EXHIBIT 10.4


 


PRODUCTION SERVICES AGREEMENT


 


This Agreement (the “Agreement”) dated as of September
23, 2004 between Coming Home Studios, LLC, a limited liability company
organized under the laws of the State of California, whose address is at 6161
Santa Monica Boulevard, Suite 100, Los Angeles, California 90028
(“Contractor”), on the one hand; and CHS/SRS, LLC, a limited liability company
organized under the laws of the State of California, whose address is at 6161
Santa Monica Boulevard, Suite 100, Los Angeles, California 90028 (the
“Company”) on the other hand, is made with reference to the following:


 


A.                                   The
Company wishes to provide $1,800,000 (the “Funding Amount”) to finance the
Completion (as defined below) and distribution of the following concert videos
(the “Concert Videos”) under the respective artist agreements set forth on
Exhibit A hereto (the “Artist Agreements”):


 


	
  Duran Duran

  
	
  Boz Scaggs—Jazz

  
	
  Boz Scaggs—Greatest Hits  

  
	
  Godsmack

  
	
  All Access

  



 


B.                                     The
Company desires to engage Contractor to produce the Concert Videos.


 


In consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:


 


1.                                       Services.


 


A.                                   Subject
to the terms and conditions set forth herein, the Company engages Contractor,
and Contractor accepts such engagement on an independent contractor basis, to
perform all production services and provide all other services, personnel,
materials and elements requested by the Company or otherwise necessary,
desirable or appropriate for the production, completion and delivery to the
Company of the Concert Videos (the “Services”), including, but not limited to,
(i) all equipment, stage/set construction material for the Concert Videos;
(ii) all transportation services or arrangements for the Concert Videos; (iii) ensuring
compliance with Artists Agreements; (iv) sound editing and mixing;
(v) music editing; (vi) rough cut and final edits of the Concert
Videos; (vii) coordinating all budgeting and accounting activities (and in
the event that the cost to complete the Concert Videos exceeds the Funding
Amount, any such excess costs shall be paid by Contractor or by additional
funding contributed by the Company in accordance with the Company’s Operating
Agreement); (vii) coordinating the hiring of all above-the-line and
below-the-line personnel; (ix) coordinating all pre-production, production
and post-production schedules subject to the Company’s prior written approval;
(x) obtaining all necessary and customary legal clearances;
(xi) ensuring compliance with all applicable laws and governmental
regulations and guild agreements, if any; (xii) obtaining all
production-related 


 

















 


agreements prepared by
Contractor’s business and legal affairs personnel; (xiii) providing
written reports (including cost, schedule and progress reports) to the Company
as to all development, pre-production, production, and post-production
activities; and (xiv) any other services necessary to produce, Complete
and deliver ready for exhibition and/or exploitation the Concert Videos.  The Concert Videos will consist of footage
from live concert performances by the artists as set forth in each respective
Artist Agreement.  The Concert Videos
will be comprised of music performances totaling not less than 90 minutes for
exploitation in domestic and foreign television markets, not less than 60
minutes for an alternate television version, and not less than 120 minutes for
exploitation in domestic and foreign home video markets (including, but not
limited to, VHS and DVD). The Company at any time may inspect and/or cause to
be inspected the production of the Concert Videos and the performance of the
Services, and the Company may make objections thereto to Contractor, which
Contractor agrees to promptly correct.


 


B.                                     Contractor
agrees that all contracts and agreements with persons or entities rendering
services, furnishing facilities, equipment or other material or granting rights
in connection with such production, completion and delivery shall be entered
into in Contractor’s name, shall be fully assignable to the Company and shall
contain the terms and conditions customary in the United States  entertainment industry for the applicable
type of services, material or rights being rendered, furnished or granted. It is
expressly understood that all rights and benefits flowing to Contractor under
each such contract and agreement shall inure to the benefit of the Company and
shall be deemed, and hereby are, irrevocably assigned to the Company throughout
the universe in perpetuity concurrently with the effectiveness of such contract
or agreement.  Notwithstanding anything
herein to the contrary, all copyrights to the Concert Videos shall be co-owned
by Contractor and the artists under the respective Artist Agreements, provided,
however, that all proceeds received by the Contractor in respect of its
ownership interest in the copyrights shall be contributed by the Contractor to
the Company in accordance with the Operating Agreement of the Company.


