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Water Supply Reserve Account - Grant Application Form <br />Form Revised May 2007 <br />4. Good Faith Negotiations: During the due diligence period, the <br />Franks shall only negotiate with weld RE-1 and Central regarding <br />the purchase of the FIDCO Shares. The Franks agree not to <br />market the FIDCO Shares to others and to cease discussions, if <br />any, with third parties for the sale of the FIDCO Shares. The <br />Franks shall not solicit or negotiate the sale of the FIDCo <br />Shares without Weld RE-1's and Central's written consent. <br />5. Contingencies: This transaction shall be contingent upon: <br />a. The parties ability to mutually agree to terms and conditions <br />within the Purchase Agreement and Recharge Agreement, <br />including but not limited to: <br />i. The Purchase Price of the FIDCO Shares, which will be <br />based on the amount of consumptive use attributable to <br />said shares; <br />ii. The existence of adequate historic use information and <br />dry up acres associated with the shares to facilitate <br />the filing of a change in use application with the water <br />court; <br />iii. The distribution of burdens and benefits under the <br />Recharge Agreement between Central and Weld RE-1, <br />including but not limited to operational <br />responsibilities and costs and augmentation credits <br />generated by recharge operations under the Recharge <br />Agreement; <br />b. An acceptable agreement between Central and Weld RE-1 under <br />which the FIDCO Shares will be transferred to Central and <br />augmentation will be provided by Central to Weld RE-1 for <br />certain well(s) owned by Weld RE-1 under the augmentation <br />plans decreed or to be decreed in Case No. 02CW335 and <br />03CW99; <br />c. All of Central's Policies, Rules and Regulations, its water <br />court decrees and the Water Conservancy Act as the same may <br />be applicable to this transaction; <br />d. Approval by the Central Board of Directors and the Weld RE-1 <br />Board of Directors to the extent necessary; and <br />e. The cooperation and agreement of any other parties, if <br />necessary, to complete the sale of the FIDCO Shares and the <br />construction and operation of the recharge facility. <br />20 <br />