EMPLOYMENT AGREEMENT


(Kirk Stingley 2012)


 


This Employment Agreement (the “Agreement”)
is made and entered into by and between American Eagle Energy Corporation (the “Company”) and Kirk Stingley
(“Executive”), on the 1st day of January, 2012, (the “Effective Date”). The Company
and Executive may be referred to herein collectively as “Parties” and individually as “Party.”
In consideration of the mutual promises, covenants and conditions hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which the Parties acknowledge, the Parties agree as follows:


 


1.          Employment
and Duties. The Company shall initially employ Executive as the Company’s Chief Financial Officer. At any time during
the Term, the Company may employ Executive in such other senior executive position as may be assigned to him by the Company’s
Chief Executive Officer. Executive’s responsibilities shall initially include, but not be limited to, overseeing all accounting,
financial, compliance, SEC reporting and/or other regulatory activities typically associated with a publicly traded company (such
as overseeing the Company’s Treasury, Human Resources, Risk Management and Investor Relations functions), managing the Company’s
relationship with its external audit firm and such other senior executive duties as may be assigned to Executive from time to time
by the Company’s Chief Executive Officer. Executive shall report to the Company’s Chief Executive Officer or to such
other person as the Chief Executive Officer may designate. Executive shall devote his full time, attention and energy exclusively
to the business and interests of the Company and to the performance of his duties and obligations under this Agreement, unless
otherwise provided by this Agreement. Notwithstanding the foregoing, however, Executive shall have the right to perform incidental
accounting, tax consulting and tax compliance services at such times and in such manner as will not interfere with the performance
of his duties for the Company.


 


2.          Term
of Agreement. The term of this Agreement shall commence on the Effective Date and shall continue through and including
the 31st day of December, 2013, subject to the provisions of the Section in this Agreement entitled “Termination
or Expiration of Agreement,” (the “Term”). Notwithstanding the foregoing, the provisions of the Sections
in this Agreement entitled “Non-competition; Secrecy,” “Representations and Warranties” and
“Miscellaneous” shall survive, and continue in full force and effect, after any termination or expiration of
this Agreement, irrespective of the reason for the termination or any claim that the termination was wrongful or illegal.


 


3.          Compensation
and Other Benefits. The Company shall provide the following compensation and other benefits to Executive during the Term
in consideration of Executive’s performance of all of his obligations under this Agreement:


 


3.1        Base
Salary. Subject to the provisions of the Section in this Agreement entitled “Termination
or Expiration of Agreement,” during the Term the Company shall, commencing on the Effective Date, pay Executive an annual
base salary of One Hundred Fifty Thousand and No/100s US Dollars ($150,000.00 USD), payable in arrears on the last day of each
calendar month, in gross monthly installments of Twelve Thousand Five Hundred and No/100s US Dollars ($12,500.00 USD). The base
salary to be paid to Executive hereunder, as changed by the Parties from time-to-time, may be referred to herein as “Base
Salary.”


 



    	 



    	 



    

 


3.2         Discretionary
Bonus. Executive shall be entitled to such discretionary bonuses as the Company’s Chief Executive Officer shall determine
appropriate in the exercise his sole discretion. Notwithstanding the foregoing, however, Executive’s total annual discretionary
bonuses for any calendar year during the term of this Agreement shall not exceed Executive’s Base Salary for such period.


 


3.3         Fringe
Benefits. As additional consideration for Executive’s performance of services under this Agreement, Executive shall
be entitled to receive the following benefits (the “Fringe Benefits”):


 


3.3.1    Employee
Benefit Plans. During the Term, the Company will pay the premiums incurred to provide group medical insurance coverage
for Executive and his dependents. During the Term, the Company will also allow Executive to participate in such other group health,
pension, welfare, and insurance plans (together with the group medical insurance plan, the “Employee Benefit Plans”)
maintained by the Company from time to time for the general benefit of its executive employees, as such Employee Benefit Plans
may be modified from time to time in the Company’s sole and absolute discretion. The Company reserves the right to terminate
any one or more of its Employee Benefit Plans as it shall determine appropriate in the exercise of its sole discretion.