 


C.                                     Contractor
hereby agrees that Contractor has entered into or will enter into valid and
binding written agreements with all persons or entities rendering services in
connection with the Concert Videos which shall provide, among other things, a
representation and warranty from every person and entity who contributes to the
creation of the Concert Videos, whether under employment or engagement to
Contractor by formal agreement or otherwise (each, a “Contributor”), that the
results and proceeds of all the Contributor’s services shall be a
“work-made-for-hire” within the meaning of the U.S. Copyright laws (and to the
extent any such results and proceeds are not deemed a “work-made-for-hire”, all
rights in such results and proceeds shall be automatically and irrevocably
assigned to Contractor throughout the universe in perpetuity), that the
Contributor waives all moral rights in connection with the Concert Videos
together with any other rights which are not capable of assignment, that the
Contributor agrees not to make unauthorized disclosure or use of the Company’s
proprietary information, that the Contributor agrees to execute any further
documentation relating to such transfer or waiver or relating to the results
and proceeds of Contributor’s services at the request of Contractor, failing
which Contractor, or the Company as Contractor’s attorney-in-fact, is
authorized to execute same as Contributor’s attorney-in-fact, and that the
Contributor will look solely to Contractor for payment of compensation for all
services in connection with the Concert Videos. Contractor hereby agrees to
make or cause to be made when due all payments which may be required to be 


 


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remitted to persons or
entities rendering services or furnishing equipment, facilities, rights or
other material to Contractor in connection with the Concert Videos and to make
such deductions and withholdings from and payments on account of such sums,
including, without limitation, all payments of taxes and other contributions
which have arisen or may arise out of the services to be rendered or the
equipment, facilities, rights or other material to be furnished by any
Contributor in connection with the Concert Videos as are required or permitted
to be deducted and withheld from or paid on account of sums paid to the Contributor
under the provisions of applicable laws or regulations or applicable union or
guild agreements, if any.


 


D.                                    Contractor
shall keep and maintain books and records with respect to the production of the
Concert Videos which books and records any member of the Company or its
designee shall have access to at all times reasonably required by any member of
the Company and which shall be subject to audit and inspection by the Company
or its designee at any time. Said books and records, along with vouchers, receipts
and other documents and information reflecting all receipts by Contractor and
all expenses and charges incurred by Contractor in connection with the
production of the Concert Videos, shall be the sole property of the Company.


 


2.                                       Start
Date.  Contractor’s engagement
hereunder shall commence on or about the date hereof.


 


3.                                       Delivery.  Contractor agrees to deliver for
distribution Complete Concert Videos in accordance with the delivery schedule
set forth as Exhibit “B”, which is attached hereto and incorporated herein by
this reference.  “Complete” or
“Completion” shall mean, with respect to any Convert Video, delivery by
Contractor of an authored DVD master of the Concert Video ready for replication
and distribution, including without limitation video, sound track, graphics,
packaging (including approved Coming Home Studios LLC and SRS Labs, Inc. ad
slicks and promotional materials), artwork and screen capture, as applicable,
in accordance with standard industry practices.  Contractor acknowledges that time is of the essence.


