Document:

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.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      
        	
                BRADLEY
                  M. COLBY

                 

              	
                ETERNAL
                  ENERGY CORP.

                 

                 

              
	
                /s/
                  Bradley M.
                  Colby                           
                  

                 

              	
                By: 
                  /s/
                  John Anderson 
                                                       
                  

                 

                Its:
                  Director                                                          
                  

                 

              

      

      

       

      
        
          
          

        

        
          10Exhibit
        4.5

    

    

      THE
        REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES
        THAT
        IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
        PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT
        WILL
        NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR
        A
        PERIOD OF 180 DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE
        OTHER
        THAN (I) THINKEQUITY PARTNERS LLC OR EARLYBIRDCAPITAL, INC. (COLLECTIVELY,
        THE
“UNDERWRITERS”) OR AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE
        OFFERING (DEFINED BELOW), OR (II) A BONA FIDE OFFICER OR PARTNER OF THE
        UNDERWRITERS OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER. THIS PURCHASE
        OPTION
        IS NOT EXERCISABLE PRIOR TO THE LATER OF (I) THE CONSUMMATION BY HIGHBURY
        FINANCIAL INC. (“COMPANY”) OF A MERGER, CAPITAL STOCK EXCHANGE, ASSET
        ACQUISITION, STOCK PURCHASE OR OTHER SIMILAR BUSINESS COMBINATION (“BUSINESS
        COMBINATION”) (AS DESCRIBED MORE FULLY IN THE COMPANY’S REGISTRATION STATEMENT
        (DEFINED HEREIN)) AND (II) ______________, 2006. VOID AFTER 5:00 P.M. EASTERN
        TIME, _____________, 2009. 

       

      FORM
        OF

      UNIT
        PURCHASE OPTION

       

      FOR
        THE PURCHASE OF 150,000 UNITS

      OF

      HIGHBURY
        FINANCIAL INC.

       

      1.  Purchase
        Option.

       

      THIS
        CERTIFIES THAT, in consideration of $50 duly paid by or on behalf of ThinkEquity
        Partners LLC (“Holder”), as registered owner of this purchase option (“Purchase
        Option”), to Highbury Financial Inc. (“Company”), Holder is entitled, at any
        time or from time to time upon the later of (i) the consummation of a Business
        Combination and (ii) ___________, 2006 (“Commencement Date”), and at or before
        5:00 p.m., Eastern Time, _____________, 2009 (“Expiration Date”), but not
        thereafter, to subscribe for, purchase and receive, in whole or in part,
        up to
        One Hundred Fifty Thousand (150,000) units (“Units”) of the Company, each Unit
        consisting of one share of common stock of the Company, par value $.0001
        per
        share (“Common Stock”), and two warrants (“Warrant(s)”) expiring four years from
        the effective date (“Effective Date”) of the registration statement
        (“Registration Statement”) pursuant to which Units are offered for sale to the
        public (“Offering”). Each Warrant is the same as the warrants included in the
        Units being registered for sale to the public by way of the Registration
        Statement (“Public Warrants”) except that the Warrants have an exercise price of
        $6.25 per share. If the Expiration Date is a day on which banking institutions
        are authorized by law to close, then this Purchase Option may be exercised
        on
        the next succeeding day which is not such a day in accordance with the terms
        herein. During the period ending on the Expiration Date, the Company agrees
        not
        to take any action that would terminate the Purchase Option. This Purchase
        Option is initially exercisable at $7.50 per Unit so purchased; provided,
        however, that upon the occurrence of any of the events specified in Section
        6
        hereof, the rights granted by this Purchase Option, including the exercise
        price
        per Unit and the number of Units (and shares of Common Stock and Warrants)
        to be
        received upon such exercise, shall be adjusted as therein specified. The
        term
“Exercise Price” shall mean the initial exercise price or the adjusted exercise
        price, depending on the context. This Purchase Option is being issued as
        one of
        two substantially identical options issued to the lead underwriters of the
        Offering. Collectively, such options are referred to herein as the “Purchase
        Options.”

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      2.  Exercise.

       

      2.1.  Exercise
        Form.
        In
        order to exercise this Purchase Option, the exercise form attached hereto
        as
        Exhibit A must be duly executed and completed and delivered to the Company,
        together with this Purchase Option and payment of the Exercise Price for
        the
        Units being purchased payable in cash or by certified check or official bank
        check. If the subscription rights represented hereby shall not be exercised
        at
        or before 5:00 p.m., Eastern time, on the Expiration Date this Purchase Option
        shall become and be void without further force or effect, and all rights
        represented hereby shall cease and expire.

       

      2.2.  Legend.
        Each
        certificate for the securities purchased under this Purchase Option shall
        bear a
        legend as follows unless such securities have been registered under the
        Securities Act of 1933, as amended (“Act”):

       

      “The
        securities represented by this certificate have not been registered under
        the
        Securities Act of 1933, as amended (“Act”) or applicable state law. The
        securities may not be offered for sale, sold or otherwise transferred, in
        whole
        or in part, except pursuant to an effective registration statement under
        the
        Act, or pursuant to an exemption from registration under the Act and applicable
        state law.”

