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OMB
APPROVAL
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OMB
Number:
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April
30, 2009
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Expires:
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3235-0060
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Estimated
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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|
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):
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February
14, 2008
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Take-Two
Interactive Software, Inc.
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(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 jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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622
Broadway, New York, New York
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10012
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|
(Address
of principal executive offices)
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(Zip
Code)
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|
Registrant’s
telephone number, including area code
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(646)
536-2842
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(Former
name or former address, if changed since last
report.)
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|
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)
|
|
o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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|
o
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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
Amendment
to ZelnickMedia Management Agreement.
As
previously disclosed in the Company’s Current Reports on Form 8-K filed on April
4, 2007 and on July 27, 2007 with the Securities and Exchange Commission (the
“SEC”),
the
Company entered into a Management Agreement, dated March 30, 2007, with
ZelnickMedia Corporation (“ZelnickMedia”),
as
amended on July 26, 2007 (the “Management
Agreement”),
pursuant to which ZelnickMedia provides financial and management consulting
services to the Company.
In
December 2007, the Board of Directors of the Company (the “Board
of Directors”)
met in
executive session (without Messrs. Strauss Zelnick and Ben Feder present) to
discuss the Company’s relationship with ZelnickMedia, the terms of the existing
Management Agreement and the Company’s strategy for employing a Chief Executive
Officer of the Company. The Board of Directors determined that the Compensation
Committee of the Board of Directors (the “Compensation
Committee”)
should
evaluate the situation and the issues arising therefrom and report back to
the
Board of Directors with a recommendation. In January 2008, the Compensation
Committee met to receive an executive compensation analysis delivered by an
independent compensation consultant. Following the study and discussion of
such
analysis, the Compensation Committee agreed upon the key terms of an amendment
to the Management Agreement. The Compensation Committee presented their
recommendation to the Board of Directors in executive session.
After
numerous subsequent meetings of the Compensation Committee and the Board of
Directors in executive session, and after negotiations with representatives
of
ZelnickMedia, on February 14, 2008, the independent members of the Board of
Directors approved, and the Company and ZelnickMedia entered into, a Second
Amendment to the Management Agreement (the “Amendment”).
The
Amendment provides that effective February 14, 2008, the Management Agreement
is
amended as follows:
|
·
|
Commencing
on April 1, 2008, the monthly management fee payable to ZelnickMedia
under
the Management Agreement is increased from $62,500 per month to $208,333
per month.
|
|
·
|
The
maximum annual bonus that ZelnickMedia is eligible to receive under
the
Management Agreement is increased for each fiscal year of the Company
ending on or after October 31, 2008 from $750,000 per fiscal year
to
$2,500,000 per fiscal year, subject to the achievement by the Company
of
certain performance thresholds, except that the annual bonus for
the
fiscal year ending on October 31, 2008 will be pro rated to reflect
a
maximum annual bonus of $750,000 for the portion of the fiscal year
prior
to April 1, 2008.
|
|
·
|
ZelnickMedia
will continue to provide certain individuals as it deems appropriate
for
the performance of the Management Agreement. Specifically (i) Mr.
Zelnick
will serve as Executive Chairman of the Board of Directors, (ii)
Mr. Feder
will serve as the Company’s Chief Executive Officer (“CEO”),
and (iii) Karl Slatoff will serve as the Company’s Executive Vice
President. On February 14, 2008, Messrs. Feder and Slatoff each entered
into an employment agreement with the Company setting forth their
duties
with the Company and providing for an annual salary of $1, as further
described in Item 5.02 to this Report on Form 8-K. If Mr. Feder or
any
other employee of ZelnickMedia acting in an executive capacity for
the
Company is unable or unavailable to serve as CEO or in such other
capacity
(other than due to a termination by the Company without Cause or
their
resignation for Good Reason (as such terms will be defined in such
person’s employment agreement with the Company)), and ZelnickMedia is
unable to provide a qualified individual within a reasonable period
of
time to serve in such capacity who is reasonably satisfactory to
the Board
of Directors, then the Company may fill such position with a person
not
affiliated with ZelnickMedia and deduct the costs of such person’s
compensation from ZelnickMedia’s compensation under the Management
Agreement.
|
|
·
|
The
term of the Management Agreement is extended one additional year
through
October 31, 2012, unless earlier terminated in accordance with its
terms.
|
In
addition, the Amendment provides for certain other amendments to the Management
Agreement that are only effective upon the approval of an amendment to the
Company’s Incentive Stock Plan to permit grants of equity awards to consultants
and to increase the number of shares authorized under such plan (the
“Proposal”)
by the
stockholders of the Company (the “Stockholders”)
at the
2008 annual meeting of the Stockholders (the “2008
Annual Meeting”).
These
amendments are as follows:
|
·
|
The
Company will make the “Additional Equity Grants” to ZelnickMedia, as
described below.
|
|
·
|
Within
six months following the Effective Date, the Company will file a
Registration Statement on Form S-3 registering for resale all of
the
shares of common stock, par value $0.01 per share (“Common
Stock”)
granted to ZelnickMedia under the Management Agreement, including
the
Additional Equity Grants.
|
|
·
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The
Management Agreement will not be further revised during its
term.
|
If
the
Stockholders approve the Proposal, then the foregoing amendments will be
effective as of the date of the 2008 Annual Meeting (the “Effective
Date”).
If
the Stockholders do not approve the Proposal, such amendments will be null
and
void.
In
addition to the foregoing amendments, the Amendment adds the following new
provisions to the Management Agreement effective February 14, 2008:
|
·
|
The
Company consented to ZelnickMedia assigning all of its rights and
obligations under the Management Agreement to ZM Capital Advisors,
LLC,
(“ZM
Capital”),
except that, if ZelnickMedia elects to make such assignment it will
continue to remain liable for all of its obligations under the Management
Agreement.
|
|
·
|
In
the event of a Change of Control (as defined in the Management
Agreement) the Compensation Committee will consider in good faith
and
recommend to the independent members of the Board of Directors, the
amount
of additional compensation, if any, to be paid to ZelnickMedia in
connection with such Change in Control and the independent members
of the
Board of Directors will consider such recommendation and determine
in good
faith the amount of additional compensation, if any, to be paid to
ZelnickMedia in connection with such Change in
Control.
|
|
·
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The
Company will include the Proposal in the proxy statement for the
2008
Annual Meeting and the Board of Directors will recommend that the
Stockholders vote for approval of the
Proposal.
|
The
foregoing description of the Amendment is only a summary and is qualified in
its
entirety by reference to the full text of the Amendment, which is attached
as
Exhibit 10.1 to
this
Report on Form 8-K and
incorporated herein by reference into this Item 1.01.
Additional
Equity Grants
As
noted
above, the Amendment provides that if the Stockholders approve the Proposal,
the
Company will make the additional equity grants to ZelnickMedia (the
“Additional
Equity Grants”)
described below. If the Stockholders do not approve the Proposal, the Additional
Equity Grants will not be granted.
|
·
|
Time
Based Award.
The Company will grant ZelnickMedia a restricted stock award of 600,000
shares of Common Stock that will vest in equal installments on each
of the
first, second and third anniversaries of the grant date, subject
to the
Management Agreement not being terminated prior to the applicable
vesting
date (the “Time
Based Award”).
However, the Time Based Award will immediately vest in full if the
Management Agreement is terminated by ZelnickMedia
for
Good Reason (as defined in the Management Agreement) or by the Company
without Cause (as defined in the Management
Agreement). Further,
in the event of a Change in Control all unvested shares of restricted
stock under the Time Based Award will vest in full immediately prior
to
the consummation of such Change in Control. However, the preceding
sentence will not apply, and the unvested shares of restricted stock
will
not vest, if (w) prior to the Effective Date, the Company received
a bona
fide indication of interest in, or offer to enter into, a business
combination (an “Offer”)
from a third party, (x) the Offer specifies, with some degree of
particularity, the material terms thereof, (y) the existence of the
Offer
is not publicly disclosed or confirmed by the Company or such third
party
prior to the Effective Date, and (z) the transaction proposed by
such
Offer is consummated prior to November 14, 2008 and the consummation
of
such transaction constitutes a Change in Control (such transaction,
an
“Excluded
Transaction”).
In the event of an Excluded Transaction, the Compensation Committee
will
consider in good faith, and recommend to the independent members
of the
Board of Directors, a number of shares of restricted stock subject
to the
Time Based Award, if any, to become vested in connection with such
Change
in Control. The independent members of the Board of Directors will
consider such recommendation and determine in good faith the number
of
shares of restricted stock under the Time Based Award, if any, that
will
become vested in connection with such Change in Control and the remaining
shares of restricted stock will be forfeited to the Company. ZelnickMedia
will forfeit to the Company any and all restricted stock that has
not
previously vested under the Time Based Award if the Management Agreement
is terminated by the Company for Cause or by ZelnickMedia
without Good Reason.
Generally, ZelnickMedia may not sell or otherwise dispose of any
Common
Stock that it acquires pursuant to the Time Based Award until the
earlier
of October 31, 2012 or the termination of the Management
Agreement.
|
|
·
|
Performance
Based Award.
