ByLaws

AMENDED AND RESTATED BYLAWS

AND RULES AND REGULATIONS

OF

WILSON IRRIGATION COMPANY

WHEREAS, the Board of Directors (the “Board”), of Wilson Irrigation Company (the ACompany@), deems it necessary to adopt these Amended and Restated Bylaws and Rules and Regulations pertaining to the administration and business affairs of the Company, the issuance and transfer of shares of stock in the Company, the distribution of Company water, the assessment of shares and procedures for the collection of delinquent assessments, and related matters for the purpose of assuring the orderly governance of the Company and a fair and equitable distribution of water to its shareholders.

NOW, THEREFORE, BE IT HEREBY RESOLVED by the Board that the bylaws and rules and regulations by which the Company shall hereafter be governed are as follows:

ARTICLE I

LEGAL AUTHORITY

These Amended and Restated Bylaws and Rules and Regulations (“Bylaws”), are promulgated pursuant to and in conformance with the Utah Revised Nonprofit Corporation Act, Utah Code Ann. '16-6a-101 et seq. (the “Act”), and pursuant to specific authority granted to the Board as set forth the Company=s Articles of Incorporation.

ARTICLE II

BOOKS AND RECORDS

2.1.  Books and Records.  The Company shall keep as permanent records, at its principal office, the following books, records and documents: (a) its Articles of Incorporation; (b) its Bylaws and Rules and Regulations; (c) resolutions adopted by the Board; (d)  the minutes of all shareholder=s meetings, for a period of three years; (e) records of all action taken by shareholders without a meeting, for a period of three years; (f) all written communications to shareholders generally as shareholders, for a period three years; (g) a list of the names and business or home addresses of its current directors and officers; (h) a copy of its most recent annual report delivered to the Division of Corporations annually; (i) all financial statements prepared for periods ending during the last three years; (j) minutes of all meetings of the Board; (k) a record of all actions taken by the Board without a meeting; (l) a record of all actions taken by a committee of the Board in place of the Board on behalf of the Company;  (m) a record of all waivers of notices of meetings of shareholders and of the Board or any committee of the Board; (n)  a record of its shareholders in a form that permits preparation of a list of the name and address of all shareholders in alphabetical order, showing the number of votes each shareholder is entitled to cast; (o) stock transfer records; and (p)appropriate accounting records.

2.2.  Inspection of Records.  A director or shareholder is entitled to inspect and copy any of the records of the Company during regular business hours, at the Company=s principal office, so long as the director or shareholder gives the Company written demand, at least five business days before the date on which the director or shareholder wishes to inspect and copy the records.  A director or shareholder may inspect and copy the records only if the demand is made in good faith, for a proper purpose, the director or shareholder describes with reasonable particularity the purpose and the records the director or shareholder desires to inspect, and the records are directly connected with the described purpose.  

ARTICLE III

MEMBERSHIP; STOCK

 3.1.  Membership; Stock Issuance.  The Company shall issue certificates for shares of the capital stock of the Company as evidencing membership therein and the members may be referred to as either shareholders or members, in conformance with the following:  

 a.  Issuance of Shares.  The aggregate number of shares of common stock which the Company shall be authorized to issue is 3,377 shares, having no par value, with classes of stock as hereinafter set forth. 

 b.  Classes of Stock.  The stock of the Company shall be issuable in two (2) classes of stock, denominated as follows:

 Class A - Agricultural Irrigation Stock

 Class B - Non-agricultural Pressurized Irrigation Stock

 (1)  Class A Stock.  The holders of Class A shares shall be entitled to utilize the Company’s water supply as delivered by the Company through the Company’s water system at the shareholder’s point of delivery only for the purpose of irrigation of agricultural farm land and stockwatering, at the rate, in a normal water year, of 3.0 c.f.s. per hour per share, in conformance with and subject to the Bylaws and Rules and Regulations of the Company (the “Bylaws and Rules and Regulations”).

 (2)  Class B Stock.  The holders of Class B shares shall be entitled to utilize the Company’s water supply as delivered by the Company through the Company’s water system at the shareholder’s point of delivery only for the purpose of pressurized irrigation in connection with residential and commercial uses on subdivided and other developed land, at the rate, in a normal water year, of 3.0 c.f.s. per hour per share, in conformance with and subject to the Bylaws and Rules and Regulations.

 c.  Issuance of Stock Certificates.  Certificates of stock shall be issued in numerical order, and each shareholder shall be entitled to a certificate signed by the president and the secretary, or an assistant secretary, certifying to the class and number of shares owned by said shareholder.  In the event any officer who has signed a certificate has ceased to be an officer before the certificate has been delivered, such certificate may, nevertheless, be adopted and issued and delivered by the Company as though the officer who signed such certificate or certificates had not ceased to be such officer of the Company.

 d.  Fractional Shares.  Certificates shall only be issued in whole shares and fractional shares of no less than one-quarter (1/4) share.

 3.2.  Holders of Stock.  Only registered shareholders shall be entitled to be treated by the Company as the holders in fact of the stock standing in their respective names, and the Company shall not be bound to recognize any equitable or other claim to or interest in any share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provide by the laws of the State of Utah.

 3.3.  Conversion of Class A shares to Class B shares.  Anytime usage of water under a share of Class A stock is to be changed from agricultural irrigation to non-agricultural irrigation in connection with residential and commercial uses on subdivided or subdivided land, such Class A share must be converted to a Class B share as follows:

 a.  Class A shares shall be convertible to Class B shares at the rate of one (1) share of Class A stock for one (1) share of Class B stock.

 b.  In order to effectuate a conversion of Class A shares to Class B shares upon the stock transfer records of the Company, the shareholder requesting the transfer shall present the Class A certificate(s) to the secretary.  

Upon receipt thereof, the Secretary shall date and mark as cancelled the Class A stock certificate(s) and then issue Class B certificate(s) to the requesting shareholder.

 3.4.  Transfers of Stock.  Transfers of stock shall be made only upon the stock transfer records of the Company, kept at the office of the Company, and shall be made in conformance with and subject to the following:

 a.  In order to effectuate a transfer of shares upon the stock transfer records of the Company, the shareholder requesting the transfer shall present to the secretary such documentation as shall be legally sufficient, in the opinion of the Board and the Company=s legal counsel, to justify the transfer of title of shares, including, but not limited to the following documents, as applicable:

 (1) a properly endorsed, original stock certificate as shown on the stock records of the Company (see Section 3.6 of this Article, below, regarding lost or mutilated stock);

 (2) a death certificate and other probate records, as necessary to demonstrate a right to the stock by reason of inheritance;

 (3) deeds signed by the record owner of the shares in which the intention of the owner to transfer the shares to the grantee named in the deed is clearly and unequivocally set forth; or

 (4) any combination of the foregoing.

Upon receipt by the Secretary of the necessary documentation, the Secretary shall date and mark as cancelled any stock certificate that is presented for transfer and issue a new certificate to the new owner thereof.

 b.  The Company shall establish, by separate resolution, a stock transfer fee which is to be paid by the shareholder requesting the transfer prior and as a condition to the transfer of the shares on the stock transfer records.  The amount of the fee shall be sufficient to cover all actual out-of-pocket costs, including printing costs, administrative costs, and legal costs, if any, incurred by the Company in connection with making the transfer.

 3.5.  Leased Shares.  Shares of stock of the Company may be leased by any shareholder to any other shareholder or non-shareholder subject to the following:

 a.  Any shareholder desiring to lease shares of stock shall, as a condition to authority to lease said shares, provide to the Company, in writing, no later than January 1 of any year in which said shares are to be leased, a written lease agreement or written authorization confirming the lease of said shares, including, but not necessarily limited to, the following information: 

 (1)  name and address of the shareholder-lessor; 

 (2)  name and address of the lessee; 

 (3)  certificate number and number of shares to be leased; 

 (4) identification of the headgate(s) or structure(s)on the Company=s diversion and canal system through which the water is to be delivered to the lessee;

  (5)  the term of such lease agreement; 

 (6)  a provision to the effect that the lessee of said stock shall be subject to and agrees to abide by all lawfully adopted by-laws and rules and regulations of the Company; and 

 (7)  such other information as may be required by the Board.

 b.  The term of any agreement for lease of shares of stock of the Company shall be for a period not less than a full irrigation season (April 1 through October 31).

 c.  The lessee of said stock shall have no right to sub-lease all or any portion of the stock leased by lessee.

 d.  No stock of the Company shall be leased in denominations of less than one (1) share.

 e.  The Company shall bill the shareholder-lessor of any leased stock for all annual and special assessments levied against any leased stock and the shareholder-lessor shall have the sole responsibility to pay said assessments as and when the same shall become due.  It shall be the sole responsibility of the shareholder-lessor of any leased shares to seek reimbursement, if any, for payment of said assessments from the lessee of the stock.

 f. All voting rights with respect to any leased shares of the Company shall be exercised by the shareholder-lessor of said shares, except by written proxy to the lessee of the stock or otherwise.

 g.  The lessee of any stock of the Company shall be subject to and agree to abide by all lawful bylaws and rules and regulations of the Company as a condition to delivery of water.

