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<br />3. Emergency or Special Assessments. <br /> <br />For the purposes of promptly paying the obligations of the corporation, for <br />emergencies or for such other special purposes as determined solely in the discretion of <br />the board of directors, the board of directors, by majority vote, may levy a special <br />assessment without prior approval or subsequent approval of the shareholders. <br /> <br />4. Forfeiture of Stock. <br /> <br />The board of directors may declare forfeiture or sale of stock for failure to pay <br />assessments which from time to time may become due but no forfeiture of stock or the <br />amount paid thereon shall be declared against any estate or against any shareholder <br />before demand has been made for the amount due thereon either in person or by written <br />or printed notice duly mailed to the last known address of such shareholder, as shown by <br />the records of the corporation, at least Thirty (30) days prior to the time the forfeiture is to <br />take effect. All costs of forfeiture, including attorney fees, shall be paid by the shareholder, <br />and, in the case of a sale, such costs and fees shall be taken from the proceeds of the sale <br />along with the delinquent amount of the assessments. The proceeds of any sale, over and <br />above the amounts due on said shares including the costs and fees, shall be paid to the <br />delinquent shareholder at his last known address. If said proceeds are returned to the <br />corporation because the address of the shareholder is unknown, the corporation shall be <br />entitled to keep said proceeds. In the case of forfeiture where the stock is returned to the <br />treasury of the corporation, the delinquent shareholdershall not receive any compensation <br />of any kind whatsoever. <br /> <br />5. Judgment and Lien. <br /> <br />If forfeiture or sale of stock shall not be sufficient in the determination of the board <br />of directors to satisfy the delinquent assessments due, the corporation may seek a <br />judgment against the shareholder or with notice to the shareholder may file a lien upon the <br />property for which the stock has been issued. The corporation shall be entitled to all costs <br />of any such prOCi:lEiuftlg;-inciudifly attorrrey'fees;i:llJd'iile ib~dl rate of interest thereon. <br /> <br />6. Withholding of Services. <br /> <br />Upon determination by the board of directors that the shareholder has failed to pay <br />proper assessments, the board of directors may declare the assessments delinquent and <br />cease to deliver the water to which that share is entitled and cease to provide any other <br />services. . <br /> <br />7. Transfer of Stock. <br /> <br />No stock shall be transferred upon the books of the corporation while any <br />assessment on such stock is unpaid. <br /> <br />F:\KFL\KERN.RESERVOIR\8YLAWS <br /> <br />11 <br />