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111111111111111111111111111111111111111 inui ilii I1Ii <br />3591169 11/21/2008 02:181' Weld County, CO <br />6 of 22 R 111.00 D 0.00 Steve Moreno Clerk & Recorder <br />S. DRILLING AND COMPLETION OPERATIONS. <br />KMG shall endeavor to diligently pursue any drilling operations to minimize the total <br />time period and to avoid rig relocations or startup during the course of drilling. ASCI waives <br />any objections to continuous (i.e., 24-hour) drilling operations. <br />9. SHUT-IN OF WELLS. <br />In the event ASCI interferes with KMG's operations on the Property which result in <br />KMG shutting -in or prevents KMG from repairing or returning to production one or more of the <br />Wells, then ASCI shall pay to KMG as liquidated damages (actual damages being difficult to <br />ascertain), $5,000 per day per Well until such Well(s) are returned to production. Both parities <br />agree that such amount is a reasonable estimate of actual damages which would be difficult to <br />calculate with certainty. ASCI shall provide a bond in the amount of $50,000 as security for <br />payment of such liquidated damages. Such bond shall be in form and from bonding agents <br />acceptable to KMG, shall name KMG as an obligee and shall expressly permit KMG direct <br />access to and recourse against the issuer of such bond. Copies of such bond shall be provided for <br />KMG's approval not less than 30 days prior to the commencement of mining on the Property. <br />The requirement for such bond shall end upon the mutual agreement of the Parties or the <br />termination of this Agreement. <br />10. GOVERNMENTAL PROCEEDINGS. <br />So long as there is no default under this Agreement, ASCI shall not oppose KMG in any <br />agency or governmental proceedings, including but not limited to the COGCC, Weld County, or <br />other governing body proceedings, related to KMG's operations on the Property, including but <br />not limited to drilling, workovers, well deepenings and recompletions, provided that KMG's <br />position in such proceedings is consistent with this Agreement. <br />11. DEVELOPMENT PLANS. <br />ASCI has provided herewith copies to KMG of its Mining Permit, and the engineering <br />structural report prepared in connection with the Mining Permit (the "Plans"). KMG <br />acknowledges receipt of said Plans and has no objections to said Plans as approved by the <br />DRMS. This acceptance by KMG in no way waives KMG's rights in this Agreement or <br />obligations of ASCI under the terms of this Agreement. ASCI acknowledges that KMG may <br />conduct oil and gas activities within the applicable Oil and Gas Operations Areas as provided <br />herein and shall not oppose KMG before any agency or governmental proceeding if such oil and <br />gas activities are proposed and carried out in accordance with the terms of this Agreement. <br />12. LIMITATION OF LIABILITY, RELEASE AND INDEMNITY. <br />a. No party shall be liable for, or be required to pay for, special, punitive, <br />exemplary, incidental, consequential or indirect damages to any other party for activities <br />undertaken within the scope of this agreement; <br />b. Except as to claims arising out of pollution or environmental damage (which <br />claims are governed by Section 13 below) or out of other provisions of this Agreement (which <br />6 <br />Surface Use Agreement <br />