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NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
<br />which is hereby acknowledged and in consideration of the terms and conditions of this
<br />Agreement, the Parties agree as follows:
<br />1. Agreement to Plus and Abandon the Well. Release the Easement Rights, Flush and
<br />Cleanse the Lines, and Partially Release the Easement. Upon execution of this Agreement by all
<br />Parties and upon timely receipt of the payment required by pazagraph 2 of this Agreement, KPK
<br />hereby agrees to plug and abandon the Well in accordance with paragraph 3 below; to release to
<br />Surface Owner all of KPK's rights, title and interest to its Easement Rights on the Glen Horton
<br />#2 Location in accordance with paragraph 4 below; to abandon the Lines in accordance with
<br />paragraph 5 below; and to partially release the Easement in accordance with pazagraph 6 below.
<br />2. Consideration. In consideration for KPK's agreement to plug and abandon the Well, to
<br />release to Surface Owner its Easement Rights, and to flush and cleanse the Lines in accordance
<br />with the terms and conditions of this Agreement, Surface Owner agrees pay KPK a sum of two
<br />hundred and fifty thousand (USA) dollazs ($250,000.00), payable to KPK at KPK's offices, the
<br />address of which is set forth above, nn or before the date of execution. Payment shall be made
<br />by cashier check or certified funds. Failure of the Surface Owner to make timely payment shall
<br />render this Agreement null and void, the 2007 SUA will remain in full force and effect as to all
<br />its provisions, and KPK shall have no obligation under this Agreement to Surface Owner.
<br />3. Plugsn~ and Abandonment of the Well. On or within 15 days after Surface Owner has
<br />fulfilled its obligations under paragraph 2 above, KPK shall apply to the Colorado Oil and Gas
<br />Conservation Commission (COGCC) to plug and abandon the Well. The time and manner for the
<br />performance by KPK to plug and abandon the Well shall be in accordance with this paragraph.
<br />a. Once the COGCC permit is issued to plug and abandon the Well, weather permitting,
<br />KPK shall within 90 days, plug and abandon the Well in accordance with rules and regulations
<br />ofthe COGCC, except as provided herein.
<br />b. This Agreement is being entered into in accordance with the requests of Surface
<br />Owner and for the convenience of Surface Owner to facilitate its plans for the development of
<br />the surface of the Property. Accordingly, and except as provided herein, Surface Owner, for
<br />itself and its successors and assigns, hereby waives the provisions of the Leans, if any, relating
<br />to the reclamation of locations of the Well and the related production facilities. Specifically,
<br />KPK will not be required to close, rip, grade, other than to level the location of the Weli if
<br />necessazy, or to re-contour the location of the Weli, access roads and the production facility for
<br />the Well as required by COGCC regulations absent a waiver or to remove culverts, alleviate
<br />compaction, or re-seed or re-vegetate any such areas. Notwithstanding the foregoing and only to
<br />the extent requred by applicable COGCC regulations, KPK will, at its wst and expense, clean
<br />up and/nr remove soils contaminateP: by KPK`s oherati~n :~f rho i~'ell. In order to aecamphsb
<br />the fore;~cirg, Surfa~~c t`?wre~s wail, aT nu t;cst to Surface t)wi,er, :~ssis{ t~°)i ire obtai~aulg
<br />~~ ar~ianees ~~rom the 5p~tkahle ("OCiCi" retlamati~?n rz~}uiresuents
<br />c !n a~:~:ordmtcr. to tle t,;CKi%t_' rules, KPK hereby a~~ees ~.:~ bear atl of the a~~sts
<br />incurred by KPK in plugging and abaa~doning the Wcll, provided however, Surface Owner
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