Distribution Agreement - Take-Two Interactive Software inc., Mindscape Inc. and Mindscape International Ltd.
Take 2 / Mindscape
Term Sheet
Agreement: Mindscape (which term shall include Mindscape, Inc. and
Mindscape International Limited) and Take-Two Interactive
Software, Inc. ("Take 2") hereby agree to amend the two
agreements between the companies, the "U.S. Agreement" which
is that certain Agreement between Mindscape, Inc. and Take 2
dated December 27, 1995 as amended by the First Amendment
dated July 9, 1997, and the "U.K. Agreement" which is that
certain Agreement between Mindscape International Limited
and Take 2 dated January 31, 1997 (collectively, the "Old
Agreements") to restructure these Agreements and to
incorporate the terms of this letter of intent into a new
agreement (the "New Agreement") which will effectively
terminate any further interest of Mindscape in the Game
Titles as defined in the U.S. Agreement. Mindscape
acknowledges that, subject to the terms outlined below, Take
2 shall be free to solicit and market these titles to third
parties.
Rights/Repayment: U.K. Agreement. Mindscape shall not owe Take 2 any further
advances under the U.K. Agreement. Take 2 and Mindscape
agree that European distribution rights for the Game Titles
found in the U.K. Agreement will revert back to Take 2 on
the condition that all advances paid by Mindscape to Take 2
under the U.K. Agreement are to be repaid to Mindscape in
accordance with the following schedule:
$170,666 on or before December 15, 1997;
$170,666 on or before May 15, 1998; and
$170,667 on or before September 15, 1998.
U.S. Agreement. Take 2 and Mindscape agree that worldwide
distribution rights for the Game Titles listed in the U.S.
Agreement will revert back to Take 2 Interactive (subject to
a six month sell off period for Callahan's CTS), and the
following U.S. advances for these products shall be repaid
to Mindscape, under the following schedule:
Jetfighter: Full Burn
The $500,000 advance for this Game Title ($100,000 of
which is in repayment of the advances on Steel and Bone,
which Take 2 canceled) shall be repaid to Mindscape no
later than three (3) months after its publication
anywhere in the world, under any product name, by any
party (e.g., Take 2 Interactive, a third party, or under
license/sublicense).
Black Dahlia
The $300,000 advance for this Game Title shall be repaid
to Mindscape no later than three (3) months after its
publication anywhere in the world, under any product
name, by any party (e.g., Take 2 Interactive, a third
party, or under license/sublicense).
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If Take 2 is able to derive revenue from a third-party by
publishing, licensing, or otherwise commercially exploiting
or transferring its rights in either Jetfighter: Full Burn
or Black Dahlia, Take 2's repayment obligations shall
accelerate and Take 2 shall repay all advances previously
paid for that Game Title to Mindscape immediately to the
extent of revenues received; provided, however, that Take 2
may first recoup its direct costs of completing such Game
Title, such direct costs to be limited to out of pocket
costs incurred for product development employee's salaries
and/or payments made to contractors.
After it has recouped its direct costs for completing such
game titles, Take 2 further agrees to pay Mindscape a
fifteen percent (15%) royalty on any revenues attributable
to Jetfighter, Full Burn or Black Dahlia, provided, however,
that if Take 2 has completely reimbursed Mindscape for all
advances on these titles under the U.S. Agreement by no
later than March 1, 1998, the royalty rate shall be reduced
to ten percent (10%).
Other: By signing below, the parties agree that these terms are
binding upon them but that they will negotiate in good faith
with the intention of executing in due course a
comprehensive mutually acceptable definitive agreement
reflecting these and other customary and appropriate terms
which definitive agreement, when executed, shall supersede
these terms. Except as modified here, the Old Agreements
shall stand in full force and effect until such time. This
Letter of Intent shall not be valid until its signed by both
parties.
Mindscape, Inc: Take 2 Interactive Software:
/s/ [ILLEGIBLE] /s/ Ryan Brant
----------------------------------- --------------------------------------
By: By: Ryan Brant
Title: Title: CEO
Date: 11/11/97 Date: Nov. 11, 1997
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[LETTERHEAD]
MINDSCAPE
January 28, 1998
Ryan Brant
Take Two Interactive Software
575 Broadway
New York, NY 10012
Dear Ryan,
Here are the revised terms we have discussed with respect to the proposed
distribution by Mindscape of Jeopardy! 64 and Wheel of Fortune 64 to the Target
and K-Mart accounts.
Take Two designates Mindscape as its exclusive distributor of Jeopardy! 64 and
Wheel of Fortune 64 for the Target Stores, Inc. account and as its exclusive
distributor of Jeopardy! 64 for the K-Mart Corp. account. Mindscape Inc. shall
order inventory from Take Two for Jeopardy! 64 and Wheel of Fortune 64 at the
prices on the attached schedule. The initial order of 6,000 units of Wheel of
Fortune 64 shall be provided by Take Two to Mindscape immediately. Additionally,
we understand that Take Two has instructed Nintendo Company, Ltd. to ship 14,000
units of Jeopardy! 64 which Take Two has already paid for directly to Mindscape.
Upon signing this letter and receiving appropriate confirmation from Nintendo,
Mindscape will consider Take Two to have fulfilled its obligation with respect
to these units of Jeopardy! 64 to be shipped by Nintendo. Freight costs to
Mindscape's warehouse or, if reasonably equivalent, directly to an account's
central warehouse, shall be Take Two's responsibility. Freight costs from
Mindscape to the accounts shall be Mindscape's responsibility.
Take Two agrees that it will provide up to 4,608 units of Jeopardy! 64 and 1,000
units of Wheel of Fortune 64 to Mindscape immediately upon written request to
fulfill any reorders from said accounts. Mindscape shall submit a purchase order
to Take Two for these units and Take Two shall ship inventory directly to the
account's central warehouse as may be mutually agreed, or to Mindscape's
designated warehouse FOB Mindscape, within five days of receipt of a purchase
order.
All such units shipped to Mindscape (or to Mindscape's account) shall be
transferred to Mindscape's ownership upon receipt. Mindscape shall have the
right to sell this inventory to Target and K-Mart. The purchase price for a
total of 7,000 units of Wheel of Fortune 64 and 18,608 units of Jeopardy! 64
shall be $800,000 which shall accrue for the benefit of Take Two upon Take Two
signing this letter but shall be offset against amounts currently owned to
Mindscape by Take Two under the Term Sheet of November
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January 28, 1998
Ryan Brant
Page 2
11, 1997 between the parties with respect to the U.S. Agreement (as defined in
the Term Sheet) of $800,000 related to royalty advances for Black Dahlia and Jet
Fighter Full Burn. Any units ordered by Mindscape and shipped beyond the units
described above may similarly be offset against other amounts owed by Take Two
with respect to advances for other titles, and other unreimbursed amounts
including MDF in the amount of $107,662.
Please sign below to confirm your agreement to these terms.
Sincerely, Take Two Interactive
/s/ Ian Rose /s/ Ryan Brant
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Ian Rose Ryan Brant, CEO
Senior Vice President
Cc: Jim Prather
Gordon Landies
Bill Arkwright
Chuck Kroegel
Debbie Minardi
Caryn Minal