Filed by Automated Filing Services Inc. (604) 609-0244 - August Biomedical Corporation - Exhibit 10.1






 Zone
  Exploration, Inc.  

  P.O. Box 1362 Billings, Montana 59103 

  ph and fax (406) 259-5106 zonexplore@aol.com 

 

December 15, 2003 

 Mr. Scott Houghton 

  August Biomedical Corp. 

  P.O. Box 73575 

  Vancouver, British Columbia 

  Canada V6E 4L9

	 	Re:	Agreement for Sale and Purchase 

      Horizontal Amsden Play 

      Musselshell and Yellowstone Counties, Montana (USA) 



Dear Mr. Houghton:


                This
  letter sets forth terms of an agreement for sale and purchase (“Agreement”),
  which, when accepted by you, shall form a binding Agreement between Zone Exploration,
  Inc. and John Fredlund (jointly referred to herein as “Zone”) and
  August Biomedical Corp. (“August”), subject to the terms and conditions
  hereinafter set forth. 

	1. 	This Agreement is entered
        into on the basis of the following representations and warranties made
        to August by Zone.

	 	 	 
	 	a) 
	Zone is the owner of an oil and gas prospect called
        the “Horizontal Amsden Play,” which has been described in certain
        materials presented to August, and which is herein referred to as the
        “Prospect;”

	 	 	 
	 	b) 
	Zone is the legal owner of a number of oil and gas
        leases within the Prospect, covering approximately 12,972.14 gross leasehold
        acres (and approximately 9,268.32 net leasehold acres) in Musselshell
        and Yellowstone Counties, Montana, USA, more particularly described on
        Exhibit “A” attached hereto, and which are henceforth referred
        to as “the Leases;”

	 	 	 
	 	c) 
	Zone represents that the Leases are in good standing
        and that they comply with all regulatory requirements and laws;

	 	 	 
	 	d) 
	Zone is not in breach of any laws, ordinances, statutes,
        regulations, bylaws or decrees to which it is subject or which applies
        to it which may adversely affect the Leases;

	 	 	 
	 	e) 
	There are no claims being made nor are any claims
        anticipated to be made as against Zone or the Leases;



 1 




 

	 	f)	No person, company or entity has any right, agreement
      or option to purchase any interest in, or portion or, the Leases; 
	 	 	 	 
	 	g)	Zone has the full and absolute
        right, power and authority to enter into this Agreement on the terms and
        conditions herein set forth, to carry out the transactions contemplated
        in this Agreement and to sell one hundred percent (100%) of its respective
        legal and beneficial title and ownership of the Leases to August; 

	 	 	 
	 	h) 	Any assignments from Zone
        to August shall conform to the regulations of both the State of Montana
        and the United States Bureau of Land Management; 

	 	 	 
	 	i) 	There is no action, suit,
        judgment, litigation, strike, labour disturbance, proceeding or investigation
        against or pending against or involving Zone which might adversely affect
        Zone transferring one hundred percent (100%) of its respective legal and
        beneficial ownership of the Leases to August, or which will result in
        any liability to August in respect of the Leases; 

	 	 	 
	 	j) 	Zone holds all permits,
        licenses, consents and authorities issued by any Government or governmental
        authority having jurisdiction or any subdivision thereof, including without
        limitation, any governmental department, commission, bureau, board or
        administrative agency which are necessary in relation to its respective
        ownership of the Leases and its respective ability to sell and transfer
        those Leases to August; 

	 	 	 
	 	k)	Zone is not in default or
        breach of any provision of any contract, agreement, lease, indenture or
        other instrument which may adversely affect the Leases or the sale and
        transfer of the ownership of the Leases to August; 

	 	 	 
	 	l) 	The sale or transfer of
        the Leases to August will not: 

	 	 	 
	 	 	i) 
	violate any provisions of the constating
        documents of Zone, or 

	 	 	 	 
	 	 	ii)
	result in or require the creation or
        imposition of any mortgage, deed of trust, pledge, lien, security interest,
        claim, charge, right of others or any encumbrances of any nature upon
        or with respect to the Leases, except as provided for in this Agreement.
      

	 	 	 
	 	m) 	Zone is a corporation duly
        incorporated, validly existing and in good standing under the laws of
        the State of Montana, USA; 

	 	 	 
	 	n) 	Zone knows of no environmental
        hazards that will adversely affect the drilling for oil and gas on the
        properties encompassed by the Leases. To the best of its knowledge and
        belief, all environmental laws and ordinances have been complied with.
      