 


3.3.2    Other
Benefits. The Company shall provide Executive with all other benefits and perquisites as are made generally available
to the Company’s executive employees under the Company’s Employee Handbook, as such Employee Handbook may be modified
from time to time in the Company’s sole and absolute discretion.


 


3.3.3    Vacation;
Sick Leave and Holidays. Executive shall be entitled to four (4) weeks of paid vacation per year, which will be earned
ratably during the year, and to such sick leave and paid holidays as are generally made available to the Company’s executive
employees under the Company’s Employee Handbook, as such Employee Handbook may be modified from time to time in the Company’s
sole and absolute discretion.


 


3.3.4    Reimbursement
of Business Expenses. Subject to the prior approval of the Company, the Company shall reimburse Executive for all reasonable
travel, entertainment and other expenses incurred by Executive in connection with the performance of his duties under this Agreement,
upon submission by Executive to Company of reasonable documentation pertaining to such expenses.


 


3.4        Deferred
Compensation. Any deferred compensation (within the meaning of Section 409A of the Internal Revenue Code) payable under
this Agreement on account of Executive’s separation from service shall not commence prior to six months following such separation
if Executive is a key employee (within the meaning of Section 409A). Provided, that in determining whether Executive is a key employee,
any compensation realized on account of the exercise of a stock option or a disqualifying disposition of stock acquired through
exercise of an incentive stock option shall be disregarded.


 


3.5        Withholding.
All customary withholding taxes and other employment taxes which the Company is required by law to withhold and pay with respect
to compensation paid by an employer to an employee shall be subtracted and withheld from all compensation paid by the Company to
Executive for services rendered by Executive to the Company.


 





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4.           Termination
or Expiration of Agreement.


 


4.1        Termination
at Company’s Election. The Company may terminate Executive’s employment at any time during the Term, for any
reason or no reason, with or without Cause (as hereinafter defined), and with or without notice, subject to the provisions of the
Sub-sections of this Section entitled “Termination for Cause,” “Termination Without Cause” and “Severance
Following a Change in Control.”


 


4.1.1   Termination
for Cause. If Executive’s employment is terminated for Cause (defined below), Executive shall be entitled to receive
only the following: (i) payment of Executive’s Base Salary through and including the date of termination; (ii) payment for
all accrued and unused vacation time as of the date of termination, which will be paid at a rate calculated in accordance with
Executive’s Base Salary at the time of termination; and (iii) reimbursement of business expenses incurred prior to the date
of termination. Except as expressly set forth in this Sub-section, Executive shall not be entitled to receive any Base Salary,
Fringe Benefits or severance benefits in the event Executive’s employment is terminated for Cause, except that Executive
may continue to participate in the Employee Benefit Plans to the extent permitted by and in accordance with the terms of those
plans or as otherwise required by law.


 


4.1.2
   Termination Without Cause. If Executive’s employment by the Company is terminated by the
Company without Cause or if Executive’s employment is terminated for Good Reason (defined below), Executive shall
receive: (i) payment of Executive’s Base Salary through and including the date of termination; (ii) payment for all
accrued and unused vacation time existing as of the date of termination, which will be paid at a rate calculated in
accordance with Executive’s Base Salary at the time of termination; and (iii) reimbursement of business expenses
incurred prior to the date of termination. In addition, if the severance of Executive’s employment falls within the
terms of this Sub-section and if the terms of the Subsection of this Section entitled “Severance Following a Change
in Control” does not apply to the severance of Executive’s employment with the Company, then, subject to the
condition that Executive sign a general release of all claims in a form approved by the Company in the exercise of its sole
discretion, Executive shall receive a severance payment in an amount equal to Thirty Five Thousand and No/100s US
Dollars ($35,000.00 USD), less applicable withholdings.


