Você está na página 1de 91

S

DARCA
Ditch and Reservoir Company Alliance

2010-2011
Register Online www.darca.org
DITCH AND RESERVOIR COMPANY ALLIANCE
DARCA
1630A 30th Street, #431
Boulder, Colorado 80301
970-412-1960
John McKenzie, Executive Director
John.McKenzie@darca.org

SAMPLE DITCH COMPANY BYLAWS

Bylaws for Ditch Companies Workshop

'HQYHU&RORUDGR
2FWREHU , 20

Compiled and edited by Eve Triffo 20

etriffo1@aol.com
INTRODUCTION

This book is an edited compilation of bylaws from a number of


Colorado ditch companies. I am very grateful to the ditch
companies and their lawyers who sent me a copy of their bylaws.
Without their cooperation, this work would not have been possible.
I have taken care to remove all identifying characteristics from the
bylaws I have included in this selection to preserve the anonymity
of the ditch companies.

There are also some bylaws I wrote from scratch which do not
originate with any ditch company.

A second installment of bylaws will be produced for the DARCA


Directors and Officers Training Workshop in late January 2010.
That installment will include, among other things, bylaws
concerning directors and officers duties and powers, the handling
of ditch company money, and issues regarding ditch company
stock.

This compilation is only for educational purposes and does not,


and should not be construed to, constitute legal advice. It is meant
to provide an educational tool for DARCA members and others.

I am always eager to receive additional ditch company bylaws for


my files. Please feel free to send them to me.

Eve Triffo
etriffo1@aol.com
P.O. Box 464
Canon City, CO 81215
DARCA, 1--

BYLAWS FOR DITCH COMPANIES -- HANDOUTS

TABLE OF CONTENTS

1. Sample Articles of Incorporation (from DARCA Handbook)

2. Sample Bylaws entire set (from DARCA Handbook)

a. Stockholders and Rights and Duties


b. Board of Directors Duties and Compensation
c. Officers Duties and Compensation
d. Finance-related
e. Shares and Their Transfer
f. Miscellaneous
g. Distribution of Water
h. Assessments on Stock and Liens

3. Sample Bylaws second entire set with Catlin (change of


water right, augmentation) provisions

4. Sample Policy Statement Regarding Access to Companys


Books, Records or Minutes and Sample Request for
Information Form (from DARCA Handbook) & Sample Ditch
Rules Separate from Bylaws

5. Sample Operations Bylaws

, 6. Sample Penalties for Interference with Ditch Structures


Bylaws

7. Sample Change of Water Right/Augmentation/Catlin Bylaws

8. Sample Indemnification Bylaws


9. Sample Right of First Refusal Bylaws

10. Sample Easement and License Bylaws

11. Sample Assessments and Forfeiture Bylaws

12. Sample Fractional Shares Bylaws (Prohibition, Buy-out,


Green Buy-out)
darca - byla

STATE OF COLORADO
SUPREME COURT
BOARD OF CONTINUING LEGAL & JUDICIAL EDUCATION
1560 Broadway #1820
Denver, CO 80202
(303) 866-6500

NOTICE OF ACCREDITATION
The Board has accredited the following continuing legal education seminar under Rule 260:

GENERAL ETHICS
NAME OF SEMINAR LOCATION DATE SPONSOR CREDITS
CREDITS

BYLAWS: DITCH COMPANIES DENVER CO 10/22/2010 DARCA 4

Colorado attorneys and judges who attend the entire seminar may claim the credits indicated. If any Ethics Credits
are indicated, they may be claimed by attending those parts of the seminar indicated below the seminar's name.
Ethics credits are NOT IN ADDITION TO General Credits. General and Ethics Credits are NOT added to or
subtracted from each other. This accreditation is awarded provided the sponsor permits the Board's staff to attend
the seminar; gives every Colorado attorney and judge attending a copy of this combined notice/affidavit form;
accepts at the seminar, this form after it is executed by attending Colorado attorneys and judges; and delivers the
executed forms to the Board within 10 days after the seminar.

Date Reviewed: 10/21/2010

AFFIDAVIT

INSTRUCTIONS: Colorado attorneys and judges may report CLE Credits earned at this seminar by executing this
affidavit and returning the ENTIRE notice/affidavit form to the Sponsor AT THE SEMINAR according to the sponsor's
instructions. This credit will not be entered into the Board's records unless your name and Colorado attorney
registration number are PRINTED CLEARLY and your signature appears in ths spaces below.

DO NOT CLAIM THESE CREDITS ON ANY OTHER AFFIDAVIT

CERTIFICATION OF ATTENDENCE: By signing below I certify that I am entitled to claim:

General Credits Ethics Credits

ATTY NUMBER LAST NAME (print)

SIGNATURE DATE
Sample articles of incorporation
of a mutual ditch company
Parenthetical comments are shown in [italics].

ARTICLES OF INCORPORATION
OF
ABC [Mutual] DITCH COMPANY

For the purpose of forming a mutual ditch company pursuant to C.R.S. 7-42-101 et seq. and the provisions of the Colo-
rado Revised Nonprot Corporation Act, the undersigned, being three natural persons of the age of eighteen years or more,
hereby make, execute and acknowledge the following articles of incorporation.

[The name of the company can, but is not required to, reect its mutual ditch status.]

ARTICLE I
Name

The name of the corporation shall be ABC [Mutual] DITCH COMPANY (hereinafter referred to as the Company).

[The name of the company is required by C.R.S. 7-102-102 (1)(a).]

ARTICLE II
Duration

The period of duration of the Company shall be perpetual.

[The duration of the company can be set by the incorporators at any length of time short of perpetual. However, it is not generally
recommended to identify less than a perpetual duration.]

ARTICLE III
Purposes

[The purpose or purposes of the company is not required to be set forth in the articles of incorporation. However, C.R.S. 7-42-101(1)
does at least require that the articles of incorporation state: the stream, channel, or source from which the water is to be taken; the point
or place at or near which the water is to be taken; the location, as near as may be, of any reservoir intended to be constructed; the line,
as near as may be, of any ditch or pipeline intended to be constructed; and the use to which the water is intended to be applied. See
Sample Article III subparagraphs A and B below. The Incorporators should carefully consider, with counsel, the specic needs of the
company and draft the provisions of the articles of incorporation accordingly.]

The purposes for which the Company is organized and the nature of the business to be carried on by it, without pecuniary
gain or prot, are as follows:

A. To acquire, own, hold, improve, manage, control, operate, repair and maintain the real property commonly known
as the [name of ditch], together with all water rights related thereto, whether now existing or as may be acquired in the
future, including the water right originally decreed to [identify decreed water rights]. The source of supply of said water
right is [identify source of supply]. [Identify the point of diversion, the line of the ditch].

B. To use the yield from said water rights for the benet of shareholders who own the rights to its use for all benecial
purposes recognized by law.

Ditch Company Handbook | June 2005


C. To furnish and distribute to all shareholders their pro rata share of each years net annual yield of water produced in the
exercise of the water rights managed by the Company.

D. To do all and everything necessary, suitable, or proper for the accomplishment, attainment, or exercise of any of the
objects and purposes set forth herein, and to do every other act or thing incidental or appurtenant to or growing out of or
connected with those objects and purposes.

The enumeration of any specic purpose shall not be construed to limit or restrict in any manner the general rights of the
corporation as provided by law, nor shall the expression of one purpose be determined to exclude another.

ARTICLE IV
Principal Ofce

The Companys principal ofce is [identify principal ofce].

[Identication of the principle ofce of the company is required by C.R.S. 7-102-102 (1)(d).]

ARTICLE V
Powers

[Description of the powers of the company is not required to be included in the articles of incorporation. However, the
incorporators should consider, with advice of counsel, enumerating at least the basic powers to do business the corporation
possesses as recommended below.]

In furtherance of its purposes but not otherwise, the Company shall have the following powers:

A. All of the powers and privileges conferred upon nonprot corporations and mutual ditch companies by the common
law and the statutes of the State of Colorado in effect from time to time.

B. All of the powers necessary, suitable, proper or desirable to perform the obligations and duties and to exercise the rights
and powers of the Company including, without limitation, the following powers:

1. To make, in the manner prescribed by law, assessments on its capital stock, to be levied pro rata on the shares of stock
for the purpose of meeting operating expenses, paying any indebtedness of the Company, or both, and to enforce
such assessments according to Colorado law.

2. To have a perpetual lien upon its capital stock and the water rights represented by the same for any and all assess-
ments duly levied until the same shall be fully paid.

3. To keep in good order, condition and repair, all of the assets of the Company.

4. To obtain and maintain, to the extent available, all policies of insurance appropriate or required by law.

5. To protect and defend the assets of the Company from loss and damage by suit or otherwise.

6. To own, hold, improve, manage, control, operate, repair and maintain the assets of the Company in connection with
its affairs, subject to these Articles of Incorporation and the Bylaws.

7. To pay all expenses in connection with the performance of its duties and the exercise of its powers and all ofce,
legal, accounting and other expenses incident to the conduct of the business of the Company, specically including
all licenses, taxes, charges, fees, assessments or governmental charges levied or imposed against the assets of the
Company.

8. To borrow funds and to give security therefore in order to pay for any expenditure or outlay required pursuant to
law, these Articles of Incorporation or the Bylaws, and to execute all instruments in evidence of such indebtedness
as the Board of Directors may deem necessary or desirable.

9. To enter into contracts within the scope of the Companys duties and powers, and to do all other acts necessary,
appropriate or advisable in carrying out any purpose of the Company with or in association with any person, rm,
association, corporation or other entity or agency, public or private.

Ditch & Reservoir Company Alliance


10. To establish bank accounts which are interest bearing or non-interest bearing, as may be deemed advisable by the
Board of Directors.

11. To keep and maintain detailed, full and accurate books and records showing in chronological order all of the
receipts, expenses, and disbursements of Company funds and, upon the vote of a majority in interest of the share-
holders, to cause a complete audit to be made of the books and records by a certied public accountant.

12. To supervise all ofcers, agents and employees of the Company and to see that their duties are properly performed.

13. To designate and remove the personnel necessary for the operation, maintenance, and repair and replacement of
the assets of the Company.

14. To adopt, alter, amend and repeal such Bylaws as may be necessary or desirable for the proper management of
the affairs of the Company, provided however, that such Bylaws may not be inconsistent with or contrary to any
provisions of law or these Articles of Incorporation.

ARTICLE VI
Capital

The aggregate number of shares which the Company shall have authority to issue is [identify number of shares of stock]
shares, without par value, which shares shall be designated Common Stock. Such Common Stock shall be fully assess-
able. No assessment shall, however, be made unless the question of making such assessment shall rst be submitted to the
holders of the Common Stock of the corporation at the annual meeting, or at a special meeting called for that purpose, and
a majority of the holders of Common Stock, either in person or by proxy voting thereon, shall vote in favor of making such
assessment.

[Information regarding shares of the company (the information required by C.R.C. 7-106-101) is required to be included in the
articles of incorporation by C.R.S. 7-102-102 (1)(b). The Incorporators should seek advice of counsel in determining how best to draft
the voting provisions to effect the goals of the company.]

ARTICLE VII
Voting

Each outstanding share of Common Stock shall be entitled to one vote and eachoutstanding fractional share of Common
Stock shall be entitled to a corresponding fractional vote on each matter submitted to a vote of shareholders, except that at
each election for directors every shareholder entitled to vote at such election shall have the right to a number of votes equal to
the number of such shareholders shares and fractional shares of Common Stock multiplied by the number of directors to be
elected. A shareholder may cumulate such votes for the election of directors to be elected, but not for any other purpose.

[This is a sample voting rights section for demonstration purposes only. Voting rights of the shareholders should be carefully consid-
ered by the Incorporators, with advice of counsel, and should be drafted to t the specic needs of the company.]

ARTICLE VIII
Preemptive rights

The shareholders shall have no preemptive rights to acquire any unissued or treasury shares of stock of the Com-
pany, securities convertible into shares, or securities carrying stock purchase options or warrants to acquire any unissued or
treasury shares of stock of the Company.

[This is a sample section dealing with preemptive rights for demonstration purposes only. The Incorporators should carefully con-
sider, with advice of counsel, what rights shareholders will and will not have and draft the provisions of the articles of incorporation to
t the specic needs of the company.]

ARTICLE IX
Quorum of Shareholders

A quorum at any meeting of shareholders of the Company shall consist of a majority of the shares of the Company entitled
to vote at such meeting, and the same proportion of the shares of any class entitled to vote as a class at such meeting, repre-
sented in person or by proxy.

Ditch Company Handbook | June 2005


[This is a sample section dealing with quorum issues for demonstration purposes only. The Incorporators should carefully consider, with advise
of counsel, what quorum provision will t the specic needs of the company and draft the provisions of the articles of incorporation accordingly.]

ARTICLE X
Regular Shareholder Vote

At any meeting of shareholders at which a quorum is present, the afrmative vote of a majority of the shares present in person or
by proxy and entitled to vote on the matter shall be the act of the shareholders.

[This is a sample section dealing with shareholder voting for demonstration purposes only. The Incorporators should carefully consider, with advice
of counsel, what voting requirements will t the specic needs of the company and draft the provisions of the articles of incorporation accordingly.]

ARTICLE XI
Shareholder Voting on Extraordinary Actions

With respect to the following extraordinary actions which may be taken by the Company, and which require the vote or concur-
rence of the holders of the outstanding shares of the Company shares entitled to vote thereon, the following afrmative vote of such
shares shall be required to constitute approval of such action.

A. Two-thirds to amend the Articles of Incorporation.

B. Two-thirds to voluntarily dissolve the Company by the act of the Company or to revoke voluntary dissolution proceedings
previously initiated by the Company.

[This is a sample section dealing with shareholder voting for demonstration purposes only. The Incorporators should carefully consider, with advice
of counsel, what voting requirements will t the specic needs of the company and draft the provisions of the articles of incorporation accordingly.]

ARTICLE XII
Right of Directors and Ofcers to Contract with Company

It being the express purpose and intent of this Article to permit the Company to engage in transactions with other corporations,
rms, associations, or entities of which any or all of the directors and ofcers of the Company may be directors, ofcers, or mem-
bers or in which any or all of them may have pecuniary interests, no contract or other transaction between the Company and one
or more of its directors or any other corporation, rm, association, or entity in which one or more of its directors are directors or
ofcers or are nancially interested shall be either void or voidable solely because of such relationship or interest or solely because
such directors are present at the meeting of the board of directors or a committee of the board which authorizes, approves, or raties
such contract or transaction or solely because their votes are counted for such purpose if:

1. The fact of such relationship or interest is disclosed or known to the board of directors or committee which authorizes, ap-
proves, or raties the contract or transaction by a vote or consent sufcient for the purpose without counting the votes or
consents of such interested directors; or

2. The fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, ap-
prove, or ratify such contract or transaction by vote or written consent; or

3. The contract or transaction is fair and reasonable to the Company.

Furthermore, common or interested directors may be counted in determining the presence of a quorum at a meeting of the board
of directors or a committee of the board which authorizes, approves, or raties any such contract or transaction.

[These provisions are not required to be included in the articles of incorporation. However, it is recommended that the incorporators consider,
with advice of counsel, what will t the specic needs of the company and draft the provisions of the articles of incorporation accordingly.]

ARTICLE XIII
Board of Directors

The business and affairs of the Company shall be conducted, managed and controlled by the Board of Directors. The number of
directors of the Company shall be xed by the bylaws, or if the bylaws fail to x such a number, then by resolution adopted from
time to time by the Board of Directors, provided that the number of directors shall not be less than three (3) nor more than ve (5).

Ditch & Reservoir Company Alliance


Members of the Board of Directors shall be elected in the manner set forth by the Bylaws and shall either be, or represent
persons or entities entitled to receive water from the facilities of the Company. Directors may be removed and vacancies on
the Board of Directors shall be lled in the manner provided in the Bylaws.
The initial Board of Directors shall consist of three (3) persons. The names and addresses of the members of the initial Board of
Directors who shall serve until the rst annual meeting of shareholders and until their successors are duly elected and qualied,
are as follows:

[names and address of initial Board of Directors]

Any vacancies on the Board of Directors occurring before the rst election of Directors by the shareholders shall be lled
by the remaining Directors.

[These provisions are not required to be included in the articles of incorporation. However, it is recommended that the incorporators
consider, with advice of counsel, what will t the specic needs of the company and draft the provisions of the articles of incorporation
accordingly.]

ARTICLE XIV
Ofcers

The Board of Directors may appoint a President, one or more Vice Presidents, a Secretary, a Treasurer and such other
ofcers as the Board of Directors in accordance with the provisions of the Bylaws deems to be in the best interests of the
Company. The ofcers shall have such duties as may be prescribed in the Bylaws and shall serve at the pleasure of the Board
of Directors.

[This provision is not required to be included in the articles of incorporation. However, it is recommended that the incorporators
consider, with advice of counsel, what will t the specic needs of the company and draft the provisions of the articles of incorporation
accordingly.]

