Document:

General Security Agreement of November 8, 2004 with JMG Exploration, Inc.

  
 Exhibit 10.2

  
 GENERAL SECURITY AGREEMENT 
  
 1. FELLOWS ENERGY LTD., a Nevada corporation, of 370 Interlocken Boulevard, Suite 400,
Broomfield, Colorado 80021, (the “Borrower”) for valuable consideration grants, assigns, transfers, sets over, mortgages and charges to JMG EXPLORATION, INC., a Nevada corporation, of Suite 2600, 500 – 4th Avenue S.W., Calgary, Alberta T2P 2V6 Canada (the “Lender”) as and by way of a fixed and specific mortgage and
charge, and grants to the Lender, a security interest in the present and after acquired undertaking and property (other than consumer goods) of the Borrower including all the right, title, interest and benefit which the Borrower now has or may
hereafter have in all property of the kinds hereinafter described where ever located (the “Collateral”): 
  

	 	(a)	all goods comprising the inventory of the Borrower including but not limited to goods held for sale or lease or that have been leased or consigned to or by the Borrower or furnished
or to be furnished under a contract of service or that are raw materials, work in process or materials used or consumed in a business or profession or finished goods and timber cut or to be cut, oil, gas, hydrocarbons, and minerals extracted or to
be extracted, all livestock and the young and unborn young thereof and all crops; 

  

	 	(b)	all goods which are not inventory or consumer goods, including but not limited to furniture, fixtures, equipment, machinery, plant, tools, vehicles and other tangible personal
property, whether described in Schedule “A” hereto or not; 

  

	 	(c)	all accounts, including deposit accounts in banks, credit unions, trust companies and similar institutions, debts, demands and choses in action which are now due, owing or accruing
due or which may hereafter become due, owing or accruing due to the Borrower, and all claims of any kind which the Borrower now has or may hereafter have including but not limited to claims under insurance policies; 

  

	 	(d)	all chattel paper; 

  

	 	(e)	all warehouse receipts, bills of lading and other documents of title, whether negotiable or not; 

  

	 	(f)	all instruments, shares, stock, warrants, bonds, debentures, debenture stock or other securities, money, letters of credit, advices of credit and checks; 

 

	 	(g)	all intangibles including but not limited to contracts, agreements, options, permits, licenses, consents, approvals, authorizations, orders, judgments certificates, rulings,
insurance policies, agricultural and other quotas, subsidies, franchises, immunities, privileges, and benefits and all goodwill, patents, trade marks, trade names, trade secrets, inventions, processes, copyrights and other industrial or intellectual
property; 

  

	 	(h)	with respect to the personal property described in subparagraphs (a) to (g) inclusive, all books, accounts, invoices, letters, papers, documents, disks, and other records in any
form, electronic or otherwise, evidencing or relating thereto; and all contracts, securities, instruments and other rights and benefits in respect thereof; 

  

	 	(i)	with respect to the personal property described in subparagraphs (a) to (h) inclusive, all parts, components, renewals, substitutions and replacements thereof and all attachments,
accessories and increases, additions and accessions thereto; and 

  

	 	(j)	with respect to the personal property described in subparagraphs (a) to (i) inclusive, all proceeds therefrom (other than consumer goods), including personal property in any form or
fixtures derived directly or indirectly from any dealing with such property or proceeds therefrom, and any insurance or other payment as indemnity or compensation for loss of or damage to such property or any right to such payment, and any payment
made in total or partial discharge or redemption of an intangible chattel paper, instrument or security. 

  
 In this Agreement the words “goods”, “consumer goods”, “account”, “account debtor”, “inventory”,
“crops”, “equipment”, “fixtures’, “chattel paper”, “document of title”, “instrument”, “money”, “security” or “securities’, “intangible”,
“receiver”, “proceeds” and “accessions” shall have the same meanings as their defined meanings where such words are defined in the Uniform Commercial Code, including any amendments thereto, being referred to in
this Agreement as “the UCC”. In this Agreement, “Collateral” shall refer to “Collateral or any item thereof”. 
  
 2. The fixed and specific mortgages and charges and the security interest granted under this Agreement secure payment and performance of all obligations of the Borrower
to the Lender, including but not limited to: 
  

	 	(a)	that certain promissory note in the amount of $1,500,000 issued by the Borrower in favour of the Lender of even date of this Agreement; and 

  

	 	(b)	all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by the Borrower to the Lender in any currency or
remaining unpaid by the Borrower to the Lender in any currency, whether arising from dealings between the Lender and the Borrower or from other dealings or proceedings by which the Lender may be or become in any manner whatever a creditor of the
Borrower and wherever incurred, and whether incurred by the Borrower alone or with another or others and whether as principal or surety, including all interest, commissions, legal and other costs, charges and expenses; 

  
 (collectively, the “Obligations”). 
  
 3. The Borrower hereby represents and warrants to the Lender that: 
  

	 	(a)	all of the Collateral is, or when the Borrower acquires any right, title or interest therein, will be the sole property of the Borrower free and clear of all security interests,
mortgages, charges, hypothecations, liens or other encumbrances except as disclosed by the Borrower to the Lender in writing; 

  

	 	(b)	the Borrower’s chief executive address is located at the address specified in paragraph 1; 

  

	 	(c)	none of the Collateral consists of consumer goods; 

  

	 	(d)	this Agreement has been properly authorized and constitutes a legally valid and binding obligation of the Borrower in accordance with its terms; 

  

	 	(e)	the Borrower is duly organized and validly existing in good standing in all jurisdictions in which the Borrower operates; and 

  

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	 	(f)	subject to any limitation stated therein or in connection therewith, all balance sheets, earnings statements and other financial data which have been or may hereafter be furnished
to the Lender do or shall farily represent the Borrower’s financial condition as of the dates, and results of its operations for the periods, for which the same are furnished, and all other information, reports and other paper furnished to the
Lender are or shall be at the time the same are so furnished accurate and correct in all material respects and complete insofar as completeness may be necessary to give Lender a true and accurate knowledge of the subject matter.

