General Membership Meeting Minut

General Membership Meeting
Minutes Printable Version
September 30, 2006

President Judy Jones called the membership meeting to order. Wilburn Williams gave the invocation. Judy Jones introduced herself. She said she would like to squash one rumor right up front. She said she was not interested in buying this as a personal venture, personal gain or anything. She said the rumor has been that she wanted to take it to North Carolina. She said if they didn't want it in Montana they had better not sell it to her because in a couple of years that was where she was going to retire.

Pres. Jones stated that about six or eight weeks ago and dealing with this business all year long she was a firm believer to make it go they were going to sell it to one identity. She said in the last week she had changed her mind 360 degrees. She told the membership with the people here that week and the way they had turned it around in the last six months they were going to survive. She said they had some problems yet to come but they were going to make it if everybody would continue like they had that week, they would be strong again. She told them they had nothing but positiveness, a wonderful show, good horses, people have had fun and it has been nothing but a positive attitude for the most part. She stated with that said that she wanted to say one more time they can survive. She told them they had some obstacles they still had to cross, they were still in the midst of a lawsuit, they still did not know if they were going to sell some property off which of course would be up to them.

She said the first thing they needed to do was to get a computer system that worked. She told them the previous afternoon after the Board meeting there was a little glitch and they were down again so everybody had to pull together last night to write down the entries. She said they had to go through boxes, rather these girls did, and they wouldn't let her do it because she can't write. They had to go through boxes so they could see who had been entered before because they lost all that. She said for about two hours three or four of these women volunteered their time and pulled in there with Miss Donna and helped her and of course the show went right on last night without a hitch.

She told them she was not going to ask for committee reports because she did not think any of them were really interested except maybe the treasurer's report. She asked they bear with them through the treasurer's report and to please look at these things and if they had any questions ask them here. She asked that they to away from there with everybody knowing everything that was going on.

Jim Morris asked if everybody had a copy of the monthly expense. (sheets were handed out) Darlene Harris, Treasurer, said she handed out the last financial statement they had which was the month of August that was completed. She explained it showed the comparisons of the first eight months of 2005 and the first eight months of 2006. She said there were some expenses go down and some income go down and they were off from where they were last year. She said it wasn't as good as last year. Ms. Harris told them the problem was not having the assets that they didn't seem to have enough cash flow. She said the sheet they handed out was what the monthly expenses were and was what it basically took to run this place every month. Ms. Harris asked if anyone had any questions. She stated that after this show when they see where they are, they have October, November, December and January which are hard months to make all these payments. She told them this was what they were going to run into before winter meetings, when memberships start coming in and start up against the first of the year.

Ms. Harris said the other piece of paper she handed out was from the accountant, the CPA firm. She told them they do the books every month and they had been doing them for quite a few years. She said Mr. Breeden had been with them for a long time and he had been running these things for them and he knew exactly what the situation was years ago and what it is now. She said that was why they went to him and asked his opinion on what he saw in the future for them and where they were heading. Ms. Harris asked if anybody had any questions of what would happen with the $70,000. She reminded them they have a tax liability there. Pres. Jones said the $70,000 was what had been put in their bank and they would get to that when they got to old business. Ms. Harris said it was hard to go through some of this with the financial statement when they hadn't discussed some of the other. She said they still had a tax liability which when you didn't have a lot of cash flow that still has to be paid and all of the taxes have to be paid by March 15th. She stated that was over and above where they were at with income from our shows and memberships and stuff like that; that is only that liability, so it could end up being more.

She asked if there were any more questions. Question from membership could not be heard on tape, it was unclear. She responded that the bills were paid and they were up to date on the mortgage and they were not behind at this point, they were trying to anticipate where they were going to be. She said they were not trying to say they were three or four months behind now and that anybody was knocking on their door or they were going to shut the gates or anything like that, they just wanted to be forewarned and be sure that none of this hit them in the face and they were not prepared. Question from membership. (unclear) Ms. Harris said they would get into that a little bit later.

Pres. Jones said they would get into Old Business. She said the first thing was the lawsuit they were in. She told the membership that some of the Board met on August 25, there was a majority. She said met and voted to settle the lawsuit with Mr. Porter, to this date they had not settled it. She told them there was a little glitch in there about pending the bank's approval and they had to have the bank's approval to turn the property loose. She said Mr. Porter did not want to sign with that verbiage in there. She told them that was all she could tell them because that was as far as they have gone on that deal.

