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October 8, 2009 Longmont, Colorado The Board of Directors of the Supply Irrigating Ditch Company met in the Guaranty Bank and Trust Company building, 401 Main Street at 10:00 a.m. Those Directors attending included Ed Markham; Jim Young; Karl Gruber; and Bob Brand. Also attending was Superintendent Ben Armstead. President Markham called the meeting to order. The purpose of the meeting was to discuss the status of the Knouth Reservoir rehabilitation project in light of the construction bid received from DeFalco Construction at a total of $1,200,000. Other costs of the project were reviewed which are estimated at this time to include: 1. $88,500 costs already incurred by the Ditch Company for engineering and legal services. 2. $1,200,000 for the DeFalco construction costs 3. $99,300 for URS Work Order #5 which is for construction management 4. $25,815 for URS Work Order #6 an Emergency Preparedness Plan 5. $15,000 outlet gate 6. $25,000 estimated legal expenses to finalize the Knouth Reservoir Corporation documents 7. $288,000 which is a 20% reserve contingency. These cost estimates total approximately $1,742,000. Based on the estimated costs of the project, the Board of Directors agreed that it would be necessary to have at the minimum a"Memorandum of Intent/Understanding/Agreement" with Little Thompson Water District which would be a reaffirmation of what the understanding has been all along which is that Little Thompson acquires 20% of the Supply Ditch's 60% of the stock in the Knouth Reservoir Corporation paid in over a three year period. The 20% represents one-third of the costs. A question was raised as to whether or not the Board has the authority from the Shareholders to proceed since the costs estimated are considerably greater than what had been expected and discussed previously. Advantages to the Shareholders for the Knouth Reservoir were further discussed especially in terms of the low interest rate on the CWCB loan in light of anticipated increases in interest rate in the future with inflation as well as the relatively low bid from the contractor reflecting the state of the economy and the desire for contractors to have work. The Board agreed that the shareholders need to be advised of these advantages with an attempt to compare the cost of debt service with the cost of leasing a comparable amount of water. The advantage of owning the water rights will also be emphasized as opposed to seasonally leasing water.