ARTICLE XV
Initial Registered Ofce and Agent

The initial registered ofce of the Association shall be [insert address of registered agent ofce]. The initial registered agent
at such ofce shall be [insert name of registered agent].

[Identication of the initial registered ofce and agent of the company is required by C.R.S. 7-102-102 (1)(c).]

ARTICLE XVI
Dissolution

In the event of the dissolution of the Company, either voluntarily by the shareholders, by operation of law or otherwise,
those assets of the Company which are held for the benet of the shareholders including any water rights held by the Com-
pany and not directly by the shareholders and corresponding water distribution system shall be returned to the shareholders.
Any additional assets shall be disposed of pursuant to the requirements of law.

[A description of what happens in the event of dissolution is not required to be included in the articles of incorporation. Dissolution of
a corporation and distribution of assets is otherwise provided for by statute. However, because statutes change, the incorporators should
consider including what they intend to happen in the event of dissolution.]

ARTICLE XVII
Incorporation

The incorporators of this Company and their address is as follows:

Name Address

[Identication of the true name and address of each incorporator of the company is required by C.R.S. 7-102-102 (1)(e). For
formation of a mutual ditch company, C.R.S. 7-42-101(1) requires that there be at least three (3) incorporators.]

Executed this ____ day of _________________, 2005.

Ditch Company Handbook | June 2005


__________________________________________
[Incorporator]

__________________________________________
[Incorporator]

__________________________________________
[IncorporatorSTATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )

The foregoing instrument was acknowledged before me on this ___ day of ___________________, 2005, by
, and .

Witness my hand and ofcial seal.

Notary Public

My commission expires:

[Name and address of registered agent] hereby consents to appointment as the initial Registered Agent of the Company.

_____________ ___, 2005.

[Name of Registered Agent]

The name and mailing address of the individual who causes this document to be delivered for ling is [Insert name and address].
F. Action Items:

Retrieve and review a copy of your companys Articles of Incorporation

G. For further information:

Colorado Secretary of States website at http://www.sos.state.co.us.

Colorado Ditch and Reservoir Companies statutes, C.R.S. 7-42-101 et seq.

Colorado Business Corporation Act, C.R.S. 7-101 through 117.

Colorado Revised Nonprot Corporation Act, C.R.S. 7-121 through 137.

Colorado Water Law, George Vranesh, Volume 2 (1987) at 929-950.

Ditch & Reservoir Company Alliance


SAMPLE BYLAWS
BYLAWS
OF
THE _________ IRRIGATION AND RESERVOIR COMPANY

ARTICLE I
OFFICES

The principal ofce of the Corporation in the State of Colorado shall be located in the County of ________ or __________.
The Corporation may have such other ofces, either within or without the state of incorporation as the Board of Directors may
designate or as the business of the Corporation may from time to time require.

ARTICLE II
STOCKHOLDERS

1. ANNUAL MEETING.
The date of the annual meeting of the stockholders shall be set by the Board of Directors each year, but if the directors do
not otherwise specify, it shall be held on the rst ________ (day of week) of _____________ (month) in each year at the hour
of __:00 oclock a.m. / p.m., for the purpose of electing directors and for the transaction of such other business as may come
before the meeting. If the day xed for the annual meeting shall be a legal holiday such meeting shall be held on the next suc-
ceeding business day.

2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by
the President or by the directors, and shall be called by the President at the request of the holders of not less than ___ (sugges-
tion--25) per cent of all the outstanding shares of the Corporation entitled to vote at the meeting.

3. PLACE OF MEETING.
The directors may designate any place within _______ or ______ County, Colorado, unless otherwise prescribed by statute,
as the place of meeting for any annual meeting or for any special meeting called by the directors. A waiver of notice signed by
all stockholders entitled to vote at a meeting may designate any place, either within or without the state unless otherwise pre-
scribed by statute, as the place for holding such meeting. If no designation is made, or if a special meeting be otherwise called,
the place of meeting shall be the principal ofce of the Corporation.

4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than __ (suggest 10) nor more than __ (suggest 90) days
before the date of the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or the ofcer
or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, addressed to the stockholder at the stockholders address as
it appears on the stock transfer books of the Corporation, with postage thereon prepaid.

5. CLOSING OF TRANSFER BOOKS OR FIXING; OF RECORD DATE.


For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjourn-
ment thereof, or in order to make a determination of stockholders for any other proper purpose, the directors of the Corpora-
tion may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, __ (suggest 20)
days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at
a meeting of stockholders, such books shall be closed for at least __ (suggest 7) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the directors may x in advance a date as the record date for any such determination
of stockholders, such date in any case to be not more than __ (suggest 20) days and, in case of a meeting of stockholders, not
less than __ (suggest 7) days prior to the date on which the particular action requiring such determination of stockholders is to
be taken. If the stock transfer books are not closed and no record date is xed for the determination of stockholders entitled to
notice of or to vote at a meeting of stockholders, the date on which notice of the meeting is mailed shall be the record date for
such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has
been made as provided in this section, such determination shall apply to any adjournment thereof.

Ditch & Reservoir Company Alliance


6. VOTING LISTS.
The ofcer or agent having charge of the stock transfer books for shares of the Corporation shall make, at least __ (suggest 2)
days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, or any adjourn-
ment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period
of __ (suggest 1) day prior to such meeting, shall be kept on le at the principal ofce of the Corporation and shall be subject
to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to inspection of any stockholder during the whole time of the meeting.
The original stock transfer book shall be prima facie evidence as to who are the stockholders entitled to examine such list or
transfer books or to vote at the meeting of stockholders.

7. QUORUM.
At any meeting of stockholders ___________ (suggest one-fth up to a majorityi.e. 50% + 1 share) of the outstanding
shares of the Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stock-
holders. If less than said number of the outstanding shares is represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been transacted at the meeting as originally notied.
The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum.

8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by the stock-
holders duly authorized attorney in fact. Such proxy shall be led with the Secretary of the Corporation before or at the time
of the meeting.

9. VOTING.
Each stockholder entitled to vote in accordance with the terms and provisions of the Articles of Incorporation and these
bylaws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder.
A fractional share shall be entitled to a fractional vote in the same amount as the fractional share. Upon the demand of any
stockholder, the vote for directors and upon any question before the meeting shall be by ballot. All elections for directors shall
be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Articles
of Incorporation or the laws of this State.

10. ORDER OF BUSINESS.


The order of business at all meetings of the stockholders shall be as follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Ofcers.
5. Reports of Committees.
6. Election of Directors.
7. Unnished Business.
8. New Business.

11. INFORMAL ACTION BY STOCKHOLDERS.


Unless otherwise provided by law, any action required to be taken at a meeting of the stockholders, or any other action
which may be taken at a meeting of the stockholders, may be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the stockholders entitled to vote with respect to the subject matter thereof.

12. MANNER OF ACTING.


If a quorum is present, the afrmative vote of the majority of the shares represented at the meeting and entitled to vote on
the subject matter shall be the act of the stockholders, unless the vote of a greater proportion or number is otherwise required
by statute or by the Articles of Incorporation or these bylaws.

13. VOTING OF SHARES BY CERTAIN STOCKHOLDERS.


Shares standing in the name of another corporation or other entity may be voted by such ofcer, agent or proxy as the bylaws
of such corporation or the organization document of such other entity may prescribe, or, in the absence of such provision, as
the board of directors of such other corporation or the authorized authority of such other entity may determine.
Shares standing in the name of a deceased person, a minor ward or an incompetent person may be voted by an administra-
tor, executor, court appointed guardian or conservator, either in person or by proxy without a transfer of such shares into the
name of such administrator, executor, court-appointed guardian or conservator. Shares standing in the name of a trustee may

Ditch Company Handbook | June 2005


be voted by the trustee, either in person or by proxy, but no trustee shall be entitled to vote shares held by the trustee without
a transfer of such shares into the trustees name.
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 the receivers name if authority so to do be contained in an ap-
propriate order of the court by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of stock held in cotenancy by two or more persons shall be voted by only one individual as determined by the cote-
nants; and the Corporation may rely on the vote of any one of the cotenants whose name appears to correspond to the name of
one of the cotenants on the records of the Corporation.
Neither shares of its own stock belonging to this Corporation, nor shares of its own stock held by it in a duciary capacity,
nor shares of its own stock held by another corporation if the majority of shares entitled to vote for the election of directors of
such corporation is held by this Corporation may 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.
Voting by a stockholder that is not an individual shall be allowed only upon presentation to the Corporation prior to or upon
registration at each stockholders meeting satisfactory evidence (as determined by the board of directors) entitling the individual
presenting the evidence to vote for such stockholder.
Shares whose voting rights are vested in the Secretary or any other ofcer of the Corporation by agreement, court order or
otherwise, shall be voted by the Secretary as directed by the Board of Directors.

14. VOTING BY BALLOT.


Voting on any question or in any election may be by voice vote unless the presiding ofcer shall order or any stockholder
shall demand that voting be by ballot.

ARTICLE III
BOARD OF DIRECTORS

1. GENERAL POWERS.
The business and affairs of the Corporation shall be managed by its Board of Directors. The directors shall in all cases act as
a Board, and they may adopt such rules and regulations for the conduct of their meetings and the management of the Corpora-
tion, as they may deem proper, not inconsistent with these bylaws and the laws of this State.

2. PERFORMANCE OF DUTIES.
A director of the Corporation shall perform the directors duties as a director, including the directors duties as a member of
any committee of the Board upon which the director may serve, in good faith, in a manner the director reasonably believes to be
in the best interests of the Corporation, and with such case as an ordinarily prudent person in a like position would use under
similar circumstances. In performing the directors duties, a director shall be entitled to rely on information, opinions, reports,
or statements, including nancial statements and other nancial data, in each case prepared or presented by persons and groups
listed in paragraphs (a), (b), and (c) of this Paragraph 2; but the director shall not be considered to be acting in good faith if the
director has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A person who so
performs the directors duties shall not have any liability by reason of being or having been a director of the Corporation. Those
persons and groups on whose information, opinions, reports, and statements a director is entitled to rely upon are:
a. One or more ofcers or employees of the Corporation whom the director reasonably believes to be reliable and com-
petent in the matters presented;
b. Counsel, public accountants, or other persons as to matters which the director reasonably believes to be within such
persons professional or expert competence; or
c. A committee of the Board upon which the director does not serve, duly designated in accordance with the provision
of the Articles of Incorporation or the bylaws, as to matters within the committees designated authority, which committee the
director reasonably believes to merit condence.

3. NUMBER, TENURE AND QUALIFICATIONS.


The number of directors of the Corporation shall be ________ (an odd number usually from 3 to 9). Each director shall
hold ofce for a ___ (suggest one yearhowever if the board is of sufciently large size then multi-year terms may be used and
staggering of terms may be used) year term or until the directors successor shall have been elected and qualied.
1. No Board member shall be eligible to become or remain a director who is not a stockholder of the Corporation. Pro-
vided, however that a director may qualify by reason of having been designated by a person that is not an individual to repre-
sent such stockholder.
2. When stock ownership is held jointly, only one of the joint members may be elected a director.
3. If a director shall cease to be eligible to become or remain a director by reason of any of the provisions herein, such
director may be removed by the vote of the majority of the Board of Directors and the vacancy thus created, lled as hereinafter

Ditch & Reservoir Company Alliance


provided. Nothing contained in this Article III shall, or shall be construed to, affect in any manner whatsoever the validity of
any action taken at any meeting of the Board of Directors.

4. REGULAR MEETINGS.
A regular meeting of the directors shall be held without other notice than this bylaw immediately after, and at the same
place as, the annual meeting of stockholders. The directors may provide, by resolution, the time and place for the holding of
additional regular meetings without other notice than such resolution.

5. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the President or any two directors. The person or
persons authorized to call special meetings of the directors may x the place for holding any special meeting of the directors
called by them.

6. NOTICE.
Notice of any special meeting shall be given at least __ (suggest 5) days previously thereto by written notice delivered person-
ally, or by electronic mail or mailed to each director at the directors business address. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by
electronic mail, such notice shall be deemed to be delivered when the electronic mail is delivered to the electronic network.
The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends
a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or
convened.

7. QUORUM.
At any meeting of the directors the majority shall constitute a quorum for the transaction of business, but if less than said
number is present at a meeting. The act of the majority of the directors present at a meeting at which a quorum is present shall
be the act of the directors. A majority of the directors present may adjourn the meeting from time to time without further notice.
The associate director shall not be counted in determining a quorum.

8. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the directors.

9. INFORMAL ACTION BY DIRECTORS.


Any action required or permitted to be taken by the Board of Directors or by a committee thereof at a meeting may be taken
without a meeting if a consent in writing setting forth the action so taken, shall be signed by all of the directors or all of the
committee members entitled to vote with respect to the subject matter thereof.

10. PARTICIPATION BY ELECTRONIC MEANS.


Any members of the Board of Directors or any committee designated by such Board may participate in a meeting of the
Board of Directors or committee by means of telephone conference or similar communications equipment by which all persons
participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at the
meeting.

11. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.


Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board for
any reason except the removal of directors by the stockholders may be lled by a vote of a majority of the directors then in of-
ce, although less than a quorum exists. Vacancies occurring by reason of the removal of directors by the stockholders shall be
lled by vote of the stockholders. A director elected to ll a vacancy caused by resignation, death or removal shall be elected to
hold ofce for the unexpired term of the directors predecessor.

12. REMOVAL OF DIRECTORS.


Any or all of the directors may be removed for cause by vote of the stockholders.

13. RESIGNATION.
A director may resign at any time by giving written notice to the Board, the President or the Secretary of the Corporation.
Unless otherwise specied in the notice, the resignation shall take effect upon receipt thereof by the Board or such ofcer, and
the acceptance of the resignation shall not be necessary to make it effective.

14. COMPENSATION.
No compensation shall be paid to directors, as such, for their services, but by resolution of the Board a xed sum and ex-
penses for actual attendance at each regular or special meeting of the Board may be authorized. Such amount may be designated

Ditch Company Handbook | June 2005


as a per diem in lieu of itemization of expenses. The stockholders, or if not set by the stockholders, the Board shall set the
per diem. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.

15. PRESUMPTION OF ASSENT.


A director of the Corporation who is present at a meeting of the directors, at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless the directors dissent shall be entered in the minutes of the meet-
ing or unless the director shall le the directors written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such
action.

16. EXECUTIVE AND OTHER COMMITTEES.


The Board, by resolution, may designate from among its members an executive committee and other committees, each con-
sisting of one or more directors. Each such committee shall serve at the pleasure of the Board.

ARTICLE IV
OFFICERS

1. NUMBER.
The ofcers of the Corporation shall be a President, a Vice-President, a Secretary and a Treasurer, each of whom shall be
elected by the directors. Such other ofcers and assistant ofcers as may be deemed necessary may be elected or appointed by
the directors. All ofcers of the Corporation, except the Secretary, shall be stockholders of the Corporation.

2. ELECTION AND TERM OF OFFICE.


The ofcers of the Corporation to be elected by the directors shall be elected annually at the rst meeting of the directors
held after each annual meeting of the stockholders. Each ofcer shall hold ofce until the ofcers successor shall have been
duly elected and shall have qualied or until the ofcers death or until the ofcer shall resign or shall have been removed in
the manner hereinafter provided.

3. REMOVAL.
Any ofcer or agent elected or appointed by the directors may be removed by the directors whenever in their judgment the
best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights,
if any, of the person so removed.

4. VACANCIES.
A vacancy in any ofce because of death, resignation, removal, disqualication or otherwise, may be lled by the directors
for the unexpired portion of the term.

5. PRESIDENT.
The President shall be the principal executive ofcer of the Corporation and, subject to the control of the directors, shall in
general supervise and control all of the business and affairs of the Corporation. The President shall, when present, preside at
all meetings of the stockholders and of the directors. The President may sign, with the Secretary or any other proper ofcer of
the Corporation thereunto authorized by the directors, certicates for shares of the Corporation, any deeds, mortgages, bonds,
contracts, or other instruments which the directors have authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the directors or by these bylaws to some other ofcer or agent of the Corpora-
tion, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the ofce
of President and such other duties as may be prescribed by the directors from time to time.

6. VICE-PRESIDENT.
In the absence of the President or in event of the Presidents death, inability or refusal to act, the Vice-President shall per-
form the duties 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 such other duties as from time to time may be assigned to the Vice-President by
the President or by the directors.

7. SECRETARY.
The Secretary shall keep the minutes of the stockholders and of the directors meetings in one or more books provided for
that purpose, see that all notices are duly given in accordance with the provisions of these bylaws or as required, be custodian of
the corporate records and of the seal of the Corporation and keep a register of the post ofce address of each stockholder which
shall be furnished to the Secretary by such stockholder, have general charge of the stock transfer books of the Corporation and

Ditch & Reservoir Company Alliance


in general perform all duties incident to the ofce of Secretary and such other duties as from time to time may be assigned to
the Secretary by the President or by the directors.