Pres. Jones told the membership they did have insurance that will cover them from that day forward on the lawsuit. She said when the lawsuit came out and when their attorneys answered his lawsuit, they in turn sued James Morrison because of selling property that was not supposed to be sold. Ms. Jones said they have the contracts and everything here that anybody can look at. She said that was where they stood on the lawsuit. She said the insurance that they had would pick up from here and go forward and represent them and pay and do whatever they had to do to get the lawsuit settled. She said they didn't involve them because they thought they had it settled. She said they had gone to the accountant the other day he told them that selling this property off in little bits like they were doing is killing them. He (accountant) told them they were paying taxes and had all their depreciation in the buildings and everything. She said all their tax liability, they had this property somewhere around $700 per acre and they did that to depreciate and not have to pay as much taxes to begin with. She said it was the way it was set up probably 8, 10 or 15 years ago. She told them that was where they stood on the lawsuit. She told them if they had any question to go over them right now. Ed Hiers asked who was suing James Morrison. She answered the Racking Horse Breeders' Association of America. He asked if that was a separate action filed against James Morrison specifically or was it a part of our defense against Mr. Porter's lawsuit. Pres. Jones told him it was part of their defense against Mr. Porter's $52 million lawsuit. He said he understood that our biggest defense against Mr. Porter's accusation is that Mr. Morrison by executing these did not have the authority to do that. Pres. Jones stated that was correct. Mr. Hiers said that we had to separate for our defense ourselves from Mr. Morrison and name him as the culprit, and he was in fact the culprit. Pres. Jones responded that is correct.

Pres. Jones asked if there was anything else on the lawsuit. A member asked if the entire Board was in agreement that they should sue James Morrison. Pres. Jones answered no. She said when you rebuttal you had to name a counterpart, and she guessed that was part of rebuttal. The woman asked if all the Board was aware that they were suing James Morrison. Pres. Jones replied no. Several were talking in the membership (unclear) A member asked who the attorney was that John Baggett recommended to represent them Ms. Jones answered one of his counterparts, Richard Morris.

Pres. Jones asked if anyone else had a question. She told them to ask all the questions and get everything out in the open, and they didn’t want to have any more speculations. Someone (unclear) asked if James Morrison just took it on his own to sell a piece of property or did he talk with other folks in the organization. She said," I'm sure James wasn't by himself, she didn't know that". Someone asked her if she had called James and asked him about it. She responded she had not. She was asked why not. Discussion in the membership. (unclear)

Ed Hiers told them he had a letter from Mr. James Morrison. Pres. Jones asked Mr. Hiers to come to the front and read. He said he had a letter that was sent to the bank from Mr. James Morrison on October 28, 2005 that reads, "Dear Mr. Dickson... Pres. Jones told him to remember it was right after our meeting. He told them to preface that the Board of Directors meet in September 2005 after seeing the contracts that Mr. Morrison had prepared with Mr. Porter and the Board voted that they were going to reject those contracts and they weren't going to honor them and at that time they set up a committee to research and to research and go back re-examine the possibilities or to come up some new contracts, that's what they wanted to do and have those reviewed by independent outside attorneys not by Mr. Porter since he was representing himself as our attorney at the time. He said the Board told him (Morrison) no deal that they were not doing anything until they come back to the Board with the outside attorney's opinion that we get something done. He said that was in September. Pres. Jones said the General Membership had the same meeting.

Mr. Hiers said in the letter dated October 28, 2005 addressed to Robert Dickson of AmSouth Bank says, "Dear Mr. Dickson, enclosed please find the legal description of the property that the Racking Horse Breeders' Association of America is requesting the Bank release the mortgage on. We are also enclosing a check made payable to the RHBAA and AmSouth in the amount of $70,000 to be applied to the principal amount of the RHBAA loan if you can release this property from the mortgage. I appreciate your consideration in this matter etc., etc.” Mr. Hiers said he had copies of the check as well and the check was originally made out to the RHBAA in print and at some point in time, it was added to, the check was also made out to AmSouth Bank in a different handwriting. He said to him that would have thrown up a red flag. He said that his biggest concern was Mr. Morrison took it upon himself in a month and 30 days time not announcing to any of the directors or to the General Membership, we didn't know anything about any of this until February at the Winter Meetings. He said it was already a done deal. He stated he was supposed to be on the committee to research it and get it to an independent counsel. He called Mr. Morrison in November and asked him about the committee that they hadn't met or anything and Mr. Morrison told him he did not know he would find out and get back to him; knowing very well he had already sent a check in to the bank. Mr. Hiers said, "If that didn't seem to be completely under-handed to you it certainly does to me". Someone in the membership asked a question (unclear) Ms. Harris told Ms. Jones to tell them they didn't deposit the check until October. Pres. Jones told the membership they had to bear in mind they got that check in October. Someone in the membership (unclear) said it seemed like to him the Bank and him are together, Mr. Porter and the Bank. Pres. Jones said, "Somebody was, that was what she was going to say, because you got to remember the Bank received this check on October 28th, she thought it was". She asked Ed Hiers what the day of the letter was. He said the letter was dated October 28th. She said they received it sometime in October. She stated the money was not deposited to their account until mid-February. Ms. Harris said applied. Pres. Jones said applied until mid-February.

