MINIMUM WEEKLY RUNNING EXPENSES.

Orchestra

<table><tr><td>4 leaders. (House supplies other six.)</td><td>$200</td></tr><tr><td>Actors Minimum wage basis</td><td>750</td></tr><tr><td>Stage Manager</td><td>45</td></tr><tr><td>Business and press</td><td>100</td></tr><tr><td>Advertising</td><td>300</td></tr><tr><td>Miscellaneous</td><td>1395</td></tr><tr><td></td><td>105</td></tr><tr><td></td><td>1500</td></tr></table>

MINIMUM PRODUCTION EXPENSE

<table><tr><td>Scenery</td><td>3000.00</td></tr><tr><td>Costumes</td><td>4000.00</td></tr><tr><td>Producer</td><td>500.00</td></tr><tr><td>Advertising and printing</td><td>500.00</td></tr><tr><td>Total</td><td>5000M</td></tr></table>

September 15, 1944

The Theatre Guild, Inc.
23 West 53rd Street
New York, N.Y.

Gentlemen:

Your signature under the words "AGREED TO" at the end of this letter shall constitute the following an agreement between you and me.

FIRST: I understand that you intend to produce on the legitimate stage the play tentatively entitled the estimated production cost of which is Dollars. I desire to advance to you Dollars towards the cost of such production, predicated on the aforesaid estimated production cost. If the final production cost exceeds the estimated production cost, I shall also advance to you my pro rata share of the difference between the estimated production cost and the final production cost provided that I shall not be called upon to advance in addition more than twenty five (25%) percent of my original advance. If the final production cost is less than the estimated production cost you will return to me the proper pro rata share of the difference between the estimated production cost and the final production cost. Within five days after your request therefore, I agree to make my advances to you hereunder, provided that such request shall not be made sooner than one month before the date rehearsals for the play begin.

I agree that the advances made by me hereunder shall be repayable to me only as hereinafter provided, and I acknowledge that you have made no warranty that there will be sufficient net receipts to repay such advances to me and that you have made no warranty to me that there will be any net profits to be derived hereunder.

SECOND: In full consideration for the advances made by me hereunder and in lieu of interest thereon, you agree to pay me, and I agree to accept a sum equal to percent of net profits derived from the production and exploitation of the play and subsidiary rights as such term "net profits" is hereinafter defined. This is predicated on the basis that all the parties advancing the production cost, including you if you participate in such financing, will be entitled to an aggregate of fifty (50%) percent of the net profits for advancing such production cost, and that you will be entitled to retain fifty (50%) percent of the net profits for management.

THIRD: For the purposes of this agreement the following terms shall have the following meanings:

a) The term "net profits" shall be deemed to mean the excess of "gross receipts" over all "production expenses", "running expenses", and "other expenses".

b) The term "gross receipts" shall be deemed to mean all sums derived by you by virtue of your position and status as a Manager, as such term is used in the agreement approved by the Dramatists' Guild of the Authors League of America, Inc., from any source whatsoever from the exploitation or turning to account of your rights in the play, including all proceeds derived by you from the liquidation of the physical production of the play at the conclusion of the run thereof.

c) The term "production expenses" shall include fees of directors, designers, cost of sets, curtains, drapes, costumes, properties, furnishings, electrical equipment, premiums for bonds and insurance, cash deposits or guarantees to Actors Equity Association or other similar organizations by which, according to customs or usual practices of theatrical business, such deposits or guarantees may be required to be made, advances to authors, rehearsal charges and expenses, transportation charges, cash office charge, reasonable legal and auditing expenses, advance publicity, theatre costs and expenses, and all other expenses and losses of whatever kind (other than expenditures precluded hereunder) actually incurred in connection with the production preliminary to the opening of the play in New York, N.Y., including any out-of-town losses.

d) The term "running expenses" shall be deemed to mean all expenses, charges and disbursements of whatsoever kind actually incurred as running expenses of the play, including, without limitation of the generality of the foregoing, author's royalties, salaries to be paid to the cast and business manager, director's royalties, salaries of orchestra, and miscellaneous stage help, transportation charges, cash office charge, advertising, rentals, miscellaneous supplies, reasonable legal and auditing expenses, theatre operating expenses, and all other expenses and losses of whatever kind actually incurred in connection with the operation of the play, and taxes of whatsoever kind or nature other than taxes on your and my incomes.

e) The term "other expenses" shall be deemed to mean all expenses of whatsoever kind or nature other than those referred to in "c" and "d" hereof, actually and reasonably incurred in connection with the operation of the business, including but without limiting the foregoing, commissions paid to agents, monies paid or payable in connection with claims for plagiarism, libel, negligence, etc.

2.

FOURTH: You agree that all gross receipts shall be applied as follows and in the following order:

a) Towards unpaid production costs.

b) Towards running expenses of all companies then operating.

c) Towards the creation and maintenance of a sinking fund in the sum of Ten Thousand ($10,000) Dollars, which may be used by you to pay any losses which you may incur in connection with the presentation of the play.

d) Towards the expenses in the event that the original or another company is sent on the road.

e) Towards the reimbursement of all parties, including myself and you, if you shall have participated in the financing of the production costs. All parties (including you, if you shall have participated in the financing of the production cost with cash advances or by way of assuming liability) who shall have made advances hereunder shall be paid that proportion as the total of his advances bears to the aggregate advances or assumptions of liability made by all parties. Such payments, if any become due hereunder, shall be made at least monthly or more often as you determine.

FIFTH: You shall have the right to make an office charge which shall include office rent, secretarial help, stationary and local telephone calls (exclusive of press department charges) of Three Hundred Fifty ($350.) Dollars per week per company, commencing with the first day of rehearsal and continuing throughout the period of the respective runs of the play. You agree to make no charge for any salaries paid to your executive officers.

SIXTH: All decisions of every nature whatsoever, whether artistic or commercial, shall rest entirely in your discretion.

SEVENTH: You will have the right to present the play to some or all of your subscription audiences making the customary charges for subscription services in New York and the American Theatre Society subscription services on tour; such charges to be apportioned between the theatres and the attraction according to the terms of your contracts with the theatres.

3.

EIGHTH: You shall have the right to abandon the production of the play at any time prior to its New York opening for any reasonable cause whatsoever. In the event of such abandonment the production shall be forthwith liquidated and all funds derived from such liquidation and all gross receipts theretofore derived shall be distributed in the same manner as set forth in paragraph "FOURTH" hereof.

NINTH: You agree to send me approximately two weeks after the regular opening of the play in New York City, a statement of production costs and also in due course, the weekly statements and accountings of net profits, together with any payments of net profits due me hereunder. You agree to keep customary books and records and to permit a certified public accountant duly authorized to represent me, to inspect such books and records relating to the production and operation of the play, at your premises and during reasonable business hours.

TENTH: Excepting only my obligation to make the advances agreed to be made by me hereunder, I shall not be liable for any obligations or losses in connection with your production or business.

ELEVENTH: Nothing herein contained shall be deemed to create any relationship of partnership or joint venturer, or co-venturer or the relationship of principal and agent between us.

TWELFTH: Any dispute arising under, out of, or in connection with, or in relation to, this agreement or any breach thereof, shall be determined and settled by arbitration in New York City, pursuant to the rules then obtaining of the American Arbitration Association. Any award rendered will be final and conclusive upon us and a judgment thereon may be entered in the highest court of the forum, state or federal, having jurisdiction.

Very truly yours,

AGREED TO:

THE THEATRE GUILD, INC.

By

AGREEMENT made in New York City, New York, as of the date hereinafter stated, by the parties who shall execute this agreement as hereinafter provided.

## DEFINITIONS & CONSTRUCTION.

Wherever used in this agreement the following terms shall have the following meanings:

The term "the play" shall mean the play described in paragraph I of Exhibit A hereof.

The term "contributions of limited partners" shall mean the amount which each limited partner shall have set forth opposite his signature, including any amount which may be paid by giving an obligation pursuant to paragraph FIFTH hereof, or which may be, or may have been, paid in advance as provided for in said paragraph FIFTH.

The term "aggregate limited contributions" shall mean the aggregate of the contributions of the limited partners.

The term "sinking fund" shall mean the sum set forth in paragraph III of Exhibit A hereof.

The term "estimated production requirements" shall mean the sum set forth in paragraph IV of Exhibit A hereof.

The term "cash office charge" shall mean the sum set forth in paragraph V of Exhibit A hereof.

The term "author" shall be deemed to be used in the singular or plural, as the identity of the person or persons may require.

In the event that only one person shall sign as general partner, then the phrase "general partners" shall be construed to mean the singular.

All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons, firm or firms, corporation or corporations may require.

## REPRESENTATIONS & WARRANTIES.

The general partners represent, warrant and/or agree:

(1) That they have entered into, or have duly acquired by assignment, a contract with the author of the play in the form prepared for such contract by the Dramatists' Guild of the Authors' League of America, Inc., which incorporates the Minimum Basic Agreement of said Dramatists' Guild of the Authors' League of America, Inc., and that (except as otherwise set forth in paragraph I of Exhibit A), the terms of the production contract are no more favorable to the author than the minimum terms provided for in the Minimum Basic Agreement.

(2) That they have acquired and own the full and unencumbered right to produce the play in the United States and Canada, and that they have also acquired and own an interest in the subsidiary rights in the play, to the fullest extent permitted by the Minimum Basic Agreement, subject only to such limitations, restrictions, conditions

1

and contingencies, if any, as may be set forth in paragraph II of
Exhibit A hereto annexed;

(3) That the total cost of opening a first-class production of the play in New York City, including all theatre deposits and all cash deposits (or the amount of obligations given in lieu thereof) required by Actors' Equity Association or similar organizations, and including all production expenses and the cost of an out of town try-out run, will not exceed the sum set forth in paragraph IV of Exhibit A as the estimated production requirements;

(4) That the only sums, as of the date of this agreement, expended, or expenditures incurred, by them for which they are to be reimbursed under any provision of this agreement are the items set forth in paragraph VIII of Exhibit A;

(5) That they will receive no payments, directly or indirectly, from the partnership other than the cash office charge, any items set forth in paragraph IX of Exhibit A, and the share of profits hereinafter provided for;

(6) That they have not entered into any contracts pursuant to which any person employed by the partnership will receive a percentage of the gross box office receipts, other than those set forth in paragraph X of Exhibit A. The general partners agree that they will not, on behalf of the partnership, enter into any such contracts other than those which may be reasonably necessary for the production of the play.

AGREEMENT.

FIRST: The parties hereto hereby form a Limited Partnership, pursuant to the provisions of Article 8 of the Partnership Law of the State of New York, for the purpose of managing and producing the play, and for the purpose of exploiting and turning to account the rights at any time held by the partnership in connection therewith, and for no other purpose.

SECOND: The general partners shall be the persons or person who shall execute this agreement as general partners. All of the other parties (and, in addition, those persons who shall execute this agreement as general partners, provided they also contribute as limited partners) shall be limited partners.

THIRD: The said partnership shall be conducted under the firm name set forth in paragraph VI of Exhibit A. The location of the principal place of business of said partnership shall be the place set forth in paragraph VII of Exhibit A. Said location may be changed to another place in the Borough of Manhattan, City of New York, upon notice from the general partners to the limited partners.

FOURTH: The general partners hereby agree to contribute to the partnership, by due and proper assignment, all of the rights in the play held by them, including those acquired or to be acquired under the aforesaid production contract with the author, and further agree that all other rights acquired or which may be acquired

2

relating to the play, and to all services rendered or to be rendered
in connection therewith, shall belong to and be held in the name of
the partnership. To the extent that any rights are now held or are
acquired prior to the beginning of the term of the partnership, the
general partners agree to execute due and proper assignments to the
partnership.

