EMPLOYMENT
        AGREEMENT

       

      This
        Employment Agreement (the “Agreement”) is entered into by and between Eternal
        Energy Corp., a Nevada corporation (the “Company”), and Bradley M. Colby
        (“Executive”), effective as of November 7, 2005. The parties hereto agree as
        follows:

       

      1.  Employment
        and Duties. The Company shall employ Executive in the position of
        President, Chief Executive Officer (“CEO”), Treasurer, Chief Financial Officer
        (“CFO”) and Secretary of the Company (or such other senior executive position as
        may be assigned to him by the Company’s Board of Directors). Executive shall
        report directly to the board of directors (the “Board”) of the Company (or such
        other persons designated by the Board) and shall perform all duties and
        obligations of President, CEO, Treasurer, CFO and Secretary (or such other
        senior executive duties assigned to Executive from time to time by the Board).
        Executive shall devote at least fifty percent (50%), on average, of each
        normal
        forty hour work week 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. However, on or before May
        7th, 2006, the parties agree to meet and by mutual agreement
        determine if the time Executive is required to devote to the business interests
        of the Company and to the performance of his duties and obligations under
        this
        Agreement is adequate to discharge his duties hereunder in an appropriate
        manner
        and, if not, to re-determine, by mutual agreement, the amount of time Executive
        shall thereafter be required on average to devote exclusively to the performance
        of services for and on behalf of the Company.

       

      2.  Term
        of Agreement.
        The
        term of this Agreement shall commence on November 7, 2005 and shall continue
        through and including November 6, 2007 (the “Term”), subject to the provisions
        of Section 5. Notwithstanding the foregoing, the provisions of Sections 6
        and 11
        of the Agreement 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 Section 5, the Company shall pay to Executive an annual
        base salary (the “Base Salary”) of $60,000.00, less applicable withholdings,
        during the Term of this Agreement. Notwithstanding the foregoing, however,
        if
        the parties mutually agree to increase the amount of time Executive shall
        be
        required on average to devote exclusively to the performance of services
        for and
        on behalf of the Company pursuant to the terms of Section 1 above, the parties
        agree to increase Executive’s Base Salary to a level appropriate to adequately
        compensate him for the additional services to be rendered by him, as they
        shall
        mutually agree upon. The Base Salary shall be payable in accordance with
        the
        Company’s ordinary payroll practices in effect during the Term.

       

      3.2  Signing
        Bonus.
        Upon
        execution of this Agreement by both parties, Executive shall be paid, directly
        or on his behalf, a signing bonus of $165,000, less applicable withholdings
        (the
“Signing Bonus”). 

       

      
        
          
          

        

        
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      3.3  Stock
        Options.
        On the
        first day of the Term, the Board of Directors or Compensation Committee will
        grant to Executive an initial stock option grant (“Stock Options”) to purchase
        1,443,800 shares of the Company’s common stock at a per share exercise price of
        $1.00. The Stock Options will vest as set forth in a Stock Option Agreement,
        which will provide that the options become exercisable in an equal amount
        every
        six (6) months over a period of three years, with the first one-sixth (1/6)
        becoming exercisable six (6) months from the effective date of this Agreement.
        If the Company terminates Executive’s employment without Cause, Executive’s
        severance benefits (including vesting of options) will be governed by Section
        5.1.2 of this Agreement. If the Company terminates Executive’s employment for
“Cause” as defined in Section 5.1.1, then all of Executive’s unvested options
        shall expire and become unexercisable as of the date of such “for Cause”
        termination.

       

      3.4  Fringe
        Benefits.
        As
        additional compensation under this Agreement, Executive shall be entitled
        to
        receive the following benefits (the “Fringe Benefits”):

       

      3.4.1  Employee
        Benefit Plans.
        During
        the Term, the Company shall allow Executive to participate in such group
        medical, health, pension, welfare, and insurance plans (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.

       

      3.4.2  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.

       

      3.4.3  Vacation;
        Sick Leave and Holidays.
        Executive shall be entitled to such vacation time, 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.

       

      3.4.4  Reimbursement
        of Business Expenses.
        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. 

       

      3.4.5  Rent.
        The
        Company shall pay Westport Petroleum, Inc. (“Westport”) the sum of one thousand
        dollars ($1,000.00) per month as rent for using a portion of Westport’s leased
        space for the conduct of Company Business (as defined in Section 6.1 below)
        for
        so long as the Company occupies Westport’s facilities.

       

      3.5  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.

       

      
        
          
          

        

        
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      4.  Repurchase
        Right of the Company;
        Transfer Limitations.