Ms. Harris said as the Treasurer she wanted to say another thing that the check was not run through their account, the checking account. She said that should have been deposited by the office and then a check from RHBAA, if it had been on the up and up, it would have been a check from us to the bank. She said not something directly from Mr. Porter to the bank. She said there were not many businesses that run things that way and the accountants never knew that the $70,000 was hanging out there and was supposed to be applied to the mortgage, but the bank did not apply it until February. Pres. Jones told the membership that the accountants did not anything about it until RHBAA got sued. Barbara, a member, asked didn't they at the General Membership meeting at the winter meetings agree as a general membership to sell off the property. Ms. Harris responded 60 acres. Pres, Jones said 60 acres for $90,000. She said her memory served her that the general membership said to sell off what they did not use. She said anything we were not using and keep what we use to save our industry and that was the last they discussed at the general membership meeting. Pres. Jones told her she thought, she couldn't say right then yes or no that somebody that was up on these minutes more than she was, they agreed to sell the 60 acres for $90,000. Barbara said she didn't think there was a number on it, she remembered they agreed to sell everything that they weren't using. Ms. Harris said it was in the minutes. Ms. Harris said no it said 60 acres. Pres. Jones said 60 acres that she knew that was in there. Tim Toler said they agreed to sell the 60 acres but there was not a number put on it, there wasn’t $100,000 or $300,000, he didn't think there was a monetary figure on it. He said it was to sell the property ...(unclear) A woman in the membership asked if the RHBAA spent the $70,000. Pres. Jones replied no, they deposited it to their loan. Someone asked who got the other $20,000. Pres. Jones said it was just lying out there in limbo. Pres. Jones said nobody has it. She said it was (unclear). Vice Pres. Jacobs said retainer. The member said there seem to be an indication that somebody had gotten it. Pres. Jones responded that there was not an indication that somebody got it. She said there was a contract for legal services for $20,000. She said that was where the other $20,000 was at. Pres. Jones said they were going to pay him $20,000 for legal services that we did not ask for, and that was neither here or there. A man in the membership asked if the $20,000 was in escrow. She replied no. (several talking) She said it was a float thing that it was nowhere. Several were talking at one time. Pres. Jones responded there was no escrow. One man in the membership said he was confused. He said they said they were going to sell 60 acres for $90,000 in February which in fact that had already sold it and they ended up with a $70,000 check. Pres. Jones said that was correct. He said we sold it to our attorney. Pres. Jones responded yes and this was the same attorney that they had that sued them to remember that. The man asked if he was their attorney at the time. (too many talking) Pres. Jones said yes. Several on the Board said he was not. The man in the membership asked if the guy who bought the property was named Porter and he is an attorney. Ms. Jones responded yes. He asked we got a $70,000 check and a bill for $20,000 to make up the $90,000. She responded yes. She said in April he (Porter) told the Board he had spent $7800 plus of that $20,000. She said he stood in the Board meeting and told them he was re-working the Rule Book and see how he could sell it to any individual. The man said when he asked if he was their attorney some of them said yes and some said no, and if he was not our attorney what are they paying him for. He asked if the Board said Mr. Porter you are our attorney, contracts are entered into by the Board on accountants and attorneys and what ever else they use for professional services. He said he did not understand where the $20,000 was and who authorized anybody to spend it. Pres. Jones said they did not hire him. Ed Hiers said Mr. Morrison hired him and he told the Board he was representing Mr. Morrison and he would only answer to Mr. Morrison and his clock was ticking or his meter was ticking. The man said if the Board hired Mr. Porter, in any meeting, anywhere, and authorized spending legal services with Mr. Porter. Pres. Jones responded no.

Another man from the membership said everybody kept saying we sold for $70,000. He said they didn't sell anything and nobody in there sold anything. He said it need (unclear). Ed Hiers said to go back to the minutes of the Board of Directors meeting for September 2005 where they specifically said that we don't have contracts and you don't do anything until you come back. He said anything that was done after those instructions are done illegally. Jake Jacobs said the $20,000 retainer credit. Someone said the retainer from the attorney...(unclear). Mr. Jacobs responded yes. Someone said not for the RHBAA that it was James Morrison they way they understood it. Ms. Harris said contract for legal services. Someone asked the question did the RHBAA retain Mr. Porter for professional services for $20,000 credit. He asked if the Board do that on their behalf. Ms. Jones said no. Discussion between Pres. Jones and Vice Pres. Jacobs regarding the retainer. She asked Mr. Jacobs when that Board was meeting and where were they at. Mr. Jacobs said it was a proposal for the Board to approve; his proposal was for a $20,000 retainer. Pres. Jones said to bear in mind that she was standing there with a contract. Mr. Jacobs said the deal was for $90,000, $70,000 in a check and a proposal to the Board was to be $20,000 retainer for four years for his services. Mr. Jacobs said the retainer was not cash it was understood that he would serve us as attorney if the Board approved for four years or more until that $20,000 was used. He said Mr. Porter had used part of it; he thought $7,000; if the Board would not hire him or terminate him. Mr. Hiers asked Mr. Jacobs weren’t those contracts refused by the Board of Directors in September 2005. Mr. Jacobs said the question from Billy Strickland was what happened to the $20,000. Mr. Hiers said his point was the Board said it does not have a contract, so you are talking about a contract that the Board said they refused and did not want any part of. Mr. Jacobs said a proposed contract. Ms. Jones told him he had a signed contract. He said he understood that from James Morrison and the rest of the Board did not agree to it and that is where we are now. Mr. Jacobs told Mr. Strickland that the answer to his question was a retainer for $20,000 for four years. Pres. Jones said alright that's what we have.