 3.6.  Lost or Mutilated Certificates.  In case of loss or destruction of any certificate of stock, another certificate may be issued in its place upon filing with the Board proof of such loss or destruction including an affidavit, duly sworn and acknowledged before a notary public, representing that the affiant is the owner of the shares to be transferred; that the original stock certificate or certificates have become mutilated or lost, and that after diligent search the certificate or certificates cannot be found; that the shares of stock represented by the certificate or certificates have not been sold or transferred; that the affiant is requesting that the Company issue new certificates; and that in the event lost stock certificates are later found, the same will be immediately surrendered to the Company for insertion in the stock transfer records.  In addition, the Board may require the posting of a satisfactory bond of indemnity to the Company and/or to the transfer agent and registrar of such stock, in such sum as the Board, on a case-by-case basis, may reasonably provide. 

The form of the affidavit to be used as referenced herein is attached as EXHIBIT “A” hereto.

 3.7.  Rules.  The Board shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, conversion and registration of certificates for shares of the capital stock of the Company, not inconsistent with the laws of the State of Utah, the Articles of Incorporation and these Bylaws.

ARTICLE IV

SHAREHOLDER'S MEETINGS

 4.1.  Place of Meetings.  All meetings of the shareholders shall be held at such place as shall be determined from time-to-time by the Board, and the time and place at which such meeting shall be held shall be stated in the notice and call of the meeting.

 4.2.  Annual Meeting.  An annual meeting of the shareholders of the Company shall be held at such time and on such date as shall be stated in or fixed in accordance with a resolution of the Board. The failure to hold an annual meeting at the time and date determined shall not affect the validity of any corporate action.  The business for the meeting shall include, but not be limited to, the following: (a) calling the meeting to order, (b) proof of notice of the meeting, (c) reading of the minutes of the previous annual meeting, (d) report of officers, (e)  report of committees, if any, (f) election of directors, and (g) miscellaneous business.

 4.3.  Special Meetings.  Special meetings of the shareholders, for any purpose or purposes, including emergencies, unless otherwise prescribed by state law, may be called by the president of the Company, or in the event of his failure or refusal to act, by a majority vote of the Board, and shall be called at any time by the president or vice president, or the secretary or treasurer, upon the request of shareholders owning not less than 33-l/3 percent of the outstanding stock of the Company entitled to vote at such meeting.  Business transacted at all special meetings shall be confined to the subjects stated in the call of the meeting.

 4.4.  Notice of Meetings.  

 a.  Time and Manner of Notice.  Notice of the date, time and place of any annual or special meeting of shareholders shall be given to each shareholder of record of the Company entitled to vote, in conformance with the following:

 (1) Notice shall be given by electronic communication, including fax or e-mail, or by mailing written or printed notice of the same at least ten (10) days prior to the meeting; and if notice is mailed by other than first-class or registered mail, not less than thirty (30) days nor more than sixty (60) days prior to the date of such meeting.  Such notice shall be deemed to be delivered when sent by electronic communication or, if by mail, when deposited in the United States Mail, postage prepaid, and addressed to the shareholder=s address appearing on the stock transfer records or other records of the Company.  Notice may be waived in writing, signed by the shareholder entitled to the notice and delivered to the Company for inclusion within the minutes or for filing with the corporate records.  

 (2)  In addition to written notice, notice may but need not be given by publication.  If by publication, notice of the meeting shall be published three separate times, with the first of the publications being no more than 60 days before the meeting and the last publication being no fewer than 10 days prior to the meeting.  

 (3)  An emergency meeting may be called using the most reasonable means of notice possible, including notice communicated in person, by telephone, by any form of electronic communication, including fax or e-mail, by mail, by private carrier or any combination of the above.

 b.  Contents of the Notice.  The notice may include any matter or matters to be approved or discussed and shall include a description of any matter or matters that must be approved by the shareholders or for which approval is sought in connection with conflict of interest transactions, indemnification of directors and officers, amendments to the articles of incorporation and bylaws, merger plan, sale of Company property other than in the ordinary course of business, and dissolution of the Company. The Company shall give notice of a matter a shareholder intends to raise at the meeting if requested in writing to do so by a person entitled to call a special meeting and the request is received by the secretary or president of the Company at least 10 days before the Company gives notice of the meeting.

 c.  Record Date.  The Board may fix in advance a date, not exceeding thirty (30) days preceding the date of any meeting of shareholders, as a record date for the determination of the shareholders entitled to notice of and to vote at any such meeting.  If a record date is not established for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, the date on which notice of the meeting is mailed shall be the record date.  When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof.

 4.5.  Quorum.  Except as otherwise provided herein, at any annual or special meeting of shareholders, the shareholders entitled to vote who are present at the meeting or represented by proxy shall constitute a quorum for action on any matter, unless otherwise expressly provided herein on in the Act.  Once a shareholder is represented for any purpose at a meeting, including the purpose of determining that a quorum exists, the shareholder is considered present for quorum purposes for the remainder of the meeting and for any adjournment of the meeting.

 4.6.  Voting at Meetings.

 a.  Shareholder Voting List.  A complete list of the shareholders entitled to vote at the ensuing election, arranged in alphabetical order and sequentially numbered with a number for each shareholder, showing the address of each shareholder entitled to notice of and to vote at the meeting, and the number of voting shares held by each, shall be prepared by or at the direction of the Secretary who shall have charge of the stock ledger and be filed in the office where the election is to be held, at least two (2) days before every election.  The shareholder voting list shall, during normal business hours and during the proceedings of the election, be open to the examination of any shareholder. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting.  The original stock transfer record shall be prima facie evidence as to the shareholders entitled to examine such list or transfer record or to vote at the meeting of shareholders.

 b.  Personal and Proxy Vote.  At the meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such shareholder and bearing a date not more than eleven months prior to said meeting, unless said instrument provides for a longer period.

 c. Manner of Voting.  Voting at all meetings of shareholders shall be by voice vote, by vote indicated by raise of hand, or otherwise, as directed by the presiding officer.  

 d.  Votes Per Share.  

 (1)  Each shareholder having full shares shall be entitled to one (1) vote for each full share of stock.  In those cases where a shareholder owns only a fraction of one share, he shall be entitled to one (1) vote.  Fractions of shares above one share shall be rounded up or down to the nearest full share and be entitled to vote accordingly..  

 (2)  If a stock certificate stands of record in the name of two or more persons, only one person may vote the share and that share shall still be entitled to the voting power said share would otherwise have under subsection (1) immediately above.

 e. Simple Majority Vote. Except as otherwise provided herein, all questions voted upon shall be approved by a simple majority vote.

 f. Voting of Shares by Fiduciaries.

 (1)  Shares held by an administrator, executor, guardian, or conservator may be voted by him either in person or by proxy without a transfer of such stock into his name.

 (2)  Shares standing in the name of a trustee may be voted by him either in person or by proxy but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name as transferee.

 (3)  Shares standing in the name of a receiver may be voted by such receiver, and shares held by, or under the control of a receiver, may be voted by such receiver without the transfer thereof into his name, if authorization to do so is contained in an appropriate order of the court by which such receiver was appointed.

 (4)  A shareholder whose shares are pledged shall be entitled to vote such shares until the shares shall have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

 (5)  Shares of Company stock belonging to the Company, or held by it in a fiduciary capacity, shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares at any given time.

 g.  Inspectors of Election.  Two inspectors of election shall be appointed by the Board before or at each meeting of the shareholders of the Company at which votes shall be taken.  The inspectors shall receive and take charge of all proxies and shall decide all questions touching upon the qualification of voters, the validity of proxies, and the acceptance and rejection of votes. In case of a tie vote by the inspectors on any questions, the presiding officer shall decide. 

 4.7.  Participation in Meetings by Telecommunication not Allowed.  A shareholder shall not be allowed to participate in an annual or special meeting by means of telecommunication. 

 4.8.  Action by Written Ballot Without a Meeting.  

 a.  At the direction of the Board, any action that may be taken at any annual or special meeting of shareholders may be taken without a meeting if the Company delivers in person, or by first class mail, a written ballot to every shareholder entitled to vote on the matter.  

 b.  Such written ballot shall set forth each proposed action and provide an opportunity to vote for or against each proposed action to be decided by written ballot.

 c.   Approval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot equals or exceeds the quorum otherwise required to be present at a meeting authorizing the action and  the number of approvals equals or exceeds the number of votes that would be required to approve the matter at a meeting at which the total number of votes cast at the meeting was the same as the number of votes cast by ballot.

 d.  All solicitations for votes by written ballot shall:

 (a)  indicate the number of responses needed to meet the quorum requirements; 

 (b)  state the percentage of approvals necessary to approve each matter other than election of directors;

 (c) specify the time by which a ballot must be received by the Company in order to be counted; and  

 (d) be accompanied by written information sufficient to permit each shareholder casting the ballot to reach an informed decision on the matter. 

 e.  A written ballot may not be revoked by the shareholder casting the same.

 f.   Action taken under this section has the same effect as action taken at a meeting of shareholders and may be described as such in any document.  

 g.  The shareholders voting list for meeting and action by written ballot without a meeting shall be prepared in conformance with the provisions of Section 4.6.a., Shareholder=s Voting List, of this Article.

