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<br />'-"" <br /> <br />N <br />en <br /> <br />~-~ <br /> <br /><::::> <br />,=> <br /> <br />for approval at the annual meeting, but if not approved, the <br /> <br />Board has authority to approve assessments within ninety (90) <br /> <br />days of the close of the fiscal year. <br /> <br />Bylaws, Article VI, <br /> <br />Section 5. The Bylaws also provide for the forfeiture and sale <br /> <br />at public auction of shares for nonpayment of assessments. The <br /> <br />Bylaws differ from the state statutes, in that the enforcement <br /> <br />authority of the Board includes suit against a shareholder for <br /> <br />nonpayment of assessments in addition to forfeiture by public <br /> <br />auction (although we are unaware that this method of enforcement <br /> <br />has ever been used). Bylaws, Article VI, Section 5, Paragraph 2. <br /> <br />Shares are assessed according to classes. Class A and B shares, <br /> <br />which represent entitlement to water, are assessed according to <br /> <br />costs to deliver the first share (Class A) versus the costs to <br /> <br />deliver all subsequent shares (Class B) to shareholders. Class C <br /> <br />shares, which only represent the right to take water from the <br /> <br />Kiefer Extension Ditch and do not represent an entitlement to <br /> <br />water, are assessed according to a formula based on the historic <br /> <br />relationship between assessments levied on the Company's Class A <br /> <br />and B shares versus the costs of maintenance, operations, and <br /> <br />management of the Fruita Land & Canal Company (now merged with <br /> <br />the Company) . <br /> <br />Subject to the same concerns expressed in Section II.B. <br /> <br />above regarding the overall authority of the Company in regards <br /> <br />to salinity control activities, it is our conclusion that, except <br /> <br />for the questionable power to sue a shareholder for assessments, <br /> <br />the mechanism for the assessment of shares of stock in the <br /> <br />13 <br />