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<br />AGREEMENT <br />THIS AGREEMENT, is made this ~fikday of May, 1989, between <br />the UPPER YAP•1PA ?aATER CONSERVANCY DISTRICT, a quasi- municipal <br />corporation organized under the laws of the State of Colorado <br />("District"), and the PEABODY COAL COMPANY, a Delaware <br />corporation ("Corporation"). <br />RECITALS <br /> <br />A. The District has constructed and will operate a dam and <br />reservoir known as Stagecoach Feservoir for the purpose of <br />supplying water to municipal, industrial and agricultural users <br />within its boundaries. The dam and reservoir will be located on <br />the Yampa (Bear) River upstream from the City of Steamboat <br />Springs, Colorado. The total storage capacity of the reservoir <br />will be approximately 33,275 acre-feet. Water will be stored in <br />Stagecoach Reservoir pursuant to water rights that have been <br />acquired by the District from Colorado-Ute Electric Corporation, <br />Inc. ("Colorado-Ute"). <br />B. It is anticipated that approximately 15,000 acre-feet <br />of storage capacity in Stagecoach Reservoir in excess of the <br />conservation and recreation pool will be allocated by the <br />District approximately as follows: municipal users - 2,000 <br />acre-feet; industrial users - 9,000 acre-feet; agricultural users <br />- 4,000 acre-feet. <br />C. The parties hereto have reached agreement for the <br />purchase by the Corporation of SO acre-feet annually of <br />Stagecoach Reservoir storage water allocated for municipal uses, <br />and the parties wish to execute this written Agreement setting <br />forth all of the terms and conditions of said agreement. <br />NOW, THEREFORE, in consideration of the payments to be made <br />by the Corporation as hereinafter provided, and in consideration <br />of the mutual covenants herein contained, the sufficiency of <br />which consideration is hereby expressly acknowledged, the <br />District and the Corporation hereby agree as follows: <br />STORAGE AND RELEASE OF WATER: <br />1.1 The District agrees, subject only to physical water <br />supply conditions, the administration of water rights by State of <br />Colorado water officials and the terms of this Agreement, to <br />store in Stagecoach Reservoir prior to July 15th of each calendar <br />year SO acre-feet of water for release for the Corporation's use <br />(by direct diversion, exchange or plan for augmentation, provided <br />that any such exchange or plan for augmentation shall not provide <br />for delivery, use or consumption of water outside the <br />geographical boundaries of the District) upon request between <br />July 15th and April 1st of the folLocaing year. The Corporation <br />shall be entitled to one use of the water delivered hereunder to <br />extinction, but shall not be entitled to the reuse or successive <br />use of such water. <br />i <br />16-i-39 <br />