       

      4.1  Repurchase
        Right.
        In the
        event Executive’s employment is terminated for any reason other than reasons
        described in Sections 5.1.2 and 5.2 below or as a result of the expiration
        of
        the Term, the Company shall, upon the date of such termination, have an
        irrevocable, exclusive right to repurchase (the “Repurchase Right”) any of the
        3,250,000 shares of common stock (the “Restricted Shares”), including 2,500,000
        shares held of record by Executive (the “Executive Shares”) and 750,000 shares
        held of record by Executive’s immediate family and beneficially by Executive
        (the “Family Shares”), which have not yet been released from the Repurchase
        Right, at a price per share equal to the lesser of (x) the fair market value
        of
        the shares at the time the Repurchase Right is exercised, as determined by
        the
        Company’s board of directors, and (y) the original purchase price of the
        Restricted Shares, which original purchase price was $75,000. Twenty-five
        percent of the Executive Shares shall be released from the Repurchase Right
        on
        the date that is six months from the effective date of this Agreement, and
        an
        additional twenty-five percent shall be released at the end of each successive
        six months from the first release date, such that all 2,500,000 shares shall
        be
        released from the Repurchase Right on the two-year anniversary of this
        Agreement. One hundred percent of the Family Shares shall be released from
        the
        Repurchase Right on the date that is the one-year anniversary of the effective
        date of this Agreement. Once Executive Shares and Family Shares have been
        released from the Repurchase Right as provided by this Subsection, such shares
        shall not thereafter be subject to the Repurchase Right set forth herein
        or be
        subject to forfeiture under the terms of this Agreement.

       

      4.2  Transfer
        Limitations.
        In
        addition to any restrictions of transfer imposed on the Restricted Shares
        by
        applicable federal and state securities laws, the parties hereto hereby agree
        to
        the following limitations with respect to the sale and transfer of the
        Restricted Shares: (i) Executive (and his beneficiaries or assigns, as
        applicable) shall not sell any of the Executive Shares during the first year
        of
        this Agreement; and (ii) during each three-month period beginning on the
        one-year anniversary of this Agreement, Executive (and his beneficiaries
        or
        assigns, as applicable) may sell only that number of shares that is equal
        to
        twenty-five percent of the total number of the Executive Shares if such number
        has been released from the Repurchase Right at the beginning of each such
        three-month period. For purposes of clause (ii) above, the twenty-five percent
        limitation shall apply separately to the Family Shares, for which Executive
        shall not sell or cause a sale except as in accordance with the limitation
        described in clause (ii). At the two-year anniversary of the effective date
        of
        this Agreement, the foregoing limitation shall terminate.

       

      5.  Termination
        or Expiration of Agreement.

       

      5.1  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 provisions of Sections 5.1.1 and
        5.1.2.

       

      
        
          
          

        

        
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      5.1.1  Termination
        for Cause.
        If
        Executive’s employment is terminated for Cause (as 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; and (iii)
        reimbursement of business expenses incurred prior to the date of termination.
        Except as expressly set forth in this Section 5.1.1, Executive shall not
        be
        entitled to receive any Base Salary or Fringe 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.
        As
        used in this Agreement, Cause shall be defined as: (a) a material breach
        by
        Executive of any term of this Agreement; (b) an intentional refusal or failure
        to follow the lawful and reasonable instructions of the Board of Directors
        or an
        individual to whom Executive reports (as appropriate); (c) a willful or habitual
        neglect of duties; (d) misconduct on the part of Executive that is materially
        injurious to the Company, including without limitation misappropriation of
        trade
        secrets, fraud, or embezzlement; or (e) Executive’s conviction for fraud, theft
        or a felony involving moral turpitude; and, in the case of clauses (a) through
        (c), Executive fails to cure such breach within thirty (30) days of Executive’s
        receipt of written notice from the Company.

       

      5.1.2  Termination
        Without Cause.
        If
        Executive is terminated by the Company without Cause or if Executive’s
        employment is terminated for “good reason” (as 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; and (iii) reimbursement of business expenses
        incurred prior to the date of termination. In addition, Executive shall be
        eligible to receive the following additional benefits if Executive’s employment
        is terminated under this Section 5.1.2 on the condition that Executive signs
        a
        general release of all claims in a form approved by the Company: (iv) a
        severance payment in an amount equal to one (1) year of Executive’s Base Salary,
        less applicable withholdings; (v) immediate vesting in full of any unvested
        options issued to Executive; and (vi) the immediate termination of the
        Repurchase Right. 

