HAL ROACH STUDIOS LETTERHEAD - Culver City, CA - TYPEWRITTEN
November 1, 1939.
HAL ROACH STUDIOS, INC.,
This will confirm our oral understanding as to an amendment to the Agreement of Employment between us, dated April 3, 1939. By the terms of said agreement, it is agreed that the undersigned will render his services in the making of four-reel photoplays, as designated by you, but not to exceed in any event four (4) such four-reel photoplays during the term thereof. It is agreed between us that it is now desired to permit you to make and release all, or any of said photoplays, as feature length photoplays in lieu of four-reelers. This right shall apply to all photoplays heretofore made, now in the process of making, or hereafter made, under the terms of said agreement.
It is agreed that the undersigned will render all services required by you in the making or changing of such photoplays into feature length, and that the same shall be done for the same compensation set forth in said agreement EXCEPT the following additional compensation shall apply to each photoplay that is released as a feature length photoplay, in lieu of a four-reel length photoplay.
It is agreed that as to all feature length photoplays released that I shall receive an extra percentage on domestic net profit, arrived at as follows:
There shall first be determined the proportion that "domestic gross receipts" bear to the "world gross receipts". Next, the same preparation shall be taken and determined of the total cost of making the photoplay in question. This proportion of cost so determined, shall be deemed to be the "domestic cost" of making the picture. This "domestic cost" when thus determined, shall have added thereto the "domestic cost" of distribution, including but not limited to all charges and costs which the distributor is entitled to deduct under his present distribution contract with you, and all other costs in connection with the domestic distribution of such photoplay. The said total amount thus determined by adding together "domestic cost" of making the photoplay and the entire "domestic cost" of distribution thereof, shall be deducted from the "domestic gross receipts" (as above computed), and if any profit is shown thereby, I shall receive ten (10%) per cent of such profit, paid to me in the same manner, and at the same times, and under the same condition and agreements as the ten (10%) per cent profit to be paid to me as set forth in paragraph "Twenty Sixth" of the agreement of April 8, 1939. By way of illustration, if the "world gross receipts" of a picture are $500,000.00, and the "domestic gross receipts" are $200,000.00, then said "domestic receipts" are two fifths (2/5ths) of the "world receipts". If the total cost of making the photoplay is $200,000.00, then the "domestic cost" of making the photoplay, as used herein, will be two-fifths (2/5ths) of $200,000.00, or $50,000.00 ("domestic cost" of making the photoplay) and the $70,000.00 ("domestic cost" of distribution of the photoplay) we have $150,000.00, total cost. Deducting this total "domestic expense" of $150,000.00 from the $200,000.00 receipts, we would have a profit of $50,000.00, on which I would be entitled to receive my ten (10%) per cent, or $5,000.00.
It is further agreed that the total cost of the making of the photoplay (upon which the "domestic cost" is to be computed, as heretofore set forth) shall be arrived at as set forth in said paragraph "Twenty Sixth" above referred to. It is likewise agreed that you shall irrevocably direct the distributing company to pay the additional one-tenth (1/10th) of the profits to in paragraph "Twenty-Sixth" above referred to, and particularly at page 25 of the agreement referred to.
It is further agreed that I shall have true and accurate detailed monthly statements in connection with the additional percentage profit as set forth in the aforementioned paragraph "Twenty-sixth". It is further agreed that my right to participate in the receipts of the photoplays shall end seven (7) years from the date of the release thereof (with the exception in my favor as set forth commencing with the word "except" in the sixth line from the bottom of page 25 of said agreement dated April 8, 1939.)
It is further understood and agreed that under our present agreement of April 8, 1939, and particularly as set forth in paragraph "Twenty-Sixth" thereof, I am to receive a certain part of the average saving on the photoplays made under the contract (see pages 27 and 28 of our agreement of April 8, 1939.) This computation is based upon an average cost of $200,000.00 for each four-reel photoplay. In the event that any of the photoplays are released as feature length, then the cost thereof, for the purpose of computation referred to in our agreement, shall be $225,000.00 for the feature length, in lieu of $200,000.00 for the four-reelers, and I am to receive my part of the savings under $225,000.00, but not to exceed Five Thousand ($5,000.00) Dollars for each picture.