8. TREASURER.
If required by the directors, the Treasurer shall give a bond for the faithful discharge of the Treasurers duties in such sum and
with such surety or sureties as the directors shall determine. The Treasurer shall have charge and custody of and be responsible
for all funds and securities of the Corporation; receive and give receipts for moneys due and payable to the Corporation from
any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other
depositories as shall be selected in accordance with these bylaws and in general perform all of the duties incident to the ofce
of Treasurer and such other duties as from time to time may be assigned to the Treasurer by the President or by the directors.

9. SALARIES.
The salaries of the ofcers shall be xed from time to time by the directors and no ofcer shall be prevented from receiving
such salary by reason of the fact that the ofcer is also a director of the Corporation.

ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS

1. CONTRACTS.
The directors may authorize any ofcer or ofcers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority may be general or conned to specic in-
stances.

2. LOANS.
No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the directors. Such authority may be general or conned to specic instances.

3. CHECKS, DRAFTS, ETC.


All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation, shall be signed by such ofcer or ofcers, agent or agents of the Corporation and in such manner as shall from
time to time be determined by resolution of the directors.

4. DEPOSITS.
All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the directors may select.

ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER

1. CERTIFICATES FOR SHARES.


Certicates representing shares of the Corporation shall be in such form as shall be determined by the directors. Such certi-
cates shall be signed by the President and by the Secretary or by such other ofcers authorized by law and by the directors. All
certicates for shares shall be consecutively numbered or otherwise identied. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certicates surrendered
to the Corporation for transfer shall be cancelled and no new certicate shall be issued until the former certicate for a like
number of shares have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certicate a new
one may be issued therefor upon such terms and indemnity to the Corporation as the directors may prescribe. Lost certicates
may also be issued pursuant to Section 7-42-113, C.R.S., as amended.

2. TRANSFERS OF SHARES.
(a) Upon surrender to the Corporation or the transfer agent of the Corporation of a certicate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to
issue a new certicate to the person entitled thereto, and cancel the old certicate; every such transfer shall be entered on the
transfer book of the Corporation which shall be kept at its principal ofce.
(b) The Corporation shall be entitled to treat the holder of record of any share as the holder in fact thereof, and, accord-
ingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person
whether or not it shall have expenses or other notice thereof, except as expressly provided by the laws of this State.
(c) The ofcers of the Corporation shall not issue certicates for shares in the Corporation for less than
(insert smallest number of shares or smallest fractional share that the company desires to transfer), except that certicates shall
be issued in lieu of shares of stock of less than one (1) which were in existence on (insert date of en-

Ditch Company Handbook | June 2005


actment of this bylaw0. This provision of the bylaws shall be liberally construed to prevent the issuance of fractional shares of
stock in the Corporation.
(d) Upon request of any of the incorporated lateral ditch companies that receive water delivery from the Corporation, the
Secretary of the Corporation shall not complete transfers of certicates for shares for a stockholder of the Corporation that also
has shares of stock in the lateral ditch company without the authorization of the secretary of the lateral ditch company. It is the
intent of this bylaw provision to require the transferee of the shares of the Corporation to also be the transferee of the shares
of the lateral ditch company to ensure that the transferee shall be required to pay the assessments of and abide by the bylaws,
rules and regulations of the lateral ditch company whether or not the facilities of the lateral ditch company are utilized by the
transferee.

ARTICLE VII
FISCAL YEAR

The scal year of the Corporation shall begin on the 1st day of January in each year.

ARTICLE VIII
ORGANIZATION AND DIVIDENDS

This Corporation is organized as a nonprot corporation exclusively for irrigation purposes. The directors may not
declare or pay dividends on the outstanding shares of the Corporation.

ARTICLE IX
SEAL

The directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the
Corporation, the state of incorporation, year of incorporation and the words, Corporate Seal.

ARTICLE X
WAIVER OF NOTICE

Unless otherwise provided by law, whenever any notice is required to be given to any stockholder or director of the Corpo-
ration under the provisions of these bylaws or under the provisions of the Articles of Incorporation, a waiver thereof in writ-
ing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.

ARTICLE XI
AMENDMENTS

These bylaws may be altered, amended or repealed and new bylaws be adopted by the following method: A vote of the
Board of Directors at any regular meeting of the board, or at any special meeting called for that purpose, provided that notice
of intention to move an amendment or other change, together with the text of such amendment or change, shall have been
led with the secretary, in writing, at least ten days before such meeting; and when any such notice is led with the secretary,
the secretary shall at once mail to each of the members of the board a copy of such notice. [Insert provision here for voting
requirements above a majority vote of the stockholders, such as 2/3 or _ of the quorum or such as a majority of all issued and
outstanding shares.]

ARTICLE XII
INDEMNIFICATION

The Corporation shall indemnify each of its directors, or ofcers, agents, and employees or former directors, ofcers, agents,
or employees or any afliated organization to the maximum extent permitted by law.

ARTICLE XIII
LIABILITY

Personal liability of a director of the Corporation for monetary damages for breach of duciary duties as a director of the
Corporation to the Corporation or to its stockholders is eliminated to the maximum extent permitted by law.

ARTICLE XIV
DISTRIBUTION OF WATER

Ditch & Reservoir Company Alliance


1. A manager (superintendent or ditch rider) may be appointed by the Board and shall have charge of the waters carried
by the Corporations system under the direction of the Board.

2. No stockholder shall take or cause to be taken more than the stockholders proportionate share of water from the sys-
tem.

3. No one shall draw water from the system without prior permission from the manager.

4. The Corporation may transport water allotted by ____________________ (insert names of supplemental water pro-
viders), Conservancy District or any other foreign water not owned by the Corporation, for individuals who are stockholders
or non-stockholders of this Corporation, upon such terms and conditions and for such considerations as the Board of Direc-
tors of the Corporation may from time to time determine. Delivery of such water shall be made at an established point in the
Corporations system, and the stockholder or non-stockholder shall arrange for the transportation of the water from the point
of delivery to the place of use.

5. The Board of Directors shall have the unrestricted discretion to control the location and construction of checks,
headgates and other diversion structures installed in the system, and as a condition for permitting any such checks, headgates
or diversion structures to require compliance with such structural or engineering specications as are reasonably necessary to
insure the safety and structural integrity of the system and the unimpeded and undiminished ow of water therein.

6. It shall be the policy of the Corporation, its directors and ofcers that all decreed water allocated to or delivered by
the Corporation to its stockholders or others shall be benecially used and administered only within the boundaries of the
Corporations area of service.

7. Each stockholder or person receiving water through the Corporations system desiring to change the place to which
any water the stockholder or person may be entitled shall be delivered or to make any change in water rights of any kind or
nature shall make prior written request to the Board. If in the opinion of the Board, such change can be made without injury
to the ditches, the reservoirs, the Corporation or other stockholders, such water may be delivered to such place or places as
requested upon such terms and conditions imposed by the Board. After such Board approval, such person shall notify in writing
all stockholders and other persons affected by the change prior to such change.

8. Except as hereinafter provided, no water shall be furnished to other than stockholders and to stockholders only in
proportion as the amount of stock the stockholders own or control is to the whole capital stock of the Corporation. It is made
the duty of the manager of this Corporation each and every year before any water is drawn from the reservoirs of the Corpora-
tion, to ascertain as near as may be the amount of water contained in said reservoirs, and to make and estimate of the number
of days said water can be continuously run in the ditches of the Corporation upon a basis of 1/10 cubic foot water per second
time per share, and stockholders desiring to use water for irrigation, may have the same turned out to them upon this basis at
a regular hour on any day between May 1 and October 31 each year (both dates inclusive). In order that water may not be run
to disadvantage or waste, it shall be necessary that at least CFS be ordered to initiate or to continue daily water
delivery service. All river water belonging to the Corporation run in the ditches, and all surplus water turned into the reservoirs
after they have been measured shall be divided pro rata among the stockholders. All water not delivered pursuant to such calls
prior to the rst day of November shall be forfeited to the Corporation for the benet of all its stockholders to be apportioned
among them for delivery during the next succeeding year.

ARTICLE XV
ASSESSMENT ON STOCK AND LIEN

1. If the Corporation deems it necessary to raise funds to keep its ditches, canals, or reservoirs in good repair or to pay
any indebtedness theretofore contracted or the interest thereon, the Corporation shall have power to make an assessment on the
capital stock thereof, to be levied pro rata on the shares of stock payable in money, labor, or both, for the purpose of keeping
the property of the Corporation in good repair and for the payment of any indebtedness or interest thereon.

2. But no such assessment shall be made unless the question of making the assessment is rst submitted to the stock-
holders of the Corporation at an annual meeting or at a special meeting called for that purpose, if a quorum is present, and the
majority of stock represented at such meeting, either by the owner in person or proxy, entitled to vote thereon shall vote in favor
of making such assessment; and if said stockholders fail to hold any such meeting or fail to make or authorize any assessment
within ninety days after the close of the Corporations scal year, the directors shall have power to make any such assessment
at any regular or special meeting called therefor for that year.

Ditch Company Handbook | June 2005


3. The Corporation hereby provides for the sale and forfeiture of shares of stock for such assessment as provided in sub-
section (4) of this section and has the benet of said subsection (4) for the recovery of such assessments by forfeiture or sale of
the stock in default, and the Corporation shall have a perpetual lien upon such shares of stock and the water rights represented
by the same for any and all such assessments or other amounts due until the same are fully paid. The Corporation hereby
provides that no water shall be delivered until assessments or any other amounts due are paid. Unpaid assessments shall bear
interest at the rate of 18% per annum compounded annually from the date due.

4. The shares of stock shall be deemed personal property and transferable as such in the manner provided by the bylaws.
A forfeiture or sale of stock on failure to pay the assessments or any other amounts due that from time to time may become due
are to be conducted in the manner provided in this bylaw. No forfeiture of stock shall be declared as against any estate or against
any stockholder before demand has been made for the amount due thereon either in person or by written or printed notice duly
mailed to the last known address of such stockholder at least thirty days prior to the time the forfeiture is to take effect. If the
assessment is not paid within such 30 day period, then the Secretary is directed to cancel on the books and records of the Cor-
poration, the stock for which the amount due is unpaid, and is directed to reissue the stock in the name of the Corporation. At
the next annual meeting of the stockholders of the Corporation, such stock shall be offered for sale to the stockholders and shall
be sold to the highest bidder. If the proceeds from the sale are insufcient to satisfy the amount due the Corporation, including
all reasonable and proper costs of making and giving such notice, the Corporation may maintain an action to recover such de-
ciency. The proceeds of any sale, over and above the amount due on said shares, shall be paid to the delinquent stockholder.

Enacted by the Board Of Directors of the Corporation on , 2___.

POLICY STATEMENT

THE ______ DITCH AND RESERVOIR COMPANY

SUBJECT: Access to Companys Books, Records or Minutes

DATE: ________________, 2___

STATEMENT: Release of information contained in the books, records or minutes of the Company shall be controlled in the
following manner:

A. General Public. The following information of a general or routine nature regarding the Company shall be available
to persons either by written or oral request:

A.1 The Companys Articles of Incorporation, Bylaws, charges, rules and regulations;

A.2 Formal audit reports rendered periodically by independent auditors;

A.3 Any publications the Company may have for general distribution; and

A.4 Publications subscribed to or otherwise obtained by the Company bearing on one or more aspects of the organization
and operation.

B. Stockholders
B.1 In addition to the above information available to the general public, the following information shall be avail-
able to a stockholder of the Company by either written or oral request:

B.1.1 The operating and other nancial reports that are regularly made to lenders to the Company;

B.1.2 monthly or periodic or special operating and nancial reports submitted by Management to the
Board of Directors;

B.1.3 adopted budgets for current and future operations and capital improvements;

B.1.4 adopted work plans for the Companys future construction, operation and maintenance of its system;
and

B.1.5 the Minutes of any prior stockholder meeting.

Ditch & Reservoir Company Alliance


BYLAWS OF
_________________________

THESE BYLAWS have been duly adopted by the Board of Directors of


__________________ (the Company) effective as of ___________.

SECTION 1
BOARD OF DIRECTORS

1. An annual meeting of the Companys stockholders for the election of a Board of


Directors shall be held in January of each year at such time and place in _____ County,
Colorado, as shall be determined by the Board of Directors.

2. The Board of Directors (the Board) shall consist of three members who shall
be the President, the Vice President and the Secretary/Treasurer elected each year at the
annual stockholder meeting. Members of the Board must be stockholders or, in the case
of stockholders that are corporations, partnerships, limited liability companies or other
entities with the capacity to hold property, persons designated by such entity as its
representative. Each member of the Board shall hold office for one year or until his or
her successor shall have been elected and qualified.

3. Notice of the time, date and location of the annual stockholders meeting and of
any special stockholders meeting shall be given to each stockholder by mail or personal
service at least twenty (20) days prior to the date set for such meeting.

4. A majority of the shares of stock in the Company, represented by the owner of


such shares or such owners duly appointed representative, shall constitute a quorum at
any meeting of stockholders. Unless otherwise provided herein or required by law, all
decisions at meetings of stockholders shall be made by the affirmative vote of the
stockholders (or their duly appointed representatives) owning a majority of the shares
represented at such meeting.

SECTION 2
OFFICERS

1. The officers of the Company shall consist of a President, a Vice President, a


Secretary/Treasurer, and a General Superintendent. The President, the Vice President
and the Secretary/Treasurer shall be elected by the stockholders each year at the annual
meeting of stockholders and shall serve for a term of one year or until their respective
successors are elected and qualified.

2. The Board shall elect as General Superintendent another stockholder or


representative designated by a stockholder that is an entity.

3. The officers and agents of the Company shall be entitled to receive such
reasonable compensation for the services provided to the Company as shall from time to

{00048947 / 2}
time be fixed by the Board and in all cases shall be entitled to be repaid for reasonable
expenses incurred and paid by them in the transaction of the Companys business.

SECTION 3
PRESIDENT

It shall be the duty of the President to preside at all stockholders and Board
meetings, to sign all bylaws and written contracts of the Company, and to call meetings
of the Board or stockholders whenever in his or her judgment the interest of the Company
or the law shall require them.

SECTION 4
VICE PRESIDENT

The Vice President shall preside at stockholders and Board meetings in the event
that the President is absent, and shall have the authority to act in the capacity of the
President in the event that the President is and will not within a reasonable amount of
time be available to take any action that the Vice President, in his or her reasonable
judgment, believes to be necessary or appropriate.

SECTION 5
GENERAL SUPERINTENDENT/DITCH RIDER

1. The General Superintendent, under the general supervision of the Board, shall
have charge of the Companys ditches, laterals, reservoirs and right-of-way; employ all
necessary labor and assistance, including a ditch rider, for the care, maintenance,
improvement, and control of such ditches, laterals, reservoirs and right of ways, and the
operation of the Companys water service, and to fix the compensation of such labor and
assistance, have the custody of the property of the Company where such custody is not
otherwise specially provided for, and generally do and perform all other things which are
usually required or expected of general superintendents of ditch companies.

2. The duties of the ditch rider shall be such as are ordinarily required of ditch
riders in ditch companies.

3. The Board, in consultation with the General Superintendent, is hereby


empowered to prescribe reasonable rules regulating the use of water from the Companys
ditches not inconsistent with these bylaws or with the laws of the State of Colorado.

SECTION 6
SECRETARY/TREASURER

1. It shall be the duty of the Secretary/Treasurer to receive and safely keep and
account for all moneys belonging to the Company, and to render a report on the accounts

2
and finances of the Company at the stockholders annual meeting next following his
election.

2. The Treasurer shall not pay out money except as authorized by the Board.

3. Subject to the approval of the Board, the Secretary/Treasurer may engage the
assistance of such accounting and/or secretarial services as may be needed for the
professional and efficient performance of the duties of the Secretary/Treasurer. All
services provided by assistants shall be performed under the supervision of the
Secretary/Treasurer.

4. The Secretary/Treasurer shall record, or cause to be recorded in the minute books


of the Company the proceedings of the stockholders at meetings of stockholders and the
proceedings of the Board at meetings or by written consent. The Secretary/Treasurer
shall also attest all bylaws and written contracts of the Company.

5. The Secretary/Treasurer shall also file and preserve or cause to be filed and
preserved the Companys papers and correspondence and all bonds entered into by the
officers of the Company and upon being tendered a reasonable fee therefore, shall make a
certified copy of any Company record, paper, file or bylaw for the use of any person
entitled to receive a copy of such document.

6. The Secretary/Treasurer shall prepare or cause to be prepared a list of the


stockholders owning all voting shares and have the same available at the annual meeting
of stockholders.

7. The Secretary/Treasurer shall also perform or cause to be performed such other


duties as are usually required of secretaries and treasurers of ditch companies.

8. It shall especially be the duty of the Secretary/Treasurer to collect all moneys due
the Company from persons who fail to make a voluntary payment.