Mr. Rials asked why didn't they invite James Morrison to come here and be in on this and explain it that it sounded like to him that (too many talking) Pres. Jones told the group to listen to Mr. Rials. He said he thought they needed to invite James Morrison to come to the meeting and explain why he did it. He said he wasn't one of his favorite people but he believed in giving the devil his dues. Pres. Jones said she did too. He said it sounded to him like he (Morrison) was trying to do what he thought was right with the Breed he just went about it the wrong way. Ms. Jones said that was a good possibility. She stated the only problem she had with that was after the meeting in September when the Board told him not to do anything and the membership told him not to do anything and 10 or 15 days later it was a done deal. She said in the Board meeting last year they kept talking about this $70,000 and she kept asking about the $90,000 and they talked about the $70,000. She told the membership that she said she would give them, if $70,000 was going to make them or break them, she would give them the $70,000. She asked if that was right. She said she would loan them the $70,000, she would hold property for $70,000 or whatever it takes that they didn't want to start selling our land all for nothing. She said she understood this was swamp land and that may be a wonderful price for it, but to her you don't sell land for $1,100 per acre.

A member stated she thought that what Tim was saying that we needed to invite Mr. Morrison here, she didn't think they could legally do that since there was a lawsuit pending against him, we all have to go through attorneys now. She said the membership was not supposed to contact him individually and it had to go through the attorneys. (Discussion)

Adrian Rehkemper asked what the tax base was that they were paying on the property that was sold for the $90,000. Pres. Jones said it depends on when you... Ms. Harris stated the tax base was $123,000 on the 60 acres. (several people talking) Pres. Jones told them if they applied it this year it would be about $123,000 because they had about $40,000 something (unclear) Ms. Harris said no, they were talking about the property tax base. Pres. Jones asked the property tax base. Adrian asked what the county said the property they were paying taxes on (unclear). Ms. Jones said the appraisal said one thing but the county said something else. Ms. Harris said on the 40 acres back there, Morgan County land, the back 40 not the 20 what’s (unclear). Mr. Creech said their value was right there, it was appraised for $1.1 million in 2003 and they had improvements since then. He told them it was the 36 acres where all the buildings are. He said the 60 acres that sold off, 20 of it appraised for $19,330 and then the tax due was $75.05. That was for 40 of it. He said the other 20 was appraised for $9,586 and the taxes were $37.01. He said that was how much tax was paid on those 60 acres. He told the membership that the appraisal on 40 acres was $19,330 and the other 20 acres was $9,586. Ms. Jones said that was appraisal price that was not their taxes. Ms. Harris read from the Revenue Commission of Morgan County; the 40 acres at the back said land property value $125,400. Someone asked if that was what they were taxing them on. She responded that is how it works. Pres. Jones said that came straight off the computer. Someone said they had worked in the property office for 5 or 6 years and counties never have property value as high as the actual real estate value. Pres. Jones agreed. The person asked Mr. Creech who prepared the information that he just gave. Mr. Creech told him that it was the appraisal that they had done in 2003 by Petree and Associates. The person said the property had raised a bunch since 2003. Ms. Harris said they were doing it because they were refinancing. The man said banks never put up at what it is because they don't want to lend you too much money.

Ed Hiers asked (several talking) lawsuit... Mr. Porter as far as the $70,000 for that 60 acres that because since this has come up the Board has authorized to go ahead and let Mr. Porter have that 60 acres for the $70,000 that was already done. He said it was not that the Board necessarily objecting to that part of the contract, the other part of the contracts was an option on an additional 52 acres selling far below what a number of us think is to be the real value of it. He said Mr. Porter had rejected accepting the 60 acres for $70,000, plus, he thought the Board had offered him money in addition to that to cover his expenses for his survey or whatever else and he has rejected that. He told them that what Mr. Porter said, and it was his interpretation of it, was no I want that and I want my 52 acre option at the price I told you or whatever price now or nothing at all; or I am going forward the lawsuit. Mr. Hiers said it was not just that 60 acres and that $70,000 , he is not going to be satisfied until all those contracts that were rejected by the Board in September that he gets his way or he is just not going to be happy it doesn't seem.

