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Sample Business Contracts

Proposal - Movie Gallery Inc. and Sight & Sound Distributors Inc.

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                         1997 Proposal for Movie Gallery

                                       From

                            Sight & Sound Distributors

                            ...Customized Fulfillment


Overview:

Since Sight & Sound and Movie  Gallery  formed  their  distribution  partnership
several years ago we have together enjoyed a unique business  relationship  that
has allowed for both of our companies to look forward to continued  efficiencies
as we grow together.  Sight & Sound has enjoyed the market share increases Movie
Gallery has provided us, and we, in turn, have  reciprocated by attempting to be
proactive  in our  approach to reducing  Movie  Gallery's  costs for service and
product.  We have resolved to create these efficiencies while never compromising
our service levels.

During this past year we brought  some  rather  radical  new  approaches  to the
partnership designed to serve both our companies equally. We trust they made you
more profitable. They remain an exclusive component of our business relationship
and  epitomize  our efforts this year at crafting  more winning ways we can both
benefit by doing business together.

This year we believe we have created an ever better plan for Movie Gallery...one
which takes into consideration  Movie Gallery's growth over the past year, Movie
Gallery's drive to reduce costs, and most  importantly,  one that is menu driven
so that Movie Gallery can enjoy the benefits of Sight & Sound's  ability to be a
low-cost provider while maintaining the highest levels of service.

We are  proposing a "fee based"  supply  program that gives Movie Gallery all of
the benefits of "owning" a  distribution  company  while  incurring  none of the
start-up costs of building such a supply vehicle.

As always,  we remain  committed to the  successful  completion  of all of Movie
Gallery's goals and greatly appreciate the opportunity to work together with you
in shaping the future of video retailing in the USA.

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<PAGE>



                             RENTAL PRODUCT PRICING

Current:  Cost plus [*] or an average of about [*] per unit.

Proposed:  Cost plus [*] per unit/tape.

We would  appreciate  every effort at submitting us the preorder for the month's
titles  no later  than  the  10th of the  month  prior,  so that we can  control
inventory costs on over/under ordering which occurs when we guestimate orders on
late preorders.

                                                   [*]

Current: [*]

[*]

[*].

Proposed: [*]

[*]

[*]

                        SELL-THROUGH EVENT TITLE ORDERING

("Event title" in this proposal now meaning any  sell-through in a shipper of at
least 24 units and 72 units or less). "Event" in prior contract meant theatrical
revenues of $10 million dollars or more.

Current:  Cost plus [*]

Proposed:  Cost plus [*]

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Returns [*]

[*]


                         SELL-THROUGH CATALOGUE PRICING

("Catalogue" now means in this proposal any sell-through title priced $29.99 and
below that is not in a prepack of 24 or more  units,  or is shipped in a prepack
of 24 or more units).

Current:  Cost plus [*]

Proposed:  Cost plus [*]

     *Sight & Sound  would be willing to carry extra stock held for MGA on their
Top 1000 etc. to better "guarantee" product availability.

                                  GAME PRICING

Current: Cost plus [*]

Proposed:         [*] cost plus [*]


                          ACCESSORY/PROCESSING CHARGES

Current: [*]

Proposed: [*]

See exhibit B.



                                       3
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                                     DATING

Current:  Net 60 days from invoice with payments to be made twice monthly.

Proposed:  Net [*] days from [*]

We strongly  propose the institution of EDI processes  between our two companies
which we believe would create money saving efficiencies for both parties.  Sight
& Sound is fully capable to go "on-line" with the process.

EDI will provide both our companies the following:

1.    Invoices:  Eliminate the need for MGA employees to keypunch invoices.
2.    Credits:  To speed MGA use and improve cash flow.
3.    Cash remittance:  Avoid unnecessary  reconciliation problems that result
      from misapplied payments.
4.    Orders:  Streamline the process, save time.


                                     FREIGHT

     Current:  Free freight on all new release shipments to be delivered one day
prior to street date based upon availability of product from manufacturer... [*]

     Proposed:  Free freight on [*]Special orders [*]

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                                RETURN ALLOWANCES

Current: Rental:..                                   [*]
         .........Event:                                      [*]
         .........Planogram:                                  [*]
         .........Other Sell-through:                         [*]
         .........Games:                             [*]

Proposed:.........Rental:                                     [*]
         .........Event:                                      [*]
         .........Non Event:                                  [*]
         .........Games:                             [*]


                                   ADVERTISING

Current:  Rental = [*]

[*]

[*]

Sell-through = [*]

Advertising Assistance: [*]

Advertising Credits:  Sight & Sound pays media directly within terms.

Proposed:  Rental = [*]

[*]

Sell-through = [*]

Advertising Assistance: [*]

*Option:  Sight & Sound will [*]
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Advertising Credits:  Sight & Sound pays media directly within terms.