In all computations "cost" of making the photoplay shall be arrived at in the manner described in said paragraph "Twenty Sixth".
Except as otherwise herein changed and amended said agreement of April 8, 1939 remains in full force and effect between us.
If the foregoing is in accordance with your understanding of our agreement, kindly so signify by affixing your signature under the word "Accepted" at the end hereof.
Very truly yours,
APPROVED AND ACCEPTED:
HAL ROACH STUDIOS, INC.,
November 16, 1939
Hal Roach Studios, Inc.
Culver City, California
My dear Frank [Ross]:
So that there may be no misunderstanding of any sort, this will serve to confirm the conversation I had with you a few minutes ago.
I called you in response to your call, and I mentioned to you, in substance, that the transaction affecting the compensation of Mr. Laurel, wherein his share of the profits from United States distribution would be greater than from distribution elsewhere, is rather difficult, for the reason, especially, that this additional ten per cent would not be paid as in the instance of the ten per cent now provided for by the contract and which is to be paid directly for Mr. Laurel’s account by the distributor, to which you replied that that is the only way it could be handled, which I understood to be that the extra ten per cent would come from the Studios. I told you then that I felt that, on the pictures under discussion, we should make a deal wherein the $5,000.00 additional compensation would be paid straight through and that then the profit sharing arrangement should be raised throughout to twenty per cent.
I am, particularly, writing this letter within five minutes after the completion of the conversation with you, because of the unusual statements that you chose to make.
You stated, in substance, that you would not do it; that I was using this only as an excuse to crawl out of a deal I had with you.
At this point, may I digress by stating that when I was out to see you at the Studios on the 28th of October, I offered you a proposition which you said was subject to the acceptance by Hal. Thereafter, you called me and I understood that the only proposition that Hal would make was that we make the deal that Mr. Laurel’s $5,000.00 would not depend on an average of not more than $195,000.00 per picture but would be raised to the average of $225,000.00 per picture, and I told you then that I did not feel that that was a just approach to the problem. You then, after several other conversations, finally, on Tuesday, made me the proposal of $5,000.00 extra on a picture; without limitation or averaging of costs.
When I stated to you today that, in effect, we were converting a contract for four-reelers into a feature contract, you agreed with it, but when I made the above proposal of twenty per cent throughout of the profits to be paid by the distributor, you not only refused, but said you would take the Laurel - Hardy situation into your own hands and that you would act with Laurel and Hardy as you pleased; that you did not give a G--- Damn for anything and that you would make the Laurel - Hardy pictures as cheaply and quickly as possible and make them as four-reelers, and that then Laurel and Hardy would not be worth anything to anyone. I stated to you then that I felt it was rather an unusual manner of approaching a business problem, or trying to solve a problem, to which you further replied that you have been trying to solve the problem with me and have acted honorably, but that I have not. Wherein such improbability on my part enters has not been made clear to me, but I said that, in view of your unusual state of mind regarding so valuable a property as Laurel and Hardy, I would have to take steps to protect myself.
I am loath to believe that these unhappy statements on your part are the pronouncements of the reasoned policy of a business institut1on, and I am taking the liberty of sending a copy of this letter to Mr. Roach, who I understand to be the President of the company, so that he may be apprised of your views and desires in respect to persons under contract to Hal Roach Studios, Inc.
I trust this fully states your conversation. If I have been remiss in giving any details thereof, I shall be glad to know it.
Yours very truly,
B. W. Shipman
Illiana Laurel (right), Russian dancer and singer, was back in court Tuesday to elaborate on her plea to have her divorce from Stan Laurel of the films set aside. She charged the divorce had been forced on her and asserted the comedian, clad only in shorts, once chased her down a Beverly Hills street. She then wore only a negligee. Countess Sonia, shown also, filed an affidavit describing the incident.
November 23, 1939