all costs incurred and paid that are associated with acquiring
      the Subject Leases, including land brokerage, title and curative costs,
      and all delay rentals paid. 

      

                                       v.
             "Seismic Costs" means all
      costs incurred and paid in connection with the Exploration Program, including
      without limitation costs of acquiring seismic permits, options and licenses
      attributable to the Area. 
	 	 

                                 o.
        "Related Records" means all
the files, records and data relating to the Acquired Assets, including without
limitation, title records (including abstracts of title and title curative documents),
geological and geophysical interpretations, seismic records (to the extent the
same are transferable) and related contracts, correspondence owned by the Sellers.

                                 p.
        "Subject Leases" means the Oil,
Gas and Mineral Leases covering portions of the Project Area acquired or to be
acquired in connection with Exploration efforts identified pursuant to this Agreement.
Assignments to the Subject Leases shall be made to the Parties in conjunction
with closing of the Purchase and Sales Agreement or immediately if agreement has
been executed and if proper elections and payments have been made. Each lease
assignment will provide that the lease reverts to Seller if the lease has not
been included in a drilling or production unit prior to two hundred seventy (270)
days from the lease termination date. 

3 

                                 q.
       "Working Interest" means the
operating interests under an oil and gas lease and when used in the plural, the
aggregate of all such interests. 

                2.
            SALE OF
ASSETS; ASSUMPTION OF LIABILITIES. 

                                 a.
        Sale of Assets By the Sellers.
At the Closing, for the consideration set out in Section 3 below, the Sellers
shall grant, sell, convey and assign to the Purchaser all right, title and interest
of Sellers in and to the Acquired Assets, except that as to each Property, the
Sellers will retain (i) a One Percent (1%) Working Interest, (ii) an Overriding
Royalty Interest in and to the Subject Leases equal to the positive difference
between (a) Twenty-Five Percent (25%) of 8/8ths and (b) the lessor's royalty burden,
determined on a lease by lease basis; in no event, however, to ever be less than
Three Percent (3%) of 8/8ths. (ZaZa will deliver a Seventy-Five Percent (75%)
to Seventy-Two Percent (72%) NRI in the Subject Leases using the above parameters),
and (iii) a Back-In After Prospect Pay Out Interest, all as more fully described
in Section 4(a), to have and hold the same unto Purchaser, its successors and
assigns forever, and the Purchaser shall accept such grant, sale, conveyance,
and assignment. The Overriding Royalty Interest and Back-in After Prospect Payout
Working Interest shall be divided among the Sellers in accordance with the agreement
between the Sellers dated 10/31/2008. 

                                 b.
        Assumption of Liabilities by the
Purchaser. At the Closing, the Sellers shall transfer, assign and delegate
to the Purchaser all of the liabilities set forth on Exhibit B hereto (the "Assumed
Liabilities"), and the Purchaser shall accept such transfer, assignment and delegation
and assume and undertake to pay, perform and discharge such Assumed Liabilities
when due. Except for the Assumed Liabilities, the Purchaser shall not assume and
shall not be liable or responsible for any liability of Sellers or any affiliate
of Sellers. 

                                 c.
        Project Operations. REOS, as
Contract Operator, will conduct the exploration and development across the Hackberry
Creek Area and conduct operations on the Hackberry Creek Project. All Project
exploration and development costs for the Area shall be paid by parties in accordance
with their respective Working Interests. The Contract Operator shall invoice or
AFE the parties in accordance with the JOA (as defined in Section 8g.) 

                3.
            PURCHASE CONSIDERATION;
CLOSING DELIVERABLES. 

                                 a.
        Consideration. In exchange for
the Acquired Assets, the Purchaser shall pay to ZaZa on behalf of the Sellers
Five Million Five Hundred Thousand Dollars ($5,500,000) payable by wire transfer
in immediately available funds. As additional consideration, the Purchaser agrees
to assume the Assumed Liabilities. ZaZa shall dispurse funds in accordance with
the agreement between the Sellers dated 10/31/2008. 

                                 b.
       Closing. The closing of the sale
of the Acquired Assets and the other transactions contemplated hereunder (the
"Closing") shall take place at the offices of ReoStar Energy Corporation, located
at 3880 Hulen St., Ste 500, Fort Worth, Texas 76107 on or before August 1, 2009
or at such other time and place upon which the Sellers and the Purchaser shall
mutually agree (the "Closing Date"). 