       

      For
        purposes of this Agreement, “good reason” means without Executive’s prior
        written consent and in the absence of any circumstance that constitutes Cause:
        (a) the regular assignment to Executive of duties materially inconsistent
        with
        the position and status of Executive; (b) a material reduction in the nature,
        status or prestige of Executive’s responsibilities or a materially detrimental
        change in Executive’s title or reporting level, excluding for this purpose an
        isolated, insubstantial or inadvertent action by the Company which is remedied
        by the Company promptly after the Company’s receipt of written notice from
        Executive; or (c) a reduction by the Company of Executive’s annual Base Salary
        as of the date of this Agreement or as the same may be increased from time
        to
        time.

       

      5.2  Termination
        upon Death or Permanent Disability.
        This
        Agreement will terminate automatically on Executive’s death or if Executive
        becomes Permanently Disabled (as defined below). In the event of such
        termination, Executive, or his beneficiary or estate, shall be entitled to
        receive such amounts of the Base Salary and Fringe Benefits as would have
        been
        payable to Executive under a termination without Cause under Section 5.1.2
        as of
        the date of death or on which the Company determines in its reasonable
        discretion that Executive has become Permanently Disabled. In addition, as
        of
        the date of the termination of Executive’s employment pursuant to this Section
        5.2, Executive shall be immediately vested in full as to any unvested options
        issued to Executive. As used in this Agreement, “Permanently Disabled” shall
        mean the incapacity of Executive due to illness, accident, or any other reason
        to perform his duties for a period of 90 days, whether or not consecutive,
        during any 12-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.

       

      
        
          
          

        

        
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      5.3  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 30 days
        prior
        to the date selected for resignation. If Executive resigns from employment
        before expiration of the Term under any circumstances, other than for “good
        reason” as defined above, 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 Section 5.3, Executive shall not be
        entitled to receive any Base Salary or Fringe 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.

       

      5.5  Termination
        on Expiration of Term. If
        this
        Agreement is terminated on the expiration of the Term in accordance with
        Section
        2 above, 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; and (iii) reimbursement
        of
        business expenses and payment to Westport of rent pursuant to Section 3.4.5
        incurred prior to the date of termination. Executive shall be entitled to
        exercise all vested options held by Executive as of the date of termination
        pursuant to the terms of the Executive’s agreement(s) with the
        Company.

       

      6.  Non-competition;
        Secrecy.

       

      6.1  Assistance
        to Competitors.
        During
        the Term, Executive shall not, except as provided below, own a material interest
        in (other than up to two percent of the voting securities of a publicly traded
        corporation), render financial assistance to, or offer personal services
        to
        (whether for payment or otherwise), any entity or individual that competes
        with
        the Company in the Company Business or any entity or individual that the
        Company
        has reviewed as a business or investment opportunity in any given three-month
        period. “Company
        Business”shall
        mean the Company’s oil and gas business as it is conducted or proposed to be
        conducted on the effective date of this Agreement. Notwithstanding anything
        to
        the contrary set forth in this Agreement, Executive shall have the right
        to own
        a material interest in, render financial assistance to and/or offer personal
        services to any entity or individual in connection with a project or opportunity
        in which: (i) such entity or individual produces, or proposes to produce,
        hydrocarbons through surface or subsurface gas/water separation and disposal;
        or
        (ii) the Company has failed or declined to exercise its right of first refusal
        described below. Executive agrees that he will, in writing, offer the Company
        a
        right of first refusal to pursue all opportunities which he desires to pursue
        involving the exploration, development and production of hydrocarbons which
        do
        not involve, or are proposed to involve, surface or subsurface gas/water
        separation and disposal. The parties acknowledge and agree that Executive
        has no
        obligation to offer opportunities to the Company which involve, or which
        are
        proposed to involve, surface or subsurface gas/water separation and disposal.
        This right of first refusal shall include such information in Executive’s
        possession as shall be reasonably necessary 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 ten business days of its receipt of Executive’s written
        offer. 

       

      
        
          
          

        

        
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      6.2  Confidential
        Information.
        Executive acknowledges and agrees that the Company is engaged in business
        activities in which it is or may 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 or after the Term, either directly or indirectly, (i) divulge
        or
        convey any Confidential Information to any entity or individual, except as
        may
        be expressly authorized in writing by the Company or as required in the course
        of Executive’s performance of his duties hereunder, or (ii) use any Confidential
        Information for Executive’s own benefit or the benefit of any entity or
        individual except the Company. The Confidential Information to which Executive
        may have access may include, but is not limited to, matters of a technical
        or
        intellectual nature such as inventions, designs, improvements, processes
        of
        discovery, techniques, methods, ideas, discoveries, developments, know-how,
        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.