  
 4. The Borrower hereby agrees that: 
  

	 	(a)	the Borrower shall diligently maintain, use and operate the Collateral and shall carry on and conduct its business in a proper and efficient manner so as to preserve and protect the
Collateral and the earnings, incomes, rents, issues and profits thereof; 

  

	 	(b)	the Borrower shall cause the Collateral to be insured and kept insured to the full insurable value thereof with reputable insurers against loss or damage by fire and such other
risks as the Lender may reasonably require, shall maintain such insurance with loss if any payable to the Lender and shall lodge such policies with the Lender and shall cause a standard mortgage clause to be appended to such insurance as the Lender
requires and name the Lender as additional insured and mortgagee; 

  

	 	(c)	the Borrower shall pay all rents, taxes, levies, assessments and government fees or dues lawfully levied, assessed or imposed in respect of the Collateral or any part thereof or
which may give rise to a lien or trust claim against the Collateral or any part thereof, as and when the same shall become due and payable and shall exhibit to the Lender, when required, the receipts and vouchers establishing such payment;

  

	 	(d)	the Borrower shall duly observe and conform to all valid requirements of any governmental authority relative to any of the Collateral and all covenants, terms and conditions upon or
under which the Collateral is held; 

  

	 	(e)	the Borrower shall keep proper books of account in accordance with sound accounting practice, shall furnish to the Lender such financial information and statements and such
information and statements relating to the Collateral as the Lender may from time to time require, and the Borrower shall permit the Lender or its authorized agents at any time at the expense of the Borrower to examine all books of account and other
financial records and reports relating to the Collateral and to make copies thereof and take extracts therefrom; 

  

	 	(f)	the Borrower shall furnish to the Lender such information with respect to the Collateral and the insurance thereon as the Lender may from time to time require and shall give written
notice to the Lender of all litigation before any court, administrative board or other tribunal affecting the Borrower or the Collateral; 

  

	 	(g)	the Borrower shall defend its title to the Collateral against all persons and shall keep the Collateral free and clear of all security interests, mortgages, charges, liens and other
encumbrances except for those disclosed to the Lender in writing prior to the execution of this Agreement or hereafter approved in writing by the Lender prior to their creation or assumption; 

  

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	 	(h)	the Borrower shall, upon request by the Lender, execute and deliver all such financing statements, certificates, further assignments and documents and do all such further acts and
things as may be considered by the Lender to be necessary or desirable to give effect to the intent of this Agreement; 

  

	 	(i)	the Borrower shall promptly notify the Lender in writing of any event which occurs that would have a material adverse effect upon the Collateral or upon the financial condition of
the Borrower and immediately upon the Borrower’s acquisition of rights in any vehicle, mobile home, trailer, boat, aircraft, aircraft engine or other serial number goods (as defined in the regulations to the UCC), shall promptly provide the
Lender with full particulars of such collateral; and 

  

	 	(j)	the Borrower will not change its name or the location of its chief executive office or place of business or sell, exchange, transfer, assign or lease or otherwise dispose or change
the use of the Collateral or any interest therein or modify, amend or terminate any chattel paper, document of title, instrument, security or intangible, without the prior written consent of the Lender, except that the Borrower may, until an event
of default set out in paragraph 8 occurs, sell or lease inventory in the ordinary course of the Borrower’s business. 

  
 5. Until an event of default occurs, the Borrower may use the Collateral in any lawful manner not inconsistent with this Agreement, but the Lender shall have the right at
any time and from time to time to verify the existence and state of the Collateral in any manner the Lender may consider appropriate and the Borrower agrees to furnish all assistance and information and to perform all such acts as the Lender may
reasonably request in connection therewith, and for such purpose shall permit the Lender or its agent access to all places where Collateral may be located and to all premises occupied by the Borrower to examine and inspect the Collateral and related
records and documents. 
  
 6. After an event of default occurs, the Lender may
give notice to any or all account debtors of the Borrower and to any or all persons liable to the Borrower under an instrument to make all further payments to the Lender and any payments or other proceeds of Collateral received by the Borrower from
account debtors or from any persons liable to the Borrower under an instrument, whether before or after such notice is given by the Lender, shall be held by the Borrower in trust for the Lender and paid over to the Lender upon request. The Lender
may take control of all proceeds of Collateral and may apply any money taken as Collateral to the satisfaction of the Obligations secured hereby. The Lender may hold as additional security any increase or profits, except money, received from any
Collateral in the Lender’s possession, and may apply any money received from such Collateral to reduce the Obligations secured hereby and may hold any balance as additional security for such part of the Obligations as may not yet be due,
whether absolute or contingent. 
  
 7. Upon the Borrower’s failure to perform
any of its duties hereunder, the Lender may, but shall not be obliged to, perform any or all of such duties, without waiving any rights to enforce this Agreement, and the Borrower shall pay to the Lender, forthwith upon written demand therefor, an
amount equal to the reasonable costs, fees and expenses incurred by the Lender in so doing plus interest thereon from the date of such costs, fees and expenses are incurred until paid at the rate of 18% per annum. 
  
 8. The happening of any one or more of the following events shall constitute an event of
default under this Agreement: 
  

	 	(a)	if the Borrower does not pay when due any of the Obligations; 

  

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	 	(b)	if the Borrower does not perform any material provisions of this Agreement or of any other agreement to which the Borrower and the Lender are parties; 

  

	 	(c)	if the Borrower ceases or threatens to cease to carry on its business, commits an act of bankruptcy, makes an assignment for the benefit of creditors or upon petition for protection
under federal, state or local bankruptcy, insolvency or debtor relief laws, whether made voluntarily or involuntarily, and including any appointment of or taking of possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of the Borrower, for any part of its property; 

  

	 	(d)	if the Borrower enters into any reconstruction, reorganization, amalgamation, merger or other similar arrangement; 

  

	 	(e)	if any proceeding is taken with respect to a compromise or arrangement, or to have the Borrower declared bankrupt or wound up, or if any proceeding is taken, whether in court or
under the terms of any agreement or appointment in writing, to have a receiver appointed of any Collateral or if any encumbrance becomes enforceable against any Collateral; 

  

	 	(f)	if any execution, sequestration or extent or any other process of any court becomes enforceable against the Borrower or if any distress or analogous process is levied upon any
Collateral; 

  

	 	(g)	if the Lender in good faith believes and has commercially reasonable grounds for believing that the prospect of payment or performance of any material Obligation is or is about to
be impaired or that any material portion of the Collateral is or is about to be in danger of being lost, damaged, confiscated or placed in jeopardy; or 

  

	 	(h)	if a substantial loss, theft, damage or destruction of any of the Collateral occurs, or if any material portion of the Collateral is used in any manner or for any purpose which
threatens confiscation by a legal authority. 

