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622 HARVARD BUSINESS REPORTS
by the provisions of the operating agreement and further that, if membership were terminated by reason of expulsion, resignation, mutual agreement, or otherwise, the exhibitor would continue to be bound by his obligations under the operating agreement and would continue to enjoy his rights under the agreement. The by-laws authorized the board of directors to consent to the assignment or transfer of membership and to accept the assignee or transferee into membership under reasonable rules and regulations established by the board. The by-laws further provided that "no voluntary consolidation or merger of a member corporation, partnership, or joint association shall be deemed a transfer within the meaning of this section, but the merged or consolidated successor corporation shall continue as a member of the association in the place and stead of the original member."
For the refusal or failure of a member to abide by the operating agreement or for his threat to violate it, the operating agreement provided that the association might go into the proper courts and secure a restraining order and an injunction to prevent such action. It further provided that if the member was not prevented by an injunction from violating the agreement the association was entitled to collect, in any proper court, in addition to all costs, liquidated damages for every such violation to the amount of 10% of the net price to the exhibitor of all pictures or properties purchased by that member. The by-laws stated that any member knowingly violating any provisions of the by-laws would be liable to the association for the payment of a fine of $50 for each violation in addition to any other penalties imposed by the by-laws or the operating agreement. The by-laws further authorized the board of directors by a majority of the whole board to suspend a member for a period of time not to exceed one year for violation of the by-laws or any contract between the member and the association. They also provided that the board of directors might recommend the expulsion of a member and that the members of the association in general meeting might, by a vote of at least twothirds of those present, expel a member, but that such expulsion was not to affect or diminish or enlarge the member's rights or obligations under the operating agreement or any other agreement between the association and himself.
The board of directors, which was to have charge and control of the business of the association, was to be composed of 18 mem