4

                                 c.
       Deliverables by the Sellers.
At the Closing, the Sellers shall (i) take all steps necessary to place the Purchaser
in actual possession and control of the Acquired Assets and (ii) deliver the following
items, duly executed by the Sellers as applicable, all of which shall be in a
form and substance reasonably acceptable to the Purchaser and the Purchaser's
counsel: 

	 	A. 	A General Assignment and Bill
      of Sale from the Sellers covering all of the applicable Acquired Assets;
      
	 	 	 
	 	B. 	An Assignment and Assumption Agreement
      covering all of the Assumed Liabilities; 
	 	 	 
	 	C. 	Assignments of all leases and
      interests covering all of the applicable Acquired Assets from Eli Smith
      (the title nominee of record); 
	 	 	 
	 	D. 	All other Basic Documents or instruments
      of assignment, transfer, or conveyance, in each case dated as of the date
      of this Agreement, as the Sellers and the Purchaser and their respective
      counsels shall reasonably deem necessary or appropriate to vest in or confirm
      title to the Acquired Assets; 
	 	 	 
	 	E. 	A certificate of existence and
      of good standing for each of the Sellers from the Secretary of State of
      the State of Texas, dated within ten (10) days of the Closing; 
	 	 	 
	 	F. 	Copies of resolutions, certified
      by the Secretary of each of the Sellers as to the authorization of this
      Agreement and all of the transactions contemplated hereby; 
	 	 	 
	 	G. 	A fully executed Joint Operating
      Agreement covering the Acquired Assets and the AMI in the form attached
      as Schedule 3(d)(iv); and 
	 	 	 
	 	H. 	A fully executed copy of this
      Agreement. 

                                 d.
       Deliverables by the Purchaser.
At the Closing, the Purchaser shall (i) deliver to the Sellers in the aggregate
the consideration set forth in Section 3(a) above, and (ii) deliver the following
items, duly executed by the Purchaser as applicable, all of which shall be in
a form and substance reasonably acceptable to the Sellers and Sellers' counsel:

	 	A. 	An Assignment and Assumption Agreement
      covering all of the Assumed Liabilities;  
	 	 	 
	 	B. 	A certificate of existence and
      of good standing for the Purchaser from the Secretary of State of the State
      of Nevada, dated within ten (10) days of the Closing and evidence that Purchaser
      is qualified to do business and in good standing in the State of Texas,
      again dated within ten (10) days of the Closing; 
	 	 	 
	 	C. 	Copies of resolutions of the Purchaser's
      board of directors, certified by the Secretary of the Purchaser as to the
      authorization of this Agreement and all of the transactions contemplated
      hereby; 

5

 

	 	D. 	A fully executed Joint Operating
      Agreement covering the Acquired Assets and the AMI in the form attached
      as Schedule 3(d)(iv); and 
	 	 	 
	 	E. 	A fully executed copy of this
      Agreement. 

                 4.
            TITLE MATTERS.

                                 a.
        Interest to be Transferred.
The Sellers will transfer to Purchaser Sellers' entire ownership interest in the
Properties except that Sellers will retain the following interests and at the
time of the transfer each of the Properties will be burdened by the following
interests in favor of Sellers, in addition to any third party and lessor burdens:

                                                                  i.
       An Overriding Royalty Interest in and
to the Subject Leases equal to the positive difference between (a) Twenty-Five
Percent (25%) of 8/8ths and (b) the lessor's royalty burden, determined on a lease
by lease basis; in no event, however, to ever be less than Three Percent (3%)
of 8/8ths. ZaZa will deliver a Seventy-Five Percent (75%) to Seventy-Two Percent
(72%) NRI using the above parameters; 

                                                                  ii.
       A Back-In After Prospect Pay Out Interest
equal to a Twenty Percent (20%) Working Interest. Once Prospect Payout is achieved
in the first instance, the Back-In After Prospect Payout Interest will apply to
all prospect expenses and revenue incurred or received thereafter; and 

                                                                  iii.
       A One Percent (1%) Working Interest.

To the extent that a Subject Lease described in this Agreement covers less than
the full interest in oil, gas and other minerals in the lands covered by such
lease, the Overriding Royalty Interest and Back-In After Prospect Payout Interest
therein retained by Sellers shall be proportionately reduced in the proportion
that the interest covered by such Subject Lease bears to the full interest therein.
Sellers shall have the right but not the obligation to pay off their respective
outstanding payout balance and be vested in its Back-In After Prospect Payout
Interest at any time. 