  
 9. If an event of
default occurs, the Lender may withhold any future advances and may declare that the Obligations shall immediately become due and payable in full, and the Lender may proceed to enforce payment of the Obligations and the Borrower and the Lender shall
have, in addition to any other rights and remedies provided by law, the rights and remedies of a debtor and a secured party respectively under the UCC and other applicable legislation and those provided by this Agreement. The Lender may take
possession of the Collateral, enter upon any premises of the Borrower, otherwise enforce this Agreement and enforce any rights of the Borrower in respect of the Collateral by any manner permitted by law and may use the Collateral in the manner and
to the extent that the Lender may consider appropriate and may hold, insure, repair, process, maintain, protect, preserve, prepare for disposition and dispose of the same and may require the Borrower to assemble the Collateral and deliver or make
the Collateral available to the Lender at a reasonably convenient place designed by the Lender. 
  
 10. Where required to do so by the UCC, the Lender shall give to the Borrower the written notice required by the UCC of any intended disposition of the Collateral by serving such notice personally on the Borrower or
by sending any notices to the Borrower in accordance with paragraph 15 hereof or by any other method authorized or permitted by the UCC. 
  
 11. If an event of default occurs, the Lender may take proceedings in any court of competent jurisdiction for the appointment of a receiver (which term shall include a
receiver and 

  

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manager) of the Collateral or may by appointment in writing appoint any person to be a receiver of the Collateral and may remove any receiver so appointed by
the Lender and appoint another in his stead; and any such receiver appointed by instrument in writing shall, to the extent permitted by applicable law or to such lesser extent permitted, have all of the rights, benefits and powers of the Lender
hereunder or under the UCC or otherwise and without limitation but acting in a commercially reasonably manner have power (a) to take possession of the Collateral, (b) to carry on all or any part or parts of the business of the Borrower; (c) to
borrow money required for the seizure, retaking, repossession, holding, insurance, repairing, processing, maintaining, protecting, preserving, preparing for disposition, disposition of the Collateral and for any other enforcement of this Agreement
or for the carrying on of the business of the Borrower on the security of the Collateral in priority to the security interest created under this Agreement, and (d) to sell, lease or otherwise dispose of the whole or any part of the Collateral at
public auction, by public tender or by private sale, lease or other disposition either for cash or upon credit, at such time and upon such terms and conditions as the receiver may determine provided that if any such disposition involves deferred
payment the Lender will not be accountable for and the Borrower will not be entitled to be credited with the proceeds of any such disposition until the monies therefor are actually received; and further provided that any such receiver shall be
deemed the agent of the Borrower and the Lender shall not be in any way responsible for any misconduct or negligence of any such receiver. 
  
 12. Any proceeds of any disposition of any Collateral may be applied by the Lender to the payment of reasonable expenses incurred or paid in connection with seizing,
repossessing, retaking, holding, repairing, processing, insuring, preserving, preparing for disposition and disposing of the Collateral or for the carrying on of the business of the Borrower (including reasonable solicitor’s fees and legal
expenses and any other reasonable expenses), and any balance of such proceeds may be applied by the Lender towards the payment of the Obligations in such order of application as the Lender may from time to time effect. All such expenses and all
amounts borrowed on the security of the Collateral under paragraph 11 shall bear interest at the rate of 18% per annum, shall be payable by the Borrower upon demand and shall be Obligations under this Agreement. If the disposition of the
Collateral fails to satisfy the Obligations secured by this Agreement and the expenses incurred by the Lender, the Borrower shall be liable to pay any deficiency to the Lender on demand. 
  
 13. The Borrower and the Lender further agree that: 
  

	 	(a)	the Lender may grant extensions of time and other indulgences, take and give up security, accept compositions, grant releases and discharges and otherwise deal with the Borrower,
debtors of the Borrower, sureties and others and with the Collateral or other security as the Lender may see fit without prejudice to the liability of the Borrower and the Lender’s rights under this Agreement; 

  

	 	(b)	this Agreement shall not be considered as satisfied or discharged by any intermediate payment of all or any part of the Obligations but shall constitute and be a continuing security
to the Lender for a current or running account and shall be in addition to and not in substitution for any other security now or hereafter held by the Lender; 

  

	 	(c)	nothing in this Agreement shall obligate the Lender to make any loan or accommodation to the Borrower or extend the time for payment or satisfaction of the Obligations;

  

	 	(d)	 any failure by the Lender to exercise any right set out in this Agreement shall not constitute a waiver thereof; nothing in this Agreement or in the Obligations
secured by this Agreement shall preclude any other remedy by action or 

  

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otherwise for the enforcement of this Agreement or the payment in full of the Obligations secured by this Agreement; 

  

	 	(e)	all rights of the Lender under this Agreement shall inure to the benefit of its successors and assigns and all obligations of the Borrower under this Agreement shall bind the
Borrower, its successors and assigns; 

  

	 	(f)	if more than one Borrower executes this Agreement, their obligations under this Agreement shall be joint and several, and the Obligations shall include those of all or any one or
more of them; 

  

	 	(g)	the pleading of any statute of limitations as a defense to any demand against the Borrower is expressly waived; 

  

	 	(h)	the time for attachment of the security interest created hereby has not been postponed and is intended to attach when this Agreement is signed by the Borrower and attaches at that
time to Collateral in which the Borrower then has any right, title or interest and attaches to Collateral in which the Borrower subsequently acquires any right, title or interest at the time when the Borrower first acquires such right, title or
interest; 

  

	 	(i)	this Agreement with all contemporaneously executed notes constitutes the entire understanding between the parties with regard to the subject matter hereof, and may not be modified
or amended except by an instrument signed by the party against which the enforcement of such modification or amendment is sought; 

  

	 	(j)	where ever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, and if any provision hereof is held to
be invalid, illegal or unenforceable, such determination shall not effect the validity of the remaining provisions of this Agreement, which shall continue in full force and effect as if the invalid portions had been deleted or never written.

