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                                                                    EXHIBIT 10.7

                        FIRST AMENDMENT TO 1998 AGREEMENT

         WHEREAS, the Farmers Reservoir and Irrigation Company ("FRICO") and
Eldorado Artesian Springs, Inc. ("Eldorado") (collectively the "Parties") on
December 8, 1998 entered into an agreement with respect to, inter alia, the
acquisition and use of one unit of the Windy Gap Project water from the Northern
Colorado Water Conservancy District, now owned by the Superior Metropolitan
District ("1998 Agreement"); and

         WHEREAS, paragraph 2 of the 1998 Agreement provides as follows:

                  Any such agreement between FRICO and the Superior Metropolitan
                  District ("FRICO/Superior Agreement") must be concluded within
                  ninety (90) days of this Agreement, unless such time period is
                  extended by mutual agreement of the parties. The terms of the
                  FRICO/Superior Agreement must be fully acceptable to Eldorado;
                  or the$10,000.00 initial payment will be refunded to Eldorado
                  and this Agreement will terminate.

         WHEREAS, the Parties, as of this date, are awaiting confirmation of the
transfer of one unit of Windy Gap Project water from the Superior District; and

         WHEREAS, the Parties desire to provide for an alternative water supply
for Eldorado in the event that the Windy Gap Project water is not available from
Superior; and

         WHEREAS, by virtue of the agreement between FRICO and Superior, other
water is being made available to FRICO which can be incorporated into a program
for augmentation for Eldorado.

         NOW, THEREFORE, it is agreed as follows:

         1. FRICO is the recipient of the water allocated to Superior on
approximately 100 shares of FRISCO stock owned by the Superior Metropolitan
District.

         2. FRICO will issue one additional share of stock presently held in the
FRICO treasury which stock will be entitled to the special presumptive
allocation of 100 acre-feet of consumptive use water. The presumptive allocation
of 100 acre-feet shall be divided into ten options, each for 10 acre-feet of
consumptive use water, and the water represented by each option will be
delivered to or for the benefit of Eldorado through a plan of augmentation.

         3. Within thirty (30) days after execution of this Agreement, FRICO and
Eldorado will proceed with an application for change of water right and for a
plan of augmentation using water identified in paragraph 1, above, in the same
manner as set forth in the FRICO/Eldorado agreement to which this Amendment is
attached. Also upon closing, Eldorado shall pay FRICO a non-refundable
$10,000.00 for the options. Upon entry of a decree acceptable to FRICO and



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Eldorado, Eldorado may exercise as many of the options as it desires. The
exercise price for each option shall be $91,600.00 for each 10 acre-feet of
consumptive use. The option price for each 10 acre-foot option not exercised in
any given year will be increase by nine percent (9%) each year, beginning with
the date of the entry of the acceptable decree. Eldorado can exercise the
options at any time, provided, however, that the exercise of the option rights
for unexercised options shall all expire on the tenth anniversary of the entry
of the decree. In the event that the Water Court determines that more or less
consumptive use is available than 100 acre-feet per year, there may be more or
less than 10 acre-foot options. In addition, there may also be partial 10
acre-foot options in the event that the amount of consumptive use determined to
be available by the Water Court is not evenly divisible by 10. For example, if
the Water Court determines that 93 acre-feet per year of consumptive use are
available, there would be nine 10 acre-foot options and one 3 acre-foot option.
The price of any partial 10 acre-foot option shall be based on the price of
$9,160.00 per acre-foot as of the date of entry of the decree, subject to
increase of nine percent (9%) each year as provided above.

         4. Eldorado shall have the right to proceed with the acquisition of the
Windy Gap Project water as set forth in the attached agreement as it may, from
time to time, be amended. Alternatively, at Eldorado's election, the application
may proceed with the Marshall Lake water which is the subject of this Amendment
under the terms of this Amendment, or may proceed with both the Windy Gap
Project water and the Marshall Lake water which is the subject of this
Amendment, in which case the payment schedules of both this Amendment and the
provisions of the FRICO/Eldorado Agreement shall be applicable.

         5. In the event that a mutually acceptable decree is not obtained,
Eldorado shall have the right to terminate this agreement, each party being
released from all terms and provisions of this agreement, and each party shall
bear its own cost and expenses incurred, provided that FRICO shall be entitled
to retain the $10,000.00 paid by Eldorado in consideration of the options.

         6. In addition to the payments as set forth above, Eldorado shall pay
to FRICO the amount equal to the annual stock assessment on four (4) shares of
the stock allocated for water delivery purposes to the Marshall Lake Division
for each 10 acre-foot option exercised by Eldorado. Said assessment shall be
paid in the same manner as stock assessments in the company generally.

         Dated this 11th day of July, 2000.


             [Signatures of the parties are on the following page.]



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ATTEST:                                THE FARMERS RESERVOIR AND
                                       IRRIGATION COMPANY



By: /s/ Mary E. Hanssen                By: /s/ Pete Roskop
   -------------------------------        --------------------------------
   Secretary                              Pete Roskop, President


ATTEST:                                ELDORADO ARTESIAN SPRINGS, INC.



By: /s/ Kevin Sipple                   By: /s/ Douglas A. Larson
   -------------------------------        --------------------------------
   Secretary                              Douglas Larson, President