       

      2.3.  Cashless
        Exercise.

       

      2.3.1.  Determination
        of Amount.
        In lieu
        of the payment of the Exercise Price multiplied by the number of Units for
        which
        this Purchase Option is exercisable (and in lieu of being entitled to receive
        Common Stock and Warrants) in the manner required by Section 2.1, the Holder
        shall have the right (but not the obligation) to convert any exercisable
        but
        unexercised portion of this Purchase Option into Units (“Conversion Right”) as
        follows: upon exercise of the Conversion Right, the Company shall deliver
        to the
        Holder (without payment by the Holder of any of the Exercise Price in cash)
        that
        number of shares of Common Stock and Warrants comprising that number of Units
        equal to the quotient obtained by dividing (x) the “Value” (as defined below) of
        the portion of the Purchase Option being converted by (y) the Current Market
        Value (as defined below). The “Value” of the portion of the Purchase Option
        being converted shall equal the remainder derived from subtracting (a) (i)
        the
        Exercise Price multiplied by (ii) the number of Units underlying the portion
        of
        this Purchase Option being converted from (b) the Current Market Value of
        a Unit
        multiplied by the number of Units underlying the portion of the Purchase
        Option
        being converted. As used herein, the term “Current Market Value” per Unit at any
        date means the remainder derived from subtracting (x) the exercise price
        of the
        Warrants multiplied by the number of shares of Common Stock issuable upon
        exercise of the Warrants underlying one Unit from (y) (i) the Current Market
        Price of the Common Stock multiplied by (ii) the number of shares of Common
        Stock underlying one Unit, which shall include the shares of Common Stock
        underlying the Warrants included in such Unit. The “Current Market Price” of a
        share of Common Stock shall mean (i) if the Common Stock is listed on a national
        securities exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap
        Market or NASD OTC Bulletin Board (or successor such as the Bulletin Board
        Exchange), the last sale price of the Common Stock in the principal trading
        market for the Common Stock as reported by the exchange, Nasdaq or NASD,
        as the
        case may be; (ii) if the Common Stock is not listed on a national securities
        exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap Market
        or the
        NASD OTC Bulletin Board (or successor such as the Bulletin Board Exchange),
        but
        is traded in the residual over-the-counter market, the closing bid price
        for the
        Common Stock on the last trading day preceding the date in question for which
        such quotations are reported by the Pink Sheets, LLC or similar publisher
        of
        such quotations; and (iii) if the fair market value of the Common Stock cannot
        be determined pursuant to clause (i) or (ii) above, such price as the Board
        of
        Directors of the Company shall determine, in good faith.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      2.3.2.  Mechanics
        of Cashless Exercise.
        The
        Cashless Exercise Right may be exercised by the Holder on any business day
        on or
        after the Commencement Date and not later than the Expiration Date by delivering
        the Purchase Option with the duly executed exercise form attached hereto
        with
        the cashless exercise section completed to the Company, exercising the Cashless
        Exercise Right and specifying the total number of Units the Holder will purchase
        pursuant to such Cashless Exercise Right.

       

      2.3.3.  Warrant
        Exercise.
        Any
        warrants underlying the Units shall be issued pursuant to and subject to
        the
        terms and conditions set forth in the Warrant Agreement, entered into by
        and
        between the Company and Continental Stock Transfer & Trust Company, dated as
        of [______], 2005; provided that the exercise price of the Warrants shall
        be as
        set forth herein.

       

      3.  Transfer.

       

      3.1.  General
        Restrictions.
        The
        registered Holder of this Purchase Option, by its acceptance hereof, agrees
        that
        it will not sell, transfer, assign, pledge or hypothecate this Purchase Option
        for a period of 180 days following the Effective Date to anyone other than
        (i)
        an underwriter or a selected dealer in connection with the Offering, or (ii)
        a
        bona fide officer or partner of the Underwriters or of any such underwriter
        or
        selected dealer. On and after the 180th
        day
        following the Effective Date, this Purchase Option may be sold, transferred,
        assigned, pledged, hypothecated or otherwise disposed of, in whole or in
        part,
        subject to compliance with or exemptions from applicable securities laws.
        In
        order to make any permitted assignment, the Holder must deliver to the Company
        the assignment form attached hereto as Exhibit B duly executed and completed,
        together with the Purchase Option and payment of all transfer taxes, if any,
        payable in connection therewith. The Company shall within five business days
        transfer this Purchase Option on the books of the Company and shall execute
        and
        deliver a new Purchase Option or Purchase Options of like tenor to the
        appropriate assignee(s) expressly evidencing the right to purchase the aggregate
        number of Units purchasable hereunder or such portion of such number as shall
        be
        contemplated by any such assignment.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      3.2.  Restrictions
        Imposed by the Act.
        The
        securities evidenced by this Purchase Option shall not be transferred unless
        and
        until (i) the Company has received the opinion of counsel for the Holder
        that
        the securities may be transferred pursuant to an exemption from registration
        under the Act and applicable state securities laws, the availability of which
        is
        established to the reasonable satisfaction of the Company (the Company hereby
        agreeing that the opinion of Cooley Godward LLP shall be deemed satisfactory
        evidence of the availability of an exemption), or (ii) a registration statement
        or a post-effective amendment to the Registration Statement relating to such
        securities has been filed by the Company and declared effective by the
        Securities and Exchange Commission (the “Commission”) and compliance with
        applicable state securities law has been established.