Dan said he had listened to Ed and some of them and we have a lawsuit filed, he sued us and at some point in time our insurance company sued James Morrison. He said he realized that they were discussing this and all but they couldn't do anything until this lawsuit is settled. Pres. Jones told him that was exactly right. He said he didn't think there was any reason to sit around and beat a dead cat until the lawsuit is settled. He said if the judge told them they were going to sell the 60 acres for $70,000 then that's what they are going to do. He stated they were already in this crunch and he thought the only thing this membership could do was to tell the Board don't do anything until this lawsuit is settled and if it is settled don't do anything until you come back to us.

Pres. Jones said the only question she has had on the whole thing all along, like she said it was obvious they took this man's money, somebody took it and credited it to our account and right is right and wrong is wrong. She said the thing she did not understand is when it was released from this bank; 1) why didn't James Morrison sign the deed, 2) why didn't Clyde Creech sign this deed. She asked why it was thrown back into their lap, why wasn’t it handled then. She said now she was being sued because of this deal personally, he (Porter) named her personally, how she didn't know. She said neither one of these gentlemen signed the thing; evidently they felt something was wrong here. Someone said it was an irrelevant (unclear) at this point and time and he thought we had to decide we are going to do whatever the court tells us to do. Pres. Jones said that was basically what they were going to have to do. The member said after that they had to come back and sit down and decide what they were going to do at that point. He said if they ask the membership now to vote anything for the future we can’t; because they didn't know which way the court was going to decide. He said they didn't know if they were going to owe money or if our insurance was going to pay and they didn't know any of that.

Pres. Jones asked if they did settle this what about the other 52 acres he was demanding. The member said he understood Ed (Hiers) or whoever had the contract earlier, if the lawsuit was based on this that contract was going to come into the lawsuit, so at some point in time there would be a ruling or settlement between the parties of the $70,000 plus the 52 if it is in the same contract. He said there was no way it was not going to come in that contract. Pres. Jones asked it's just a general consensus since guessed that was about what everybody, she meant they were all in agreement that was what they were going to do. Mr. Creech said that on August 25th the Board had a meeting and asked Mr. Porter what it would take to settle this lawsuit. He told the membership that Mr. Porter wanted his deed for the $70,000 and wanted his option, and really we negotiated and we got more money, he said he would give us $95,000 for the 52 acres; pending he would drop it and James would drop it and the lawsuit would be over (unclear).. He continued the lawsuit would be over pending the membership approval and the Board voted to accept it, the ones who were there and pending the bank would release it and he would settle the lawsuit with them. A member asked if that was in August. Pres. Jones said in August 2006. The member asked if they had not settled. Mr. Creech said they were waiting on the membership to vote to approve to give the deed for 60 acres, exercise his option for $95,000 on the other 52 acres and if the membership would approve it and the bank would release it. A member said if we were in that deal they were going to settle this and he assumed they had talked with their attorneys at some point about this. He said in the settlement we are going to end up giving him the 60 acres for $70,000 and end up giving him 52 more acres for $95,000 that would be 112 acres. He said they owed somewhere in the range of $500,000 or something like that. Ms. Jones said $550,000. The member said they were going to reduce the debt by $160,000. Ms. Jones said not to forget the taxes because they were going to have to pay 37%. He said they were going to reduce their debt and they were going to have tax liability period if we sell anything. He said then they still had a question of some $20,000 versus some $7,000. He asked Mr. Creech if that was discussed in the settlement. Ms. Harris answered no. Pres. Jones answered no. Vice Pres. Jacobs answered it was lost. Mr. Creech said he (Porter) had done $7,000 and something work for us. He said that Mr. Porter had paid for the appraisals and all that stuff for it. He said the option was originally $90,000 and he gave them $5,000 for the option. Mr. Creech said they really picked up $12,000 more of the option. The member said if we settle it the $20,000 issue is done too and we are going to lose it. Mr. Creech said we had $70,000 of his for a year and a half. (too many talking) The member asked if our insurance was representing us in the lawsuit. Pres. Jones said they can, today and go forward with it, they were not yet but they are ready. He asked if we had insurance at the time. She responded yes. He asked if they were willing to represent them in court. She said yes. He asked if the insurance policy said they had to pay legal fees. Pres. Jones answered no. Someone asked what did our attorneys say about the settlement if individuals entered into a contract illegally, why we should be held responsible or take the short end of the stick. Pres. Jones told him it was like any other thing when you go into a situation like this there is a no win situation. She said when you get two attorneys somebody is going to come out with more money than the other one, and basically there is not a winner in this deal.

Howard Bellamy said he was there when they hired the attorney and he told every one of them that was sitting there that they were in the defensive mode and it was a losing proposition for them. He told them the longer they stay in it the more they were going to lose. Mr. Bellamy said at that time they did not know about the insurance company, but that was what he (attorney) advised us to do. Mr. Bellamy said their attorney was a very smart man. He told them he didn't know which way it would go. Mr. Bellamy said they never know which way it would go, but understand we are on the defensive end of this lawsuit.

