UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15 (d) of the
Securities
Exchange Act of 1934
Date
of
Report (Date of earliest event reported): February
20, 2007
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-29230
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51-0350842
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(State
or Other
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(Commission
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(IRS
Employer
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||
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Jurisdiction
of
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File
Number)
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Identification
No.)
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||
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Incorporation)
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622
Broadway, New York, NY
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10012 | ||
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(Address
of Principal Executive
Offices)
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(Zip Code) | ||
Registrant’s
telephone number, including area code (646)
536-2842
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item
1.01 Entry
into a Material Definitive Agreement
Based
on
the previously announced conclusions of the investigation into the stock options
practices of Take-Two Interactive Software, Inc. (the “Company”), the Company’s
Board of Directors has approved certain remedial measures that have been adopted
by the Company, including the adoption of certain best practices in the granting
and documenting of stock options.
In
connection with the investigation, a Special Committee consisting of three
independent members of the Board of Directors determined that certain stock
options issued by the Company to each of Robert Flug, Oliver R. Grace, Jr.,
Todd
Emmel, Steven Tisch and Mark Lewis (each, an “Independent Director” and
collectively, “Independent Directors”), were improperly dated. Accordingly, as
an additional part of its remedial measures, the Company entered into an
agreement (the “Agreement”) with each of the Independent Directors pursuant to
which the Independent Directors agreed that with respect to stock options that
were improperly dated (i) that were previously exercised by the Independent
Directors, the Independent Directors would remit to the Company after-tax gains
that they realized as a result of the improper grant date and (ii) that remain
unexercised, such stock options would be re-priced to reflect an appropriate
price for which such stock options should have been deemed granted. The
Agreement was entered into voluntarily by the Company and the Independent
Directors, none of whom serve on the Special Committee.
Pursuant
to the Agreement, the Independent Directors cancelled certain of their
outstanding stock options as follows:
|
Independent
Director
|
Number
of Options Cancelled
|
|||
|
Todd
Emmel
|
7,341
|
|||
|
Robert
Flug
|
43,079
|
|||
|
Oliver
R. Grace, Jr.
|
12,788
|
|||
|
Mark
Lewis
|
21,919
|
|||
|
Steven
Tisch
|
2,027
|
|||
-2-
Pursuant
to the Agreement, the following unexercised stock options held by the
Independent Directors were re-priced as follows:
|
Option
Holder
|
Number
of
Options
Still
Outstanding
and
which were
Re-priced(1)
|
New
Exercise
Price(1)
|
|||||
|
Todd
Emmel
|
13,659
|
$
|
12.12
|
||||
|
Todd
Emmel
|
10,500
|
$
|
17.85
|
||||
|
Todd
Emmel
|
10,920
|
$
|
16.83
|
||||
|
Robert
Flug
|
19,500
|
$
|
16.83
|
||||
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Oliver
R. Grace, Jr.
|
6,712
|
$
|
13.70
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||||
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Oliver
R. Grace, Jr.
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19,500
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$
|
17.17
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||||
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Oliver
R. Grace, Jr.
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19,500
|
$
|
16.83
|
||||
|
Mark
Lewis
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8,081
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$
|
16.83
|
||||
| (1) |
All
share and price per share information gives effect to stock
splits.
|
Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(b)
On
February 20, 2007 Mr. Steven Tisch advised the Company that he will not seek
re-election as a director of the Registrant at the Registrant’s next annual
meeting of stockholders.
Item
9.01 Financial Statements and Exhibits
| (d) |
Exhibits
|
Item
10.1 Agreement
made and entered into as of the 21st
day of
February 2007 by and between, Robert Flug, Oliver R. Grace, Jr., Todd Emmel,
Steven Tisch and Mark Lewis and Take-Two Interactive Software, Inc.
-3-
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
(Registrant)
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||
| |
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| Date: February 23, 2007 | By: | /s/ Karl H. Winters |
|
Name: Karl H. Winters |
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| Title: Chief Financial Officer | ||
-4-
INDEX
TO EXHIBITS
| Exhibit No. | Description |
| 10.1 |
Agreement
made and entered into as of the 21st
day of February 2007 by and between, Robert Flug, Oliver R. Grace,
Jr.,
Todd Emmel, Steven Tisch and Mark Lewis and Take-Two Interactive
Software,
Inc.
|
-5-
AGREEMENT
This
Agreement (“Agreement”) is made and entered into as of this 21st day of
February, 2007, by and between, Robert Flug, Oliver R. Grace, Jr., Todd Emmel,
Steven Tisch, and Mark Lewis (collectively referred to herein as the
“Independent Directors” and individually referred to herein as “Independent
Director”) for themselves, their heirs, executors, administrators, successors,
assigns, agents, affiliates, partners, employees, advisors, and consultants;
and
Take-Two Interactive Software, Inc. (“Take-Two”) through its Board of Directors
upon recommendation by the Special Litigation Committee of Take-Two (“Special
Litigation Committee”), as set forth below. The parties to this Agreement are
referred to individually as a “Party” and collectively as the
“Parties.”