       

      4.  New
        Purchase Options to be Issued.

       

      4.1.  Partial
        Exercise or Transfer.
        Subject
        to the restrictions in Section 3 hereof, this Purchase Option may be exercised
        or assigned in whole or in part. In the event of the exercise or assignment
        hereof in part only, upon surrender of this Purchase Option for cancellation,
        together with the duly executed exercise or assignment form and funds sufficient
        to pay any Exercise Price and/or transfer tax, the Company shall cause to
        be
        delivered to the Holder without charge a new Purchase Option of like tenor
        to
        this Purchase Option in the name of the Holder evidencing the right of the
        Holder to purchase the number of Units purchasable hereunder as to which
        this
        Purchase Option has not been exercised or assigned.

       

      4.2.  Lost
        Certificate.
        Upon
        receipt by the Company of evidence satisfactory to it of the loss, theft,
        destruction or mutilation of this Purchase Option and of reasonably satisfactory
        indemnification or the posting of a bond, the Company shall execute and deliver
        a new Purchase Option of like tenor and date. Any such new Purchase Option
        executed and delivered as a result of such loss, theft, mutilation or
        destruction shall constitute a substitute contractual obligation on the part
        of
        the Company.

       

      5.  Registration
        Rights.

       

      5.1.  Demand
        Registration.

       

      5.1.1.  Grant
        of Right.
        The
        Company, upon written demand (“Initial Demand Notice”) of the Holder(s) of at
        least 51% in interest of the Purchase Options and/or the underlying Units
        and/or
        the underlying securities (“Majority Holders”), agrees to register on one
        occasion, all or any portion of the Purchase Options requested by the Majority
        Holders in the Initial Demand Notice and all of the securities underlying
        such
        Purchase Options, including the Units, Common Stock, the Warrants and the
        Common
        Stock underlying the Warrants (collectively, the “Registrable Securities”). On
        such occasion, the Company will file a registration statement or a
        post-effective amendment to the Registration Statement covering the Registrable
        Securities within sixty days after receipt of the Initial Demand Notice and
        use
        its best efforts to have such registration statement or post-effective amendment
        declared effective as soon as possible thereafter. The Initial Demand Notice
        for
        registration may be made at any time during a period of five years beginning
        on
        the Effective Date. The Company covenants and agrees to give written notice
        of
        its receipt of any Initial Demand Notice by any Holder(s) to all other
        registered Holders of the Purchase Options and/or the Registrable Securities
        within ten days from the date of the receipt of any such Initial Demand
        Notice.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      5.1.2.  Terms.
        The
        Company shall bear all fees and expenses attendant to registering the
        Registrable Securities, including the expenses of any legal counsel selected
        by
        the Holders to represent them in connection with the sale of the Registrable
        Securities, but the Holders shall pay any and all underwriting commissions.
        The
        Company agrees to use its reasonable best efforts to qualify or register
        the
        Registrable Securities in such States as are reasonably requested by the
        Majority Holder(s); provided, however, that in no event shall the Company
        be
        required to register the Registrable Securities in a State in which such
        registration would cause (i) the Company to be obligated to qualify to do
        business in such State, or would subject the Company to taxation as a foreign
        corporation doing business in such jurisdiction or (ii) the principal
        stockholders of the Company to be obligated to escrow their shares of capital
        stock of the Company. The Company shall cause any registration statement
        or
        post-effective amendment filed pursuant to the demand rights granted under
        Section 5.1.1 to remain effective
        for a period of nine consecutive months from the effective date of such
        registration statement or post-effective amendment.

       

      5.2.  “Piggy-Back”
        Registration.

       

      5.2.1.  Grant
        of Right.
        In
        addition to the demand right of registration, the Holders of the Purchase
        Options shall have the right for a period of seven years commencing on the
        Effective Date, to include the Registrable Securities as part of any other
        registration of securities filed by the Company (other than in connection
        with a
        transaction contemplated by Rule 145(a) promulgated under the Act or pursuant
        to
        Form S-8); provided, however, that if, in the written opinion of the Company’s
        managing underwriter or underwriters, if any, for such offering, the inclusion
        of the Registrable Securities, when added to the securities being registered
        by
        the Company or the selling stockholder(s), will exceed the maximum amount
        of the
        Company’s securities which can be marketed (i) at a price reasonably related to
        their then current market value, and (ii) without materially and adversely
        affecting the entire offering, then the Company will still be required to
        include the Registrable Securities, but may require the Holders to agree,
        in
        writing, to delay the sale of all or any portion of the Registrable Securities
        for a period of 90 days from the effective date of the offering, provided,
        further, that if the sale of any Registrable Securities is so delayed, then
        the
        number of securities to be sold by all stockholders in such public offering
        during such 90 day period shall be apportioned pro rata among all such selling
        stockholders, including all holders of the Registrable Securities, according
        to
        the total amount of securities of the Company owned by said selling
        stockholders, including all holders of the Registrable Securities.