ARTICLE V

BOARD OF DIRECTORS

 5.1.  Number  The powers and business affairs of the Company shall be exercised and managed by a governing board consisting of seven (7) directors (the “Board of Directors”), to be elected and appointed as hereinafter set forth. 

 5.2.  Representation; Election and Appointment; Tenure.  

 a.  The holders of Class A shares entitled to vote shall elect five  (5) directors, the holders of Class B shares entitled to vote shall elect one (1) director, and the six members of the Board of Directors shall by majority vote appoint one (1) director who shall serve as a director and hold the office of secretary-treasurer of the Company.  The candidate receiving the highest number of votes cast in favor of their election shall be elected to the elected positions on the Board. Directors may be elected and appointed for successive terms.  

 b.  Each elected director shall be elected  and the appointed director shall be appointed for a term of two (2) years and shall hold office until their successors are elected and qualified as set forth herein. Board elections shall be called and conducted at annual shareholder’s meetings in such a manner as to provide for staggered terms of the members of the Board. 

 5.3 Qualification.  All directors must be natural persons of 18 years of age or older, and be a shareholder in the Company owning at least one (1) share of the class of Company stock by which the director is elected.  Notwithstanding the foregoing, with regard to business entities or political subdivisions of the State which own more than twenty (20) shares of Company stock, of either class, one natural person who is an officer, director, manager, partner or other designee of said shareholder, who is designated in writing by said shareholder as the official representative of said entity or political subdivision, shall be eligible to serve as a director on the Board.

 5.4.  Powers.  In addition to the powers and authority which by these Bylaws and the Articles are expressly conferred upon it, the Board may exercise all such powers of the Company and do all such lawful acts and things as are not by the Act, the Articles, or these Bylaws directed or required to be exercised or done by the shareholders. Without limiting the general powers of the Board to exercise control of the Company set forth above, the Board shall have the power, among other things: (i) to locate and construct wells, pipelines, dams, storage reservoirs, canals, ditches, head gates and diversions to provide for the storage and delivery of waters to the shareholders of the Company; (ii)  to adopt bylaws and rules and regulations governing the management of the internal affairs of the Company, the operation and control of the Company=s water rights, water stock, sources of water supply, and diversion and canal systems and appurtenant facilities and equipment, (iii)  to ration water in times of scarcity; (iv) to levy assessments on all shares of Company stock and enforce and collect such assessments; (v)  to buy, sell, exchange, or dispose of the real and personal property of the Company as may be deemed necessary; provided, however, that no sale, exchange or lease of real estate or water rights (other than as a pledge as security for a loan) shall be valid unless and until approved by a majority vote at a regular or a special meeting of the shareholders called for that purpose at which a quorum constituting 50% of the outstanding stock of the Company is present; (vi) to regulate the transfer of Company stock; (vii) to prescribe the duties of its officers, agents, and employees, and fill all vacancies in the Board caused by an increase in the number of members of the Board, by death, by resignation or otherwise; (viii) to employ engineers, attorneys, superintendents, and other subordinate officers, agents and laborers as in their judgment the business of the Company may require, prescribe their duties, and provide for their compensation; and (ix) to have and exercise any and all such express and implied powers as shall be necessary or convenient to effect any or all of the purposes for which the Company is organized so long as such actions are not inconsistent with the Articles, these Bylaws or the Act.  

 5.5.  Regular Meetings.  Regular meetings of the Board shall be held at the principal office of the Company or at such other place or places  within or without the State of Utah, and on such dates and times as the Board may from time-to-time designate. 

 5.6.  Special Meetings.  Special meetings of the Board may be called at any time by the president, or in his absence, by the vice president, or by any two directors, to be held at the principal office of the Company or at such other place or places within or without the State of Utah, and on such dates and times as the Board may from time-to-time designate. 

 5.7.  Action Without a Meeting.  

 a.  Any action required or permitted to be taken at a Board meeting may be taken without a meeting if each and every director in writing either (a) votes for the action; or (b) votes against the action or abstains from voting and waives the right to demand that action not be taken without a meeting.  

 b.  Action is taken under this section only if the affirmative vote for the action equals or exceeds the minimum number of votes that would be necessary to take the action at a meeting at which all of the directors then in office were present and voted.  

 c.  An action taken pursuant to this Section 5.6 is not effective unless the Company receives a written document satisfying the requirements of subsection (1) of this Section 5.6, signed by all directors, and which is not revoked pursuant to subsection (4) of this Section 5.6.  The writing may be received by electronically transmitted facsimile or other form of wire or wireless communication providing the Company with a complete copy of the document, including a copy of the signature on the document.  A director=s right to demand that action not be taken without a meeting shall be considered to have been waived if the Company receives a writing satisfying the requirements of this subsection (3) that has been signed by the requisite number of directors and not revoked pursuant to subsection (4) of this Section 5.6.  Action taken pursuant to this section shall be effective when the last writing necessary to effect the action is received by the Company, unless the writings describing the action taken set forth a different effective date.  

 d.  If the writing is received by the Company before the last writing necessary to effect the action is received by the Company, any director who has signed a writing pursuant to this Section 5.6 may revoke the writing by a writing signed and dated by the director describing the action and stating that the director=s prior vote with respect to the writing is revoked.  

 e.  An action taken pursuant to this Section 5.6 has the same effect as an action taken at a meeting of directors and may be described as an action taken at a meeting of Directors in any document.  

 5.8.  Quorum.  At any meeting of the directors, a majority of the directors in office immediately prior the beginning of the meeting shall constitute a quorum for the transaction of business, but if less than said number is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. 

 5.9.  Manner of Acting.  Each director shall be entitled to one (1) vote on all matters brought before the Board. If a quorum is present when the vote is taken, the affirmative vote of the majority of the directors present at a meeting shall be the act of the Board. 

 5.10.  Notice of Meetings.  

 a.  Regular meetings of the Board may be held without notice of the date, time, place and purpose of the meeting.  

 b.  Special meetings of the Board shall be preceded by at least five (5) days= notice of the date, time and place of the meeting.  Notice may be delivered by written notice mailed to each director at said director=s home or business address, or personally by telephone, or by electronic transmission, including fax or e-mail.  If mailed, such notice shall be deemed to have been delivered when deposited in the United States Mail so addressed, postage prepaid.  The notice need not describe the purpose of the special meeting.  A director may waive any notice of a special meeting before or after the time and date of the meeting, which waiver shall be in writing, signed by the director entitled to notice. 

 5.11.  Waiver of Notice; Presumption of Assent.  A director=s attendance at or participation in a meeting waives any required notice to that director of the meeting unless at the beginning of the meeting or promptly upon the director=s later arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice; and after objecting, the director does not vote for or assent to action taken at the meeting; or if special notice was required of a particular purpose the director objects to transacting business with respect to the purpose for which the special notice was required; and  after objecting, the director does not vote for or assent to action taken at the meeting with respect to the purpose.  

 5.12.  Committees.  An Executive Committee may be appointed by resolution passed by a majority of the Board and shall have all the powers provided by statute, except as specially limited by the Board.  Additionally, other standing or temporary committees may be appointed from time-to-time by a majority vote of the Board among the members of the Board or from among the shareholders, which committees shall be invested with such power as the Board may see fit, subject to such conditions as may be prescribed by such Board.  All committees so appointed shall keep regular minutes of the transactions of their meetings, and shall cause them to be recorded in books kept for that purpose in the office of the Company and shall report the same to the Board.  All committees shall serve at the pleasure of the Board.

 5.13.  Compensation.  Compensation to directors for their service on the Board may be authorized and fixed as determined, from time-to-time, by the Board.  Directors shall be reimbursed, with approval of the Board, for any actual and reasonable expenses incurred by a director in the performance of his duties as a director.  Shareholders of special or standing committees may likewise be reimbursed upon approval of the Board.

 5.14.  Vacancy.  If a vacancy occurs on the Board, for any reason, the remaining members of the Board may fill the vacancy, for the unexpired term of the person vacating the office, by the affirmative vote of a majority of all the directors then remaining in office.  

 5.15.  Removal.  The shareholders may remove one or more directors elected by them, for cause.  A director or directors may be removed only at a meeting called for the purpose of removing that director or those directors and if the meeting notice states that the purpose, or one of the purposes, of the meeting is removal of a director or directors.  A director or directors may only be removed if the number of votes cast to remove the director or directors would be sufficient to elect the director at a meeting to elect directors.  A director elected by the Board to fill the vacancy of a director elected by the shareholders may be removed for cause only by the shareholders, and not by the Board.

ARTICLE VI

OFFICERS

 6.1.  Election; Term of Office; Qualification.  

 a.  The officers of the Company shall consist of one (1) president and one (1) vice-president, who shall be elected by the directors from among the membership of the Board of Directors, and a secretary-treasurer who shall be appointed by the Board of Directors as provided in 5.2 a., 

 b.  All officers shall serve for a term of two (2) years.  Each officer shall hold office until their successors are elected and qualify.  All officers shall be natural persons of 18 years of age or older and shareholders. 