FIFTH: Each of the limited partners shall contribute to the
capital of the partnership, at the time hereinafter stated, the sum
set forth as his contribution opposite his signature hereto.

If a limited partner shall give, or cause to be given, to Actors'
Equity Association or any other similar organization an obligation
acceptable to it in lieu of any cash deposits otherwise required from
the partnership by such Association or other organization, and if
he shall have stated in substance on the page of this agreement bear-
ing his signature that he will so give or cause to be given such
obligation, and the face amount thereof so given or to be given,
and the organization to which given or to be given, then the amount
specified in such acceptable obligation, when given, shall be deemed
equivalent to the making by such limited partner of a cash contribu-
tion to the partnership of that amount. In the event that the play
shall close before the repayment in full of the principal amount of
the limited partners' contributions, and all or any part of such
obligation shall have been satisfied by action of the partnership, then
immediately after such action each limited partner who shall have
furnished such an obligation shall pay to the partnership, in cash,
the full principal amount originally stated in such obligation (less
any amounts which he may already have been called upon to pay, and
actually shall have paid, thereunder), and such cash payment to the
partnership (plus any such amounts theretofore paid as referred to
in the immediately preceding parentheses) shall thereupon and there-
after represent the capital contribution to the partnership by such
limited partner to the extent formerly represented by said amount
originally stated in said obligation.

Any prospective limited partner may, at the time of executing this
agreement, pay to the general partners all or part of his agreed con-
tribution, and may authorize the general partners to expend all or
part thereof for production expenses (as defined in paragraph FOUR-
TEENTH, subdivision (c) hereof). In such event, the general partners
shall, upon or before the filing of the certificate of partnership herein-
after mentioned, assign to the partnership all of the benefits derived
from the expenditure of said funds for production expenses, and
pay any balance of the sum so advanced to them into the Special
Account hereinafter provided for, and, when the partnership shall
have received, in cash, the balance, if any, of the agreed contribution
of such limited partner, the partnership shall thereupon be deemed
to have received, in cash, the full agreed contribution of such limited
partner. In the event that the partnership shall not come into being,
the general partners shall return the full sum so paid to them, without
interest, to such prospective limited partner, unless otherwise agreed
in writing between them and him at the time such contribution is paid
to the general partners. In no event shall any other limited partner
be in any wise liable in connection with any such transaction.

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If so provided in Exhibit A, paragraph XII hereof, each limited partner agrees, on demand of the general partners in writing, to make an additional contribution in cash equal to such percentage of his original contribution as is set forth in Exhibit A, paragraph XII hereof. Each such contribution shall be paid promptly after receipt by each limited partner from the general partners of a written notice requesting such payment.

SIXTH: As soon as aggregate limited contributions equal to the estimated production requirements have been agreed to be contributed (by actual signatories hereto) pursuant to the provisions of this agreement, the general partners shall notify each of the limited partners in writing to that effect. Upon receipt of such notices by the limited partners respectively, the contribution of each limited partner (or such portion thereof as he may not have paid on account thereof to the general partners prior to the receipt of such notice) shall be paid by him to the partnership. All such payments shall be kept in a Special Bank account and shall not be used for any purpose of the partnership until the aggregate limited contributions in full shall have been so paid in. In the event that such aggregate limited contributions are not received within ten (10) days after the sending of such notices, the general partners shall, within ten (10) days after the expiration of said ten (10) days period, return all contributions and the partnership shall not be formed nor come into being, and no party to whom the general partners are thus bound to return such contributions shall be under any liability in connection with the play whatsoever, provided, however, that if, during said last mentioned ten (10) days period, the general partners shall procure signatures hereto from other persons as limited partners and shall obtain from such other persons payment of contributions as limited partners equal in the aggregate to contributions of limited partners which are not so received within said first mentioned ten (10) days period, the partnership shall come into effect as and when provided for in paragraph SEVENTH hereof.

SEVENTH: The partnership shall commence on the day upon which, pursuant to the New York Partnership Law, the Certificate of Limited Partnership is duly filed in the office of the Clerk of New York County, and shall continue until terminated as in this agreement provided. Such Certificate shall be filed immediately after (but in no event prior to) the date on which the aggregate limited contributions (including any additional contributions obtained and paid pursuant to the provisions of paragraph SIXTH hereof) shall have been actually paid in.

EIGHTH: Until said aggregate limited contributions shall have been paid in, any limited partner may at any time agree, by writing endorsed hereon, to increase or decrease the amount of the contribution set opposite his signature, and any additional person or persons (including any general partner) may become limited partners by signing this agreement as limited partners and specifying the amount to be contributed to the capital by him. After said aggregate limited contributions shall have been paid in, any additional persons who desire to become limited partners as in this paragraph provided may

4

do so, upon complying herewith, but such additional persons shall not be entitled to any compensation with respect to their contributions as limited partners, or to any share in the net profits of the partnership, except such as they may become entitled to by special agreement with the general partners, and then only upon condition that such compensation or share shall be payable from the general partners' own share of the net profits.

**NINTH:** In the event that the actual production expenses, as hereinafter defined, shall exceed the estimated production requirements, the general partners agree, either by making cash contributions themselves as limited partners, or by obtaining contributions from other limited partners, to make available to the partnership such sums as shall equal the excess, but such additional contributions shall not have the effect of reducing the share of net profits payable to the original limited partners.

**TENTH:** If, however, by reason of enemy invasion, strikes, acts of God, or other extraordinary events beyond the reasonable control of the general partners the cost of opening the production in New York City shall be increased above the estimated production requirements, the general partners shall not be obligated to contribute or obtain additional contributions made necessary by such extraordinary events, but they, nevertheless, agree to exert their best endeavors so to do.

**ELEVENTH:** Anything herein to the contrary notwithstanding, the general partners shall have the right (whenever in their discretion they shall deem it necessary) to abandon the production at any time prior to its New York opening for any reasonable reason whatsoever other than for their inability or failure to contribute, or to obtain contributions for, the sums which under paragraph **NINTH** they are obligated to obtain. In the event of such abandonment, the production shall be forthwith liquidated and all funds then held in the Special Bank Account or Accounts, and all "gross receipts" shall be distributed to the same persons and in the same manner as set forth in paragraph **SEVENTEENTH**, subdivision (d) hereof.

**TWELFTH:** The production of the play shall be announced as set forth in paragraph XI of Exhibit A hereof.

**THIRTEENTH:** Subject to the provisions of the foregoing paragraphs, the partnership shall continue until all rights of the partnership in the play shall have terminated. Upon said termination the general partners shall liquidate the affairs of the partnership as hereinafter provided for.

**FOURTEENTH:** For the purposes of this agreement the following terms shall have the following meanings:

(a) The term "net profits" shall be deemed to mean the excess of "gross receipts" over all "production expenses", "running expenses", and "other expenses".

(b) The term "gross receipts" shall be deemed to mean all sums derived by the partnership from any source whatsoever from the exploitation or turning to account of its rights in the play, including

5

all proceeds derived by the partnership from the liquidation of the
physical production of the play at the conclusion of the run thereof.

(c) The term "production expenses" shall include fees of director, designers, cost of sets, curtains, drapes, costumes, properties, furnishings, electrical equipment, premiums for bonds and insurance, cash deposits with Actors' Equity Association or other similar organizations by which, according to customs or usual practices of theatrical business, such deposits may be required to be made, advances to authors, rehearsal charges and expenses, transportation charges, cash office charge, reasonable legal and auditing expenses, advance publicity, theatre costs and expenses, and all other expenses and losses of whatever kind (other than expenditures precluded hereunder) actually incurred in connection with the production preliminary to the opening of the play in New York, N. Y., including any out-of-town losses. The general partners have heretofore incurred or paid, and, prior to the inception of the partnership, will incur or pay, certain production expenses as hereinabove set forth, and the amount thereof, and no more, shall be included in the production expenses of the partnership, and (but only if the aggregate limited contributions in full shall have been paid in) the general partners shall be reimbursed for the expenses so paid by them individually, including those set forth in paragraph VIII of Exhibit A hereof.

(d) The term "running expenses" shall be deemed to mean all expenses, charges and disbursements of whatsoever kind actually incurred as running expenses of the play, including, without limitation of the generality of the foregoing, author's royalties, salaries to be paid to the cast and business manager, director's royalties, salaries of orchestra, and miscellaneous stage help, transportation charges, cash office charge, advertising, rentals, miscellaneous supplies, reasonable legal and auditing expenses, theatre operating expenses, and all other expenses and losses of whatever kind actually incurred in connection with the operation of the play, and taxes of whatsoever kind or nature other than taxes on the incomes of the respective limited and general partners.

(e) The term "other expenses" shall be deemed to mean all expenses of whatsoever kind or nature other than those referred to in "(c)" and "(d)" hereof actually and reasonably incurred in connection with the operation of the business of the partnership, including, but without limiting the foregoing, commissions paid to agents, monies paid or payable in connection with claims for plagiarism, libel, negligence, etc.

**FIFTEENTH:** The net profits that may accrue from the business of the partnership shall be distributed to, and divided among, the general and limited partners in the following proportions:

The limited partners shall each receive that proportion of fifty (50%) percent of the net profits which his contribution bears to the aggregate limited contributions, excluding, however, from such limited partners all persons who, pursuant to the provisions of paragraph EIGHTH hereof, may be entitled to compensation with respect to their contributions as limited partners only from the share of the general partners in such net profits, and excluding from such aggre-

6

gate limited contributions the contributions as limited partners so made by such persons. The other limited partners, if any, shall receive such proportion of the other 50% of the net profits as the general partners may have agreed to pay them from the general partners' share of the profits, and the general partners shall receive the remaining net profits, to be divided between them as they shall agree.

**SIXTEENTH:** Until net profits shall have been earned, losses suffered and incurred by the partnership, up to but not exceeding the aggregate limited contributions, shall be borne entirely by the limited partners in proportion to their respective contributions. After net profits shall have been earned, then, to the extent of such net profits, the general partners and limited partners shall share such losses pro rata in the same percentages as they are entitled to share in net profits pursuant to the provisions of paragraph **FIFTEENTH** hereof.

No limited partner (other than a partner who is both a limited and a general partner) shall be personally liable for any debts, obligations or loss of the partnership in any event, except from the capital contributed by him hereunder, but the provisions of this paragraph **SIXTEENTH** shall not affect such obligations of the limited partners as are set forth in paragraph **SEVENTEENTH** hereof to return capital contributions or profits actually received by them.

**SEVENTEENTH:** (a) The contributions of the limited partners shall be returned to them at the following times:

At such times (after the opening of the play in New York City) as the partnership has a cash reserve not less than the sinking fund (plus a reasonable amount for initial expenses in the event that the original company is sent on tour) after the payment or reasonable provision for payment of all debts, liabilities, taxes and contingent liabilities, all cash received from time to time by the partnership in excess of said cash reserve shall be paid monthly to the limited partners until their total contributions shall have been thereby fully repaid. Each limited partner shall receive that proportion of each monthly excess of cash as the total of his contribution bears to the aggregate amount of all contributions made by all limited partners. (In the event that any limited partner shall have given an obligation to Actors' Equity Association or similar organization, then, at the time of each such payment aforesaid, the partnership shall set aside the amount which would have been payable to such limited partner had he made a contribution in cash equal to the face amount of such obligation, until there shall be accumulated a sum sufficient to release the liability of such limited partner, and the partnership shall there-after hold such limited partner harmless from any liability under such obligation. If, upon the termination of the production, the amount so accumulated shall not have been used, it shall revert to the funds in the special account for distribution as in this agreement provided.)