  
 14. The Borrower acknowledges receiving a copy of this
Agreement. 
  
 15. All notices required or contemplated to be given under this
Agreement and all other communications required or permitted by this Agreement to be given by the Lender or the Borrower shall be in writing and shall be either delivered personally or transmitted by fax to the other party at the following
addresses: 
  

			
	 Fellows Energy Ltd.
	  	JMG Exploration, Inc.
	 370 Interlocken Boulevard, Suite 400
	  	Suite 2600, 500 – 4th Avenue S.W.
	 Broomfield, Colorado 80021
	  	Calgary, Alberta T2P 2V6
	 Fax Number: (303) 327-1526
	  	Fax Number: (403) 294-1197
	 Attention: George Young, President
	  	Attention: Thomas J. Jacobsen, President

  
 16. The Borrower may from time to time
by notice delivered in accordance with this paragraph 15 change its address or number for notices hereunder. Communications given personally shall be deemed to have been given by the Lender and received by the Borrower on the date of delivery.
Communications given by fax shall be deemed to have been given by the Lender and received by the Borrower on the date they are received by the Borrower. 
  

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 Signed this 8th day of November, 2004. 
  

									
	 [SEAL]
	 	 	 	 	 	FELLOWS ENERGY LTD.
				
	ATTEST:	 	 	 	 	 	 
				
	 /s/ Marsha Johnston
	 	 	 	By:	 	 /s/ George S.Young

	 	 	 	 	 	 	 	 	 George S.Young

	 	 	 	 	 	 	 	 	 President

  

 - 8 - 

  
 SCHEDULE “A”

  
 (Description of Collateral) 
  

 - 9 -Exploration & Development & Conveyance Agreement of Nov 8,2004 with JMG Exp

  
 Exhibit 10.3

  
 EXPLORATION AND DEVELOPMENT AND CONVEYANCE AGREEMENT

  
 (WESTON COUNTY, WYOMING) 
  
 (CARBON COUNTY, UTAH) 
  
 THIS EXPLORATION AND DEVELOPMENT, AND CONVEYANCE AGREEMENT
(“Agreement”), is entered into, and is effective as of the Effective Date, by and between JMG EXPLORATION, INC., a Nevada corporation, (“JMG”) whose address is Suite 2600, 500 4th Avenue SW, Calgary, AB, T2P 2V6, and; FELLOWS ENERGY, LTD., a Nevada corporation, (“Fellows”) whose address is 370 Interlocken
Boulevard, Suite 400, Broomfield, CO 80021. JMG and Fellows may sometimes be referred to collectively as “Parties.” Fellows may sometimes be referred to as “Seller.” JMG may sometimes be referred to as “Buyer.”

  
 In consideration of the mutual premises and covenants
contained in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Agreement, intending to be legally bound, hereby agree as follows: 
  
 ARTICLE I 
  
 DEFINITIONS AND INTERPRETATION 
  
 1.1 Definitions. Capitalized terms used in this Agreement shall have the meaning set out below, and
capitalized terms not defined herein shall have the meanings set out for such terms in the JOA: 
  
 “Affiliate” means, with respect to any specified Person, any other Person which, directly or indirectly, is in control of, is controlled by, or
is under common control with, such specified Person, where “control” as used with respect to any Person means the power to direct the business and affairs of such Person, as evidenced by equity ownership of fifty percent (50%) or greater,
by agreement or otherwise. 
  
 “Agreement” means this
Exploration and Development and Conveyance Agreement, the recitals, and all exhibits and schedules to this Agreement. 
  
 “AMI” means the Area of Mutual Interest among the parties created pursuant to Article VI of this Agreement. 
  
 “Bridge Loan” means the loan to Fellows by JMG governed by the
Bridge Loan Agreements. 
  
 “Bridge Loan Agreements”
means the Promissory Note and General Security Agreement, the recitals, and all exhibits and schedules to such Bridge Loan Agreements as attached as Exhibit H-l and Exhibit H-2, respectively. 
  

			
	 Weston County/Carbon County Agreement
	  	Page 1 of 13
	 102204.1(3)
	  	 

 “Carbon County Prospect” means the leasehold interests of Seller within Carbon County, Utah as
more particularly described in Exhibit A-l to this Agreement. 
  
 “Exploration and Development Lands” means the geographical and geologic area outlined in Exhibits A-l and A-2 to this Agreement. 
  
 “Effective Date” means November 8, 2004. 
  
 “Initial Program” in defined in Section 3.3. 
  
 “JOA” means the Joint Operating Agreement attached to this Agreement as Exhibit D. 
  
 “Program” is defined in Section 4.1. 
  
 “Well Information” is defined in Section 9.1. 
  
 “Weston County Prospect” means the leasehold interest of Seller
within Weston County, Wyoming as more particularly described in Exhibit A-2 to this Agreement. 
  
 1.2 Terms denoting the singular only shall include the plural, and vice versa. 
  
 1.3 Unless otherwise stated, a reference to a Recital, Article, Section, Schedule or Exhibit is a reference to a
Recital, Article, Section, Schedule or Exhibit of this Agreement. 
  
 1.4 Section numbers and headings are for convenience of reference only, and shall not affect the interpretation of this Agreement. 
  
 1.5 Reference to any gender includes the other. 
  
 1.6 Reference to “including” means including, but not by way of limitation. 
  
 1.7 Unless otherwise expressly provided in this Agreement, reference to an Agreement (including this Agreement),
document, or instrument is the same as amended, modified, novated or replaced from time to time. 
  
 1.8 Reference to a statute or other legislative act, by-law, rule, regulation, or order is to the same as amended, modified or replaced from time
to time and to any rule, regulation or order promulgated pursuant to such law. 
  