                                 b.
       General Access. Prior to the
execution hereof, the Sellers have granted the Purchaser access to their respective
records. Until Closing, the Sellers will, except to the extent that the Sellers
are prohibited therefrom by any agreement, contract or license to which they are
a party (i) give to the Purchaser and its representatives (such representatives
to include consultants, other attorneys and other advisors of the Purchaser) full
access to all the documents evidencing the Properties and the Related Records,
as well as all of the offices and personnel of Sellers and any other document
pertaining to the Acquired Assets, including without limitation, all abstracts
of title, lease files, title policies, title opinions, title records and files
which the Sellers may have (or have access to) relating in any way to the Properties,
and any geological and geophysical interpretations, (ii) use reasonable efforts
to obtain and submit to the Purchaser or its representatives as promptly as practical,
such abstracts, title reports, status reports, certificates of title, certificates
of facts and other evidence of title covering and other information with respect
to the Properties that are reasonably available and that the Purchaser may reasonably
request; and (iii) authorize the Purchaser and its representatives to consult
with attorneys, abstract companies and other consultants or independent contractors
of the Sellers concerning title related matters. 

6

                                 c.
        Covenants Relating to Title.
From and after the date hereof and until the Closing, each of the Sellers covenants
and agrees to (i) use its reasonable efforts to provide the Purchaser with a listing
of all consents, approvals, waivers and agreements of all other parties and governmental
authorities which are necessary to the consummation of the transactions provided
for herein, (ii) use its reasonable efforts to make all filings which may be made
(and to record all instruments that may be recorded), with respect to the Properties,
in (x) the Bureau of Land Management Records and (y) the records of the respective
counties in which the Properties are situated, in order that the records maintained
by the Bureau of Land Management and the real property records of such counties
shall accurately reflect Seller's current interest in the Properties, including
those interests to be evidenced by assignments due to Seller but not yet made
to the Seller. 

                                 d.
        Marketable Title. The parties
acknowledge that there are certain assignments of interests with respect to the
Properties listed on Exhibit A that will be received by the Sellers after execution
of this Agreement, which interests are to be included in the Acquired Assets to
be transferred to the Purchaser hereunder. Likewise, pursuant to the terms hereof,
certain assignments of interests affecting the Properties may be made by the Sellers
to third parties prior to the Closing, as allowed, including but not limited to
the Overriding Royalty Interests, Back-In Prospect After Pay Out Interest, and
One Percent (1%) Working Interest. The title warranties of the Sellers hereunder,
and the documents transferring title to the Purchaser at the Closing, shall be
applicable after taking into account such assignments and reservations. 

                                 e.
       Notice of Title Defect. 

                                                        i.
       The Purchaser agrees to use its reasonable
efforts to identify promptly any issues with respect to the Properties that are
title defects ("Title Defects") and shall, upon identifying any Title Defects,
promptly notify the Sellers of the same; provided, however, that Purchaser may,
but is not required to cure any Title Defect of concern to the Purchaser prior
to notifying Sellers. No later than forty-five (45) calendar days after the Closing,
Purchaser shall have identified in writing for the Sellers, as applicable, each
Title Defect. Any Title Defect not so identified will be waived. At the time the
Purchaser gives notice of an uncured Title Defect to the Sellers, Purchaser shall
deliver to Sellers all files and other related information and data developed
by the Sellers and the Purchaser in connection with the Property in question and
any curative efforts reasonably related thereto. 

                                                       ii.
       Each of the Sellers agrees to use its
reasonable efforts to cure each Title Defect so as to render the title to the
respective Property "defensible," which is defined as entitling Seller to receive
not less than the net revenue interests and Working Interests shown in the applicable
Assignments. Each of the Seller shall promptly deliver to the Purchaser written
notice of all Title Defects that such Seller has cured and written notice with
respect to all Title Defects not cured. If the Seller fails to cure one or more
Title Defects that the Purchaser requests be cured, the Purchaser may, at its
option: 

                                                                  a.
       Waive such Title Defects and proceed
with the terms and provisions of this Agreement; or 

                                                                  b.
       Accept title to the Title Defect acreage
as represented by the Seller, pursuant to Seller's written agreement of indemnity
in which event the Seller shall agree to 

7

indemnify and hold Purchaser harmless for any loss or damage sustained by Purchaser
as a result of the existence of such Title Defect; provided, however, that Seller's
liability under such indemnity shall be limited to the portion of the purchase
price under Section 3(a) allocated to such Title Defect, which allocation shall
be part of the indemnity and be based on the pro rata net mineral acreage subject
to the uncured Title Defect. 

The remedies set out in Subsections 4(e)(ii)(a) and b are the only remedies available
to Purchaser with respect to a Title Defect or misrepresentation or failure of
warranty with respect to a matter of title affecting the Properties and Purchaser
waives all other remedies in connection with such matters. 

