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<br />WATER LEASE AGREEMENT <br />This Water Lease Agreement ("Agreement"), is made and entered into as of <br />the _ day of , by and between Basin Resources, Inc., and <br />North Central Energy, Inc., both of which are Colorado corporations (collectively, <br />"NCE"), and Picketwire Processing LLC, a Colorado limited liability company <br />("Picketwire"). <br />RECITALS <br />A. A.P. Maxwell Development Company, tLC ("Maxwell") an Indiana <br />limited liability company, has entered into a Purchase Agreement with NCE of even <br />date herewith; <br />B. Pursuant to the Purchase Agreement, NCE is required to lease to <br />Picketwire certain Water Rights identified in the following Decrees (the "Water <br />Rights") on the terms set forth herein: <br />Decree No. Date <br />• 83-CW-128 September 16, 1985 <br />83-CW-129 September 16, 1985 <br />83-CW-130 September 16, 1985 <br />C. Unless specifically defined in this Agreement, the capitalized terms <br />used herein shall have the meanings specified in the Purchase Agreement. <br />NOW, THEREFORE, in consideration of the sum of and other good <br />and valuable consideration, the parties hereby mutually covenant and agree as <br />follows: <br />1. Grant of Lease. NCE hereby leases to Picketwire the right to divert and <br />use up to 250 acre feet of water per calendar year from the Water Rights on the terms <br />and conditions set forth herein, including the right to use all facilities necessary to <br />direct and use the Water Rights and all rights granted in the referenced water <br />decrees and anv permits necessarv to use the Water Rights. NCE further leases to <br />Picketwire the right to divert and use the water rights owned by NCE and identified <br />in the decree in Case i~1o. 83CW131, Water Division No. 2, dated September 16, 1985 <br />(the "83CW131 Water"), upon prior written notice to NCE, provided that said lease <br />of water may only be exercised if Picketwire requires, but is unable to divert 250 acre <br />feet of water under the Water Rights in any given year, and provided chat such <br />