 


4.1.3   Severance
Following a Change in Control.


 


A.           If,
immediately prior to or within twelve months following a Change in Control (defined below), (i) Executive’s employment is
terminated by the Company without Cause or (ii) Executive’s employment is terminated for Good Reason (defined below), Executive
shall receive: (x) payment of Executive’s Base Salary through and including the date of termination; (y) payment for all
accrued and unused vacation time existing as of the date of termination, which will be paid at a rate calculated in accordance
with Executive’s Base Salary at the time of termination; and (z) reimbursement of business expenses incurred prior to the
date of termination. In addition, if the severance of Executive’s employment falls within the terms of this Sub-section,
then, subject to the condition that Executive sign a general release of all claims in a form approved by the Company in the exercise
of its sole discretion, the Company shall pay Executive severance payment in an amount equal to Executive’s annual Base Salary
as the same may have been changed through the date of the severance of Executive’s employment, less applicable withholdings.


 





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B.           If
Executive severs employment with the Company within sixty (60) days of a Change in Control (defined below) for any reason other
than Good Reason (defined below), Executive shall receive: (x) payment of Executive’s Base Salary through and including the
date of termination; (y) payment for all accrued and unused vacation time existing as of the date of termination, which will be
paid at a rate calculated in accordance with Executive’s Base Salary at the time of termination; and (z) reimbursement of
business expenses incurred prior to the date of termination. In addition, if Executive severs employment with the Company within
sixty (60) days of a Change in Control for any reason other than Good Reason, then, subject to the condition that Executive sign
a general release of all claims in a form approved by the Company in the exercise of its sole discretion, the Company shall pay
Executive a severance payment in an amount equal to the product of one-half (.5) times Executive’s annual Base Salary as
the same may have been changed through the date of the severance of Executive’s employment, less applicable withholdings.


 


C.           For
purposes of this Agreement, the term “Change in Control” shall mean the occurrence of any of the following events,
other than as occasioned by the closing of the Transaction contemplated by the Merger Agreement: (i) the consummation of any transaction
after the Effective Date in which any person or entity or group of related persons and/or entities becomes the beneficial owner,
directly or indirectly, of securities representing more than twenty percent (20%) of the combined voting power of the Company’s
outstanding voting securities, (ii) three or more directors, whose election or nomination for election is not approved by a majority
of the members of the Company’s Board of Directors on the Effective Date, are elected within any twelve month period to serve
on its Board of Directors, or (iii) any merger (other than a merger in which the Company is the survivor and there is no change
of control pursuant to (i) or (ii) of this sentence), reorganization, consolidation, liquidation, winding up or dissolution of
the Company or the sale of all or substantially all of its assets.


 


4.1.4   “Cause.”
As used in this Agreement, “Cause” means:


 


  A.           Criminal
Conduct. Executive’s conviction of a crime punishable as a felony or of any offense involving moral turpitude, dishonesty
or immoral conduct;


 


  B.           Incarceration.
Executive’s incarceration for any reason. For purposes of this provision, incarceration means any confinement of Executive
by any federal, state or local governmental agency which causes Executive to be unable to provide services for and on behalf of
the Company at its principal place of business for the period of Executive’s confinement;


 


  C.           Neglect
or Other Misconduct. Executive’s conduct, neglect or failure to act which (i) materially and adversely affects the business
or reputation of the Company; or (ii) renders his continued service in the employment of the Company materially detrimental to
the ordinary, continued, or successful operation of its business, or (iii) is or is likely to be materially detrimental to, or
which materially interferes with, his ability to effectively perform his duties for the Company; or (iv) constitutes the misappropriation,
misuse, or misdirection of the Company’s funds or property; or (v) materially interferes with or materially impairs the ordinary
operation of the Company’s business; or (vi) involves moral turpitude and which is reasonably likely to cause material damage
to the Company’s business, its reputation or its goodwill;