                5.
            CONSENTS. 

                                 a.
       Consents of Lessors. Schedule
5(a) contains a list of all leases which require, as a condition of transfer of
Sellers' interest thereunder, consents of any third party. To the best of each
of the Seller's knowledge, Schedule 5(a) represents a complete and accurate record
of all leases requiring such consent. If at the Closing, these consents which
are required in order not to render an assignment void have not been secured and
delivered to the Purchaser by the Sellers, the failure to obtain and deliver any
such consents shall be deemed a Title Defect for such leases as of Closing. 

                                 b.
       Contractual Restraints on Assignments.
Schedule 5(b) contains a list of all contractual restraints on assignments of
executory contracts including but not limited to farmins, farmouts, or agreements
or options for earning of acreage affecting the Properties. As soon as practical
after Closing, the Sellers shall notify each party to such contracts of the Purchaser's
purchase of the effected Properties. With regard to Properties that are not material,
the Sellers shall use reasonable efforts to provide a list of all contractual
restraints on assignment of executory contracts as soon as practical but not later
than thirty (30) days after the Closing. 

                6.
            VALUE OF TITLE
FAILURES. The value of the title failure or Title Defect shall be determined
by mutual agreement between the Purchaser and the Sellers within twenty (20) days
after notice, taking into account the legal effect of the Title Defect giving
rise to the title failure, the potential economic effect before tax of the Title
Defect on the life of the Property involved and applicable contract provisions
but such value shall not exceed the pro rata portion of the cash consideration
paid to Sellers under Section 3 attributable to the net mineral acreage subject
to the Title Defect. 

                7.
           LEASE REACQUISITION,
AMI AND RIGHT OF FIRST REFUSAL. The parties agree to create an Area of Mutual
Interest ("AMI") comprising all of the lands identified as the Hackberry Creek
Prospect, which shall be included within the provisions of the JOA. The term of
the AMI as to the Hackberry Creek Prospect shall expire three (3) years from the
date of the JOA or when all leases expire within the AMI boundary whichever is
longer. During the term of the AMI and within the AMI boundary, if any party hereto
(the "Acquiring Party") acquires any oil and gas leasehold interest, unleased
mineral interest, or the right to earn any such interest, directly or indirectly
(through any individual or entity associated or affiliated with such party), the
Acquiring Party shall, within fifteen (15) days following such acquisition, notify
the other parties to this AMI provision, or a counterpart thereof (the "Offerees")
of such acquisition. The notice from the Acquiring Party to the Offerees shall
include a copy of all instruments of acquisition and any other pertinent available
data, and an itemized statement of the actual costs and expenses incurred by the
Acquiring Party in acquiring 

8

such interest, excluding, however, costs and expenses of its own personnel. Each
Offeree shall have fifteen (15) days after the receipt of such notice within which
to notify the Acquiring Party of its election to acquire its proportionate interest
in the interest acquired by the Acquiring Party. The proportionate interests will
be based upon the Parties' respective Working Interests, either before or after
Project Payout, as the case may be. If the Acquiring Party has not received actual
notice of the election of an Offeree to acquire its proportionate interest within
the 15-day period, it shall be conclusively presumed that the Offeree has rejected
the offer. If an Offeree notifies the Acquiring Party within the aforesaid time
period of its election to purchase its proportionate interest in the interest
acquired, the Acquiring Party shall promptly invoice the Offeree for its proportionate
part of the actual third party costs incurred in the acquisition, along with a
written agreement whereby the Offeree assumes its proportionate share of all terms,
conditions, provisions, obligations and liabilities assumed by the Acquiring Party
in connection with such acquisition. Notwithstanding any of the foregoing, however,
if a well is being drilled within the AMI at the time of acquisition, the result
of which could affect the value of the interest so acquired, the Acquiring Party
shall so advise the Offerees, and the election to acquire a proportionate interest
in the acquired interest must be made within forty-eight (48) hours after receipt
of such notice. Failure of an Offeree to timely respond in either case to the
Acquiring Party shall be conclusively deemed an election by such party not to
acquire its proportionate interest in the acquired interest. In the event Seller
should elect not to acquire its proportionate interest in such acquisition, or
should fail to timely exercise its option, the reserved Overriding Royalty Interest
and Back-In After Prospect Payout Interest will remain applicable thereto. The
original Acquiring Party shall, promptly after the expiration of the response
period, notify each of the parties who have elected to acquire an interest that
the non-electing party or parties named in the notice have failed or refused to
exercise their option. Each of the parties so notified and the original Acquiring
Party shall have the option for forty-eight (48) hours (exclusive of Saturday,
Sunday and legal holidays) after receipt of such second notice to acquire the
remaining interest in the proportion that the interest of each such party bears
to the total interest of all parties hereto desiring to acquire the remaining
interest. Should one of the parties electing to share in the acquisition in the
first instance elect not to acquire any additional interest, such remaining interest
shall again be offered to the other parties and shared in the same manner as provided
in the immediately preceding sentence. Promptly upon determination of the proportionate
ownership of such acquisition, the parties electing to participate therein shall
pay the Acquiring Party their respective proportionate share of the total cost
thereof. 