 6.2.  Duties.

 a.  President.  The president shall be the principal executive officer of the Company and, subject to the control of the directors, shall have general supervision and control of the business affairs of the Company and the operation and maintenance of the Company=s water diversion and canal systems.  The president, when present, shall preside at all meetings of shareholders and directors.  He may sign or countersign, with the secretary or any other proper officer of the Company thereunto authorized by the directors, all certificates for shares of the Company, as well as any deeds, mortgages, bonds, contracts and other instruments of the Company as authorized by the Board, and shall perform all such other duties as are incident to his office or are properly required of him, from time-to-time, by the Board and as authorized by the Act.

 b.  Vice-president.  In the absence of the president, or in the event of his death, inability or refusal to act, the vice-president shall perform and exercise the duties and functions of the president, and when so acting shall have all the powers of and be subject to all the restrictions upon the president.  The vice-president shall perform and discharge such other and further duties as may be assigned from time-to-time by the president or by the Board.

 c.  Secretary -Treasurer.  The secretary-treasurer shall have the following duties:

 (1) keep and maintain as custodian, at the principal office of the Company, the books, records and documents set forth in Article II herein, in written form or in another form capable of conversion into written form within a reasonable time;

 (2) see that all notices regarding annual stock assessments, delinquencies and stock sales are duly given in accordance with the provisions of these By-laws;

 (3)  have general charge of the stock transfer records of the Company;

 (4)  have the charge and responsibility for all the funds and securities of the Company from any source whatsoever, and in such capacity shall deposit all such funds in the name of the Company in such banks, trust companies or other depositories as shall be selected in accordance with these By-laws, shall keep regular books of account, shall disburse the funds of the Company in payment of the just demands against the Company, or as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the Board from time to time as may be required an account of all transactions and of the financial condition of the Company; and

 (5)  in general perform all duties incident to the office of secretary and treasurer and such other duties as from time to time may be assigned by the president or the Board.

 6.3.  Absence or Inability to Act.  In the case of absence or inability to act of any officer of the Company and of any person herein authorized to act in his place, the Board may from time-to-time delegate the powers or duties of such officer to any other officer or any director or other person whom it may select.  

 6.4.  Vacancies.  Vacancies in any office held by an officer arising from any cause may be filled by the Directors at any annual or special meeting.

 6.5.  Other Officers.  The Board may appoint such other officers and agents as it shall deem necessary or expedient, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

 6.6.  Compensation.  Compensation to officers of the Company shall be authorized and fixed as determined, from time-to-time, by the Board.  The officers shall be reimbursed, with approval of the Board, for any actual and reasonable expenses incurred by an officer in the performance of his or her duties as an officer of the Company. 

 6.7.  Fidelity Bonds.  The Board, by resolution, may require any and all of the officers to give bonds to the Company, with sufficient surety or sureties, conditioned for the faithful performance of the duties of their respective offices, and to comply with such other conditions as may from time-to-time be required by the Board.

 6.8.  Tenure and Removal from Office.  The officers of the Company shall hold office until their successors are chosen and qualify. Any officer and the general manager may be removed at any time, with or without cause, by the affirmative vote of a majority of the whole Board.

 6.9.  Resignation.  Any officer may resign his office by giving written notice of resignation to the Board. Such resignation shall be effective when the notice is received unless the notice specifies a later effective date.

ARTICLE VII

INDEMNIFICATION

 7.1.  Shareholders Not Liable for Corporate Obligations.  The private property of the shareholders of the Company and of its directors and officers shall not be liable for the obligations of the Company.

 7.2  Indemnification.  To the fullest extent allowed by the Act, the Company shall indemnify any director, officer, or former director or officer of this Company against any expense reasonably incurred in connection to any action, suit, or proceeding in which he/she is made a party by reason of being, or having been, a director or officer of this Company provided that he/she acted in good faith and that he/she reasonably believed their conduct was in the Company=s best interest and was not adverse to the Company.  The indemnification of such expenses shall include attorney=s fees, judgments, fines, and amounts paid in settlement. The Company may obtain insurance to assist it in performing this obligation. 

ARTICLE VIII

CONTRACTS, LOANS, CHECKS AND DRAFTS

 8.1.  Contracts.  The directors may authorize any officer or officers, and any duly authorized agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Company, and such authority may be general or confined to specific instances.

 8.2.  Loans.  The Board, upon resolution duly adopted, shall have the authority to incur indebtedness on behalf of the Company, in an amount not to exceed $200,000.  Any loans or indebtedness in excess of that amount shall be incurred by the Company only upon a majority vote of shareholders of the Company.  The Board shall be authorized to issue notes, bonds, and/or make and perform contracts with the United States, the State of Utah and other governmental entities and agencies and/or private lenders, pursuant to which the Company shall be authorized to sell, lease, exchange, mortgage and/or pledge all or substantially all of the assets of the Company as and for security for loans, or otherwise, for the purpose of acquiring water, water rights, water stock, sources of water supply, and real and personal property, and for the development of and/or improvements to the Company=s water diversion and canal systems and related appurtenances and equipment or otherwise for the purpose of attaining or furthering any of its lawful purposes and objectives; provided, however, that no such note, bond, contract or other evidence of indebtedness which exceeds $200,000 and/or which requires a pledge of all or substantially all of the assets of the Company as and for security therefor shall be authorized or valid unless: (i) the Board shall adopt a resolution recommending the same to the shareholders and directing that the resolution be submitted to a vote at a meeting of shareholders having voting rights, which may be either an annual or special meeting, (ii) written notice of such meeting shall have been duly given in conformance with the requirements of these Bylaws, and (iii) said resolution shall be approved by a majority vote of all the shareholders in person or by proxy at a meeting in which a quorum is present.

 8.3.  Checks and Drafts.  All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Company, shall be signed by such officer or officers, agent or agents of the Company and in such manner as shall from time-to-time be determined by resolution of the Board.

ARTICLE IX

DISTRIBUTION OF WATER

 9.1.  Water Master.  The Board directors shall appoint and employ a Water Master and one or more ditch riders and such other employees, if any, as the Board deems necessary.  Compensation to be paid to the Water Master and other employees shall be fixed by the Board.  

 (a)  Authority.  The Water Master shall be the official representative of the Company, with authority to distribute the water of the Company to its shareholders in an equitable manner, by share, according to the turn schedule established by the Board in consultation with the Water Master.  The Water Master shall serve at the pleasure of and be answerable to the Board.

 (b)  Water Master Duties and Responsibilities.  The Water Master shall have the duty and responsibility to implement a water turn schedule and system of headgate settings in order to effectuate the distribution of water to the shareholders.  The shareholders shall abide by the water turn schedule and headgate settings implemented by the Water Master.  The Water Master will coordinate with the individual shareholders and cooperate with them to the extent possible, in carrying out the Water Master’s duties and responsibilities.  The Water Master shall inspect the Company=s canals on a frequent and regular basis, as necessary, for the purpose of inspecting the canals and diversion devices, setting headgates and checking turns and usage.  More frequent inspections of the canal may be required, for safety reasons, depending on the circumstances. The Water Master will prepare and maintain such records and reports as the Board may from time-to-time direct.

 (c) Appeal of Water Master Decisions. In the event a shareholder shall contest a decision of the Water Master with regard to the distribution of water, the shareholder shall first attempt to resolve the issue with the Water Master. The final decision of the Water Master may be appealed by a shareholder to the Board which shall have the final say in such matters. 

 9.2.  Distribution.  

 a.  Water Delivery.  Each shareholder in the Company shall be entitled to a flow of water bearing the same ratio to the total flow of water available for distribution to all shareholders as the number of shares owned by him bears to the total number of shares of stock issued and outstanding, regardless of class; provided, however, that this regulation shall not preclude the rotation and use of water among shareholders by agreement and with the consent and approval of the Board.  Water shall be distributed to the shareholders only through authorized diversion devices installed and maintained in the canals by the Company.  The timing and amount of water distributed to each shareholder at a given diversion device shall determined according to the turn schedule established by the Water Master based upon the shares of stock assigned by said shareholder to that diversion device.  The Company shall at all times have the right to measure the stream of water being delivered to a shareholder by meter, flume, weir or other measuring device as the Board may determine.  

 b.  Theft of Water.  The taking of water by any shareholder out of turn or exceeding the amount of water to which the shareholder is entitled pursuant to the shareholder=s shares of Company stock, or the altering of any stream flow in the canals, without the express written approval of the Water Master, shall herein be defined to constitute theft of the Company=s water.  In the event of a theft of Company water:

 (1)  The Board shall prosecute the theft to the fullest extent of the law; 

 (2)  The Board may, in its discretion, impose a fine, levied and collectible as a special assessment, in such amount as the Board may, in its sole discretion, determine to be sufficient in amount to compensate the Company for the value of the water taken, including all expenses incurred by the Company in investigating and rectifying the theft, which amount shall in no event be less than $200.00 for each offense; and

 (3)  The Company may, in its discretion, withhold the delivery of water to any shareholder who is guilty of theft of the Company’s water until such time as the Water Master is assured that the theft has been terminated and will not continue.

