The Exhibitor (Nov 1938-May 1939)

tempting to use this Article, shall be submitted to arbitration by exhibitor within 14 days after the refusal by distributor to license to exhibitor the number of features requested by the exhibitor. IV. Preferred Playing Time (1) Flat rentals ami guarantees. A distributor will not exercise the right to designate features for preferred playing time which it may have under a license agreement with respect to any features, the license fee for which is either a fixed sum or is computed in whole or in part upon a percentage of the gross receipts of exhibition with a fixed minimum sum guaranteed. (2) Features Unsuitable for Preferred Playing Time. If a distributor shall exercise the right to designate features for preferred playing time which it may have under a license agreement with respect to any feature licensed solely on a percentage basis, which is claimed by exhibitor to be unsuitable for such playing time and if exhibitor shall give distributor written notice of his objections thereto and the reasons therefor within seven days after the mailing of notice of such designation in case of a first-run in a city in which an exchange is located or in any other case within 7 days after the close of its first exhibition in the exchange city from which exhibitor is served or the mailing of the notice of designation, whichever is later, the question of such suitability shall be determined by agreement between distributor and exhibitor or, lacking such agreement, by arbitration. Unless distributor rejects the claim of exhibitor by mailing notice to exhibitor within 7 days after the mailing by exhibitor of such notice of objections as above provided, distributor shall be deemed to have withdrawn such designation. Should distributor, however, reject such claim, exhibitor shall commence arbitration proceedings to determine the dispute within 7 days after the mailing of such notice of rejection. If the feature is determined, by agreement or arbitration, to be unsuitable for the designated preferred playing time, or the designation thereof be deemed withdrawn as above provided, distributor may, at its option, either (a) designate the feature to be exhibited upon the same license terms on other days of the week or (b) then or thereafter substitute another feature to be exhibited on preferred playing time upon the terms designated for the feature objected to; in the latter case the license fee for the feature originally designated shall be such as may be designated by the distributor within its right under the license agreement. Nothing in this Section (2) shall decrease or increase the number of features in each bracket as set forth in the license agreement. V. Some Run Available To meet objections of certain exhibitors to so-called "exclusive selling,” an exhibitor shall be able to obtain from a distributor a run of its feature in any situation, the run to be designated by the distributor, provided (a) distributor and exhibitor can mutually agree upon the number of features to be licensed and other terms and conditions; (b) the exhibitor’s theatre(s) (i) is not of an obsolete character, (ii) is in good condition and (iii) is operated under a policy that is not destructive and (iv) is operated under a policy which will not substantially reduce the distributor’s revenue from any other run7; and (c) exhibitor is of good reputation as a theatre operator and customer or, if he has not been an exhibitor therefore, is of good reputation and financially responsible. Any dispute arising under provisos (b) or (c) hereof shall be subject to arbitration. No dispute under proviso (a) hereof shall be subject to arbitration; but each distributor states that it will be its policy not to request unreasonable license fees or other terms 7A policy shall not be deemed destructive or one which will substantially reduce such revenue if it is a policy established under methods of competition normal and fair in such situation. SPECIAL FEATURES or conditions from an exhibitor for the purpose of defeating this Article V. VI. Regular Customer To meet objections of certain exhibitors to so-called "selling away to a circuit,” a distributor will not refuse to license its features to its regular customer who is not a "circuit customer,”8 in order to license them, for the same run in the same competitive area, to another exhibitor for the sole reason that such other exhibitor is a circuit customer, provided such regular customer (a) has substantially performed his previous license agreements with the distributor, (b) maintains and operates his theatre in a modern manner, and (c) is financially responsible. Any dispute as to whether a distributor has so refused to license its features to such regular customer shall be subject to arbitration. Should distributor elect to license its features to an exhibitor (other than its then current customer) who is a circuit customer, distributor shall, if its then current customer is not a circuit customer, give him notice by telegraph of its election so to do. Should such current customer fail to commence arbitration proceedings within 5 days after the sending of such notice, he shall be deemed to have waived all claims, if any, in connection with such features under this Article VI. VII. Short Subjects, Newsreels, etc. No exhibitor shall be required to license short subjects, newsreels, trailers, serial, reissues, "Westerns” or foreign0, (hereinafter collectively referred to in this Article as "Shorts”), as a condition of licensing other features. An