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<br />. <br /> <br />opinion, the person indemnified did not commit such negligence or misconduct. The foregoing <br />right of indemnification shall not be exclusive of other rights to which he may be entitled as a <br />matter of law or by agreement. <br /> <br />B. The stockholders, directors and officers of this company shall enjoy the same measure of <br />immunity from liability for corporate acts or omissions as stockholders, directors, and officers of <br />corporations formed under the "Colorado Corporation Code", Articles 1 to 10 of the Colorado <br />Statutes, or the "Colorado Nonprofit Corporation Acf', Articles 20 to 29 of the Colorado statutes. <br /> <br />TENTH. Collection of Assessments <br /> <br />A. Upon becoming a shareholder in the Company, each shareholder shall be deemed to have <br />given, granted, conveyed, deeded, pledged and mortgaged his shares in the Company and his <br />interest in the Lake Henry Reservoir and related facilities to secure the payment of all <br />assessments made with respect to such shares. The Company's security interest in said shares <br />shall be in the nature of a lien thereon and its security interest in the shareholder's ownership of <br />the reservoir, canal and canal rights of way shall be in the nature of a mortgage. Said security <br />interests shall remain and be permanent security interests binding upon all future transfers of <br />shares irrespective of whether said shares are actually assigned or the reservoir and its right of <br />way conveyed, or both. <br /> <br />B. The Company shall have the right to foreclosed and forfeit a shareholder's interest in his <br />Company shares and the Company properties as follows. When any shareholder has been <br />delinquent for thirty days or more in the payment of an assessment or in the payment of an <br />installment of an assessment the Board of Directors may direct that the assessment or <br />installment be declared to be in default. Said shareholder shall be notified by mail or other <br />means ordered by the Board of Directors that a default exists and unless it is cured the <br />shareholder's interest in his shares and the Company properties may be forfeited. After the <br />Board shall have notified the shareholder that a default exists, no waters shall be delivered to the <br />interest of such shareholder and he shall be notified at the time of notification of default that this <br />will be one of the consequences of his default. <br /> <br />C. If such default shall continue and shall not be cured by the payment of the amount of the <br />assessment or installment in default, together with interest thereon and reasonable penalties <br />established by the Board, the Board shall, not earlier than two years after the declaration of <br />default shall have been adopted, adopt a resolution ordering the shares, the shareholder's <br />interest in the Reservoir and the other Company properties sold at public auction at Ordway, <br />Colorado, on at least thirty days' written notice to the defaulting shareholder. At the public sale <br />the Company shall bid the amount of the assessment or installment in default, plus any interest <br />thereon and penalties imposed by the Board with respect thereto. The shares, the shareholder's <br />interest in the Lake Henry Reservoir and the other Company properties shall be transferred upon <br />such publiC sale to the highest bidder which may include the Company. The defaulting <br />shareholder shall have the period or six months after said public sale to redeem said shares and <br />his interest in the Lake Henry Reservoir and the other Company properties upon payment of the <br />amount bid at the sale, such interest and penalties and the cost of sale. If the Company is the <br />highest bidder and no redemption occurs such shares shall become treasury stock and title to <br />the interest in the Reservoir and other Company properties formerly owned by the defaulting <br />shareholder shall be held by the Company in perpetuity for the benefit ratably of all of its <br />shareholders. Any amount bid for the shares at the public sale shall be used first to pay <br />outstanding assessments, interest and penalties. Any excess amount shall be held in escrow by <br />the Company for the benefit of the defaulting shareholder. If said shareholder does not redeem <br />his shares as provided herein, that amount in escrow shall be paid to the defaulting shareholder <br />at the close of the redemption period, or, if said defaulting shareholder cannot be found, shall be <br />retained for his benefit, without interest, for a period not to exceed twenty-one (21) years. If not <br />clamed prior to the expiration of twenty-one (21) years, said amount shall be paid to the <br />Company for the benefit of its shareholders. <br /> <br />4 <br />