Ed Hiers said there was two things; the agreement or contract that they had been talking about had been most recently presented through Mr. Porter was prepared by their attorney; it wasn't prepared by another lawyer. He knows that another law firm has already been set up and established by the insurance company and he knows if we go any further he is on his way out. Mr. Hiers said he prepared this in our interest at the direction of the Board of Directors. He said he understood in the last few days that Mr. Porter had rejected that agreement where he does not want the clause in there where we accept that $95,000 offer for that 52 acre option with the clause from the bank, that the bank releases it. Mr. Hiers said, "He says is if you go to the bank and the bank says you have to agree that you sell it to me for $95,000. Now the bank tells you they won't release it for less than $150,000, then you are just going to be on the hook for the rest of it. You are going to have to pay the bank to get the bank to release it to me and I am still getting it for $95,000; that is the reason he is not accepting that".

Mr. Hiers said on the second part and what you are asking about reducing our debt by $95,000, that was not the way it works. He said what they would do they would calculate the tax liability would be on selling that acreage and then go to the bank and propose to them the difference on (unclear) He stated for instance, if they were to estimate the tax on that transaction was going to cost them $20,000 then they wouldn't go to the bank because they wouldn't have an extra $20,000 to pay that; what they would do is go to the bank and ask if they would take $75,000 and release that land. He said they would apply $75,000 on the balance and they would use the other $20,000 to pay the tax liability. He said that was the way that worked and they don't reduce their debt by the full amount that they are paid.

Billy Strickland said he was all for settling the lawsuit and the longer they stayed in the lawsuit they were going to lose money, and he was not for losing money. Pres. Jones said that was basically what the lawyer said, he said you have a good chance of winning it; but you have a good chance of losing it, just like any other lawsuit. He said now that they had an insurance retained attorney he thought it would be ...Mr. Jacobs said they did not have one yet. Ms. Jones said they did that they had already been named, they were on and that was what she told him yesterday. Mr. Strickland asked if the insurance attorney had filed in Morgan County on this lawsuit. Pres. Jones said she could not answer that because their attorney had spoken with the insurance attorney two or three times. She said she called their attorney from the Board room and told him she thought they were going to settle, she talked with him later that afternoon and he said he was going to put on hold talking to the insurance attorney and not waste no more of your money from me telling him where we're at. She said he was on hold because he thought they had it settled. Mr. Strickland told her they had two options; they could go ahead and let the insurance attorney enter his appearance and get rid of the one we are paying for, that is just common sense; or you can settle this lawsuit but there was no way they were going to settle this lawsuit without a clause in there that the bank was going to release this property. Pres. Jones said that was right. He said that was a crazy settlement if you do that because this organization can't pay Mr. Porter a dime or anybody else and he thought they knew that. He said so Mr. Porter won't except that you have one choice, let the insurance attorney enter his appearance and go forward with the settlement then because we cannot afford $50,000. One member asked if there was a deductible on the insurance policy. Ms. Jones said she did not think so, no. She said she would say yes or no, she didn't, but she did not think so. One member said if we pay $13,003 for an insurance company we need to let them do their job. Pres. Jones agreed.

Ms. Harris told her to ask if they wanted to sell for. Pres. Jones said the question was did we want to sell this thing for $95,000. Some said no. One member asked what the Board recommended. Pres. Jones said they didn't know, they couldn't agree. Jim Morris said they had to bear in mind the 52 acres in his opinion was worth well more than $95,000. Someone said they were beating that dead cat again.

Pres. Jones said if they were going to take a vote right now like we are going to talk about this, if we were going to take a vote right now, which they were not, but they have to before it is over with; would they sell the 52 acres for $95,000. Some said yes and some said no. Ms. Harris told her how about now. Some one asked the question if they settled this thing, everything (unclear) and we own everything all of this property, between us and the bank, what are we going to do with it. He said we have to look for another buyer. Ms. Jones said they had people who would buy the whole thing. He said he was talking about the 50 acres. She said they had people who would buy the whole thing, but they couldn't get a guarantee they were going to stay here. She said you really couldn't pursue selling the rest of it until they got the lawsuit settled. She said there was one man that was really waiting to buy it the whole grounds, but we can't insure a home.

Mr. Bellamy said one thing to consider was we had $70,000 of this man's money that they had to give back to him. Pres. Jones agreed and the bank said they would give it back to him. She said the bank told them they would give it back to them, but here again we are beating a dead horse. Ms. Harris said it still had to be a vote no matter what. Ms. Jones said it would have to go back to the general membership. Someone said they wanted to ask about the taxes again. He asked if he heard right that the county here or who ever does that, that their appraisal was higher than land appraiser's appraisal. Ms. Jones replied yes. A member asked if they did not get a notice, they get one every year, that your taxes are going up and you can contend that. He said he got one every year. He said you can take that appraisal up there and show them you have an over appraisal. Ms. Jones said she thought they had already gone over that but thanks.