The
Board
of Directors initiated a voluntary investigation of Take-Two’s historical stock
option granting practices. This investigation was delegated to the Special
Litigation Committee, consisting of independent members of the Board (including
none of the five Independent Directors who are each a Party to this agreement).
In order to facilitate its investigation, the Special Litigation Committee
retained Kasowitz, Benson, Torres & Friedman LLP (“the Kasowitz Firm”) as
its counsel, and the Kasowitz Firm retained BDO Seidman, LLP as independent
accounting advisors.
In
connection with this investigation, the Special Litigation Committee, and
the
Kasowitz Firm, conducted a thorough and independent analysis. The Special
Litigation Committee determined that certain stock options issued by the
Company
were improperly dated without the Independent Directors’ knowledge. The Special
Litigation Committee therefore proposed that, with respect to such options
that
were exercised by the Independent Directors, the Independent Directors remit
to
the Company after-tax gains that they realized as a result of the improper
grant
date, and that unexercised options be re-priced as set forth in Exhibit A
hereto.
The
Parties have decided to enter into this Agreement in order to effectuate
this
proposal, which the Parties believe to be in the best interests of the
shareholders of Take-Two. In making this Agreement, the parties are aware
of
pending derivative litigations, including those captioned St.
Clair Shore Gen. Employees Ret. Sys.
v.
Eibeler,
No.
06-cv-0688 (S.D.N.Y. Oct. 4, 2006); and In
re
Take-Two Interactive Software, Inc. Derivative Litig.,
Lead
Case No. 06-cv-05279 (S.D.N.Y. Nov. 27, 2006).
1. Consideration
Paid by Robert Flug.
Robert
Flug agrees to remit a total amount equivalent to $244,100.66, using the
valuation method described in Section 7, through the cancellation of the
following Take-Two stock options:
|
Original
Grant Date
|
Number
of
Options
Cancelled*
|
Black-Scholes
Value
per Option*
|
Value
|
|||||||
|
2/22/02
|
19,500
|
$
|
6.53
|
$
|
127,335.00
|
|||||
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8/5/02
|
19,500
|
$
|
4.80
|
$
|
93,600.00
|
|||||
|
9/17/02
|
4,579
|
$
|
5.06
|
$
|
23,169.74
|
|||||
*post-split
2. Consideration
Paid by Oliver Grace.
Oliver
R. Grace, Jr. agrees to remit a total amount equivalent to $83,504.05, using
the
valuation method described in Section 7, through the cancellation of the
following Take-Two stock options:
|
Original
Grant Date
|
Number
of
Options
Cancelled*
|
Black-Scholes
Value
per Option*
|
Value
|
|||||||
|
2/22/02
|
12,788
|
$
|
6.53
|
$
|
83,505.64
|
|||||
*post-split
3. Consideration
Paid by Todd Emmel.
Todd
Emmel agrees to remit a total amount equivalent to $59,532.34, using the
valuation method described in Section 7, through the cancellation of the
following Take-Two stock options:
|
Original
Grant Date
|
Number
of
Options
Cancelled*
|
Black-Scholes
Value
per Option*
|
Value
|
|||||||
|
2/22/02
|
7,341
|
$
|
8.11
|
$
|
59,535.51
|
|||||
*post-split
2
4. Consideration
Paid by Steven Tisch.
Steven
Tisch agrees to remit a total amount equivalent to $10,620.00, using the
valuation method described in Section 7, through the cancellation of the
following Take-Two stock options:
|
Original
Grant Date
|
Number
of
Options
Cancelled*
|
Black-Scholes
Value
per Option*
|
Value
|
|||||||
|
4/29/02
|
2,027
|
$
|
5.24
|
$
|
10,621.48
|
|||||
*post-split
5. Consideration
Paid by Mark Lewis.
