OSUM OIL SANDS CORP. OIL SANDS LEASE EXTENSION AGREEMENT. THIS AGREEMENT made effective the day of, 2010

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1 OSUM OIL SANDS CORP. OIL SANDS LEASE EXTENSION AGREEMENT THIS AGREEMENT made effective the day of, 2010 BETWEEN: WHEREAS: HER MAJESTY THE QUEEN IN RIGHT OF ALBERTA, as represented by the Minister of Energy (the Crown ) - and - OSUM OIL SANDS CORP., a body corporate incorporated under the laws of the Province of Alberta ( OSUM ) A. The Minister of Energy cancelled Oil Sands Lease No underlying Marie Lake on September 21, B. The Crown wishes to support OSUM in adapting its business model from reliance on Oil Sands Lease No by allowing for the term extension of other oil sands Primary Leases or Deemed Primary Leases in which OSUM has acquired or will acquire an interest, so as to provide sufficient time to evaluate the leases. NOW THEREFORE the parties agree as follows: 1 INTERPRETATION 1.1 In this Agreement, (a) Act means the Mines and Minerals Act, R.S.A. 2000, c. M-17; (b) Continued Lease means a continued lease as defined in the Regulation; (c) Deemed Primary Lease means a deemed primary lease as defined in the Regulation; (d) Designated Lease means a lease designated by OSUM under section 2 of this Agreement; (e) enactment means an enactment as defined in the Interpretation Act, R.S.A. 2000, c. I-8; (f) evaluate means taking action as described in section 3 of the Regulation towards attaining a minimum level of evaluation of the oil sands of a lease; 1 of 7

2 (g) Lessee means a lessee as defined in the Act; (h) Minimum Annual Work Commitment means the minimum number of sections to be evaluated each calendar year as specified in section 3.1. (i) Minimum Level of Evaluation means a minimum level of evaluation for each Primary Lease or Deemed Primary Lease as described in section 3 of the Regulation; (j) Minister means the Minister of Energy or such other Minister of the Crown as from time to time has responsibility for the subject matter of this Agreement; (k) Primary Lease means a primary lease as defined in the Regulation; (l) Regulation means the Oil Sands Tenure Regulation (AR 50/2000) and supporting Alberta Oil Sands Tenure Guidelines. 1.2 The Act, its regulations, other enactments and the Alberta Oil Sands Tenure Guidelines apply to this Agreement, including Designated Leases, unless the context requires otherwise. For greater certainty, references in the Act to under this Act shall be read and interpreted to include under this Agreement. 1.3 In the event of any conflict between the provisions of the Act, its regulations, other enactments and the Alberta Oil Sands Tenure Guidelines, the provisions of this Agreement will prevail to the extent of the conflict. 1.4 In this Agreement, a reference to the Act, the Regulation or any other enactment shall be construed as a reference to (a) the Act, the Regulation or other enactment, as amended from time to time, (b) any replacement of all or part of the Act, the Regulation or other enactment from time to time, and (c) any regulations, orders, directives or other subordinate legislation from time to time made under any enactment referred to in clauses (a) or (b), as amended, substituted or replaced from time to time. 1.5 Terms defined in the Act or Regulation (whether or not capitalized) have the same meaning in this Agreement, unless otherwise required by the context in which they have been used or unless otherwise defined in this Agreement. 1.6 Numerical references to section numbers are to the numbered provisions of this Agreement, unless otherwise specified. 1.7 Whenever the singular, masculine or neuter is used in this Agreement, the same will be construed as meaning plural or body politic or corporate and vice versa where the context so requires. 2 of 7