Pres. Jones told them the membership was going to have to vote on it. She told them the ladies consignment shop would be beside the Chamber booth. Ms. Jones said she had two letters of intent to purchase the remainder of what we do not settle with Porter; it would encompass the Breeders' registry and the entire grounds. She told them in other words they would sell the whole thing. She said she had two letters of intent for that thing. She said if they wanted to discuss it they would. Billy Strickland made a motion and to settle this dead cat now, that they don't sell anything or take anymore letters of intent to sell anything until the lawsuit is settled. He said then sends out to the general membership about what they want to do because you can tell us what we have left, what we might owe or not owe and that way we can make a decision. A member told Pres. Jones they could not have a vote nobody got a membership count or checked verification or anything. Ms. Jones said they could not so really they were just discussing. Mr. Strickland told them to just forget the motion.

Vice Pres. Jacobs said in conclusion on the lawsuit he would like to remind them on August 25th the Board voted to settle the lawsuit along with the attorneys and along with James Morrison. He said the majority of the Board at that time recommended the lawsuit be settled. He said there was some verbiage in there that needed to be corrected and could be handled. He said he wanted to let them know that the Board's recommendation is to settle. Mr. Hiers said he hoped Mr. Strickland made it clear to the Board of Directors that you talk about changing verbiage, that they do not go along with Mr. Porter and take the verbiage out about the bank agreeing to it, to release the lean on the land. Mr. Jacobs told Mr. Hiers that it was take some seating down and some discussion to get it done and they couldn't do it here. Mr. Hiers said all he was saying was that the Board was aware that they did not want a settlement agreement sent to Mr. Porter taking the bank agreement out of the picture. (too many talking) Ms. Harris said it still had to come to a vote that it still said in the verbiage pending membership approval. She said the 52 acres can't be released and they can't settle the lawsuit on that 52 acres without a vote and they were in a proxy situation where that might have to be done by proxy, we don't know. Someone asked if they couldn't do it without a vote how did James Morrison sell it without a vote. He said if they would answer him that question he would be satisfied. Pres. Jones said no one could answer that. (too many talking) Someone asked if they couldn't vote on it. Pres. Jones and Vice Pres. Jacobs said they could not vote. Vice Pres. Jacobs said they did not have the database of qualified voters. (too many talking)

Pres. Jones said let's talk about some good things. (too many talking) Pres. Jones called on Ed Cotter. Mr. Cotter said it sounded like to him that this attorney is trying to back you into a trick deal, because if a person owed some money on a car and he made him an offer the bank has got to release that. He was asking the question, why did he want that verbiage out of that contract that the bank has got to release it. He said it sounded like to him that he might think that was in equity and then if the bank wanted to release it, why was he wanting that verbiage out of there. He said if it was his property he would want a good deed for it. He asked if Ed (Hiers) or anybody knew why he wanted that verbiage out of there, it seemed like to him (unclear) and he would want a clear title if it were him. (too much talking in the background) Pres. Jones said it was a very good question and it was one she couldn't answer it; maybe the boys who talk to him can answer it

Someone said they spent $13,000 for an insurance company to represent them, let them do their job. Pres, Jones told him the $13,000 encompassed a lot more that that. Pres. Jones asked if anyone else had something. One member replied he was confused and Tim Toler said they were too. He asked if they say they cannot vote because of a proxy question, explain the proxy. Ms. Harris told her they can't because of last year's board. Pres. Jones said she thought was a moot point from yesterday. She said you have a proxy situation in place. She told them when they put in that proxy for the chain, you put it in to vote by proxy. Someone asked for everything. She said for everything. Someone said then she was saying that the Board and membership voted at some point in time to allow proxy votes. She replied yes the Board did. She said that yesterday the Board voted to eliminate it. (lots of talking) Lila Jean Benintende said if they were saying the Board can eliminate that means they were saying that the Board has complete say over everything. Several replied no. Mr. Jacobs said they had to ratify it. Pres. Jones said you had to ratify everything that is done. Ms. Benintende asked what that meant exactly. Pres. Jones said you have to approve. The member said so they were saying they have to vote. Ms. Jones responded yes. (too many talking)

Mr. Toler said that the verbiage that was put into the bylaws as far as the minutes are concerned and as far as the bylaw (unclear) when you vote on something it has to be posted 45 days in advance, that is the rule that’s what it says right now. He said the reason they couldn't vote today is because they didn't know who was in there was an eligible member to vote and you have to be an eligible member to vote. He said to do that you have to check the people in the door and check it by a list and they had to be eligible voters. We can't vote on anything in here today and we can't vote on any of these motions that have been put on there because we didn't send out a proxy and it hasn't been 45 days. He said it had been 45 days but it had not been a proxy vote sent out. He told them that the Board voted yesterday to do away with the proxy for this very reason. Someone asked if they could do that without the membership vote. Mr. Toler asked to let him finish. Discussion followed. One of the members said they had lots of questions, their industry was about to die and everyone in there was a member and owners and every member had a right to express their opinion. Mr. Jacobs told her that the membership did have to vote on what they did yesterday.

