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10. Charge. In consideration of the water leased under this Agreement, including any <br /> Option Water,Lessee agrees to pay Pueblo Water a charge ofMleeer acre-foot of water for <br /> the quantity of water identified in paragraph 2 above. The that the water leased <br /> hereunder is on a "take or pay" basis. Accordingly, Lessee must pay the charge for all leased <br /> water,whether or not said quantities of water are actually taken by Lessee or are required for use <br /> by Lessee. Likewise, Pueblo Water agrees to make the water available for delivery throughout <br /> the term of this Agreement subject to paragraphs 13 through 16 below. The failure of Lessee to <br /> take delivery of the full quantity of water contracted for and paid for in any given Contract Year <br /> does not entitle Lessee to a refund of any sums paid or to receive any portion of such unused <br /> water in an subsequent Contract Year. <br /> 11. Payments. <br /> 11.1. On the Effective Date of this Agreement, Lessee must pay to Pueblo Water the first <br /> Contract Year payment of_ <br /> 11.2. Additional payments in an amount equal to the Contract Year quantity of water <br /> described in paragraph 2 multiplied by the applicable per-acre-foot charge as determined <br /> under paragraphs 10 and 12 ate due from Lessee to Pueblo Water on the first day of each <br /> Contract Year thereafter for the term of this Agreement. <br /> 11.3. On the Effective Date of this Agreement, Lessee will also pay to Pueblo Water a <br /> one-time non-refundable fee of n consideration of legal and administrative costs <br /> incurred by Pueblo Water for tht ement. <br /> 11.4. Delinquent balances will be subject to a late payment charge of 1.5% per month <br /> on the unpaid balance. No water will be delivered under this Agreement if Lessee has an <br /> unpaid balance. <br /> 12. Escalation. The charge for water for the second and all subsequent Contract Years of <br /> this Agreement will be annually adjusted based upon the percentage increase, if any, over the <br /> previous calendar year in Pueblo Water's water rates for its general customers for treated water. <br /> For example, if the percentage increase for the second Contract Year is five percent, then the <br /> price for the second Contract Year will be per acre-foot, and if the percentage increase <br /> for the third Contract Year is also five per the price per acre-foot for the third Contract <br /> Year will be a five percent increase over the second Contract Year price. Pueblo Water <br /> will give to written notice before the end of the Contract Year of any rate increase <br /> pursuant to this paragraph that will take effect in the next Contract Year. <br /> 13. Pueblo City Charter Provision. This Agreement involves the use of water outside the <br /> territorial limits of the City of Pueblo and is specifically limited by the provisions of the City <br /> Charter governing such use.The City Charter provides,among other things, that: "The Board of <br /> Water Works shall have and exercise all powers which are granted to cities of the first class by <br /> the Constitution and Laws of the State of Colorado, except the power to levy and collect taxes <br /> directly or indirectly. Surplus water may be supplied to territories outside the City until same is <br /> needed by the inhabitants of the City." <br /> Page 3 of 7 <br />