If an Offeree elects to acquire its proportionate interest and assumes its obligations,
as hereinabove set forth, the Acquiring Party shall, after such Offeree has paid
the invoice amount and executed and delivered the written agreement provided for
above, execute and deliver a written assignment in recordable form covering the
Offeree's proportionate share in the acquired interest, which assignment shall
be made without any warranty of title, express or implied, except to claims of
all persons claiming or to claim the same or any part thereof by, through or under
the Acquiring Party, but not otherwise. Such assignment shall also be made subject
to the terms of this Agreement. 

                8.
            REPRESENTATIONS,
WARRANTIES, AND COVENANTS OF THE SELLERS. Except as specifically set forth
on the disclosure schedules delivered by Sellers to the Purchaser (the parts of
which are numbered to correspond to the individual section numbers of this Section
8), each Seller hereby represents, warrants, and covenants to the Purchaser as
follows: 

9

                                 a.
       Requisite Power and Authority.

                                                        i.
       Seller has all necessary power and authority
under all applicable provisions of law to execute and deliver this Agreement and
to carry out its provisions. All action on Seller's part required for the lawful
execution and delivery of this Agreement has been or will be taken prior to the
Closing. Upon its execution and delivery, this Agreement will be a valid and binding
obligation of the Seller, enforceable in accordance with its terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights and
(b) general principles of equity that restrict the availability of equitable remedies.

                                                        ii.
       Seller represents that it has obtained
all necessary consents and/or approvals of all of its Members to enter into this
Agreement and to perform its obligations set forth hereunder. 

                                 b.
       Ownership. Seller is the lawful
owner of or has the right to transfer to Purchaser each of the Acquired Assets
being transferred by it pursuant hereto, subject to matters of record in Lavaca
and Colorado Counties, Texas, prior in time to the date of the applicable lease
and those matters listed on Schedules 5(a) and 5(b). The delivery to Purchaser
of the appropriate assignments of interest subject to the matters required under
Schedule 5(a) and 5(b) will vest good and marketable title to the Acquired Assets
in Purchaser, free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances and claims of any kind by, through,
or under Seller. There are no outstanding agreements, options or commitments of
any nature obligating the Seller to transfer any of the Acquired Assets or rights
or interests therein to any party other than Purchaser. 

                                 c.
       No Conflict. The execution, delivery
and performance by the Seller of this Agreement and the consummation of the transactions
contemplated hereby do not and will not: (i) violate or conflict with any provision
of the charter documents or bylaws of Seller; (ii) violate any provision or requirement
of any domestic or foreign, national, state, or local law, statute, judgment,
order, writ, injunction, decree, award, rule, or regulation of any governmental
entity applicable to Seller; (iii) violate, result in a breach of, constitute
(with due notice or lapse of time or both) a default or cause any obligation,
penalty, premium or right of termination to arise or accrue under any contract
except as provided on Schedules 5(a) and 5(b); (iv) result in the creation or
imposition of any lien, charge or encumbrance of any kind whatsoever upon any
of the properties or assets of Seller; and (v) result in the cancellation, modification,
revocation or suspension of any license, permit, certificate, franchise, authorization
or approval issued or granted by any governmental entity. 

                                 d.
       Consents. All consents and notices
required to be given by or on behalf of Seller before consummation of the transactions
contemplated by this Agreement in compliance with all applicable laws, rules,
regulations, orders or governmental or other agency directives binding upon Seller
are described on Schedule 8(d) and all such consents have been duly obtained and
are in full force and effect. 