9. The Secretary/Treasurer shall maintain the stock records of the Company, and the
Companys stock records shall be subject to inspection at all reasonable times by the
Companys stockholders and other persons entitled to inspect such records. No transfers
or assignments of shares of Company stock shall be effective unless an endorsement to
that effect is entered by the Secretary/Treasurer in the Companys stock book.

SECTION 7
POWERS AND DUTIES OF THE BOARD OF DIRECTORS

1. The Board shall have the general supervision of the Companys business, may
enact and repeal bylaws, may remove any officer for incompetence or neglect of duty or
for other good cause and may require all officers of the Company to give bond for the
faithful discharge of their duties.

2. Two members of the Board shall constitute a quorum for the transaction of
business, except in enacting and repealing bylaws. Meetings of the Board of Directors

3
may be conducted by telephone conference so long as the telephone facilities permit all
of the participants to hear and be heard by each of the other participants.

3. The Board shall have the power to take such actions as may be necessary to
prevent obstructions in the ditch, to prohibit concentrated livestock crossings of the ditch,
and to otherwise protect the integrity of the ditch channel and structure against damage or
encroachment of any kind.

4. The Board shall also have the power to appoint committees comprised of Board
members, stockholders and representatives of stockholders to address specific issues or
topics. Committees shall report directly to the Board and shall engage in activities
authorized by the Board.

5. In the course of a meeting of the Board or of the stockholders, a Board member


who is present at the meeting but fails to object to a motion shall be deemed to have
supported the motion.

6. The Board may take an action without a Board meeting if all Board members
consent to the action in writing, or if it is ratified at the next Board meeting.

7. If a vacancy occurs on the Board, the remaining members of the Board may fill
it by appointment until the next annual election of stockholders.

8. The Board may call meetings of the stockholders whenever they deem it
necessary, and they shall call meetings of the stockholders at any time upon a written
petition of stockholders owning at least one-fourth of the capital stock of the Company.

9. The Board may appoint and remove at pleasure all employees of the Company
and shall prescribe their duties and fix their compensation.

10. The Board may make rules, regulations, and policy determinations not
inconsistent with the laws of the State of Colorado or the articles of incorporation or the
bylaws of the Company.

11. The Board may incur such indebtedness as it may deem necessary for carrying
out the objects and purposes of the Company, provided that such indebtedness shall not
to exceed $30,000.00 unless approved at a duly constituted meeting of stockholders.

12. The Board shall have authority to exercise entire control of the ditch and all of
its lateral headgates, including regulating the grade of the ditch by checks or locks when
it is necessary, to control the delivery of water through flumes and lock sluices and to
determine the location and type of headgates.

13. The Board shall cause the Secretary/Treasurer, or in the absence of the
Secretary/Treasurer, a member of the Board or other person designated by the Board, to
keep a complete record of all actions taken by written consent of the Board, at Board
meetings and at meetings of the stockholders.

4
14. The Board shall supervise all the acts of the officers and employees of the
Company and require the Secretary/Treasurer to keep full and accurate books of account
and to prescribe the form and mode of keeping such books of account.

15. The Board may audit and adjust the accounts prepared by or under the direction
of the Secretary/Treasurer, authorize payment of indebtedness of the Company and direct
the Secretary/Treasurer to prepare stock certificates to be issued to stockholders entitled
thereto for signature by the President and Secretary/Treasurer.

16. The Board shall cause or permit to be delivered to each individual stockholder
the pro rata share of water due to such stockholder according to the number of shares of
stock held by each stockholder in the Company using the existing or future structures and
facilities of the Company or using other structures and/or at other locations that have
been approved in a final judgment and decree of the District Court, Water Division 1
(Water Court) or substitute water supply plan (SWSP) approved by the State
Engineers Office. The Company may, but is not obligated, to construct new facilities or
structures for delivery of water.

17. The Board shall not permit to exist any obstruction of any kind placed in said
ditch whereby the natural flow of the water is impeded or is raised above the proper
grade, thus causing danger to the embankments.

18. The Board shall protect the integrity of the ditch banks by prohibiting
concentrated livestock crossings that threaten the stability of the banks or allow water to
escape the ditch channel.

19. In any proceedings before the Water Court and/or the State Engineers office
instituted by any stockholder(s) seeking a change in use of that portion of water rights
represented by such stockholders shares, the Board or such persons as may be authorized
by the Board may participate on behalf of the Company in order to ensure that adequate
terms and conditions are included in any final judgment and decree of the Water Court or
any SWSP approval to protect injury to the shares that are not the subject of such change
proceeding.

SECTION 8
CONDUCT OF STOCKHOLDERS MEETINGS

1. At all regular and called meetings each stockholder shall be entitled to cast one
vote for each share of stock owned by such stockholder, and a fractional vote equivalent
to any fraction of a share held.

2. The President shall appoint two (2) stockholders or other responsible persons as
tellers at each meeting of the stockholders at which a vote is taken. The tellers shall be
responsible for collecting and counting the votes in the election of the Board.

3. Upon any question submitted to a vote, an absent stockholder may be


represented by proxy.

5
4. Any stockholders or persons designated for such purpose by stockholders that
are entities shall be eligible for any Company office.

5. The officer or agent having charge of the stock transfer books for shares of the
Company shall make, at least ten days before each meeting of stockholders, a complete
list of the stockholders entitled to vote at such meeting, or any adjournment thereof,
arranged in alphabetical order, with the address of, and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept on file at the
principal office of the Company and shall be subject to inspection by any stockholder at
any time during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to inspection of any stockholder
during the whole time of the meeting. The original stock transfer book shall be prima
facie evidence as to who are the stockholders entitled to examine such list or transfer
books or to vote at any meeting of stockholders.

6. Voting of Shares by Certain Holders.

A. Shares standing in the name of a company or other entity may be voted by


such officer, agent, or proxy as the bylaws or rules of such company or entity may
prescribe, or, in the absence of such provision as the board of directors of such
company or entity may determine.

B. Shares held by an administrator, executor, guardian, or conservator may


be voted by him or her, either in person or by proxy, shares held in the name of a
trust may be voted by any person authorized to do so under the trust, either in
person or by proxy, but no trust beneficiary shall be entitled to vote shares held by
a trust without a transfer of such shares into such beneficiarys name.

C. 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 authority to so is contained in
an appropriate order of the court by which such receiver was appointed.

SECTION 9
HEADGATES/CHECKS

1. The Company shall own and control all headgates in the Companys ditches,
and it is hereby made the duty of the ditch rider to destroy and remove all headgates from
said ditches not put in and owned by the Company, except those permitted by the General
Superintendent.

2. No person shall be permitted to put a check in any of the Companys ditches


after water shall have been turned on for the season without the consent of the General
Superintendent or a person deputized by the Board of the General Superintendent for that
purpose, provided the owner of any check which shall have washed out during the
irrigating season, or shall have otherwise been destroyed without his fault shall be
entitled to replace the same.

6
3. All checks shall be examined under the direction of the General Superintendent
between the first of November and the first of the following March and the owners of
checks that are condemned shall be required to repair or reconstruct the same before the
fifteenth day of March under the directions of the General Superintendent or a person
deputized by the Board or the General Superintendent for that purpose.

SECTION 10
FENCES

No person shall build or maintain any fence or other erection upon the Companys
right of way without the consent of the General Superintendent, unless such person shall
provide and maintain a convenient gate way through such fence or such right of way or
within a reasonable distance therefrom.

SECTION 11
TRANSFER OF STOCK

1. Certification of ownership of stock in the Company for whole or fractional


shares may be issued by the Secretary based upon the Companys stock records. New
stock certificates may be prepared for issuance by the Secretary upon surrender of any
outstanding certificate, with authority for transfer duly endorsed thereon, provided the
conditions set forth in this Section are satisfied.

2. All certificates of stock, when issued, shall be signed by the President and
countersigned by the Secretary or a member of the Board, and shall be sealed with the
Companys seal. Certificates shall be numbered in the order of issuance, and each
certificate shall show on its face its certificate number, the date of its issue, the number of
shares which it represents, the name of the holder, the par value of each share, and
whether the shares are fully paid.

3. At no time shall certificates of stock be outstanding and uncancelled for any


shares in excess of the total number of shares of the Company, and any certificate for
shares of stock issued in excess of the limit shall be null and void.

4. Stock can be transferred only on the books of the Company upon surrender of
the certificate with authority for the transfer endorsed thereon either by the owner in
person or by his authorized agent, or attorney in fact, having written authority therefore.
Such surrendered certificate shall be canceled before the issuance of a new certificate in
lieu thereof; but no certificate of stock transferred until all assessments and interest
thereon up to the date of cancellation or transfer shall have been paid in full.

5. Any person acquiring stock by purchase, or transfer, either at public or private


sale, shall be subject to all liabilities incurred and assumed by the transferor the shares of
stock, and to all provisions of these bylaws.

7
6. The Secretary may collect, as a fee for each transfer of capital stock, such sum
as set by the Board each year, the same to be paid by the person, or persons, making such
transfer.

7. Each stockholder in this ditch Company shall be entitled to freely transfer his
stock to any other stockholder or to any purchaser of land heretofore irrigated by said
Company, and each holder of capital stock shall be entitled to receive from the
Companys ditch, water owned or controlled by the stockholder for the irrigation of lands
heretofore irrigated by said ditch, in such amount of water as carried in said ditch in the
ratio and proportion which his shares shall bear to the total outstanding shares of said
Company, subject to the limitations and conditions set forth in this Section and Section
16 of these bylaws.

8. No transfer of shares for uses on land not historically irrigated by water of this
ditch (hereinafter new land) or for uses not historically made (hereinafter new uses)
shall be permitted, except by and upon orders and approval of the Board. If a person
acquiring stock (hereinafter applicant) expresses an intent to use the purchased shares
for new uses or upon new lands, the secretary of this Company shall suspend the re-
issuance of certificates pending review by the Board. The applicant shall submit an
application to the board describing the new uses and/or locations that is sufficiently
detailed to permit the board to determine whether the proposed uses will be detrimental to
the operation of the Companys delivery system, in violation of the Companys water
rights decrees or these bylaws, or otherwise injurious to the stockholders and the
Company as a whole. The board shall review any such application in a timely manner,
and, if the board determines that the application cannot be granted as presented, it shall
allow the applicant an opportunity to revise its plan to address the boards concerns. The
board is authorized to engage engineering and legal help to assist in its review of the
application, and any fees thereby generated which would not have been incurred but for
the application shall be borne by the applicant.

9. Any person seeking reissuance of a lost stock certificate may do so pursuant to


7-42-113 to 117 C.R.S. If the Board determines a bond would protect the Company, a
new certificate may be issued upon proof of a bond in an amount to be determined by the
Board. The person seeking reissuance of a lost stock certificate shall also pay all the
costs incurred by the Company to reissue the lost certificate, including, secretary time, all
costs and attorney fees.

SECTION 12
ASSESSMENTS

1. The Company shall have the power to make an assessment on the capital stock,
to be levied pro-rata on the shares of the stock payable in money for any of the purposes
of the Company.

2. All assessments for every purpose necessary for the operation and maintenance
of the Company and its property shall be levied by the stockholders at the annual or any
special meeting of the stockholders. In the event that the stockholders fail to levy an

8
assessment, a levy may be made by the Board to meet the necessary expenses of
operation and maintenance of the Company. The Secretary/Treasurer shall mail the bills
to the stockholders no later than May 1st of each year. This annual assessment shall be
paid no later than May 15th each year.

3. In the event that the assessment described above is not paid by May 15th, a late
fee of seventy-five (75) dollars per stockholder per month shall be due and owing at once,
and the Board shall cease delivery of water. If the assessment and late fees have not been
paid by December 31st of the year in which levied the Board may proceed to collect said
assessments and fees, with interest, costs and attorneys fees, by suit for the recovery
thereof against the delinquent stockholder, or the Company may sell the stock, at the
annual stockholders meeting or in any other forum, for the purpose of paying the unpaid
assessment and interest, together with necessary expenses incurred in selling the stock.
All sales of forfeited stock shall be by public auction conducted by the President or such
person as may be designated by the Board, and the proceeds of such sale, if any, over and
above the amount due on said shares, including late fees and interest, plus the expenses of
the sale, shall be paid to the delinquent stockholder. No such sale shall occur until the
delinquent stockholder has been given notice of the time, place, manner and purpose of
the sale by mail or personal service at least thirty (30) days before the proposed sale or by
publication at least ten (10) days before the proposed sale. Inclusion of the notice of sale
in the notice of annual meeting mailed to stockholders and published pursuant to Section
3 of these bylaws shall constitute sufficient notice to the delinquent stockholder. In the
event the sale of the stock shall not cover the unpaid assessment, the Company may seek
recovery against the stockholder by any other lawful means available.

4. The address of each stockholder as shown on the books of the Company shall be
deemed the correct address.

SECTION 13
WATER DELIVERIES

1. All stockholders of the Company shall be entitled to receive from the


Companys ditches and reservoirs, by reason of being such stockholders so much water
as may be necessary for the irrigation of their lands and for domestic purposes or for any
other purposes approved by the Water Court, in the ratio and proportion which his shares
shall bear to the total outstanding shares of said Company, subject to the limitations and
conditions set forth in this Section and Section 16 of these bylaws.

2. No water shall be delivered to stockholders except through the Companys


headgate or at other points approved in a final judgment and decree of the Water Court or
in an approved SWSP.

3. No water shall be delivered for irrigation or any other use on lands not
historically served by the ditch unless the stockholder seeking such use has applied for
and received approval for such use from the Water Court in a final judgment and decree
or in a SWSP.

9
4. Any stockholder (or person designated by a stockholder to take delivery of
water on such stockholders behalf) who is found to have willfully wasted water by
reason of insufficiently diked or filled up or uncleaned laterals or otherwise, shall forfeit
the right to receive water from the Company ditches until he shall have provided
sufficient and adequate laterals, and otherwise have provided for the economic use of
water, and no such consumer who is in arrears with his assessment on stock for more than
thirty days shall be entitled to further water service by the Company until such arrears
shall have been satisfactorily adjusted with the Company.

5. If due to any cause the supply of water shall be insufficient to fill and flow
through the Companys canal according to its capacity, or if from any other cause, the
supply shall be insufficient; such water as may flow through said canal shall be
distributed pro rata to the stockholders to whom water shall have been allotted and for the
purpose of so doing the Board may establish and enforce such rules and regulations as
they may deem necessary or expedient; and except as otherwise provided herein, the
stockholders to whom water shall have been allotted shall be entitled to the amount of
water as above provided.

SECTION 14
DAMAGES

1. Every stockholder in and consumer of water furnished from the Companys


ditches shall be held to waive all claims for damages resulting from flooding lands or
crops from said ditches or from flooding public or private roads where such damages
could have been avoided by the exercise of reasonable care upon the part of such
stockholder or consumer; or whose neglect induces or contributes to such damage.

2. If such stockholder or consumer expends labor or material necessarily in the


repair of the Companys ditches to prevent such flooding he shall be reasonably
remunerated for such labor and material.

SECTION 15
INDEMNIFICATION

1. The Company shall indemnify any person who was or is an involuntary party or
is threatened to be made a party to any threatened, pending or contemplated action, suit
or proceeding, whether civil, criminal, administrative, or investigative (other than an
action by or in the right of the Company) by reason of the fact that he is or was a trustee,
officer, employee, fiduciary or agent of the Company or is or was serving at the request
of the Company as a trustee, officer, employee, fiduciary or agent of another Company,
partnership, joint venture, trust or other enterprise, against expenses (including attorney
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit, or proceeding, if he acted in good faith and in
a manner he reasonably believed to be in the best interest of the Company and, with
respect to any criminal action or proceeding had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding by judgment,

10
order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent shall
not of itself create a presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in the best interest of the Company and, with respect
to any criminal action or proceeding, had reasonable cause to believe his conduct was
unlawful.

2. The Company shall indemnify any person who was or is a party defendant or is
threatened to be made a party to any threatened, pending or completed action or suit by or
in the right of the Company to procure a judgment in its favor by reason of the fact that
he is or was a trustee, officer, employee, fiduciary or agent of another Company,
partnership, joint venture, trust or other enterprise against expenses (including attorney
fees) actually and reasonably incurred by him in connection with the defense or
settlement or such action or suit if he acted in good faith and a manner he reasonably
believed to be in the best interest of the Company; but no indemnification shall be made
in respect to any claim, issue, or matter as to which such person has been adjudged to be
liable for negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that the court in which such action or suit was brought determines
upon application that despite the adjudication such person is fairly and reasonably
entitled to indemnification for such expenses which such court deems proper.

3. To the extent that a trustee, officer, employee, fiduciary or agent of the


Company has been successful on the merits in defense of any action, suit or proceeding
referred to in preceding paragraphs or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses (including attorney fees) actually and reasonably
incurred by him in connection therewith.