 1.9 All reference made to dollars or $ is in United States of America currency. 
  
 1.10 The following Exhibits are attached hereto and form a part hereof: 
  

			
	Exhibit

	  	 
		
	A-l	  	Carbon County Prospect Leasehold Lands
		
	A-2	  	Weston County Prospect Leasehold Lands

  

			
	 Weston County/Carbon County Agreement
	  	Page 2 of 13
	 102204.1(3)
	  	 

			
		
	B	  	Lease Liens & Encumbrances
		
	C	  	Rental Obligations
		
	D	  	Joint Operating Agreement
		
	E	  	Well Information
		
	F	  	Leases Excluded From General Warranty of Title
		
	G	  	Fellows Energy Private Placement Memorandum
		
	H	  	Bridge Loan Documents
		
	I	  	Sample of Type of Seismic Data Subject to This Agreement

  
 ARTICLE II

  
 REPRESENTATIONS OF SELLER 
  
 2.1 Title. Seller represents that it is the owner of leasehold
interests in certain leases within Weston County, Wyoming and within Carbon County, Utah, as more particularly described in Exhibit A-1 and Exhibit A-2, free and clear of all liens, claims or encumbrances, except as disclosed in writing to
Seller and attached hereto as Exhibit B (Liens, Claims, & Encumbrances). Seller shall, under terms of this Agreement, convey an undivided 50% of all such leasehold interests to JMG free and clear of all liens, claims and encumbrances and
shall provide a general warranty of title as to leases within the Weston County, Wyoming and Carbon County, Utah. Such general warranty of title shall not apply to the leasehold interests listed on Exhibit F. 
  
 2.2 Seismic License. Seller represents and warrants that it has
the right to disclose to JMG and license the use by JMG of attached seismic data similar to the sample data attached as Exhibit I in Weston County, Wyoming and Carbon County, Utah and as further set forth in Section 8.1 of this Agreement.

  
 2.3 Leases. Seller represents that there is no
event that with notice or lapse of time, or both, would constitute a material default by Seller under any lease. 
  
 ARTICLE III 
  
 CONVEYANCE 
  
 INITIAL PROGRAM 

 
 3.1 Conveyance. Seller hereby conveys, assigns and transfers
to JMB an undivided fifty percent (50%) interest in Fellows’ interest in the Exploration and Development Lands, 

  

			
	 Weston County/Carbon County Agreement
	  	Page 3 of 13
	 102204.1(3)
	  	 

 
effective from and after the Effective Date, and JMG hereby accepts the transfer. Seller shall forthwith execute all assignments and conveyance documents in
a form reasonably acceptable to JMG conveying such interest and all conveyances shall be promptly recorded. All such assignments shall be from the surface to all depths, except as otherwise shown on Exhibits A-l and A-2. Seller and its
Affiliates or assigns have not and will not reserve any overriding royalty in the Exploration and Development Lands, provided, however, that such assignments shall be subject to the royalties set out on Exhibit B. 
  
 3.2 Consideration. In consideration for the conveyance of
interests set out in Section 3.1: 
  

	 	(a)	JMG shall pay 100% of all costs associated with the drilling and completion of the wells, including costs of obtaining additional leases, if required, in the Initial Program
up to a total of $1,200,000.00 as an equalization payment for amounts already expended by Fellows; 

  

	 	(b)	JMG shall make the Bridge Loan to Fellows; and 

  

	 	(c)	JMG shall commit a minimum amount of $2,000,000.00 to the Initial Program, consisting of the amount set out in Subsection 3.2(a), and $800,000.00 including an advance to
Fellows of $400,000.00 for which Fellows will execute a promissory note in the form of the promissory note contained in the Bridge Loan Agreements and which shall be governed under the Bridge Loan Agreements and Subsection 3.4.

  
 3.3 Initial Program The Initial
Program shall consist of six wells in the Weston County Prospect and one well in the Carbon County Prospect, as proposed by JMG with input and advice from Fellows and as approved by Fellows. 
  
 3.4 Repayment of Drilling and Completion Coats. The amounts
advanced by JMG pursuant to Subsection 3.2(c) and any other amounts of Program costs which the parties mutually agree shall be advanced by JMG for Fellows, shall be repaid in the form of a production payment, or, at JMG’s option, from the
proceeds of the Private Placement financing currently being undertaken by Fellows and defined by the Private Placement Memorandum attached wherein as Exhibit G. and shall be secured by the general security agreement contained in the Bridge
Loan Agreements. If JMG elects to secure the advance as a production payment, Seller agrees to assign JMG a production payment secured by 100% of Seller’s existing or future production in the Exploration and Development Lands. This production
payment shall be equal to the amount of 100% of Seller’s gross cash flow from all production allocated or attributable to Seller within the Exploration and Development Lands, net of Seller’s proportionate share of royalties, severance
taxes and lease operating expenses. JMG shall be entitled to the production payment upon all Program costs expended on behalf of Seller, plus a simple interest charge calculated at the rate of eighteen percent (18%), on the unliquidated balance of
the production payment, computed monthly on the basis of 360 day year, 30 day month. Fellows agree to execute an instrument memorializing said production payment in a form which can be recorded of record. 
  
 3.5 Non-Completion of the Initial Program: In the event that
JMG does not complete the expenditure of $2,000,000.00 on the Initial Program by November 7, 2005, JMG 

  

			
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	 102204.1(3)
	  	 

 
shall reconvey, transfer and assign to Fellows the working interests conveyed to JMG hereunder. JMG shall forthwith execute all assignments and conveyance
documents in a form reasonably acceptable to Fellows conveying such interests and all conveyances shall be promptly recorded JMG shall have not reserved any overriding royalty in the Exploration and Development Lands. 
  