 


4.                                       (a)  Compensation & Expenses.  As complete consideration for all of
Contractor’s services hereunder and for all rights granted and to be granted
hereunder by Contractor, provided Contractor is not in breach or default
hereof, Contractor shall be entitled to receive the following production fees:


 


	
  Concert Video

  	
   

  	
  Production
  Fee

  	
   

  
	
  Duran Duran

  	
   

  	
  $

  	
  200,000

  	
   

  
	
  Godsmack

  	
   

  	
  $

  	
  75,000

  	
   

  
	
  Boz Scaggs

  	
   

  	
  $

  	
  90,000 

  	
  (aggregate, Jazz and Greatest Hits)

  
	
  All Access

  	
   

  	
  $

  	
  —

  	
   

  
	
  Total

  	
   

  	
  $

  	
  365,000

  	
   

  



 


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(b)  Allocation of Funding Amount; Costs and
Expenses.  The Contractor and the
Company agree that the Funding Amount shall be allocated for accounting
purposes among the Concert Videos as follows:


 


	
  Concert Video

  	
   

  	
  Funding
  Amount

  	
   

  
	
  Duran Duran

  	
   

  	
  $

  	
  860,000

  	
   

  
	
  Godsmack

  	
   

  	
  $

  	
  340,000

  	
   

  
	
  Boz Scaggs Jazz

  	
   

  	
  $

  	
  175,000

  	
   

  
	
  Boz Scaggs Greatest
  Hits

  	
   

  	
  $

  	
  175,000

  	
   

  
	
  All Access

  	
   

  	
  $

  	
  250,000

  	
   

  
	
  Total

  	
   

  	
  $

  	
  1,800,000

  	
   

  



 


Contractor shall
be responsible for the payment of all costs and expenses in connection with the
production of the Concert Videos, and the completion and delivery of the
elements and materials in connection therewith, including, but not limited to,
all fees, compensation, and expenses due in connection with the services of all
above-the-line and below-the-line personnel engaged or employed in connection
with the Concert Videos, and obtaining all underlying rights, licenses,
clearances or permissions, including licenses for music synchronization, music
performance and literary and other material (except as otherwise owned or
controlled by the Company). 
Notwithstanding the foregoing, in the event that the actual cost to
produce the Concert Videos exceeds the Funding Amount, Contractor shall be
responsible for all overages unless such overages are funded by additional
funding from the Company in accordance with the Company’s Operating
Agreement.  All profits, losses and cash
distributions in respect of the Concert Videos are to be allocated pursuant to
the terms of the Company Operating Agreement


 


5.                                       Tax
Treatment.  In the event it is
determined by the Company, in its sole discretion, to elect to create a
structure in order to qualify for favorable tax treatment, tax relief and/or
tax shelter arrangements in connection with the Concert Videos, Contractor
hereby agrees to fully cooperate in connection therewith, including such
efforts as may be required in contracting with third parties in order to
facilitate the aforementioned purposes. It is expressly understood and agreed
that any and all tax relief or benefits relating hereto shall accrue and be
payable solely to the Company. The terms of any such election will be set
forth, if at all, in an amendment to this Agreement or in any “long form”
formal agreement that may be entered into by the parties hereto in connection
with the subject matter hereof.


 


6.                                       Subcontractors.  All work performed by such key
subcontractor(s) shall be warranted to the same extent as that performed by
Contractor, and Contractor shall remain responsible for the actions of such
third parties.


 


7.                                       Key
Personnel.  Contractor warrants and
represents that Daniel E. Catullo, III shall be available on a non-exclusive,
but first-priority basis to perform producer services on, and oversee
production of, the Concert Videos; and has or will have a valid employment
agreement with Contractor, and will continue his employment with Contractor
until delivery of all Concert Videos under this Agreement.


 


8.                                       Independent
Contractor.  It is understood and
agreed that Contractor is acting as an independent contractor in the
performance of the services hereunder, and nothing herein contained shall be
deemed to create an agency relationship between Contractor and the Company.
Contractor shall in no event be entitled to participate in, or to receive any
benefits 


 


4

















 


from, any of the
Company’s benefit or welfare plans, specifically including, but not limited to,
coverage under the Company’s workers’ compensation program. the Company shall have
no obligation whatsoever to compensate Contractor on account of any damages or
injuries which Contractor may sustain as a result or in the course of the
performance of Contractor’s services hereunder. Contractor shall be solely
responsible for the payment of all Federal and state income taxes, social
security taxes, Federal and state unemployment insurance and similar taxes and
all other assessments, taxes, contributions or sums payable with respect to the
Contractor and/or Contractor’s employees and Subcontractors as a result of or
in connection with the services performed by Contractor hereunder and
Contractor shall file all returns and reports with respect to any of the
foregoing. The exercise by the Company of its rights of direction, control and
approval under this Agreement shall not operate to relieve Contractor of its
obligations; nor shall it create any agency, employment or partnership between
Contractor and the Company; nor shall it render the Company to be the employer
or supervisor of Contractor or any of its employees nor shall it create any
liability on the part of the Company as such.