       

      6.3  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 material or ideas, and all results and proceeds of the performance
        of
        Executive’s services hereunder, conceived of or produced during the Term by
        Executive in the performance of his services hereunder. The parties acknowledge
        and agree, however, that such transfer and assignment shall not apply to,
        or
        attach in and to, any material or ideas which were not conceived or produced
        in
        the performance of Executive’s services hereunder. 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 ownership
        of such material, ideas, the results and proceeds of the performance of
        Executive’s services under this Agreement. Executive’s agreement to assign to
        the Company any of his rights as set forth in this Section 6.3 shall not
        apply
        to any invention for which no equipment, supplies, facility or trade secret
        information of the Company was used and that was developed entirely upon
        Executive’s own time, and (i) that does not result from any work performed by
        Executive for the Company or (ii) that relates to the exploitation of commercial
        oil and gas opportunities which Executive is permitted to pursue pursuant
        to
        Section 6.1 above. 

       

      6.4  Company
        Property.
        All
        records, papers, documents, materials, and electronically stored data kept,
        made, or received by Executive in the performance of his duties while employed
        by the Company, or generated for, in the course of, or in connection with
        the
        business of the Company (other than opportunities which Executive is permitted
        to pursue pursuant to Section 6.1 above), 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 at 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 all Company Property to the Company, without keeping a copy of any
        such
        Company Property for himself or any other entity or individual.

       

      
        
          
          

        

        
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      6.5  Interference
        with Employees and Clients.

       

      6.5.1  Not
        Hire Away.
        For so
        long as Executive is employed by the Company in an executive role, and for
        a
        one-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 who
        is employed by, or engaged to render services on behalf of, the
        Company.

       

      6.5.2  Non-Solicitation
        of Clients.
        For so
        long as Executive is employed by the Company in an executive role, and for
        a
        one-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
        would
        cause any customer or client of the Company (i) who became known to Executive
        by
        virtue of Executive’s employment with the Company during the Term, or (ii) whose
        status as a client or customer of the Company during the Term can be determined
        by reference to records maintained by the Company to curtail or terminate
        its
        business relationship with the Company. 

       

      6.6  Injunctive
        Relief.
        Executive and the Company acknowledge and agree that (i) Executive’s breach of
        his obligations under this Section 6 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 6, the Company
        shall be entitled to obtain injunctive relief (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. 

       

      7.  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.

       

      
        
          
          

        

        
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      8.  Severability.
        In the
        event that any provision of this Agreement should be held to be void, voidable,
        unlawful or for any reason unenforceable, the remaining provisions or portions
        of this Agreement shall remain in full force and effect.

       

      9.  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
        Board
        of Directors of 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.

       

      10.  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 the choice
        of
        law provisions of any other jurisdiction.

       

      11.  Arbitration.

       

      11.1  Exclusive
        Remedy.
        Except
        as set forth in Section 11.3, 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.

       

      11.2  Claims
        Subject to Arbitration.
        Excepting only claims excluded in Section 11.3 below, 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, 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.

       

      11.3  Claims
        Not Subject to Arbitration.
        This
        Section 11 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 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. 

       

      
        
          
          

        

        
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      11.4  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.

       

      11.5  Costs.
        The
        parties shall be responsible for their own attorneys’ fees and costs, except
        that the Arbitrator shall have the authority to award attorneys’ fees and costs
        to the prevailing party in accordance with the applicable law governing the
        dispute.

       

      11.6  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 Section 11, or any issue relating to whether a Claim
        is
        subject to arbitration under this Section 11, 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 11.

       

      12.  Entire
        Agreement.
        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.

       

      13.  Counterparts.
        This
        Agreement may be executed by the parties in counterparts, each of which shall
        be
        deemed to be an original, but all such counterparts shall together constitute
        one and the same instrument.

       

      14.  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.

       

      15.  Notices.
        Any
        notice required or permitted to be given under this Agreement shall be
        sufficient if in writing, and if sent by certified or registered mail or
        personally delivered to Executive at 26 Wedge Way, Littleton, Colorado 80123
        or
        to the Company at 2120 West Littleton Blvd., Suite 300, Littleton, Colorado
        80120.

       

      
        
          
          

        

        
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                BRADLEY
                  M. COLBY

                 

              	
                ETERNAL
                  ENERGY CORP.

                 

                 

              
	
                /s/
                  Bradley M.
                  Colby                           
                  

                 

              	
                By: 
                  /s/
                  John Anderson 
                                                       
                  

                 

                Its:
                  Director                                                          
                  

                 

              


      

      


       

      
        
          
          

        

        
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