 ARTICLE IV 
  
 PROGRAMS 
  
 4.1 Programs. For purposes of this Agreement, “Program” shall mean an exploration or development
program for the drilling of one to ten wells, and all costs associated therewith, including any additional lease cost, surface lease and road costs, drilling and completion costs of the wells and all costs of facilities beyond the wellhead for the
wells in the Program, including but not limited to dehydration units, separators, tank batteries, pump jacks, meter stations, compressors and pipelines, which, subject to the equalization payment by JMB out in Subclause 3.2(a) will be shared in the
following proportions: 
  

				
	 JMG
	  	50.00	%
	 Fellows
	  	50.00	%
	 	  	
	

	 	  	100.00	%

  
 4.2 Program
Procedures. Subject to Section 3.3 respecting the Initial Program, JMG may propose Programs to Fellows, including the number and proposed locations of the wells and an AFE for the estimated Program costs. Fellows shall have ninety (90) days
from the receipt of the proposal to elect to participate in the Program. Notwithstanding Fellows’ approval of the overall AFE for a Program, costs will be cash-called on a well by well basis under the terms and provisions of the JOA.

  
 ARTICLE V 
  
 OPERATIONS AND THE JOA 
  
 5.1 Application of JOA to Exploration and Development Lands.
Upon the approval by Fellows of a Program, including the Initial Program, leases obtained, costs incurred and operations carried out under the Program shall be subject to the JOA. The JOA will be binding upon the Parties whether or not executed. JMG
shall be the Operator under the terms of the JOA. JMG may designate a contract operator of its choosing, subject to the approval of Fellows, acting reasonably, provided that the appointment of JED Oil Inc. as the contract operator is not subject to
the approval of Fellows. Any designation of a contract operator by JMG shall not relieve JMG of any liability or obligation as Operator for purposes of this Agreement nor prevent it from exercising any rights or fulfilling its obligations as
Operator under the JOA. 
  

			
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 ARTICLE VI 

 
 AREA OF MUTUAL INTEREST (“AMI”) 
  
 6.1 The Parties hereto create among themselves an Area of Mutual
Interest (“AMI”) covering the Exploration and Development Agreement as further set forth in Exhibit E. The AMI shall be in effect for a period of five (5) years from the Effective Date of this Agreement, or until this Agreement
terminates, whichever is earlier. The proportionate shares and percentage of interests which the Parties are entitled to purchase and acquire within the AMI are as follows: 
  

			
	 Company

	  	Working Interest Percent
in AMI Acreage

	 JMG
	  	50.00%
	 Fellows
	  	50.00%
	 	  	

	 	  	100.00%

  
 6.2 If, during
the duration of such AMI, either Party should acquire (“Acquiring Party”) any oil and gas lease, leasehold interest or mineral interest by any means including, but not limited to, purchase, top lease, farmins, farmouts, farmout options, or
acreage contributions, then the Acquiring Party shall immediately notify the Non-Acquiring Party, in writing, of such acquisition setting forth the nature of the interest acquired, all terms, provisions and contracts related to the acquisition
(along with copies of all documents relating to the acquisition or rights to earn a leasehold or mineral interest) and the price paid therefor. The Non-Acquiring Party shall have a period of thirty (30) days following the receipt of notice to elect
in writing to purchase at the Acquiring Party’s cost a proportionate share of such acquisition by remitting the required payment to the Acquiring Party during such thirty (30) day period. The Acquiring Party shall assign to the Party electing
to participate in the acquisition, it’s proportionate share of such acquired interest, subject to a like proportionate share of the costs and obligations relating thereto. If the interest is to be earned by drilling and/or shooting seismic, the
Non-Acquiring Party must ratify all appropriate agreements within the thirty (30) day period. Notwithstanding the preceding sentence, such thirty (30) day notice period may be reduced due to applicable contractual obligations or limitations (e.g.,
farmout terms or lease expiration dates), in which case the Non-Acquiring Party may be required to respond in a shorter time period as may be reasonably appropriate under the circumstances. If the Non-Acquiring Party turns down any interest, the
Acquiring Party shall hold such interest tree and clear of any further AMI obligations of this Agreement. 
  
 6.3 The Parties specifically agree that if a lease or interest covers land both inside and outside the AMI, the Acquiring Party must offer the
entire lease or interest to the other Party and if the other Party elects to acquire an interest in the lease or interest, it must agree to proportionately acquire an interest in the entire lease or interest notwithstanding the fact that a portion
of the lease or interest lies outside the AMI. 
  

			
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 ARTICLE VII

  
 FORCE MAJEURE 
  
 7.1 If either Party is rendered unable, wholly or in part, by reason
of the occurrence and continuance of an event of force majeure, to carry out its obligations under this Agreement, other than any obligation to make any payments, such Party shall give to the other Party prompt written notice of the force majeure
event, with reasonably full particulars, and thereupon the obligations of the Party giving the notice, so far as it is affected by the event of force majeure, shall be suspended during, but not longer than, the continuance of the force majeure
event, plus such reasonable further period of time, if any, required to resume the suspended operation. The affected Party shall use all reasonable diligence to remove the force majeure situation as quickly as practical; provided that, it shall not
be required to settle strikes, lockouts or other labor difficulty contrary to its wishes. “Force majeure” means an act of God, strike, lock-out or other industrial disturbance, act of the public enemy, war, blockade, public riot,
lightning, fire, storm, flood or other adverse weather condition, inability to gain access to leasehold lands, explosion, governmental action, governmental inaction, restraint or delay, unavailability of equipment or drilling rigs, unavailability of
workers or contractors, delays in securing necessary or advisable permits or permissions, or any other cause which is not reasonably within the control of the Party claiming the occurrence of an event of force majeure. 
  
 ARTICLE VIII 
  
 SEISMIC ACCESS 
  
 8.1 License for Existing Seismic. (a) If the license for
existing seismic is exclusive in nature, Seller recognizes and agrees that JMG will be granted an irrevocable, perpetual and exclusive license to existing seismic data related to the Exploration and Development Lands currently owned by Seller
(‘Fellows License”). Seller shall secure and grant a permanent and exclusive license to JMG to use this data, and shall have the data delivered to JMG’s offices in Calgary, Alberta, as a condition precedent to the obligation of JMG to
commence the Initial Program. The Fellows License issued pursuant to this Section 8.1 shall be on standard terms and conditions reasonably acceptable to JMG. 
  
