LEGAL PHASES OF COOPEEATIVE ASSOCIATIONS 123 
bers residing in that district to consider the removal of the director ; and by a 
vote of the majority of the members of that district the director in question shall 
be removed from office. 
16. Referendum. — Upon demand of one-third of the entire board of directors, 
any matter that has been approved or passed by the board must be referred 
to the entire membership or the stockholders for decision at the next special or 
regular meeting: Provided, however, That a special meeting may be called for 
the purpose. 
17. Marketing contract. — The association and its members may make and 
execute marketing contracts, requiring the members to sell for any period of 
time, not over 10 years, all or any specified part of their agricultural products 
or specified commodities exclusively to or through the association, or any 
facilities to be created by the association. If they contract a sale to the 
association, it shall be conclusively held that title to the products passes 
absolutely and unreservedly, except for recorded liens, to the association upoc 
delivery ; or at any other specified time if expressly and definitely agreed in 
the said contract. The contract may provide that the association may sell 
or resell the products delivered by its members, with or without taking title 
thereto; and pay over to its members, the resale price, after deducting all 
necessary selling, overhead, and other costs and expenses, including interest 
on preferred stock, not exceeding eight (8) per cent per annum, and reserves for 
retiring the stock, if any ; and other proper reserves ; and interest not exceeding 
eight (8) per cent per annum upon common stock. 
18. Remedies for breach of contract. — (a) The by-laws or the marketing 
contract may fix, as liquidated damages, specific sums to be paid by the mem- 
ber or stockholder to the association upon the breach by him of any provision 
of the marketing contract regarding the sale or delivery or withholding of 
products ; and may further provide that the member will pay all costs, prem- 
iums for bonds, expenses, and fees, in case any action is brought upon the 
contract by the association; and any such provisions shall be valid and en- 
forceable in the courts of this State; and such clauses providing for liquidated 
damages shall be enforceable as such and shall not be regarded as penalties. 
(&) In the event of any such, breach or threatened breach of such market- 
ing contract by a member, the association shall be entitled to an injunction 
to prevent the further breach of the contract and to a decree of specific per- 
formance thereof. Pending the adjudication of such an action and upon filing 
a verified complaint showing the breach or threatened breach, and upon filing 
a sufficient bond, the association shall be entitled to a temporary restraining 
order and preliminary injunction against the member. 
(c) In any action upon such marketing agreements, it shall be conclusively 
presumed that a landowner or landlord or lessor is able to control the delivery 
of products produced on his land by tenants or others, whose tenancy or pos- 
session or work on such land or the terms of whose tenancy or possession or 
labor thereon were created or changed after execution by the landowner or 
landlord or lessor, of such marketing agreement ; and in such actions, the fore- 
going remedies for nondelivery or breach shall lie and be enforceable against 
such landowner, landlord or lessor. 
19. Purchasing business of other associations, persons, firms or corporations — 
Payment — Stock issued. — Whenever an association, organized hereunder with 
preferred capital stock, shall purchase the stock or any property, or any interest 
in any property of any persons, firm or corporation or association, it may dis- 
charge the obligations so incurred, wholly or in part, by exchanging for the 
acquired interest, shares of its preferred capital stock to an amount which at 
par value would equal the fair market value of the stock or interest so pur- 
chased, as determined by the board of directors. In that case the transfer 
to the association of the stock or interest purchased sha.ll be equivalent to pay- 
ment in cash for the shares of stock issued. 
20. Annual reports. — Each association formed under this act shall prepare 
and make out an annual report on forms to be furnished by the Dean of the 
College of Agriculture of the University of Kentucky, containing the name of 
the association ; its principal place of business ; and a general statement of its 
business operations during the fiscal year, showing the amount of capital stock 
paid up and the number of stockholders of a stock association or the number 
of members and amount of membership fees received, if a nonstock association ; 
the total expenses of operations ; the amount of its indebtedness or liabilities, 
and its balance sheets. 