       

      5.2.2.  Terms.
        The
        Company shall bear all fees and expenses attendant to registering the
        Registrable Securities, including the expenses of any legal counsel selected
        by
        the Holders to represent them in connection with the sale of the Registrable
        Securities but the Holders shall pay any and all underwriting commissions
        related to the Registrable Securities. In the event of such a proposed
        registration, the Company shall furnish the then Holders of outstanding
        Registrable Securities with not less than fifteen days written notice prior
        to
        the proposed date of filing of such registration statement. Such notice to
        the
        Holders shall continue to be given for each applicable registration statement
        filed (during the period in which the Purchase Option is exercisable) by
        the
        Company until such time as all of the Registrable Securities have been
        registered and sold. The holders of the Registrable Securities shall exercise
        the “piggy-back” rights provided for herein by giving written notice, within ten
        days of the receipt of the Company’s notice of its intention to file a
        registration statement. The Company shall cause any registration statement
        filed
        pursuant to the above “piggyback” rights granted under Section 5.2.1 to remain
        effective for a period of nine consecutive months from the effective date
        of
        such registration statement or post-effective amendment.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      5.3.  Damages.
        Should
        the registration or the effectiveness thereof required by Sections 5.1 and
        5.2
        hereof be delayed by the Company or the Company otherwise fails to comply
        with
        such provisions, the Company shall, in addition to any other equitable or
        other
        relief available to the Holder(s), be liable for any and all incidental,
        special
        and consequential damages sustained by the Holder(s), including, but not
        limited
        to, the loss of any profits that might have been received by the Holder upon
        the
        sale of the Units, Common Stock or Warrants (and shares of Common Stock
        underlying the Warrants) underlying this Purchase Option.

       

      5.4.  General
        Terms.

       

      5.4.1.  Indemnification.
        The
        Company shall indemnify the Holder(s) of the Registrable Securities to be
        sold
        pursuant to any registration statement hereunder and each person, if any,
        who
        controls such Holders within the meaning of Section 15 of the Act or Section
        20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”),
        against all loss, claim, damage, expense or liability (including all reasonable
        attorneys’ fees and other expenses reasonably incurred in investigating,
        preparing or defending against litigation, commenced or threatened, or any
        claim
        whatsoever whether arising out of any action between the Underwriters and
        the
        Company or between the Underwriters and any third party or otherwise) to
        which
        any of them may become subject under the Act, the Exchange Act or otherwise,
        arising from such registration statement but only to the same extent and
        with
        the same effect as the provisions pursuant to which the Company has agreed
        to
        indemnify the underwriters contained in Section 6 of the Underwriting Agreement
        between the Company, the Underwriters and the other underwriters named therein
        dated the Effective Date. The Holder(s) of the Registrable Securities to
        be sold
        pursuant to such registration statement, and their successors and assigns,
        shall
        severally, and not jointly, indemnify the Company, its officers and directors
        and each person, if any, who controls the Company within the meaning of Section
        15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
        damage, expense or liability (including all reasonable attorneys’ fees and other
        expenses reasonably incurred in investigating, preparing or defending against
        any claim whatsoever) to which they may become subject under the Act, the
        Exchange Act or otherwise, arising from information furnished by or on behalf
        of
        such Holders, or their successors or assigns, in writing, for specific inclusion
        in such registration statement to the same extent and with the same effect
        as
        the provisions contained in Section 6 of the Underwriting Agreement pursuant
        to
        which the underwriters have agreed to indemnify the Company.

       

      5.4.2.  Exercise
        of Purchase Options.
        Nothing
        contained in this Purchase Option shall be construed as requiring the Holder(s)
        to exercise their Purchase Options or Warrants underlying such Purchase Options
        prior to or after the initial filing of any registration statement or the
        effectiveness thereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      5.4.3.  Documents
        Delivered to Holders.
        The
        Company shall furnish the Underwriters, as representatives of the Holders
        participating in any of the foregoing offerings, a signed counterpart, addressed
        to the participating Holders, of (i) an opinion of counsel to the Company,
        dated
        the effective date of such registration statement (and, if such registration
        includes an underwritten public offering, an opinion dated the date of the
        closing under any underwriting agreement related thereto), and (ii) a “cold
        comfort” letter dated the effective date of such registration statement (and, if
        such registration includes an underwritten public offering, a letter dated
        the
        date of the closing under the underwriting agreement) signed by the independent
        public accountants who have issued a report on the Company’s financial
        statements included in such registration statement, in each case covering
        substantially the same matters with respect to such registration statement
        (and
        the prospectus included therein) and, in the case of such accountants’ letter,
        with respect to events subsequent to the date of such financial statements,
        as
        are customarily covered in opinions of issuer’s counsel and in accountants’
        letters delivered to underwriters in underwritten public offerings of
        securities. The Company shall also deliver promptly to the Underwriters,
        as
        representatives of the Holders participating in the offering, the correspondence
        and memoranda described below and copies of all correspondence between the
        Commission and the Company, its counsel or auditors and all memoranda relating
        to discussions with the Commission or its staff with respect to the registration
        statement and permit the Underwriters, as representatives of the Holders,
        to do
        such investigation, upon reasonable advance notice, with respect to information
        contained in or omitted from the registration statement as they deem reasonably
        necessary to comply with applicable securities laws or rules of the National
        Association of Securities Dealers, Inc. (“NASD”). Such investigation shall
        include access to books, records and properties and opportunities to discuss
        the
        business of the Company with its officers and independent auditors, all to
        such
        reasonable extent and at such reasonable times and as often as the Underwriters,
        as representatives of the Holders, shall reasonably request. The Company
        shall
        not be required to disclose any confidential information or other records
        to the
        Underwriters, as representatives of the Holders, or to any other person,
        until
        and unless such persons shall have entered into reasonable confidentiality
        agreements (in form and substance reasonably satisfactory to the Company),
        with
        the Company with respect thereto.