                                 e.
       Basic Documents. (i) All Basic
Documents to which Seller is a party or by which it is bound are in full force
and effect and are the valid and legally binding obligations of the Seller and
are enforceable in accordance with its respective terms; (ii) the Seller is not
in breach of default with respect to any of its material obligations pursuant
to any such Basic Document or any regulations 

10

incorporated therein or governing same; (iii) all payments including,
without limitation, royalties, and valid calls under unit or joint operating agreements
due thereunder have been made by Seller; (iv) to the knowledge of the Seller,
no other party to any such Basic Documents (or any successor in interest thereto)
is in breach of default with respect to any of its obligations thereunder; (v)
there has not occurred any event, fact or circumstance which, with the lapse of
time or the giving of notice, or both, would constitute such a breach or default
on behalf of Seller, or to the knowledge of Seller with respect to any other party;
and (vi) neither Seller or any other party to any Basic Document have given or
threatened to give notice of any action to terminate, cancel, rescind or procure
a judicial reaffirmation of any such Basic Document or any material provision
thereof, except as set out on Schedule 8(e). 

                                 f.
        Leases. With respect to the
oil, gas and other mineral leases, unit agreements, pooling agreements, and other
documents creating interests comprising the Acquired Assets, except as otherwise
disclosed in the Schedules (i) such interests are to be transferred to the Purchaser
hereunder without reservation by Seller of any interest other than those set out
in Section 4(a) and the reassignment rights; (ii) Seller has fulfilled all requirements
for filings, certificates, disclosures of parties in interest, and other similar
matters contained in such leases or other documents and is fully qualified to
own and hold all such leases or other interests; (iii) there are no provisions
applicable to such leases or other documents which increase the royalty share
of the lessor thereunder, except as such increases are reflected in Schedule 8(f);
(iv) there are no royalty provisions (other than those allowing a lessor the right
to take in kind) requiring the payment of royalty on any basis other than fair
market value at the well head, except with respect to natural gas liquids extracted
and gas processing facilities; (v) upon the establishment of production in commercial
quantities the leases and other interests are to be in full force and effect over
the economic life of the Property involved and do not have terms fixed by a certain
number of years. 

                                 g.
       Operating Agreements. Schedule
8(g) is a true and complete copy of the Joint Operating Agreement ("JOA") covering
the Properties. 

                                 h.
       Legal Proceedings. Except as
shown in Schedule 8(h), there is no suit, action, claim, investigation by any
person or entity or by any administrative agency or governmental body, and no
legal administrative or arbitration proceeding pending or, to the Seller's best
knowledge, threatened against Seller which has materially adversely affected or
may so affect the Acquired Assets. 

                                 i.
       Permits. The Seller has been
granted all governmental licenses and permits and has properly made all filings
necessary and appropriate to obtain such licenses and permits and to own and operate
the Acquired Assets as presently being owned and operated, and such licenses,
permits and filings are in full force and effect and no material violations exist
or have been recorded in respect of any such licenses, permits or filings, no
proceeding is pending or Seller's best knowledge is threatened looking toward
the challenge, revocation or limitation of any such licenses, permits or filings,
the failure of which would have a materially adverse effect on the Acquired Assets.

                9.
            REPRESENTATION,
WARRANTIES AND COVENANTS OF THE PURCHASER. The Purchaser hereby represents,
warrants, and covenants to the Sellers as follows: 

                                 a.
       Organization, Good Standing and Qualification.
The Purchaser is duly organized, validly existing and in good standing under the
laws of the State of Nevada and qualified to do business 

11

in and is in good standing in the State of Texas. The Purchaser has all requisite
corporate power and authority to execute and deliver and thereafter to carry out
the provisions of this Agreement. 

                                 b.
       Authorization; Binding Obligations.
This Agreement, when executed and delivered, will be a valid and binding obligation
of the Purchaser enforceable in accordance with its terms, except (a) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application affecting enforcement of creditors' rights and (b) general
principles of equity that restrict the availability of equitable remedies. 

                10.
          SUBSEQUENT OPERATIONS.
The Purchaser will operate the Properties that comprise the Acquired Assets as
Contract Operator and any other properties purchased by the parties in the AMI,
under the terms of the JOA (as defined in Section 8(g)). Drilling and completion
operations on the first well (or substitute therefore) commenced on the Hackberry
Creek Area will be conducted in accordance with the JOA including without limitation,
the non-consent penalty provisions. Such provisions provide, in part, that parties
electing, or deemed to elect, not to participate in the drilling of an initial
test well or substitute therefore, will release, relinquish and forfeit all right,
title and interest in and to the Hackberry Creek Area; provided, however, in the
case of ZaZa, or Eli Smith, as the non-participants, the Reserved Overriding Royalty
Interest and the Back-In After Prospect Payout Interest will remain applicable
to such Prospect Area. 

