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WATER LEASE AGREEMENT <br />(Longer than one year) <br />THIS AGREEMENT is entered into this 11 day of 2014, to be effective <br />September I, 2014, by and between VALC'O. INC. (hereinaftArrefjred to as "Lessee"), whose <br />address is 12753 S. Parker Rd., #203, Parker, Colorado, 80134, and the Upper Arkansas Water <br />Conservancy District through its water activity enterprise, known as Upper Arkansas Water <br />Activity Enterprise (hereinafter referred to as "District''). whose address is P.O. Box 1090. <br />Salida, Colorado, 81201. <br />RECITALS <br />A. Lessee needs a temporary supply of replacement water to meet out -of -priority <br />depletions. Lessee desires for this water to be made available in the Arkansas River basin from <br />the District's water supplies in Twin Lakes Reservoir. Pueblo Reservoir or from other District <br />owned or controlled sources in order to meet the requirements of a court or administratively <br />approved substitute supply plan, replacement plan, or similar plan for the replacement of out -of - <br />priority depletions ("Lessee's Replacement Plan"). <br />The location of the Lessee's operations is ("Place of Need" y Canon City East Pit located in <br />Section I, TI 9S. R70W, Fremont County, Colorado. <br />B. The District owns, leases, or controls fully consumable water supplies from <br />various sources, including but not limited to water attributable to shares of stock in Twin Lakes <br />Reservoir and Canal Company (collectively "District Consumable Water'). <br />C. Lessee desires to lease a portion of such water from the District for use in <br />Lessee's Replacement Plan; and the District is willing to lease such water to Lessee under the <br />terms and conditions hereof. <br />NOW, THEREFORE, in consideration of the mutual promises contained herein and other <br />good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, <br />the parties agree as follows: <br />I. Lease of Water. Lessee shall lease from District, and District shall lease to <br />Lessee, a minimum of 7 acre-feet and a maximum of 12 acre-feet per year of District <br />Consumable Water for a period of 5 years. The 7 to 12 acre-feet per year shall be both the <br />minimum and the maximum quantity of water to be paid for and delivered under this Lease for <br />each of the 5 contract years. Lessee's failure to take delivery of its full leased amount ofwater in <br />any one lease year shall not entitle Lessee to more than 12 acre-feet in any subsequent year or to <br />an extension of the terns of this lease. <br />Long -terns Lease 3'16 10 <br />Valco--'anon Cite East Pit <br />Page 1 of 5 <br />