       

      5.4.4.  Underwriting
        Agreement.
        The
        Company shall enter into an underwriting agreement with the managing
        underwriter(s), if any, selected by any Holders whose Registrable Securities
        are
        being registered pursuant to this Section 5, which managing underwriter shall
        be
        reasonably acceptable to the Company. Such agreement shall be reasonably
        satisfactory in form and substance to the Company, each Holder and such managing
        underwriters, and shall contain such representations, warranties and covenants
        by the Company and such other terms as are customarily contained in agreements
        of that type used by the managing underwriter. The Holders shall be parties
        to
        any underwriting agreement relating to an underwritten sale of their Registrable
        Securities and may, at their option, require that any or all the
        representations, warranties and covenants of the Company to or for the benefit
        of such underwriters shall also be made to and for the benefit of such Holders.
        Such Holders shall not be required to make any representations or warranties
        to
        or agreements with the Company or the underwriters except as they may relate
        to
        such Holders and their intended methods of distribution. Such Holders, however,
        shall agree to such covenants and indemnification and contribution obligations
        for selling stockholders as are customarily contained in agreements of that
        type
        used by the managing underwriter. Further, such Holders shall execute
        appropriate custody agreements and otherwise cooperate fully in the preparation
        of the registration statement and other documents relating to any offering
        in
        which they include securities pursuant to this Section 5. Each Holder shall
        also
        furnish to the Company such information regarding itself, the Registrable
        Securities held by it, and the intended method of disposition of such securities
        as shall be reasonably required to effect the registration of the Registrable
        Securities.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      5.4.5.  Rule
        144 Sale.
        Notwithstanding anything contained in this Section 5 to the contrary, the
        Company shall have no obligation pursuant to Sections 5.1 or 5.2 for the
        registration of Registrable Securities held by any Holder (i) where such
        Holder
        would then be entitled to sell under Rule 144 promulgated under the Act (“Rule
        144”) within any three-month period (or such other period prescribed under Rule
        144 as may be provided by amendment thereof) all of the Registrable Securities
        then held by such Holder, and (ii) where the number of Registrable Securities
        held by such Holder is within the volume limitations under paragraph (e)
        of Rule
        144 (calculated as if such Holder were an affiliate within the meaning of
        Rule
        144).

       

      5.4.6.  Supplemental
        Prospectus.
        Each
        Holder agrees, that upon receipt of any notice from the Company of the happening
        of any event as a result of which the prospectus included in the Registration
        Statement, as then in effect, includes an untrue statement of a material
        fact or
        omits to state a material fact required to be stated therein or necessary
        to
        make the statements therein not misleading in light of the circumstances
        then
        existing, such Holder will immediately discontinue disposition of Registrable
        Securities pursuant to the Registration Statement covering such Registrable
        Securities until such Holder’s receipt of the copies of a supplemental or
        amended prospectus, and, if so desired by the Company, such Holder shall
        deliver
        to the Company (at the expense of the Company) or destroy (and deliver to
        the
        Company a certificate of such destruction) all copies, other than permanent
        file
        copies then in such Holder’s possession, of the prospectus covering such
        Registrable Securities current at the time of receipt of such
        notice.

       

      6.  Adjustments.

       

      6.1.  Adjustments
        to Exercise Price and Number of Securities.
        The
        Exercise Price and the number of Units underlying the Purchase Option shall
        be
        subject to adjustment from time to time as hereinafter set forth:

       

      6.1.1.  Stock
        Dividends - Split-Ups.
        If
        after the date hereof, and subject to the provisions of Section 6.1.3 below,
        the
        number of outstanding shares of Common Stock is increased by a stock dividend
        payable in shares of Common Stock or by a split-up of shares of Common Stock
        or
        other similar event, then, on the effective date thereof, the number of shares
        of Common Stock underlying each of the Units purchasable hereunder shall
        be
        increased in proportion to such increase in outstanding shares. In such case,
        the number of shares of Common Stock, and the exercise price applicable thereto,
        underlying the Warrants underlying each of the Units purchasable hereunder
        shall
        be adjusted in accordance with the terms of the Warrants. For example, if
        the
        Company declares a two-for-one stock dividend and at the time of such dividend
        this Purchase Option is for the purchase of one Unit at $7.50 per whole Unit
        (each Warrant underlying the Units is exercisable for $5.00 per share), upon
        effectiveness of the dividend, this Purchase Option will be adjusted to allow
        for the purchase of one Unit at $7.50 per Unit, each Unit entitling the holder
        to receive two shares of Common Stock and four Warrants (each Warrant
        exercisable for $2.50 per share).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      6.1.2.  Aggregation
        of Shares.
        If
        after the date hereof, and subject to the provisions of Section 6.1.3, the
        number of outstanding shares of Common Stock is decreased by a consolidation,
        combination or reclassification of shares of Common Stock or other similar
        event, then, on the effective date thereof, the number of shares of Common
        Stock
        underlying each of the Units purchasable hereunder shall be decreased in
        proportion to such decrease in outstanding shares. In such case, the number
        of
        shares of Common Stock, and the exercise price applicable thereto, underlying
        the Warrants underlying each of the Units purchasable hereunder shall be
        adjusted in accordance with the terms of the Warrants.

