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<br />- . <br /> <br />., - <br /> <br />CARLSON. HAMMOND & PADDOCK <br /> <br />Mr. Nick <br />December <br />Page 2 <br /> <br />Ioannides <br />16, 1988 <br /> <br />held on December 8, 1988, at which the officers were authorized and <br />directed to execute the contr<lct will not become final until <br />approved by the Board at a subsequent meeting of the Board at which <br />those minutes are read and considered. However, Mr. John Carlson <br />of our firm personally attended the Board meeting of December 8, <br />1988, and observed the Board's <lctions. <br /> <br />We are further of the opinion that the Board of Directors, <br />pursuant to the authorization ot the stockholders at their annual <br />meeting dated December 1, 1987, duly obtained in accordance with <br />XI of the Company's bylaws, haa the authority to enter into the <br />Contract. The Company is a Colorado mutual di tch company, <br />organized pursuant to C.R.S. 97-42-101 et seq.; as such, it is not <br />an entity controlled by the provisions of Article XI, Sections 1 <br />and 6 of the Colorado Constitution. The authorization from the <br />stockholders is reflected in th~ certified copy of the minutes of <br />the December 1, 1987, stockholders meeting, attached as Exhibit A. <br /> <br />We are further of the opinion that there are no provisions in <br />the Company's corporate charter, bylaws, or the laws of the State <br />of Colorado under which it is organized that prevents this Contract <br />from binding the Company; and that the Contract will be valid and <br />binding against the entity it entered into by the State of <br />Colorado. In this connection, we note that the Company, as a <br />mutual ditch and reservoir company, fixes its annual assessments <br />only by vote of its stockholders at annual meetings of the <br />stockholders. Only in the event that no assessment is established <br />at a called annual meeting of the stockholders does the Board of <br />Directors of the Company have a~thority, pursuant to C.R.S. 97-42- <br />104(2) to fix an annual assessment. Article IX of the company's <br />bylaws is to the same effect. In the course of the negotiation of <br />this contract, this particular point of law was disclosed to the <br />State of Colorado, and our opinion proceeds on the basis that the <br />Contract is consistent with this legal requirement aftecting mutual <br />ditch and reservoir companiea organized and operating under <br />Colorado law. <br /> <br />Yours sincerely, <br /> <br />~ IS-(JV? 7-c!~d IT liddad{ <br /> <br />CARLSON, HAMMOND & PADDOCK <br /> <br />JUC:ab <br />