4. Any indemnification under this Section (unless ordered by a court) shall be


made by the Company only as authorized in a specific case upon determination that
indemnification of the trustee, officer, employee, fiduciary or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
paragraphs A. or B. above. Such determination shall be made by the Board by a majority
vote of a quorum consisting of directors who were not parties to such action, suit, or
proceeding, or if such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in written opinion.

5. The expenses (including attorney fees) incurred in defending a civil or criminal


action, suit, or proceeding may be paid by the Company in advance of the final
disposition of such action, suit, or proceeding as authorized in this Section upon receipt
of an undertaking by or on behalf of the trustee, officer, employee, fiduciary or agent to
repay such amount unless it is ultimately determined that he is entitled to be indemnified
to the Company as authorized by this bylaw.

6. That the indemnification provided by this bylaw shall not be deemed exclusive
of any other rights to which those indemnified may be entitled to under any other bylaw,
agreement, vote of Stockholders or disinterested directors, or otherwise any procedure
provided for by any of the foregoing, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a person

11
who has ceased to be a trustee, officer, employee, fiduciary or agent and shall inure to the
benefit of heirs, executors, and administrators of such a person.

7. That the Company may purchase and maintain insurance on behalf of any
person who is or was a trustee, officer, employee, fiduciary or agent of the Company or
who is or was serving at the request of the Company as a trustee, officer, employee,
fiduciary or agent of another Company, partnership, joint venture, trust, or other
enterprise against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the Company would have the
power to indemnify him against such liability under provisions of this Section.

SECTION 16
CHANGE OF WATER RIGHT

1. Any stockholder (applicant) desiring a change of water right as defined in the


Water Right Determination and Administration Act of 1969, Colorado Revised Statutes
37-92-101 through 37-92-603, including, but not limited to, a change in point of
diversion or place of use of any water that the applicant is entitled to receive as a result of
stock ownership must first make a written application to the directors of the Company. A
change of water right shall include the use of water the shareholder is entitled to as a
result of stock ownership as augmentation water in a plan for augmentation or exchange.
The request should detail the requested change and include adequate terms and conditions
to prevent injury to the Company and its shareholders. If, in the reasonable opinion of
the directors, such change may be approved without injury to the Company and all of its
stockholders, the directors shall then approve the change application subject to necessary
terms and conditions. In evaluating whether the requested change of water rights can be
made without injury to the Company and its shareholders, the Company may obtain an
engineering and legal analysis of the requested change by the applicant and the terms and
conditions offered by the applicant.

2. The Company shall evaluate the application for change of water right within a
reasonable amount of time.

3. No application for approval of a change of water right or plan for augmentation as


described above may be made to the District Court for Water Division No. 1, State of
Colorado (Water Court), unless the same has been approved by the Company. If an
application has been approved by the Company, the applicant must include terms and
conditions at least as stringent as those approved by the Company in an application to the
District Court for Water Division No. 1, State of Colorado.

4. An applicant for a change of water right must reimburse the Company for the
Companys reasonable costs and fees, including a charge for time spent by the directors
and Company employees in analyzing the application to the Company and in any judicial
litigation that follows. This specifically includes a challenge to the Companys denial of
an application. Prior to analyzing the proposed change, the Company shall obtain an
estimate of costs. The Company shall make said estimate of cost within 30 days of
submission of an application and the applicant shall have 30 days after receipt of the

12
estimate from the Company to make the deposit. The Company shall not take final action
on any application until, and unless, the applicant makes said deposit. If the estimate and
deposit needs to be adjusted by further payment or reimbursement, said adjustment shall
be made upon the completion of the analysis. In no event shall the Company be required
to finally approve or disapprove the application until all fees incurred by the Company
are reimbursed.

SECTION 17

All bylaws shall take effect from and after the date of their adoption.
Amendments to these bylaws may be proposed by any stockholder or the Board.
Proposed bylaw amendments shall not become effective unless and until approved by
written consent of the all of the members of the Board or by a majority of the Board or of
the shares present or represented at a duly constituted meeting.

Date: ____________ by
Name:
Title: President

Attest:

Name:
Title: Secretary/Treasurer

13
SAMPLE POLICY STATEMENT
THE ______ DITCH AND RESERVOIR COMPANY

SUBJECT: Access to Companys Books, Records or Minutes

DATE: ________________, 2___

STATEMENT: Release of information contained in the books, records or minutes of the


Company shall be controlled in the following manner:

A. General Public. The following information of a general or routine nature regarding the
Company shall be available to persons either by written or oral request:
A.1 The Companys Articles of Incorporation, Bylaws, charges, rules and regulations;
A.2 Formal audit reports rendered periodically by independent auditors;
A.3 Any publications the Company may have for general distribution; and
A.4 Publications subscribed to or otherwise obtained by the Company bearing on one or more
aspects of the organization and operation.

B. Stockholders
B.1 In addition to the above information available to the general public, the following
information shall be available to a stockholder of the Company by either written or oral
request:
B.1.1 The operating and other financial reports that are regularly made to lenders to the
Company;
B.1.2 monthly or periodic or special operating and financial reports submitted by management
to the Board of Directors;
B.1.3 adopted budgets for current and future operations and capital improvements;
B.1.4 adopted work plans for the Companys future construction, operation and maintenance
of its system; and
B.1.5 the Minutes of any prior stockholder meeting.

B. Stockholders
B.2 In addition to the above information available to the general public and the stockholders,
the following information shall be available to a stockholder of the Company by formal written
request on the attached form:
B.2.1 Information that is germane to the requesting stockholders interest as a stockholder of
the Company; and
B.2.2 other information specifically approved by the Board of Directors.

Information Not to be Released. The following information is confidential and will not be
released.
1. Information in relation to any threatened or pending lawsuit against the Company or any
Director or employee of the Company without a court order, the Companys Board approval, or
advice of counsel;
2. Information that will, or may invade the privacy of any person, employee or Director of the
Company, or violate any of their rights;
3. Information that would violate an agreement or contract with third parties with respect to
trade secrets;
4. Information that might result in an adverse action against the Company, its Board of
Directors or employees;
5. Information that may be used to adversely affect the Company with third-party negotiations;
or
6. Information contained in confidential communications between the Company and its legal
counsel.

Information for Financial Institutions & Regulatory Agencies. The above information may
be released to financial institutions and to regulatory agencies as necessary or required to carry
on the affairs of the Company.

Release of Information. Upon compliance with the above requirements and authorizations,
information shall be released as promptly as possible during regular business hours. At the sole
discretion of the Company, a charge for multiple copies of information or for the cost to
produce the requested information that exceeds a minimal cost may be required and shall be
paid in advance.

Information Not Specifically Covered. Any information requested by a person or a


stockholder not specifically covered above must receive approval of the Manager and the
Companys legal counsel. If the Manager initially determines that the request for information
should not be granted, he may withhold disclosure of such information pending consideration
by the Board of Directors of the Company.

ATTESTED: By action of the Board of Directors at its regular meeting held ___________, 2___.

____________________________________
President

____________________________________
Secretary

Ditch Company Handbook | June 2005


Sample Ditch Rules Separate From Bylaws

DITCH RULES, POLICIES AND SHAREHOLDER


RESPONSIBILITIES

1. Ownership of water rights in the Ditch Company is by stock


certificate only. The Ditch Company is responsible for
maintenance of and distribution of water from the main ditch
only. The Ditch Supervisor (Rider) is the only person
authorized to adjust the flow of water from the main ditch
into the laterals.
2. Lateral lines are the responsibility of the shareholders on that
lateral. This includes maintenance, repair and replacement.
3. Pumping directly from the main ditches is prohibited. All
pumps must be removed from the main ditch and replaced
with a sump and head gate. If you have any questions on
installation, contact the ditch rider.
4. Storage of water in tanks or ponds is prohibited.
5. New head gates, sumps or alterations of these on the main
ditch must be approved by the Board. Contact the ditch rider
before tapping into the main ditch.
6. Trees and bushes shall not be planted on the ditch easement
and volunteer plants must be removed. All vegetation that
impedes water flow must be removed by the land owner on
either side of the ditch prior to irrigation turn in date.
7. Users should not over irrigate and not leave irrigation
unattended. Shareholders should make a special effort to
work with their neighbors who are on the same lateral to
insure all get water.
8. During the annual ditch cleaning (October through March),
shareholders should cooperate with the Ditch Superintendent
and his crew. Shareholders should clean their laterals at this
time.
9. SHAREHOLDERS ARE REMINDED THAT
ASSESSMENTS ARE DUE AND PAYABLE ON OR

1
BEFORE THE FIRST OF FEBRUARY EACH YEAR.
FAILURE TO PAY ASSESSMENTS BY FEBRUARY 1
WILL RESULT IN MONTHLY INTEREST CHARGES
FROM THE DATE OF THE ASSSESSMENT WHICH IS
JANUARY 1. ALL UNPAID BALANCES WILL
CONTINUE TO DRAW INTEREST AT THE RATE OF
ONE AND ONE-HALF PERCENT PER MONTH PLUS A
MONTHLY SERVICE CHARGE OF $5.00. FAILURE TO
PAY ASSESSMENTS, INCLUDING INTEREST AND
SERVICE CHARGES, BY MARCH 1 WILL RESULT IN
THE FORFEITURE OF SHARES.
10. Shareholders who plan to subdivide their property must
submit plans for the redistribution of water shares to the Board
of Directors for approval. This is to assure that proper and
equitable apportionment of the shares has been made and that
proper easements have been provided. If a shareholder sells his
or her property, all of the ditch shares must be transferred to the
new owner (administrative fee is $50). In the case of death or
divorce (or name change), a stock transfer must be made
(administrative fee is $50).

11. Please inform the Ditch Company of all mailing address


changes.

2
DARCA 11/09: SAMPLE DITCH COMPANY BYLAWS

OPERATIONS

Section 1. Shareholder Rights and Responsibilities re Water Delivery.

Shareholders shall have the right to delivery of water allocated to


them for the irrigation of their land within the prescribed time and
limits as established by the Board of Directors of the Ditch
Company. [For some ditches, it will be necessary to spell out how
much water each share or Shareholder is entitled to.]

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

1
Alternative to Shareholder Rights and Responsibilities re Water Delivery.

The owner of each share of stock of this Ditch Company, as long as


said share of stock has not been forfeited in accordance with these
bylaws, shall be entitled, by virtue of such ownership, to delivery of
water from the ditches of the Ditch Company for irrigation of lands
only [and not for domestic use], sufficient to irrigate the following:
[specify the amount of land or the cubic feet per acre or whatever the
measure is, per share or Shareholder]. No Shareholder shall have the
right to delivery from any ditch, lateral or reservoir of this Ditch
Company of any more water than is actually needed for the purpose or
purposes for which the Shareholder is entitled to water, nor shall the
Shareholder allow his, her or its headgate to remain open for any
longer time, nor more often, than is necessary for such purpose or
purposes. But it shall be the duty of each Shareholder to see that his
or her or its headgate or pump is kept shut or the power turned off
when not necessary to have it operate, and also to keep his ditch in
good repair and to use all reasonable means to prevent waste of water.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

2
DROUGHT/OVER USE

Whenever there is insufficient water available to fully supply all


Shareholders demands or the demands of other persons entitled to
the Ditch Companys water, the Ditch Superintendent may make
such distribution of the water available to create the most
advantageous use of the limited supply available. Such distribution
may include a proportional delivery of water to all Shareholders or
other persons entitled to delivery of water alike, or the Ditch
Superintendent may provide a full delivery to all Shareholders or
other persons entitled to delivery of water in a section of the ditch
for a limited time, moving the section from portion to portion of the
ditch as may appear to the Ditch Superintendent to be calculated to
make the most efficient and effective use of the limited supply
available.

If any Shareholder or other person is found to be receiving a supply


of water from the ditch beyond or in addition to such Shareholders
or persons proper proportion of water in the ditch, the Ditch
Superintendent may reduce or terminate the supply of water to that
Shareholder or person until that Shareholder or person satisfies the
Ditch Superintendent that adequate means have been agreed upon to
remedy any past or future injury or inequity.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

3
FIRST ALTERNATIVE TO DROUGHT/OVER USE

Whenever there is insufficient water available for the ditch to fully supply
all stockholders or other persons demand, the Superintendent [Ditch Rider,
Ditch Foreman, Manager] may make such distribution of the water available
as the Superintendent finds most likely to effectuate an equitable distribution
to create the most advantageous use of the limited supply available. Such
distribution may include a proportional delivery of water to all stockholders
or other persons entitled to delivery of water alike, or the Superintendent
may provide a full delivery to all stockholders or other persons entitled to
delivery of water in a section of the ditch for a limited time, moving the
section from portion to portion of the ditch as may appear to the
Superintendent to be calculated to make the most efficient and effective use
of the limited supply available.

If any stockholder or other person is found to be receiving a supply of water


from the ditch beyond or in addition to such persons proper proportion of
water in the ditch, the Superintendent may curtail or determine the supply of
water to that person until that person satisfies the Superintendent that
adequate means have been agreed upon to remedy any past and future injury
or inequity.

Stockholders or other persons receiving delivery of water from the Ditch


Companys facilities may rent, loan or exchange water at any time when the
Superintendent finds there is capacity in the delivery structure to effectuate
the proposed change without impairing the operation of the structure or the
exercise of the rights of other stockholders or persons receiving water
through the Ditch Companys water distribution ditch and facilities.
Whenever desirable for the proper operation of the ditch, the Superintendent
may require any proposed loan or exchange to be set forth in writing and
signed by the person(s) involved before permitting a loan or exchange.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

4
SECOND ALTERNATIVE TO DROUGHT/OVER USE

If by reason of any cause the supply of water shall be insufficient


to fill and flow through the Ditch Companys ditch [canal],
according to its estimated capacity, or if from any other cause, the
supply shall be insufficient to furnish an amount equal to all the
water rights then allotted, such water as may flow through said
ditch [canal] shall be distributed pro rata to the shareholders to
whom such water shall have been allotted; and, for the purpose of
doing so, the Board of Directors may establish and enforce such
rules and regulations as they may deem necessary or expedient.

In case of any dispute between different shareholders concerning


their supply of water, as among themselves, or concerning the use
of water from the laterals or subsidiary ditches [canals] taking
water from the Ditch Companys ditch [canal], the same shall be
referred to the Board of Directors of said Ditch Company, and the
Board of Directors decision shall be final.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

5
CONTROL OF WATER DELIVERY STRUCTURES

No Shareholder or person shall be entitled to take water from the Ditch


Companys facilities except by means of appropriate delivery structures in
accordance with standards approved by the Board. All structures within
property of the Ditch Company shall be constructed by the Ditch Company.
All costs of installation shall be borne by the Shareholder(s) or non-
Shareholder(s) for the delivery of whose water they shall be installed.

The Board shall have unrestricted discretion to control the location and
construction of checks, head gates and other diversion structures installed in
the water delivery system and, as a condition for permitting any such
structures, may require compliance with such structural or engineering
specifications as are reasonably necessary to insure the safety and structural
integrity of the system and the unimpeded and undiminished flow of water
in it.

When more than one person is entitled to receive water through a delivery
structure, the charge for construction of it shall be divided among the
Shareholders or persons entitled to receive water through that structure in
proportion to the amount of water to be delivered through the structure to
those Shareholders or persons. No water shall be delivered through the
structure until the entire structure has been paid for by the appropriate
Shareholders or persons.

Before beginning work on any delivery structure, the Ditch Company shall
require, in advance, a deposit in the estimated amount of the cost of the
work. Any change in or modification of a delivery structure except as
authorized by the Board shall be deemed to have been done by the
Shareholder(s) or person(s) taking water from the delivery structure, and
unless such Shareholder(s) or person(s) can demonstrate the change or
modification is necessary to the proper delivery of water through that
structure, the cost of correcting the modification or change shall be charged
to the Shareholder(s) or person(s) causing that change or medication to be
made. The Board may cause any unauthorized modification or change to be
rectified to the Ditch Companys standards and the cost shall be paid by the
Shareholder(s) or person(s) taking water from that structure.

Delivery structures shall be erected, maintained and operated so that the


Ditch Superintendent can readily limit each Shareholder or person receiving

6
water to the proportion of water to which that Shareholder or person is
legally entitled. Once measured and turned out of the ditch for the account
of a Shareholder or person, the management, use and enjoyment of the water
so delivered and the duty of complying with the laws of Colorado respecting
such water is the sole responsibility of the Shareholder or person receiving
that water.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

7
FIRST ALTERNATIVE TO CONTROL OF WATER
DELIVERY STRUCTURES

All division boxes, headgates and measuring devices shall be


maintained by the Ditch Company at its expense. Any extraordinary
maintenance, repair or replacement shall be the responsibility of the
Shareholder(s) using the structure, but shall be approved in advance
of that maintenance by the Board or the Ditch Superintendent. No
new turn-outs, division boxes, checks, headgates, or other structures
shall be placed in or on the ditch or within the easements owned by
the Ditch Company and/or associated with the ditch without the
prior written approval of the Ditch Company as indicated by the
signature of the President or other authorized Officer on the plans
and specifications of the structure. All such structures shall be
installed at the expense of the Shareholder(s) requesting them, under
the supervision of the Ditch Superintendent. Any engineering or
legal fees incurred by the Company in reviewing the plans and
specifications or entering into an agreement relating to any such
structure shall be paid in advance or reimbursed to the Ditch
Company, at the Boards discretion, by the Shareholder(s)
requesting approval of the structure(s).