The Company will grant ZelnickMedia a restricted stock award of 900,000
shares of Common Stock that may vest on or after each of the Vesting
Dates
listed in the table below in the amounts set forth opposite the applicable
Vesting Date, and subject to, with respect to each tranche, (i) the
achievement of an increase in the price of the Common Stock which
would
place the stockholder return on the Common Stock in the 75th
percentile of the stockholder returns of all of the companies in
the
NASDAQ Industrial Index, and (ii) the Management Agreement not being
terminated prior to the achievement of the applicable performance
goal for
such Vesting Date (the “Performance
Based Award”).
|
|
Vesting
Date
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Shares
Eligible to Vest
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First
anniversary of grant date
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180,000
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Second
anniversary of grant date
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270,000
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Third
anniversary of grant date
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405,000
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Fourth
anniversary of grant date
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45,000
|
In
the
event that the Company achieves the performance target as of any Vesting
Date,
all of the shares of restricted stock that did not vest on any prior Vesting
Date shall nevertheless vest on such Vesting Date for which the Company achieves
the performance target.
However,
the Performance Based Award will immediately vest in full if the Management
Agreement is terminated by ZelnickMedia
for
Good
Reason or by the Company without Cause. Further,
in
the
event of a Change in Control, if
|
(A)
such Change in Control occurs on or prior to March 31, 2009, then
180,000
unvested shares of restricted stock under the Performance Based Award
will
vest in full immediately prior to the consummation of such Change
in
Control and the Compensation Committee will consider in good faith,
and
recommend to the independent members of the Board of Directors, a
number
of shares of restricted stock subject to the Performance Based Award,
if
any, to become vested in connection with such Change in Control.
The
independent members of the Board of Directors will consider such
recommendation and determine in good faith, the number of shares
of
restricted stock under the Performance Based Award, if any, that
will
become vested in connection with such Change in Control and the remaining
shares of restricted stock will be forfeited to the Company. However,
the
foregoing will not apply if the Change in Control is an Excluded
Transaction. If such Change in Control is an Excluded Transaction
then the
Compensation Committee will consider in good faith, and recommend
to the
independent members of the Board of Directors, a number of shares
of
restricted stock subject to the Performance Based Award, if any,
to become
vested in connection with such Change in Control. The independent
members
of the Board of Directors will consider such recommendation and determine
in good faith, the number of shares of restricted stock under the
Performance Based Award, if any, that will become vested in connection
with such Change in Control and the remaining shares of restricted
stock
will be forfeited to the Company;
or
|
(B) If
such
Change in Control occurs on or following April 1, 2009, all unvested shares
of
restricted stock under the Performance Based Award will vest in full immediately
prior to the consummation of such Change in Control.
ZelnickMedia
will forfeit to the Company any and all restricted stock not previously vested
under the Performance Based Award if the Management Agreement is terminated
by
the Company for Cause or by ZelnickMedia
without Good Reason.
Generally, ZelnickMedia may not sell or otherwise dispose of any Common Stock
that it acquires pursuant to the Performance Based Award until the earlier
of
October 31, 2012 or the termination of the Management Agreement.
The
foregoing description of the Additional Equity Awards is only a summary and
is
qualified in its entirety by reference to the full text of the Form of
Restricted Stock Agreement and Form of Performance Based Restricted Stock
Agreement, attached as Exhibits A and B, respectively, to the Amendment which
is
attached as Exhibit 10.1 to
this
Report on Form 8-K and
incorporated herein by reference into this Item 1.01.
Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
February 15, 2008, the Company announced the appointment of Strauss Zelnick,
currently Chairman, to the position of Executive Chairman, and the entering
into
of separate employment agreements (“Employment
Agreements”)
with
each of Ben Feder, currently serving as Chief Executive Officer in connection
with the services provided by ZelnickMedia pursuant to the Management Agreement,
and Karl Slatoff, pursuant to which Messrs. Feder and Slatoff will be employed
as Chief Executive Officer and Executive Vice President, respectively. The
press
release announcing these appointments is attached hereto as Exhibit 99.1
and is incorporated by reference into this Item 5.02.
Messrs.
Zelnick, Feder and Slatoff are compensated through the Management Agreement
with
ZelnickMedia. Pursuant to the Employment Agreements, each of Messrs. Feder
and
Slatoff will receive an annual salary of $1.00. The Employment Agreements also
provide that Messrs. Feder and Slatoff will be entitled to participate in all
benefits and plans which the Company may institute from time to time for its
executive officers and employees. The Employment Agreements will be in effect
for the term of the Management Agreement, unless earlier terminated upon the
employee’s death or by the Board of Directors for any reason. Upon termination
of their employment, the Company will have no further obligation towards Messrs.
Feder and Slatoff other than continued indemnification rights and coverage
under
the Company’s directors’ and officers’ liability insurance policies. In
addition, the Employment Agreements provide that during the employment term
and,
in the event of a termination for Cause or without Good Reason, for a period
of
one year thereafter, Messrs. Feder and Slatoff will be subject to
non-competition and non-solicitation restrictions.
Strauss
Zelnick, age 50, has been Chairman of the Company since he was nominated by
certain stockholders of the Company and elected to the Board of Directors at
the
Company’s 2007 annual meeting of stockholders on March 30, 2007. Mr. Zelnick is
also a partner of ZelnickMedia and is Chairman of Columbia Music Entertainment
(CME) of Japan, Online Testing Exchange, Inc. and ITN Networks. He also serves
on the Boards of Directors of Blockbuster Inc. and Naylor LLC. Mr. Zelnick
served as Executive Chairman of Direct Holdings, the parent company of Time
Life
and Lillian Vernon until the company was sold to Reader's Digest in March 2007.
Prior to co-founding ZelnickMedia in 2001, Mr. Zelnick was President and Chief
Executive Officer of BMG Entertainment, an entertainment company with more
than
200 record labels and operations in 54 countries. He is an associate member
of
the National Academy of Recording Arts and Sciences and served on the Board
of
Directors of the Recording Industry Association of America and the Motion
Picture Association of America.
Ben
Feder, age 44, has been acting Chief Executive Officer and a director of the
Company since he was nominated by certain stockholders of the Company and
elected to the Board of Directors at the Company’s 2007 annual meeting of
stockholders on March 30, 2007. Mr. Feder is also a partner of ZelnickMedia,
and
oversees ZelnickMedia's interest in Columbia Music Entertainment (CME) of Japan.
He is a director of CME, which is traded on the Tokyo Stock Exchange. Prior
to
co-founding ZelnickMedia in 2001, Mr. Feder was Chief Executive Officer of
MessageClick, Inc., a leading provider of voice messaging technology for
next-generation telephone networks.
Karl
Slatoff, age 37, is a partner at ZelnickMedia, with expertise in the areas
of
music, direct marketing, broadcast, interactive entertainment and new media.
In
connection with the ZelnickMedia management agreement, for the past year Mr.
Slatoff has devoted significant time and energy to Take-Two and worked closely
with members of the Company’s management team, focusing on restructuring and
cost saving initiatives, and mergers and acquisitions. Previously, Mr. Slatoff
served as Vice President, New Media for BMG Entertainment. Before joining BMG,
he worked in strategic planning at the Walt Disney Company, where he focused
on
the consumer products, studio and broadcast divisions, as well as several
initiatives in the educational, publishing and new media sectors. Earlier,
he worked in the corporate finance and mergers and acquisitions units at Lehman
Brothers.
The
foregoing description of the Employment Agreements is only a summary and is
qualified in its entirety by reference to the Employment Agreements, copies
of
which are attached as Exhibits 10.2 and 10.3 hereto and are incorporated by
reference into this Item 5.02.
Except
as
described above and except as set forth in the Management Agreement, there
were no arrangements or understandings between the Company and any of Messrs.
Zelnick, Feder or Slatoff pursuant to which any of such individuals was selected
or nominated as an officer of the Company. None of Messrs. Zelnick, Feder or
Slatoff has a family relationship with any director or executive officer of
the
Company. Other than as disclosed herein, there were no transactions since the
beginning of the Company’s last fiscal year between the Company and any of
Messrs. Zelnick, Feder or Slatoff.
Item 5.03 Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Amendment
of By-laws.
On
February 14, 2008, the Board of Directors approved and adopted an amendment
(the “By-law
Amendment”)
to the
Amended and Restated By-laws of the Company (the “By-laws”).
The
purpose of the By-law Amendment is to add an “advance notice provision” to the
By-laws. The advance notice provision requires the Stockholders to give prior
written notice in connection with any proposal to be brought for the vote of
the
Stockholders at an annual or a special meeting. The By-law Amendment became
effective immediately upon its approval by the Board of Directors.
The
foregoing description of the By-law Amendment is only a summary and is qualified
in its entirety by reference to the full text of the By-law Amendment, which
is
attached as Exhibit 3.1 to this Report on Form 8-K and incorporated herein
by reference into this Item 5.03.