 





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D.           Absence. Executive’s absence from the active performance of his
duties in the operation of the Company’s business on more than an occasional basis, other than as a result of (i)
approved vacations, medical leave or personal leave, or (ii) a Permanent Disability, defined below;


 


E.           Violation
of the Company’s Rules. Executive’s violation of the Company’s material written rules, policies or procedures
(which do not conflict with the terms of this Agreement), after notice and not less than five (5) business days opportunity to
cure such failure or refusal;


 


F.           Failure
to Perform Duties. Executive’s failure or refusal to perform the duties reasonably required of him pursuant to the terms
of this Agreement, after notice and not less than five (5) business days opportunity to cure such failure or refusal; or


 


G.           Violations
of the Board of Director Directives. Executive’s intentional violation of the lawful directives of the Company’s
Board of Directors. 


 


4.1.5   “Good
Reason.” As used in this Agreement, “Good Reason”
means the occurrence of any of the following without Executive’s prior written consent and in the absence of any circumstance
that constitutes Cause: (i) the regular assignment to Executive of material duties which do not involve the performance of accounting
and compliance services for the Company; or (ii) a reduction by the Company of Executive’s annual Base Salary.



 


4.2          Termination
upon Death or Permanent Disability.


 


4.2.1   Termination
Resulting from Death or Permanent Disability. This Agreement
will terminate automatically on Executive’s death or if Executive becomes Permanently Disabled (as defined below) and the
Base Salary, Fringe Benefits and other payments and benefits which Executive, or Executive’s beneficiaries or estate, shall
be entitled to receive shall be determined exclusively by operation of this Subsection. In the event of the termination of Executive’s
employment as a result of his death or Permanent Disability, Executive, or Executive’s beneficiaries or estate, shall receive
from the Company:  (x) payment of Executive’s Base Salary through and including the date
of termination; (y) payment for all accrued and unused vacation time existing as of the date of termination, which will be paid
at a rate calculated in accordance with Executive’s Base Salary at the time of termination; and (z) reimbursement of business
expenses incurred prior to the date of termination. In addition, subject to the condition precedent that Executive or his estate
or his legal representative, as the case may be, sign a general release of all claims in a form approved by the Company in the
exercise of its sole discretion, Executive shall also receive, and the Company shall pay Executive, a severance payment in an amount
equal to the product of one-quarter (.25) times Executive’s annual Base Salary as the same may have been changed through
the date of the termination of Executive’s employment, less applicable withholdings.


 





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4.2.2    Permanent
Disability. As used in this Agreement, “Permanent Disability” and “Permanently Disabled”
shall mean the incapacity of Executive due to illness, accident, or any other reason to perform his duties for a period of ninety
(90) days, whether or not consecutive, during any twelve month period of the Term, all as determined by the Company in its reasonable
discretion. All determinations as to the date and extent of incapacity of Executive shall be made by the Company’s Board
of Directors, upon the basis of such evidence, including independent medical reports and data, as the Board of Directors in its
discretion deems necessary and desirable. All such determinations of the Board of Directors shall be final and binding upon the
Parties.


 


4.3          Termination
at Executive’s Election. Executive may resign from employment with the Company prior to the expiration of the Term
for any reason by providing written notice to the Company at least thirty (30) days prior to the date selected for resignation.
If Executive resigns from employment before expiration of the Term under any circumstances other than (i) for Good Reason (defined
above), or (ii) within sixty (60) days of a Change in Control (defined above) for any reason other than Good Reason (defined below),
then Executive shall be entitled to receive only the following: (i) payment of Executive’s Base Salary through and including
the date of resignation; (ii) payment for all accrued and unused vacation time existing as of the date of resignation, which will
be paid at a rate calculated in accordance with Executive’s Base Salary at the time of resignation; and (iii) reimbursement
of business expenses incurred prior to the date of resignation. Except as expressly set forth in this Sub-section, Executive shall
not be entitled to receive any Base Salary, Fringe Benefits or severance benefits in the event Executive resigns from employment
before expiration of the Term, except that Executive may continue to participate in the Employee Benefit Plans to the extent permitted
by and in accordance with the terms thereof or as otherwise required by law and except as otherwise provided by this Agreement.


