PURCHASE AND SALEAGREEMENT

Eternal Energy Corp., a Nevada corporation; PNP Petroleum, I, L.P., a Texas Limited Partnership and Cibolo Energy Operating, Inc. , a Texas corporation, herein collectively referred to as "Sellers" and Century Assets Corporation, a Delaware corporation, herein referred to as "Buyer," enter into this Purchase and Sale Agreement ("Agreement"), in consideration of Sellers' agreement to sell, and Buyer's agreement to buy, the property described in this Agreement, all pursuant to the terms and conditions of this Agreement. For purposes hereof, Buyer and Sellers may collectively be referred to herein as the “Parties” or in the singular as the “Party”.

1.           Affirmation of the Terms of the Letter agreement. The Parties hereby agree to and reaffirm all of the terms of the Letter Agreement dated March 10, 2010, as their agreement,  including the provisions regarding the payment of purchase price and transfer of leases stated in paragraph 3., whereby upon receipt of the $50,000.00 good faith deposit the Sellers assigned all of their right, title and interest in the 194 acre, R. Bennett Lease, and have transferred operations of same to the Buyer.  The remainder of the properties, excluding the R. Bennett Lease will be conveyed to Buyer upon receipt of the balance of the adjusted Purchase Price, outlined below.   The parties hereby agree to and reaffirm the terms of the Letter Agreement, attached hereto as Exhibit “A”, as amended by that certain First Amendment to March 10, 2010 Letter Agreement dated June 3, 2010, attached hereto as Exhibit “A-1” as their agreement and hereby incorporate it by reference.

2.           Closing.  At Closing the following actions will take place

(a)          Buyer shall deliver to Sellers at or before the Closing the following:

(i)           The remaining amount of the Purchase Price in certified funds or by wire transfer pursuant to Sellers’ written instructions; and

(ii)           Such other instruments or documents as Sellers may reasonably request of Buyer at least 48 hours prior to Closing which are necessary to consummate the transaction contemplated herein.

(b)          Sellers shall deliver to Buyer at or before the Closing the following:

(i)

an Original executed Assignment, in the form attached hereto as Exhibit “B”;

(ii)

The Interim Proceeds, as defined below, if any, in certified funds;

(iii)

A non-foreign affidavit executed by Sellers in the form attached as Exhibit “C”;

(iv)

All geological and engineering data in Sellers’ possession which pertain to the Property with the exception of any 3-D seismic data;

(v)

Such other instruments or documents as Buyer may reasonably request of Sellers at least 48 hours prior to Closing which are necessary to consummate the transaction contemplated herein,

(vi)

All title information in Sellers’ possession which pertains to the Property, including but not limited to all land files including the original executed and recorded leases for all tracts being conveyed, copies of all original title opinions in Sellers’ possession, copies of canceled checks or receipts for original lease bonus payments and lease delay rental payments.

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(c)          Effective Date.  The conveyance from Sellers to Buyer shall be effective as of January 1, 2010, at 7:00 a.m. Central Standard Time the (“Effective Date”).

3.           Proration of Production and Expenses.  At Closing, Sellers shall pay to Buyer the amount of net proceeds received by Sellers, if any, for the interests conveyed herein between the Effective Date and the Closing Date that are attributable to the Property net of any royalties and of any production, severance, sales or windfall profit taxes not reimbursed to Sellers by Buyer and net of all expenditures (including capital expenditures) paid by Sellers that are attributable to the Property for the period between the Effective Date and the Closing Date including, without  limitation, royalties, rentals, services, equipment, and similar charges and expenses including those billed under applicable operating agreements, and all prepaid expenses (“Interim Proceeds”).

4.           Taxes and Fees.  Sellers shall be responsible for all un-paid property taxes relating to the Property accruing in the twelve months prior to the Effective Date and discovered within one year of the Closing Date.  Buyer shall be responsible for all taxes (exclusive of federal, state or local income taxes assessed as against Sellers for income generated prior to the Effective Date) relating to the Property from and after the Effective Date.  Buyer shall be responsible for all recording and transfer fees and all sales, use, transfer, documentary and similar taxes arising out of the sale of the Property. Each party shall bear its own costs and expenses as may be associated with this transaction.

5.           Assumption of Obligations.  At Closing, Buyer shall, (i) assume all of Sellers’ operational, contractual and legal obligations, liabilities, duties and costs associated with, attributable to, or arising out of the use, operation or ownership of the Property, after the Effective Date including, but not limited to, the obligations to properly plug and abandon all wells located on the Lease, to remove all pipe and equipment now located on the Property or hereafter placed on the Property, to cleanup and restore the Property, and to conduct all operations using good oilfield practices in accordance with all agreements affecting the Property; (ii) comply with all lease terms and all terms and conditions contained in any all agreements related or associated with the Property; (iii) assume all liabilities, obligations, duties and costs attributable to the Property arising from, attributable to, or alleged to be arising from or attributable to, a violation of, or the failure to perform any obligation imposed by, any agreement or any law, regulation or rule including, but not limited to, any and all applicable environmental laws.