 


9.                                       Representations &
Warranties.


 


A.                                   Contractor
represents and warrants that: (i) Contractor is a duly organized and
existing limited liability company and is presently in good standing under the
laws of the state, province and/or country of its organization; (ii) the
consent of no other person or entity is necessary for Contractor to enter into
and fully perform this Agreement and Contractor has not done and will not do
any act and has not made and will not make any grant, assignment or agreement
which will or might conflict or interfere with the complete enjoyment of all of
the Company’s rights hereunder; (iii) the Concert Videos shall be of
first-class quality and shall have at least the same production standards as
works produced by first-class producers of feature length motion pictures for
home video distribution and network television broadcast; (iv) all
material composed or created by Contractor hereunder shall be original with
Contractor and shall not infringe upon or violate the privacy of, or constitute
a libel or slander against, or violate any common law statutory right or any
other right of any person, firm, or corporation; and (v) none of the rights
herein granted or agreed to be granted to or vested in the Company has been
transferred to any third party and all said rights are free of any liens,
claims and encumbrances whatsoever in favor of any third party.  None of said rights or any right to exercise
the same has been in any way limited, diminished or impaired, there being no
claims, litigation or other proceedings pending or threatened adversely
affecting the Company’s rights hereunder.


 


B.                                     The
Company represents and warrants that: (i) the Company is a duly organized
and existing limited liability company and is presently in good standing under
the laws of the state, province and/or country of its incorporation;
(ii) the consent of no other person or entity is necessary for the Company
to enter into and fully perform this Agreement; (iii) all material
provided by the Company to Contractor shall be original with the Company and/or
owned and controlled by the Company, and shall not infringe upon or violate the
privacy of, or constitute a libel or slander against, or violate any common law
statutory right or any other right of any person, firm, or corporation.


 


5

















 


10.                                 Indemnification.


 


A.                                   Contractor
shall defend, hold harmless and indemnify the Company and its subsidiaries, its
Members, related and affiliated companies, assignees and licensees, and the
officers, directors, employees and agents of each of the foregoing and hold it
and them harmless from and against any and all claims, demands, causes of action,
losses, liabilities and expenses (including, without limitation, attorneys’
fees) in connection with any third party claim or action arising out of the
breach of any of Contractor’s representations, warranties or agreements herein.


 


B.                                     The
Company shall defend, hold harmless and indemnify Contractor and its
subsidiaries, related and affiliated companies and the officers, directors,
employees and agents of each and to hold it and them harmless from and against
any and all claims, demands, causes of action, losses, liabilities and expenses
(including, without limitation, attorneys’ fees) in connection with any third
party claim or action arising out the breach of any of the Company’s
representations, warranties or agreements herein, excluding such matters as are
covered by Contractor’s indemnification of the Company hereunder or which
result from Contractor’s tortious conduct.


 


11.                                 Insurance.  Contractor shall, at Contractor’s cost and
expense, procure and maintain in full force and effect at all times during
production of the Concert Videos a comprehensive general liability policy
(including, but not limited to, providing coverage for loss or damage to the
delivery materials and other production elements), worker’s compensation and
event cancellation, errors and omissions and such other insurance policies as
are customarily required by the Company. Contractor shall deliver to the
Company upon execution of this Agreement evidence satisfactory to the Company
of such insurance coverage in the form of valid insurance certificates listing
the Company as a named additional insured. The foregoing policies must cover
claims, regardless of when raised, based on occurrences relating in any way to
the Services and/or the Concert Videos and shall include a provision requiring
the insurer to give the Company prompt written notice, not exceeding
thirty (30) days, of any cancellation or modification. The errors and
omissions policy must remain in full force and effect for a period of
seven (7) years from the date of completion of the Concert Videos.
Contractor shall promptly replace any insurance which has been cancelled or
modified.