 9.3.  The Company Canal System and Shareholder Irrigation Systems; Title.  

 a.  The Company Canal System Described; Title; Operation and Maintenance.  The canal system of the Company (the “Company Canal System”), shall consist of the Wilson Canal, the North Branch Wilson Canal and the South Branch Wilson Canal, together with all main diversion structures and headgates, delivery laterals and headgates, weirs, flumes, and measuring devices used in the delivery and measurement of water to shareholders, and all facilities and equipment related thereto, up to and including the headgate at each shareholder’s point of delivery of Company water.  Title to the Company Canal System shall at all times be and remain vested in the Company and shall be operated, maintained, repaired and replaced by the Company, at its sole cost and expense.  

 b.  Shareholder Irrigation Systems Described; Title; Operation and Maintenance.  

 (1)  All pumps, ditches and pipeline laterals and related facilities and equipment extending from the shareholder=s side of the Company=s delivery headgate (the “Shareholder=s Irrigation System”), shall be owned, operated, maintained, repaired and replaced by the individual shareholder, at the shareholder=s sole cost and expense.

 (2)  Shareholders shall not divert water from the canal through any pump without the express written approval of the Board.  No pump shall be installed in a canal or on a canal right-of-way within the Company Canal System without the express written approval of the Board.  Persons desiring to install a pump shall first make a written application to the Board.  Information required for the application shall include a complete set of plans and specifications for the pump and related equipment and facilities, the exact location of the pump, a map detailing the location and number of acres to be irrigated through the pump; and the intended date of installation. All pumps shall be installed by the shareholders in conformance with these Bylaws and such other specifications as may be required by the Board from time-to-time.  No pump shall be installed in such a manner as to hinder or otherwise interfere with the Company=s right-of-way along a canal bank.  In that regard, screening structures, if any, shall not obstruct the flow of water in the canal.  The Company shall have continual access to all private pumps and appurtenant measuring devices placed in or near the canal as a condition to Company authority to establish and use the pump.

 (3)  All Shareholder Irrigation Systems shall be operated and maintained by the shareholders in good repair so as not to waste the valuable water supply of the Company.

 9.4.  Exclusive Control.  The Company Canal System shall be under the exclusive control and management of the Board, the Water Master and other employees acting under authority of the Board or the Water Master.  The distribution of Company water to shareholders shall only be made by order of the Board or by the Water Master and other employees as may be designated and acting under authority of the Board.  In all instances, the Board shall have the responsibility to assure that the water of the Company is used in a beneficial manner, efficiently and without waste.

 9.5.  Checks, Dams & Obstructions.  

 a.  No shareholder shall place any check, dam or obstruction in a Company canal, for any purpose, without the express written approval of the Water Master. Shareholders who have received approval for the use of a check or dam in the canal shall have the sole and separate responsibility to clean and maintain the same, at the shareholder=s expense.  In the event a shareholder shall fail to clean and maintain a check or dam as required herein, the Company shall remove the same at the shareholder=s cost and expense.

 b.  Shareholders who maintain checks or dams in the canal shall defend, indemnify and hold the Company and its directors, officers, employees and consultants harmless from and against any claim, liability or damage to the canal and/or other property, real or personal, of the Company, its shareholders or any other person, and for injury to persons or animals, resulting from or arising out of the shareholder's use and maintenance of said check or dam.

 9.6.  Responsible Persons and User Information.  

 a.  A responsible person shall be designated for each diversion structure, in conformance with the following:

 (1)  When the shareholder receiving water from a canal diversion structure is a single shareholder, that shareholder shall be the responsible person.  In those instances when the shareholder receiving water from a canal diversion structure is a corporation, association or entity, then such corporation or association or entity shall appoint a person to be designated as the responsible person for the diversion structure.  

 (2)  A record of the name of the responsible person, together with said person=s address, home and work telephone numbers and the number of the diversion structure for which said person is responsible, shall be maintained by the Water Master. It shall be the duty of the individual shareholder, corporation, association or entity, as the case may be, to notify the Water Master, in writing, of any changes in the responsible person for a diversion structure.  

 b.  In order to provide for the reasonable and orderly conduct of the Company, the responsible persons designated for each diversion structure, at the request of the Board, shall provide information relative to the water users and the lands irrigated with water diverted through said diversion structure.  Such information may include, but is not limited to, the names, addresses and telephone numbers of those persons who divert and use water through the diversion structure, a map identifying the location of secondary diversions off of the shareholder=s system, if any, and the place of use of the water diverted through the diversion structure.

 c.  Responsible persons shall be obligated to ensure, to the extent possible, that water diverted through a diversion structure is only used by those who own or rent stock of the Company or are rightfully entitled to use water by virtue of membership in another corporation, association or entity which is a shareholder of the Company.

 9.7.  Company Canal System Encroachments.

 a.  No person, corporation, association or entity, public or private, shall be authorized to construct, install or place any structure, including, but not limited to, any bridge, fence, pipeline, utility line or other such structure which extends over, under, into, across or through any canal or otherwise encroaches upon any canal right-of-way or Company property, without the express written approval of the Board.  No such use of the canal and/or right-of-way or Company property shall be authorized except by specific grant of license or easement from the Company, and no such license or easement shall be granted except upon the following conditions:

 (1)  The grantee under the license or easement shall first be required to submit to the Board plans and specifications setting forth in detail the proposed use of the canal and/or right-of-way or Company property.  Such other and further information as shall be necessary, in the discretion of the Board, to properly review and consider said proposed use shall be submitted promptly by the grantee upon request.

 (2) The grantee shall sign a written acknowledgment and agreement wherein the grantee shall agree to:

 (a)  construct and install any such structure, and to own, operate, maintain, repair and replace the same, in good working order, and to repair any canal bank or other property damaged as a result of any such structure, so long as the structure shall remain in place, all at grantee=s sole cost and expense.  Particularly with respect to bridges or other such structures extending over the top of the canal, a minimum freeboard clearance of at least 12 inches must be provided between the canal water surface elevation at maximum design capacity of the canal; and

 (b) defend, indemnify and hold the Company and its directors, officers, employees and consultants harmless from and against any liability or damage to the canal and/or other property, real or personal, of the Company, its shareholders or any other person, and for injury to persons or animals, resulting from or arising out of the grantee=s ownership, operation and maintenance of any such structure.

 b. No substance or material, of any kind or nature, including, without limitation, storm drainage water off of roadways or other developments, shall be introduced into the canal or upon any canal right-of-way or Company property, without the express written approval of the Board. Absent authority from the Board, any unauthorized encroachment or introduction of material into any canal or right-of-way of the Company is prohibited and any such trespass shall be prosecuted by the Company to the full extent of the law.  The Board may authorize such lawful action as is necessary to secure the removal of any unauthorized structure upon consultation with the Company=s legal counsel.

 c.  Any person, corporation, association or entity, public or private, which owns, operates and maintains any existing structure which extends over, under, into, across or through the canal or otherwise encroaches upon any canal right-of-way shall, as of the effective date hereof, be subject to the terms and provisions of this Section 9.7.

 9.8.  Emergency Distribution.  In times of water shortage due to drought or any other natural or man-made condition or occurrence, the Board shall have the full right and authority to declare a water emergency, and to ration or otherwise regulate the distribution and use of water to the shareholders, in such manner as it deems appropriate, until the emergency situation has been alleviated.

 9.9.  Violations.  In the event any shareholder shall violate any provision of these Bylaws, or other lawfully adopted regulation promulgated by the Board as authorized herein, the Board and/or general manger may authorize the Water Master to terminate water service to said shareholder until the violation is corrected.

ARTICLE X

CHANGES IN POINT OF DELIVERY, PLACE AND NATURE OF USE OF WATER

 10.1.  Requested Changes “Within” the Company Canal System.  A shareholder may not change the point of delivery and place of use of the Company=s water from one point of delivery on a canal (the “Prior Delivery Point”) to a new point of delivery on the same canal or on a different canal within the Company Canal System (the “New Delivery Point”), without the prior written approval of the Board.  

 a.  In evaluating the request for such a change, the Board shall consider all relevant factors pertinent to the requested change including, but not limited to, the following:

 (1) whether the shareholder requesting the change has fully paid all outstanding assessments against the shareholder=s stock;

 (2) whether there is sufficient capacity and water pressure in the New System for the proposed use;

 (3) whether sufficient water will remain at the Prior Delivery Point so as to insure the delivery of water with adequate pressure to the other shareholders;

 (4) whether there will be increased maintenance costs to the Company and/or its shareholders; and

 (5) whether such a change will, in any way, impair, adversely affect or otherwise interfere with any existing rights of the Company and/or any of its shareholders.

 b.  Procedure for Effectuating the Requested Change Within the System.  The procedure to be followed by a shareholder requesting a change within the Company Canal System, and the procedure to be followed by the Board in reviewing and taking action on the request are as follows:

 (1)  Any shareholder, as a condition to making such a change shall first be required to submit a formal written application for such change to the Board prior to January 1 of the year in which the change is proposed to be made.  The application shall contain the following information:

 (a)  the name and address of the applicant;

 (b)  the certificate number, class and number of shares to be changed;

 (c)  the place of use of water delivered at the Prior Delivery Point;

 (d)  the proposed point of delivery and place of use at the New Delivery Point, and the nature of use of Company water proposed at the new place of use; and

 (e)  the purpose for which the change is requested.