(b) The time and manner of distribution of the net profits of the partnership shall be as follows:

Such part of the net profits of the partnership as can be paid in cash and still leave the partnership with a cash reserve not less

7

than the sinking fund (plus a reasonable amount for initial expenses in the event that the original company is sent on tour) after the payment, or reasonable provision for the payment, of all debts, liabilities, taxes and contingent liabilities, and after making the payments provided for in subdivision '(a)' of this paragraph SEVENTEENTH, shall be paid monthly to the limited and general partners (in accordance with the percentage provisions hereinbefore set forth in paragraph FIFTEENTH);

(c) Solely for the purpose of determining whether or not any contributions are to be repaid or net profits are to be distributed to the limited and/or general partners under the provisions of this paragraph SEVENTEENTH (but not for any other purpose), the monthly financial report prepared by the accountants for the partnership shall be conclusive;

(d) Upon the closing of all companies presenting the play under the management of the partnership, and the abandonment of further intention of producing the play, the assets of the partnership shall be liquidated as promptly as possible and the cash proceeds shall be applied as follows, and in the following order of priority:

(1) To the payment of all debts, taxes, obligations and liabilities of the partnership, and the necessary expenses of liquidation. Where there is a contingent debt, obligation or liability, a reserve shall be set up to meet it, and if and when said contingency shall cease to exist, the moneys, if any, in said reserve shall be distributed as herein provided for in this paragraph SEVENTEENTH.

(2) To the repayment of the capital contributed by the limited partners (if any shall then remain unpaid), the said partners sharing each such repayment proportionately to their respective contributions.

(3) The surplus, if any, of the said assets then remaining shall be divided among all the partners in the proportion they share in net profits.

In liquidating the assets of the partnership, all physical assets of a saleable value, belonging to the partnership, shall be sold at public or private sale, as the general partners may deem advisable. No assets other than physical ones need be sold. It is agreed that any limited and/or general partner may purchase said physical assets at such sale.

At any time after the completion of the run of all companies presenting a first-class production under the management of the partnership, the general partners shall have the right to sell or otherwise dispose of the production rights and the partnership's interest in the subsidiary rights other than the motion picture rights. The limited and/or general partners may be purchasers upon any such sale provided the amount paid by them as purchasers shall be a fair and reasonable one. The signatories hereto agree that Mr. James F. Reilly, or a person who shall at the time be acting in the capacity which Mr. Reilly now holds with the League of New York Theatres, may pass upon the fairness and reasonableness of the amount the proposed purchaser shall offer to pay at any such pro-

8

posed sale, and his judgment shall be final and binding upon all
parties.

(e) If any sum by way of repayment of contribution or distribu-
tion of profits shall have been paid prior or subsequent to the termina-
tion date of the partnership, and at any time subsequent to such
repayment there shall be any unpaid debts, taxes, liabilities or obliga-
tions of the partnership, and the partnership shall not have sufficient
assets to meet them, then each limited and each general partner shall
be obligated to repay to the partnership up to the amount of capital
so returned to him and profits so distributed to him as the general
partners may need for such purpose and may demand. In such
event the limited partners and general partners shall first repay
any profits theretofore distributed to them, such repayment by them
to be made in proportion to the amounts of such profits theretofore
distributed to them respectively, and if such distributed profits shall
be insufficient, the limited partners shall return contributions of
capital which may have been repaid to them, such return by the
limited partners, respectively, to be made in proportion to the
amounts of contributions of capital which may have been so repaid
to them, respectively. All such repayments by limited partners shall
be repaid promptly after receipt by each limited partner from the
general partners of a written notice requesting such repayment,
together with a statement of the aggregate amount so to be repaid
and of the amounts so to be repaid by each limited and by each
general partner, and together, also, with an explanation of the neces-
sity for such repayment. Such repayments by the general partners
shall be made by them at the time of sending of such notice to the
limited partners.

The obligations herein set forth in this subparagraph shall be
in lieu of the obligations imposed under Sections 105 and 106 of the
Partnership Law of the State of New York insofar as said obliga-
tions are imposed by said Sections, and in addition thereto insofar
as they are not imposed by said Sections.

EIGHTEENTH: The general partners agree that upon the begin-
ning of the partnership they will, in the name of the partnership,
open, and will thereafter maintain, in New York City, a Special Bank
Account or Accounts, in which shall be deposited all of the capital
of the partnership, and all of the gross receipts as hereinbefore
defined, and no other funds. The funds in said Special Bank Account
or Accounts shall be used solely for the business of the partnership.

NINETEENTH: At all times during the continuance of the partner-
ship, the general partners shall keep or cause to be kept full and
faithful books of account in which shall be entered fully and ac-
curately each transaction of the partnership. All of said books of
account shall be at all times open to the inspection and examination
of the limited partners, or their representatives. The general part-
ners shall likewise have available for the examination and inspection
of the limited partners or their representatives, at any time, box-
office statements received from the theatre (or theatres, as the case
may be) at which the play produced by the partnership shall be
shown. The general partners further agree, after the abandonment
of the play as provided for in paragraph ELEVENTH hereof, and

9

within thirty (30) days thereafter, to furnish each limited partner with a final detailed statement of the operations of the partnership, and also to furnish each limited partner with a final detailed liquidating statement. The general partners agree to deliver to the limited partners, not later than thirty (30) days after the opening of the play in New York City, a complete statement of production expenses, duly audited, and they further agree to deliver to the limited partners as long as the play is being presented as a first-class attraction by the partnership, a monthly statement of operations duly audited. The general partners further agree to deliver to each limited partner all so-called "information returns" (prior to the filing thereof with the Federal and State governments) showing the income of the partnership and of each partner received therefrom.

The general partners further agree, after the close of all companies presenting the play under the partnership's management, to furnish each limited partner a final, detailed statement of the operations of each such company (as well as separate statements for each such company during its presentation of the play), and upon the termination of the partnership to furnish each limited partner a final, detailed liquidating statement.

All such statements shall be prepared by the firm of Pinto, Winokur & Pagano, or their successors in interest, or such other firm of accountants, experienced in the theatrical business, as the partnership may at the time have auditing its accounts.

**TWENTIETH:** The general partners agree to render, in connection with the play, services customarily and usually rendered by theatrical producers, and to devote as much time thereto as may be necessary, it being agreed, however, that, subject to faithful performance by the general partners of this obligation, they may engage in other businesses, including other theatrical productions. They agree to furnish, from the date of this agreement, office facilities including local telephone, stationery, secretarial and like facilities (but not including a press department) for which they shall receive the cash office charge, and no more, beginning with the week of first rehearsal and continuing through the week after the close of the play. In the event that there is more than one company, the cash office charge shall be payable for each additional company for the period beginning with the week of first rehearsal of such additional company and continuing until one week after its close. Payments made hereunder shall be deemed to be, and shall be charged as, running expenses and/or production expenses of the partnership.

The general partners (subject to the rights of the play's author and to the provisions of paragraphs ELEVENTH and TWENTY-FIRST hereof) shall have complete control, in their discretion, both of production of the play and the exploitation of all rights therein, including, without limiting the generality of the foregoing, changes in script, choice of cast, directors and designers, properties, sets, prices of tickets, time of opening and closing the New York City company or any other company, and organizing and arranging for additional companies.

**TWENTY-FIRST:** In the event that the general partners shall desire to organize an additional company or companies to present

10

13

the play, or to take any other action which would involve the use or investment of the partnership funds (other than for the original production of the play or for the acquisition of foreign rights thereto), the general partners shall send written notice, via registered mail, of such desired action to each of the limited partners. Such notice shall also state the aggregate amount which the general partners desire so to use or invest and the proportionate shares thereof of each limited partner. If within ten days after the sending of such notice the general partners shall receive written objection to such proposed action from any limited partner or partners, then the general partners shall have the right to take such action for the benefit of themselves and of the limited partners who do not so object in writing, and to use for such purpose such portions of the partnership funds then on hand or thereafter, in the course of the partnership business, received by the general partners, which do not include any share of the partner or partners so objecting. The limited partner or partners so objecting shall not have any interest whatsoever in such additional company or companies, or in any such other action, and the share of the limited partner or partners so objecting in the other partnership funds or assets shall not be reduced by any losses caused by, or arising or accruing from, any such additional company or companies, or from any such other action.

In the event of such written objection from any limited partner or partners, and in the further event that by reason of such written objection the portion of the partnership funds which, pursuant to the foregoing provisions of this paragraph TWENTY-FIRST, may nevertheless be used or invested by the general partners for such additional company or companies, or for such other action, is less than the aggregate amount stated in the written notice from the general partners as the aggregate amount so to be used or invested, the general partners may not organize such additional company or companies, nor take such other action, unless they shall have procured other persons to become additional limited partners and to agree and to pay any contributions as limited partners equal in the aggregate to the portion of partnership funds which would have been available for such use or investment if the objecting limited partners or partner had not so objected. In lieu thereof, however, the general partners may procure such additional funds in any reasonable manner which they may deem proper (other than by procuring the same from additional limited partners), provided, however, that in so procuring the same in such other manner, the general partners shall not, on behalf of the partnership, enter into any agreement, obligation or commitment whereby the share of the objecting limited partner or partners in the firm's assets may be reduced, or whereby any amount of cash held for distribution to such objecting partner shall be used. In no event shall such additional funds (whether obtained from such additional limited partners or in any other manner) be obtained on any basis which will reduce the share or interest of the non-objecting limited partner or partners in such additional company or companies, or in such other action, below that which such non-objecting limited partner or partners would have had if no limited partner had so objected.

11

In the event that any such additional company or companies is organized, or in the event that any such other action is taken, the books of account of the partnership shall be kept in such manner as to carry out the foregoing provisions of this paragraph TWENTY-First.

In any event, however, the general partners shall have the right in their discretion to make arrangements to license the road rights to any other party or parties they may designate, provided the partnership receives reasonable royalties or other reasonable compensation therefor, and provided, further, that the partnership shall not be involved in any loss or expenses by reason thereof. In the event of any such license of rights none of the limited or general partners shall be disqualified from participating in such proposed action by investment of their funds or otherwise as a separate enterprise, but in such event the reasonableness of the royalties or other compensation shall be passed upon by James F. Reilly, or a person who shall at the time be acting in the capacity which Mr. Reilly now holds with the League of New York Theatres. In the event of any such license of rights any general partner may render services to the licensee in connection with the exploitation by the licensee of the rights so licensed. No such rights shall be licensed to a person, firm or corporation organized or controlled by the general partners, or either of them, or in whose financial affairs the general partners, or either of them may have an interest, unless the general partners shall cause such person, firm or corporation to offer by registered mail to all limited partners a reasonable opportunity to participate in such venture by such person, firm or corporation at least to the same proportionate extent and upon terms at least as favorable as the participation of such limited partner hereunder, nor unless the time for the acceptance of such offer shall have expired. The "reasonable opportunity" hereinbefore referred to shall be deemed to have been given and expired if, within ten days from the date of mailing of the notice of offer, the limited partner to whom it is sent shall not, in writing, send by registered mail to the offering party, his acceptance of the offer.

Each general partner agrees that neither he, nor any person, firm or corporation controlled by him or in whose financial affairs he may have an interest, will present a second company or a foreign company of the play (or participate in doing so or in the benefits therefrom), unless the limited partners shall have the same reasonable opportunity of participating in such new venture as is secured to them by the above provisions with respect to licensing. The provisions hereinbefore contained with respect to the "reasonable opportunity" to be given in connection with a license shall apply to such reasonable opportunity in connection with such second company or with such foreign company.

**TWENTY-SECOND:** No assignee of a limited partner shall have the right to become a substituted limited partner in the place of his assignor.

