This will serve to confirm our understanding relative to the distribution of Laurel and Hardy pictures solely in the foreign market.
The thought was expressed that four reel length would not render itself for most advantageous distribution in countries other than the United States, and we are therefore agreed that our agreement shall be changed and modified to the extent that, upon the completion of each of the four-reelers to be made under the contract of April 8, 1939 in each of said four reelers my be included such surplus material as has been already photographed for the particu1ar photoplay for the purpose of extending the picture to five reels in lieu of such four reels.
In the event it is necessary to photograph additional material for the purpose of extending the picture into five reels for such foreign distribution then and in that event the cost of producing such additional material shall be chargeable to the cost of the photoplay for the purpose of ascertaining the cost thereof, in accordance with the provisions of paragraph "TWENTY SIXTH" of the agreement of April 8, 1939, but only insofar as the same applies to the computation of the ten (10%) per cent of all net profits made by STUDIOS on any photoplay to be paid to ARTIST, and such cost shall not be chargeable to the cast of the photoplay for the purpose or ascertaining the cost thereof in connection with the rights of ARTIST as to the average saving under $200,000.00 on each photoplay, as provided for in said paragraph TWENTY SIXTH".
It is understood that the agreement of April 8, 1989 shall remit unchanged in all other particulars and that this modification is being made solely to permit distribution of said photoplays in a length of five reels in countries other then the United States, such length of five reels being deemed more suitable for such foreign distribution.
Yours very truly,
HAL ROACH STUDIOS, INC.