EXHIBIT 10.4
PROPOSED FORM OF VIDEO ONE CANADA LTD. BUSINESS AGREEMENT
WITH LANGARA DISTRIBUTION
VIDEO ONE CANADA LTD.
BUSINESS AGREEMENT WITH LANGARA DISTRIBUTION
The purpose of this agreement is to document the terms and conditions of sale of
prerecorded videocassettes, DVD and accessories between Video One Canada Ltd.
(Video One) and Langara Distribution (Langara). Both parties indicate their
acceptance of these terms by signing where indicated. This agreement is
effective June 26, 2001 to June 26, 2002. This agreement will be renewed
automatically for another year upon expiry unless either party with written
notification terminates it 60 days prior to expiration date. Either Video One or
Langara Distribution can terminate this agreement at any time, during the
initial and/or renewal period, with 90 days written notification.
This agreement constitutes the entire agreement between Video One and Langara
Distribution with respect to the matters provided herein. The parties hereto
acknowledge that there is no representation, warranty, undertaking, agreement or
understanding between them other than as expressed herein. The terms and
conditions of this agreement supersede all previous proposals, quotations,
negotiations and other communications between the parties whether written or
oral.
PAYMENT TERMS
o Payments are due * for all purchases. No unauthorized deductions are
allowed. Any unauthorized deductions not resolved or explained within 30
days may cause the account to be put on hold.
o A credit limit of * has been established.
PRICING
o New Release VHS/DVD - *
o Catalogue VHS/DVD - *
o Games - *
o Langara Distribution will be entitled to the benefit of CLOSEST PACK PRICING
on orders placed by pre-order date. Pack pricing will not be extended to
"Mixed" pack configurations however. Mixed packs are defined as packs
containing more than one title. Cancellations of pack items after pre-order
date are not allowed.
o Video One can provide Langara with competitive pricing on accessories.
o A consolidated invoice will be generated for all catalogue products daily to
minimize the number of invoices.
COOP/MDF
o Coop / MDF funds will be accrued title specifically and will be handled on a
program-by-program basis. Coop is paid based on proof of advertising
performance being provided to Video One by Langara Distribution no later
than 30 days from ad date.
o Coop monies offered to Langara are the property of our supplying studios and
as such, are subject to their published Terms and Conditions. Failure to
abide by studio coop guidelines will result in the rejection of our coop
submission. This, in turn, will result in a rejection of payment to Langara
Distribution of that coop. To ensure ad compliance, Video One must obtain
studio approval of all ads prior to ad date on Langara's behalf.
*Confidential information omitted and filed separately with the Securities and
Exchange Commission
o Coop/MDF monies will be paid to Langara when Video One receives the proof of
performance, provided all advertisements/promotions were pre-approved by
Video One.
PRODUCT DELIVERY
o New Release product - Will be available for pick up on Wednesday afternoon.
o Catalogue product - in stock product from Calgary branch where orders are
received by 10:00 am will be ready for pick-up by 4:00pm daily. We request
that you provide and identify a separate P.O. for customer orders, and one
for stock replenishment.
o Freight charges for products sourced from branches other than Calgary will
be the responsibility of Langara Distribution.
INVENTORY
o Video One Calgary will set a min/max inventory value on Langara's
requirements based on information they provide. Titles on this list will
remain on min/max for a period of 6 months. At that time, the purchasing
system will review and reconfigure these requirements based on actual
purchase history.
o Langara will assist in creating New Release forecasts by pre-order date in
order to minimize out of stock situations due to late orders.
DEFECTIVES
o RA's for defective product will be issued up to 30 days from street date.
Credits will be issued only if the product is not in stock; otherwise the
product will be replaced. Replacement copies of VHS, DVD and Accessories
will be supplied by the best economical means. Freight charges for defective
returns to Video One are the responsibility of Langara and should be
returned by the best economical means.
RETURNS
o All catalogue products are 100% guaranteed within 6 months of date of
purchase. Return privileges on Major New Release titles will be determined
by the studio published return policy and/or any product defined as
non-returnable by the studios. Credits will be issued at the current value
of the product being returned. Only product purchased from Video One is
eligible for return.
o Cancellations/returns of new release product after pre-order date may be
subject to a 20% restocking fee.
o Discontinued or Moratorium titles will not be accepted for return after the
return date. Video One will forward discontinued and moratorium notices
upon notification from the studios.
RETURNS PROCESSING
To ensure that Langara receives credits for returns on a timely basis, the
following process will apply:
o Returns will be delivered prepaid by Langara to Video One. Langara retains
ownership of returns in transit to Video One.
o If product is returned after 90 days of Langara 's original invoice date,
the product may be subject to a reduced credit price of original purchase
per title based on studio product revaluation policy.
o Langara must request a return authorization number (R.A.#) for each box
prior to returning product.
o An R.A.# must be clearly marked on each box.
o All R.A.#'s must be written on the waybill for tracking and proof of
delivery purpose.
o Return quantity and pricing is subject to verification by Video One.
o Damaged / Defective returns must be requested separately from other product
and clearly identified as damaged / defective.
GENERAL
o Langara Distribution is deemed to have accepted the invoices at face value
unless a written objection is submitted to Video One's credit department
within 30 days of invoice date.
o Langara Distribution agrees to pay in accordance with the terms of this
agreement and that Langara Distribution shall not be entitled to defer any
payment by reason of any claim for set off.
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Michael Glossop Mike Duszynski
Director, Alberta Region President
Video One Canada Ltd. Langara Distribution
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Date Date
*Confidential information omitted and filed separately with the Securities and
Exchange Commission