 


12.                                 Publicity.  No publicity or public announcements by
Contractor regarding the business relationship set forth herein shall be made
without prior written consent of the Company, provided, however that nothing
herein shall prohibit any member of the Company from making any disclosure
regarding this Agreement or the business relationship set forth herein which
may be required under applicable law, as determined in the sole discretion of
such member.


 


13.                                 No
Obligation.  The Company shall not
be obligated exhibit, distribute, transmit, advertise, exploit or otherwise
make use of the Concert Videos or any of the Results and Proceeds created by or
worked upon by Contractor.


 


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14.                                 Termination.


 


A.                                   The
Company may, by written notice to Contractor, terminate this Agreement if
Contractor is in material breach of any term, condition or provision of this
Agreement, which breach is not cured within five (5) days after
receiving written notice of such breach, if curable; provided that if
Contractor has previously been notified of a curable material breach of this
Agreement, and has cured such breach, Contractor shall not be entitled to any
additional opportunity to cure such, or subsequently similar, breaches of this
Agreement. (For purposes of clarification, in the event Contractor fails to
timely deliver materials, is provided written notice from the Company of a
breach, cures, and then subsequently fails again to timely deliver materials,
Contractor shall not be entitled to cure such subsequent breach.)


 


B.                                     The
Company reserves its right to terminate this Agreement without any further
obligation to Contractor if the development or production of the Concert Videos
is terminated. In the event the development or production of the Concert Videos
is terminated at the Company’s election, and not as a result of a breach by
Contractor, the Company shall pay Contractor all non-cancelable, fully burdened
and accrued payments through the date of such termination within
thirty (30) business days of terminating this Agreement.


 


15.                                 Remedies.  In the event of any breach of this Agreement
by the Company, Contractor’s rights shall be limited to the right, if any, to
seek money damages in an action at law. The Company waives any right to rescind
the rights granted to the Company hereunder (all of which rights shall
immediately and fully vest with the Company) and waives any right to enjoin the
development, production, promotion, distribution or other exploitation of the
Concert Videos (or any part thereof). Contractor hereby agrees that the Company
shall be entitled to seek injunctive and other equitable relief to restrain, enjoin
or prevent the breach of any obligation herein by Contractor, in addition to
any other rights which the Company may have; however, pursuit by the Company of
one remedy shall not be construed as a waiver of any other remedy. The failure
or delay of the Company to enforce any of its rights hereunder shall not be
deemed a waiver of any kind.


 


16.                                 Assignment.  This Agreement shall not be assigned by
Contractor or modified except by mutual written agreement between Contractor
and the Company. In addition, the Company shall have the right to assign this
Agreement (or any of its rights hereunder) to any person, firm or corporation.
The Company shall be released and discharged from the obligations so assumed if
such person, firm or corporation is financially responsible and assumes in
writing the obligations of the Company hereunder.


 


17.                                 Attorneys’
Fees.  If any legal action arises
under this Agreement or by reason of any asserted breach of it, the prevailing
party shall be entitled to recover all costs and expenses, including all
reasonable attorneys’ fees, incurred in enforcing or attempting to enforce any
of the terms, covenants or conditions, and all of the costs and expenses,
including, reasonable attorneys’ fees, incurred in any appeal from an action
brought to enforce any of the terms, covenants or conditions hereof.