*Option:  Sight & Sound will [*]


                                   DEFECTIVES

Current:  Return up to [*] days from street date for one to one exchange.  If no
exchange  product  exists at Sight & Sound,  Movie Gallery may take a credit for
the tape.

[*]

Sight & Sound  issues  a credit  memo for  exchange  of the  defective  in these
instances when no replacement tape is in stock.

Proposed:  Return  [*]. If no exchange  product  exists at Sight & Sound,  Movie
Gallery may take a credit for the tape.

Sight & Sound  issues  a credit  memo for  exchange  of the  defective  in these
instances when no replacement tape is in stock.

[*]


                              SALES REPRESENTATION

Current:Sight & Sound employs Gary Hay as the Account Manager for Movie Gallery.

Sight & Sound employs a fully loaded customer  service "Answer Center" for Movie
Gallery stores to call in orders,  order  defective  replacements,  check stock,
etc.  that is available  not only during  business  hours but also  evenings and
weekends.

Sight & Sound employs four dedicated Movie Gallery telemarketers whose job it is
to  proactively  call stores  probing  for  problems,  questions,  communication
disconnects  between our two companies  and the stores and MGA home office,  and
rectify any situations they can before any damage is done at the store level.

Proposed: Sight & Sound employs the one and only Gary Hay as the Account Manager
for Movie Gallery.

                                       6
<PAGE>



Sight & Sound employs a fully loaded customer  service "Answer Center" for Movie
Gallery stores to call in orders,  order  defective  replacements,  check stock,
etc.  that is available  not only during  business  hours but also  evenings and
weekends.

Sight & Sound employs four dedicated Movie Gallery telemarketers whose job it is
to  proactively  call stores  probing  for  problems,  questions,  communication
disconnects  between our two companies  and the stores and MGA home office,  and
rectify any situations they can before any damage is done at the store level.

Mike Grunwald will move to Dothan as primary on-sight sales rep. [*]

*Option:  Sight & Sound will [*]


                                    Prepacks

Current: .........[*]

Proposed:.........         [*]


                         Business Interruption Guarantee

Current:  Sight & Sound will credit  Movie  Gallery for rental lost due to S&S's
failure  to  deliver  product by street  date.  This does not include  delays in
shipments  caused by UPS,  RPS, or other  shippers who deliver  later than their
expected delivery date.

This also does not include  receiving  product late form video or game suppliers
or vendors.

Sight  & Sound  issues  a  credit  memo  for  Business  Interruption  Guarantees
fulfillment.

Proposed:  Sight & Sound will credit Movie Gallery for rentals lost due to S&S's
failure  to deliver  product by street  date.  This does not  include  delays in
shipment  caused by UPS,  RPS, or other  shippers  who deliver  later than their
expected delivery date.

This also does not include  receiving  product late from video or game suppliers
or vendors.

Sight  & Sound  issues  a  credit  memo  for  Business  Interruption  Guarantees
fulfillment.

                                       7
<PAGE>



                                     P.O.P.

Current: Sight & Sound delivers to the stores directly, during the first week of
the month, all posters in the Marquee kits.

Standees sent from shipping  warehouses  as available.  We encourage  studios to
ship direct on standees.

Proposed:  Sight & Sound delivers to the stores directly,  during the first week
of the month, all posters in the Marquee kits.

Standees sent from shipping  warehouses  as available.  We encourage  studios to
ship direct on standees.


                                       8
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*SPECIAL CONSIDERATION:

If MGA would elect to choose a [*] year contract with Sight & Sound, [*]

If Sight & Sound were unable to [*]












Revised 3/13/97


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The signatures below are  representation of a mutual agreement and acceptance of
the terms noted in this document  between Sight & Sound  Distributors,  Inc. and
Movie Gallery, Inc. This agreement shall be in effect until March 30, 1998.


/s/ J.T. Malugen                                         3-13-97
J.T. Malugen, C.E.O.                                      Date
Movie Gallery, Inc.

/s/ John Jump                                            3-13-97
John Jump                                                  Date
Sight & Sound Distributors, Inc.

                                       10
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                                    EXHIBIT B

                        MOVIE GALLERY PROCESSING CHARGES

                              Currently - Our Cost

MATERIALS

         MQL VVC 226F                                        [*]
         EKN Insert                                                   [*]
         West Label Tamper Seal                              [*]
         *Checkpoint Flap Security                           [*]
         Alpha Shrink Wrap                                   [*]
         Checkpoint Rewind Sticker                           [*]

         Total Cost Materials                                         [*]
         w/o Flap Security                                   [*]

         *Flap Security Strips are [*].

LABOR

         Unwrap Tape
         Foil Tamper Proof
         Rewind Sticker
         Flap
         Insert
         Shrink Wrap
         Tape in Case
         Band Cover Box & Tape

         Total Labor                                                  [*]



Our Cost Total Processing                                    [*]
         w/o Flap Security                                   [*]

         Current Charge             `                        [*]

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