Mark
Lewis agrees to remit a total amount of $141,260.30, using the valuation
method
described in Section 7, through the cancellation of the following Take-Two
stock
options:
|
Original
Grant Date
|
Number
of
Options
Cancelled*
|
Black-Scholes
Value
per Option*
|
Value
|
|||||||
|
2/22/02
|
15,000
|
$
|
6.53
|
$
|
97,950.00
|
|||||
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1/30/03
|
6,919
|
$
|
6.26
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$
|
43,312.94
|
|||||
*post-split
6. Re-Pricing
Stock Options.
All
stock option grants to the Independent Directors listed in the chart annexed
as
Exhibit A are re-priced as set forth therein. The Parties agree to execute
any
and all documents necessary to effectuate this re-pricing, and no signature
will
be unreasonably withheld.
7. Valuation
of Consideration.
The
Parties agree that the valuation of any stock options cancelled hereunder
shall
be the Black-Scholes value calculated using the closing price of Take-Two
common
stock on February 16, 2007.
8. Further
Agreement.
Other
than those matters described in Sections 1 through 7 and Exhibit A hereto,
the
Special Litigation Committee and Take-Two agree that they will not seek any
further cancellation of options, restricted stock or payments of cash from
the
Independent Directors arising from the Independent Directors’ receipt of
Take-Two stock options with improper grant dates. The Special Litigation
Committee and Take-Two further agree to recommend and support this Agreement
in
any action, litigation, judicial or administrative proceeding, whether
derivative or direct, as full and fair compensation to Take-Two. In the event
that there is a fairness hearing concerning a settlement in any derivative
litigation concerning historical stock option granting practices at Take-Two,
it
is the present intention of the Parties to submit this Agreement to the Court
for its approval.
9. No
Admission of Wrongdoing.
It is
expressly understood that acceptance and execution of this Agreement by the
Parties and all negotiations, documents, statements and proceedings in
connection herewith, (a) shall not be construed as, or deemed to be, an
admission or concession on the part of any party; and (b) shall not be offered
or received in evidence in any action or proceeding in any court or other
tribunal or offered, used or deemed in any way as an admission, concession
or
evidence of any liability, fault, wrongdoing or misconduct of any nature,
or
weakness or lack of merit of any claim or defense by any of the Parties,
provided,
however, that nothing herein shall prevent any of the Parties from using
this
Agreement, or any document or instrument delivered hereunder:
3
(a) to
effectuate the Agreement contemplated herein;
(b) to
obtain
Court approval of any settlements of any action to which the Independent
Directors are a party, if necessary;
(c) to
enforce the terms of this Agreement.
10. Entire
Agreement.
Except
for writings or provisions incorporated herein by reference, this Agreement
constitutes the final and entire agreement among the Parties with respect
to the
subject matter hereof. It is intended to supersede and replace any and all
prior
or contemporaneous discussions, negotiations, or agreements, written or oral,
with respect to the subject matter hereof. No other representations, covenants,
undertakings, or other prior or contemporaneous agreements, oral or written,
respecting such matters, that are not specifically incorporated herein, shall
be
deemed in any way to exist or bind the parties.
11. Choice
of Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York. The parties to the Action consent to the jurisdiction
of the
State and Federal Courts located in Manhattan for all purposes related to
the
Agreement.
12. Severability.
Should
any portion, provision, or part of this Agreement be held, determined, or
adjudged by a court of competent jurisdiction to be unenforceable, invalid,
or
void for any reason, each such portion, provision, or part shall be severed
from
the remaining portions, provisions, or parts of the Agreement, and shall
not
affect the validity or enforceability of such remaining portions, provisions,
or
parts.
13. Amendment.
This
Agreement may be modified or amended only by an agreement in writing executed
by
or on behalf of each of the Parties.
14. Interpretation
and Construction.
The
Agreement shall not be construed presumptively against any of the Parties
and no
single Party will be deemed the drafter of this Agreement. In particular,
but
without limitation, with respect to this Agreement, the Parties hereby waive
the
benefit of any statutory, case law, or other rule providing in cases of
uncertainty or ambiguity that language of a contract should be interpreted
most
strongly against the party who caused the uncertainty or ambiguity to exist.
The
Agreement shall be construed as if all Parties jointly prepared the Agreement,
and any uncertainty or ambiguity shall not be interpreted against any one
Party.