3 1.8 The headings of this Agreement are for convenience of reference only and do not affect the meaning or construction of this Agreement. 2 LEASE DESIGNATIONS 2.1 OSUM may acquire a legal or beneficial interest in Primary Leases or Deemed Primary Leases between the effective date of this Agreement and December 31, 2012 for designation under this section. 2.2 OSUM may designate in writing to the Minister, on or before December 31, 2012, Primary Leases or Deemed Primary Leases, up to a cumulative total of fifty-five thousand and forty (55,040) hectares or approximately two hundred and fifteen (215) sections, in which OSUM (a) is the Lessee, or (b) has acquired a beneficial interest under a farm-in agreement with a Lessee and the Lessee has, in that same agreement, (i) acknowledged having received a copy of this Agreement from OSUM, and (ii) agreed to assist OSUM in performing its obligations under this Agreement, where applicable. 2.3 In the case of a beneficial interest under section 2.2(b), (a) there is no minimum interest that OSUM must acquire, (b) OSUM must provide a copy of the farm-in agreement to the Minister when designating the Primary Lease or Deemed Primary Lease, and (c) the Minister may refuse to accept a designation if the Minister, acting reasonably, is not satisfied with the agreement made in respect of section 2.2(b)(ii). 2.4 If the Minister refuses a designation under section 2.3(c), OSUM may (a) amend the applicable farm-in agreement to the satisfaction of the Minister, or (b) designate alternate Primary Leases or Deemed Primary Leases not exceeding the cumulative total specified in section If OSUM holds less than a one hundred percent (100%) interest in a Designated Lease, as Lessee or as farmee under a farm-in agreement, the total number of hectares or sections of that Designated Lease shall count towards the cumulative total specified in section MINIMUM ANNUAL WORK COMMITMENT 3.1 For each full calendar year, OSUM shall evaluate a minimum of fifty percent (50%) of the balance of the unevaluated sections from the then Designated Leases or fifteen (15) sections, whichever is less, unless the Minister is of the opinion, based on information provided by OSUM, that the circumstances warrant waiving or reducing the minimum percentage or minimum number of sections for a particular calendar year. Such information must be provided as early as it is known by OSUM, but not later than the 1 st of November of that calendar year. 3 of 7

4 3.2 For the calendar year 2010 and a partial final calendar year resulting from the early termination of this Agreement under section 8.2, the Minimum Annual Work Commitment for that year shall be prorated based on the number of full months remaining in that year. 3.3 As provided for in the Alberta Oil Sands Tenure Guidelines, evaluation data for a particular section of a Designated Lease that predates the issuance of the Designated Lease may be used to satisfy the Minimum Level of Evaluation. 4 ANNUAL WORK PLANS 4.1 By the 1 st of November of each year, starting in 2010 and ending in 2019, OSUM shall submit an annual work plan to the Minister identifying which Designated Leases are going to be evaluated during the following calendar year and providing details describing when, where and how the Minimum Annual Work Commitment will be performed. 4.2 OSUM may deviate from an annual work plan submitted to the Minister provided that OSUM will achieve the Minimum Annual Work Commitment by the end of the year covered by the annual work plan. 4.3 OSUM must notify the Minister in writing of any deviation from an annual evaluation work plan within thirty (30) days of a deviation. 5 EVALUATION DATA 5.1 By the 1 st of May of each year, starting in 2011 and ending in 2021, OSUM shall provide all technical and financial data required by the Minister evidencing that the Minimum Annual Work Commitment has been completed for the previous calendar year. 6 LEASE EXTENSIONS 6.1 On an annual basis, if the Minimum Level of Evaluation of a Designated Lease has not been completed by the expiry date of the Designated Lease, the Minister shall extend the term of the Designated Lease by one additional year, provided that the Minimum Annual Work Commitments to that date have been satisfied for each calendar year that precedes the calendar year in which the Designated Lease expires. 6.2 If, in the opinion of the Minister, OSUM is unable to complete the Minimum Annual Work Commitment due to action taken by the Government of Alberta, any Designated Lease that could not be evaluated as a result of that action shall be (a) extended by one additional year, in the case of work that cannot be completed during a calendar year, or (b) substituted for another Primary Lease or Deemed Primary Lease of equivalent area, as determined by the Minister, in the case of work that cannot be completed during the remainder of the term of this Agreement. 6.3 Notwithstanding sections 6.1 and 6.2, a Designated Lease must not be extended by the Minister beyond December 31, of 7

