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RECEIVED <br /> MAY 2 3 2019 <br /> WATER RESOURCES <br /> STATE ENGINEER <br /> consistent with good beneficial use practices utilizing proper accounting techniques arwo <br /> stewardship of the water to maximize the beneficial use of the water delivered to AGUA <br /> or as may be authorized by the Division Engineer or the Water Court, Water Division 2. <br /> AGUA shall not attempt to sell, transfer, encumber, lease, convey or otherwise dispose <br /> of all or any portion of the subject water rights approval. If AGUA, its agents, or <br /> employees responsible for discharging the obligations under this lease have not <br /> properly satisfied such obligations, Stonewall may declare an event of default and <br /> choose among the remedies set forth in Paragraph 5 below. <br /> A. Use of subject water rights by Stonewall. The Parties agree and <br /> acknowledge that all or a portion of the subject water rights have recently been used, <br /> including during the 2017-18 and 2018-19 water years, as a source of augmentation <br /> water for pumping from wells owned and controlled by Stonewall and augmented by <br /> AGUA under its Rule 14 plan for augmentation, or under an approved Substitute Water <br /> Supply Plan as requested by Stonewall. The Parties further agree and acknowledge <br /> that administrate policies of the Division Engineer's Office for Water Division No. 2 have <br /> disqualified such Stonewall-owned wells from any further participation in AGUA's Rule <br /> 14 plan, and that therefore Stonewall has sought approval of an administratively <br /> approved Substitute Water Supply Plan and the pending Plan for Augmentation in Case <br /> No. 16CW3094, to allow Stonewall's continued use of the Stonewall Wells, and that a <br /> source of replacement/augmentation water under any such administratively or judicially <br /> approved augmentation plan is anticipated to be the Stonewall's Excelsior Shares. The <br /> Stonewall Shares shall be available for use in such SWSP and/or plan for augmentation <br /> consistent with the terms and conditions of this Lease Agreement, and the Parties shall <br /> cooperate in resolving any issues which may develop in this regard. To the extent <br /> Stonewall may not utilize the entirety of the water attributable to the Stonewall Share's <br /> in its own SWSP and/or Plan for Augmentation; AGUA shall have the right to utilize the <br /> Stonewall Shares Itself for replacement or augmentation purposes. It is anticipated that <br /> Stonewall shall pay to AGUA the same amounts, to the extent in excess of AGUA <br /> membership dues, paid by other AGUA members for water provided by AGUA in its <br /> Rule 14 plan, under other SWSP approvals, or under other plans for augmentation for <br /> water actually provided to Stonewall by AGUA for such purposes. The Parties shall <br /> cooperate in any such administrative or judicially approved plans, and Stonewall shall <br /> provide AGUA with all notice practicable should it be anticipated that the Stonewall <br /> Shares will be unavailable for AGUA's use under this Lease Agreement. <br /> B. Notwithstanding the foregoing, to the extent AGUA may desire to <br /> utilize all or a portion of the Stonewall shares for provision of augmentation or <br /> replacement supply, or for other lawful purposes, to non-members of AGUA, AGUA <br /> shall first provide Stonewall with written notice of the party seeking to utilize the <br /> Stonewall Shares, and the amount per acre foot such party proposes to pay AGUA for <br /> such use. Stonewall shall have a right of first refusal on any such transaction, and shall <br /> at its discretion be entitled to reserve the Stonewall Shares for its own use to the extent <br /> AGUA wishes to utilize such Stonewall Shares for provision of water to non-members of <br /> 3 <br />