Item
9.01 Financial
Statements and Exhibits
| (c) |
Exhibits:
|
|
3.1
|
Amendment
to the Amended and Restated By-laws of the Company dated February 14,
2008.
|
|
10.1
|
Second
Amendment, dated February 14, 2008, to the Management Agreement dated
March 30, 2007 between Take-Two Interactive Software, Inc. and
ZelnickMedia Corporation.
|
|
10.2
|
Employment
Agreement, dated February 14, 2008, by and between Take-Two Interactive
Software, Inc. and Benjamin Feder.
|
|
10.3
|
Employment
Agreement, dated February 14, 2008, by and between Take-Two Interactive
Software, Inc. and Karl Slatoff.
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|
99.1
|
Press
Release entitled “Take-Two Interactive Software, Inc. Announces Executive
Appointments” dated February 15,
2008.
|
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 hereunto
duly authorized.
|
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
|
||
|
(Company)
|
||
|
By:
|
/s/Daniel
P. Emerson
|
|
|
Daniel
P. Emerson
|
||
|
Vice
President and Associate General
Counsel
|
||
Date:
February 15, 2008
EXHIBIT
INDEX
| Exhibit |
Description
|
| 3.1 |
Amendment
to the Amended and Restated By-laws of the Company dated February 14,
2008.
|
| 10.1 |
Second
Amendment, dated February 14, 2008, to the Management Agreement dated
March 30, 2007 between Take-Two Interactive Software, Inc. and
ZelnickMedia Corporation.
|
| 10.2 |
Employment
Agreement, dated February 14, 2008, by and between Take-Two Interactive
Software, Inc. and Benjamin Feder.
|
| 10.3 |
Employment
Agreement, dated February 14, 2008, by and between Take-Two Interactive
Software, Inc. and Karl Slatoff.
|
| 99.1 |
Press
Release entitled “Take-Two Interactive Software, Inc. Announces Executive
Appointments ” dated February 15,
2008.
|
AMENDMENT
TO THE
AMENDED
AND RESTATED BY-LAWS OF
TAKE-TWO
INTERACTIVE SOFTWARE, INC.,
a
Delaware Corporation
The
board
of directors of Take-Two Interactive Software, Inc. (the
“corporation”)
desires
to amend the Amended and Restated By-laws of the corporation, effective
February 14, 2008, as follows:
1.
Article II of the By-laws is hereby amended by adding the following text at
the
end thereof:
“Section
12.
A. Annual
Meetings of Stockholders.
1. Nominations
of persons for election to the board of directors and the proposal of business
to be considered by the stockholders may be made at an annual meeting of
stockholders only (a) pursuant to the corporation’s notice of meeting (or any
supplement thereto), (b) by or at the direction of the board of directors or
(c)
by any stockholder of the corporation who was a stockholder of record at the
time of giving of notice provided for in this Section 12, who is entitled to
vote at the meeting and who complies with the notice procedures set forth in
this Section 12.
2. For
nominations or other business to be properly brought before an annual meeting
by
a stockholder pursuant to clause (c) of paragraph (A)(1) of this Section 12,
the
stockholder must have given timely notice thereof in writing to the secretary
of
the corporation and such other business must otherwise be a proper matter for
stockholder action. To be timely, a stockholder’s notice shall be delivered to
the secretary at the principal executive offices of the corporation not later
than the close of business on the ninetieth (90th) day nor earlier than the
close of business on the one hundred twentieth (120th) day prior to the first
anniversary of the date of the preceding year’s annual meeting of stockholders;
provided, however, that (I) if either (x) the date of the annual meeting is
more
than thirty (30) days before or more than thirty (30) days after such
anniversary date, or (y) no annual meeting of stockholders was held in the
previous year, notice by the stockholder to be timely must be so delivered
not
earlier than the close of business on the one hundred twentieth (120th) day
prior to such annual meeting and not later than the close of business on the
later of (A) the ninetieth (90th) day prior to such annual meeting and (B)
the
close of business on the tenth (10th) day following the date on which notice
of
the date of the meeting is given to stockholders or made public, whichever
occurs first, and (II) with respect to the annual meeting of stockholders to
be
held in 2008, notice by the stockholder to be timely must be so delivered not
later than the close of business on the tenth (10th) day following the date
on
which notice of this amendment to the by-laws was made public. Such
stockholder’s notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director, (i) all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) and Rule 14a-11 thereunder; (ii) such person’s
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected. and (iii) a statement whether such person,
if
elected, intends to tender, promptly following such person's election or
re-election, an irrevocable resignation effective upon such person's failure
to
receive the required vote for re-election at the next meeting at which such
person would face re-election and upon acceptance of such resignation by the
board of directors, in accordance with the Corporate Governance Guidelines
of
the corporation; (b) as to any other business that the stockholder proposes
to
bring before the meeting, the text of the proposal or business (including the
text of any resolutions proposed for consideration and in the event that such
business includes a proposal to amend the by-laws of the corporation, the
language of the proposed amendment), the reasons for conducting such business
at
the meeting and any material interest in such business of such stockholder
and
the beneficial owner, if any, on whose behalf the nomination or proposal is
made; and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the corporation’s books, and of
such beneficial owner, (ii) the class and number of shares of capital stock
of
the corporation which are owned beneficially and of record by such stockholder
and such beneficial owner, (iii) a representation that the stockholder is a
holder of record of stock of the corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to propose such
business or nomination, and (iv) a representation whether the stockholder or
the
beneficial owner, if any, intends or is part of a group which intends (a) to
deliver a proxy statement and/or form of proxy to holders of at least the
percentage of the corporation’s outstanding capital stock required to approve or
adopt the proposal or elect the nominee and/or (b) otherwise to solicit proxies
from stockholders in support of such proposal or nomination. The foregoing
notice requirements shall be deemed satisfied by a stockholder if the
stockholder has notified the corporation of his or her intention to present
a
proposal at an annual meeting in compliance with Rule 14a-8 (or any successor
thereof) promulgated under the Exchange Act and such stockholder’s proposal has
been included in a proxy statement that has been prepared by the corporation
to
solicit proxies for such annual meeting. The corporation may require any
proposed nominee to furnish such other information as it may reasonably require
to determine the eligibility of such proposed nominee to serve as a director
of
the corporation
3. Notwithstanding
anything in the second sentence of paragraph (A)(2) of this Section 12 to the
contrary, in the event that the number of directors to be elected to the board
of directors of the corporation is increased and there is no public announcement
by the corporation naming all of the nominees for director or specifying the
size of the increased board of directors at least one hundred (100) days prior
to the first anniversary of the date of the preceding year’s annual meeting of
stockholders (or, if the annual meeting is held more than thirty (30) days
before or thirty (30 days after such anniversary date, at least one hundred
(100) days prior to such annual meeting), a stockholder’s notice required by
this Section 12 shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the secretary at the principal executive office of the corporation
not later than the close of business on the tenth (10th) day following the
day
on which such public announcement is first made by the corporation.
B. Special
Meetings of Stockholders. Only such business shall be conducted at a special
meeting of stockholders as shall have been brought before the meeting pursuant
to the corporation’s notice of meeting. Nominations of persons for election to
the board of directors may be made at a special meeting of stockholders at
which
directors are to be elected pursuant to the corporation’s notice of meeting (a)
by or at the direction of the board of directors or (b) provided that the board
of directors has determined that directors shall be elected at such meeting,
by
any stockholder of the corporation who is a stockholder of record at the time
notice provided for in this Section 12 is delivered to the secretary of the
corporation, who is entitled to vote at the meeting and upon such election,
who
complies with the notice procedures set forth in this Section 12. If the
corporation calls a special meeting of stockholders for the purpose of electing
one or more directors to the board of directors, any such stockholder entitled
to vote in such election of directors may nominate a person or persons (as
the
case may be), for election to such position(s) as specified in the corporation’s
notice of meeting, if the stockholder’s notice required by paragraph (A)(2) of
this Section 12 shall be delivered to the secretary at the principal executive
offices of the corporation not earlier than the close of business on the one
hundred twentieth (120th) day prior to such special meeting and not later than
the later of (x) the close of business of the ninetieth (90th) day prior to
such
special meeting or (y) the close of business of the tenth (10th) day following
the day on which public announcement is first made of the date of such special
meeting and of the nominees proposed by the board of directors to be elected
at
such meeting. In no event shall the public announcement of an adjournment or
postponement of a special meeting commence a new time period (or extend any
time
period) for the giving of a stockholder’s notice as described
above.
C. General.
1. Only
such
persons who are nominated in accordance with the procedures set forth in this
Section 12 shall be eligible to be elected at an annual or special meeting
of
stockholders of the corporation to serve as directors and only such business
shall be conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in this Section
12. Except as otherwise provided by law, the certificate of incorporation or
these by-laws, the chairman of the meeting shall have the power and duty (a)
to
determine whether a nomination or any business proposed to be brought before
the
meeting was made or proposed, as the case may be, in accordance with the
procedures set forth in this Section 12 (including whether the stockholder
or
beneficial owner, if any, on whose behalf the nomination or proposal is made
solicited (or is part of a group which solicited) or did not so solicit, as
the
case may be, proxies in support of such stockholder’s nominee or proposal in
compliance with such stockholder’s representation as required by clause
(A)(2)(c)(iv) of this Section 12) and (b) if any proposed nomination or business
was not made or proposed in compliance with this Section 12, to declare that
such nomination shall be disregarded or that such proposed business shall not
be
transacted. Notwithstanding the foregoing provisions of this Section 12(C),
if
the stockholder (or a qualified representative of the stockholder) does not
appear at the annual or special meeting of stockholders of the corporation
to
present a nomination or business, such nomination shall be disregarded and
such
proposed business shall not be transacted, notwithstanding that proxies in
respect of such vote may have been received by the corporation.