2 




 

	2.	August warrants and represents as follows:

	 	 	 
	 	a)	This it is a publicly traded company
        duly incorporated in the State of Nevada (U.S.) The shares of August trade
        on the NASD over-the-counter bulletin board market in the United States
        of America under the symbol “AGBM”.

	 	 	 
	 	b)	August will not be in breach of any
        of its constating documents in entering into this Agreement for purchasing
        the Leases from Zone;

	 	 	 
	 	c)	 August will obtain all authorizations
        as are necessary in order to enter into this Agreement and purchase the
        Leases.

	 	 	 
	3.	Following execution of this
        Agreement by Zone and August (jointly referred to as the “parties”),
        August shall pay to Zone a non-refundable deposit of twenty thousand dollars
        ($20,000.00) in United States funds (“Initial Deposit”).





	 	The above Initial Deposit shall be sent by wire transfer
      to the following:
	 	 	 	 
	 	 	Wire to Account Name:	John Fredlund
	 	 	 	 
	 	 	Account Number:	XXXXXXXXXXXX
	 	 	 	 
	 	 	Routing Number:	XXXXXXXXX
	 	 	 	 
	 	 	Bank:	XXXXXXXXXX
	 	 	 	XXXXXXXXXXXX
	 	 	 	XXXXXXXX, XXXXXXX XXX XXXXX
	 	 	 	(XXX) XXX-XXXX
	 	 
	4.	Within two business days of the execution
        of this Agreement, Zone shall provide to August complete access to all
        of the Leases and all other relevant documentation in possession of Zone
        respecting the Leases in a data room at the following location: 115 N.
        Broadway, Suite 315, Billings, Montana, USA, Monday through Friday, between
        the hours of 9 a.m. and 5 p.m. MST, in order to assist August in obtaining
        a legal opinion and accounting advise and undertake its requisite due
        diligence respecting the terms and conditions of the Leases and whether
        what is proposed herein is feasible. August shall have sixty (60) days
        after execution of this Agreement in which to obtain this advice. If the
        legal and other opinions obtained by August support the project and indicate
        that the project is feasible, then, on or before the sixtieth (60th)
        day, August shall so advise Zone in writing of August’s selection
        to proceed with the project, and immediately wire transfer to Zone to
        the account named herein, a non-refundable payment of one hundred sixty-five
        thousand three hundred sixty-six dollars ($165,366.00) in United States
        funds. This payment is the balance due on the purchase price for the Leases,
        and will be known as the “Exercise Payment.”



3 




 

	5.	The aforesaid twenty thousand
        dollars ($20,000.00) U.S. Initial Deposit and the one hundred sixty-five
        thousand three hundred sixty-six dollars ($165,366.00) U.S. Exercise Payment
        together shall constitute the “Purchase Price” for the Leases.
        Zone and August agree that the total Purchase Price per net acre for the
        Leases is $20.00 U.S. per net acre. Based on the net acres represented
        by Zone (9,268.32 net acres), the total Purchase Price is one hundred
        eighty-five thousand three hundred sixty-six dollars ($185,366.00) U.S.
        [9,268.32 x $20.00 = $185,366.00]. If a due diligence title examination
        by August reveals that Zone owns a different number of net leasehold acres,
        the parties herein agree to adjust the Purchase Price accordingly.

	 	 	 
	6.
   	
Upon payment of the Purchase Price in full, Zone shall
        deliver to August in a timely fashion, an Assignment of Oil and Gas Leases
        (“Assignment”) constituting 100% of all of the right, title
        and interest of Zone in the Leases, and at the same time reserve an Overriding
        Royalty Interest on the Leases, resulting in the delivery of an 82% Net
        Revenue Interest to August (100% - landowners’ royalty – override
        = 82%) on each of the leases, proportionately reduced in cases where the
        leased mineral interest is less than 100%. Furthermore, Zone shall retain
        the rights of REASSIGNMENT AND RENEWAL, as follows:

      

	 	 	 
	 	 	“The overriding royalty reserved
        herein, and all other terms and conditions of this assignment or transfer
        shall apply to any and all extensions, renewals and substitute leases
        obtained by Assignee, its successors or assigns on the lands described
        herein. In the event Assignee desires to surrender said lease as to all
        or any part of the acreage covered thereby, said Assignee agrees to notify
        Assignor by registered mail, at least 30 days in advance of the anniversary
        date specified in said lease, and Assignor hereunder shall then have 15
        days after receipt of such notice within which to elect to take a reassignment
        of said lease as to the portion thereof to be relinquished. Should Assignor
        hereunder elect to receive such a reassignment, same will be delivered
        by Assignee prior to the anniversary date of the lease. It is understood,
        however, that there shall be no penalty for oversight or clerical error,
        except liability not to exceed the amount that was paid for the assignment.
        Any relinquishment under the terms of this paragraph shall be free and
        clear of all burdens, encumbrances, or outstanding interests other than
        those existing on the date hereof.”