 


4.4          Termination
on Expiration of Term. If this Agreement is terminated on the expiration of the Term in accordance with the Section in
this Agreement entitled “Term of Agreement,” Executive shall receive: (i) payment of Executive’s Base
Salary through and including the date of termination; (ii) payment for all accrued and unused vacation time existing as of the
date of termination, which will be paid at a rate calculated in accordance with Executive’s Base Salary at the time of expiration
of the Term; and (iii) reimbursement of business expenses incurred prior to the date of the expiration of the Term. Except as expressly
set forth in this Sub-section, Executive shall not be entitled to receive any Base Salary, Fringe Benefits or severance benefits
in the event that this Agreement is terminated on the expiration of the Term in accordance with the Section in this Agreement entitled
“Term of Agreement,” except that Executive may continue to participate in the Employee Benefit Plans to the
extent permitted by and in accordance with the terms thereof or as otherwise required by law and except as otherwise provided by
this Agreement.


 





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5.           Non-competition;
Secrecy. 


 


5.1      Assistance
to Competitors. Unless otherwise provided in this Subsection, Executive shall not during the Term and for a period of two
years following the severance of Executive’s employment with the Company own a material interest in, render financial assistance
to, or offer personal services to (whether for payment or otherwise), (i) any person or entity that competes with the Company in
the Company Business (as defined below), or (ii) any person or entity or any subsidiary or affiliate of any person or entity which
is pursuing any business or investment opportunity which the Company reviewed within the previous six month period. “Company
Business” shall mean the conduct of the oil and gas exploration and development business in those basins or areas of
mutual interest (i) within which the Company directly or indirectly owns, leases or otherwise holds mineral interests, (ii) as
to which the Company is actively evaluating the desirability of directly or indirectly acquiring mineral interests, or (iii) as
to which the Company is endeavoring to directly or indirectly acquire mineral interests. Notwithstanding anything to the contrary
set forth in this Agreement, Executive shall have the right to own a material interest in or render financial assistance to any
person or entity in connection with a project or opportunity in which the Company has failed or declined to exercise its right
of first refusal described below. Executive agrees that during the Term he will offer the Company a right of first refusal, in
writing, to pursue all opportunities of which Executive learns involving the exploration, development and production of hydrocarbons.
Contemporaneously with Executive’s delivery of such written notification to the Company, Executive shall provide the Company
with all material information in Executive’s possession or control which is reasonably necessary to enable the Company to
evaluate the economic viability and risks of pursuing each such opportunity. Company shall exercise its right of first refusal
to pursue such an opportunity by giving Executive written notice of its exercise within forty five business days of its receipt
of Executive’s written notification and all of the information described above.


 


5.2      Confidential
Information. Executive acknowledges and agrees that the Company is engaged in business activities in which it is and will
in the future be crucial to develop and retain proprietary, trade secret, or confidential information for the benefit of the Company
(collectively, “Confidential Information”). Accordingly, Executive shall not at any time during the Term or
for a period of three years following the termination or expiration of this Agreement, either directly or indirectly, (i) divulge,
convey or communicate any Confidential Information to any person or entity, except as may be expressly authorized in writing by
the Company or as may be necessary for Executive to perform his duties hereunder, or (ii) use any Confidential Information for
Executive’s own benefit or the benefit of any person or entity other than the Company. Confidential Information includes,
but is not limited to geological, geophysical, and engineering data, models, analyses, compilations, estimates of reserves,
interpretations, data, studies, reports, business plans, business methods, contractual and financial information, matters
of a technical or intellectual nature such as inventions, designs, improvements, processes of discovery, techniques, methods, ideas,
discoveries, developments, know-how, techniques, formulae, compounds, compositions, specifications, trade secrets, specialized
knowledge, or matters of a business nature such as information about costs and profits, records, customer lists, customer data
or sales data and other data in whatever form stored or maintained, whether oral, written, documentary, digital, computer
storage or otherwise.