**TWENTY-THIRD:** If a limited partner shall die, his executors or administrators, or if he shall become insane, his committee or other representative, shall have the same rights that the limited partner would have had if he had not died or become insane and the share of such limited partner in the assets of the partnership shall, until

12

the termination of the partnership, be subject to all the terms, provisions and conditions of this agreement as if such limited partner had not died or become insane.

The partnership shall terminate upon the death, insanity or retirement of a general partner.

**TWENTY-FOURTH:** Unless otherwise specified in writing, the address of each party hereto for all purposes shall be that set forth next to the signature of that party at the end of this agreement.

**TWENTY-FIFTH:** Unless agreed to in writing by all of the parties hereto, the limited partners shall have no right to demand and receive property other than cash in return for their contributions.

**TWENTY-SIXTH:** Any dispute arising under, out of, in connection with, or in relation to this agreement, or any breach thereof, shall be determined and settled by arbitration in New York City, pursuant to the rules then obtaining of the American Arbitration Association. Any award rendered shall be final and conclusive upon the parties and a judgment thereon may be entered in the highest court of the forum, State or Federal, having jurisdiction.

**TWENTY-SEVENTH:** This agreement may be executed in counterparts, all of which taken together shall be deemed one original.

**TWENTY-EIGHTH:** Each of the limited partners has executed a power of attorney, in the form originally annexed hereto, authorizing one of the general partners to make, execute, sign, acknowledge and file a Certificate of Limited Partnership. Said Certificate shall be substantially in the form outlined in Exhibit B hereof.

**TWENTY-NINTH:** Each of the partners agrees that one original of this agreement (or set of original counterparts) shall be held at the office of the partnership, that a Certificate of Limited Partnership shall be filed in the office of the County Clerk of the County of New York, and that a duplicate original (or set of duplicate original counterparts) shall be held at the office of the attorney for the partnership, and that there shall be distributed to each partner a conformed copy thereof.

**THIRTIETH:** Exhibit A hereto annexed is to be deemed incorporated herein and made a part of this agreement, including "Special Arrangements", if any, set forth in the said Exhibit A.

IN WITNESS WHEREOF the parties hereto have hereunto set their hands and seals as of the day of , 194 .

AS GENERAL PARTNERS

Name

Residence Address

13

["<table><thead><tr><th>Name</th><th>Residence Address</th><th>Cash Amount<br>Agreed to be<br>Contributed</th><th>Percentage of<br>Profits to be<br>Received</th></tr></thead><tbody><tr><td></td><td></td><td></td><td></td></tr><tr><

KNOW ALL MEN BY THESE PRESENTS that the undersigned make, constitute and appoint , the true and lawful attorney for the undersigned, and in the name, place and stead of the undersigned, to make, execute, sign, acknowledge and file the Certificate of Limited Partnership of , a limited partnership under the laws of the State of New York, and to include therein all information required by the laws of said State, and also to make, execute, sign, acknowledge and file a Certificate of Conducting Business under an assumed name, as required by Sec. 440 of the Penal Law of the State of New York.

WITNESS the hand(s) and seal(s) of the undersigned this day of , 194 .

<table><tr><td>....................</td><td>L. S.</td><td>....................</td><td>L. S.</td></tr></table>

STATE OF
COUNTY OF , —SS.:

On this day of , 194 , before me personally came , to me known and known to me to be one of the individuals described in, and who executed the foregoing instrument, and he duly acknowledged to me that he executed the same.

STATE OF
COUNTY OF , —SS.:

On this day of , 194 , before me personally came , to me known and known to me to be of the individuals described in and who executed the foregoing instrument and duly acknowledged to me that executed the same.

PINTO, WINOKUR & PAGANO

ACCOUNTANTS AND AUDITORS
50 EAST 42ND STREET, NEW YORK 17
MURRAY HILL 2-2110

March 6, 1951

Garrick Picture Productions, Inc.
23 West 53rd Street
New York 19, N.Y.

Attention Mr. Peter Davis

Gentlemen:

We are enclosing herewith copy of Form 1120, corporation
income tax return for the fiscal year ended August 31, 1950.

According to new income tax regulations it is necessary for
all fiscal year corporations to file another income tax return.

Please sign this return where indicated, on the bottom of
page one, and affix the corporate seal.

Mail the return to the Collector of Internal Revenue, 110
East 45th St., New York 17, N.Y. before March 15, 1951.

There is no payment due.

JW:LBH
Enc.

Received from PINTO, WINOKUR & PAGANO, 50 EAST 42ND STREET
NEW YORK 17,

THE FOLLOWING:

Mar. 6, 1951

copy of corporation Fed. tax return for fiscal year
ended Aug. 31,1950 with added Schedule N for Mar.15 filing

DATE

SIGNED

Kindly receipt and return in the enclosed stamped envelope

Memo from

LAWRENCE LANGNER

3/23/51

W FITELSON

Dear Bill:

You are quite right
about making the little flourish,
but unfortunately, the letters
went out. However, we did say we
were happy to send them the final
amount.

As there will be a
little profit in each case as well,
as with AS YOU LIKE IT, which has
still to be sent out -- I will
make the flourish at that time, and
have sent copy of this memo to Sara
to remind me.

LL

CC: Sara Greenspan

ARTCRAFT LITHO. & PRINTING CO. N. Y.

Memo from
LAWRENCE LANGNER

July 16, 1951

To: Peter Davis

Will you please send a check for $427.49
to Messrs. Davis, Polk, Wardwell, Sunderland
and Kiendl for disbursements in connection
with Simonson et al vs. Helburn et al.

Please notify the Bookkeeping Department
that this is to be charged as General
Overhead.

Also, check whether somebody else has given
the same instructions.

L.L.

ARTCRAFT LITHO. & PRINTING CO., N. Y.

Memo from
LAWRENCE LANGNER

July 18, 1951

To: Peter Davis
Jack Pinto

I would like our Bookkeeping on OKLAHOMA in New York to be in accordance with our agreement with Mr. Shubert.

The total of the pool expenses is to be deducted from the receipts and the results, whether profits or losses, divided 50/50.

Now, for all I know, Jack Pinto's sheets show the above, but they don't show the pooling operation, and I have no way of telling whether Pinto has looked over Shubert's expenses to see if they are okay in the same way that Shubert looks over our expenses. In other words, Shubert goes over our expenses with a fine tooth comb and Pinto has to do the same with Shubert. Otherwise, where are we?

The proper way to set this out would be as follows:

Gross

Katz & box office receipts

Less Shubert expenses

Less Guild expenses

Total Profit -- 50% to Shubert
50% to Guild

Memo from
LAWRENCE LANGNER

Follow the statement of the Guild's expenses.

I could not possibly send your present sheets
to our investors, which mentions our share
as being "xx". There is no such thing as
"our share" and "their share". All expenses
are pooled.

L.L.

C
O
P
Y

July 5, 1951

MEMO FROM: SARA GREENSPAN

MEMO TO: LAWRENCE LANGNER
THERESA HELBURN

I want to bring you up-to-date on the financing before I leave
tomorrow.

Everyone I telephoned was particularly interested in THE MAN WHO MADE THE MOUNTAIN SHAKE and they all want to read the script before committing themselves. Perhaps when we have this corrected script, the prospective investors might also be induced to invest in the other two plays.

To date the following are the only people who have indicated that
they are willing to invest in the three without reading the scripts:

American Theatrical Company 1%
Mr. and Mrs. Sherman Ewing 1%
Louis Singer 1%
Nathan Hirschfield 1%
Al Greenstone 1%

Since we could make out no financial agreement for THE MAN WHO MADE THE MOUNTAIN SHAKE, I wrote to all the above and explained that I was sending the copies for the SAINT JOAN agreement and as soon as the other two were ready, we would send them on. So far I have heard from only Mr. Ewing and the American Theatrical Company and Al Greenstone said he would give me the check next month.

Billy Rose is still interested in THE MAN WHO MADE THE MOUNTAIN SHAKE. However, he wants to see an estimated production cost and also a weekly operating statement. I am also waiting for scripts for Josh Logan, who is interested in investing in this play and Mr. Weinstock wants a script for Mr. Shubert. Mr. Shubert is not interested in SAINT JOAN or POINT OF DEPARTURE. I also have some new people I have contacted but they want to read the scripts before deciding. I still haven't heard from Bea Lawrence although I have telephoned her and written her once.

What is happening about Warren's investors? It would be wonderful
if he could get 15% for each play in view of the fact that I have met with very
little enthusiasm when I spoke about SAINT JOAN and POINT OF DEPARTURE. I know
Warren will accept whatever the Guild thinks is fair.

* * * *

There are 8,100 subscription renewals to date for New York.

S. G.

Memo from
LAWRENCE LANGNER

July 23, 1951

To: Peter Davis

Attached is a letter from John Pinto. Will you please ascertain how this man comes to owe us $888.00. Surely there is some mistake. If not, please explain the circumstances.

Now, as regards the IOU of $25.00, has this been charged against me in the Guild? Please obtain this information from the bookkeeper. If it is charged against me, there is no reason why I should pay it twice.

L.L.

TO: JK
FROM: LL

July 26, 1950

I am enclosing herewith some sheets. These are
marked Budget A and Budget B and Budget C, respectively.

I am trying to find out approximately (and I mean approximately and not to the last cent) what it costs to run the Guild in 1950. In Budget "A" I have taken the 1949 figures and have left a column for 1950. Would you be good enough to fill this in?

You will note there is a column 1951. In this column I intend to put the 1951 figures after consulting with you. You will also note there is a column marked "Westport". This represents the dream possibility of moving the Guild's main offices to Westport, out of the way of atom bombs, etc.

On the two sheets Budget "B" I am trying to get detailed information regarding costs. Please fill in the salaries for 1950.

On Budget "C" I have put the items for the cost of running 23 West 53rd Street for the year 1950. Will you please fill in the expenses and the income.

Will you also note the item marked "Rent Deficit". This is to cover the deficit as you told me we do not pay Garrick enough.

LL

Enc.

AUGUST 7, 1951

MEMO FROM: PETER DAVIS

MEMO TO: LAWRENCE LANGNER

RE: INVESTORS' AGREEMENTS

It is suggested that the office expense to be charged to each non-musical show would be $250.00 per week beginning two (2) weeks before rehearsals and ending one (1) week after the close of the play.

It is also suggested that in the future a provision be made whereby the Theatre Guild can charge $350.00 per week representing services of the general and company managers. This would result in the Theatre Guild receiving from each play a certain amount which would represent the difference between any salaries actually paid to a Company Manager and the $350.00 mentioned which can be used as an offset to the Guild's overhead expenses.

P. D.

August 21, 1951

MEMO TO: LL,
TH
BF

MEMO FROM: AM

RE: FINANCING OF THIS SEASONS PLAYS

I would like to go on record now and say that I feel that putting THE SCREWBALL into a group of plays which we are financing across the board is going to make it very difficult to raise our money.

When we do THE MAN WHO MADE THE MOUNTAIN SHAKE with Kazan and POINT OF DEPARTURE with Dorothy McGuire and PICNIC with Josh Logan, it seemed feasible and possible that we could get our financing for ST. JOAN by group financing because even that as a separate proposition looks tough. But when they get the other things thrown in, it could be carried by a possibility of success from at least one of the other three and possibly two. But when you put in two plays which are questionable, such as THE SCREWBALL undoubtedly is, from the reactions in Westport, it is then just a two to three break.

I thought at our meeting yesterday that our understanding was that we would only produce the SCREWBALL if we got the money for it and that we would try to get that money - at least a goodly partion from the picture companies, which LL stated were tremendously interested in it at Westport.