	 	 	 
	7.	Zone and August will enter
        into an Area of Mutual Interest Agreement (“AMI”), wherein Zone
        will reserve a maximum of a three percent (3%) Overriding Royalty Interest
        on subsequently acquired leases within the AMI. This AMI Agreement and
        the geographical area that it covers are both described on Exhibit “B”
        attached hereto.

	 	 	 
	8.	Zone and August will enter
        into a Lease Brokerage Agreement (“Broker Agreement”), wherein
        August agrees to retain Zone to research mineral title throughout the
        AMI and negotiate and acquire additional oil and gas leases in a manner
        agreeable with August. This Brokerage Agreement is attached hereto as
        Exhibit “C.”




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	9.	August commits to the following project expenditures
        (“Project Expenditures”) in addition to the funds tendered for
        the purchase of the Leases (all funds U.S.):





	 	YEAR 1	 	 	Amount	 	Purpose
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	Date of Agreement	 	$	20,000.00	 	Initial Deposit
	 	 	 	 	 	 	 
	 	Within 60 days	 	$	165,366.00	 	Exercise Payment
	 	 	 	 	 	 	 
	 	Within 90 days	 	$	300,000.00	 	Acquisition of additional
	 	 	 	 	 	 	Prospect leases (15,000 acres)
	 	 	 	 	 	 	 
	 	Within 120 days	 	$	200,000.00	 	Acquisition of additional
	 	 	 	 	 	 	Prospect leases (10,000 acres)
	 	 	 	 	 	 	 
	 	 	 	$	300,000.00	 	Negotiations and Purchase
	 	 	 	 	 	 	of existing vertical oil well
	 	 	 	 	 	 	properties (2-6 wells possible)
	 	 	 	 	 	 	 
	 	Within 180 days	 	$	300,000.00	 	Acquisition of additional
	 	 	 	 	 	 	Prospect leases (15,000 acres)
	 	 	 	 	 	 	 
	 	 	 	$	200,000.00	 	3-D seismic survey at
	 	 	 	 	 	 	Wolf Springs field
	 	 	 	 	 	 	 
	 	Within 300 days	 	$	1,200,000.00	 	Drilling participation budget
	 	 	 	 	 	 	For 1, 2 or 3-well program
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	YEAR 2	 	 	Amount	 	Purpose
	 	 	 	 	 	 	 
	 	First 9 months	 	$	750,000.00	 	Drilling participation budget
	 	 	 	 	 	 	For additional drilling
	 	 	 	 	 	 	 
	 	 	 	$	75,000.00	 	2nd year lease rentals
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	TOTAL 2-YR. BUDGET:	 	$	3,510,366.00	 	 



5






 

	10.	August will determine who shall be the
        operator of the drilling project. At August’s request, Zone may assist
        by providing to August a list of operators who are capable of undertaking
        the seismic, drilling or production responsibilities. August hereby agrees
        to indemnify and hold Zone harmless from any and all liabilities, claims,
        demands or suits arising as a result of any exploration operations conducted
        pursuant to this paragraph.

	 	 
	11.	In the event that August defaults on
        any of its payments with respect to the Purchase Price to Zone, Zone will
        provide written notice to August of such default. Upon receipt of such
        written notice, August will have fourteen (14) days to cure the defect
        and rectify the situation by making the outstanding payment of the Purchase
        Price that is owning to Zone. Should August fail to cure the default within
        that time, August shall immediately forfeit its entire interest in the
        Prospect and the Leases described herein, unless both August and Zone
        agree otherwise.

	 	 
	12.	In the event that August defaults on
        any of its payments with respect to payments that may be due to Zone under
        the terms of the AMI Agreement or the Brokerage Agreement, the terms of
        those agreements shall prevail.

	 	 
	13.	In the event that August defaults on
        any of its payments with respect to the Project Expenditures other than
        those referred to in paragraph 12, the prevailing Model Form Operating
        Agreements between August and other partners shall dictate remedies, unless
        said expenditures are owed to specifically to Zone. Under this circumstance,
        Zone will provide written notice to August of such default. Upon receipt
        of such written notice, August will have sixty (60) days to cure the defect
        and by making the outstanding payment of the Project Expenditure that
        is owed to Zone.




