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Canal, and new pump station at Highline Lake or at another suitable location ("Pumping Piant") which, when operated and maintained as a system, will reduce the Canal's annual diversion requirements and contribute to the goal of improving flow conditions in the 15 Mile Reach of the Colorado River for the recovery of endangered fish. The Improvements will be made on Grand Valley Project features that are owned by the United States and are located within the Grand Valley Project service area, Grand Junction, Colorado. REC�nnATION constructed the Grand Valley Project in accordance with the Act of June 25, 1910 (36 Stat. 835), which was approved by the President on January 5, 1911. Funding for capital improvements under the Recovery Program is to be cost-shared among federal, state and private sources. The state and private cost-share combined is to be up to 20% based on the amounts discussed in section 5.4 of the "Final Recovery Implementation Program for Endangered Fish Species in the Upper Colorado River Basin" dated September 29, 1987. In the proposed federal long-term funding legislation (S. 1544 and H.R. 2348), up to 17% in state and private cost-share is expected. F. At its November 25-26, 1996 Board meeting, the CWCB approved a grant of up to $1,250,000 (i.e., approximately 15% of the total estimated cost of $8.4 million to plan, design, do National Environmental Policy Act compliance, construct, operate and maintain the Improvements) to the U.S. Fish and Wildlife Service from the Construction Fund Fish and Wildlife Resources Account (for purposes of this contract, said grant shall be called the Improvements Grant), provided that any unneeded or unused portion of these funds would be returned to the Construction Fund Fish and Wildlife Resources Account if the Recovery Program ceases to be in effect or to serve its intended purposes. The purpose of the Improvements Grant is to provide the required 15% non-federal cost share for the Improvements. G. Subsequently, and pursuant to Senate Bill 97-008, Section 11(a), the STATE was authorized to make a nonreimbursable grant in an amount of up to $1,250,000 from the Fish and Wildlife Resources Account of the CWCB Construction Fund to the U.S. Fish and Wildlife Service for the Improvements, under the condition that any unneeded or unused portion of these funds will be restored to the Fish and Wildlife Resources Account if the Recovery Program ceases to be in effect or to serve its intended purposes. H. At its January 1998 Board meeting, the Board approved amending the authorization for this grant to include participants of the Colorado River Recovery Implementation Prngram as grant recipients. In the 1998 Colo. Sess. Laws, Ch. 175, Section 13, the General Assembly amended said authorization to delete the U.S. Fish and Wildlife Service and add "participants of the Colorado River Recovery Implementation Program." NOW THEREFORE, in consideration of the mutual and dependent covenants contained herein, the Parties agree as follows: 1. Operation, maintenance and replacement of IMPROVEMENTS. The AssociAT�oN shall utilize the Improvements Grant in conjunction with other funds (i.e. Recovery Program funds from Reclamation) available to the ASSOCIATION to cause the operation, maintenance and replacement of the Improvements in accordance with the Improvementsplans and specifications developed and approved by Reclamation and the ASSOC�AT�oN, which plans and specifications are incorporated herein by reference. 2. Disbursement of funds. The STATE's disbursement of the Improvements Grant to the Associa,Ti�N shall be in one lump sum of $1,250,000 (one million two hundred fifty thousand dollars) and shall be paid within twenty (20) days of the date of award of the first Improvements construction contract, provided that the STATE has approved the institution into which the Page 2 of 11