AM:cj

CONFIDENTIAL

Dictated August 28, 1951

Memorandum to: TH, HWF, AML

From: LL

Re: Little Man Financing

The plays which we are now talking of financing are as
follows:

1. SAINT JOAN -- our share $30,000.

2. THE LITTLE SCREWBALL -- our share approximately $30,000.

3. POINT OF DEPARTURE -- $60,000.

4. PICNIC -- our share $32,500.

5. THE MAN WHO MADE THE MOUNTAIN SHAKE -- $60,000.

6. JANE -- $50,000.

This adds up to $262,500, or over a quarter of a million dollars. Obviously, to raise a quarter of a million dollars is something far beyond anything the Guild has been faced with before.

I agree that if we can have a hit, it will make it much easier to raise the money. It is like -- which comes first, the hen or the egg? How are we going to have the hit unless we raise the money? How are we going to raise the money unless we have the hit? There are three solutions to this problem:

1. To use the Guild's capital where we cannot raise the money.

2. To develop by some miracle a talent for raising money -- a talent which we seemingly do not possess in the Guild.

3. To engage a person of ability and to pay him well for the job.

Just to show the value to the Guild as an organization of our being in the play-producing business, rather than in the business of consuming overhead, if these six plays could run an average of

- 2 -

twenty weeks for the entire group, the office expenses alone
would bring in a contribution towards overhead of nearly
$50,000. But this is no reason for securing such a man. This
is only to show what the organization is losing by not having
fund-raising ability.

The harder it is to raise funds, as at present, the harder it
is to produce plays. I think we should face the problem in a
realistic manner -- not by waiting until we get a hit, which
may be far in the distance -- but right now trying to secure
backing from three groups:

1. Those who will back plays from the point of view of prestige and love of art, and

2. Those who like gambling but must have a hit now and again, and

3. Those who are interested both in art and in gambling.

I am glad that everyone felt at the meeting today that I was
on the right track, and I will begin next week to look for a man
who has real connections in the financial world to do this job.

CONFIDENTIAL

September 3, 1951

Memorandum to: HWF

From: LL

Thanks for your memorandum of August 31st. I am glad you take so optimistic a view of the situation. It is indeed fortunate that we will probably have both the Kazan and the Logan shows on this season's program -- but I say "probably" with some reservations, as neither gent has yet signed his contract.

I was very much impressed at Dayton with a speech made by Charles F. Kettering, in which he ascribed the success of most of his ventures to what he called "problem analysis". This meant quietly and calmly to analyze the problems into the known and unknown factors, and then to find the solution by trial and error or by research or discussion, as the case might be. Our problem is becoming manifestly more clear. There are fine plays to be done, but the great costs of production make it difficult to secure investment when the main inducement is the making of a profit.

The Guild for 32 years has primarily been concerned with the production of works of art. When it is no longer possible to finance these, the Guild must be impotent or use its own capital. There are a number of different ways of solving this problem, and each of these should be carefully analyzed:

1. Producing a play which is a hit. Our experience has shown that it is impossible to select or prognosticate in this field. Even the selection of a play of a so-called commercial character does not insure that if it is a hit it will make money. About the only hit plays (other than musicals) which are making money today are those with small casts. Therefore, one part of our problem can be solved by finding and producing a hit play with a small cast which can make money. However, we cannot be limited to this category.

2. Producing musicals. The trend seems to be in this direction, and we have succeeded in the past by finding new angles on musicals, rather than by repeating other people's patterns. To produce a musical has been a pious wish, but no concerted effort has been made to make this come true. We should form a sub-committee which should meet once a week and keep pushing for a new musical. Perhaps other ways of pushing this idea can be suggested.

3. Another solution to the problem would be a frank recognition that we cannot rely on being able to make money with our plays, and that we belong in the category of British Arts Council Projects. This aspect of the problem can be

FITELSON AND MAYERS

INTER-OFFICE MEMO

TO TH, LL, AML

DATE August 31, 1951

FROM HWF

SUBJECT LL's memo, 8/28/51.

STRICTLY CONFIDENTIAL

Dear Mr. Langner:

Your confidential memorandum dictated August 28th
was just placed on my desk. As I commented at the
meeting, I did not disagree with the principle, but I
understood that the matter was to be held in abeyance
for further discussion until our next meeting. At the
last meeting JANE was not on the program. There were
only five shows involved:

ST. JOAN--our share of financing, $30,000, of which approximately 18,000 has been raised, leaving a balance of approximately $12,000 to be raised.

THE LITTLE SCREWBALL--for which at least $5,000 has
been raised leaving, according to your estimate of our
share, approximately $25,000 to be raised.

POINT OF DEPARTURE--which, if it has Dorothy McGuire,
can be raised without difficulty right at the Guild.

PICNIC--which will be over-subscribed without outside
help if Joshua Logan directs it.

MAN WHO MADE THE MOUNTAIN SHAKE--$60,000 which will
be over-subscribed if Kazan directs it.

This means, that of the five shows, there is very
little to raise. Certainly, not enough to consider at this
time such a radical suggestion without further discussion.
Despite the fact that I think this is a more accurate pic-
ture, I still think that the suggestion is good and should
be discussed at length.

H.W.F.

MEMORANDUM

FITELSON AND MAYERS

673 FIFTH AVENUE NEW YORK 22, N. Y.

TO LL, TH, AM

(Confidential)

DATE 9/4/51

RE: Financing Guild Plays

Thank you very much for your confidential memo of September 3rd, which is an excellent point of focus. I agree with most of the points made. But I am not sure of others.

In addition to these three points, there are a number of others. I am all for discussing them at length and certainly briefing Walter Fried on what the situation is.

Years ago I came to the conclusion that it was unwise to devote so much energy as is devoted at the Guild, and to de vote so much overhead as is devoted, and at the same time to invest substantial capital in play production. I am all for the devotion of the energy and the necessary overhead, but not for the investment of substantial capital unless it is a "must". I think there are ways of getting around this "must" by getting other investors in generally. It is the exception that is the burden. And I think that you will find we will be spending a great deal of time discussing the exceptions.

By all means we should follow your suggestion about the concerted effort concerning musicals. You did it before and there is no reason why, by following the same procedure, you could not do it from time to time again.

Will make notes on all of this for our future discussions.

H. William Fitelson

by Lawrence Langner

September 27, 1951

Theatre financing is based on the fact that the money is a loan. If the play is a success, the first monies received pay back to the investor what he has invested in it. The manager receives no management fee or profit unless the play shows a profit after the capital has been returned. Then the capital takes 50% of the profits and the manager takes the other 50%. The manager is allowed an office expense of $250. a week, which is less than his actual running expenses. If the play is a failure, the investor is permitted to take a tax loss of the amount invested.

Plays are usually capitalized between $50,000 and $60,000, so that 1% of a play usually costs around $1000. There is usually a 10% or 20% overcall, but no more. The investor is protected that he cannot be called on to supply more than the amount set forth in the investing contract. By a 10% or 15% overcall is meant that in case, for any reason, it is impossible to bring the play in for the budgeted amount on the basis of which the investor has made his loan, he could be asked for 10% to 20% more -- but never more than the 10%. It is unusual in the Guild business to have overcall because the budgeting is careful and the plays are supported by subscription, which means that there is a guaranteed audience for the Guild plays which makes for less losses out of town or in case of failure. This constitutes audience underwriting.

Of the plays that have made profits in the last three seasons, we mention Katharine Hepburn in AS YOU LIKE IT; Lunt and Fontanne

page 2

in I KNOW MY LOVE; John Gielgud in THE LADY'S NOT FOR BURNING;
Jose Ferrer in THE SILVER WHISTLE; Shirley Booth and Sidney
Blackmer in COME BACK, LITTLE SHEBA. Most of these plays can
definitely be classed as artistic and cultural plays. Against
that, the following plays were unsuccessful: THE CURIOUS SAVAGE,
THE RELAPSE, ARMS AND THE GIRL, MAKE WAY FOR LUCIA, and MY NAME
IS AQUILON.

by Lawrence Langner

September 27, 1951

Plays are usually capitalized between $50,000 and $60,000, so that 1% of a play usually costs around $1000. There is usually a 10% or 15% overcall, but no more. The investor is protected that he cannot be called on to supply more than the amount set forth in the investing contract. By a 10% or 15% overcall is meant that in case, for any reason, it is impossible to bring the play in for the budgeted amount on the basis of which the investor has made his loan, he could be asked for 10% to 15% more -- but never more than the 15%. It is unusual in the Guild business to have overcall because the budgeting is careful and the plays are supported by subscription, which means that there is a guaranteed audience for the Guild plays which makes for less losses out of town or in case of failure. This constitutes audience underwriting.

page 2

Memo from
LAWRENCE LANGNER

October 29, 1951

To: Jack Pinto

Re: Theatre Guild weekly report dated
September 29, 1951.

Will you please let me have the explanation
of the following items:

1. "Legal fees and expenses ... $3,292.93"

2. "Telephone and telegraph... $ 924.23" Has any of this been charged off to the different enterprises.

3. "Department Expenses - Cashling". How did we use up $207.?

L.L.

Memo from

LAWRENCE LANGNER

CONFIDENTIAL

April 1, 1952

Dear AML:

I want you to try to work out a budget for
next season in which we can, if possible,
keep the running expenses down to $1000. per
week. Attached hereto is a list of the
General and Administrative expenses.

Salaries:

Sara Greenspan, Peter Davis,
Business Dept. secretary (Mina
Cohen)

LL's secretary (Elsie Kerr)

TH's secretary (Sheila Tatnall)

AML's secretary (Caro Jones)

Accounting and Bookkeeping -
Pinto (as per contract), book-
keeper

Associate Director

General Office (telephone
operator)

Building expenses, rent, light,
heat, cleaning, supplies.

Department expenses

General office

Pension fund

Tel. and tel.

Printing and stationery

Office supplies

Insurance

Messenger service

Transportation and carfares

Entertainment conferences

Gifts and gratuities

Memo from

LAWRENCE LANGNER

March 13, 1952

To: Jack Pinto

Please note the attached. Mr. Langner agrees completely with this, and wishes you to bring his and Miss Helburn's salaries up to date, and then have them both receive their compensation monthly.

If it is possible, Miss Helburn would appreciate receiving her check tomorrow, since she is going away for a brief holiday.

Elsie Kerr

April 23rd, 1952

MEMO TO: LL, HWF

FROM: AM

RE: RENTAL TWO FLOORS TG

Please & Elliman made the following suggestions for rental
of the first two floors:

First Floor

The Downstairs Radio Office -- $1,800.00
New York Subscription Office 1,500.00
ATS - two offices 3,000.00

(Note: This would necessitate cutting a
door into the toilet room of the Radio
Office from the outside hall so that the
men on that floor could use that toilet.)

Second Floor

He thinks that the entire second floor
could be rented for $9,600. - either separating the front
and back or together - but this would necessitate the
present kitchen being made into two toilet rooms - - one
for men and one for women. This is possible because the
plumbing is there. If it is rented, the big ballroom could
rent for $5,100. and the Casting Office for $4,500.

AM:cj

April 28th, 1952

MEMO TO: LL, TH, HWF and Jack Pinto

RE: Meeting of April 25, 1952 with Jack Pinto

PRESENT: LL, TH, AM and Jack Pinto

The following plan was decided upon in order to cut
expenses:

Jack Pinto will not give us a weekly statement for
the 10 weeks of the summer, but will give us one summary
monthly statement for June, one for July, and one for
August. His salary will be $50. a week for this service
instead of $100.

Beginning September 1st, we will get a Bookkeeper
or use Mrs. Becher and she will make out a weekly summary
statement each week. Jack Pinto's charges will be reduced
to $200. a month. He will give us a monthly statement and
a six-month interim statement for this salary. Mrs. Becher,
during the month of June, will be trained to do the weekly
statement to find out if she is capable of handling the work
this Fall. If she cannot do it, we will get a bookkeeper
who can.

