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<br />Ms. Illian, Contract Manager <br />Page 2 <br />April 6, 2004 <br /> <br />No debts shall be a contracted against this company except on order of the Board <br />of Directors. Provided, however, the Board is authorized to incur such <br />indebtedness as it may deem necessary for carrying out the objects and purpose of <br />this company and may authorize the president and secretary to make the notes of <br />the company with which to pay the indebtedness so incurred. Provided always. <br />that no mortgage or trust deed shall be placed upon the property of this company. <br />or any part thereof. until authorized by the majority vote of the meeting of the <br />stockholders of the company at which a QUorum is present. <br /> <br />Enclosed is a copy of the Minutes of the Annual Meeting that was held on November 20, <br />2003. The second to the last paragraph of said minutes on page 3, last sentence of said <br />paragraph designated as "New Business" seem to reflect a consensus on the part of the <br />shareholders that the members of the board of directors shall use their discretion in terms <br />of applying for a Colorado Water Conservation Board Loan or accomplishing whatever is <br />necessary in order to make the needed repairs at the Terrace Irrigation Company <br />Reservoir. I am certain that the Notice of the meeting did not set forth the intent of the <br />board of directors to request authorization from the shareholders to execute a deed of <br />trust to secure the loan being procured from the Colorado Water Conservation Board. It <br />is my further understanding that the members of the board of directors did not forward to <br />you that document designated as "Resolution of the Shareholders of the Terrace Irrigation <br />Company" because though the question of whether to obtain a Colorado Water <br />Conservation Board Loan was discussed, the question of mortgaging the assets of the <br />Terrace Irrigation Company was not specifically addressed. It has been pointed out by <br />the members of the board of directors that the loan that was obtained from the Colorado <br />Water Conservation Board approximately ten years ago did encumber the reservoir and <br />that the obligation of this subsequentloan is to run concurrently with the prior loan. <br /> <br />In discussions with Mr. Rodney Rienhardt, the President of the Terrace Irrigation <br />Company, he has indicated that if the employees of the Colorado Water Conservation <br />Board are confident that the minutes that are herewith presented enable the execution of a <br />trust deed in compliance with Article 11 of the By-Laws Mr. Rodney Reinhardt and Mr. <br />John Riddick will execute the deed of trust in behalf of the Terrace Irrigation Company <br />for the benefit of the Colorado Water Conservation Board. Ifhowever, the employees of <br />the Colorado Water Conservation Board deem said minutes to be insufficient Mr. Rodney <br />Reinhardt and Mr. John Riddick will call a special meeting of the shareholders for the <br />specific purpose of authorizing the execution of a deed of trust in favor of the Colorado <br />Water Conservation Board. <br /> <br />As the attorney and counsel for the Terrace Irrigation Company I have no misgivings in <br />assuring you that the loan contract has been executed by officers of the borrower who are <br />duly elected or appointed and are authorized to execute the contract and to bind the <br />borrower. <br />