 


5.3      Ownership
of Ideas. The Company shall own, and Executive hereby transfers and assigns to the Company, all rights, of every kind and
character throughout the world, in perpetuity, in and to any and all materials, ideas, concepts and results inuring from or in
connection with Executive’s performance of services for the Company, or conceived of or produced by Executive during the
Term and which relate to the Company Business. The Parties acknowledge and agree, however, that such transfer and assignment shall
not apply to, or attach in and to, any materials, ideas or concepts which fall outside the ambit of this Agreement. Executive shall
execute and deliver to the Company such assignments, certificates of authorship, or other instruments as the Company may require
from time to time to evidence the Company’s ownership of material, ideas and other results inuring from or in connection
with Executive’s performance of services for the Company, or conceived of or produced by Executive during the Term and which
relate to the Company Business.


 





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5.4        Company
Property. All records, papers, documents, materials, and electronically stored data kept, made, or received by Executive
while employed by the Company, or generated for, in the course of, or in connection with the Company Business, whether or not containing
Confidential Information, shall be and remain the exclusive property of the Company (collectively referred to as “Company
Property”) at all times during and after Executive’s employment with the Company, without regard to how Executive
came into possession of any Company Property or whether Executive played any role in creating any Company Property. Executive shall
not destroy any Company Property or remove any Company Property from the Company’s premises, whether during or after employment
by the Company, except as expressly directed for the purpose of performing services on behalf of the Company. Upon the termination
of Executive’s employment with the Company at any time and for any reason, or upon the Company’s request at any time
and for any reason, Executive shall promptly return, at Executive’s expense, all Company Property to the Company, without
keeping a copy of any such Company Property for himself or any other entity or individual. Executive
will, upon request by Company, certify his compliance with the terms of this Subsection.


 


5.5         Interference
with Employees and Clients.


 


5.5.1    Non-Solicitation
of Employees. For so long as Executive is employed by the Company, and for a three-year
period thereafter, Executive shall not, directly or indirectly, whether for his own benefit or for the benefit of any other entity
or individual: (i) solicit, encourage, or in any way influence any person employed by, or engaged to render services on behalf
of, the Company to cease performing services for the Company, or to engage in any activity contrary to or conflicting with the
interests of the Company; (ii) hire away any person employed by, or engaged to render services on behalf of, the Company; or (iii)
otherwise interfere to the Company’s detriment in any way in the Company’s relationship with any person or entity who
is employed by, or engaged to render services on behalf of, the Company.


 


5.5.2    Non-Solicitation
of Clients. For so long as Executive is employed by the Company, and for a three-year period thereafter, Executive shall
not, whether for his own benefit or for the benefit of any other entity or individual, take any action which could cause any customer
or client of the Company to limit, curtail or terminate its business relationship with the Company.


 


5.5.3    Injunctive
Relief. Executive and the Company acknowledge and agree that (i) Executive’s breach of his obligations under this
Section would cause the Company irreparable harm and that monetary damages alone would not be an adequate remedy for any such breach;
and, therefore, (ii) if Executive breaches this Section, the Company shall be entitled to obtain injunctive relief without bond
(and any other form of equitable relief), as well as any other remedies (including monetary damages) to which the Company is entitled
as a consequence of such breach or otherwise. No waiver of any breach or violation hereof shall be implied from forbearance
of failure by the Company to take any action hereon.