                11.
          COVENANTS OF THE SELLERS.

                                 a.
       Consents and Approvals. Each
Seller shall use its reasonable efforts to obtain all such provisions, approvals
and consents by federal, state and local governmental authorities and others as
may be required, to vest title to its Properties in the Purchaser as provided
hereunder and for the subsequent use and operation by the Purchaser of the Properties,
or as may be otherwise reasonably requested by the Purchaser. 

                                 b.
       Transfers. From the date of this
Agreement until the Closing Date, the Sellers shall not, and shall not cause their
respective officers, directors, shareholders and affiliates to, sell, assign,
transfer, mortgage, convey or otherwise dispose of any of the Properties to any
party, other than as may be required with respect to the Overriding Royalty Interests
and Back-In After Payout Rights. 

                                 c.
       Operations. From the date of
this Agreement until the Closing Date, the Purchaser shall operate the Properties
in the ordinary course of business as a reasonably prudent operator, under the
terms of the JOA. 

                                 d.
       Defaults. Each Seller shall give
prompt written notice to the Purchaser of any defaults (or written threat of default,
whether disputed or denied) received or given by Seller under any instrument or
agreement affecting any material portion of the Properties or which binds any
of the Properties. 

                                 e.
        Further Assurances. At any time
from and after the Closing Date, the Sellers shall, upon request of the Purchaser,
execute, acknowledge, and deliver to Purchaser such further instruments of conveyance,
assignment, and transfer and take such other action as the other party may reasonably
request in order to more effectively perfect and cure, convey, assign, transfer
and deliver title to the Acquired Assets, all as contemplated by this Agreement.

12

                12.
          CONDITIONS TO CLOSING.

                                 a.
       Conditions Precedent to the Obligations
of the Purchaser. The obligations of the Purchaser to consummate the transactions
contemplated by this Agreement at Closing are subject to each of the following
conditions: 

                                                        i.
       The representations and warranties of
the Sellers contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof, shall be true on and as of the Closing Date
with the same effect as though such representations and warranties were made at
and as of such date, except to the extent that the failure to be so true would
not materially and adversely affect the ability of the Sellers to consummate the
transaction contemplated by this Agreement or materially and adversely affect
the Acquired Assets. 

                                                        ii.
       As of the Closing Date, Sellers shall
have performed and complied in all material respects with all agreements and conditions
required by this Agreement to be performed and complied with by it unless mutually
waived by the parties hereto. 

                                                        iii.
       As of the Closing Date, there shall
be no effective injunction, writ or preliminary restraining order or any order
of any nature issued by a court or governmental agency of competent jurisdiction
directing that the transaction provided for herein not be consummated as herein
provided. 

                                                        iv.
       As of the Closing Date, no suit, action
or other proceeding shall be pending or threatened against the Sellers which could
result in a material impairment or loss of value as to the Acquired Assets. 

                                                        v.
       The Purchaser shall have consummated
the Financing. 

                                 b.
       Conditions Precedent to the Obligations
of Sellers. The obligations of the Sellers to consummate the transactions
contemplated by this Agreement at Closing are subject to each of the following
conditions: 

                                                        i.
       The representations and warranties of
the Purchaser contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof, shall be true on and as of the Closing Date
with the same effect as though such representations and warranties were made at
and as of such date, except to the extent that the failure to be so true would
not materially and adversely affect the ability of the Purchaser to consummate
the transaction contemplated by this Agreement. 

                                                        ii.
       As of the Closing Date, the Purchaser
shall have performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed and complied with by
it unless mutually waived by the parties hereto. 

                                                        iii.
       As of the Closing Date, there shall
be no effective injunction, writ or preliminary restraining order or any order
of any nature issued by a court or governmental agency of competent jurisdiction
directing that the transaction provided for herein not be consummated as herein
provided. 

13

                                                        iv.
The Purchaser shall have consummated the Financing. 

                13.
          TERMINATION. 

                                 a.
       Right of Termination. This Agreement
and the transactions contemplated herein may be completely terminated at any time
at or prior to the Closing: 

                                                        i.
by mutual consent of the parties; or 

                                                        ii.
by the Sellers on the one hand or by the Purchaser on the other if the Closing
shall not have occurred by August __1__, 2009. 

                                 b.
       Effect of Termination. In the
event of the termination of this Agreement pursuant to the provisions of this
Section 13, this Agreement shall become void and have no effect and neither party
shall have any further right or duty to the other hereunder, except as expressly
provided to the contrary herein. 

                14.          MISCELLANEOUS.

                                 a.
       Governing Law. This Agreement
shall be governed by, and construed and enforced in accordance with, the laws
of the State of Texas, without regard to its choice-of-law principles. 

                                 b.
       Successors and Assigns. Except
as otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto. 