2. The
board
of directors of the corporation shall be entitled to make such rules or
regulations for the conduct of meetings of stockholders as it shall deem
necessary, appropriate, convenient or desirable. Subject to such rules and
regulations of the board of directors, if any, the chairman of the meeting
shall
have the right and authority to prescribe such rules, regulations and
procedures, and to do all such acts as, in the judgment of such chairman, are
necessary, appropriate, convenient or desirable for the proper conduct of the
meeting, including, without limitation, establishing an agenda or order of
business for the meeting, rules and procedures for maintaining order at the
meeting and the safety of those present, limitations on participation in such
meeting to stockholders of record of the corporation and their duly authorized
and constituted proxies, and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comment by
participants, regulation of the opening and closing of the polls for balloting
on matters which are to be voted on by ballot, and the authority to conclude
or
adjourn the meeting with or without stockholder approval. Unless, and to the
extent, otherwise determined by the board of directors or the chairman of the
meeting, meetings of stockholders shall not be required to be held in accordance
with the rules of parliamentary procedure.
3. For
purposes of this Section 12, “public announcement” and “was made public” shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant
to
Section 13, 14 and 15(d) of the Exchange Act.
4. Notwithstanding
the foregoing provisions of this Section 12, a stockholder shall also comply
with all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth herein. Nothing
in
this Section 12 shall be deemed to affect any rights (i) of stockholders to
request inclusion of proposals in the corporation’s proxy statement pursuant to
Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of
Preferred Stock to elect directors pursuant to any applicable provisions of
the
certificate of incorporation.
Section
13. Prior
to
the holding of each annual or special meeting of the stockholders, one or more
inspectors of election to serve thereat shall be appointed by the board of
directors, or, if the board of directors shall not have made such appointment,
by the chairman of the meeting, the Chief Executive Officer or the President.
If
there shall be a failure to appoint an inspector, or if, at any such meeting,
the inspector or inspectors so appointed shall be absent or shall fail to act
or
the office shall become vacated, the chairman of the meeting may, and at the
request of a stockholder present in person and entitled to vote at such meeting
shall, appoint such inspector or inspectors of election to act thereat. The
inspector or inspectors of election so appointed to act at any meeting of the
stockholders, before entering upon the discharge of their duties, shall be
sworn
faithfully to execute the duties of inspector at such meeting, with strict
impartiality and according to the best of his or her ability, and the oath
so
taken shall be subscribed by such inspector. Such inspector or inspectors of
election shall take charge of the polls, and, after the voting on any question,
shall make a certificate of the results of the vote taken. No director or
candidate for the office of director shall act as an inspector of an election
of
directors. Inspectors need not be stockholders.”
*
* * *
*
SECOND
AMENDMENT TO MANAGEMENT AGREEMENT
Dated
February 14, 2008
This
Second Amendment to Management Agreement (this “Amendment”)
is
made to the Management Agreement (the “Agreement”),
dated
March 30, 2007, by and between ZelnickMedia Corporation, a New York corporation
(“ZelnickMedia”)
and
Take-Two Interactive Software, Inc., a Delaware corporation (the “Company”),
as
amended on July 26, 2007.
WHEREAS,
the Company acknowledges and agrees that ZelnickMedia has and continues to
provide services in excess of those required to be performed by ZelnickMedia
pursuant to the terms of the Agreement, including by providing the services
of
Benjamin Feder as Chief Executive Officer of the Company, and
WHEREAS,
the Company desires to make such services available on a permanent basis for
the
term of the Agreement;
NOW,
THEREFORE, in consideration of the foregoing and the respective agreements
hereinafter set forth, and the mutual benefits to be derived herefrom,
ZelnickMedia and the Company hereby agree as follows:
1.
Management
Fee.
Section
4 of the Agreement shall be amended and restated in its entirety as
follows:
“4.
Management
Fee.
On the
first day of each month during the term of this Agreement (each, a “Payment
Date”),
beginning April 1, 2008, the Company shall pay to ZelnickMedia a monthly
management fee of $208,333.33 ($2,500,000 per annum) in immediately available
funds (the “Management
Fee”).
On
March 1, 2008, the Company shall pay to ZelnickMedia a monthly management fee
of
$62,500, unless this Agreement is terminated in accordance with its terms prior
to such date.”
2.
Annual
Bonus.
Section
5 of the Agreement shall be amended and restated in its entirety as
follows:
“5.
Annual
Bonus.
In
addition to the Management Fee, ZelnickMedia shall receive an annual bonus
(the
“Annual
Bonus”)
of up
to $2,500,000 for each fiscal year of the Company ending on or after October
31,
2008; provided,
that
the maximum Annual Bonus for the fiscal year ending October 31, 2008 shall
be
pro rated to reflect a maximum Annual Bonus of $750,000 prior to April 1, 2008,
as determined by the Compensation Committee of the Board. The actual amount
of
the Annual Bonus shall be determined by the Compensation Committee of the Board
with respect to each fiscal year ending after the date hereof, and shall be
payable within 15 days of the Company’s receipt of its audited financial
statements for the applicable
fiscal year, but
in
any event paid prior to March 15 of the calendar year following the fiscal
year
to which the Annual Bonus relates,
as
follows::
| i. |
In
the event actual results in a given fiscal year during the term of
this
Agreement are less than 80% of the Target (as defined below), the
Annual
Bonus shall be zero.
|
| ii. |
In
the event actual results in a given fiscal year during the term of
this
Agreement are equal to or greater than 80% of the Target but less
than
100% of the Target, the Annual Bonus shall be between zero and $1,250,000,
pro rated on a straight-line basis between 80% and 100% based upon
the
actual percentage of Target
achieved.
|
| iii. |
In
the event actual results in a given fiscal year during the term of
this
Agreement are equal to or greater than 100% of the Target but less
than
120% of the Target, the Annual Bonus shall be between $1,250,000
and
$2,500,000, pro rated on a straight-line basis between 100% and 120%
based
upon the actual percentage of Target
achieved.
|
| iv. |
In
the event actual results in a given fiscal year during the term of
the
Agreement are equal to or greater than 120% of the Target, the Annual
Bonus shall be $2,500,000.
|
For
example, if the actual results in a given fiscal year are 110% of the Target
(as
defined in the Agreement), the Annual Bonus shall be $1,875,000 (without giving
effect to the proviso in the first sentence of this Section 5).
The
term
“Target” shall mean budgeted EBITDA of the Company (or other measurement of
financial performance reasonably determined by the members of the Board,
excluding the designees of ZelnickMedia pursuant to Section 3 above, and agreed
with ZelnickMedia for a particular year), determined within 30 days of the
beginning of that year by mutual agreement of the Company and ZelnickMedia,
each
acting reasonably and in good faith, and measured without giving effect to
any
payments under this Agreement.”
3.
Personnel.
Section
3 of the Agreement shall be amended and restated in its entirety as
follows:
“3.
Personnel.
(i)
ZelnickMedia shall provide and devote to the performance of this Agreement
such
employees, agents and representatives of ZelnickMedia, and for such time, as
ZelnickMedia shall deem appropriate for the furnishing of the services required
hereunder. Notwithstanding the generality of the foregoing, it is agreed that
in
the performance of its duties hereunder, ZelnickMedia shall make available
the
following individuals to provide the described services:
(A)
During the term of the Agreement Strauss Zelnick shall serve as the Executive
Chairman of the Board, and shall devote a sufficient amount of his business
time
to the performance of his duties during the term of this Agreement, consistent
with past practice.
(B)
Benjamin
Feder shall serve as Chief Executive Officer (“CEO”)
of the
Company and shall enter into an employment agreement setting forth the duties
of
such position and providing for an annual salary of $1.00.
(C)
Karl
Slatoff shall serve as an Executive Vice President of the Company and shall
enter into an employment agreement setting forth the duties of such position
and
providing for an annual salary of $1.00.
(D)
Other
ZelnickMedia personnel as appropriate, shall provide services to the Company
on
a project-by-project, as needed basis.