exhibitor shall have no right to assert any claim that the licensing of such features was so conditioned unless he shall have mailed to the distributor at its Home Office notice in writing of such claim and the grounds therefor within 48 hours after delivery by exhibitor of his signed application for such "Shorts.” Any dispute as to whether the licensing of such features was so conditioned shall be subject to arbitration. The powers of arbitrators in any such dispute shall be limited to: (a) a finding as to whether or not the licensing of such features was so conditioned; and, if the finding be in the affirmative, then, (b) an award cancelling the license agreement or agreements for (or to the extent that they relate to) such "Shorts.” VIII. Score Charges Score charges, if any, for flat rental features for the 1938-1939 exhibition season shall be added to and consolidated with the license fees therefor. Commencing with the 1939-1940 exhibition season there shall be no separate score charge for features licensed on either a flat rental or a percentage basis. IX. Allocation of Features Under license agreements authorizing a distributor to allocate features to particular price brackets, distributor, on giving notice of the availability of each future, shall notify exhibitor of the price allocation thereof, except that such notice of price allocation shall be given not later than 14 days after the national release date thereof to first-run exhibitors in those cities which the distributor may designate as "Key Cities.” X. Form of License Agreement Each distributor will use its best efforts to simplify its form of license agreement. XI. Selective License Agreements Whenever an exhibitor shall have the right under a license agreement to select a number SA "circuit customer,” as that term is used in Article VI, is a customer who is, or is a part of, a circuit, a buying combine, a booking combine or a cooperative. “"Westerns” and foreigns as defined in Article I, Section (1). 2 5 d of features out of a larger number, he shall exercise such right by written notice of selection or rejection of each feature to which he may be entitled under such agreement within 21 days after the mailing of the notice of availability thereof. Failure of exhibitor to give such written notice with respect to any feature within such period shall constitute a selection thereof by exhibitor. XII. Playing Features in the Order of Release If under any license agreement an exhibitor is obligated to pay features in order of their release, the distributor will not withhold features from exhibitor because features previously released have not been exhibited by him if his failure to exhibit them was due to the failure of distributor to make them available. Any dispute hereunder shall be subject to arbitration. XIII. Coercing Contracts No distributor shall coerce or intimidate an exhibitor to enter into any license agreement by threatening to build or otherwise acquire, or by falsely representing that any other person will build or acquire, a motion picture theatre for operation in competition with such exhibitor. An exhibitor shall have no right to assert any claim that he has been so coerced or intimidated unless he shall have mailed to the distributor at its Home Office in writing of such claim and the grounds therefor within 48 hours after delivery by exhibitor of his signed application for such license agreement. Any dispute as to whether exhibitor was so coerced or intimidated shall be subject to arbitration. The powers of arbitrators in any such dispute shall be limited to: (a) a finding as to whether or not the exhibitor was so coerced or intimidated; and, if the finding be in the affirmative, then; (b) an award cancelling such license agreement. XIV. Other Subjects of Arbitation ( 1 ) Performance of License of Agreements. Any claim by either party to a license agreement that the other party has breached any provision thereof shall be subject to arbitration. The arbitrators shall have power to make the following awards only: (a) to find that the provision involved has been breached; (b) to direct specific performance of the provision involved; (c) to award actual damages with respect to each feature involved, which award shall not exceed the liquidated damages provided therefor in the license agreement. (2) Clearance. The parties hereto recognize: that clearance, reasonable as to time and area, is essential in the distribution and exhibition of motion pictures; that an exhibitor has the right without restriction to license for any theatre any run for which he is able to negotiate with any distributor; and that, subject to Article VI hereof, a distributor has the right without restriction to license for any theatre any run for which it is able to negotiate with any exhibitor. Any dispute as to whether or not the existing clearance under the conditions involved in the particular instance, is unreasonable, shall be subject to arbitration. The powers of arbitrators in any dispute relating to clearance shall be limited to: (a) a finding as to whether or not the theatre or theatres whose clearance is complained of, or any of them, is entitled to clearance; and, if so, then; (b) an award of the reasonable maximum clearance to which such theatre or theatres is entitled. (3) Over-buying. Any complaint by an exhibitor that another exhibitor has contracted for the license for exhibition of a greater number of features than the latter reasonably requires for exhibition in his theatre or theatres, with the April 5, 19)9 QUAD