 (2)  The applicant shall be required to pay a non-refundable application fee in such amount as may be determined from time-to-time by the Board to cover administrative costs incurred by the Company in reviewing and processing the application.

 (3) In the event a shareholder desires to change an existing headgate on a canal at the Prior Delivery Point and/or the New Delivery Point, the approval of 51% or more of the shares receiving water out of said headgate at the Prior Delivery Point and/or the New Delivery Point, as the case may be, shall approve the change as a condition precedent to Board approval of the transfer; except that if the shareholder desires to change to a New Delivery Point into a ditch owned by an incorporated or other business entity, the approval of said entity shall be required as a condition precedent to Board approval of the transfer.

 (4)  The applicant, at applicant=s sole expense, shall pay all costs of constructing and installing the Shareholder=s Irrigation System and related facilities at the New Delivery Point, including reimbursing the Company for all costs and expenses incurred by it in constructing and installing the Company=s delivery structure.

 (5) The applicant, at applicant=s sole expense, shall re-construct, install, alter, repair and/or replace any part of the Company Canal System and related facilities used in connection with the delivery of water to the applicant in connection with the Prior Delivery Point so as to avoid or remedy any adverse affect or interference to the Company or other shareholders resulting from the change requested by the applicant.

 (6)  If in the opinion of the Board, there is a need for the Company=s attorneys, engineers or other consultants to review the application to insure that the proposed changes do not adversely affect the Company and/or any other shareholder, then the Company shall provide the applicant with a detailed statement of the costs and fees incurred by the Company in connection with such review and the applicant shall be required to pay all such costs and fees as billed by the Company.

 (7)  The applicant shall defend, indemnify and hold the Company, and its directors, officers, employees and consultants harmless from and against any claims, liability or damage to any property, real or personal, of the Company, its shareholders or any other person, and for injury to persons or animals, resulting from or arising out of the applicant=s change. 

 (8)  All fees, costs and expenses which are required to be paid by the applicant in connection with the application for change as provided herein shall be deemed to be a special assessment against the applicant=s shares of stock, collectible in conformance with the provisions of these Bylaws pertaining to special assessments.

 10.2.  Requested Changes “Outside” the Company Canal System or Otherwise Involving a Change in the Underlying Water Rights of the Company.  No shareholder shall be permitted to file or cause to be filed with the Utah Division of Water Rights a permanent change application, temporary change application or exchange application involving a change to a point of diversion and place of use outside the Company Canal System and/or otherwise involving any element of the Company=s underlying water rights without the express written approval of the Board and full compliance with the requirements of Section 73-3-3.5 Utah Code Annotated, 1953, as amended (the “Change Statute”), and the following rules and regulations:

 a.  Applicable Changes.  Proposed changes which require approval of the Board under the provisions of this Section 10.2 include, but are not limited to, the following:

 (1) A proposed change to a point or points of diversion different from the Company=s authorized point or points of diversion, including proposed changes to a source or sources of water supply different from the Company=s authorized source or sources of water supply;

 (2) A proposed change to a place of use different from the Company=s authorized place of use of water, including proposed changes to a distribution system different from the Company=s existing canal system;

 (3) A proposed change to a nature of use of water which is different from the Company=s authorized nature of use of water, including, if applicable, a proposed change to a period of use different from the Company=s authorized period of use; and/or

 (4) Any other proposed change which by law requires the filing of a permanent or temporary change application or exchange application with the Division of Water Rights.

 b. Evaluation Factors.  In evaluating the request for a change under this Section 10.2, the Board shall evaluate all relevant factors pertaining to the change as requested including, but not limited to the following:

 (1) any increased cost to the Company or its shareholders;

 (2) interference with the Company=s ability to manage and distribute water for the benefit of all shareholders;

 (3) whether the proposed change represents more water than the shareholder=s pro rata share of the Company=s water right pursuant to the shares owned by the shareholder;

 (4) impairment of either the quantity or quality of water delivered to other shareholders under the existing water rights of the Company, including rights to carrier water;

 (5) whether the proposed change would cause a violation of any statute, ordinance, regulation, or order of a court or governmental agency;

 (6) whether the shareholder has or can arrange for the beneficial use of water to be retired from irrigation within the Company=s service area under the proposed change; and/or

 (7) the cumulative effects that the approval of the change application may have on other shareholders or Company operations.

 c.  Change Procedure.  The procedure to be followed by a shareholder requesting a change under this Section 10.2, and the procedure to be followed by the Board in reviewing and taking action on the request are as follows:

   (1)  Written Application.  Any shareholder, as a condition to making any change referenced in Section 10.2. a. above shall first be required to submit a formal written application for such change with the Board prior to January 1 of the year in which the change is proposed to be made.  The Board may provide a standard application form for such purpose.  

   (a)  The application requesting the change shall contain the following minimum information:

 (i)  the name and address of the applicant, and the applicant’s tax identification number and employee identification number, as applicable;

 (ii)  the quantity of water sought to be changed;

 (iii)  the certificate number and number of shares affected by the change;

 (iv)  the current point or points of delivery for the Company=s water under the shares prior to the change;

 (v)  the proposed point or points of diversion for the water under the shares after the change;

 (vi)  the current place of use of water under the applicant=s stock and a legal description of the land proposed to be retired from irrigation, if applicable;

 (vii)  the proposed place of use, including a legal description of the land upon which the water under the shares is proposed to be used after the change;

 (viii)  the proposed nature of use and period of use for the water under the shares after the change; and

 (ix)  an explanation of the proposed change including the need and purpose for which the change is requested.

 (b)  Within a reasonable time after receipt of the application for change, the Board shall specifically request any further information that may, in its discretion, be required for it to properly evaluate and consider the request and, if applicable, prepare any required change or exchange application, if any, which may be required to be filed with the State Engineer.  The applicant shall fully cooperate with the Company in providing such additional information as requested.

 (2)  Notice of Application.  

 (a)  The Board, within thirty (30) days from the date of receipt of the application, may, but need not, send notice of the request to any or all other shareholders who, in the opinion of the Board, may be affected by the requested change. Such notice shall include a copy of the change request and provide that any affected shareholder may file a written objection to the request within ten (10) days of mailing such notice.

 (b)  The applicant, and any other shareholder who has filed a written objection to the change proposed in the request shall receive ten (10) days= written notice of the meeting at which the request is to be considered by the Board, and shall be allowed to attend.  

 d. Payment of All Costs and Expenses Associated with the Change.  The applicant shall be required to pay all costs and expenses incurred by the Company in connection with the applicant=s proposed change, as follows:

 (1) The applicant shall pay, as billed by the Company, all costs and expenses relating to the Board=s consideration and processing of the application, including, without limitation, all costs and expenses incurred by the Company which are associated with: 

 (a) all administrative costs and expenses as a result of the requested change, including, without limitation, all notices, and all legal, engineering and other consultants= fees and costs; 

 (b) all costs and expenses incurred in connection with the preparation and filing with the State Engineer of any required change or exchange application to effectuate the applicant=s requested change;

 (c) all costs and expenses incurred in connection with any and all administrative and judicial proceedings in connection with any change or exchange application;

 (d)  all costs and expenses related in any way to the applicant=s diversion of water at the new point of diversion, including, without limitation, the construction, installation, repair, maintenance, and replacement of all facilities, structures, equipment and appurtenances related thereto;

 (e) all costs and expenses associated with the re-construction, alteration, repair, maintenance and replacement of any existing or new delivery device and related facilities of the Company and/or any other shareholder which shall be necessitated in order to avoid or remedy any adverse affect or interference resulting from the change requested by the applicant; and

 (f) all costs and expenses incurred in connection with the submittal of proof of appropriation with respect to the change.  

 (2)  All costs and expenses which are required to be paid by applicant in connection with the application for change as provided above shall be deemed, individually and collectively, to be special assessments against the shares of stock of the applicant, enforceable and collectible in conformance with the provisions of the Bylaws pertaining to assessments.

 (3) Simultaneously with the filing of the application for change, the applicant shall surrender to the Board the applicant=s shares of stock upon which the proposed change is based.  The Company shall hold said certificates as security for the payment of all costs and fees for which applicant is responsible as provided in subparagraph d.(1) (a) through (e).  The certificates shall be returned to the applicant upon payment in full of all such costs and fees.  

 e.  Application Agreement.  As part of the application, the applicant shall be required to enter into an agreement with the Company wherein the applicant shall acknowledge and agree as follows:

 (1)  Notwithstanding the fact that the applicant may divert and utilize water from a point of diversion and/or at a place of use outside the Company distribution system and outside the authorized place of use of the Company=s water supply, and for a purpose other than the purpose for which Company water has historically been used, the applicant, nevertheless, shall:

 (a)  be and remain a shareholder of the Company and be treated the same as and be subject to and shall agree to abide by the Company=s Articles, these Bylaws, as well as any and all other reasonable rules and regulations which may be promulgated by the Board from time-to-time, as applicable, and 

 (b)  continue to pay all stock assessments on applicant=s share(s) of stock as and when the same become due;

 (2) The applicant shall be subject to such conditions, and/or limitations that may be reasonably necessary to insure that the change requested by the applicant shall not adversely affect or otherwise interfere with any existing rights of the Company and/or any of its other shareholders.