6






 

	14.	All notices and communications required or permitted
        under this Agreement shall be in writing and shall be effective when received
        by mail, certified mail;, registered mail, return receipt requested, facsimile
        or hand delivery as follows:





	 	Zone Exploration, Inc.	-and-	Gary G. Broeder
	 	Attn: John Fredlund	 	Attorney at Law
	 	115 N. Broadway, Suite 315	 	Transwestern I
	 	Billings, Montana USA 59101	 	404 N. 31st Street
	 	-also-	 	Billings, Montana USA 59101
	 	P.O. Box 1362	 	Ph           (406)
      255-8630
	 	Billings, Montana USA 59103	 	Fax          (406)
      255-7125
	 	Ph          (406)
      259-5106	 	E-mail:     ggbroeder@aol.com
	 	Fax         (406)
      259-5106	 	 
	 	E-mail:    zonexplore@aol.com	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	August Biomedical Corp.	-and-	Stephen O’Neill
	 	Attn: Scott Houghton	 	O’Neill & Co.
	 	1014 Robson Street	 	Suite 80, 1055 West Georgia
	 	Vancouver, British Columbia	 	Vancouver, British Columbia
	 	Canada V6E 4L9	 	CanadaV6B 2A3
	 	-also-	 	Ph          (604)
      687-5792
	 	P.O. Box 73575	 	Fax         (604)
      687-6650
	 	Vancouver, British Columbia	 	E-Mail    son@stockslaw.com
	 	Canada V6E 4L9	 	                abo@stockslaw.com
	 	Ph          
      (604) 608-3831	 	 
	 	Fax          (604)
      608-3382	 	 
	 	Cell         (604)
      341-6051	 	 
	 	E-mail     sch@novus-tele.net	 	 




	15.	Until such time that Zone has been paid
        the full Purchase Price, Zone is entitled to notification of and a timely
        copy of all press releases and other public announcements that may be
        issued by August concerning the Prospect.

	 	 
	16.	Either party may, by written notice so delivered to the other,
      change the address to which notice shall thereafter be made.



7






 

	17.	This instrument contains the entire
        Agreement of the parties with respect to the transactions contemplated
        herein, supersedes any and all prior agreements or understandings, written
        or oral, and cannot be amended except by a writing signed by all of the
        parties. The parties agree to be reasonable with respect to any amendments
        sought by another party.

	 	 
	18.	In the event that any party is required
        to seek legal or equitable action to interpret or enforce any provision
        of this Agreement, the prevailing party shall be entitled to its reasonable
        costs and fees, including attorney fees.

	 	 
	19.	This Agreement may be executed by facsimile
        and in any number of counterparts, each of which shall be deemed an original
        instrument, but all of which together shall constitute one and the same
        instrument.

	 	 
	20.	The waiver of any breach or any term
        or condition of this Agreement shall not be deemed to constitute a waiver
        of any other breach of the same or any other term or condition of the
        Agreement.

	 	 
	21.	Both Zone and August will bear their
        own costs and expenses, including the fees of legal, accounting and other
        professional advisors engaged by them in connection with the transactions
        contemplated by this Agreement and its preparation.

	 	 
	22.	The parties shall perform such further
        acts and execute such other agreements or documents as may be reasonably
        necessary to carry out the intent and provisions of the Agreement.

	 	 
	23.	In addition to complying with any specific
        standards of conduct set forth herein, the parties have acted and shall
        continue to act toward each other in good faith in the negotiation, execution,
        delivery and performance of this Agreement.

	 	 
	24.	This Agreement and all transactions
        contemplated herein shall be interpreted in accordance with the laws of
        the State of Montana and shall inure to the benefit of, and be binding
        upon, the parties hereto, their respective heirs, administrators, successors
        and assigns as the case may be.

	 	 
	25.	Time is of the essence of this Agreement.




8







                If
  the foregoing accurately sets forth your understanding of our agreement, kindly
  sign this Agreement where indicated below, and return it to the office of Zone
  no later than Friday, December 19, 2003, at 3:00 P.M. Mountain Standard Time.
  Your signature and acceptance will form a binding Agreement between us, subject
  only to the terms and conditions aforesaid. 

  

Respectfully, 

  

Zone Exploration, Inc. 

 By: /s/ John Fredlund . 

         John Fredlund, President 

        /s/ John Fredlund .
  

        John Fredlund

TERMS UNDERSTOOD AND AGREED TO AND THE WITHIN OFFER
  ACCEPTED THIS 18th DAY OF DECEMBER , 2004.
  

   August 

   By: /s/ Scott Houghton .  