AM:cj

Memo from
LAWRENCE LANGNER

April 28, 1952

To: AML

Re: Meeting with Jack Pinto, April 25, 1952

Your memorandum of this meeting is subject to
a slight misunderstanding.

The second paragraph should read: "Jack
Pinto will not give us a weekly statement for
the 10 weeks of the summer, but will give us
one summary monthly statement for June, one
for July, and one for August. His salary
will be ..." etc. etc.

LL

Memo from
LAWRENCE LANGNER

September 26, 1952

To: Sara Greenspan

We have placed an order today with the
Drama Book Shop for three copies of
HE WHO GETS SLAPPED (Andreyev), and
have charged them to "executive".

June 12, 1953

MEMO

To: TH, AML
From: LL
Re: Financing plays

Now that we are going to do so many shows with other managements because of money raising problems, I think there should be some sort of table of what we would like to get. This, however, can not apply to deals which have already been made e.g. LL's deal on SAILOR'S DELIGHT where he obtained an option for the Guild. There are, however, a number of plays to which it can be applied - 1. Home Is The Hero; 2. Day of Grace; 3. The River Line, etc.

LL's suggestion is as follows:

MONEY RAISING

A. Where the party we are dealing with is a non-professional or a professional who is willing to accept the deal e.g. Joanna Albus on STARLESS AIR -

15% For raising all the money with the understanding that if all the money is not raised, it will cover the portionate share of the amount raised with production credit "In Association With" if he wants it.

35% If more than ½ the money is raised. 10% to Theatre Guild. 26% (Out of which Theatre Guild takes care of production associate - for example, Paul Bigelow)

B. Where dealing with a theatrical management which is not well established, and whose main contribution is the money raised -

When he guarantees to raise at least ½ of the money, on the basis of the money raising taking 10%, with the understanding that if he raises more than ½ he will receive a proportionately larger percentage plus a credit of "In Association With". 5%

For the additional services rendered in assisting Theatre Guild. 7½%

12½%

Theatre Guild share for making the production, owning the play, selecting cast, putting in subscription etc. and including the Associate Producer. 37½%

general

C. Suggested plan for division of profits where dealing with established theatrical manager or author e.g. Josh Logan.

Where author puts up director or star and play, cost of raising money. 10%

If the Guild or the other management raises this money they will share proportionately; balance divided 50-50.

Memo to: TH, AML

-2-

Thus, if the Guild found all the money the other management would receive....................20%
And the Guild....................................30%

GENERAL REMARKS

I do not see how there can be a rule which covers every situation. I think it might be a rule of thumb to say that raising the money is 10%, providing the star is 5%, providing the play is another 5%, providing subscription another 5%, and providing the production work 15%. Balance of 10% will be divided between the Guild and money raiser or kept by the Guild depending on circumstances.

Finally, in most cases where we deal with theatrical management it will probably be on a 50-50 basis if they provide something very good, like Joshua Logan.

Lawrence Langner

["MEMO", "June 23, 1953", "To: TH, AML\nFrom: LL\nRe: Financing Plays", "Now that we are going to do so many shows with other managements because of money raising problems, I think there should be some sort of table of what we would like to get. This, however, cannot apply to deals which have already been made; e.g. LL's deal on SAILOR'S DELIGHT where he obtained an option for the Guild. There are, however, a number of plays to which it can be applied -- 1. HOME IS THE HERO, 2. DAY OF GRACE, 3. THE RIVER LINE, etc.", "LL's suggestion is as follows:", "MONEY RAISING", "A. Where the party we are dealing with is a non-professional or a professional who is willing to accept the deal; e.g. Joanna Albus on THE STARLESS AIR --", "15% for raising all the money with the understanding that, if half the money is raised, party can have production credit \"In Association With\" if he wants it.", "35% to Theatre Guild, out of which Theatre Guild takes care of production associate -- for example, Paul Bigelow", "B. Where dealing with a theatrical management which is not well established, and whose main contribution is the money raised --", "When he guarantees to raise at least 1/2 of the money, on the basis of the money-raising taking 10%, with the understanding that, if he raises more than 1/2, he will receive a proportionately larger percentage, plus a credit of \"In Association With\" . . . . . . . . . . . . . . . . .

["- 2 -", "If the Guild or the other management raises this money,\nthey will share proportionately; balance divided 50-50.", "Thus, if the Guild found all the money the other management\nwould receive . . . . . . . . . . . . .

MEMORANDUM

October 12, 1953

To: HWF, TH, AML
From: LL
Re: Budgets

I am writing this memorandum especially to HWF on the subject of budgets because of a suggestion he made last year regarding the elimination of bonds from the budget. The high cost of A TRIP TO BOUNTIFUL budget; viz. $70,000, when we are underwritten against out-of-town losses and underwritten in New York, both by subscription, has made me offer the following proposal to you all:

The budget could eliminate the bonds which amount to approximately 15 to 20 percent on the average show (between $10,000 and $12,000) provided that (a) the first monies received from the theatre shall be applied to the payment of the actors' and stagehands' salaries, and (b) that there be a special bond overcall in case we are called on to meet the bond, this overcall being the exact amount of the bond.

There would, therefore, be two protections on this point: (a) the first monies going to the actors and stagehands as suggested by Bill and (b) the special bond overcall which I think would never be needed.

I visualize that a play that would ordinarily be budgeted at $60,000 could, on the above basis, be budgeted at approximately $50,000 with the usual overcall of 15% and the bond overcall as above.

Attached to this memorandum are some of the advantages which financing Theatre Guild plays offers as compared with other theatrical investments. Please let me have your careful consideration and comments regarding the above.

LL

bn

Attach.

LL's Memo Re:

<u>THEATRE GUILD ASSOCIATES</u>

Theatre Guild investors secure the following advantages
which are not attainable in any other theatrical invest-
ment:

1. The new plays are underwritten by subscription in New York City, thus insuring that the play will run for three weeks and secure the motion picture rights.

2. The Theatre Guild plays have the right to subscription on the road which underwrites these plays and reduces potential road losses.

3. The play ventures do not have to be capitalized with the amount of the bonds. This is covered by the Guild having the right to make a bond overcall in case the amount of the bonds is used up.

Because of the above arrangements, The Theatre Guild plays can be capitalized for less than plays by other management and, if successful, should pay back sooner.

THEATRE GUILD ASSOCIATES

The purpose of this group is to raise the necessary funds to finance The Theatre Guild for its season of 1953-1954. The investors in this group will secure the following & advantages which are not attainable in any other theatrical investment:

2. The Theatre Guild plays have the right to subscription on the road which underwrites these plays and cuts down on potential road losses.

3. The Theatre Guild is not required by Equity to put up cash for the bonds and, as a result, the play ventures do not have to be capitalized with the amount of the bonds. This is covered by the Guild having the right to make an overcall in case the amount of the bonds is used up.

Because of the above arrangements, The Theatre Guild plays can be capitalized at considerably less than plays by other managements and, if successful, they will pay back sooner.

FITELSON AND MAYERS

INTER-OFFICE MEMO

TO LL, TH, AM

DATE 10/14/53

FROM H. William Fitelson

SUBJECT LL's Memo of 10/12/53 re Budgets

I have been thinking of your memo of October 12th. It seems to me that it would be a bad precedent to offer investors participations in plays on the basis that bonds are not part of production costs and would be furnished by the Guild. People who furnish bonds, even when they get preferred recoupment, receive a participation in the profits therefor.

I really do not think that it would make any difference to an investor to get such an advantage. It seems to me that it is the old question of "The play's the thing"! If an investor likes a play, he will invest under almost any conditions. If an investor doesn't like a play, then the preferred basis is not a large factor.

Your other points seem to me to be very well taken.

HWF

MEMORANDUM

October 27, 1953

To: TH, AML, HWF, BA
Re: Statements

Dear John,

Replying to yours of October 19th, you say that it
has been the policy of the Bookkeeping Department and you as
auditors to render statements on all plays "whenever it was
practical to do so."

I think we should have something more definite
than this. In the case of the current plays, I think we
should continue with our present system. When a play closes,
we should within thirty days furnish an interim statement.
This should be followed up within three months by a final
statement.

When a play is closed, if a large sum comes in
(e.g., sale of picture rights) statements should be made
within two weeks of receipt. In the case where the play is
closed and we are merely collecting a small amount of in-
come on stock royalties, then we should render an account-
ing after the end of a fiscal year -- usually within 45
days after August 31st.

I see no reason to make statements on these plays
once every six months -- once a year is sufficient.

If there is anything wrong with the above,
please let me know.

LL

bn

October 19, 1953

Dear Lawrence:

This is in answer to your memorandum of October 15 regarding statements on plays.

It has been the policy of the bookkeeping department and we as auditors to render statements on all plays whenever it was practical to do so. It has been our policy on closed plays where the income received during the physical fiscal period of The Theatre Guild, Inc. was small to render an accounting after the end of the fiscal year - usually within 45 days after August 31. However, when large amounts of money have been received on closed plays, a statement was prepared and a distribution made shortly after the receipt of such large payments.

If you think that this procedure should be changed, I shall be glad to discuss it with you.

With reference to the "Lo and Behold" statements, I do not see the cause for criticism by Mr. Shubert in that the facts relating to this play are as follows:

1. The show closed January 12, 1952, and the first statement covering the complete operations of the play was prepared by us on February 7 when we were certain that the major portion of all bills had been received.

2. On June 17, 1952, we received a final bill from the insurance company at which time a distribution of $3000 was made to the backers of the play. At the close of the fiscal year, August 31, 1952, a final statement dated October 20, 1952, was prepared by us and a distribution of $1000 was made.

3. From September 1, 1952, to June 8, 1953, the total royalty received amounted to $1,084.74 - more than 50% of which was received in April and May of 1953. After the meeting held at Mr. Lee Shubert's office, a statement was prepared on October 5, 1953, reflecting this income and a distribution was made of all the income shown in the statement (this is possibly the only statement that could be considered to have been held up unnecessarily, although some excuse could be offered because of the dissolution of the corporation on that date and the necessity of knowing all income earned to that date.)

4. At the same time, there was prepared a statement of stock and amateur royalties received in August and September, 1953, in the amount of $2,166.99 and a distribution of $2000 was made on October 5, 1953.

xx copy to AML? WF, TH

MEMORANDUM

November 13, 1953

To: TH, AML
From: LL
Re: Out-of-town Losses

I have been studying the dreadful cost of out-of-town losses
on THE TRIP TO BOUNTIFUL, and wonder whether we are not
complete fools.

When we did such plays as THE SILVER CORD, NED MCCOBB'S DAUGHTER,
and FATA MORGANA and others of our greatest successes, we
opened cold in New York after four week's rehearsal.

Now take our new plays. HOME IS THE HERO has run a year in
Dublin. It needs no tryout for rewriting, and the author will
not even be here. Now take DAY OF GRACE. This play has been
tried out twice. We know all it's acting values. With four
weeks of rehearsal and one week of previews in New York, what
do we want to lose $15,000 on the road for? I say we should
go back to our old system with these two plays and open them
in New York -- not cold, but with one week of preview
audiences. This will reduce the budget on each play roughly
to $45,000, leaving in each enough money for the bonds and
about $5,000 for reserve or a total of $15,000, which, in my
opinion, is enough to underwrite three weeks in New York in
case they flop.

Furthermore, I draw your attention to the fact that, when we
are charging $900 a unit, it is much easier to make a 10%
overcall than when we are charging $1200 to $1400 a unit.
I regard this decision as a life and death decision for the
Guild. We can't go on losing $60,000 on so-called art
theatre plays. We must set them up more inexpensively. I
believe SHEBA was set up for $900 per unit. I don't want to
set these two plays up for a penny more! They are both one-
set plays with minimum costume bills. Your immediate decision
is vital.

