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I THE STATE OF TEXAS LEASE OF CITY PROPERTY FOR COUNTY OF HAYS AGRICULTURAL USE KNOW ALL PERSONS BY THESE PRESENTS: This agreement ("Lease Agreement") pertains to the agriculture use of certain lands, located adjacent to City of San Marcos Surface Water Treatment Plant, situated in Hays County, Texas. The Lease Agreement is made and entered into by and between the City of San Marcos, a Texas municipal corporation, ("City") and Curby D. Ohnheiser ("Lessee"). I. DESCRIPTION OF LEASED PROPERTY I The Leased Property consists of 304 acres, more or less, of land which is depicted by the accompanying drawing attached as Exhibit B (not to include the 33 acres of the Surface Water Treatment Plant as outlined) and incorporated in this Lease Agreement and made a part for all purposes. Exhibit B is an approximation of the dimensions and acreage based on available information but is not based on a surveyor metes and bounds description. The City does not warrant the accuracy of the depiction. City leases such property to the Lessee in accordance with this Lease Agreement. II. TERM OF THE LEASE A. This Lease Agreement shall commence on December 15, 2006 and continue until December 14, 2009 a term of three (3) calendar years. B This Lease may be extended for one (1) additional three (3) year period, provided all terms and conditions shall remain in full force and effect except for the lease period being extended. This option, if exercised, is to be executed in the form of a Letter of Agreement, to be issued no sooner than ninety days (90) prior to expiration of this Lease, nor later than the final day of the lease period. This option to renew requires the mutual agreement of both parties. Refusal by either party to exercise this option to extend shall cause this Lease to expire on the original or mutually agreed upon date. The total period of this Lease, including all extensions as a result of exercising this option, shall not exceed a maximum combined period of ten (10) years. I C. The City reserves the right to terminate this Lease Agreement at any time by giving 90 days written notice to the Lessee. The notice shall state the date of the termination. In the event City terminates this Lease Agreement under the provisions of this paragraph, City shall account to Lessee for the fair market value, as determined by the City, of any agricultural products growing at the time of such termination less any damages or expenses incurred by City in tending, harvesting and marketing same, such accounting to occur at the time any such crops are marketed, and City agrees to market crops as promptly as it can reasonably be done; and, the City will refund to the Lessee a