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<br />Ms. Illian, Contract Manager <br />Page 3 <br />April 6, 2004 <br /> <br />I can also assure you that there are no prOVISIOns in the Borrower's Articles of <br />Incorporation or By-Laws or any state or local law that prevent this contract from binding <br />the Borrower provided that it is deemed by the employees of the Colorado Water <br />Conservation Board that the Minutes of the annual shareholders meeting are sufficient to <br />enable the Board of Directors to execute the deed of trust and security agreement. <br /> <br />At present I am not able to express an opinion as to whether the deed of trust will be valid <br />and binding against the borrowers entered into by the Colorado Water Conservation <br />Board until the question of the authorization of the shareholders is resolved and I am also <br />unable to express an opinion as to whether the resolution of the borrower authorizing the <br />execution and delivery of the deed of trust was duly adopted by the borrower's board of <br />directors and or shareholders since apparently the Notice of the Annual Meeting did not <br />specifically set forth that authorization would be sought to encumber the property of the <br />Terrace Irrigation Company as appears to be required by the By-Laws. <br /> <br />I will appreciate receiving a response from you to this letter in writing as to whether the <br />employees of the Colorado Water Conservation Board deem what is set forth in the <br />minutes of the annual meeting to be sufficient to enable the Board of Directors to execute <br />the Note and Security Agreement essentially encumbering the property of the Company. <br /> <br />If the foregoing gives rise to any questions feel free to contact me. <br /> <br />Very truly yours, <br /> <br /> <br />FDV/ls <br /> <br />Enclosures <br /> <br />cc: Rodney Reinhardt <br />