           Scott Houghton, President 

  


9






  
   

 Exhibit “A”  

                Attached
  to and made part of that certain Agreement for Sale and Purchase dated December
  15, 2003, between Zone Exploration, Inc. and John Fredlund (jointly referred
  to herein as “Zone”), and August Biomedical Corp. (“August”),
  to wit: 

 Oil and Gas Leases – Musselshell and Yellowstone
  Counties, Montana (USA) 

	 	Lessee /	 	 
	 	Lease Date /	Land Description/	 
	Lessors	Term
      Length	Net
      Acres	Recording
	 	 	 	 
	 	 	 	 
	 	 	 	 
	North Mason Lake and Stag-Summit
      Prospects	 
	 	 	 	 
	State of Montana	John Fredlund	Township 10 North, Range 24 East	 
	(34,875-02)	12-3-2002	Section 36: All	 
	 	10 years	 	 
	 	 	Containing 640.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(640.0 net acres)	 
	 	 	 	 
	 	 	 	 
	John Fredlund,	Zone Exploration, Inc.	Township 9 North, Range 24 East	 
	et ux Bess Snyder	9-1-2003	Section 2: S2	 
	 	5 years	Section 11: Lots 1-4, N2S2, N2	 
	 	 	Section 12: E2, SW	 
	 	 	 	 
	 	 	Containing 1,402.46 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(105.90 net acres)	 
	 	 	 	 
	 	 	 	 
	John Fredlund,	Zone Exploration, Inc.	Township 9 North, Range 25 East	 
	et ux Bess Snyder	9-1-2003	Section 19: Lots 1, 2, E2NW	 
	 	5 years	 	 
	 	 	Containing 161.40 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(20.18 net acres)	 
	 	 	 	 
	 	 	 	 
	State of Montana	John Fredlund	Township 9 North, Range 25 East	 
	(34,872-02)	12-3-2002	Section 16: All	 
	 	10 years	 	 
	 	 	Containing 640.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(640.0 net acres)	 


 1 





 Exhibit “A” – Page 2 

  Agreement for Sale and Purchase 

  December 15, 2003 

	AgAmerica, FCB	John Fredlund	Township 9 North, Range 25 East	Book 373
	(FCB 01-0164)	5-10-2001	Section 9: S2	Page 707
	 	5 years	 	 
	 	 	Containing 320.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(160.0 net acres)	 
	 	 	 	 
	 	 	 	 
	AgAmerica, FCB	John Fredlund	Township 9 North, Range 25 East	Book 385
	(FCB 02-0161)	12-9-2002	Section 17: All	Page 164
	 	5 years	 	 
	 	 	Containing 640.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(320.0 net acres)	 
	 	 	 	 
	 	 	 	 
	Bryan W. Adolph,	Zone Exploration, Inc.	Township 9 North, Range 25 East	Book 385
	et ux Kathy J.	9-15-2003	Section 7: Lots 3, 4, E2SW, NE	Page 687
	 	7 years	Section 8: W2W2	 
	 	 	Section 15: W2	 
	 	 	Section 17: W2	 
	 	 	Section 18: NE	 
	 	 	Section 22: SE	 
	 	 	 	 
	 	 	Containing 1,442.08 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(1,091.95 net acres)	 
	 	 	 	 
	 	 	 	 
	USA	John Fredlund	Township 9 North, Range 25 East	 
	(MTM-85136)	7-1-1996	Section 10: All	 
	 	10 years	Section 15: E2	 
	 	 	Section 22: N2NW	 
	 	 	 	 
	 	 	Containing 1,040.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(1,040.0 net acres)	 


2





 Exhibit “A” – Page 3

  Agreement for Sale and Purchase 

  December 15, 2003 

	USA	John Fredlund	Township 9 North, Range 25 East	 
	(MTM-85137)	7-1-1996	Section 18: SE	 
	 	10 years	Section 19: E2	 
	 	 	Section 20: All	 
	 	 	 	 
	 	 	Containing 1,120.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(1,120.0 net acres)	 
	 	 	 	 
	 	 	 	 
	USA	John Fredlund	Township 9 North, Range 25 East	 
	(MTM-85370)	7-1-1996	Section 22: NE, S2NW	 
	 	10 years	 	 
	 	 	Containing 240.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(240.0 net acres)	 
	 	 	 	 
	 	 	 	 
	USA	John Fredlund	Township 9 North, Range 25 East	 
	(MTM-85545)	9-1-1996	Section 22: SW	 
	 	10 years	 	 
	 	 	Containing 160.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(160.0 net acres)	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	Conoco Prospect	 	 	 
	 	 	 	 
	State of Montana	John Fredlund	Township 9 North, Range 25 East	 
	(34,873-02)	12-3-2002	Section 36: All	 
	 	10 years	 	 
	 	 	Containing 640.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(640.0 net acres)	 


 3 





 Exhibit “A” – Page 4

  Agreement for Sale and Purchase 

  December 15, 2003 

	Gage Dome Prospect	 	 	 
	 	 	 	 
	USA	John Fredlund	Township 9 North, Range 26 East	 
	(MTM-85735)	11-1-1996	Section 8: SE	 
	 	10 years	Section 14: SESE	 
	 	 	Section 18: Lots 1, 2	 
	 	 	 	 
	 	 	Containing 282.89 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(282.89 net acres)	 
	 	 	 	 