6.           Buyer Indemnities.  Buyer agrees to indemnify, release, defend and hold harmless Sellers, its officers, directors, employees, agents, representatives, affiliates, subsidiaries, successors and assigns From and against any and all Claims (as hereinafter defined) including, without limitation, damage to property, or injury to or death of persons attributable in whole or in part to conditions caused by, arising from, attributable to, or alleged to be caused by, arising from or attributable to: (I) the ownership and/or operation of the Property AFTER THE EFFECTIVE DATE, or (ii) the breach by Buyer of any of its representations, warranties, covenants or agreements hereunder.  The term “Claims” as used in this Agreement shall mean all claims, liabilities, losses, damages, costs and expenses including without limitation attorney’s fees, fines and penalties.

7.           Sellers’ Indemnities.  Sellers agrees to indemnify, release, defend and hold harmless buyer, its officers, directors, employees, agents, representatives, affiliates, subsidiaries and successors (collectively, the “Buyer Indemnities”) from and against any and all Claims caused by, arising from or attributable to: (I) the ownership and/or operation of the Property BEFORE THE EFFECTIVE DATE, or; (II) Sellers’ breach of any of its representations, warranties, covenants or agreements hereunder.

8.           Effect of Negligence.  Without limiting or enlarging the scope of the indemnification obligations set forth in this Agreement, an indemnified party shall be entitled to a defense and indemnification hereunder in accordance with the terms hereof, regardless of whether the loss or claim giving rise to such indemnification obligation is the result of the sole, concurrent or comparative negligence, strict liability or violation of any law of or by such indemnified party.  The parties agree that this section constitutes a conspicuous legend.

 

8.           Representations by Sellers.  Sellers represent and warrant that the following statements are true and correct at the date hereof and at the Closing Date:

a.           Organization and Authority.  Eternal Energy Corp is a Nevada Corporation, PNP Petroleum, I, L.P. is a Texas Limited Partnership and Cibolo Energy Operating, Inc is a  Texas  corporation duly organized, in good standing, and qualified to own operated and non-operated mineral interests in the state where the Property is located and have the power and authority to carry on its business as presently conducted, to own and hold the Property, to sell the Property (subject to any required consents to assignment) and to perform all obligations required by this Agreement.

b.           Litigation.  To the best of Sellers’ knowledge there are no actions, suits, charges, investigations or proceedings, including tax proceedings, pending or threatened before any court or governmental agency, as of the Effective Date that would result in a loss or impairment of Sellers' title to the Property, obstruct operation of the Property or significantly reduce the value of the Property.

c.           The persons signing this Agreement on behalf of Sellers are duly appointed and authorized by Sellers to bind Sellers to this Agreement.

d.           Any liens created prior to execution of this Agreement will be released and evidenced by a release furnished to Buyer at Closing.

e.         Environmental.   To the Knowledge of Sellers, there are no Violations of Environmental Laws that arise from events occurring during the period Sellers owned the affected Assets, which have not been corrected or remediated under the requirements of any Governmental Body having jurisdiction, and to the Knowledge of Sellers, there are no Environmental Liabilities that arise from events occurring prior to Sellers’ ownership of the Assets. There are no environmental investigations, studies or audits with respect to any of the Assets owned or commissioned by, or in the possession of, Sellers or Affiliates which have not been disclosed in writing to Buyer. To the best of Sellers’ knowledge, Sellers have, at their own expense, covered every open pit related to their operations on the affected Assets and disposed of all associated drill cuttings in accordance with the requirements of any Governmental Body having jurisdiction.

9.           Representations by Buyer. Buyer represents and warrants that the following statements are true and correct at the date hereof and at the Closing Date:

a.      Permits.  Buyer is bonded and qualified to own and/or operate the Property, as such requirements are mandated by federal, state or local law and holds or will hold at Closing all necessary permits and governmental authorizations for the use and enjoyment of the Property.

b.    Authority.  The persons signing this Agreement on behalf of Buyer are duly appointed and authorized by Buyer to bind Buyer to this Agreement.

10.         Entire Agreement.  This Agreement and all exhibits hereto, shall constitute the entire contract and agreement of Sellers and Buyer and shall supersede and override any and all prior discussions, correspondence, and agreements, between them as to, and only as to, the contemplated operations, promises, and agreements as specifically provided for herein.  All such prior communications and understandings as to, and only as to, the contemplated operations, promises, and agreements as specifically provided for herein are hereby merged into this Agreement and the exhibits attached hereto.  Sellers and Buyer agree that as to the matters contemplated and provided for herein, there are no undertakings, obligations, promises, assurances, agreements or conditions, whether precedent or otherwise, except those specifically set forth in this Agreement and in the exhibits attached hereto.  Other than as prescribed herein, no amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing and signed by the Parties.

11.         Enforcement of Provisions Following Closing.  Following the Closing of this Agreement, the terms and conditions of this Agreement, including, but not limited to, the Indemnity Provisions of paragraphs 4, 5and 6 and any and all assurances herein, shall continue in full force and effect to the extent necessary to provide the Parties herein with the full benefit of the provisions herein contained.