 





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6.           Representation
and Warranties. Executive represents and warrants to the Company that Executive is under no contractual or other restriction
or obligation that is materially inconsistent with the execution of this Agreement, the performance of his duties hereunder, or
the rights of the Company hereunder, including, without limitation, any development agreement, non-competition agreement or confidentiality
agreement previously entered into by Executive. 


 


7.           Miscellaneous.


 


7.1      Severability.
If any provision of this Agreement becomes or is found to be illegal or unenforceable for any reason, such clause or provision
must first be modified to the extent necessary to make this Agreement legal and enforceable and then, if necessary, second, severed
from the remainder of the Agreement to allow the remainder of the Agreement to remain in full force and effect. If for any reason
whatsoever, any one or more of the provisions of this Agreement shall be held or deemed to be inoperative, unenforceable or invalid
as applied to any particular case or in all cases, such circumstances shall not have the effect of rendering such provision invalid
in any other case or of rendering any of the other provisions of this Agreement inoperative, unenforceable or invalid.


 


7.2      Amendment
and Waiver. No provision of this Agreement can be modified, amended, supplemented or waived in any manner except by an
instrument in writing signed by both Executive and the Company. The waiver by either Party of compliance with any provision of
this Agreement by the other Party shall not operate or be construed as a waiver of any other provision of this Agreement, or of
any subsequent breach by such Party of any provision of this Agreement.


 


7.3.     Applicable
Law. This Agreement, Executive’s employment relationship with the Company, and any and all matters or claims arising
out of or related to this Agreement or Executive’s employment relationship with the Company, shall be governed by, and construed
in accordance with, the laws of the State of Colorado, regardless of choice of law provisions of any jurisdiction.


 


7.4. 
   Arbitration.


 


7.4.1    Exclusive
Remedy. Except as set forth in the Subsection in this Section entitled “Claims Not Subject to Arbitration,”
arbitration shall be the sole and exclusive remedy for any dispute, claim, or controversy of any kind or nature (a “Claim”)
arising out of, related to, or connected with this Agreement, Executive’s employment relationship with the Company, or the
termination of Executive’s employment relationship with the Company, including any Claim against any parent, subsidiary,
or affiliated entity of the Company, or any director, officer, employee, or agent of the Company or of any such parent, subsidiary,
or affiliated entity. It also includes any Claim against the Executive by the Company, or any parent, subsidiary or affiliated
entity of the Company.


 


7.4.2 
  Claims Subject to Arbitration. Except for claims described in the Subsection in this
Section entitled “Claims Not Subject to Arbitration,” this Agreement specifically includes (without limitation)
all Claims under or relating to any federal, state or local law or regulation prohibiting discrimination, harassment or
retaliation based on race, color, religion, national origin, sex, sexual orientation, age, disability or any other condition
or characteristic protected by law; demotion, discipline, termination or other adverse action in violation of any contract,
law or public policy; entitlement to wages or other economic compensation; any Claim for personal, emotional, physical,
economic or other injury; and any Claim for business torts or misappropriation of confidential information or trade
secrets.


 





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7.4.3     Claims
Not Subject to Arbitration. This Subsection does not preclude either Party from making an application to a court of competent
jurisdiction for provisional remedies (e.g., temporary restraining order or preliminary injunction), subject to the Colorado Revised
Statutes. This Agreement also does not apply to any claims by Executive: (i) for workers’ compensation benefits; (ii) for
unemployment insurance benefits; (iii) under a benefit plan where the plan specifies a separate arbitration procedure; (iv) filed
with an administrative agency which are not legally subject to arbitration under this Agreement; or (v) which are otherwise expressly
prohibited by law from being subject to arbitration under this Agreement.


