ETERNAL ENERGY CORP.

SUBSCRIPTION AGREEMENT

Eternal Energy Corp.
c/o Randolf W. Katz
Bryan Cave LLP
2020 Main Street, Suite 600
Irvine, California 92614

Dear Mr. Katz:

The undersigned hereby subscribes to purchase the securities (the “Securities”)
of Eternal Energy Corp., a Nevada corporation (the “Company”), consisting of
________ shares (the “Shares”) of the Company’s Common Stock and a warrant, in
the form attached hereto as Exhibit A (the “Warrant”), to purchase up to
________ shares of the Company’s Common Stock, in accordance with the following
paragraphs. This subscription may be rejected in whole or in part by the
Company, in its sole and absolute discretion for any cause or for no cause. Any
questions regarding this document or the investment described herein should be
directed to Randolf W. Katz, Bryan Cave LLP, 2020 Main Street, Suite 600,
Irvine, California 92614, (949) 223-7103.

1. Purchase. Subject to the terms and conditions hereof, the undersigned hereby
irrevocably agrees to purchase the Securities, consisting of __________ Shares,
and a Warrant to purchase ___________ shares of the Company’s Common Stock at an
exercise price of $1.00 per share, for a total purchase price of $___________,
and tenders such purchase price by means of a check (cashiers, certified, or
personal), money order, or wire transfer made payable to: “Bryan Cave LLP Client
Trust Account, as Escrow Agent for Eternal Energy Corp.”

2. Representations and Warranties of the Purchaser. The undersigned hereby makes
the following representations and warranties to the Company, and the undersigned
agrees to indemnify, hold harmless, and pay all causes of action, lawsuits,
debts, controversies, damages, claims, demands and judgments (including
litigation expenses and reasonable attorneys' fees) incurred by the Company, and
its past and present officers, directors, employees, agents, successors and
assigns, whether or not under federal or state securities laws, arising out of
or in connection with the undersigned’s misrepresentation or breach of any of
the representations and warranties set forth herein, including, without
limitation,

   
(a)
The undersigned is the sole and true party in interest and is not purchasing the
Securities for the benefit of any other person and has not granted any other
person any right or option or any participation or beneficial interest in any of
the Securities;

 
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(b)
The undersigned confirms receipt and careful review of all written material
provided by, or on behalf of, the Company in respect of its business and
prospects, and all information provided by the Company to its stockholders and
the undersigned in respect of its business and prospects, including all
attachments and exhibits thereto. The undersigned understands that all books,
records, and documents of the Company relating to this investment have been and
remain available for inspection by the undersigned upon reasonable notice. The
undersigned confirms that all documents requested by the undersigned have been
made available, and that the undersigned has been supplied with all of the
additional information concerning this investment that has been requested. The
undersigned confirms that he has obtained sufficient information, in his
judgment or that of his independent purchaser representative, if any, to
evaluate the merits and risks of this investment. The undersigned confirms that
he has had the opportunity to obtain such independent legal and tax advice and
financial planning services as the undersigned has deemed appropriate prior to
making a decision to subscribe for the Securities. In making a decision to
purchase the Securities, the undersigned has relied exclusively upon his
experience and judgment, or that of his purchaser representative, if any, upon
such independent investigations as he, or they, deemed appropriate, and upon
information provided by the Company in writing or found in the books, records,
or documents of the Company;

   
(c)
In evaluating the suitability of this investment the undersigned has not relied
upon any representations or other information (whether oral or written), other
than that furnished to the undersigned by the Company or its representatives.
The undersigned acknowledges and represents that no representations or
warranties have been made to the undersigned by the Company or its directors,
officers or any agents or representatives with respect to the business of the
Company, the financial condition of the Company and\or the economic, tax or any
other aspect or consequence of the purchase of the Securities and the
undersigned has not relied upon any information concerning the Company, written
or oral, other than supplied to the undersigned by the Company.

   
(d)
The undersigned has such knowledge and experience in financial and business
matters that the undersigned is capable of an evaluation of the merits and risks
of the undersigned’s investment in the Securities;

 
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(e)
THE UNDERSIGNED IS AWARE THAT AN INVESTMENT IN THE COMPANY IS HIGHLY SPECULATIVE
AND SUBJECT TO SUBSTANTIAL RISKS. The undersigned is capable of bearing the high
degree of economic risk and burdens of this venture, including, but not limited
to, the possibility of a complete loss, the lack of a sustained and orderly
public market, and limited transferability of the Securities, which may make the
liquidation of this investment impossible for the indefinite future. The
undersigned has the financial ability to bear the economic risks of its
investment, has adequate means of providing for its current needs and personal
contingencies, and has no need for liquidity in this investment. The
undersigned's commitment to investments that are not readily marketable is not
disproportionate to its net worth, and this investment will not cause such
overall commitment to become excessive;

   
(f)
The offer to sell the Securities was directly communicated to the undersigned by
such a manner that the undersigned, or his purchaser representative, if any, was
able to ask questions of and receive answers from the Company or a person acting
on its behalf concerning the terms and conditions of this transaction. At no
time, except in connection and concurrently with such communicated offer, was
the undersigned presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement, or any other form of general
advertising;

   
(g)
The Securities are being acquired solely for the undersigned’s own account, for
investment, and are not being purchased with a view to resale, distribution,
subdivision, or fractionalization thereof;

   
(h)
The undersigned understands that the Securities have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”), or any state
securities laws, in reliance upon exemptions from regulation for non-public
offerings. The undersigned understands that the Securities or any interest
therein may not be, and agrees that the Securities or any interest therein will
not be, resold or otherwise disposed of by the undersigned unless the Securities
are subsequently registered under the Securities Act and under appropriate state
securities laws or unless the Company receives an opinion of counsel
satisfactory to it that an exemption from registration is available;