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

8
DISTRIBUTION OF WATER TO SHAREHOLDERS

Right to water. The ownership of stock in the Ditch Company shall entitle
the Shareholder to a proportionate amount [measured by number of
Shareholders, or by amount of stock owned, etc.] of the total amount of
water available when distributed to all other Shareholders.

Schedule of distribution. The waters of the Ditch Company shall be


distributed through gates or division-boxes in the main canals or ditches of
the Ditch Company at such time and in amounts as determined by the Board
of Directors. All waters distributed through the headgates shall be measured
by a device approved by the Board of Directors and provided and
maintained by the Shareholder.

Areas of distribution. The distribution system of the Ditch Company shall


be divided into [four] areas as defined as follows:
Area One: That area above ______ Reservoir.
Area Two: That area between ________ Reservoir and
_________ Reservoir.
Area Three: That area lying below ______ Reservoir.
Area Four: That area using water from the main ditch
west of ___________ Reservoir.
The above areas may be changed by the Board of
Directors as the best interests of the Ditch Company may
require.
(4.) Application of water. A Shareholder who desires to use
water on any land must notify the [specify officer or
Ditch Superintendent] prior to [April 1], where the land
is located that he/she proposes to use the water during the
next irrigation season. The Board of Directors shall have
the authority to approve or disapprove the transfer of any
water between any area of distribution or between any
ditches or headgates.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

9
FIRST ALTERNATIVE TO DISTRIBUTION OF WATER:

1. A manager (superintendent or ditch rider) may be appointed by the


Board and shall have charge of the waters carried by the Ditch
Companys system under the direction of the Board.
2. No stockholder shall take or cause to be taken more than the
stockholders proportionate share of water from the system.
3. No one shall draw water from the system without prior permission
from the manager.
4. The Ditch Company may transport water allotted by [insert names of
supplemental water providers), Conservancy District or any other
foreign water not owned by the Ditch Company, for individuals who
are stockholders or non-stockholders of this Ditch Company, upon
such terms and conditions and for such consideration as the Board of
Directors of the Ditch Company may from time to time determine.
Delivery of such water shall be made at an established point in the
Ditch Companys system, and the stockholder or non-stockholder
shall arrange for the transportation of the water from the point of
delivery to the place of use.
5. The Board of Directors shall have the unrestricted discretion to
control the location and construction of checks, headgates and other
diversion structures to require compliance with such structural or
engineering specifications as are reasonably necessary to insure the
safety and structural integrity of the system and the unimpeded and
undiminished flow of water in it.
6. It shall be the policy of the Ditch Company, its directors and officers,
that all decreed water allocated to or delivered by the Ditch Company
to its stockholders or others shall be beneficially used and
administered only within the boundaries of the Ditch Companys area
of service.
7. Each stockholder or person who wants to change the place to which
their entitled water shall be delivered, or to make any change in water
rights of any kind or nature, shall make a prior written request to the
Board. If in the opinion of the Board, such change can be made
without injuring the ditches, the reservoir(s), the Ditch Company or
other stockholders, that water may be delivered to such place(s) as
requested upon the terms and conditions imposed by the Board. After
Board approval, the stockholder or person applying for the change
shall notify in writing all stockholders and other persons affected by
the change prior to that change.

10
8. Except as provided below, no water shall be furnished other than to
stockholders, and then only in the proportion of the amount of stock a
stockholder owns or controls to the whole capital stock of the Ditch
Company. Every year before any water is drawn from the reservoir(s)
of the Ditch Company, the manager [superintendent, ditch rider, etc.]
must determine as near as may be the amount of water contained in
said reservoir[s], and must make and estimate the number of days that
water can be continuously run in the Ditch Companys ditches upon a
basis of [1/10 cubic foot] water per second of time per share.
Stockholders who wish to use water for irrigation may have water
turned out to them on this basis at a regular hour on any day between
May 1 and October 31 each year (both dates inclusive). In order that
water may not be run to disadvantage or waste, it shall be necessary
that at least ____________ CFS be ordered to initiate or to continue
daily water delivery service. All river water belonging to the Ditch
Company run in the ditches, and all surplus water turned into the
reservoir[s] after they have been measured, shall be divided pro rata
among the stockholders. All water not delivered pursuant to such
calls prior to the first day of November shall be forfeited to the Ditch
Company for the benefit of all of its stockholders to be apportioned
among them for delivery during the next succeeding year [season].

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

11
NO STORAGE

All water furnished by the Ditch Company must be applied directly to the
land and no water may be stored and kept for use at a later time.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

12
NO CLAIM FOR LEAKAGE OR OVERFLOW

No shareholder shall make any claim for loss or damage by reason of any
leakage or overflow of the Ditch Companys main ditch [canal], or any of its
reservoirs, lakes or laterals, upon any land or lands belonging to him,
notwithstanding any statute, law or custom to the contrary.

Any shareholder making such claim and not prevailing shall be liable for
and pay all of the Ditch Companys attorneys fees, expenses and costs of
litigation including expert witness fees.

Any shareholder making such claim shall not be considered to have


prevailed unless he prevails fully on every claim he asserts against the
Ditch Company.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

13
DITCH FOREMAN

The Board of Directors may hire a Ditch Foreman [Ditch Rider, Ditch
Superintendent] for the Ditch Company with qualifications and at a salary to
be set by the Board of Directors. The Ditch Foreman shall act as foreman of
work and construction on the Ditch and its appurtenances. He shall keep a
labor record and any other record required by his duties, and report the same
to the secretary-treasurer before each special or annual meeting of the
shareholders of the Ditch Company.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

14
FIRST ALTERNATIVE TO DITCH FOREMAN

DITCH SUPERINTENDENT

The Superintendent shall, subject to the control and direction of the Board of
Directors and the President, supervise and control the ditch, headgates and
other irrigations facilities of the Ditch Company.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

15
SECOND ALTERNATIVE TO DITCH FOREMAN

DUTIES OF DITCH SUPERINTENDENT

It shall be the duty of the Ditch Superintendent [Ditch Rider, Ditch


Foreman] to have control of the working and development, operating and
maintaining of the Ditch Companys property; to report to the Board of
Directors for their approval all contemplated material changes,
improvements or additions to said property; and that after such approval, to
have power to conduct said work. All expenses incurred by the
Superintendent in the operation, maintenance, and management of the Ditch
Companys property shall be borne by the Ditch Company. A suitable
compensation shall be determined by the Board of Directors and allowed the
Ditch Superintendent for his services.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

16
THIRD ALTERNATIVE TO DITCH FOREMAN

DITCH RIDER

The Ditch Rider [Ditch Superintendent, Ditch Foreman] shall have the direct
management and control of the canal and all its appurtenances, including the
lateral head gates, subject to the supervision of the Board of Directors. He
shall divide the water from the canal pro rata to all those shareholders or
others who have rights to use the same, and who actually are using the same,
in any irrigating season, and who have paid all assessments for
superintendence and maintenance and other lawful purposes duly made,
according to the number of shares or water rights which they own or have
the right to use, respectively. He shall attend the regular monthly meetings
of the Board of Directors and report at any meeting, either verbally or in
writing, the condition of the ditch and property of the Ditch Company, what
repairs, if any, are needed, and such other matters as may be required by the
Board of Directors.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

17
DARCA 11/09: SAMPLE DITCH COMPANY BYLAWS

PENALITIES FOR INTERFERENCE WITH DITCH STRUCTURES

Any person who tampers or interferes with any headgate, flume, bridge
or other structure or portion of the ditch without the permission of the
Ditch Superintendent or the Board, shall be prosecuted to the full extent
of the law.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

1
FIRST ALTERNATIVE TO PENALTIES FOR INTERFERENCE
WITH DITCH STRUCTURES

Violators of [put in the section number(s) here for the bylaws about
operation of the ditch and what people can and cannot do] will be given
written notices to correct the violation within three days. If the violation
is repeated or not corrected, the Board is authorized to levy an
appropriate fine or suspend the delivery of water to the offending
Shareholder or other person entitled to use ditch water for the remainder
of the irrigation season. In an effort to increase legal enforcement by
giving notice of Colorado law, the following Colorado Statutes which
cover both irrigation and right-of-way will be enforced by the Ditch
Company and the appropriate law enforcement agencies:

(1.) Colorado Revised Statutes (C.R.S.) 37-42-109: Penalty


for damage
Any person who willfully or maliciously damages or
interferes with any road, ditch, flume, bridge, ferry, railroad,
or telegraph line or any of the fixtures, tools, implements,
appurtenances, or property of any Corporation [ditch
company] which is organized under the provisions of law is
guilty of a misdemeanor and, upon conviction thereof, shall
be punished by a fine of not more than five hundred dollars,
or by imprisonment in the county jail for not more than one
year, or by both such fine and imprisonment. Any such fine
shall be paid into the county treasury, and the offender shall
also pay all damages that any such Corporation sustains,
together with costs of suit.

(2.) C.R.S. 37-84-124: Amount of water taken


It is the duty of every person who is entitled to take water
for irrigation purposes from any ditch, canal, or reservoir to
see that he receives no more water from such ditch, canal, or
reservoir through his head gate, or by any ways or means
whatsoever, than the amount to which he is entitled. At all
times, such person shall take every precaution to prevent
more water than the amount to which he is entitled from
such ditch, canal, or reservoir from coming upon his land.

(3.) C.R.S. 37-84-125: Receipt of too much water

2
It is the duty of every such person, taking water from any
ditch, canal, or reservoir, to be used for irrigation purposes,
on finding that he is receiving more water from such ditch,
canal, or reservoir, either through his head gate or by means
of leaks, or by any means whatsoever, immediately to take
steps to prevent his further receiving more water from such
ditch, canal or reservoir than the amount to which he is
entitled. If knowingly he permits such extra water to come
upon his land from such ditch, canal, or reservoir, and does
not immediately notify the owners of such ditch or take
steps to prevent its further flowing upon his land, he shall be
liable to any person, company, or Corporation [ditch
company] who may be injured by such extra appropriation
of water, for the actual damage sustained by the party
aggrieved. The damages shall be adjudged to be paid,
together with the costs of suit, and a reasonable attorneys
fee to be fixed by the court and taxed with costs.

(4.) C.R.S. 37-89-101: Penalty for cutting or breaking gate,


bank, flume.
Any person who knowingly and willfully cuts, digs, breaks
down, or opens any gate, bank, embankment, or side of any
ditch, canal, flume, feeder, or reservoir, or who knowingly
and willfully breaks, cuts, checks, or otherwise interferes
with the flow of water in any drainage ditch, box drain, or
tile drain, or any manhole, or other opening in any box drain
or tile drain, in which such person may be a joint owner, or
which may be the property of another, or in the lawful
possession of another and used for the purpose of drainage,
irrigation, manufacturing, mining, or domestic purposes,
with malicious intent to injure any person, association, or
Corporation, or for personal gain, unlawfully, with intent of
stealing, taking, or causing to run or pour out of or into such
ditch, canal, reservoir, feeder, flume, drainage ditch, box
drain or tile drain any water for personal profit, benefit, or
advantage, or with intent to check or change the flow in any
such ditch, canal, feeder, flume, drainage ditch, box drain or
tile drain, to the injury of any other person, association, or
Corporation, lawfully in the use of such water or of such
ditch, canal, reservoir, feeder, flume, drainage ditch, box

3
drain or tile drain, is guilty of a misdemeanor and, upon
conviction thereof, shall be punished by a fine of not less
than fifty dollars nor more than seven hundred fifty dollars
or by imprisonment in the county jail for not more than
ninety days. The court shall further order that such person
make full restitution to the victim of his or her conduct for
the actual damages that were sustained. The amount of such
restitution shall be equal to the actual pecuniary damages
that were sustained. The court shall fix the manner and time
in which such restitution shall be made.

(5.) C.R.S. 37-86-102: Right-of-way through other lands


Any person owning a water right or conditional water right
shall be entitled to a right-of-way through the lands which lie
between the point of diversion and point of use for the
purpose of transporting water for beneficial use in
accordance with said water right or conditional water right.

(6.) C.R.S. 7-42-103: Right-of way


Any ditch, reservoir, or pipeline Corporation formed under
the provisions of law shall have the right-of-way over the
line named in the certificate, and shall also have the right to
run water from the stream, channel, or water source, whether
natural or artificial, named in the certificate through its ditch
or pipeline, and store the same in any reservoir of the
company when not needed for immediate use. The line
proposed shall not interfere with any other ditch, pipeline, or
reservoir having prior rights, except the right to cross by pipe
or flume; not shall the water of any other stream, channel, or
other water course, whether natural or artificial, be diverted
from its original channel or source to the detriment of any
person or persons having priority of right thereto, but this
shall not be construed to prevent the appropriation and use of
any water not theretofore utilized and applied to beneficial
uses.

(7.) C.R.S. 37-86-103: Extent of right-of-way


Such right-of-way shall extend only to a ditch, dike, cutting,
pipeline, or other structure for the purpose required.

4
(8.) C.R.S. 37-86-106: Shortest route must be taken
Whenever any persons find it necessary to convey water
through the lands of others, they shall select for the line of such
conveyance the shortest and most direct route practicable upon
which said ditch can be constructed with uniform or nearly
uniform grade.

(9.) C.R.S. 37-89-103: Penalty for interfering with adjusted


headgates.
(1) Every person who willfully and without authority opens,
closes, changes, or interferes with any headgate of any
ditch, or any water box or measuring device of any ditch for
the receiving or delivery of water, after the headgate of the
ditch has been adjusted by and is in the control of the
division engineer, or after such water box or measuring
device has been adopted by the ditch officer in charge, is
guilty of a misdemeanor and, upon conviction thereof, shall
be punished by a fine of not more than three hundred
dollars, or by imprisonment in the county jail for not more
than sixty days, or by both such fine and imprisonment.
(2) Any person who is found using water taken through any
such headgate, water box, or measuring device so
unlawfully interfered with shall prima facie be deemed
guilty of a violation of this section.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

5
SECOND ALTERNATIVE TO PENALTIES FOR INTERFERENCE
WITH DITCH STRUCTURES

Any shareholder or other person entitled to use the Ditch Companys water
who tampers or interferes with any headgate, flume, bridge or other structure
or portion of the ditch and its facilities without the permission of the Ditch
Superintendent or the Board shall be fined a dollar amount in the discretion
of the Board of Directors, not to exceed $_______ for a first offense, and
increasing by $________ for each subsequent offense.

The Board of Directors shall prosecute to the fullest extent of the law any
person other than a shareholder or other person entitled to use the Ditch
Companys water who tampers or interferes with any headgate, flume,
bridge of other structure or portion of the ditch and its facilities without the
permission of the Ditch Superintendent or the Board. In the discretion of the
Board of Directors, the Board may prosecute to the fullest extent of the law
any shareholder or other person entitled to use the Ditch Companys water
who has been fined ___ or more times for interference with the Ditch
Companys ditch structures.

6
DARCA 11/09: SAMPLE DITCH COMPANY BYLAWS

CHANGE OF WATER RIGHT/CATLIN BYLAW

A. Any Shareholder (Applicant) desiring a change of water right, including, but


not limited to, a change in point of diversion or place of use of any water that
the Applicant is entitled to receive as a result of stock ownership must first
make a written application to the directors of the Ditch Company. A change
of water right shall include the use of water the Shareholder is entitled to as a
result of stock ownership as augmentation water in a plan for augmentation or
exchange. A change of water right specifically includes a change of water
right requested in an application submitted to District Court, Water Division
No. _ (Water Court) pursuant to Colo. Rev. Stat. Secs. 37-92-101 to -603 or
in an application for a substitute water supply plan submitted to the Colorado
State Engineer (State Engineer).

B. The written change application should detail the requested change and
include adequate terms and conditions to prevent injury to the Ditch
Company and its Shareholders. If, in a reasonable opinion of the directors,
such change may be approved without injury to the Ditch Company and all
of its Shareholders, then the directors shall approve the change application
subject to necessary terms and conditions. In evaluating whether the
requested change of water right can be made without injury to the Ditch
Company and its Shareholders, the Ditch Company may obtain an
engineering and legal analysis of the requested change by the Applicant and
the terms and conditions offered by the Applicant. The Ditch Company
shall evaluate the application for change of water right with diligence and
reach a decision within a reasonable amount of time.

