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{2.3) shares of common stock for the issuance of each share of preferred stock to the member or, upon the Baard's determination preferred stock may be issued upon the conveyance to LAWMA of vva�er equivalent to two and three-tenths {2.3} shares of common stock. For purposes of determiaing the number of outstanding shares issued by the corpora#ion, one share ofpreferred stock shall be equivalent to two and three-tenths {2.3) shares of common stock. The member requesting the issuance af skares of stock may be requirad to pay all of the iegal and engineering costs assaciated with evaluating �d cairying-out the groposed issuance of shazes of stock to the member and including fhe mennber's well(s) in LAW�MA's au�nentation plan. The decision of the Board as ta whether shares of stock wilI be isse�ed to the member shall be final and sha11 be transmitted to the membc� requesting the issuance of shares of stoek. ARTICLE VII Use of Water Secfion 1. The Board ofDirectors shall setpolicies andpracedures for and make decisions regarding use of the wa.ter rights and facilities owned or eontrolled by the corporation, including the timing and Iocation of releases, replacement of deplcnans, and retention of water in carryover storage, in accordance with applicable state laws and regulations. Section 2. The Board of Directors shall annually allacate an aznount of water associated with each share of stock in the corporation, expressed as the aniount of rep�acement water available per share. The Baard of Directors intends to annually allocate one (1) acre-foot of replacemez�t water ta each share of preferred stoak. Preferred stock will receive the first allocation �f any repiace�zeni water owned or contrailed by LAWMA that LAWIvIA is permitted to al3ocate to its shareholder memhers by the Colorado State Engineer, Coioz�ado Water Court or otlier auti�ority exercising jurisdic�iozt over such m.atters. Such allocation shall be made no later thanApril 1 of each year and writte� notice of the alloca.�ion shall be provided to each shazeholder. The notice shall also state the nnaximtim amount of water that can be pzunped by each well included in the p2an far augmentatian. A suppiementa.l allocation may be made at any time by the Board of Dixectors at its sole discretion. The aznount of water alloca.ted in each year shaII be deteimined with due regard for cur�'ent year needs and availability and far future year possible needs and availability. Section 3. The Board of Directors may adopt rules to provide general guidance, but in recognition of the difficulty of anticipatina all $ydrological and water management situations, the Board shall reserve the right to make exceptions or alterations in any.particnlar year, including, wiYliout Iimita�ion situatiozzs in which �he water rights owned or cflntrolled by the corporation are insufficient to replace depletions from member wells in any year. No memb�r, whether shaxeholder or non:-shareholder, shall be entitled to pump in excess of #he maximwm allowable amount, or cause depletions in excess of the amount of zeplacement water allocated to the znember, unless a supplemental alloca.tion is made or that member has rented additional sources af replacement water, including remaining allocatioz► stock rented from o#her shareholders. Such rental sources and the use fihereof must be first approved by the Board. Such rules may include a requiremezit that pumping from member wells be curta.iled, and may provide for procedures to enforce such curtailmen� Section 4. Provision ofRenlacement Waterto Members with water uses tlzat mav need t� be considered to be Non-G�rtailable. A• in general, aravel pits, and wells that are used to provide water for inciustrial, commercial, municzpal or domestic uses may not reasonably and practicalIy 10