	 	 	 	 
	USA	John Fredlund	Township 9 North, Range 26 East	 
	(MTM-84837)	2-1-1996	Section 21: All	 
	 	10 years	 	 
	 	 	Containing 640.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(640.0 net acres)	 
	 	 	 	 
	 	 	 	 
	Delphia Prospect	 	 	 
	 	 	 	 
	State of Montana	John Fredlund	Township 9 North, Range 27 East	 
	(34,874-02)	12-3-2002	Section 36: All, excpt RR r/w	 
	 	10 years	 	 
	 	 	Containing 613.50 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(613.50 net acres)	 
	 	 	 	 
	 	 	 	 
	USA	John Fredlund	Township 9 North, Range 27 East	 
	(MTM-85736)	11-1-1996	Section 21: E2	 
	 	10 years	Section 22: SWNE, S2NW, SW	 
	 	 	 	 
	 	 	Containing 600.0 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(600.0 net acres)	 


 4 





 Exhibit “A” – Page 5

  Agreement for Sale and Purchase 

  December 15, 2003 

	Hawk Creek Prospect	 	 	 
	 	 	 	 
	John Fredlund,	Zone Exploration, Inc.	Township 8 North, Range 29 East	 
	et ux Bess Snyder	9-1-2003	Section 2: Lots 13-20	 
	 	5 years	 	 
	 	 	Township 8 North, Range 30 East	 
	 	 	Section 6: Lots 4, 5, 12, 13, 20, 21,	 
	 	 	25, 26, E2SW, W2SE, NESE	 
	 	 	Section 18: Lots 1-4, E2W2, E2	 
	 	 	 	 
	 	 	Containing 1,429.81 acres, more or less.	 
	 	 	Musselshell Co., Montana	 
	 	 	(89.91 net acres)	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	Wolf Springs Prospect	 	 	 
	 	 	 	 
	Charles Ruthern Horton,	Reger Oil, Inc.	Township 7 North, Range 32 East	Doc. No.
	aka Charles R. Horton	6-22-2000	Section 19: Lots 2-4, SENW, S2NE,	3096057
	aka Charley R. Horton	5 years	E2SW, SE	 
	 	 	Section 30: E2	 
	 	 	 	 
	 	 	Containing 800.0 acres, more or less.	 
	 	 	Yellowstone Co., Montana	 
	 	 	(152.0 net acres)	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	Charles Rockwood Horton,	Reger Oil, Inc.	Township 7 North, Range 32 East	Doc. No.
	aka Charles Rocky Horton	8-3-2000	Section 19: Lots 2-4, SENW, S2NE,	3264951
	 	5 years	E2SW, SE	 
	 	 	Section 30: E2	 
	 	 	 	 
	 	 	Containing 800.0 acres, more or less.	 
	 	 	Yellowstone Co., Montana	 
	 	 	(48.0 net acres)	 


 5 





 Exhibit “A” – Page 6

  Agreement for Sale and Purchase 

  December 15, 2003 

	Jeffrey D. Horton,	Reger Oil, Inc.	Township 7 North, Range 32 East	Doc. No.
	Personal Representative	7-24-2000	Section 19: Lots 2-4, SENW, S2NE,	3264952
	of the Estate of	5 years	E2SW, SE	 
	Roland Dean Horton,	 	Section 30: E2	 
	deceased	 	 	 
	 	 	Containing 800.0 acres, more or less.	 
	 	 	Yellowstone Co., Montana	 
	 	 	(184.0 net acres)	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	Gross Leasehold Acres:	12,972.14	 
	 	Net Leasehold Acres:	9,268.32	 


 6 




  
   

 Exhibit “B”  

 Agreement for Area of Mutual Interest 

                Attached
  to and made part of that certain Agreement for Sale and Purchase dated December
  15, 2003, between Zone Exploration, Inc. and John Fredlund (jointly referred
  to herein as “Zone”), and August Biomedical Corp. (“August”),
  to wit: 

 All lands located in Musselshell and Yellowstone Counties,
  Montana (USA)

	 	The Area of Mutual Interest is defined as the following
      lands: 
	 	 	 
	 	Township 10 North, Range 24 East	Sections 25-27, 34-35
	 	Township 10 North, Range 25 East	Sections 29-32
	 	 	 
	 	Township 9 North, Range 24 East	Sections 1-3, 10-15
	 	Township 9 North, Range 25 East	Sections 1-27, 34-36
	 	Township 9 North, Range 26 East	Sections 7-36
	 	Township 9 North, Range 27 East	Sections 19-36
	 	Township 9 North, Range 28 East	Sections 19, 30, 31
	 	Township 9 North, Range 29 East	Sections 34-36
	 	Township 9 North, Range 30 East	Sections 31-33
	 	 	 