 (3) The applicant shall defend, indemnify and hold the Company, and its directors, officers, employees and consultants harmless from and against any claims, liability or damage to any property, real or personal, of the Company, its shareholders or any other person, and for injury to persons or animals, resulting from or arising out of the applicant=s change.

 (4) The applicant shall pay all costs and expenses which applicant is obligated to pay pursuant to the provisions of Article, as levied and billed by the Company.

 f.  Action by the Board.  No later than 120 days from the date of receipt of a properly submitted application requesting the change, the Board, at a duly-called meeting, shall take action on the application.  The Board shall notify the applicant of its decision in writing sent by regular mail. If the Company fails to respond to the change request within said time, the failure to respond shall be considered to be a denial of the request.

 (1)  Based on the facts and circumstances of each proposed change, the Company may, by resolution duly adopted by majority vote, approve the change request, approve the change request with conditions or deny the change request, subject to the following:

 (a)  If the requested change is approved, in connection with the change or exchange application to be filed with the Utah Division of Water Rights, the Board, in its sole discretion, may either require that the Company be a co-applicant with the applicant on such application, or that the applicant may file such application in applicant=s own name.  With respect to either method, a letter assenting to the change or exchange application shall be signed by the president of the Company as follows:

 (i)  The letter of assent shall set forth all conditions imposed by the Board in conformance with these regulations and clearly state that the Company=s assent to the filing of the change or exchange application is subject to the conditions imposed by the Board and that said conditions are to be included in the State Engineer=s memorandum decision and certificate pertaining to the requested change.  

 (ii) Each condition shall be clearly set forth and include, but not be limited to, as applicable, any required limitations and adjustments that the applicant must make in the quantity of water which the shareholder shall be authorized to divert and use from the shareholder=s source of supply outside the Company Canal System; the bearing of all losses or reductions caused by the change through evaporation, seepage, and percolation; the structuring of proper credits and/or deductions for carrier water or return flow; the duty to take water in turn; the obligation to pay for reorganizing the water distribution program or schedule of the Company so as to adjust for differing flows in the canal and required adjustments to other Company facilities; the modification of diversion structures, diversion devices, and connections; and any and all other adjustments and modifications to the Company Canal System, and the Shareholder Irrigation Systems, all as may be prescribed by the Board of the Company in its sole discretion.

 (iii)  The applicant shall attach the letter of assent to the change or exchange application filed with the Utah Division of Water Rights.  

 (iv)  The applicant shall pay all costs, fees and expenses associated with the preparation, filing and prosecution of the change or exchange applications through all administrative and legal proceedings, including costs of appeal.

 (b)  If the requested change is denied, the written notice shall contain a brief explanation for the denial.  

 (2)  A change request shall not be denied, absent other factors, if any anticipated or potential cost, damage, or impairment to the Company or its shareholders can be reasonably mitigated by the applicant without cost to the Company. 

 g. Accomplishing the Change/Exchange. Upon final approval by the State Engineer of the change or exchange application, the applicant, at applicant=s sole expense, shall have the responsibility of accomplishing the change or exchange subject to any conditions imposed by the Company and/or the State Engineer.

 h.  Extensions.  If the Company is a co-applicant on the change or exchange application, all requests for extension of time in which to submit proof filed with the Utah Division of Water Rights shall be co-signed by the president of the Company, unless the Board directs otherwise, in which case the applicant alone may file such a request. If the applicant alone files the change or exchange application, the applicant may file requests for extension of time without further approval of the Company, so long as copies of such requests are sent to the Company.

 i.  Notation on Stock Ledger Books.  If the State Engineer approves the requested change or exchange, the Secretary shall make a notation thereof on the Company stock record reflecting the change and point of diversion, place or nature of use of the water represented by the shares which are the basis of the change or exchange.

 j.  Continued Beneficial Use.  Subject to the provisions of Article X, while the change or exchange is being accomplished, the applicant shall be responsible for continued beneficial use of the water represented by the shareholder=s stock at the existing point of diversion and place of use under the shares which are the basis of the change or exchange or by lease or otherwise as approved by the Board in conformance with these Bylaws.

 k.  Compliance with Conditions.  If the applicant fails to comply with any condition imposed by the Board in its approval of the requested change, either before or after a certificate of change is issued by the State Engineer, the Board may, after written notice to the applicant and after allowing reasonable time to remedy any failure, withdraw its approval of the application and petition the State Engineer for an order canceling the application or certificate, as the case may be; provided, however, the Company shall not withdraw its approval so long as all such conditions are being substantially complied with.  

 l.  Retirement of Acreage Upon Proof.  Upon submittal of proof on any change, the applicant shall arrange for the retirement from irrigation of the required amount of land within the Company=s certificated or decreed service area, if applicable, and shall so notify the Company in writing.

ARTICLE XI

APPORTIONMENT OF WATER RIGHTS LOST BY FORFEITURE

 11.1.  Legal Authority.  If, upon the issuance of a final decree or interlocutory decree in a quiet title or general adjudication action of a court of competent jurisdiction, it is determined that a portion of the water rights owned or held by the Company has been forfeited for non-use under the laws of the State of Utah, the Board, pursuant to Section 73-1-4.5  Utah Code Ann. (2002), shall have the power and authority to apportion such loss or forfeiture to any and all shareholders whose failure to make beneficial use of the water caused the loss or forfeiture of that portion of the Company=s water right.  The procedure for allocating such forfeiture and loss of water shall generally follow the process set forth in '16-6a-609, Utah Code Ann.(2000) and the provisions of this Section, which shall control.

 11.2.  Determination of Forfeiture.  Upon a court finding of forfeiture as set forth in Section 11.1 above, the Board shall conduct a survey or review of all beneficial uses of water within or without the Company=s certificated or decreed service area, as changed from time-to-time by authority of the State Engineer.  The survey and review shall attempt to identify those shareholders and the corresponding shares of Company stock owned by each that have caused the loss of the Company=s water rights, in conformance with the following: 

 a.  The survey or review shall include, but not be limited to:

 (1)  a review of the stock transfer records and other records of the Company; 

 (2)  any reports, notes, or other data relative to the use and delivery of water kept by the Water Master or other water distribution officials of the Company; and

 (3)  any records of the State Engineer, including, without limitation, hydrographic surveys, maps, water commissioner reports, and non-use applications or any other relevant data or information.  

 b.  The Board may retain such experts or consultants as it deems necessary to accomplish the survey and review.  

 c.  The identification of specific areas of non-use in the findings and decrees of any court shall be deemed conclusive evidence of such non-use.  

 d.  Shareholders having the longest period of non-use shall be considered first, proceeding to the next oldest in order to allocate the forfeiture among the responsible shareholders.

 e.  Any non-use of water by a shareholder occurring after the date of the relevant court decree will not be considered for purposes of the then current allocation of the loss, but may be considered in any future forfeiture loss allocation.

 f.  Shares of stock and corresponding beneficial uses which are covered by valid non-use applications approved by the State Engineer or shares beneficially used through Board approved trading or leasing of shares within the Company=s then approved service area shall not be considered as having caused the forfeiture to occur so long as the water thereunder has been beneficially used.

 11.3.  Notice to Shareholders; Opportunity for Hearing.  If a shareholder is identified by the Board as causing, in whole or in part, the forfeiture of any water rights of the Company, the Board shall direct the Company secretary to send each such shareholder written notice of its findings and notifying the shareholder that his or her shares may be subject to cancellation for failure to beneficially use the water and the reasons therefore, subject to the following:

 a.  Any such notice shall give the affected shareholder thirty (30) days to file a written response to the Board and/or to request a hearing before the Board.  

 (1)  If no response is received, the Board may proceed to take any action it deems reasonable and appropriate relative to canceling all or a portion of the shares of the shareholder to allocate the forfeiture as it deems necessary and appropriate.  

 (2)  If the shareholder files a response and/or requests a hearing, the Board shall schedule the hearing or a meeting to consider the shareholder=s written response at the next regular meeting of the Board or at a special meeting of the Board called for that purpose.  The Board may schedule the hearing at a later time where the shareholder=s response raises issues on which additional information or data is needed.  

 b.  Notice of any hearing shall be sent to the affected shareholder by regular mail, not less than ten (10) days prior to such hearing.  

 c.  No shares will be canceled unless and until the Board has taken final action as set forth herein.

 11.4.  Cancellation of Shares.  After holding a hearing and/or considering an affected shareholder=s written response, the Board shall consider all relevant information and data relative to non-use of the water represented by the shares, and may cancel all or part of such shares, as the case may be, if the evidence demonstrates that the water represented by such shares has not been beneficially used and that the non-use of water under said shares has caused a forfeiture of a portion of the Company=s water rights.  If the Board apportions all or a portion of the forfeiture of the Company=s rights to any shareholder as herein provided:

 a.  A sufficient number of shares as necessary to account for the water right lost by forfeiture, including necessary transportation or carrier water losses, shall be treated by the Company as shares redeemed by the Company from the shareholder responsible for the loss, and said shares shall be cancelled; whereupon the total number of shares owned by that shareholder shall be reduced accordingly on the records of the Company, and the authorized shares of the Company shall be reduced by the amount of shares that were redeemed and cancelled.

 b.  Notice of any such redemption and cancellation shall be sent by the secretary of the Company to the affected shareholder by certified mail.

 c.  The redemption and cancellation of shares of any shareholder pursuant to this Section shall not relieve said shareholder of any liability for unpaid assessments on such stock or debts the shareholder may owe to the Company, including, without limitation, said shareholder=s proportionate share of any underlying debt obligations incurred by the Company.

 d.  Any judicial proceeding to challenge the cancellation of shares as provided herein shall be commenced within sixty (60) days of the mailing of the notice of such cancellation.

