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Summary of Proceedings

VSDA Board of Directors  Meeting

October 21, 2005 - Chicago, Illinois

The VSDA Board of Directors  discussed the following agenda topics and took the indicated actions at its October 21, 2005 meeting, held in Chicago, Illinois.

I.                  Ratification of Minutes

The Board unanimously  ratified the minutes from its July 25, 2005 meetings.

II.               Ratification of New Members

The Board voted  unanimously to accept 58 membership applications received between July 13 and October 6, 2005.

III.            Financial Report

Staff reported on the  preliminary financial results for the first nine months of 2005, noting that the Association's net income was better than budget for the period. The primary  drivers of the positive performance were interest income, joint venture income,  and various programmatic and administrative savings. It is estimated that the  Association will end the year approximately $100,000 better than budget.

IV.            2006 Budget

The Board approved the 2006 budget for the Association, which projects revenues of $2.9 million and  expenses of $2.5 million, resulting in proposed net income of $400,000 on an  accrual basis. Approximately 37% of projected expenses would be devoted to the Independent Dealers of Entertainment Association division, and 19% would be  dedicated to public affairs activities.

V.               HEE Issues

Staff reported that  attendance at VSDA's Home Entertainment 2005 increased substantially over the 2004 event and that 233 companies exhibited at or sponsored the show. As a result, the financial performance of the show was better than budget. Surveys of attendees and exhibitors were strongly positive, with significant percentages of each indicating an intent to attend the 2006 convention.

Staff informed the Board that 259 exhibitors have already contracted for the 2006 AVN Adult Entertainment Expo, to be held at the Sands Expo Center, January 5-8, an increase of 7% from the number of exhibitors signed at the same time last year. It was announced that, for the first time, the event would include an Opening Night Party and that eight seminars would be presented.

VI.            Independent Dealers of Entertainment Association

Jim Loperfido, Chair of the Independent Dealers of Entertainment Association (iDEA), and Frank  Lucca, Executive Director of iDEA, noted that iDEA membership had increased by  73% in 2005 and that the primary membership focus in 2006 would be membership  retention. They summarized recent activities of iDEA and the division’s plans for the coming year focused on membership retention.

VII.         Association Bylaws

The Board amended the  Association's Bylaws to make the Chair of iDEA a member ex officio of the VSDA Board of Directors; clarify that member companies are appointed to the  Board and the member company designates its representative on the Board; eliminate term limits for Directors (while retaining appointment terms of three  years or less); and change all references to "iGROUP" in the Bylaws to  "Independent Dealers of Entertainment Association" or "iDEA", as appropriate.

 VIII.      Retail Advisory Committee

 The Board reviewed the recent discussions between the Association's Retail Advisory Committee and motion picture studios, which  focused on high-definition DVD, windows, media misperceptions of the video  market, and marketing of DVD for both rental and sale.

 IX.            Strategic Planning

 The Board approved an update of the Association's Strategic Plan. Members of the Board also engaged in  informal environmental scanning on anticipated industry developments in the  mid-term future.

X.               Video Game Litigation

 The Board reviewed the  Association's legal strategy and the status of current lawsuits challenging  California, Illinois, and Michigan video game restrictions in order to protect  the constitutional rights of video game retailers and their customers. The Board also considered the implications for other entertainment media of such attempts at governmental censorship of depictions of violence.

 XI.            Other Issues

The Board received reports on the Association's anti-piracy programs, government affairs activities,  and the Association's membership recruitment and retention initiatives.

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