(ii)
In
the event that Mr. Feder or any other employee of ZelnickMedia acting in an
executive capacity for the Company is unable or unavailable to serve as CEO
of
the Company or such other capacity, as the case may be, ZelnickMedia shall
provide a qualified individual to serve in such capacity, who must be reasonably
satisfactory to the Board. If ZelnickMedia does not provide a qualified
replacement reasonably acceptable to the Board within a reasonable period of
time, the Company may fill such position with a person not affiliated with
ZelnickMedia and deduct the costs of such person’s compensation (including cash
and equity compensation) from ZelnickMedia’s compensation under the Agreement;
provided,
however,
that
such costs shall not be deducted from ZelnickMedia’s compensation hereunder if
Mr. Feder or such other employee of ZelnickMedia, as applicable, is terminated
by the Company without Cause or resigns for Good Reason (each as defined in
such
person’s employment agreement with the Company). The Compensation Committee of
the Board of Directors of the Company shall determine the value of the equity
awarded to such replacement person and the appropriate deductions from the
cash
and equity compensation payable to ZelnickMedia (including, the Management
Fee
and Annual Bonus, and the equity awards pursuant to Section 6 below);
provided,
however,
that in
no event shall ZelnickMedia be required to forfeit any cash compensation paid
to
ZelnickMedia or any vested equity awards, whether granted pursuant to Section
6
below or otherwise.”
2
4.
Equity
Award.
The
following shall be added to Section 6 of the Agreement immediately prior to
the
final paragraph of such Section 6:
“ZelnickMedia
(or upon the prior written notice of ZelnickMedia to the Company, an affiliate
of ZelnickMedia) shall be entitled to receive 600,000 shares of time-based
restricted stock of the Company and 900,000 shares of performance-based
restricted stock of the Company, pursuant to and in accordance with the terms
and conditions of the agreements attached as Exhibit
A
and
Exhibit
B
hereto,
respectively (the “Grant
Agreements”),
to be
granted on the Issuance Date (as defined in the Second Amendment to the
Management Agreement). In the event that there is a Change in Control on or
after the Effective Date and prior to the Issuance Date, the Board shall act
in
good faith to take all reasonably necessary actions to compensate ZelnickMedia
for the economic value it could have received if such Change in Control had
occurred following the Issuance Date in accordance with the terms and conditions
of each of the Grant Agreements.
All
shares of restricted stock granted pursuant to the Grant Agreements shall be
subject to the restrictions and benefits set forth in the last paragraph of
this
Section 6. Notwithstanding anything to the contrary contained in Section 8
of
the Agreement, upon any Change in Control, the shares of restricted stock
granted pursuant to the Grant Agreements shall vest solely in accordance with
the terms of the respective Grant Agreement and Section 8 of the Agreement
shall
have no effect with respect to such shares of restricted stock.“
5.
Registration
Statement.
The
following shall be added as Section 23 of the Agreement:
“23.
Registration
Statement.
Subject
to the receipt of necessary information from ZelnickMedia (or its designated
affiliate, if applicable) for inclusion in such filing, the Company shall,
within six months of the Effective Date, file a registration statement on Form
S-3 (or any applicable successor registration form) (the “Registration
Statement”)
covering the shares of the common stock granted to ZelnickMedia pursuant to
Section 6 above, including the shares of common stock issuable upon exercise
of
the stock option granted to ZelnickMedia on August 27, 2007. The Company shall
use its reasonable best efforts to prepare and file with the Securities and
Exchange Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary
to
keep the Registration Statement continuously effective and free from any
material misstatement or omission to state a material fact until such time
as
all such shares of common stock have been sold pursuant to a registration
statement or are otherwise freely tradeable.”
6.
Term.
The
term of the Agreement, as set forth in Section 8 thereof, shall be extended
by
one (1) year, to expire on October 31, 2012. Accordingly, all references to
October 31, 2011 contained in the Agreement shall be replaced with “October 31,
2012”.
7.
Transfer
to ZM Capital.
Pursuant to Section 16 of the Agreement, the Company hereby consents to the
assignment by ZelnickMedia of all of its rights and obligations under the
Agreement to ZM Capital Advisors, LLC, a Delaware limited liability company
(“ZM
Capital”);
provided,
however,
that
ZelnickMedia shall remain liable for all of the obligations hereunder and under
the Agreement. In the event ZelnickMedia elects to effect such assignment to
ZM
Capital, it shall cause ZM Capital to execute a joinder agreement to the
Agreement in form and substance reasonably acceptable to the
Company.
8.
Additional
Compensation.
In the
event that the there is a Change in Control (as defined in the Agreement) the
Compensation Committee of the Board of Directors of the Company shall consider
in good faith (taking into consideration such factors including, but not limited
to, (x) the contributions of ZelnickMedia and its personnel to the Company
pursuant to the Management Agreement and otherwise, and (y) the cash and equity
compensation paid to ZelnickMedia by the Company during the term of the
Agreement including, without limitation, in connection with such Change in
Control) and recommend to the independent members of the Board, the amount
of
additional compensation, if any, to be paid to ZelnickMedia in connection with
such Change in Control. The independent members of the Board shall consider
such
recommendation and determine in good faith (taking into consideration such
factors including, but not limited to, (x) the contributions of ZelnickMedia
and
its personnel to the Company pursuant to the Management Agreement and otherwise,
and (y) the cash and equity compensation paid to ZelnickMedia by the Company
during the term of the Agreement including, without limitation, in connection
with such Change in Control) the amount of additional compensation, if any,
to
be paid to ZelnickMedia in connection with such Change in Control.
3
9.
Recommendation.
The
Company shall include the Proposals (as defined below) in the proxy statement
for the 2008 annual meeting of the stockholders of the Company and the Board
shall recommend that the stockholders vote “FOR” the Proposals.
10.
No
Further Amendments.
ZelnickMedia and the Company acknowledge and agree that the Agreement, as
amended by the First Amendment to the Agreement and this Amendment, will not
be
further revised during the balance of the term of the Agreement.
11.
Effective
Date.
This
Amendment, other than Sections 4, 5 and 10 (the “Contingent
Provisions”),
shall
be binding upon the parties as of the date hereof. The Contingent Provisions
shall be of no force or effect unless and until, at the 2008 annual meeting
of
stockholders of the Company, such stockholders approve an amendment to the
Company’s Incentive Stock Plan to permit grants of equity awards to consultants
and to increase the number of shares authorized for issuance under such plan
(the “Proposals”).
In
the event such amendment is approved by the stockholders of the Company, then
the Contingent Provisions shall become effective on and as of the date of the
2008 annual meeting of stockholders of the Company (the “Effective
Date”)
and
the shares of restricted stock described in Section 4 above shall be granted
on
the earlier of (i) the fifth trading day following the filing of the Company’s
Quarterly Report on Form 10-Q for its second fiscal quarter (ending April 30,
2008), currently anticipated to be in June 2008 and (ii) June 30, 2008 (such
earlier date, the “Issuance
Date”).
If
such amendment to the Company’s Incentive Stock Plan is not approved at the 2008
annual meeting, then the Contingent Provisions will be null and void and the
parties will have no obligations thereunder.
12.
Miscellaneous.
Except
as expressly provided herein, the Agreement remains unchanged and in full force
and effect. This Amendment may be executed and delivered by each party hereto
in
separate counterparts, each of which when so executed and delivered shall be
deemed an original and both of which taken together shall constitute one and
the
same agreement. This Amendment and any dispute arising hereunder shall be
governed by and construed in accordance with the domestic laws of the State
of
Delaware, without giving effect to any choice of law or conflict of laws
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than
the
State of Delaware.
*
* * *
*
4
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered on the date and year first above written.
|
|
ZELNICKMEDIA
CORPORATION
|
|
|
|
|
|
|
|
By:
|
/s/
Strauss Zelnick
|
|
|
|
Name:
Strauss Zelnick
|
|
|
|
Title:
President
|
|
|
|
|
|
|
|
|
|
|
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
|
|
|
|
|
|
|
|
By:
|
/s/
Michael Dornemann
|
|
|
|
Name:
Michael Dornemann
|
|
|
|
Title:
Director
|
|
By:
|
/s/ Seth D. Krauss | |
| Name: Seth D. Krauss | ||
|
Title: Executive Vice
President and General Counsel.
|
||
5
EXHIBIT
A
RESTRICTED
STOCK AGREEMENT
PURSUANT
TO THE
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
INCENTIVE
STOCK PLAN
This
Restricted Stock Agreement (this “Agreement”),
dated
June [ ], 2008, is made by and between Take-Two Interactive Software, Inc.
(the
“Company”)
and
[ ]
(the “Participant”).
WITNESSETH:
WHEREAS,
the
Company has adopted the Take-Two Interactive Software, Inc. Incentive Stock
Plan, as amended through the date hereof (the “Plan”),
which
is administered by the Compensation Committee (the “Committee”)
of the
Company’s Board of Directors (the “Board”);
WHEREAS,
pursuant
to Section 5 of the Plan, the Committee may grant to Consultants shares of
its
common stock, par value $0.01 per share (“Common
Stock”);
WHEREAS,
pursuant
to the Management Agreement between ZelnickMedia Corporation (“ZelnickMedia”)
and
the Company, dated as of March 30, 2007, as amended on July 26, 2007 and
February 14, 2008 (the “Management
Agreement”),
the
Company agreed to issue to ZelnickMedia
or one its designated affiliates,
and the
Committee has approved the grant of, the Common Stock set forth herein;
and
WHEREAS,
such
shares of Common Stock granted to the Participant hereunder are to be subject
to
certain restrictions prior to and following the vesting thereof.