LL

P.S. I do not include THE BURNING GLASS in this category.
First, it will be played by big stars; secondly, it is
a brand new play which has never been done before. We
may run into some serious problems.

MEMORANDUM

November 23, 1953

CONFIDENTIAL

To: John Pinto
From: LL
Re: Theatre Guild, Inc., Financial Statement -- September 1, 1952 to June 8, 1953

Would you please furnish me with the answers to the following questions:

1. Schedule 32 OKLAHOMA! - Foreign Venture. This should be cleaned up as promptly as possible or we shall have another insulting situation with Lee Shubert. The entire OKLAHOMA! situation should be settled right up to the date of sale to R&H. As they are looking over opportunities for claims against us, I think there should be a discussion of our office expenses in connection with OKLAHOMA! - England.

2. Schedule 25. I see two items as follows and wish to understand why there are not a single item. These are: "Accounting and Bookkeeping -- $5,219.53, and Bookkeeping -- $759.63." Please explain this.

3. I see an item, Legal and Accounting Services re: Liquidation, $13,359.56. Please let me have an itemization of this.

4. I see a further item, Legal and Bond Expenses, $200.50. Please let me have an itemization of this.

5. Schedule 24. I see an item of $13,650 for producing executive. Is this Miss Marshall? I also see an item, Preliminary and Closing Expenses, $17,255.04. This seems quite high. Please itemize.

6. Schedule 22. I see an item, LOVE OF FOUR COLONELS, Deferred to Subsequent year, $6,262. This will apparently not affect anything in regard to the venture itself. Am I correct?

7. Under Accounts Payable I note an item, Fitelson & Mayers, $9,500 and another item, $9,750, under Radio Account. Is this the same item as the preliminary expenses?

8. I see an item, $2,873.40, NBC. What is this and has it been paid?

- 2 -

9. Schedule 17. I see a number of items which we owe to other people. Have these been distributed as soon as possible?

10. Schedule 16. I would like to see these royalties paid as promptly as possible.

11. Schedule 15. Please explain the item, Federal Alien Income Tax Withheld, $872.

12. Schedule 11. I shall pay the item of $1.93.

13. Schedule 10. WHAT MASIE KNOWS. Is this a TG Item or a TH personal item?

14. Schedule 5. Have we settled SILVER WHISTLE, LEGEND OF LOVERS, CAROUSEL, COME BACK, LITTLE SHEBA and OKLAHOMA! - U.S.A? If not, these should be settled at once.

15. Schedule 3. Accounts Receivable. Billis should be sent immediately to Westport Country Playhouse, Bahama Playhouse, LEGEND OF LOVERS, I KNOW, MY LOVE. Please explain VENUS OBSERVED item, $1,327; JANE, $1,840; HWF, $167; J. W. Thompson, $2,565; also the two items of OKLAHOMA! -- Foreign Venture profits, office expenses, and compensation deposits.

After looking up this data and answering my memo *in writing*, I should like to discuss it with you.

LL

bn

MEMORANDUM

November 23, 1953

CONFIDENTIAL

- 2 -

15. Schedule 3. Accounts Receivable. Bills should be sent immediately to Westport Country Playhouse, Bahama Playhouse, LEGEND OF LOVERS, I KNOW, MY LOVE, Please explain VENUS OBSERVED item, $1,327; JANE, $1,840; HWP, $167; J. W. Thompson, $2,565; also the two items of OKLAHOMA! -- Foreign Venture profits, office expenses, and compensation deposits.

LL

bn

December 3, 1953

Mr. R. B. Humphrey
Brown, Crosby & Company, Inc.
96 Wall Street
New York, New York

Dear Mr. Humphrey:

For many years you have done all our insurance
business, and the relationship has been a very happy one.

However, we are under very severe criticism
by our investors for the unnecessary length of time it
takes to get a compensation payroll audit and render final
bills. This delay is causing us to lose investors, and
we are being criticized because we are later than any
other theatrical firm in getting out final statements due
to this recurrent delay on your part.

Our relationship has been, we believe, valuable
to both of us, and we would hate to have this situation
continue. Please, therefore, assure us that you will give
immediate attention to THE LOVE OF FOUR COLONELS and THE
TRIP TO BOUNTIFUL, and that the delays which we have
complained about will not occur again. This will be the
last letter we will write on this subject.

LL:bn

Brown, Crosby & Co., Inc.
INSURANCE

96 WALL STREET
NEW YORK 5

TELEPHONE
HANOVER 2-8400

CABLE ADDRESS
CROBROW

December 7, 1953.

Mr. Lawrence Langner
The Theatre Guild
23 West 53rd Street
New York 19, N. Y.

Dear Mr. Langner:-

I appreciate your writing me as you did under date of December
3rd.

We realize that there has been at times a greater delay than
would appear warranted in getting the final audits on productions which have
closed. We have been endeavoring to overcome this and we are confident that
the Aetna Casualty Company wishes to cooperate to the fullest extent, so that
we feel that in the future there will be no occasion for criticism.

Specifically with respect to the final audit on THE LOVE OF FOUR
COLONELS and THE TRIP TO BOUNTIFUL, the Aetna has assured us that we will
have audits and be in a position to bill you for this within the next few days.
The writer will personally follow this up.

We might explore the possibility of having Mr. Pinto send us a
detailed statement of payroll when the production has closed and we can arrange
with the Aetna to bill immediately on this basis. However, this would still be
subject to a final audit by the company, which they are required to do. If
this arrangement has your interest, please let me know and we will in the future
arrange to handle billings accordingly for the workmen's compensation and
public liability insurance on closed productions.

The writer has always enjoyed the relationship with The Theatre Guild
and suffice it to say that we do not want anything to mar this relationship.

With very best wishes,

Sincerely yours,

rbh/ef

March 8, 1955

MEMO TO: AML, TH, WHF

Here is a financial estimate for the shows for which we are already committed
next season. This estimate assumes that we will raise the money for the bonds.

| Name | Capital | Cost of Unit |
| :--- | :--- | :--- |
| THE MATCHMAKER | $ 80,000 | 1% equals $1600 |
| THE SEASHELL (We raise half) | 40,000 | 1% = 1600 |
| CHILD OF FORTUNE | 80,000 | 1% = 1600 |
| HEAVENLY TWINS | 65,000 | 1% = 1300 |

It will be seen from the above that we would normally have to raise $265,000 for the season of 1955-56. However, Binky is supplying $18,000 for THE MATCHMAKER, bringing the total amount to be raised down to $247,000 or, roughly, a quarter of a million dollars.

I feel strongly that we are not taking full advantage of our own ability to cover the bonds in view of our subscription situation. My proposal is that the Theatre Guild should go on the bonds so that we can reduce each show by approximately $15,000. To do this, the backers must agree as follows, as they did in connection with HOME IS THE HERO.

1) The first box office receipts each week must be used to pay the actors' salaries.

2) There must be an "over-call" equal to approximately the amount of the bonds.

3) There must be a sinking fund which is equal to one-half of the original bonds.

Under this method, the capitalization will be as follows:

| | | **Cost per unit** |
| :--- | :--- | :--- |
| THE MATCHMAKER | $50,000 | 1% equals $1600 * |
| THE SEASHELL (one-half) | 32,500 | 1% equals $1250 |
| CHILD OF FORTUNE | 65,000 | 1% equals $1250 |
| HEAVENLY TWINS | 50,000 | 1% equals $1000 |

*This is explained by the fact that since Binky receives approximately 11% of the show for his investment of $18,000, we should also receive a percentage of about 9% of the show for our covering the bonds of $15,000. This gives us something to play with in connection with Mr. Granz when he comes here on Saturday the 12th, and we are asked to give him some of the manager's share.

AML, LL, TH, SG, PL, BA

HOWARD GOTBETTER

NOVEMBER 8, 1957

THEATRE BUILD ACTIVITIES

The following is a list of properties recently acquired or in the process of acquisition for future production or are already in production:

LAST DAYS OF A YOUNG MAN
BOARDING HOUSE
BACK TO MENTHOLAH
SUMMER OF THE 17TH TOLL
OH! HOW THEY DANGED

BASHFUL GENIUS
FOREIGN MINISTER
FEVER FOR LIFE
SUNRISE AT CAMPOBELLO
MACKIESEL PIAZA
Complote Crusade?

The following are recent activities with respect to BELL ARE RINGING:

British Production opened. Mexican license agreement signed by authors. Australia and New Zealand license agreement in preparation. National Company being negotiated.

The following are recent activities with respect to TUNNEL OF LOVE

British Production opened. San Francisco Production. Detroit Production being negotiated.

HOWARD GOTBETTER

MEMORANDUM

June 3, 1958

RE: PRODUCTION COSTS

FROM LAWRENCE LANGNER

The attached figures which we have received from our Bookkeeping Department indicate that our overhead amounts to approximately $2,500 per month over and above what we receive on the account of "office expenses". With two plays running, this amounts to approximately $1,250 per month or about $300 per week for each play.

Therefore, for every month we have running CAMPBELLO, we have lost approximately $1,250, and as it probably will not pay off until after August, this overhead loss will approximate $10,000 or more.

In connection with BELLS ARE RINGING it took us just under 50 weeks from the time of its opening out of town to pay off. I estimate that our overhead loss on BELLS ARE RINGING amounted to about $15,000. Consequently our first $15,000 of profit was not really profit at all, but just put us where we were before we started.

The above items should be taken into consideration in considering whether or not we are justified in charging a management fee of $250 per week as charged by Kermit Bloomgarden and other managements. For example, Saint Suber is charging 1% in connection with THE DARK AT THE TOP OF THE STAIRS, and nobody seems to be making any objections. While every effort is being made to reduce overhead, we would be lucky to get this down to the amount of $200 per week. Therefore, this is not the only solution. If a considerable amount from what we make from our hit plays is consumed in overhead, we are heading for bankruptcy. In this connection it must be remembered that whatever profits we make are reduced by the weekly overhead of $300 per week throughout the entire run of the show.

At our next meeting, I shall therefore propose that a management fee be charged on all new productions.

June 2, 1958

Memo: To Mr. Langner

In analyzing The Theatre Guild office expenses for the 10-month period June 1, 1957 through March 29, 1958, we had a total of $83,313.65 less $4,557.11 which will be transferred to the partners' drawing accounts at the end of the fiscal year leaving net office expenses of $78,756.54. During this 10-month period we received a total of $51,030.19 from 5 shows and the T.V. show towards these expenses ($350 per week from a musical and $300 per week from dramatic shows), leaving a <u>loss</u> to The Theatre Guild on their office expenses of $27,726.35.

In looking back to the previous 10-month period from June 1, 1956 through March 29, 1957, when we did not have so many shows running and when there was not as much activity, I find that we had total office expenses of $44,827.43 less office charges received from 2 plays and T.V. show of $24,610.71 leaving a net loss of $20,216.72.

In checking the "Bells Are Ringing" statements, I find that it paid off at the end of 49 weeks from the time of the opening out of town.