5 7 DIVESTITURE 7.1 OSUM shall not, without the prior written consent of the Minister, such consent not to be unreasonably withheld, (a) assign this Agreement, or (b) sell, assign, transfer, farm-out or otherwise divest more than a fifty percent (50%) legal or beneficial interest in a Designated Lease on a cumulative basis. 7.2 If OSUM sells, assigns, transfers, farms-out or otherwise divests any legal or beneficial interest it holds in a Designated Lease, (a) the Minimum Annual Work Commitment shall not be adjusted, (b) the cumulative total specified to in section 2.1 shall not be adjusted, and (c) in the case of OSUM having divested its entire legal or beneficial interest, the term of the Designated Lease shall not be extended under this Agreement after the effective date of the divestiture. 7.3 If the Minister does not provide a written response within thirty (30) business days of receiving a written request for consent from OSUM, consent will be deemed to have been provided by the Minister. 8 EXPIRY & TERMINATION 8.1 This Agreement expires on May 31, OSUM may terminate this Agreement with written notice of one (1) month to the Crown. 9 INDEMNIFICATION 9.1 OSUM shall indemnify and hold harmless the Crown and the Crown s employees, officers and agents from all third party claims, demands, actions or costs, including legal costs on a solicitor-client basis, related to, occasioned by or attributable to OSUM arising from entering into agreements with third parties in respect of this Agreement. 10 NOTICES 10.1 Any notice, consent, approval, report, document or other communication authorized or required to be given pursuant to this Agreement must be in writing to be effective and will be effective when delivered by hand, registered mail or facsimile transmission to the following address: (a) In the case of the Crown: Oil Sands Operations Division Department of Energy 14 th Floor, North Tower, Petroleum Plaza Street 5 of 7

6 Edmonton, Alberta T5K 2G6 Attention: Branch Head, Operations Fax: (780) (b) In the case of OSUM: OSUM Oil Sands Corp. Suite 300, 1204 Kensington Road N.W. Calgary, Alberta T2N 3P5 Attention: Fax: 10.2 Either party may change its address under section 10.1 at any time by giving written notice of that change to the other party. 11 SURVIVAL OF TERMS 11.1 Notwithstanding any other provision of this Agreement, the following sections of this Agreement shall survive the termination of this Agreement and shall continue to be binding on the parties until their requirements have been fully met: (a) Section 1 (b) Section 9 Interpretation Indemnification 12 GENERAL (c) Section 11 Survival of Terms 12.1 This agreement is made and entered into pursuant to section 9 of the Act If any Designated Lease becomes a Continued Lease, such lease shall no longer be considered a Designated Lease for the purpose of this Agreement as of and from the date that such Continued Lease became effective Each of the parties will from time to time do all further acts and execute and deliver all further documents as are reasonably required to fully perform this Agreement In relation to and for the purposes of or referred to in this Agreement, the Minister and each person authorized in writing to act on behalf of the Minister, is authorized to make decisions, give directions and orders and do any acts or things that the Crown or the Minister may do, or is required to do, as referred to in this Agreement If any provision of this Agreement is deemed to be or becomes void, illegal, invalid or unenforceable, it may be severed without affecting the validity and enforceability of the other provisions in this Agreement. 6 of 7

7 12.6 A waiver of any right, power or remedy under this Agreement (a) must be in writing signed by the party granting it, (b) is only effective in relation to the particular obligation or breach in respect of which it is given, and (c) is not to be taken as an implied waiver of any other obligation or breach or as an implied waiver of that obligation or breach in relation to any other occasion The terms of this Agreement express and constitute the entire agreement among the parties and no implied covenant or liability of any kind on the part of either party is created or will arise This Agreement shall be construed and interpreted in accordance with the laws in force in the Province of Alberta. The courts of the Province of Alberta shall have exclusive jurisdiction over all matters arising in relation to this Agreement and each party submits to the jurisdiction of those courts This Agreement will enure to the benefit of and be binding upon each party and its successors and permitted assigns This Agreement shall not be varied in its terms or amended by oral agreement or otherwise other than by an instrument in writing dated subsequent to the date of this Agreement and executed by a duly authorized representative of each party This Agreement may be executed in separate counterparts, each of which shall be deemed an original, and all such executed counterparts together shall constitute one and the same agreement. IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written. HER MAJESTY THE QUEEN in right of Alberta, as represented by the Minister of Energy OSUM OIL SANDS CORP. Per: Name: Per: Name: Title: Title: 7 of 7