	 	Township 8 North, Range 25 East	Sections 1, 12, 13
	 	Township 8 North, Range 26 East	Sections 1-18
	 	Township 8 North, Range 27 East	Sections 1-6
	 	Township 8 North, Range 28 East	Section 6
	 	Township 8 North, Range 29 East	Sections 1-3, 10-15, 22-27, 34-36
	 	Township 8 North, Range 30 East	Sections 4-9, 16-21, 28-33
	 	Township 8 North, Range 31 East	Sections 31-36
	 	Township 8 North, Range 32 East	Sections 31-34
	 	 	 
	 	Township 7 North, Range 31 East	Sections 1-14, 23-26, 35, 36
	 	Township 7 North, Range 32 East	Sections 3-10, 15-22, 27-34
	 	 	 
	 	Township 6 North, Range 31 East	Sections 1, 2
	 	Township 6 North, Range 32 East	Sections 3-6


 For the certain terms and conditions of this AMI, refer to page 2 of Exhibit
  “B.” 





 Exhibit “B” – Page 2 

  Agreement for Purchase and Sale 

  December 15, 2003 

 Area of Mutual Interest Terms:  

 1.                Length
  of Term. The term of this AMI Agreement shall extend for five (5) years
  from December 15, 2003, and shall govern the subsequent acquisition of oil and
  gas leases and other oil and gas properties, including producing oil and gas
  wells, within the defined geographical area described herein. 

 2.               
  Subsequent Leases acquired by Zone. If Zone acquires any subsequent oil
  and gas leases or other oil and gas properties within the AMI, Zone shall, within
  90 days, offer August a 100% interest in these leases or properties. August
  shall have 45 days to elect to acquire said leases at a cost of $20.00 –U.S.
  per net mineral acre. Zone shall reserve an Overriding Royalty equal to the
  lesser interest of either a three percent (3%) Overriding Royalty or
  the difference between the existing lease burdens and an 80% Net Revenue Interest
  (NRI). [100% - existing lease burdens (landowners’ royalty + pre-existing
  overrides) = Net Revenue Interest (NRI)]. However, under no circumstances shall
  the Overriding Royalty to be reserved by Zone be less than one percent (1%).


 3               .
  Subsequent Leases acquired by August. In the event that August acquires
  any oil and gas leases or other properties within the AMI, August shall, within
  90 days or within a mutually agreeable time, assign to Zone an Overriding Royalty
  equal to the lesser interest of either a three percent (3%) Overriding Royalty
  or the difference between the existing lease burdens and an 80% NRI.
  However, under no circumstances shall the Overriding Royalty to be assigned
  to Zone be less than one percent (1%). 

 4.               
  In the Event of Default on Payment of Purchase Price. In the event that
  August acquires any leases or properties with the AMI before the Purchase Price
  for the Prospect has been paid in full and August owns 100% of the record title
  interest in the Prospect and the Leases, as defined under the terms of the Agreement
  to which this Exhibit is attached, and August elects not to participate in the
  Prospect or defaults on the Purchase Price payments and forfeits its interest
  in the Prospect, August shall offer all of these subsequently acquires leases
  or properties to Zone “at cost.” Within 90 days of forfeiture, August
  shall offer these leases to Zone, and Zone shall have 45 days to elect to acquire
  any or all of those leases or properties, and shall tender payment to August.
  August shall then make an assignment of 100% of its interest in said leases
  or properties to Zone, and the leases shall not be burdened with any overrides.
  If Zone elects not to acquire said leases or properties, August shall own said
  leases or properties with no further obligations to Zone regarding those leases
  or properties. 

 5.               
  Less than Full Mineral Interest. If any subsequently acquired oil and
  gas lease constitutes less than a full 100% mineral interest lease, the overrides
  reserved or conveyed shall be proportionately reduced with respect to the actual
  interest leased. 

 6.               
  Successors and Assigns. This AMI shall apply to the heirs, successors
  and assigns of both parties. 




  
   

 Exhibit “C”  

 Brokerage Agreement for Acquiring Subsequent Leases and
  Properties 

                Attached
  to and made part of that certain Agreement for Sale and Purchase dated December
  15, 2003, between Zone Exploration, Inc. and John Fredlund (jointly referred
  to herein as “Zone”), and August Biomedical Corp. (“August”),
  to wit: 

                NOTWITHSTANDING
  ANYTHING CONTAINED IN THE AGREEMENT FOR SALE AND PURCHASE TO THE CONTRARY, 

                Zone
  and August agree to the following: 

	 	1.
 	This Brokerage Agreement
        addresses the future work that will be conducted pursuant to the goals
        of the Horizontal Amsden Play (“project”). The work will involve
        labor directed at acquiring additional oil and gas lease acreage and other
        related properties, and all of the labor associated therewith, in a professional
        and an organized fashion. All future work done by Zone on the project
        will be done with the prior consent and at the direction of the August.