Margaret Becher, Bookkeeper

The Theatre Guild,

-2-

<table><thead><tr><th></th><th colspan="3" style="text-align:center;">Fiscal Years Ended</th></tr><tr><th></th><th style="text-align:center;">May 31, 1957</th><th style="text-align:center;">May 31, 1956</th><th style="text-align:center;">Increase</th></tr></thead><tbody><tr><th scope="row" style="text-align:left;">Current Assets . . . . . . . . . . . .</th><td style="text-align:right;">$232,196.69</td><td style="text-align:right;">$173,933.55</td><td style="text-align:right;">$ 58,263.14</td></tr><tr><th scope="row" style="text-align:left;">Liabilities . . . . . . . . . . . . . .</th><td style="text-align:right;">143,081.65</td><td style="text-align:right;">102,410.73</td><td style="text-align:right;">40,670.92</td></tr><tr><th scope="row" style="text-align:left;"><strong>NET CURRENT ASSETS . . . . . . . . . . .</strong></th><td style="text-align:right;"><strong>$ 89,115.04</strong></td><td style="text-align:right;"><strong>$ 71,522.82</strong></td><td style="text-align:right;"><strong>$ 17,592.22</strong></td></tr></tbody></table>

The following comparison of operations for the last four years is of interest:

<table><thead><tr><th></th><th colspan="4" style="text-align:center;">Fiscal Years Ended</th></tr><tr><th></th><th style="text-align:center;">May 31, 1957</th><th style="text-align:center;">May 31, 1956</th><th style="text-align:center;">May 31, 1955</th><th style="text-align:center;">May 31, 1954</th></tr></thead><tbody><tr><th scope="row" style="text-align:left;"><strong>INCOME</strong></th><td></td><td></td><td></td><td></td></tr><tr><th scope="row" style="text-align:left;">Commissions earned on . .</th><td></td><td></td><td></td><td></td></tr><tr><th scope="row" style="text-align:left;">L & H Income . . . . . . . . .</th><td style="text-align:right;">$ 1,727.78</td><td style="text-align:right;">$ 8,722.18</td><td style="text-align:right;">$ 4,918.58</td><td style="text-align:right;">$ 9,764.58</td></tr><tr><th scope="row" style="text-align:left;">G B Shaw and other royalties</th><td style="text-align:right;">2,696.58</td><td style="text-align:right;">1,076.15</td><td style="text-align:right;">1,862.99</td><td style="text-align:right;">2,015.32</td></tr><tr><th scope="row" style="text-align:left;">Subscription income (Net). .</th><td style="text-align:right;">4,095.61</td><td style="text-align:right;">10,685.59</td><td style="text-align:right;">8,552.15</td><td style="text-align:right;">7,739.57</td></tr><tr><th scope="row" style="text-align:left;">"Matchmaker" income received</th><td style="text-align:right;">15,225.00</td><td style="text-align:right;">9,187.50</td><td></td><td></td></tr><tr><th scope="row" style="text-align:left;">"Tunnel of Love" income<br>received . . . . . . . . . . .</th><td style="text-align:right;">10,200.00</td><td></td><td></td><td></td></tr><tr><th scope="row" style="text-align:left;">Interest income. . . . . . . .</th><td style="text-align:right;">1,359.00</td><td></td><td></td><td></td></tr><tr><th scope="row" style="text-align:left;">Building income. . . . . . .</th><td style="text-align:right;">833.92</td><td></td><td></td><td></td></tr><tr><th scope="row" style="text-align:left;">Miscellaneous income . . . .</th><td style="text-align:right;">42.19</td><td style="text-align:right;">20.91</td><td style="text-align:right;">366.56</td><td style="text-align:right;">1,432.76</td></tr><tr><th scope="row" style="text-align:left;"><strong>TOTAL INCOME (EXCLUDING TV). .</strong></th><td style="text-align:right;"><strong>$ 36,180.08</strong></td><td style="text-align:right;"><strong>$ 29,692.33</strong></td><td style="text-align:right;"><strong>$ 15,700.28</strong></td><td style="text-align:right;"><strong>$ 20,952.23</strong></td></tr><tr><th scope="row" style="text-align:left;"><strong>EXPENSES</strong></th><td></td><td></td><td></td><td></td></tr><tr><th scope="row" style="text-align:left;">Building expenses . . . . . .</th><td style="text-align:right;">$</td><td style="text-align:right;">$ 6,726.22</td><td style="text-align:right;">$ 6,022.72</td><td style="text-align:right;">$ 27,362.39</td></tr><tr><th scope="row" style="text-align:left;">Office expenses . . . . . . .</th><td style="text-align:right;">36,915.39</td><td style="text-align:right;">28,336.56</td><td style="text-align:right;">33,691.73</td><td style="text-align:right;">313.08</td></tr><tr><th scope="row" style="text-align:left;">Loss on abandoned productions</th><td style="text-align:right;">768.72</td><td style="text-align:right;">6,616.14</td><td style="text-align:right;">1,525.31</td><td style="text-align:right;">7,619.31</td></tr><tr><th scope="row" style="text-align:left;">Loss on play investments . .</th><td style="text-align:right;">6,616.75</td><td style="text-align:right;">15,191.07</td><td style="text-align:right;">1,157.11</td><td style="text-align:right;">550.00</td></tr><tr><th scope="row" style="text-align:left;">Other . . . . . . . . . . . . .</th><td style="text-align:right;">1,351.52</td><td style="text-align:right;">1,320.64</td><td style="text-align:right;">1,157.11</td><td style="text-align:right;">550.00</td></tr><tr><th scope="row" style="text-align:left;"><strong>TOTAL EXPENSES (EXCLUDING TV).</strong></th><td style="text-align:right;"><strong>$ 45,652.38</strong></td><td style="text-align:right;"><strong>$ 58,190.63</strong></td><td style="text-align:right;"><strong>$ 42,396.87</strong></td><td style="text-align:right;"><strong>$ 35,844.78</strong></td></tr><tr><th scope="row" style="text-align:left;"><strong>NET LOSS (EXCLUDING TV). . .</strong></th><td style="text-align:right;"><strong>$ 9,472.36</strong></td><td style="text-align:right;"><strong>$ 28,498.30</strong></td><td style="text-align:right;"><strong>$ 26,696.59</strong></td><td style="text-align:right;"><strong>$ 14,892.55</strong></td></tr><tr><th scope="row" style="text-align:left;"><strong>TV NET INCOME</strong></th><td></td><td></td><td></td><td></td></tr><tr><th scope="row" style="text-align:left;">Play productions . . . . . .</th><td style="text-align:right;">$ 80,997.56</td><td style="text-align:right;">$112,850.55</td><td style="text-align:right;">$ 93,132.34</td><td style="text-align:right;">$ 48,086.49</td></tr><tr><th scope="row" style="text-align:left;">Consultation . . . . . . . .</th><td style="text-align:right;">37,947.61</td><td style="text-align:right;">29,957.02</td><td style="text-align:right;">31,592.37</td><td style="text-align:right;">—</td></tr><tr><th scope="row" style="text-align:left;"><strong>TOTAL TV NET INCOME. . . .</strong></th><td style="text-align:right;"><strong>$118,945.17</strong></td><td style="text-align:right;"><strong>$142,807.57</strong></td><td style="text-align:right;"><strong>$124,724.71</strong></td><td style="text-align:right;"><strong>$ 48,086.49</strong></td></tr><tr><th scope="row" style="text-align:left;">Deduct Managing director's<br>share . . . . . . . . . . . .</th><td style="text-align:right;">36,806.66</td><td style="text-align:right;">32,866.89</td><td style="text-align:right;">31,181.18</td><td style="text-align:right;">12,021.62</td></tr><tr><th scope="row" style="text-align:left;"><strong>NET TV. INCOME TO GUILD . .</strong></th><td style="text-align:right;"><strong>$ 82,138.51</strong></td><td style="text-align:right;"><strong>$109,940.68</strong></td><td style="text-align:right;"><strong>$ 93,543.53</strong></td><td style="text-align:right;"><strong>$ 36,064.87</strong></td></tr><tr><th scope="row" style="text-align:left;"><strong>TOTAL NET INCOME (INCLUDING TV)</strong></th><td style="text-align:right;"><strong>$ 72,666.21</strong></td><td style="text-align:right;"><strong>$ 81,442.38</strong></td><td style="text-align:right;"><strong>$ 66,846.94</strong></td><td style="text-align:right;"><strong>$ 21,172.32</strong></td></tr></tbody></table>

During the year ended May 31, 1957 as a result of the sale of the Guild's leased premises to the Museum of Modern Art, rent for only one month was paid, whereas in prior years a full years rent was paid.

EXPLANATIONS OF THE THEATRE GUILD INCOME & EXPENSES

1953-54
The T.V. income for this fiscal year is for only 16 shows, as the first show was done Oct. 27, 1953.

The income for commissions represents the 15% commission paid to The Theatre Guild for handling the monies received for L & H Company. This applies to the commission income for each of the subsequent fiscal years.

The income from royalties is the commission received for handling the Bernard Shaw leasings. This applies to the royalty income for each of the subsequent years.

The net Building and Overhead expenses of $27,543.39 is arrived at by taking the gross expenses for the year and deducting the office charges made to shows, the share of overhead charged to T.V. and rent charged to tenants of the building. In subsequent fiscal years shown on the schedule, whenever net expenses are mentioned, it means after income has been deducted from the gross expenses.

Taxes usually mean the N.Y. State Unincorporated Business tax, and depreciation is the depreciation onfurniture and fixtures.

1954-55
The T.V. income for this year was for the full 26 shows done for Steel and also for 30 weeks of the Consultation program with ABC for $1500 per week.

The abandoned plays under the expenses means the costs for future productions that never materialized.

1955-56
T.V. income was for 26 shows and consultation fees for 40 weeks. Everything else is the same as previously explained.

1956-57
T.V. income was for 26 shows and consultation fees for 34 weeks. This year there was a net profit on the building expenses, as the tenants paid more than the building actually cost due to the fact that The Theatre Guild was not paying rent on the old building after it was sold to the Museum until the time that we moved.

I might add that the income from N.Y. Subscription department varies from year to year due to the fact that the first two fiscal years the pension fund was not charged to this department, and the last three fiscal years we did. Also, the income in 1956-57 was lower than usual, as they only gave five plays to the subscribers that year.

Margaret Becher

| Description | Amount |
| :--- | ---: |
| "Matchmaker" Income | 15,225.00 |
| "Tunnel of Love" Income | 10,200.00 |
| Profit on Bldg. | 833.92 |
| Commissions, royalties, etc. | 5,825.55 |
| | 118,318.59 |

**EXPENSES**

| Description | Amount |
| :--- | ---: |
| Net Overhead | 36,915.39 |
| Loss on "Restless Heart" | 6,616.75 |
| Other (abandoned plays, taxes, depreciation) | 3,353.47 |
| | 46,885.61 |

---
**PROFIT FOR 1956-57** **$71,432.98**

1953-54

1954-55

1955-56

1956-57

T.V. income was for 26 shows and consultation fees for 34 weeks.

Margaret Becher

<table><tbody><tr><td>T.V. (Steel & Consultation)</td><td style="text-align: right;">$2,957.72</td></tr><tr><td>N.Y. Subscription</td><td style="text-align: right;">4,095.61</td></tr><tr><td>"Matchmaker" Income</td><td style="text-align: right;">15,225.00</td></tr><tr><td>"Tunnel of Love" Income</td><td style="text-align: right;">10,200.00</td></tr><tr><td>Profit on Bldg.</td><td style="text-align: right;">833.92</td></tr><tr><td>Commissions, royalties, etc.</td><td style="text-align: right; border-top: 1px solid black;">5,825.55</td></tr><tr><td></td><td style="text-align: right;">118,318.59</td></tr><tr><td colspan="2" style="font-weight: bold; padding-top: 1em;">EXPENSES</td></tr><tr><td>Net Overhead</td><td style="text-align: right;">36,915.39</td></tr><tr><td>Loss on "Restless Heart"</td><td style="text-align: right;">6,616.75</td></tr><tr><td>Other (abandoned plays, taxes, depreciation)</td><td style="text-align: right; border-top: 1px solid black;">3,353.47</td></tr><tr><td style="font-weight: bold;">PROFIT FOR 1956-57</td><td style="text-align: right; font-weight: bold; border-top: 1px solid black; border-bottom: 3px double black;">$71,432.98</td></tr></tbody></table>