 (b) If the parties mutually agree to license the seismic to a third party after completion of the Initial Program, then any proceeds or property received
as consideration for such subsequent license shall be allocated and paid 50% for the benefit of Seller and 50% for the benefit of JMG; provided, however, that if such third-party license or transfer of the seismic occurs prior to
JMG’s receipt of the recoupment payable to JMG under Section 3.2 (c), 3.10, 4.2 and 10.1 of this Agreement, then the proceeds or properties attributable to Fellows’ 50% allocation set forth above shall be paid to JMG and credited against
the production payment recoupment amount set forth in Section 3.10 hereof. 
  
 8.2 Acquisition of Additional Seismic Data. The cost of the acquisition of any additional seismic data in the Exploration and Development Lands (including any AMI interests) will be shared equally
by the parties. Any Party electing not to participate in any additional seismic data acquisition shall be excluded from receiving any copy or information regarding such additional shoot(s). 
  

			
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 ARTICLE IX 

 
 WELL INFORMATION 
  
 9.1 Well Information. For the drilling of any well in a
Program, the proposing Party will furnish, without cost to the non-proposing party, copies of all drilling reports, logs, drillstem test data and interpreted geological and geophysical maps relevant to the proposal. In addition, the proposing Party
must furnish the following: 
  

	 	•	Authorization of Expenditure (“AFE”), the amount of which shall be comparable to the cost of drilling similar wells in the area; 

  

	 	•	Drilling and geological prognosis for the proposed well; 

  

	 	•	Title opinion for the drillsite, or like title information; and 

  

	 	•	All farmouts, farmins and other contracts taken in support of a Program. 

  
 The above information is referred to as the “Well Information.” If the non-proposing Party has not received all of the Well Information, the 90
day time period for electing to participate in the proposed Program will not start to run until all the Program information is received by the non-Proposing Party. 
  
 9.2 Additional Data. The Operator shall furnish or cause to be furnished to the Parties a copy of all forms
furnished by the Operator to the state and federal governments and all production data on a monthly basis for each producing well. Such data shall include the volume of oil, water, gas and condensate produced plus pumper data (run tickets) and daily
production data if so requested by the Parties, and shall include all rights to floor access and information set forth on Exhibit E. The requirement to supply such information is in addition to the Parties’ rights under the JOA.

  
 ARTICLE X 
  
 RENTAL PAYMENTS, SELLER’S ASSISTANCE & ABANDONED WELL OPTION

  
 10.1 Rental Payments. Exhibit C
includes a schedule of the rental obligation dates relating to Exploration and Development Lands. All rental payments shall be paid by Seller through the Effective Date. After the Effective Date, the Operator will bill all the Parties for their
proportionate working interest share of rentals and minimum royalty, but JMG agrees to fund the payment of Seller’s proportionate share of such rentals and minimum royalty in return for a production payment from Seller, secured by 100% of
Seller’s existing or future production in the Exploration and Development Lands in the form of a production payment under the same terms as found in Section 3.4 until net revenue to Seller is sufficient to pay the full amount of Seller’s
proportionate share of any then currently due rental or minimum royalty. Thereafter, if a Party does not pay rentals in a timely fashion according to this Agreement and/or the JOA, and upon sufficient notice by the Operator, but in no event later
than ninety (90) days from invoice, the non-paying Parry forfeits its right, title and interest in the leasehold on which the rentals were not paid by the non-paying Party. JMG may make, but shall not be responsible to make, any 

  

			
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lease issuance/bonus payments and option payments related to the Exploration and Development Lands, but in the event JMG does not so elect, JMG’s right
with regard to the lands subject to the lease issuance/bonus payment or option payment shall terminate and said leases shall be excluded from this Agreement. JMG shall notify Seller of any election to forego payment of lease issuance/bonus payments
and/or option payments sufficiently in advance so that Seller may make such payments should it so elect. 
  
 10.2 Assistance from Seller’s Employees. To the extent that JMG has need of technical or operational assistance from Seller’s
employees, Seller shall make such employees as reasonably requested by JMG available at a rate of $50.00 per hour. Seller and its employees shall provide such services to JMG as independent contractors. Any work conducted pursuant to this Section
10.2 shall be initiated only upon receipt by JMG of a written statement showing the scope of the work to be performed by Seller’s employees, and the estimated time to be expended in the performance of that work. 
  
 10.3 Seller’s Right to Abandoned Wells. JMG shall
give written notice to Seller of JMG’s intent to plug and abandon any well. Seller shall have the right to take title to any such well if, within ten business days of receipt of a written notice of intent to abandon a well, Seller places in
escrow in favor of JMG an amount equal to the reasonable estimate of the cost, as determined by JMG, of (i) plugging and abandoning the well, (ii) standby costs for any drill rig related to the well accruing after the written notice of intent to
plug and abandon provided above, and (iii) any reclamation costs associated with the well or any related lease. Failure to place such funds in escrow within the ten business day period shall be deemed to be a waiver by Seller of any rights to take
over a well. 
  
 ARTICLE XI 
  
 CONFIDENTIALITY 
  
 11.1 Confidentiality. No confidential information resulting
from the conduct of operations hereunder shall be given or made available to any party not a Party to this Agreement unless otherwise agreed to by the other Party, except that this prohibition shall not apply to the Affiliate of any Party, any
prospective mortgagee, pledgee or assignee of any Party of any interest in a Lease or this Agreement, or to any third party not a Party hereto if such information required for the purpose of raising finance or arranging farmouts or sales of the
Lease(s), an interest in the Agreement as to all of the AMI or any designated portion thereof and/or any Program and/or required for the purpose of review by its consultants, provided, however, the recipient of any such information shall be required
to execute a Confidentiality Agreement. This confidentiality provision shall not apply to information or data that: (i) is now or hereafter becomes a part of the public domain other than as a result of a wrongful act or omission by JMG or Fellows;
(ii) is hereafter made known to one or more of such Parties by a third party who has the lawful right to make such disclosure and who has no other confidential obligation with respect to the information or data; (iii) is required to be disclosed
pursuant to any applicable law, rule, regulation, or order issued by any court or governmental agency having jurisdiction over such information and data, including the rules or regulations of any stock exchange on which any securities or such Party
or any Affiliate are traded; or (iv) is in the possession of a Party prior to the Effective Date of this Agreement. 
  

