EXHIBIT 99.2
July 26, 0000
Xxxxxx Xxxxxxxx, Ltd. (d/b/a 3D Realms Entertainment)
0000 Xxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Chief Executive Officer
Dear Xx. Xxxxxx:
This letter agreement ("Letter") between Take-Two Interactive Software, Inc.
("Take 2) and Apogee Software, Ltd. (d/b/a 3D Realms Entertainment) ("Apogee")
sets forth the initial terms and conditions under which Apogee grants Take 2 the
exclusive worldwide right to develop Ports of the software title "Xxx Xxxxx"
(the "Game"). Apogee owns or has the exclusive right to license the Game as
provided in this Letter. Take 2 and Apogee acknowledge and agree that they each
have the right to enter into this Letter. The term "Port" shall mean conversions
of the Game onto other platforms known and hereafter developed, including Sony
Xxxxxxxxxxx 0, Xxxxxxxx Xxxxxxxx and Microsoft Xbox, except for Personal
Computers using Windows Operating System.
Rights Granted to T2: Take 2 is granted the exclusive worldwide
right to develop, produce, reproduce,
perform, promote, advertise, rent,
manufacture, package, market distribute
(through any channels), display, sell, lease
and publish Ports of the Game including the
right to market and sell the Ports through
distributors and retailers. Upon Apogee's
written approval note to be unreasonably
withheld, Take 2 may sublicense its right to
develop and produce the Game to a third
party developer. Apogee acknowledges that
Take 2 currently intends to utilize internal
development resources, which will not
require the approval of Apogee.
Advance: In consideration of the rights granted
herein, Take 2 shall pay to Apogee a
non-refundable, full recoupable advance in
the aggregate amount of two million dollars
($2,000,000) (the "Advance") as follows:
1. $500,000 payable upon signing of this
Letter;
2. $500,000 payable upon Take 2's
completion or acceptance of the Gold
Master of the Playstation 2 Port; and
3. $1,000,000 payable 7 business days
after the commercial release of the
Playstation 2 Port.
No additional Advance shall be payable to
Apogee for other Ports of the Game. All
advances paid to Apogee under this Letter
shall be recoupable from any and all
royalties accruing hereunder.
Royalties: Subject to the full recoupment of the
Advance, for each unit sold of each of the
Ports, Take 2 shall accrue a royalty to
Apogee according to the following table:
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CUMULATIVE UNITS SOLD Royalty per unit when Wholesale Price is
--------------------------------------------------------------------------------------
Over $24.00 to $20.00 to
$28.00 $27.99 $23.99
--------------------------------------------------------------------------------------
0 units to 300,000 $5.00 $4.50 $3.38
--------------------------------------------------------------------------------------
300,000 to 400,000 $5.50 $4.95 $3.71
--------------------------------------------------------------------------------------
400,001 to 500,000 $6.00 $5.40 $4.05
--------------------------------------------------------------------------------------
500,001 to 600,000 $6.50 $5.85 $4.39
--------------------------------------------------------------------------------------
600,000 to 1,000,000 $7.00 $6.30 $4.73
--------------------------------------------------------------------------------------
1,000,001 AND UP $7.50 $6.75 $5.06
--------------------------------------------------------------------------------------
For any units sold for a Wholesale Price of
under $20.00, Take 2 shall accrue to Apogee
a royalty equal to 10% of the Wholesale
Price of $1.50 whichever is greater.
"Wholesale Price" shall mean the actual
price paid to Take 2 by its customers less
any discounts, markdowns or allowances.
Royalty Payments: Royalties earned hereunder will be accrued
and paid quarterly 60 days after the end of
each of Take 2's financial quarters and
shall be accompanied by a statement
including such information as Apogee may
reasonably request. Take 2 agrees that
Apogee may, not more than once during a
calendar year, audit its books and records
for the purpose of determining the accuracy
of Take 2's statements. All payments shall
be subject to customary reserves not to
exceed 20% of the Royalty due.
Ownership: Take 2 and Apogee acknowledge and agree that
the Game franchise, the Ports, all
intellectual property related thereto, other
than technology developed by or licensed by
Take 2 or other third party developers and
all trade names, trademarks or other
identifications used with or in conjunction
with the Ports as developed by Take 2 or a
third party developer shall be owned
exclusively by Apogee. Apogee shall have no
right to utilize such technology. Apogee
shall receive appropriate credit on the
front and back of the Port packaging and in
the product manual, as well as the opening
and closing credits in accordance with
industry standards.
Marketing: Take 2 shall use its good faith,
commercially reasonably efforts to market
and distribute the Ports in accordance with
prevailing industry standards. Apogee shall
have the right to reasonably approve all
branding, boxing, packaging, manuals, sales
marketing and other materials prepared or
used by Take 2 relating to the Ports prior
to any use of such items, it being
acknowledged that all such branding, boxing,
packaging sales marketing and other
materials utilized in connection with the PC
version of the Game are deemed approved.
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This letter constitutes a binding agreement between the parties, and shall serve
as the agreement between the parties until they have had the opportunity to
negotiate and enter into a more comprehensive agreement. In the absence of a
more comprehensive agreement, this Letter shall be the binding agreement between
the parties for the term of five (5) years from the commercial release date of
the last Port. Take 2 and Apogee agree to keep the terms of this Letter herein
confidential subject to their respective legal obligations. The parties agree
that the more comprehensive agreement will contain other customary terms and
conditions including, without limitation, term, termination, confidential
information, representations, warranties and indemnities of both parties,
sell-off periods and general provisions. The parties agree to negotiate in good
faith to reach and execute a mutually acceptable definitive agreement as soon as
practicable. This Letter is to be governed under the internal laws of the State
of Texas without regard to its choice of law provisions. This Letter may be
signed in counterparts and delivered by facsimile.
[SIGNATURE INTENTIONALLY CONTINUED ON NEXT PAGE]
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If the terms of this Letter are acceptable, please sign below and return to my
attention. Upon receipt of a signed copy of this Letter, we will prepare the
definitive agreement.
Very truly yours,
TAKE-TWO INTERACTIVE SOFTWARE, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Title: C.E.O.
-----------------------------
Date: 27th July 2001
---------------------------
AGREED TO AND ACCEPTED:
APOGEE SOFTWARE, INC.
By: Action Entertainment Software, Inc. its General Partner
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
-----------------------------
Title: CEO
-----------------------------
Date: July 30, 2001
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