C. No application for approval of a change of water right may be made to the


Water Court or of a substitute water supply plan may be made to the State
Engineer, unless the same has been approved by the Ditch Company. If an
application has been approved by the Ditch Company, the Applicant must
include terms and conditions at least as stringent as those approved by the
Ditch Company in an application to the Water Court or the State Engineer.

D. An Applicant for a change of water right or for a substitute water supply


plan must reimburse the Ditch Company for the Ditch Companys

1
reasonable costs and fees in analyzing the application for change of water
right to the Ditch Company, participation in any Water Court litigation, and
participation in any substitute water supply plan approval process. Prior to
obtaining legal and engineering analyses of the proposed change, the Ditch
Company shall obtain an estimate of the costs. The Ditch Company shall
obtain said estimates of cost within thirty (30) days of submission of a
written application which complies fully with section B above and the
Applicant shall have thirty (30) days after receipt of the estimate from the
Ditch Company to make the deposit required by the Ditch Company before
continuing with the Water Court proceedings or the substitute water supply
plan. The Ditch Company shall not take final action on any application
until, and unless, the Applicant makes said deposit. In no event shall the
Ditch Company be required to finally approve or disapprove the application
until all fees incurred by the Ditch Company shall be reimbursed.

E. In addition to the fees and costs described in section D above, the Applicant
shall pay for the following:
1. A fee for the Superintendents [Ditch Riders] administration of
the change;
2. The cost of measuring devices, additional or new headgates,
division boxes, flumes and outlet structures to administer the
change; and
3. Fees for storage and carriage to compensate Shareholders and the
Ditch Company for seepage, shrinkage, evaporation, return flows,
and additional maintenance.

E. Each certificate of stock hereinafter transferred shall contain the following


endorsements:
Plans of augmentation, exchanges and any changes of the water
rights appertaining to these shares are subject to the review of the
Board of Directors as provided in the bylaws of the Ditch Company.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

2
FIRST ALTERNATIVE TO CHANGE OF WATER
RIGHT/CATLIN BYLAW

1. Any Stockholder (Applicant) desiring a change of water right as


defined in the Water Right Determination and Administration Act of
1969, Colorado Revised Statutes sections 37-92-101 through 37-92-
603, including but not limited to, a change in point of diversion or
place of use of any water that the Applicant is entitled to receive as a
result of stock ownership must first make a written application to the
directors of the Ditch Company. A change of water right shall include
the use of water the shareholder is entitled to as a result of stock
ownership as augmentation water in a plan for augmentation or
exchange. The request should detail the requested change and include
adequate terms and conditions to prevent injury to the Ditch Company
and its Shareholders. If, in the reasonable opinion of the directors,
such change may be approved without injury to the Ditch Company
and all of its Shareholders, the directors may then approve the change
application subject to necessary terms and conditions. In evaluating
whether the requested change of water rights can be made without
injury to the Ditch Company and its Shareholders, the Ditch Company
may obtain engineering and legal analyses of the requested change by
the Applicant and the terms and conditions offered by the Applicant.

2. The Ditch Company shall evaluate the application for change of water
right within a reasonable period of time.

3. No application for approval of a change of water right or plan for


augmentation as described above may be made to the District Court
for Water, Division No. __, State of Colorado (Water Court), unless
the same has been approved by the Ditch Company. If an application
has been approved by the Ditch Company, the Applicant must include
terms and conditions at least as stringent as those approved by the
Ditch Company in the application to Water Court.

4. An Applicant for a change of water right must reimburse the Ditch


Company for the Ditch Companys reasonable costs and fees,
including a charge for time spent by the directors and Ditch Company
employees in analyzing the application to the Ditch Company and in
any judicial or administrative proceedings, including but not limited to

3
litigation, that follow. This specifically includes a challenge to the
Ditch Companys denial of an application. Prior to analyzing the
proposed change, the Ditch Company shall obtain an estimate of
costs. The Ditch Company shall make said estimate of cost within
thirty (30) days of submission of a written application and the
Applicant shall have thirty (30) days after receipt of the estimate from
the Ditch Company to make the deposit required by the Ditch
Company. The Ditch Company shall not take final action on any
application until, and unless, the Applicant makes said deposit. If the
estimate and deposit need to be adjusted by further payment or
reimbursement, said adjustment shall be made upon the completion of
the analysis. In no event shall the Ditch Company be required to
finally approve or disapprove the application until all fees incurred by
the Ditch Company are reimbursed.

5. If any portion of this bylaw is declared null or void by a court of


law, the remaining portions of this bylaw shall remain in full force
and effect.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

4
SECOND ALTERNATIVE TO CHANGE OF WATER
RIGHT/CATLIN BYLAW

1. Change in Use. The shares held in this Ditch Company are for the
purpose of delivering water to shareholders as a mutual irrigating
reservoir company to deliver water from ___________ to farms along
the ditch, primarily for agricultural purposes. No water shall be
deliverable to any shareholder except through existing headgates or
additional headgates authorized specifically by the board of directors
as to engineering feasibility, location and purpose of use. This bylaw
shall not be construed to prohibit plans of augmentation, changes in
the nature of use, point of diversion or other extended uses or changes
in water rights, provided the same are allowable under Colorado law
and provided there is no damage to any vested rights of any other
shareholder by virtue of any such plan. The board of directors shall
have discretionary authority to approve, conditionally, approve, or
disapprove such changes in the event there might be damage to a
shareholders vested interest. No such change shall be valid unless an
application for such change has been previously submitted to the
board of directors. In the event such change has not been approved,
conditionally approved, or disapproved within ninety (90) days after
the same has been submitted to the board, no approval of the board of
directors shall be required.
2. Each certificate of stock hereinafter transferred shall contain the
following endorsement thereon:
Plans of augmentation, changes in nature of use, time of use,
return flow patterns, purpose of use or changes in point of
diversion or other extended uses or changes in the water rights
appertaining to these shares are subject to the reasonable
approval of the board of directors, as provided in the bylaws of
the Ditch Company.
3. Reimbursement of Costs for Change of Use.
The applicant for a change of use as described above in these bylaws
shall reimburse the Ditch Company for all of its reasonable costs and
expenses in connection therewith, including, but not limited to, the
following:
a. Attorneys fees.
b. Engineering costs.
c. Court costs.

5
d. Additional fees and costs for the Ditch Superintendent [Ditch
Rider] to administer said changes.
e. Cost of measuring devices, additional or new headgates,
division boxes, flumes and outlet structures.
f. Storage and carrying fees and water to convert a direct flow
water right into a storage right and to pay and compensate
shareholders and the Ditch Company for seepage, shrinkage,
evaporation, return flows, and additional maintenance.
g. Any other reasonable expenses that are necessitated by
hearings, contract negotiations, objections or protests to a water
change application and trials involving shares of the Ditch
Company, so that the owner of stock being changed does not
cause a disproportionate burden on the other shareholders
assessments or usage of water.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

6
THIRD ALTERNATIVE TO CHANGE OF WATER RIGHT BYLAW

Each shareholder or person receiving water through the Corporations


system desiring to change the place to which any water shall be delivered, or
to make any change in water rights of any kind or nature, shall make a prior
written request to the Board of Directors. If, in the opinion of the Board of
Directors, such change can be made without injury to the ditch(es) and/or
reservoirs, the Ditch Company or other shareholders or persons receiving
delivery of water, such water may be delivered to such place or places as
requested upon such terms and conditions as the Board of Directors may
impose. After approval by the Board of Directors, such shareholder or
person shall notify in writing all shareholders of the Ditch Company and
other persons affected by the change prior to making such change.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

7
DARCA 11/09: SAMPLE DITCH COMPANY BYLAWS

INDEMNIFICATION

The Ditch Company shall indemnify each of its directors, or officers,


agents, and employees or any affiliated organization to the maximum
extent permitted by law.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter

1
FIRST ALTERNATIVE TO INDEMNIFICATION BYLAW

Except to the extent that such sums are covered by insurance, the Ditch
Company and its Shareholders shall indemnify any person who is a party
or is threatened to be made a party to any threatened or pending civil
action, suit, or proceeding, by reason of the fact that such person is or
was a director, officer, or employee of the Ditch Company, against
expenses (including attorneys fees), judgments and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit, or proceeding, unless such persons acts or
omissions were dishonest, fraudulent, malicious, criminal, ultra vires, or
the result of gross negligence.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

2
SECOND ALTERNATIVE TO INDEMNIFICATION

The Ditch Company, through its Board of Directors, is authorized to do the


following:

1. To indemnify any person who was or is a party or is


threatened to be made a party to a threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the Ditch Company),
2. By reason of the fact that the person is, or was, a director,
officer, employee, fiduciary or agent of the Ditch Company
or was serving at the request of the Ditch Company as a
director, officer, employee, fiduciary or agent of another
enterprise,
3. against costs, expenses (including attorneys fees),
judgments, fines, and amounts paid in settlement actually
and reasonably incurred by the person in connection with
such action, suit, or proceeding, if the person acted in good
faith and in a manner he or she reasonably believed to be in
the best interests of the Ditch Company.
4. For purposes of this Section, these Bylaws adopt in total the
indemnification provisions of C.R.S. 7-3-101 as amended,
(o)(I) through and including (o)(VII), and (s).

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

3
DARCA 11/09: SAMPLE DITCH COMPANY BYLAWS

RIGHT OF FIRST REFUSAL (ROFR) BYLAW

1. Should any Shareholder (Selling Shareholder) desire to sell shares


in the Ditch Company to any person or entity not already a
Shareholder of the Ditch Company, other than a sale made together
with land irrigated by the Selling Shareholder with Ditch Company
water as represented by the shares to be sold, the Selling Shareholder
shall give the other Shareholders a right of first refusal to purchase the
shares in accordance with the procedures set forth in this Section. For
purposes of this Section, the terms sell and sale shall mean any
transfer of ownership other than a transfer made together with land
irrigated by the Selling Shareholder with Ditch Company water as
represented by the shares to be sold.

2. The Selling Shareholder shall provide to the Secretary a written notice


(Notice) describing the terms of the transaction, including the
number of shares to be sold, the price at which the shares are to be
sold if the sale is for cash, the equivalent monetary value to be
received by the Selling Shareholder if the sale is for other than cash,
the place and acreage where the shares have historically been used,
and the date of closing.

3. The Secretary shall promptly provide a copy of such notice to each


Shareholder by mailing the same addressed to the Shareholders last
known address according to Ditch Company records. Any
Shareholder may within thirty (30) days of the date of mailing of said
notice by the Secretary elect to purchase the shares (but only as a
block) on terms and conditions the same as or equivalent in value to
the proposed transaction by giving written notice to the selling
Shareholder and to the Secretary. Such notice shall be effective when
received by the Secretary.

4. If only one (1) Shareholder provides notice of the election to purchase


the shares (the electing Shareholder), the selling Shareholder and

1
the electing Shareholder shall proceed with the closing as specified in
the Notice.

5. If more than one (1) Shareholder provides timely notice of his election
to purchase the shares, the Secretary shall notify all electing
Shareholders of the multiple acceptances. If the electing Shareholders
cannot agree among themselves within __ days of the Secretarys
notification, as to their percentage interests in the sale, a lottery
[auction?] shall be held by the Secretary ___ days after the end of the
30-day period described above to designate the Shareholder who shall
be entitled to purchase the shares. The Board of Directors, in its
discretion, shall be entitled to request whatever proof of ability to pay
for the shares from the electing Shareholders prior to the lottery
[auction?].

6. If none of the Shareholders provides timely notice of election to


purchase the shares, the Selling Shareholder shall be so notified in
writing by the Secretary within five days after the end of the 30-day
period described above. The Selling Shareholder shall then be free to
sell the shares but only on the terms and conditions and within the
time period set forth in the Notice to the other Shareholders.
Thereafter, the right of first refusal shall once again apply and the
procedures set forth in this section shall again be followed.

7. The Secretary shall not transfer on the books of the Ditch Company
any shares not sold in conformity with this section. The Selling
Shareholder shall supply the Secretary with his sworn affidavit of the
price at which the offered shares were sold, together with copies of
closing documentation, which shall be presented at the time that
transfer on the books is requested, but not more than sixty (60) days
after the sale.

Should the Ditch Company be allowed to purchase the shares as treasury


stock if no Shareholder in good standing elects to purchase them, rather
than allowing them to be sold outside the Ditch Company?

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter

2
Right of First Refusal (ROFR)

1. General Offer to Transfer Shares. Any shareholder (the


offering shareholder) desiring to sell any shares of
the Company separate from the sale of the land on which
those shares are used must first offer to the Company the
opportunity to purchase said shares (the offered
shares) on the same terms and conditions as offered by
the offering shareholder (the offered terms and
conditions) (hereafter, ROFR). The offered terms and
conditions must be forwarded by certified mail, return
receipt requested, to the Company in care of the
Secretary and copy to the Assistant Secretary, whose
names and addresses can be obtained from any Company
officer. The Company shall have 90 days after delivery
of the offer to the Secretary to accept or reject the
offer. The Company shall deliver written notice of the
acceptance or rejection to the offering shareholder. If
the Company rejects the offer or no notice is received by
the offering shareholder within the time period outlined
above, in which case the Company shall be deemed to have
rejected said offer, the offering shareholder may sell
said shares, but only on the offered terms and
conditions.
2. Prevention of Evasion of ROFR Through Use of Transfer of
Control of an Entity Which Owns Shares of the Company.
The Company is concerned that the ROFR might be avoided
by the transfer of the offering shareholder of shares to
an entity, followed by a sale of an interest in the
entity (rather than a sale of the shares themselves). In
order to prevent such an event, the following rules are
adopted concerning the transfer of shares to an entity,
and the subsequent disposition of ownership interests in
the entity. Furthermore, the Company is concerned about
determination of the price of the shares for the purposes
of the ROFR in the event of the sale of shares along with
other property (other than the land on which the water
attributable to the shares has historically been used).
It is the intention of the Company that ROFR apply only
with respect to its shares and to no other property or
interest of any other entity or person.
2.1. Applicability of the ROFR Upon Transfer of Shares
to an Entity. If the transfer of shares to an entity
does not result in the recognition of income under the
U.S. Internal Revenue Code as in effect on May 1,
2001, in the reasonable opinion of counsel for the
Company, then the ROFR will not be exercisable upon
the transfer of the shares to the entity, if a
notification agreement is made. (Such a transaction
is hereafter called a non-recognition transfer.)
The Company may require the transferor (and/or
transferee entity) to provide such information as is
necessary to demonstrate the non-recognition of
income. In the event that the transfer to the entity,
in the reasonable opinion of the counsel for the
Company, in not a non-recognition transfer, then the
transfer shall be treated as a sale and the ROFR will
apply. A notification agreement means an agreement
signed by two officers or partners of the entity, and
the entity, in which they jointly and severally agree
that the entity will provide the Company with written
notice of any change of control of more than twenty
days in advance of the consummation of the change of
control and will grant to the Company the right to
exercise the ROFR upon such change of control at the
assumed price (as defined below). (The use of the
U.S. Internal Revenue Code in this document is
intended to provide a definition of transfers to
entities which constitute a mere change in the form of
ownership, as opposed to a sale.)
2.2. Sales of Other Personal Property Along with Sales
of Shares. In the event that any sale includes both
shares and other property (other than the land on
which the water attributable to the shares has
historically been used), then the value of the other
property shall be determined as hereafter provided,
and that value shall be subtracted from the total
consideration for sale to arrive at the price of the
shares for purposes of the ROFR, unless the Company is
reasonably satisfied that the sale documents allocate
a separate and reasonable amount of the total price to
the shares. The ROFR shall apply to the price of the
shares as determined above.
2.3. Exercise of the Right of First Refusal Upon
Change of Control of an Entity Owning Shares. In the
event that the offering shareholder transfers shares
to an entity and a controlling interest in that entity
is subsequently transferred (rather than a sale of the
shares themselves), the Company shall have the right
to exercise the ROFR. The ROFR shall apply to the
assumed price (as defined below) of the shares at
the time of the change of control.
2.3.1. Change of Control. For purposes of the
ROFR, a change of control means a change in the voting
control of an entity such that those persons or
entities who had voting control prior to the change no
longer have voting control. A change of control
between family members shall not be a change of
control for purposes of the ROFR. Family members
means spouses, ancestors, lineal descendants, spouses
of lineal descendants, any trust for the benefit of
same, and any entity voting control of which is held
by same. A change of control also does not include a
transfer incident to a dissolution of marriage, or
pursuant to a will, other testamentary device, or
intestate death. In the event of a change of control
of an entity owning shares (which does not own the
land on which the water attributable to the shares has
historically been used.)
2.3.2. Determination of Assumed Price of the
Shares. The assumed price shall be determined as
follows: First, the full price of the entity, based
on the price (or value) paid for the ownership
interests transferred shall be determined by dividing
the price for the ownership interests transferred by
the percentage of total ownership which was
transferred. Then the assumed price of the shares
shall be determined by subtracting the value of the
other property included in the entity, determined as
provided hereafter, less the value of any debt
encumbering the assets of the entity, to arrive at the
assumed price. The value of non-share assets shall be
determined as provided below. However, the Company
may accept as the assumed price that price which set
forth in the documents providing for the change of
control, if the Company is reasonably satisfied that
the documents allocate a separate and reasonable
amount of the total price to the shares. (The price
allocated in the change-of-control documents shall be
grossed up to a value which would apply if the
entire entity had been sold, as provided immediately
above.)
2.4. Determination of Value of Non-Share Assets. If
it becomes necessary to determine the price (i.e.,
value) of any asset for purposes of the ROFR, the
parties shall first attempt to arrive at a written
agreement establishing the price. If such an
agreement is not reached within 30 days after written
notification of the need to determine the price is
delivered by either party to the other, then the
parties shall attempt agree upon a single appraiser to
determine the price. If agreement upon a single
appraiser is not reached within 30 days after elapse
of the first 30 day period, then either party may
nominate an appraiser by written notice to the other.
Within 30 days after receipt of such notice, the
receiving party shall designate an appraiser by
written notice to the other. The two appraisers so
selected shall then select a third appraiser, within
30 days after delivery of notice of the selection of
the second appraiser. The three appraisers shall then
determine the requisite price, the same being fair
market value as of the date of sale or change of
control, as the case may be. Their decision shall be
arrived at by majority vote. Each appraiser shall be
independent of the parties, and shall be a
professional appraiser skilled and experienced in the
valuation of the type of property which must be
valued. The transferor of the shares (or the entity
as to which control is changed) shall pay the feels of
all of the appraisers.
DARCA 11/09: SAMPLE DITCH COMPANY BYLAWS

