PURCHASE AND SALE AGREEMENT
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, X. Xxxxxxx Lease, and have
transferred operations of same to the Buyer. The remainder of the
properties, excluding the X. Xxxxxxx 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:
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(i)
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an
Original executed Assignment, in the form attached hereto as Exhibit “B”;
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(ii)
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The
Interim Proceeds, as defined below, if any, in certified
funds;
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(iii)
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A
non-foreign affidavit executed by Sellers in the form attached as Exhibit “C”;
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(iv)
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All
geological and engineering data in Sellers’ possession which pertain to
the Property with the exception of any 3-D seismic
data;
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(v)
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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,
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(vi)
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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 xxxxx 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.
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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.
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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.
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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.
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EXECUTED
this 24th
day of June, 2010.
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"SELLERS":
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"BUYER":
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Century
Assets Corporation
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BY:
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/s/ Xxxx Xxxxx
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BY:
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/s/ Xxxxxx X. XxXxxxxxx
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Xxxx
Xxxxx
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Xxxxxx
X. XxXxxxxxx
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President
& CEO
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President
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PNP
Petroleum I, L.P.
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BY:
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/s/ Xxxx Xxxxxxxx
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Xxxx
Xxxxxxxx
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Managing
Partner
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Cibolo
Energy Operating, Inc.
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BY:
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/s/ Xxxx Xxxxxxxx
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Xxxx
Xxxxxxxx
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President
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