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interest substantially to bring the total indebtedness of the UVWUA for the outstanding <br /> indebtedness to$2,060,804.88. On June 4, 1996,the UVWUA retired all debt against the <br /> construction and R&B contract. <br /> In September 2011 UVWUA entered into a WATER LEASE AGREEMENT with Delta <br /> Montrose Electric Association(DMEA) on two (2) Hydroelectric Facilities on the South <br /> Canal. Under this Agreement, DMEA shall own and operate these facilities and pay <br /> UVWUA 50%of the net profit from which the facilities generate annually. These funds <br /> are deferred to a Reserve Account until the debt is paid (20 years), at which time the <br /> UVWUA may enter into an OPTION AGREEMENT and become 50% owners in the <br /> facilities. Following is paragraph 5 from the WATER LEASE AGREEMENT. <br /> (a)If and only if(x)(A)the option described in paragraph 3 of the Option Agreement has <br /> expired without having been timely exercised or (B) such option having been timely <br /> exercised but the consents or releases or both described in clause(ii)of the first sentence <br /> of paragraph 3 of the Option Agreement not having been obtained within one(1)year of <br /> the exercise and(y)only after all Debt has been repaid,no later than February 15 of each <br /> year thereafter, DMEA will pay to the Water Users Association(or any person to whom <br /> the Users Association has assigned the Option Agreement in accordance with the terms <br /> thereof)as rent for the water provided hereunder(the "Rent") (i)upon the expiration the <br /> Option Period(as defined in paragraph 3 of the Option Agreement),a one-time payment <br /> of fifty percent(50%)of the balance in the Reserve Account,and(ii)and annual payment <br /> equal to fifty percent(50%) of the Net Profits for the just completed calendar year, with <br /> an accounting of how such payment amount was calculated; provided that, if the <br /> penultimate sentence of paragraph 3 of the Option Agreement is applicable and if the <br /> Water Users Association elect to utilize clause (x) of such sentence, in calculating the <br /> "fifty percent (50%) of the Net Profits:, the Profits for the just completed calendar year <br /> will be calculated with reference to the Revenues generated by the power sold pursuant to <br /> clause (x) of the penultimate sentence of paragraph 3 of the Option Agreement (and no <br /> Revenues generated by any other power generated by the Facilities for such year), such <br /> that the Rent payable to the Water Users Association shall only reflect all of the Profit,if <br /> any,on the power sold pursuant to clause(x)of the penultimate sentence of paragraph 3 <br /> of the Option Agreement(and no Expenses associated with any other power generated by <br /> the Facilities for such year. If the option described in paragraph 3 of the Option <br /> Agreement has been timely exercised and the consent or release or both described in <br /> clause(ii)of the first sentence of paragraph 3 of the Option Agreement is obtained within <br /> one (1) year of the exercise, DMEA will pay to the Water Users Association (or any <br /> person to whom the Water Users Association has assigned the Option Agreement in <br /> accordance with the terms thereof)as Rent,within thirty(30)days of the timely exercise <br /> of the option described in paragraph 3 of the Option Agreement but without duplicating <br /> any payment that is made under clause (ii)of the first sentence of this paragraph, a one- <br /> 7 <br />