NOW,
THEREFORE,
for and
in consideration of the mutual promises herein contained, and for other good
and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Grant
of Shares.
Subject
to the restrictions, terms and conditions of this Agreement, the Company
hereby
awards, effective as of the date hereof, to the Participant Six Hundred Thousand
(600,000) shares of duly authorized, validly issued, fully paid and
non-assessable Common Stock (the “Shares”).
Pursuant to Sections 2(a), 3(c) and 3(d) hereof, the Shares are subject to
certain transfer restrictions and possible risk of forfeiture. While such
restrictions are in effect, the Shares subject to such restrictions shall
be
referred to herein as “Restricted
Stock.”
2. Restrictions
on Transfer.
(a) Restricted
Stock.
The
Participant shall not sell, transfer, pledge, hypothecate, assign or otherwise
dispose of the Restricted Stock, except as set forth in the Plan or this
Agreement. Any attempted sale, transfer, pledge, hypothecation, assignment
or
other disposition of the Restricted Stock in violation of the Plan or this
Agreement shall be void and of no effect and the Company shall have the right
to
disregard the same on its books and records and to issue “stop transfer”
instructions to its transfer agent. Restricted Stock shall be transferable
to
any affiliate of the Participant, in whole or in part, provided that such
Shares
shall remain subject to the terms of this Agreement and each transferee agrees
in writing to take such Shares subject to and to comply with the restrictions
on
transfer contained in this Agreement.
(b) Common
Stock.
Until
October 31, 2012 or earlier if the Management Agreement is earlier terminated
in
accordance with its terms, the Participant shall not sell or otherwise dispose
(other than to an affiliate or employee of the Participant) of any shares
of
Common Stock acquired hereunder and the preceding restriction shall not be
waivable by the Company without the approval of stockholders holding a majority
of the Company’s outstanding voting securities at the time such approval is
given; provided,
however,
that
the foregoing shall not limit the right of the Participant and/or any
Permitted Transferee (as defined below)
to sell
or otherwise dispose of that number of shares of Common Stock necessary to
satisfy any taxes imposed on the Participant, its shareholders, its affiliates
and/or its members or partners, or
Permitted Transferees,
as a
result of the vesting of the shares of Restricted Stock hereunder or in
connection with the transfer of shares by the Participant to such Permitted
Transferee;
provided, further, that in
connection with any transfer of shares by the Participant to Permitted
Transferee, each such
transferee agrees in writing to take such Shares subject to and comply with
the
restrictions on transfer contained in this Agreement.
For
purposes of this Agreement, “Permitted
Transferee”
shall
mean (i) an affiliate or employee of the Participant, (ii) any transfer for
estate planning purposes to or for the benefit of any spouse, child or
grandchild of an employee of the Participant or its affiliates, or (iii)
any
trust or partnership for the benefit of any of the foregoing individuals,
including transfers by will or the laws of descent and
distribution.
3. Restricted
Stock.
(a) Retention
of Certificates.
Promptly
after the date of this Agreement, the Company shall issue stock certificates
representing the Restricted Stock unless it elects to recognize such ownership
through book entry or another similar method pursuant to Section 8 herein.
The
stock certificates shall be registered in the Participant’s name and shall bear
any legend required under the Plan or Section 4 hereof. Unless held in book
entry form, such stock certificates shall be held in custody by the Company
(or
its designated agent) until the restrictions thereon shall have lapsed. The
Participant shall deliver to the Company a duly signed stock power, endorsed
in
blank, relating to the Restricted Stock; provided,
that such stock power shall provide that it may only be used to effect a
transfer back to the Company upon the forfeiture by the Participant of the
Restricted Stock in accordance with the provisions of this Agreement.
If the
Participant receives a stock dividend or extraordinary cash dividend on the
Restricted Stock or the Restricted Stock is split or the Participant receives
any other shares, securities, moneys or property representing a dividend
on the
Restricted Stock (other than regular cash dividends and other cash equivalent
distributions on and after the date of this Agreement) or representing a
distribution or return of capital upon or in respect of the Restricted Stock
or
any part thereof, or resulting from a split-up, reclassification or other
like
changes of the Restricted Stock, or otherwise received in exchange therefor,
and
any warrants, rights or options issued to the Participant in respect of the
Restricted Stock (collectively “RS
Property”),
the
Participant will also immediately deposit with and deliver to the Company
any of
such RS Property, including any certificates representing shares duly endorsed
in blank or accompanied by stock powers duly executed in blank (provided,
that
such stock powers shall provide that they may only be used to effect a transfer
back to the Company upon the forfeiture by the Participant of such RS Property
in accordance with the provisions of this Agreement), and such RS Property
shall
be subject to the same restrictions, including that of this Section 3(a),
as the
Restricted Stock with regard to which they are issued and shall herein be
encompassed within the term “Restricted Stock.”
2
(b) Rights
with Regard to Restricted Stock.
The
Participant will have the right to vote the Restricted Stock, to receive
and
retain any regular cash dividends and other cash equivalent distributions
(but
not any dividends that constitute RS Property) payable to holders of Common
Stock of record on and after the transfer of the Restricted Stock (although
such
dividends shall be treated, to the extent required by applicable law, as
additional compensation for tax purposes if paid on Restricted Stock and
any
dividends that constitute RS Property will be subject to the restrictions
provided herein), and to exercise all other rights, powers and privileges
of a
holder of Common Stock with respect to the Restricted Stock set forth in
the
Plan,
including the right to tender the Restricted Stock (although the consideration
received in respect thereof shall be treated as “Restricted Stock”
hereunder),
with
the exceptions that: (i) the Participant will not be entitled to delivery
of the
stock certificate or certificates representing the Restricted Stock until
the
Restriction Period shall have expired; (ii) the Company (or its designated
agent) will retain custody of the stock certificate or certificates representing
the Restricted Stock and the other RS Property during the Restriction Period;
(iii) no RS Property shall bear interest or be segregated in separate accounts
during the Restriction Period; and (iv) the Participant may not sell, assign,
transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of
the RS
Property during the Restriction Period except
as
otherwise permitted under the Plan or this Agreement.
(c) Vesting.
(i) The
Restricted Stock shall become vested and cease to be Restricted Stock (but
shall
remain subject to the other terms of this Agreement and the Plan) in the
amounts
set forth opposite the Vesting Dates listed in the table below; provided,
that
with respect to each tranche the Management Agreement shall not have been
terminated (other than a termination by ZelnickMedia
or its assignee
with
Good Reason (as defined in the Management Agreement) or by the Company without
Cause (as defined in the Management Agreement)) (a “Termination”)
prior
to such date;
provided, further, shares of Restricted Stock that do not vest on or prior
to
June [ ], 2011 shall be forfeited and shall revert back to the Company without
any payment to the Participant, and the Participant shall thereafter have
no
rights with respect to such shares of Restricted Stock; provided, further,
that
all shares of Restricted Stock shall immediately vest in the event the
Management Agreement is terminated by the Company without Cause or by
ZelnickMedia or its assignee for Good Reason.
|
Vesting
Date
|
Shares
Vested
|
|
|
June
[ ], 2009
|
200,000
|
|
|
June
[ ], 2010
|
200,000
|
|
|
June
[ ], 2011
|
200,000
|
3
(ii) There
shall be no proportionate or partial vesting prior to any Vesting
Date with
respect to the Shares scheduled to vest on such Vesting Date.
(iii) In
the
event of a Change in Control (as defined in the Management Agreement) prior
to
June [ ], 2011, all shares of Restricted Stock shall become vested and cease
to
be Restricted Stock immediately prior to the consummation of such Change
in
Control. Notwithstanding the foregoing, if (w)
prior
to the Effective Date (as defined in the Second Amendment to the Management
Agreement), the Company shall have received a bona fide indication of interest
in, or offer to enter into, a business combination (an “Offer”)
from a
third party, (x) such Offer shall specify, with some degree of particularity,
the material terms thereof (y) the existence of the Offer is not publicly
disclosed or confirmed by the Company or such third party prior to the Effective
Date, and (z) the transaction proposed by such Offer is consummated prior
to
November 14, 2008 and the consummation of such transaction constitutes a
Change
in Control, then the
preceding sentence shall not apply and the Committee shall consider in good
faith, taking into consideration such factors including, but not limited
to, the
contributions of ZelnickMedia and its personnel to the Company pursuant to
the
Management Agreement and otherwise, and recommend to the independent members
of
the Board, a number of shares of Restricted Stock, if any, to become vested
and
cease to be Restricted Stock in connection with such Change in Control. The
independent members of the Board shall consider such recommendation and
determine in good faith, taking into consideration such factors including,
but
not limited to, the contributions of ZelnickMedia and its personnel to the
Company pursuant to the Management Agreement and otherwise, the number of
shares
of Restricted Stock, if any, which shall become vested and cease to be
Restricted Stock in connection with such Change in Control and the remaining
shares of Restricted Stock shall be forfeited to the Company without
compensation other than the repayment of any par value paid by the Participant
for such Shares (if any).