       

      6.1.3.  Replacement
        of Securities upon Reorganization, etc.
        In case
        of any reclassification or reorganization of the outstanding shares of Common
        Stock other than a change covered by Section 6.1.1 or 6.1.2 hereof or that
        solely affects the par value of such shares of Common Stock, or in the case
        of
        any merger or consolidation of the Company with or into another corporation
        (other than a consolidation or merger in which the Company is the continuing
        corporation and that does not result in any reclassification or reorganization
        of the outstanding shares of Common Stock), or in the case of any sale or
        conveyance to another corporation or entity of the property of the Company
        as an
        entirety or substantially as an entirety in connection with which the Company
        is
        dissolved, the Holder of this Purchase Option shall have the right thereafter
        (until the expiration of the right of exercise of this Purchase Option) to
        receive upon the exercise hereof, for the same aggregate Exercise Price payable
        hereunder immediately prior to such event, the kind and amount of shares
        of
        stock or other securities or property (including cash) receivable upon such
        reclassification, reorganization, merger or consolidation, or upon a dissolution
        following any such sale or transfer, by a Holder of the number of shares
        of
        Common Stock of the Company obtainable upon exercise of this Purchase Option
        and
        the underlying Warrants immediately prior to such event; and if any
        reclassification also results in a change in shares of Common Stock covered
        by
        Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections
        6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3
        shall
        similarly apply to successive reclassifications, reorganizations, mergers
        or
        consolidations, sales or other transfers.

       

      6.1.4.  Changes
        in Form of Purchase Option.
        This
        form of Purchase Option need not be changed because of any change pursuant
        to
        this Section, and Purchase Options issued after such change may state the
        same
        Exercise Price and the same number of Units as are stated in the Purchase
        Options initially issued pursuant to this Agreement. The acceptance by any
        Holder of the issuance of new Purchase Options reflecting a required or
        permissive change shall not be deemed to waive any rights to an adjustment
        occurring after the Commencement Date or the computation thereof.

       

      6.2.  Substitute
        Purchase Option.
        In case
        of any consolidation of the Company with, or merger of the Company with,
        or
        merger of the Company into, another corporation (other than a consolidation
        or
        merger which does not result in any reclassification or change of the
        outstanding Common Stock), the corporation formed by such consolidation or
        merger shall execute and deliver to the Holder a supplemental Purchase Option
        providing that the holder of each Purchase Option then outstanding or to
        be
        outstanding shall have the right thereafter (until the stated expiration
        of such
        Purchase Option) to receive, upon exercise of such Purchase Option, the kind
        and
        amount of shares of stock and other securities and property receivable upon
        such
        consolidation or merger, by a holder of the number of shares of Common Stock
        of
        the Company for which such Purchase Option might have been exercised immediately
        prior to such consolidation, merger, sale or transfer. Such supplemental
        Purchase Option shall provide for adjustments which shall be identical to
        the
        adjustments provided in Section 6. The above provision of this Section shall
        similarly apply to successive consolidations or mergers.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      6.3.  Elimination
        of Fractional Interests.
        The
        Company shall not be required to issue certificates representing fractions
        of
        shares of Common Stock or Warrants upon the exercise of the Purchase Option,
        nor
        shall it be required to issue scrip or pay cash in lieu of any fractional
        interests, it being the intent of the parties that all fractional interests
        shall be eliminated by rounding any fraction up to the nearest whole number
        of
        Warrants, shares of Common Stock or other securities, properties or
        rights.

       

      7.  Reservation
        and Listing.

       

      The
        Company shall at all times reserve and keep available out of its authorized
        shares of Common Stock, solely for the purpose of issuance upon exercise
        of the
        Purchase Options or the Warrants underlying the Purchase Option, such number
        of
        shares of Common Stock or other securities, properties or rights as shall
        be
        issuable upon the exercise thereof. The Company covenants and agrees that,
        upon
        exercise of the Purchase Options and payment of the Exercise Price therefor,
        all
        shares of Common Stock and other securities issuable upon such exercise shall
        be
        duly and validly issued, fully paid and non-assessable and not subject to
        preemptive rights of any stockholder. The Company further covenants and agrees
        that upon exercise of the Warrants underlying the Purchase Options and payment
        of the respective Warrant exercise price therefor, all shares of Common Stock
        and other securities issuable upon such exercise shall be duly and validly
        issued, fully paid and non-assessable and not subject to preemptive rights
        of
        any stockholder. As long as the Purchase Options shall be outstanding, the
        Company shall use its best efforts to cause all (i) Units and shares of Common
        Stock issuable upon exercise of the Purchase Options, (ii) Warrants issuable
        upon exercise of the Purchase Options and (iii) shares of Common Stock issuable
        upon exercise of the Warrants included in the Units issuable upon exercise
        of
        the Purchase Option to be listed (subject to official notice of issuance)
        on all
        securities exchanges (or, if applicable on the Nasdaq National Market, SmallCap
        Market, OTC Bulletin Board or any successor trading market) on which the
        Units,
        the Common Stock or the Public Warrants issued to the public in connection
        herewith may then be listed and/or quoted.