4
15. Notice.
Where
this Agreement requires that notice or any other communication or document
be
provided, it shall be provided by hand-delivery or overnight delivery as
follows: if to any or all of the Independent Directors, to Gandolfo V. DiBlasi,
Esq., Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10006; if to
Take-Two or the Special Litigation Committee, to Robert J. Mittman, Blank
Rome
LLP, The Chrysler Building, 405 Lexington Avenue, New York, NY 10174-0208;
or to
such other person or address as a party may specify in a notice given
hereunder.
16. Counterparts.
This
Agreement may be executed in one or more counterparts, all of which taken
together shall constitute but one and the same instrument.
17. Escrow.
The
signature pages of the Independent Directors shall be held in escrow by counsel
for the Independent Directors. This escrow shall have no effect on the valuation
date described in Section 7, but the terms of this Agreement will not become
binding on the Parties until this Agreement is approved by Take-Two and the
signature pages are released from escrow by counsel to the Independent
Directors.
18. THE
UNDERSIGNED STATE THAT THEY HAVE CAREFULLY READ OR BEEN ADVISED OF THE WITHIN
AND FOREGOING “AGREEMENT,” AND KNOW AND UNDERSTAND THE CONTENTS THEREOF AND THAT
THEY EXECUTE THE SAME OF THEIR OWN FREE AND INFORMED ACT AND DEED. The Parties
have had the opportunity to be advised by and consult with their attorneys
prior
to signing this Agreement.
[REMAINDER
OF PAGE INTENTIONALLY BLANK]
5
IN
WITNESS WHEREOF, the Parties have executed this Agreement with the intention
of
being legally bound by it.
Dated: February
21, 2007
|
/s/
Robert Flug
|
||
|
Robert Flug |
Take-Two
Interactive Software, Inc.
|
|
|
Date:
February 16, 2007
|
Date:
February 21, 2007
|
|
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||
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||
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/s/
Oliver R. Grace, Jr.
|
/s/ Paul Eibeler | |
|
Oliver R. Grace, Jr. |
By: Paul Eibeler, President |
|
|
Date:
February 16, 2007
|
||
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/s/
Steven Tisch
|
||
|
Steven Tisch |
||
|
Date:
February 16, 2007
|
||
|
|
||
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/s/
Todd Emmel
|
||
|
Todd Emmel |
||
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Date:
February 16, 2007
|
||
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/s/
Mark Lewis
|
||
|
Mark Lewis |
||
|
Date:
February 16, 2007
|
6
Exhibit
A
|
Option
Holder
|
Original
Grant
Date
|
Number
of Options Originally Granted*
|
Original
Exercise
Price*
|
Number
of Options
Still
Outstanding
and
which will be
Re-priced*
|
New
Exercise
Price*
|
|||||||||||
|
Robert
Flug
|
9/17/02
|
22,500
|
$
|
17.33
|
17,921
|
$
|
17.33
|
† | ||||||||
|
Robert
Flug
|
1/30/03
|
19,500
|
$
|
13.67
|
19,500
|
$
|
16.83
|
|||||||||
|
Oliver
R. Grace, Jr.
|
2/22/02
|
19,500
|
$
|
10.17
|
6,712
|
$
|
13.70
|
|||||||||
|
Oliver
R. Grace, Jr.
|
8/5/02
|
19,500
|
$
|
13.01
|
19,500
|
$
|
17.17
|
|||||||||
|
Oliver
R. Grace, Jr.
|
1/30/2003
|
19,500
|
$
|
13.67
|
19,500
|
$
|
16.83
|
|||||||||
|
Todd
Emmel
|
2/22/02
|
37,500
|
$
|
10.17
|
13,659
|
$
|
12.12
|
|||||||||
|
Todd
Emmel
|
8/5/02
|
18,750
|
$
|
13.01
|
10,500
|
$
|
17.85
|
|||||||||
|
Todd
Emmel
|
1/30/03
|
19,500
|
$
|
13.67
|
10,920
|
$
|
16.83
|
|||||||||
|
Steven
Tisch
|
4/29/02
|
37,500
|
$
|
15.39
|
25,473
|
$
|
15.39
|
‡ | ||||||||
|
Mark
Lewis
|
1/30/03
|
15,000
|
$
|
13.67
|
8,081
|
$
|
16.83
|
|||||||||
*post-split
| † |
Because
the new exercise price would be $17.17, these options have
not been
re-priced.
|
|
‡
|
Because
the new exercise price would be $15.35, these options have
not been
re-priced.
|
7