	 	 	 	 
	 	2.	The project area is defined
        as the area described in the larger Agreement for Sale and Purchase and
        the related Exhibits.

	 	 	 	 
	 	3.	The work required of Zone
        is the research and compilation of mineral ownership title, surface title,
        oil and gas leasing, property acquisitions, well site and access permitting,
        damage settlements and other germane land functions required to properly
        assemble a leasehold position suitable for drilling wells, and to facilitate
        the appropriate land-related issues associated with the drilling and development
        programs.

	 	 	 
	 	4.	Compensation to Zone is as follows:
	 	 	 	 
	 	 	a) 	$350 per day for work on the project.
	 	 	 	 
	 	 	b) 	Reimbursement for 100% of applicable
        expenses in the field, including motels, meals, copy work, mailing, reasonable
        telephone charges and the like.

	 	 	 	 
	 	 	c) 	Mileage allowance of .40/mile

	 	 	 	 
	 	 	d) 	100% cost reimbursement for sub-brokers
        (hired and managed by Zone) of up to $350 per day per man plus applicable
        expenses









 Exhibit “C” – Page 2 

  Agreement for Sale and Purchase 

  December 15, 2003 

	 	 	e) 	The cash difference between the actual cost of acquired
      oil and gas leases and $20.00 per net acre. Zone and August agree
      that August shall pay $20.00 per net acre to Zone for all oil and gas leases
      acquired throughout the project area. In the event that the actual cost
      of an oil and gas lease or another related property is more than $20.00
      per net acre, August shall have the right to acquire said lease or property
      “at cost” with no additional compensation to Zone.
	 	 	 	 
	 	4.	That August shall have the right, following reasonable
      notice, to audit the documentation and the cost and expense records of Zone
      specifically regarding the subject project.
	 	 	 	 
	 	Zone agrees to the following:
	 	 	 	 
	 	1.	To serve as the lead broker
        for field land services for the project.

	 	 	 	 
	 	2.	With prior consent of August,
        to hire experienced and dependable sub-brokers (landmen) to assist with
        the expedition of the project.

	 	 	 	 
	 	3.	To focus work efforts according
        to the priorities set by August, and to deliver to August all mineral
        and ownership and leasehold reports, executed leases, contracts, agreements,
        easements and executed permits and the relevant paperwork involving damage
        settlements in a timely and expeditious manner.

	 	 	 	 
	 	4.	To research title records
        for fee, state and federal ownerships and to render proper reports on
        the same. On the freehold title, to research the county records from the
        “patent to the present,” and render landman’s “Mineral
        Ownership and Leasehold Reports” based on the ownership of freehold
        oil and gas rights.

	 	 	 	 
	 	5.	To acquire leases and other
        related properties, and easements, permits and damage settlements according
        to terms set by August, and solely for the benefit of August or any other
        entity specified by August. At August’s choice, leases, permits and
        easements may be acquired in either the name of “August” or
        in the name of “Zone Exploration, Inc.” Any leases acquired
        by Zone in the prospect area shall be for the benefit of August, subject
        to the specific terms and restrictions defined in this larger Agreement.

	 	 	 	 
	 	6.	To assign “all right,
        title and interest” in any leases, contracts, permits or easements
        acquired, pursuant to clause #5 previous, to August in a timely fashion,
        when requested by August.

	 	 	 	 
	 	7.	To adhere to the Landman’s
        “Code of Ethics,” as stated by the American Association of Professional
        Landmen (copy attached).









 Exhibit “C” – Page 3 

  Agreement for Sale and Purchase

  December 15, 2003 

	 	August agrees to the following:
	 	 	 
	 	1.	To provide reasonable and ethical guidelines
        for the work required.

	 	 	 
	 	2.	To pay all invoices in a timely fashion,
        buy no longer than thirty (30) days following receipt of any invoice.



                This
  Brokerage Agreement is non-exclusive and does not prohibit August from hiring
  other people or corporations to do similar work within the project area under
  separate arrangements. 

                AGREED
  TO by the undersigned and effective as of December 15, 2003. 

	     Zone Exploration, Inc 	 	 	August Biomedical Corp.
	 	 	 	 	 
	 	 	 	 	 
	By:	            /s/
      John Fredlund	 	By:	            /s/
      Scott Houghton
	 	John Fredlund, President	 	 	Scott Houghton, President
	 	 	 	 	 
	 	 	 	 	 
	By:	            /s/
      John Fredlund	 	 	 
	 	John Fredlund, President