 


7.4.5
    Procedure. The arbitration shall be conducted in the City and County of Denver. Any Claim
submitted to arbitration shall be decided by a single, neutral arbitrator (the “Arbitrator”). The Parties
to the arbitration shall mutually select the Arbitrator not later than 45 days after service of the demand for arbitration.
If the Parties for any reason do not mutually select the Arbitrator within the 45 day period, then any Party may apply to any
court of competent jurisdiction to appoint a retired judge as the Arbitrator. The arbitration shall be conducted in
accordance with the Colorado Revised Statutes, except as modified by this Agreement. The Arbitrator shall apply the
substantive federal, state, or local law and statute of limitations governing any Claim submitted to arbitration. In ruling
on any Claim submitted to arbitration, the Arbitrator shall have the authority to award only such remedies or forms of relief
as are provided for under the substantive law governing such Claim. The Arbitrator shall issue a written decision revealing
the essential findings and conclusions on which the decision is based. Judgment on the Arbitrator’s decision may be
entered in any court of competent jurisdiction.


 


7.4.6    Interpretation of Arbitrability. The Arbitrator, and not any federal or state court, shall have
the exclusive authority to resolve any issue relating to the interpretation, formation or enforceability of this Subsection,
or any issue relating to whether a Claim is subject to arbitration under this Subsection, except that any Party may bring an
action in any court of competent jurisdiction to compel arbitration in accordance with the terms of this Section.


 


7.5.   
  Entire Agreement. All Exhibits to this Agreement are incorporated herein
by this reference. This Agreement constitutes the entire agreement between the Parties relating to the subject matter of this
Agreement and supersedes all prior and contemporaneous negotiations, understandings, or agreements between the Parties,
whether oral or written, expressed or implied.


 


7.6      Counterparts and Electronic Signatures. For
the convenience of the Parties, any number of counterparts of this Agreement may be executed by any one or more Parties
hereto, and each such executed counterpart shall be, and shall be deemed to be, an original, but all of which shall
constitute, and shall be deemed to constitute, in the aggregate but one and the same instrument. This Agreement may be
circulated for signature through electronic transmission, including, without limitation, facsimile and email, and all
signatures so obtained and transmitted shall be deemed for all purposes under this Agreement to be original signatures until
such time, if ever, as original counterparts are exchanged by the Parties.


 





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7.7  
   Headings. The headings of sections and subsections of this Agreement are included solely for
convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.


 


7.8      Notices.
All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given (a) when delivered to and received personally by the recipient, (b) when sent
to and received by the recipient by facsimile (receipt electronically confirmed by sender’s facsimile machine) if during
normal business hours of the recipient, otherwise on the next business day, (c) one business days after the date when sent to the
recipient by overnight delivery by reputable express courier service (charges prepaid) and delivery confirmed, or (d) three business
days after the date when mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid
and such receipt is confirmed. Such notices, demands and other communications shall be sent to Parties at the addresses indicated
below or to such other address as a Party may direct on written notice given pursuant to the terms of this Subsection:


 


	If to Executive:	Kirk A. Stingley
	 	7775 Lebrun Court
	 	Lone Tree, CO  80124
	 	 
	If to the Company:	Eternal Energy Corp.
	 	2549 West Main Street, Suite 202
	 	Littleton, CO  80120


 


7.9      Attorneys’
Fees. If any Party shall commence any action, arbitration or proceeding against another Party in order to enforce the provisions
hereof, or to recover damages as the result of alleged breach of any of the provisions hereof, the prevailing Party therein shall
be entitled to recover all reasonable costs incurred in connection therewith, including, but not limited to, reasonable attorney'
fees.


 


7.10    Independent
Legal Advice. Executive acknowledges that he has been advised to obtain independent legal advice with respect to this Agreement
and that he has had the opportunity to do so.


 


IN WITNESS WHEREOF, the parties have executed
this Agreement as of the day and year first above written.


 


	Executive:	 	American Eagle Energy Corporation
	 	 	 
	 	 	By:	 
	Kirk Stingley	 	 	Its: Chief Executive Officer


 





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