 


18.                                 Governing
Law; Venue; Jurisdiction.  This
Agreement shall be governed by and construed in accordance with the laws of the
United States and the State of California, without 


 


7

















 


regard to conflict of law
principles. Contractor agrees that any suit, action or proceeding arising out
of or relating to this Agreement or any of the transactions contemplated herein
(including without limitation, tort claims) shall be instituted and prosecuted
under the exclusive jurisdiction of any state or Federal court empowered to
enforce this Agreement located in Los Angeles County, California and waives any
objection thereto on the basis of personal jurisdiction or venue. However, the
Company may, in its sole and exclusive discretion, exercise the option to
initiate (or to dismiss its suit, action or proceeding in California and then
initiate) any such suit, action or proceeding in any court of competent jurisdiction
in any territory in which Contractor is present or conducts business or other
activities. In any suit, action or proceeding initiated in any state or Federal
court in California, Contractor irrevocably submits to the jurisdiction and
venue of all state and Federal courts of California and waives any and all
objection to such jurisdiction that Contractor 
may have under the laws of the State of California or the United States
and also waives any right to challenge the convenience of California as an appropriate
forum.


 


19.                                 Severability.  If any provision of this Agreement shall for
any reason be declared by a court of competent jurisdiction to be invalid,
illegal, unenforceable, inoperative or otherwise ineffective, that provision
shall be limited or eliminated to the minimum extent necessary so that this
Agreement shall otherwise remain in full force and effect and enforceable.


 


20.                                 Paragraph
Headings.  Paragraph headings are
for ease of reference only and shall not have any effect upon the construction
of this Agreement or any of the terms or provisions hereof.


 


21.                                 More
Formal Agreement.  The parties
hereto may enter into a more formal agreement containing the foregoing and such
other standard terms and conditions customarily included in the Company’s
agreements of this type (including, but not limited to, force majeure,
termination, insurance, security interests, incapacity and default,
confidentiality, name and likeness/publicity, notices, etc.) which are
incorporated herein by this reference. However, until such time as said more
formal agreement is executed by the parties hereto, if ever, this Agreement
shall constitute the sole and complete and binding agreement between the
parties regarding the subject matter hereof.


 


22.                                 Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. One or more executed
counterparts of this Agreement may be delivered by facsimile, with the
intention that they shall have the same effect as an original executed
counterpart hereof.


 


[Signature Page Follows]


 


8

















 


[Signature Page to
Production Services Agreement]


 


IN WITNESS WHEREOF, Contractor and the Company have
duly executed this Agreement as of the date first written above.


 


	
  CHS/SRS, LLC

  	
  COMING HOME STUDIOS,
  LLC

  
	
  (the “Company”)

  	
  (“Contractor”)

  
	
   

  	
   

  
	
  By:

  	
  COMING HOME STUDIOS LLC

  	
   

  
	
   

  	
  Its:  Manager

  	
  /S/ DANIEL E. CATULLO
  III

  	
   

  
	
   

  	
  By:  DANIEL E. CATULLO III

  
	
   

  	
  Its:  Manager

  
	
  By:

  	
  /S/
  DANIEL E. CATULLO III

  	
   

  	
   

  
	
   

  	
  DANIEL E. CATULLO III

  	
   

  	
   

  
						



 


9

















 


EXHIBIT “A”


 


ARTIST
AGREEMENTS


 


1.               Artist
agreement between CHS and Duran Duran Ltd. dated March 1, 2004;


 


2.               Operating
agreement between CHS and Duran Duran L & I dated as of May 8, 2004              relating to DD/CHS,
LLC;


 


2.               Artist
agreement between CHS and Godsmack Partnership dated March 18, 2004;


 


3.               Artist
agreement between CHS and Gray Cat Records, Inc. dated as of April 11, 2003
executed August 18, 2003; and


 


5.               Unexecuted
Distribution Agreement between CHS and Ideal Entertainment dated May 21, 2004.


 

















 


EXHIBIT “B”


 


DELIVERY DATES


 




	
  Boz Scaggs—Greatest
  Hits

  	
   

  	
  August 3, 2004

  
	
  Godsmack

  	
   

  	
  September 13, 2004

  
	
  All Access

  	
   

  	
  October 2004

  
	
  Boz Scaggs—Jazz

  	
   

  	
  January 2005

  
	
  Duran Duran

  	
   

  	
  March 2005