EASEMENT BYLAW

In most cases, the easement for the Ditch Companys water distribution,
drainage and waste systems (ditch, canal, etc.) is prescriptive. The ditch
easement has been established by use since the inception of the Ditch
Company, together with other appurtenant easements, over a period of a
number of years; and under Colorado law, sufficient space on either side
of the centerline of a ditch or canal for operation and maintenance
thereof is included in such prescriptive easement. The Ditch Companys
easements are generally not exclusive, but in most cases are prior in time
to any other encroaching use. Private property interests, public access
and utility interests, and other legitimate property or access interests
encroaching within or upon the Ditch Companys prescriptive easement
must recognize the extent of the Ditch Companys rights, and in the
event that an encroachment is unlawful, the Ditch Company shall be
fully reimbursed for clerical, administrative, legal, engineering and any
other expenses incurred in exercising and defending its easement rights.
Nothing herein shall preclude collection of fees and expenses as
provided elsewhere in these bylaws.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter

1
EASEMENT LICENSE BYLAW

Compensation is required for each license agreement entered into


by the Ditch Company, the amount of which shall be determined
by the Board of Directors in their sole discretion. The shareholder
or person seeking such license shall be known as the Licensee.
Prior to commencing any construction upon said easement, said
Licensee must execute both a Reimbursement Agreement and a
License Agreement with the Ditch Company. The Reimbursement
Agreement shall require the Licensee to pay 100 percent of the
engineering, legal and administrative costs to be reasonably
incurred by the Ditch Company in its preparation, review and
approval or disapproval of the License. The Licensee shall make
all such payments prior to the Ditch Companys execution of the
License Agreement. The Ditch Company retains all of its rights to
prevent any construction from commencing upon its easement until
it receives the fully executed Reimbursement Agreement and the
fully executed License Agreement, including removing any
interference constructed or placed within the Ditch, without
incurring liability or damages caused by such removal.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

2
DARCA 11/09: SAMPLE DITCH COMPANY BYLAWS

ASSESSMENTS AND FORFEITURES BYLAWS

ASSESSMENT BYLAW

Maintenance, Repairs and Expense Assessment

It shall be the duty of the Board of Directors to keep and maintain


the main ditch [and reservoirs] in good order and condition, and, in
case of damage to the same by accident, to repair the injury
occasioned by that accident as soon as practicable and expedient;
and each shareholder after having water allotted to him, shall
thereafter pay to the Ditch Company, whether he continuously
used said water or not, his proportionate share of the cost of
maintaining and keeping said ditch [and reservoirs] in repair and of
the other ordinary and necessary expenses of the Ditch Company.

Such share of the maintenance, repair and expense shall be paid


annually on _______ [date] in each year and shall be a sum of
money which shall bear the same ratio to the whole cost of such
maintenance, repairs and expenses as the amount of water allotted
to each shareholder [or share] on the first day of July in the
previous year.

Upon failure of any shareholder sum or sums due from him on


account of his proportionate share of maintenance, repairs and
expense on or before [same date as above] in any year, he shall not
be entitled to water, and the same shall be shut off and kept shut
off until the sum so due for any year shall have been paid in full.
If any such sum due and owing to the Ditch Company shall remain
unpaid sixty (60) days after the same shall have become due, the
same may be collected by action at law.

1
No transfer of stock will be permitted while the holder thereof is
indebted to the Ditch Company.

The Board of Directors may establish and enforce such other rules
and regulations, and provide and declare such other penalties and
forfeitures, as they may deem necessary or expedient for the
purposes of enforcing and collecting delinquent payments.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

2
FIRST ALTERNATIVE TO ASSESSMENT BYLAW

Assessments may be made from time to time on the paid-up capital stock of
the Ditch Company to keep its ditch or other property in good repair, to pay
any indebtedness contracted or the interest thereon, and for payment of any
claim against the Ditch Company not otherwise provided for, provided the
question of making any such assessment shall first be submitted to the
stockholders of the Ditch Company as provided by C.R.S. 7-42-104.

However, nothing in the foregoing clause concerning assessments on paid-


up stock for maintenance purposes shall apply to calls made by the Board of
Directors on the subscribers to the capital stock of the Ditch Company for
any part or all of the subscriptions to said stock, by the said subscribers. The
Board of Directors shall have power to impose such penalties and forfeitures
for the non-payment of such calls as it may from time to time consider
necessary.

Assessments when regularly made shall draw interest at the rate of ten (10)
percent per year from the time fixed in the levy of the assessment for the
same to become delinquent. No stockholder delinquent in payment of an
assessment levied shall, during the period of his delinquency, be permitted to
draw any water either in person or by his privies in interest. The Secretary
shall furnish to the Superintendent [manager, ditch rider] and President of
the Ditch Company a list of all stockholders who are delinquent in paying
assessments.

Before any assessment duly levied shall become delinquent, at least thirty
(30) days notice thereof shall be given by the Secretary to each stockholder
by mail addressed to the last known post office address of each such
stockholder. The Secretarys certificate of mailing shall be prima facie
evidence that notice has been duly given.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

3
SECOND ALTERNATIVE TO ASSESSMENT BYLAW

1. Board Recommendation. The Board of Directors shall recommend to


the Shareholders of the Ditch Company at the annual meeting or a
special meeting called for that pupose the assessment upon each share
of stock for the estimated costs for the operation and maintenance of
the Ditch for the succeeding year.

2. Shareholders Levy. No assessment shall be made unless a quorum is


present at such an annual meeting or a special meeting and a majority
of the voting shares represented at the meeting, either in person or by
proxy, vote in favor of levying such assessments. Assessments levied
by Shareholders at annual or special meetings shall be due and
payable to the Treasurer of the Ditch Company on or before
____________ [date] of each year, unless a different date is approved
by a majority of the Shareholders.

3. Directors Levy. If the Shareholders either fail to hold any such


meeting or fail to authorize any such assessment pursuant to section 2
above, then the Board of Directors shall have the power to make such
assessment for such year at any regular or special meeting called for
that purpose. Said assessments shall be due and payable to the
Treasurer of the Company on or before a date established by the
Board of Directors at such meeting.

4. Notice of Assessment. Not less than thirty (30) days, nor more than
sixty-five (65) days before any assessment or any part of any
assessment shall be due and payable, the Treasurer shall prepare
notices and demands therefore, and shall serve the same upon each
Shareholder, specifying therein the sum which will be due and
payable and the date when the same will become due and payable,
demanding payment of said sum and stating that if said sum be not
then paid, the shares held by said Shareholder will be forfeited and
sold in accordance with these bylaws.

5. Service of Notice of Assessment. The Treasurer shall serve said


notices and demands as follows: In every case where it is reasonably
practicable to do so, by personal delivery, and when such personal
delivery is not reasonably practicable, by mailing said notices and

4
demands to the Shareholders for whom the same are intended to the
address of record on the Ditch Companys Shareholder records.

6. Use of Ditch. The Board of Directors shall in no case allow any


Shareholder to use the ditch until all outstanding assessments, which
are properly assessed against the share(s) of stock on the books of the
Ditch Company, shall have been paid in full by the Shareholder. Any
excess capacity created by withholding use of the ditch from a
delinquent Shareholder may be pro-rated among the Shareholders in
good standing of the Ditch Company.

7. First Lien. The Ditch Company shall have the first lien, in perpetuity,
on all shares of stock and the water rights represented thereby for any
unpaid assessments until the Shareholder fully pays the assessments,
the special assessments, out-of-pocket fees and expenses, accrued
interest and penalties. Such lien shall be noted on each new stock
certificate issued by the Ditch Company. [Each such lien shall be
recorded in the __________ County Recorders office as a lien against
the real property of the delinquent Shareholder which is serviced by
the Ditch Companys ditch. ??]

8. Interest Due. All assessments or indebtedness of the Ditch Company,


if not paid by _________ [date] of each year, or such other date as
may be set by the Shareholders at the annual meeting, shall draw
interest at the rate of eighteen (18) percent per year until paid.

9. Special Assessment. All assessments and indebtedness of the Ditch


Company, if not paid when due, after one (1) year of such
delinquency, shall be assessed a special assessment of $____ [100?]
dollars.

10.Payment. The Board of Directors may permit past-due assessments


and interest payments thereon pursuant to an installment schedule.
Such installment payments schedule shall remain subject to the
provisions of this article.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter

5
Forfeiture Bylaw

1. Notice of Forfeiture. If any Shareholder fails to pay the assessments


owed on any share of stock more than thirty (30) days after _______
[date] in each calendar year, unless changed by the Board of
Directors, then the Secretary or Treasurer shall deem the share(s) as in
default and the share(s) shall be subject to forfeiture and cancellation
as provided below.

2. Forfeiture. Once a share is deemed to be in default pursuant to the


above paragraph, the Secretary shall serve notice upon the
Shareholder of record stating that such share(s) in default shall be
forfeited and canceled on the books of the Ditch Company if the
assessments, plus interest due pursuant to these bylaws, are not paid
within thirty (30) days of the mailing of such notice. The written
notice and demand for payment shall be sent by certified mail, return
receipt requested, to the Shareholders address of record on the books
of the Ditch Company. The Board of Directors, in their sole
discretion at a regular or special meeting, may for good cause extend
any of the time limits set forth in this bylaw.

3. Purchase by Ditch Company. The Ditch Company may purchase any


forfeited share(s) and hold the share(s) as treasury stock of the Ditch
Company.

4. Lease of Treasury Stock. The Ditch Company may, in the sole


discretion of the Board of Directors, choose to lease out its treasury
stock, including but not limited to forfeited stock, with first preference
to existing Shareholders in good standing, by auction if more than one
such Shareholder wishes to lease those shares of treasury stock.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

6
DARCA 11/09: SAMPLE DITCH COMPANY BYLAWS

FRACTIONAL SHARES

Green Buy-out of Fractional Shares

Any Shareholder who holds less than one full share in the Ditch Company shall be
eligible for the following benefits as consideration for the surrender of his, her or
its ownership of the fractional share to the Ditch Company:

1. A one-time payment of up to $__________ [if there is more than one


kind of fractional share, for example, 1/2 share, 1/4 share, 1/8 share, then
a sliding scale of payments might be specified] to a Shareholder of less
than one full share in the Ditch Company in return for the Shareholders
removing the lawn or other plantings that require watering with the Ditch
Companys water and subsequent installation of drought-resistant
plantings, gravel or pavement and surrender of the Shareholders
fractional share to the Ditch Company. The Shareholder must apply to
the Ditch Company in writing for this payment (application). The
application should detail what the Shareholder proposes to do to replace
the lawn or other plantings. The Ditch Companys Board of Directors
shall determine the amount of payment to each Shareholder. The Ditch
Company shall pay for any Water Court expenses necessary to obtain the
fractional share(s).
2. Once the Ditch Company has notified the Shareholder in writing that the
Shareholders plan to remove the Shareholders lawn and other plantings
that require Ditch Company water has been approved by the Ditch
Company and any other necessary authority such as Water Court, the
Shareholder will have up to ____ [90? 120?] days to remove the lawn
and other plantings that require Ditch Company water and either plant the
property with drought-resistant plantings, or install gravel or pavement.
Once the changes have been completed, the Shareholder shall notify the
Ditch Company. The [manager, superintendent, ditch rider or other
person] shall inspect the property for compliance with the Ditch
Companys approval and with any terms or conditions attached to that
approval. After the [manager, superintendent, ditch rider or other person]
approves the new drought-resistant plantings or gravel or pavement in

1
writing and certifies that the Shareholder has complied with all terms or
conditions imposed by the Ditch Company, the Ditch Company shall
issue the payment to the Shareholder, who shall then surrender the
fractional share(s) to the Ditch Company simultaneous with the Ditch
Companys payment to the Shareholder.
3. Any Shareholder who does not voluntarily surrender their fractional
share(s) in return for the payment described above shall not receive such
payment.
4. Once the Ditch Company is in possession of the fractional share, the
Ditch Company shall take all necessary steps at the Ditch Companys
expense to prevent the former Shareholder from accessing the Ditch
Companys water.
5. The Ditch Company shall have the option to retain in the Ditch
Companys name all such fractional shares surrendered to the Ditch
Company, and shall be empowered, by vote of the Board of Directors, to
lease such fractional shares to other Shareholder of the Ditch Company,
either as short term or long term leases. The leasing price shall include at
least the annual assessment per fractional share charged to the Ditch
Companys Shareholders and all costs associated with the lease. The
lessee shall be responsible for all maintenance and repair associated with
the leased shares during the term of the lease. For leasing purposes, the
Ditch Company may either combine fractional shares into whole shares
for leasing, or may lease fractional shares. The revenues from such
leasing shall be retained by the Ditch Company and used for the same
purposes that assessments from Shareholders are used.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter

2
FIRST ALTERNATIVE TO FRACTIONAL SHARES BYLAW

1. Once every [five?] years, or as frequently as the Board of Directors


determine is reasonable, the Ditch Company shall hire an experienced
Colorado water appraiser who is not a Shareholder of the Ditch
Company to appraise the value of a share, and/or fractional share, of
the Ditch Company. The Ditch Company shall notify Shareholders of
the appraised amounts and any changes in them at every annual
Shareholders meeting.

2. Any Shareholder who wishes to sell a fractional share or shares at the


announced appraised price shall notify the Ditch Company. The
Ditch Company shall have the option to purchase said fractional
share(s). If the Board of Directors votes to purchase said fractional
share(s), the Ditch Company shall pay all necessary expenses,
including any Water Court expenses, connected with obtaining the
fractional share(s).

3. The Ditch Company shall have thirty (30) days in which to make
payment to the Shareholder who seeks to sell the fractional share(s) to
the Ditch Company after all necessary steps have been taken and all
necessary approvals have been obtained. As a condition of payment,
the Shareholder shall surrender the fractional share(s) to the Ditch
Companys ownership.

4. Once the Ditch Company is in possession of the fractional share(s),


the Ditch Company shall take all necessary steps at the Ditch
Companys expense to prevent the former Shareholder from accessing
the Ditch Companys water.

5. The Ditch Company shall retain in its own name all such fractional
share(s) surrendered to the Ditch Company, and shall be empowered,
by vote of the Board of Directors, to lease such fractional share(s) to
other Shareholders of the Ditch Company either as short term or long
term leases. The leasing price shall include at least the annual
assessment per fractional share charged to the Ditch Companys
Shareholders and all costs associated with the lease. The lessee shall
be responsible for all maintenance and repair associated with the
leased shares during the term of the lease. For leasing purposes, the

3
Ditch Company may either combine fractional shares into whole
shares for leasing, or may lease fractional shares to Shareholders. The
revenues from such leasing shall be retained by the Ditch Company
and used for the same purposes that assessments from Shareholders
are used

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

4
SECOND ALTERNATIVE TO FRACTIONAL SHARES BYLAW

No shareholder shall be entitled to transfer stock or have water delivered to


that shareholder if he, she or it owns less than one full share of the company.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.

5
THIRD ALTERNATIVE TO FRACTIONAL SHARES BYLAW

The Ditch Company shall not issue stock certificates representing less than
__________________ (__8) shares.

Disclaimer: The information contained in this document is provided for


informational purposes only. It is not legal advice and should not be
construed as providing legal advice on any subject matter.