(i) The undersigned has been informed of and understands the following:

     
(1)
There are substantial restrictions on the transferability of the Securities;

     
(2)
No federal or state agency has made any finding or determination as to the
fairness for public investment, nor any recommendation nor endorsement, of the
Securities;

 
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(j)
None of the following information has ever been represented, guaranteed, or
warranted to the undersigned, expressly or by implication by any broker, the
Company, or agent or employee of the foregoing, or by any other person:

     
(1)
The approximate or exact length of time that the undersigned will be required to
remain a holder of the Securities;

     
(2)
The amount of consideration, profit, or loss to be realized, if any, as a result
of an investment in the Company;

     
(3)
That the past performance or experience of the Company, its officers, directors,
associates, agents, affiliates, or employees or any other person will in any way
indicate or predict economic results in connection with the plan of operations
of the Company or the return on the investment;

   
(k)
The undersigned has not distributed any information relating to this investment
to anyone other than his purchaser representative, if any, and no other person
except such personal representative and the undersigned has used this
information;

   
(l)
The undersigned hereby agrees to indemnify the Company and to hold it harmless
from and against any and all liability, damage, cost, or expense, including its
attorneys’ fees and costs, incurred on account of or arising out of:

     
(1)
Any material inaccuracy in the declarations, representations, and warranties
hereinabove set forth;

     
(2)
The disposition of the Securities or any part thereof by the undersigned,
contrary to the foregoing declarations, representations, and warranties;

     
(3)
Any action, suit, or proceeding based upon:

       
(i)
the claim that said declarations, representations, or warranties were inaccurate
or misleading or otherwise cause for obtaining damages or redress from the
Company; or

       
(ii)
the disposition of the Securities or any part thereof.

 
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The foregoing representations, warranties, agreements, undertakings and
acknowledgements are made by the undersigned with the intent that they be relied
upon in determining the undersigned’s suitability as a purchaser of the
Securities. In addition, the undersigned agrees to notify the Company
immediately of any change in any representation, warranty or other information.

3. Transferability. The undersigned agrees not to transfer or assign the
obligations or duties contained in this Subscription Agreement or any of the
undersigned’s interest herein except to a subsidiary or affiliate of the
undersigned.

4. Accredited Investor. The undersigned is an “accredited investor,” as that
term is defined in Rule 501(c) of Regulation D promulgated under the Securities
Act.

5. Understandings of the Purchaser. The undersigned acknowledges, understands,
and agrees that:

   
(a)
The Company reserves the right to reject all or any part of this subscription in
their sole and absolute discretion for any cause or for no cause;

   
(b)
The undersigned will be promptly notified by the Company whether this
subscription has been accepted, either in whole or in part, and if not accepted
in whole, agrees to accept the return of a proportionate part of the funds
tendered to the Company as a refund or a return, and in either case without
interest thereon or deduction therefrom; and

   
(c)
The Securities shall be deemed issued and owned by the undersigned upon the
Company’s receipt of the purchase price therefor and its acceptance thereof.

6. State Securities Laws. The offering and sale of the Securities is intended to
be exempt from qualification under the securities laws of Colorado, Nevada, and
such other states in which the securities are offered and sold.

7. Regulation D. Notwithstanding anything herein to the contrary, every person
or entity who, in addition to or in lieu of the undersigned, is deemed to be a
“purchaser” pursuant to Regulation D promulgated under the Securities Act or any
state law, does hereby make and join in making all of the covenants,
representations, and warranties made by the undersigned.

8. Acceptance. Execution and delivery of this Subscription Agreement shall
constitute an irrevocable offer to purchase the Securities indicated, which
offer may be accepted or rejected in whole or in part by the Company in its sole
and absolute discretion for any cause or for no cause. Acceptance of this offer
by the Company shall be indicated by its execution hereof.

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9. Binding Agreement. The undersigned agrees that the undersigned may not
cancel, terminate, or revoke this Subscription Agreement or any agreement of the
undersigned made hereunder, and that this Subscription Agreement shall survive
the death or disability of the undersigned and shall be binding upon the heirs,
successors, assigns, executors, administrators, guardians, conservators, or
personal representatives of the undersigned.

10. Choice of Law; Forum. Notwithstanding the place where this Subscription
Agreement or any counterpart hereof may be executed by any of the parties
hereto, the parties expressly agree that all the terms and provisions hereof
shall be construed under the laws of the State of Nevada and that any actions
related hereto shall be brought in a court of competent jurisdiction located in
the County of Clark, State of Nevada.

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on
the date set forth on the signature page.

The undersigned desires to take title in the Securities as an __________________
[individual, trust, partnership, corporation]. The exact spelling of name(s)
under which title to the Securities shall be taken, and the exact location for
delivery of the Securities, is (please print):

Name(s) __________________________________________________________________

(address)                                                           
                                                       

 

 

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SUBSCRIPTION AGREEMENT

SIGNATURE PAGE

Purchase Price subscribed:
$                                                          Number of Shares
subscribed:                                                
 
                                       Number of Warrant
Shares:                                                     

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    Name of Purchaser(s) (Please print or type)

 
 

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Signature

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Signature

Social Security/Tax Identification
Number:                                                                            

Mailing Address: 
                    
                                                                            

 
 
 

Executed at ___________________________, this _____ day of ____________, 2006.
    (location)

 
SUBSCRIPTION ACCEPTED:
 

        ETERNAL ENERGY CORP.  
   
   
  Date: _____________ ___, 2006 By:   /s/   

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Bradley M. Colby   Title: President and CEO 

 
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