       

      8.  Certain
        Notice Requirements.

       

      8.1.  Holder’s
        Right to Receive Notice.
        Nothing
        herein shall be construed as conferring upon the Holders the right to vote
        or
        consent as a stockholder for the election of directors or any other matter,
        or
        as having any rights whatsoever as a stockholder of the Company. If, however,
        at
        any time prior to the expiration of the Purchase Options and their exercise,
        any
        of the events described in Section 8.2 shall occur, then, in one or more
        of said
        events, the Company shall give written notice of such event at least fifteen
        days prior to the date fixed as a record date or the date of closing the
        transfer books for the determination of the stockholders entitled to such
        dividend, distribution, conversion or exchange of securities or subscription
        rights, or entitled to vote on such proposed dissolution, liquidation, winding
        up or sale. Such notice shall specify such record date or the date of the
        closing of the transfer books, as the case may be. Notwithstanding the
        foregoing, the Company shall deliver to each Holder a copy of each notice
        given
        to the other stockholders of the Company at the same time and in the same
        manner
        that such notice is given to the stockholders.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      8.2.  Events
        Requiring Notice.
        The
        Company shall be required to give the notice described in this Section 8
        upon
        one or more of the following events: (i) if the Company shall take a record
        of
        the holders of its shares of Common Stock for the purpose of entitling them
        to
        receive a dividend or distribution payable otherwise than in cash, or a cash
        dividend or distribution payable otherwise than out of retained earnings,
        as
        indicated by the accounting treatment of such dividend or distribution on
        the
        books of the Company, or (ii) the Company shall offer to all the holders
        of its
        Common Stock any additional shares of capital stock of the Company or securities
        convertible into or exchangeable for shares of capital stock of the Company,
        or
        any option, right or warrant to subscribe therefor, or (iii) a dissolution,
        liquidation or winding up of the Company (other than in connection with a
        consolidation or merger) or a sale of all or substantially all of its property,
        assets and business shall be proposed.

       

      8.3.  Notice
        of Change in Exercise Price.
        The
        Company shall, promptly after an event requiring a change in the Exercise
        Price
        pursuant to Section 6 hereof, send notice to the Holders of such event and
        change (“Price Notice”). The Price Notice shall describe the event causing the
        change and the method of calculating the same and shall be certified as being
        true and accurate by the Company’s President and Chief Financial
        Officer.

       

      8.4.  Transmittal
        of Notices.
        All
        notices, requests, consents and other communications under this Purchase
        Option
        shall be in writing and shall be deemed to have been duly made when hand
        delivered, or mailed by express mail or private courier service: (i) If to
        the
        registered Holder of the Purchase Option, to the address of such Holder as
        shown
        on the books of the Company, or (ii) if to the Company, to the following
        address
        or to such other address as the Company may designate by notice to the Holders:
        Highbury Financial Inc., 999 Eighteenth Street, Suite 3000 Denver, Colorado
        80202, Attn: Richard S. Foote, Chief Executive Officer.

       

      9.  Miscellaneous.

       

      9.1.  Amendments.
        The
        Company and the Underwriters may from time to time supplement or amend this
        Purchase Option without the approval of any of the Holders in order to cure
        any
        ambiguity, to correct or supplement any provision contained herein that may
        be
        defective or inconsistent with any other provisions herein, or to make any
        other
        provisions in regard to matters or questions arising hereunder that the Company
        and the Underwriters may deem necessary or desirable and that the Company
        and
        the Underwriters deem shall not adversely affect the interest of the Holders.
        All other modifications or amendments shall require the written consent of
        and
        be signed by the party against whom enforcement of the modification or amendment
        is sought.

       

      9.2.  Headings.
        The
        headings contained herein are for the sole purpose of convenience of reference,
        and shall not in any way limit or affect the meaning or interpretation of
        any of
        the terms or provisions of this Purchase Option.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      10.  Entire
        Agreement.

       

      This
        Purchase Option (together with the other agreements and documents being
        delivered pursuant to or in connection with this Purchase Option) constitutes
        the entire agreement of the parties hereto with respect to the subject matter
        hereof, and supersedes all prior agreements and understandings of the parties,
        oral and written, with respect to the subject matter hereof.

       

      10.1.  Binding
        Effect.
        This
        Purchase Option shall inure solely to the benefit of and shall be binding
        upon,
        the Holder and the Company and their permitted assignees, respective successors,
        legal representative and assigns, and no other person shall have or be construed
        to have any legal or equitable right, remedy or claim under or in respect
        of or
        by virtue of this Purchase Option or any provisions herein
        contained.

       

      10.2.  Governing
        Law; Submission to Jurisdiction.
        This
        Purchase Option shall be governed by and construed and enforced in accordance
        with the laws of the State of New York, without giving effect to conflict
        of
        laws. The Company hereby agrees that any action, proceeding or claim against
        it
        arising out of, or relating in any way to this Purchase Option shall be brought
        and enforced in the courts of the State of New York or of the United States
        of
        America for the Southern District of New York, and irrevocably submits to
        such
        jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives
        any objection to such exclusive jurisdiction and that such courts represent
        an
        inconvenient forum. Any process or summons to be served upon the Company
        may be
        served by transmitting a copy thereof by registered or certified mail, return
        receipt requested, postage prepaid, addressed to it at the address set forth
        in
        Section 8.4 hereof. Such mailing shall be deemed personal service and shall
        be
        legal and binding upon the Company in any action, proceeding or claim. The
        Company and the Holder agree that the prevailing party(ies) in any such action
        shall be entitled to recover from the other party(ies) all of its reasonable
        attorneys’ fees and expenses relating to such action or proceeding and/or
        incurred in connection with the preparation therefor.

