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RESOLUTIONS OF THE BOARD OF DIRECTORS OF HIGHLAND DITCH COMPANY The Board of Directors of Highland Ditch Company (Company), a meeting held November 9,2005, at Longmont, Colorado, adopted the following resolutions concerning a secured loan from the State of Colorado Water ConseNation Board (CWCB) , for the continuation of the repairs needed for the Foothills ReseNoir in the amount of $545,400 or such actual amount, more or less, as may be needed by the Company and available from the CWCB including the CWCB loan origination fee of 1 % of the loan amount. Such resolutions are contingent upon the approval of the loan to the Company by the Board of Directors of the CWCB at their regular meeting scheduled for November 16, 2005. At said meeting, the Board charged that these resolutions are irrepealable during the term of the loan and, pursuant to the Company's bylaws, authorized the President and Corporate Secretary, RESOLVED as follows. 1. to enter into and comply with the terms of a contract with the Colorado Water ConseNation Board for a loan in the amount of $545,400, or such actual amount, more or less, as needed to finance the project costs, including the CWCB loan origination fee of 1 %, and 2. to levy and collect assessments from the Shareholders in an amount sufficient to pay the annual amounts due under the Loan Contract, and to pledge assessment revenues and the Company's right to receive said revenues for repayment of the loan, and 3. to place said pledged revenues in a special account separate and apart from other COMPANY revenues, and 4. to make the annual payments required by the promissory note and to make annual deposits to a debt service reserve fund, and 5. to pledge the Foothills Reservoir, as collateral for the loan and execute all documents, including a security agreement and deed of trust, necessary to convey a security interest in said property to the CWCB, 6. to execute all documents as required by the loan contract, including, but not limited to, a Security Agreement and a Promissory Note, and 7. to take such other actions and to execute such other documents as may be necessary to consummate and implement the loan. CERTIFICATION THE UNDERSIGNED, THE PRESIDENT AND THE CORPORATE SECRETARY HEREBY CERTIFY THAT THE FOREGOING ARE TRUE AND CORRECT COPIES OF RESOLUTIONS DULY ADOPTED AT A MEETING OF THE COMPANY'S BOARD OF DIRECTORS DULY CALLED AND HELD AS ABOVE RECITED, PURSUANT TO THE COMPANY'S BYLAWS, AND THAT SAID RESOLUTIONS HAVE NOT BEEN AMENDED OR RESCINDED. GIVEN UNDER OUR HANDS AND THE SEAL OF THE COMPANY THE -!1- DAY OF /tJ,-~ 2005. (SEAL) By (p~~ Jct~ Robert Schlagel, President ATTEST: By YJtd!~). Nick Sekich, Jr., Secretary Appendix 3b to Loan Contract C150211 {()s~~\ ~~ \ \.