(iv) When
any
Shares of Restricted Stock become vested, the Company shall promptly issue
and
deliver, unless the Company is using a book entry or similar method pursuant
to
Section 8 of this Agreement, to the Participant a new stock certificate
registered in the name of the Participant for such Shares without the legend
set
forth in Section 4 hereof and deliver to the Participant any related other
RS
Property, subject to applicable withholding.
(d) Forfeiture.
The
Participant shall forfeit to the Company, without compensation, other than
repayment of any par value paid by the Participant for such Shares (if any),
any
and all Restricted Stock and RS Property the
termination of the Management Agreement by the Company for Cause or by
ZelnickMedia
or its assignee without Good Reason. For the avoidance of doubt, any shares
of
Common Stock which become vested and cease to be Restricted Stock pursuant
to
the terms of Section 3(c) above shall not be subject to forfeiture pursuant
to
this Section 3(d).
(e) Taxes.
The
Participant shall be solely responsible for all applicable federal, state
and
local or foreign taxes the Participant incurs from the grant or vesting of
the
Restricted Stock.
4
(f) Section
83(b).
If the
Participant properly elects (as required by Section 83(b) of the Code) within
30
days after the grant of the Restricted Stock to include in gross income for
federal income tax purposes in the year of issuance the fair market value
of all
or a portion of such Shares of Restricted Stock, the Participant shall be
solely
responsible for any federal, state or local taxes the Participant incurs
in
connection with such election. The Participant acknowledges that it is the
Participant’s sole responsibility, and not the Company’s, to file timely and
properly the election under Section 83(b) of the Code and any corresponding
provisions of state tax laws if the Participant elects to utilize such
election.
(g) Delivery
Delay.
The
delivery of any certificate representing the Restricted Stock or other RS
Property may be postponed by the Company for such period as may be required
for
it to comply with any applicable federal or state securities law, or any
national securities exchange listing requirements and the Company is not
obligated to issue or deliver any securities if, in the opinion of counsel
for
the Company, the issuance of such Shares shall constitute a violation by
the
Participant or the Company of any provisions of any applicable federal or
state
law or of any regulations of any governmental authority or any national
securities exchange.
4. Legend.
All
certificates representing the Restricted Stock shall have endorsed thereon
the
following legends:
(a) “The
anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge of the shares of stock represented hereby are subject
to
the terms and conditions (including forfeiture) of the Take-Two Interactive
Software, Inc. (the “Company”) Incentive Stock Plan (as the same may be amended
or supplemented from time to time, the “Plan”) and an agreement entered into
between the registered owner and the Company evidencing the award under the
Plan. Copies of such Plan and agreement are on file at the principal office
of
the Company.”
(b) Any
legend required to be placed thereon by applicable blue sky laws of any
state.
Notwithstanding
the foregoing, in no event shall the Company be obligated to issue a certificate
representing the Restricted Stock prior to the vesting dates set forth
above.
5. Securities
Representations.
The
Shares are being issued to the Participant and this Agreement is being made
by
the Company in reliance upon the following express representations and
warranties of the Participant.
The
Participant acknowledges, represents and warrants that:
(a) the
Participant has been advised that the Participant may be an “affiliate” within
the meaning of Rule 144 under the Securities Act of 1933, as amended (the
“Act”)
and in
this connection the Company is relying in part on the Participant’s
representations set forth in this section.
5
(b) If
the
Participant is deemed an affiliate within the meaning of Rule 144 of the
Act,
the Shares must be held indefinitely unless an exemption from any applicable
resale restrictions is available or the Company files an additional registration
statement (or a “re-offer prospectus”) with regard to such Shares and, other
than pursuant to the Management Agreement, the Company is under no obligation
to
register the Shares (or to file a “re-offer prospectus”).
(c) If
the
Participant is deemed an affiliate within the meaning of Rule 144 of the
Act,
the Participant understands that the exemption from registration under Rule
144
will not be available unless (i) a public trading market then exists for
the
Common Stock of the Company, (ii) adequate information concerning the Company
is
then available to the public, and (iii) other terms and conditions of Rule
144
or any exemption therefrom are complied with; and that any sale of the Shares
may be made only in limited amounts in accordance with such terms and
conditions.
6. No
Obligation to Continue Service.
This
Agreement is not an agreement of consultancy. This Agreement does not guarantee
that the Company or its affiliates will retain, or continue to retain, the
Participant during the entire, or any portion of the, term of this Agreement,
including but not limited to any period during which the Restricted Stock
is
outstanding, nor does it modify in any respect the Company or its affiliate’s
right to terminate or modify the Participant’s consultancy or
compensation.
7. Power
of Attorney.
The
Company, its successors and assigns, is hereby appointed the attorney-in-fact,
with full power of substitution, of the Participant for the purpose of carrying
out the provisions of this Agreement and taking any action and executing
any
instruments which such attorney-in-fact may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. The Company, as attorney-in-fact
for
the Participant, may in the name and stead of the Participant, make and execute
all conveyances, assignments and transfers of the Restricted Stock, Shares
and
property provided for herein, and the Participant hereby ratifies and confirms
all that the Company, as said attorney-in-fact, shall do by virtue hereof.
Nevertheless, the Participant shall, if so requested by the Company, execute
and
deliver to the Company all such instruments as may, in the judgment of the
Company, be advisable for the purpose.
8. Uncertificated
Shares.
Notwithstanding anything else herein, to the extent permitted under applicable
law, the Company may, issue the Restricted Stock in the form of uncertificated
shares. Such uncertificated shares of Restricted Stock shall be credited
to a
book entry account maintained by the Company (or its designee) on behalf
of the
Participant. If thereafter certificates are issued with respect to the
uncertificated shares of Restricted Stock, such issuance and delivery of
certificates shall be in accordance with the applicable terms of this
Agreement.
9. Provisions
of Plan Control.
This
Agreement is subject to all the terms, conditions and provisions of the Plan,
including, without limitation, the amendment provisions thereof, and to such
rules, regulations and interpretations relating to the Plan as may be adopted
by
the Committee and as may be in effect from time to time. The Plan is
incorporated herein by reference. Capitalized terms in this Agreement that
are
not otherwise defined shall have the same meaning as set forth in the Plan.
If
and to the extent that this Agreement conflicts or is inconsistent with the
terms, conditions and provisions of the Plan, the Plan shall control, and
this
Agreement shall be deemed to be modified accordingly. This Agreement, the
Plan
and the Management Agreement contain the entire understanding of the parties
with respect to the subject matter hereof and supersedes any prior agreements
between the Company and the Participant with respect to the subject matter
hereof.
6
10. Notices.
Any
notice or communication given hereunder (each a “Notice”)
shall
be in writing and shall be sent by personal delivery, by courier or by United
States mail (registered or certified mail, postage prepaid and return receipt
requested), to the appropriate party at the address set forth below:
If
to the
Company, to:
Take-Two
Interactive Software, Inc.
622
Broadway
New
York,
New York 10012
Attention:
General Counsel
If
to the
Participant, to:
or
such
other address or to the attention of such other person as a party shall have
specified by prior Notice to the other party. Each Notice will be deemed
given
and effective upon actual receipt (or refusal of receipt).
11. Governing
Law.
All
questions concerning the construction, validity and interpretation of this
Agreement will be governed by, and construed in accordance with, the domestic
laws of the State of Delaware, without giving effect to any choice of law
or
conflict of law provision or rule (whether of the State of Delaware or any
other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
12. Consent
to Jurisdiction.
In the
event of any dispute, controversy or claim between the Company or any affiliate
and the Participant in any way concerning, arising out of or relating to
the
Plan or this Agreement (a “Dispute”),
including without limitation any Dispute concerning, arising out of or relating
to the interpretation, application or enforcement of the Plan or this Agreement,
the parties hereby (a) agree and consent to the personal jurisdiction of
the
courts of the State of New York located in New York County and/or the Federal
courts of the United States of America located in the Southern District of
New
York (collectively, the “Agreed
Venue”)
for
resolution of any such Dispute, (b) agree that those courts in the Agreed
Venue,
and only those courts, shall have exclusive jurisdiction to determine any
Dispute, including any appeal, and (c) agree that any cause of action arising
out of this Agreement shall be deemed to have arisen from a transaction of
business in the State of New York. The parties also hereby irrevocably (i)
submit to the jurisdiction of any competent court in the Agreed Venue (and
of
the appropriate appellate courts therefrom), (ii) to the fullest extent
permitted by law, waive any and all defenses the parties may have on the
grounds
of lack of jurisdiction of any such court and any other objection that such
parties may now or hereafter have to the laying of the venue of any such
suit,
action or proceeding in any such court (including without limitation any
defense
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum), and (iii) consent to service of process
in
any such suit, action or proceeding, anywhere in the world, whether within
or
without the jurisdiction of any such court, in any manner provided by applicable
law. Without limiting the foregoing, each party agrees that service of process
on such party pursuant to a Notice as provided in Section 11 hereof shall
be
deemed effective service of process on such party. Any action for enforcement
or
recognition of any judgment obtained in connection with a Dispute may be
enforced in any competent court in the Agreed Venue or in any other court
of
competent jurisdiction.