       

      10.3.  Waiver,
        Etc.
        The
        failure of the Company or the Holder to at any time enforce any of the
        provisions of this Purchase Option shall not be deemed or construed to be
        a
        waiver of any such provision, nor to in any way affect the validity of this
        Purchase Option or any provision hereof or the right of the Company or any
        Holder to thereafter enforce each and every provision of this Purchase Option.
        No waiver of any breach, non-compliance or non-fulfillment of any of the
        provisions of this Purchase Option shall be effective unless set forth in
        a
        written instrument executed by the party or parties against whom or which
        enforcement of such waiver is sought; and no waiver of any such breach,
        non-compliance or non-fulfillment shall be construed or deemed to be a waiver
        of
        any other or subsequent breach, non-compliance or non-fulfillment.

       

      10.4.  Execution
        in Counterparts.
        This
        Purchase Option may be executed in one or more counterparts, and by the
        different parties hereto in separate counterparts, each of which shall be
        deemed
        to be an original, but all of which taken together shall constitute one and
        the
        same agreement, and shall become effective when one or more counterparts
        has
        been signed by each of the parties hereto and delivered to each of the other
        parties hereto.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      10.5.  Exchange
        Agreement.
        As a
        condition of the Holder’s receipt and acceptance of this Purchase Option, Holder
        agrees that, at any time prior to the complete exercise of this Purchase
        Option
        by Holder, if the Company and the Underwriters enter into an agreement
        (“Exchange Agreement”) pursuant to which they agree that all outstanding
        Purchase Options will be exchanged for securities or cash or a combination
        of
        both, then Holder shall agree to such exchange and become a party to the
        Exchange Agreement.

       

      10.6.  Underlying
        Warrants.
        At any
        time after exercise by the Holder of this Purchase Option, the Holder may
        exchange his Warrants (with a $6.25 exercise price) for Public Warrants (with
        a
        $5.00 exercise price) upon payment to the Company of the difference between
        the
        exercise price of his Warrant and the exercise price of the Public
        Warrants.

       

      [Signature
        page follows]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Company has caused this Purchase Option to be signed
        by its
        duly authorized officer as of the ____ day of __________, 200_.

       

      
        	 	 	 
	 	HIGHBURY
                FINANCIAL INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                
Name: Richard
                S. Foote
	 	Title:  
President
                and Chief Executive Officer

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Exhibit
        A

      

      Form
        to
        be used to exercise Purchase Option:

       

      Highbury
        Financial Inc.

      999
        Eighteenth Street

      Denver,
        Colorado 80202

       

      Date:
        _________________

       

      The
        undersigned hereby elects irrevocably to exercise all or a portion of the
        within
        Purchase Option and to purchase 150,000 Units of Highbury Financial Inc.
        and
        hereby makes payment of $____________ (at the rate of $_________ per Unit)
        in
        payment of the Exercise Price pursuant thereto. Please issue the Common Stock
        and Warrants as to which this Purchase Option is exercised in accordance
        with
        the instructions given below.

       

      or

       

      The
        undersigned hereby elects irrevocably to convert its right to purchase 150,000
        Units purchasable under the within Purchase Option by surrender of the
        unexercised portion of the attached Purchase Option (with a “Value” based of
        $_______ based on a “Market Price” of $_______). Please issue the securities
        comprising the Units as to which this Purchase Option is exercised in accordance
        with the instructions given below.

       

      ______________________________

      Signature

      ______________________________

      Signature
        Guaranteed

       

      INSTRUCTIONS
        FOR REGISTRATION OF SECURITIES

       

      Name
        ______________________________

      (Print
        in
        Block Letters)

       

      Address
        ____________________________

       

      NOTICE:
        THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
        THE
        FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT ALTERATION
        OR
        ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK, OTHER
        THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING MEMBERSHIP
        ON A
        REGISTERED NATIONAL SECURITIES EXCHANGE.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Exhibit
        B

       

      Form
        to
        be used to assign Purchase Option:

       

      ASSIGNMENT

       

      (To
        be
        executed by the registered Holder to effect a transfer of the within Purchase
        Option):

       

      FOR
        VALUE
        RECEIVED,______________________________________________ does hereby sell,
        assign
        and transfer unto________________________________________________ the right
        to
        purchase 150,000 Units of Highbury Financial Inc. (“Company”) evidenced by the
        within Purchase Option and does hereby authorize the Company to transfer
        such
        right on the books of the Company.

       

      Dated:
        ,
        200___ ____________________

       

      _________________________

      Signature

       

      __________________________

      Signature
        Guaranteed

       

      NOTICE:
        THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
        THE
        FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT ALTERATION
        OR
        ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK, OTHER
        THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING MEMBERSHIP
        ON A
        REGISTERED NATIONAL SECURITIES EXCHANGE.

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