Pres. Jones told them that what happened and Mr. Creech made the motion for the proxy. She said that she thought what they meant to do… She told Mr. Creech not to let her put words in his mouth by all means. She said she thought he meant for this one thing, (someone said the chains) but that was not how it got proposed. Ms. Jones read, Clyde Creech made a motion to post and make necessary changed to Section 2.9 & 2.10 & also Section 20.1 to read 45 days for the proxy. Wilburn Williams seconded the motion. Motion carried. She said she did not think it meant to be for everything but that was how it came out. She said yesterday they voted to eliminate the proxy. Oscar House said to be ratified by the membership. Pres. Jones agreed. Ed Hiers said he was on the Board during that time and told them the proxy issue actually came up from Larry Funderburk years ago before they were ever talking about chains. He said the proxy issue was not just a chain issue and he did not recall any discussion that said the proxy was just going to be for just this one issue at all. He stated the proxy vote only applies to motions made by members and the way the motion read was any motion made by a member to be voted on at a general membership meeting or a special or a regular membership meeting had to be posted 45 days in advance in order to send the proxy out. He said it did not apply to motions that the Board would make for themselves. Ms. Jones agreed. One member said there was no such thing as that type proxy. Mr. Jacobs said that was wrong, that he sent one out on James and he was on the Board. Ms. Jones said the motion was made by Mr. Philpot, it was a membership vote. Mr. Hiers said he was talking about the motion that was made to approve the proxy didn't say that it was just the chain issue, it was any motion made by members. He stated however, they still have another situation; the 45 day rule still applies to motions made by the Board of Directors themselves. He said they could vote on issues that didn't have to come before the general membership but they still are required to post it 45 days before they can come back and vote on that issue in order to give the membership the option to discuss it and get in contact with their director and allow them t0 understand their feelings on that issue and how they wish them to vote. He said even the most recent issue that was voted on by the Board of Directors, which was Tim Toler's motion that anytime a new rule was changed in would be in effect for two years and it couldn’t be changed again. He said the Board agreed because that the way it had always been or it had been that way the last number of years that they are also subject to the 45 day rule. Mr. Hiers asked Mr. Toler didn't that motion have to be posted for 45 days before the Board could come back and vote on it. Mr. Toler responded yes. Mr. Hiers said and everybody on the Board was aware of that and you came back 45 days later after they satisfied that and then made your vote on it. He said now the Board is saying they don't have to comply with that 45 day rule and they can just make a motion now and elect to do something and as long as you can get it ratified it's done without (unclear). He said he did not see how they could do that. Pres. Jones said they couldn't do that. (several talking) Mr. Jacobs said it could tell them it does not say (unclear), it says ratification 20.2.

Pres. Jones asked if there was nothing positive. Mr. Creech said he would like to straighten out one thing. He said in talking about Mr. Porter and him rejecting the agreement and the reason he didn't want to sign it, he just got that day before yesterday. He said what he (Porter) was objecting to was one paragraph. Ms. Jones said this was not true, to bear in mind that before he starts talking, he only got his Thursday. She told Mr. Creech to go ahead. He asked her wasn't that what she said. Ms. Jones said yea, go ahead, well how is he objecting to that. He told her that was what they talked about yesterday the only words he don't want. One of the members told Mr. Creech to go ahead. Mr. Creech read, the settlement approval provided herein is contingent upon the agreement of the AmSouth Bank to release all deeds and mortgages to the real property to be conveyed pursuant to this resolution for a price upon the terms acceptable to Judy Jones and her sole discretion. Mr. Creech said that was the part that he (Porter) doesn't like. Pres. Jones said that was totally, totally not true. She said the man only got the thing supposedly Thursday afternoon and he told this bank two weeks ago that he wasn't going to settle it. She said she didn't know how this verbiage got in there that she didn't do it. She said she assumed since she was the one that went to the attorneys that it fell on her to do it. (too many talking)

Pres. Jones said Mr. Thacker told her that the horse sale was ready to start and he would love for every one of them to come over there and buy some good horses. One of the members asked how they were going to vote on these issues later. Ms. Jones said it would have to be mailed out to them. She asked if there was anything else. Jim Morris said on a positive note, he thought that the Celebration this year that he thought they were in an uphill slide. He said he thought they had a good Celebration. He told Barbara Johnston that he thought she had done an excellent job. He thanked all the volunteers for helping and he thought they had done a wonderful job. Meeting was over.

Nell R. Brown
Secretary