 11.5.  Reduction in Delivery Pending Appeal.  In making the apportionment, the Company shall reduce the amount of water provided to the shareholder in proportion to the amount of the lost water right during an appeal of a decision that reduced the Company=s water rights, unless otherwise ordered by a court of proper jurisdiction.  

ARTICLE XII

STOCK ASSESSMENTS; FEES AND CHARGES

 12.1.  Stock Assessments.  

 a. Levy of Assessments.  All Class A and Class B shares shall be fully assessable. Assessments shall be levied on a per share basis, and the amount and manner of assessment may differ from class to class.  The Board shall generally levy assessments within each class on an equal and pro-rata basis; particularly with respect to special assessments, the levy of assessments may be on other than a pro-rata basis when the equities appear to justify the same.

 (1)  Annual Regular Assessments.  All stock of the Company shall be subject to annual assessment to carry out the purposes and objectives of the Company as set forth in the Articles, including, without limitation, its obligation to operate, maintain, repair, modify, replace and improve the Company Canal System, as now owned or which may hereafter be owned by the Company.  

 (2)  Special Assessments.  The Company, by separate resolution, may levy special assessments for the purpose of defraying, in whole or in part, any extraordinary expenses not reasonably capable of being fully paid with funds generated by annual regular assess­ments, the costs of any unexpectedly required repair or replacement of any part of the Company Canal System, and for the construc­tion, reconstruction, repair, or any improvement of the Company Canal System.  The Board shall issue orders levying a special assessment in the same manner as orders levying annual assessments.

 b.  Determination of Assessments.  The amount of the regular assessment shall be determined annually by the Board and the amount of any special assessment shall be determined if and when needed, in conformance with these Bylaws and applicable laws of the State of Utah regarding the levy of assessments.  All assessments shall be due and payable as hereinafter set forth, except that special assessments shall be authorized and be due and payable as necessary in the discretion of the Board, as provided below.

 c.  Assessment Lien.  All unpaid assessments shall constitute a lien against the delinquent stock, which shall have priority over any mortgage, lien, pledge, sales contract, escrow contract, lease, conditional or unconditional transfer, or any other encumbrance, lien, claim, attachment, execution, or other charge or interest in or upon or deemed or claimed to be against the stock, and the right of the Company to assess the stock for such assessments shall be paramount and superior to all those liens, claims, charges, or interests. 

 d.  Assessment Procedure.  The procedure for levying and enforcing the collection of assessments against the stock of the Company shall be as follows:

 (1)  On or before [February 1] of each water year, the Board, shall determine the amount necessary to pay in full, as the same become due, all administrative costs, costs of construction, improvement, operation, maintenance, repair, and replacement of the Company Canal System, the payment of all outstanding indebtedness of the Company, and payments for any and all other purposes for which the Company is organized in that water year, and shall make and levy a regular assessment against the outstanding stock of the Company in an amount sufficient to generate the necessary revenue.  

 (a)  The Board shall give to each shareholder a formal written notice levying the annual regular assessment on or before [March 1]of the water year.  The secretary shall issue the notice in the form attached as EXHIBIT “B” hereto.  The notice shall be mailed to each shareholder or designated person at the address said shareholder as set forth in the Company=s records.  

 (b)  All annual regular assessments shall be due and payable on or before [April 1] of the water year and shall be deemed delinquent as of said date.  Special assessments shall be due as determined by the Board at the time of their levy.  Any delinquencies after the due date for any regular or special assessment will accrue interest at the rate of 1.5% per month until paid.  Delinquent stock shall be sold as provided herein. The date for the sale of delinquent stock shall be fixed at date and time established by the Board following the [April 1] delinquency date. 

   (2)  The Company shall not deliver water to any shareholder who is delinquent in the payment of any regular or special assessments as of the date of delinquency, without express authorization from the Board.

 (3)  If the assessment, or a portion thereof remains unpaid on the date specified in the notice when the stock shall be deemed delinquent, the secretary shall thereafter prepare a Notice of Delinquency and Sale which shall contain a list of all delinquent stock, and the date time and place at which delinquent stock shall be sold as provided herein.  The Notice of Delinquency and Sale shall be published in the form attached as EXHIBIT “C” hereto. The Notice of Delinquency shall be published in a newspaper of local circulation, once each week for at least two (2) weeks prior to the date of sale of the delinquent stock, the first publication of which shall be at least fifteen (l5) days prior to the actual date of the sale of the delinquent stock as set forth in the notice.  In addition, the secretary shall also prepare and mail an Individual Notice of Delinquency and Sale to each of the shareholders identified in the Notice of Delinquency and Sale to be published as hereinabove set forth. The Individual Notice of Delinquency and Sale shall be in the form attached as EXHIBIT “D” hereto.

 (4)  Pursuant to the provisions of U.C.A. ' l6-4-l5 (1961), the publication of the Notice of Delinquency shall vest jurisdiction in the Company to sell and convey a perfect title to all stock listed therein upon which any portion of any regular or special assessment or expenses of advertising remains unpaid at the hour appointed for the sale, subject however to assessments subsequently levied; however, the Company shall sell no more of the stock than is necessary to pay the assessments due and expenses of advertising and sale, including interest, late fees and charges, and attorney=s fees, incurred by the Company; except that no less than one full share shall be sold in connection with any delinquency.

 (5)  On the day, at the place and at the time appointed in the Notice of Delinquency and Sale, the Board, in its discretion, may determine to sell the stock at public auction, or in lieu of public auction, the Board may determine to have the Company purchase the delinquent stock, subject to the following:

 (a) In the event the Board determines to sell the stock at public auction, only so many shares of delinquent stock as shall be necessary to pay the past due assessment and charges thereon shall be sold (which may be less than the total shares owned by the delinquent shareholder). The stock shall be sold to the highest bidder, for cash.  The person offering to accept the least number of shares in exchange for said offeror=s payment of the total assessment and expenses due shall be deemed to be the highest bidder. (For example, if person A offers to accept 3 shares in exchange for A=s payment of the total past due assessment and expenses, and person B offers to accept 2 shares in exchange for B=s payment of the total past due assessment and expenses, person B shall be the high bidder.)  The stock purchased shall be transferred to the highest bidder on the stock transfer records of the Company upon payment by the high bidder of said assessment and expenses.

 (b) In the event the Board determines not to offer the stock for sale at public auction, the Board shall have the Company, through the secretary or general manager, bid-in and purchase the delinquent stock at the amount of the assessment and expenses due; whereupon, the amount of the assessment and expenses shall be credited as paid in full, and entry of the transfer of the stock to the Company shall be made on the stock transfer records of the Company.  All purchases of stock by the Company for delinquent assessments shall vest the legal title to said stock in the Company, and the stock so purchased shall become treasury stock.  While the stock remains the property of the Company it is not assessable. 

The form of Sale and Assignment of Stock, to be used under either of the above scenarios, shall be in the form attached as EXHIBIT “E” hereto. 

 (6)  Upon conclusion of the sale, the secretary of the Company shall prepare and file in the permanent corporate records three affidavits, as follows: 

 (a)  The first affidavit, entitled “Affidavit of Assessment”, shall state that the secretary mailed the notice of order levying assessments as required herein.  A form for the Affidavit of Assessments is attached as EXHIBIT “F” hereto.  

 (b) The second affidavit, entitled “Affidavit of Sale of Stock”, shall state that the stock sale occurred at the time and place as set forth in the Notice of Order Levying Assessments and Notice of Delinquency and Sale, and set forth the particular quantity of stock sold, to whom and for what price the stock was sold, and acknowledge that the money was paid and received.  A form for the Affidavit of Sale of Stock is attached as EXHIBIT “G” hereto.

 (c)  In addition, the secretary of the Company shall obtain a “Proof of Publication” affidavit from the publisher of the newspaper that published the Notice of Delinquency and Sale indicating that the notice was published in the paper, the dates of publication, etc.  

 12.2.  Fees and Charges.  The Board, by separate resolution, may, from time-to-time, levy such fees and charges, other than and in addition to regular and special assessments, as it may deem necessary for the administration of the Company and otherwise in carrying out the purposes and objectives of the Company as set forth in the Articles of Incorporation.

ARTICLE XIII

FISCAL YEAR

The Company shall operate on a calendar year basis, January 1 through December 31.

ARTICLE XIV

AMENDMENT OF BYLAWS

These Bylaws may be altered, amended or repealed and new Bylaws not inconsistent with the Articles may be adopted by the Board in conformance with the applicable provisions of the Act.