                                 c.
        Entire Agreement. This Agreement
and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subject matter
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein. 

                                 d.
       Severability. In case any provision
of this Agreement shall be invalid, illegal or unenforceable, the parties intend
that (a) in lieu of such provision there be added as part of this Agreement a
provision as similar in terms to such invalid, illegal or unenforceable provision
as may be possible and be valid, legal and enforceable and (b) the validity, legality
and enforceability of the remaining provisions, or any subsequent applications
thereof, shall not in any way be affected or impaired thereby. 

                                 e.
       Amendment. This Agreement may
be amended or modified only upon the written consent of the Purchaser and the
Seller. 

                                 f.
       Delays or Omissions. It is agreed
that no delay or omission to exercise any right, power or remedy accruing to any
party, upon any breach, default or noncompliance by another party under this Agreement
shall impair any such right, power or remedy, nor shall it be construed to be
a waiver of any breach, default or noncompliance, or any acquiescence therein,
or of or in any similar breach, default or noncompliance thereafter occurring.
All remedies, either under this Agreement, by law, or otherwise afforded to any
party, shall be cumulative and not alternative. 

14

                                 g.
       Notices. All notices required
or permitted hereunder shall be in writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified; (b) when sent by confirmed
telex or facsimile if sent during normal business hours of the recipient, if not,
then on the next business day; (c) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid; or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the respective party at the address set forth below or at such other address
as such party may designate by ten (10) days advance written notice to the other
party hereto: 

Addresses for Notices: 

	If to Purchaser: 	REOSTAR ENERGY CORPORATION 

      Attn: Mark Zouvas 

      3880 Hulen St., Ste. 500 

      Fort Worth, Texas 76107 

      Tel: (817) 989-7367 

      Fax: (817) 989-7368 
	 	 
	With a copy to: 	Greenburg Traurig 

      Attn: Raymond A. Lee, Esq. 

      3161 Michelson Drive, Suite 1000 

      Irvine, CA 92612-4410 

      Tel: (949) 732-6510 

      Fax: (949) 732-6501 
	 	 
	If to Seller: 	ZAZA ENERGY, LLC 

      Attn: Gaston Kearby 

      600 Leopard St., Ste. 2100 

      Corpus Christi, Texas 78473 

      Tel: (361) 884-9105 

      Fax: (361) 884-9107 
	 	 
	With a copy to: 	Crady, Jewett & McCulley, LLP 

      Attn: Chris Goodrich 

      2727 Allen Parkway, Suite 1700 

      Houston, Texas 77019-2125 

      Tel: (713) 739-7007 

      Fax: (713) 739-8403 

 

                                 h.
       Expenses. Each party shall pay
all costs and expenses that it incurs with respect to the negotiation, execution,
delivery and performance of the Agreement. 

                                 i.
        Titles and Subtitles. The titles
of the sections and subsections of the Agreement are for convenience of reference
only and are not to be considered in construing this Agreement. 

                                 j.
       Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument. 

15

                                 k.
       Broker's Fees. Each party hereto
represents and warrants that no agent, broker, investment banker, person or firm
acting on behalf of or under the authority of such party hereto is or will be
entitled to any broker's or finder's fee or any other commission directly or indirectly
in connection with the transactions contemplated herein. Each party hereto further
agrees to indemnify each other party for any claims, losses or expenses incurred
by such other party as a result of the representation in this Section 14(k) being
untrue. 

                                 l.
        Pronouns. All pronouns contained
herein, and any variations thereof, shall be deemed to refer to the masculine,
feminine or neutral, singular or plural, as to the identity of the parties hereto
may require. 

[Signature Page Follows] 

  

  

  

  

  

  

  16

                IN
WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement
as of the date set forth in the first paragraph hereof. 

 

	 	SELLERS: 

      

      ZAZA ENERGY, LLC, 

      a Texas limited liability company 

      

      

      By: __________________________________________ 

      

      Name: ________________________________________

      

      Title: _________________________________________ 

      

      

      ELI SMITH AND ASSOCIATES 

      

      

      By:   /s/ Eli Smith                                                                           

      

      Name:   Eli Smith                                                                            
      

      

      Title: _________________________________________ 

      

      

      PURCHASER: 

      

      REOSTAR ENERGY CORPORATION, 

      a Nevada corporation 

      

      

      By:   /s/ Mark S. Zouvas                                                               

      

      Name:  Mark S. Zouvas                                                                
      

      

      Title:   Chief Executive Officer                                                     
      

      
	 	 
	 	 
	
      SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT
        

    

17

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