			
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 ARTICLE XII

  
 DISPUTE AND GOVERNING LAW 
  
 12.1 This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Colorado except the principles governing conflicts of law of such state. Either Party may enforce this contract in the federal or state courts of Colorado, and all Parties agree to and acknowledge that such courts shall
have the sole and exclusive jurisdiction over this Agreement. If any Party shall institute proceedings to enforce its rights under this Agreement, the prevailing Party in such proceedings (as determined by the tribunal) shall be entitled to recover
its costs and expenses (including attorneys’ fees and costs) incurred by it in addition to any other award or relief to ‘which such Party may be determined to be entitled. 
  
 ARTICLE XIII 
  
 CONFLICT WITH OTHER AGREEMENTS 
  
 13.1 JOA. In the event of any conflict between the terms of this Agreement and those of the JOA attached as Exhibit D or any other
Exhibits attached hereto, the terms of this Agreement shall prevail and control. If there is any conflict between the terms of this Agreement and the JOA attached as Exhibit D and any third party JOA, then the JOA attached as Exhibit D
and this Agreement will prevail among the Parties hereto. 
  
 13.2 Bridge Loan. This Exploration and Development and Conveyance Agreement, and all advances by JMG to Seller hereunder, is made expressly subject to and subordinate to the Bridge Loan Agreements, the recitals, and all
exhibits, attached as Exhibit H-l and Exhibit H-2. 
  
 13.3 Environmental Impact. The Parties agree that, the phrase “all wells on the Development Lands have been abandoned” shall be deemed to include the requirement for remediation of any environmental damage or
problems arising due to operations of any nature whatsoever carried out under this Agreement, with such remediation occurring to the standard required by the Regulations and by good industry practice. Where any such environmental damage or problem
arises after termination of this Agreement, the Parties shall remain liable for remedial costs and expenses so incurred in accordance with their respective Working Interests and each Party shall indemnify the other Parties with respect to the
indemnifying Party’s share thereof. This clause shall survive termination of this Agreement. 
  

			
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 ARTICLE XIV

  
 NOTICES 
  
 14.1 The notices provisions of the JOA will apply with respect to all
notices. 
  

			
	 To JMG

	 	 To Fellows

	JMG Exploration, Inc.	 	Fellows Energy, Ltd.
	Suite 2600, 500 – 4th Avenue S.W.	 	370 Interlocken Boulevard, Suite 400
	Calgary, Alberta T2P 2V6	 	Broomfield, Colorado 80021
		
	Fax Number: (403) 294-1107	 	Fax Number: (303) 327-1526

  
 ARTICLE XV

  
 INTERNAL REVENUE CODE ELECTION 
  
 15.1 Neither this Agreement nor the operations conducted pursuant
hereto are intended to create, and shall not be construed to create, a relationship of partnership or any association for profit between or among the Parties. The Parties elect to be excluded from the application of all the provisions of Subchapter
K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986, as permitted and authorized by Section 761 of the Code and the related regulations. In making such election, each Party states that any income can be adequately determined without the
computation of partnership taxable income. 
  
 ARTICLE XVI

  
 TERM OF THE AGREEMENT 
  
 16.1 The term of this Agreement shall commence upon the Effective Date
and shall continue for a term of five (5) years unless otherwise terminated early by JMG. After the date of termination, this Agreement shall be terminated except as provided herein. Each of the jointly owned leases in the will be operated in
accordance with and subject to the terms and conditions of the JOA attached as Exhibit D. The provisions of Articles II, III, IV, V, VII, XII, XIV, X, and XVII of this Agreement will continue thereafter for the life of the JOA as to the
leases and lands subject thereto. 
  
 ARTICLE XVII

  
 OTHER PROVISIONS 
  
 17.1 Counterparts. This Agreement may be executed in
counterpart with the same effect as if all the Parties had executed the original copy hereof and when executed by both Parties it shall be binding upon both Parties. 
  
 17.2 Successors and Assigns. This Agreement shall be binding upon the Parties hereto, their successors, and
assigns. 
  
 17.3 Entire Agreement. When executed by
the duly authorized representatives of Fellows and JMG, this Agreement shall constitute the entire agreement between the Parties regarding the Exploration and Development Lands and shall supersede and replace any and all 

  

			
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other writings, understandings, or memoranda of understanding entered into or discussed prior to the execution date hereof, other than the Bridge Loan
Agreements. 
  
 17.4 Amendments. This Agreement may
be amended, modified, changed, altered or supplemented only by written instrument duly executed by the Parties specifically for such purpose and which specifically refers to this Agreement. 
  
 17.5 Severability. In the event any portion of this Agreement
is declared by a court of competent jurisdiction to be invalid, illegal or unenforceable in a non-appealable order, such portion shall be deemed severed from this Agreement and the remaining parts hereof shall remain in full force and effect, as
fully as though such portion had never been a part of this Agreement. 
  
 17.6 Corporate Authority. The Parties each represent to the other, that as of the date of the execution hereof, each are corporations duly authorized, validly existing and in good standing under the laws of the states of their
incorporation and are qualified and authorized to do business in the State of Wyoming, and the State of Utah, and that all requisite corporate power and authority to execute, deliver and effectuate this Agreement have been duly obtained. 

 
 IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the Effective date, duly authorized. 
  

			
	JMG EXPLORATION, INC.
		
	Per:  	 	 /s/ Tom Jacobson

	 	 	 Tom Jacobson

	
	FELLOWS ENERGY, LTD.
		
	Per:	 	 /s/ George S. Young

	 	 	 George S. Young

  

			
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	 102204.1(3)
	  	 

  
 LIST OF EXHIBITS

  

			
	Exhibit

	  	 
		
	A-l	  	Carbon County, Utah Prospect
		
	A-2	  	Weston County, Wyoming Prospect
		
	B	  	Lease Liens & Encumbrances
		
	C	  	Rental Obligations
		
	D	  	Joint Operating Agreement
		
	E	  	Well Information
		
	F	  	Leases Excluded From General Warranty of Title
		
	G	  	Private Placement Memorandum
		
	H	  	Bridge Loan Documents
		
	I	  	Sample of Type of Seismic Data Subject to This Agreement

  

			
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	 102204.1(3)

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