Unassociated Document


    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;

            


    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              (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;

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              (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;

            


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              (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.

            


    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    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.

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    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) 	                        	 
	 	                        	 
	 	                        	 
	 	                        	 


    

     


    
      
         

        


        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    SUBSCRIPTION
      AGREEMENT

    


    SIGNATURE
      PAGE

    


    Purchase
      Price subscribed:
      $                                                        
 Number
      of
      Shares
      subscribed:                                                


     

                                          
Number
      of Warrant
      Shares:                                                     



    
      
        

      

    

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

    


     

     

      
        

      

    

    Signature

    


    


    
      
        

      

    

    Signature

    


    


    


    Social
      Security/Tax Identification
      Number:                                                                            


    
      	Mailing
              Address: 	
                                  

            	 
	 	                    	 
	 	                    	 
	 	                    	 


    

    
       

    

     

     

    
Executed
      at ___________________________, this _____ day
      of ____________, 2006.

       
      (location)

    


     

    SUBSCRIPTION
      ACCEPTED:

     

    
      	 	 	 
	 	ETERNAL
              ENERGY
              CORP.
	 
 	 
 	 
 
	Date: _____________
              ___, 2006	By:  	/s/ 
	 	
              
Bradley
              M. Colby
	 	Title:
              President and CEO 


    

     

    
      
        
        

      

      
        7