7
13. Counterparts.
This
Agreement may be executed (including by facsimile transmission) with counterpart
signature pages or in separate counterparts each of which shall be an original
and all of which taken together shall constitute one and the same
agreement.
14. Miscellaneous.
(a) This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, legal representatives, successors and
assigns.
(b) In
the
event of any stock split, subdivision, dividend or distribution payable in
shares of Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly shares of
Common
Stock), combination or other similar recapitalization or event occurring
after
the date hereof, each reference in this Agreement to a number of shares shall
be
amended to appropriately account for such event.
(c) The
failure of any party hereto at any time to require performance by another
party
of any provision of this Agreement shall not affect the right of such party
to
require performance of that provision, and any waiver by any party of any
breach
of any provision of this Agreement shall not be construed as a waiver of
any
continuing or succeeding breach of such provision, a waiver of the provision
itself, or a waiver of any right under this Agreement.
[End
of
text. Signature page follows.]
8
IN
WITNESS WHEREOF,
the
parties have executed this Agreement on the date and year first above
written.
|
COMPANY:
|
|
|
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
[ZELNICKMEDIA
CORPORATION]
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
[Taxpayer
Identification Number]
|
|
9
EXHIBIT
B
PERFORMANCE
BASED RESTRICTED STOCK AGREEMENT
PURSUANT
TO THE
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
INCENTIVE
STOCK PLAN
This
Performance Based Restricted Stock Agreement (this “Agreement”),
dated
June [ ], 2008 (the “Grant
Date”),
is
made by and between Take-Two Interactive Software, Inc. (the “Company”)
and
[ ]
(the “Participant”).
WITNESSETH:
WHEREAS,
the
Company has adopted the Take-Two Interactive Software, Inc. Incentive Stock
Plan, as amended through the date hereof (the “Plan”),
which
is administered by the Compensation Committee (the “Committee”)
of the
Company’s Board of Directors;
WHEREAS,
pursuant
to Section 7 of the Plan, the Committee may grant to Consultants shares
of its
common stock, par value $0.01 per share (“Common
Stock”);
WHEREAS,
pursuant
to the Management Agreement between ZelnickMedia Corporation (“ZelnickMedia”)
and
the Company, dated as of March 30, 2007, as amended on July 26, 2007 and
February 14, 2008 (the “Management
Agreement”),
the
Company agreed to issue to ZelnickMedia or one its designated affiliates,
and
the Committee has approved the grant of, the Common Stock set forth herein;
and
WHEREAS,
such
shares of Common Stock granted to the Participant hereunder are to be subject
to
certain restrictions prior to and following the vesting thereof.
NOW,
THEREFORE,
for and
in consideration of the mutual promises herein contained, and for other
good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Grant
of Shares.
Subject
to the restrictions, terms and conditions of this Agreement, the Company
hereby
awards, effective as of the date hereof, to the Participant Nine Hundred
Thousand (900,000) shares of duly authorized, validly issued, fully paid
and
non-assessable Common Stock (the “Shares”).
Pursuant to Sections 2(a), 3(c) and 3(d) hereof, the Shares are subject
to
certain transfer restrictions and possible risk of forfeiture. While such
restrictions are in effect, the Shares subject to such restrictions shall
be
referred to herein as “Restricted
Stock.”
2. Restrictions
on Transfer.
(a) Restricted
Stock.
The
Participant shall not sell, transfer, pledge, hypothecate, assign or otherwise
dispose of the Restricted Stock, except as set forth in the Plan or this
Agreement. Any attempted sale, transfer, pledge, hypothecation, assignment
or
other disposition of the Restricted Stock in violation of the Plan or this
Agreement shall be void and of no effect and the Company shall have the
right to
disregard the same on its books and records and to issue “stop transfer”
instructions to its transfer agent. Restricted Stock shall be transferable
to
any affiliate of the Participant, in whole or in part, provided that such
Shares
shall remain subject to the terms of this Agreement and each transferee
agrees
in writing to take such Shares subject to and to comply with the restrictions
on
transfer contained in this Agreement.
(b) Common
Stock.
Until
October 31, 2012 or earlier if the Management Agreement is earlier terminated
in
accordance with its terms, the Participant shall not sell or otherwise
dispose
(other than to an affiliate or employee of the Participant) of any shares
of
Common Stock acquired hereunder and the preceding restriction shall not
be
waivable by the Company without the approval of stockholders holding a
majority
of the Company’s outstanding voting securities at the time such approval is
given; provided,
however,
that
the foregoing shall not limit the right of the Participant and/or any
Permitted Transferee (as defined below)
to sell
or otherwise dispose of that number of shares of Common Stock necessary
to
satisfy any taxes imposed on the Participant, its shareholders, its affiliates
and/or its members or partners, or
Permitted Transferees,
as a
result of the vesting of the shares of Restricted Stock hereunder or in
connection with the transfer of shares by the Participant to such Permitted
Transferee;
provided, further, that in
connection with any transfer of shares by the Participant to Permitted
Transferee, each such
transferee agrees in writing to take such Shares subject to and comply
with the
restrictions on transfer contained in this Agreement.
For
purposes of this Agreement, “Permitted
Transferee”
shall
mean (i) an affiliate or employee of the Participant, (ii) any transfer
for
estate planning purposes to or for the benefit of any spouse, child or
grandchild of an employee of the Participant or its affiliates, or (iii)
any
trust or partnership for the benefit of any of the foregoing individuals,
including transfers by will or the laws of descent and
distribution.
3. Restricted
Stock.
(a) Retention
of Certificates.
Promptly
after the date of this Agreement, the Company shall issue stock certificates
representing the Restricted Stock unless it elects to recognize such ownership
through book entry or another similar method pursuant to Section 8 herein.
The
stock certificates shall be registered in the Participant’s name and shall bear
any legend required under the Plan or Section 4 hereof. Unless held in
book
entry form, such stock certificates shall be held in custody by the Company
(or
its designated agent) until the restrictions thereon shall have lapsed.
The
Participant shall deliver to the Company a duly signed stock power, endorsed
in
blank, relating to the Restricted Stock; provided,
that such stock power shall provide that it may only be used to effect
a
transfer back to the Company upon the forfeiture by the Participant of
the
Restricted Stock in accordance with the provisions of this Agreement.
If the
Participant receives a stock dividend or extraordinary cash dividend on
the
Restricted Stock or the Restricted Stock is split or the Participant receives
any other shares, securities, moneys or property representing a dividend
on the
Restricted Stock (other than regular cash dividends and other cash equivalent
distributions on and after the date of this Agreement) or representing
a
distribution or return of capital upon or in respect of the Restricted
Stock or
any part thereof, or resulting from a split-up, reclassification or other
like
changes of the Restricted Stock, or otherwise received in exchange therefor,
and
any warrants, rights or options issued to the Participant in respect of
the
Restricted Stock (collectively “RS
Property”),
the
Participant will also immediately deposit with and deliver to the Company
any of
such RS Property, including any certificates representing shares duly endorsed
in blank or accompanied by stock powers duly executed in blank (provided,
that
such stock powers shall provide that they may only be used to effect a
transfer
back to the Company upon the forfeiture by the Participant of such RS Property
in accordance with the provisions of this Agreement), and such RS Property
shall
be subject to the same restrictions, including that of this Section 3(a),
as the
Restricted Stock with regard to which they are issued and shall herein
be
encompassed within the term “Restricted Stock.”
2
(b) Rights
with Regard to Restricted Stock.
The
Participant will have the right to vote the Restricted Stock, to receive
and
retain any regular cash dividends and other cash equivalent distributions
(but
not any dividends that constitute RS Property) payable to holders of Common
Stock of record on and after the transfer of the Restricted Stock (although
such
dividends shall be treated, to the extent required by applicable law, as
additional compensation for tax purposes if paid on Restricted Stock and
any
dividends that constitute RS Property will be subject to the restrictions
provided herein), and to exercise all other rights, powers and privileges
of a
holder of Common Stock with respect to the Restricted Stock set forth in
the
Plan,
including the right to tender the Restricted Stock (although the consideration
received in respect thereof shall be treated as “Restricted Stock”
hereunder),
with
the exceptions that: (i) the Participant will not be entitled to delivery
of the
stock certificate or certificates representing the Restricted Stock until
the
Restriction Period shall have expired; (ii) the Company (or its designated
agent) will retain custody of the stock certificate or certificates representing
the Restricted Stock and the other RS Property during the Restriction Period;
(iii) no RS Property shall bear interest or be segregated in separate accounts
during the Restriction Period; and (iv) the Participant may not sell, assign,
transfer, pledge, hypothecate, exchange, encumber or otherwise dispose
of the RS
Property during the Restriction Period except
as
otherwise permitted under the Plan or this Agreement.
(c) Vesting.
(i) The
Restricted Stock shall become vested and cease to be Restricted Stock (but
shall
remain subject to the other terms of this Agreement and the Plan) based
on the
achievement of the performance goal described on Annex A attached hereto;
provided,
that
the Management Agreement shall not have been terminated (other than a
termination by ZelnickMedia or its assignee with Good Reason (as defined
in the
Management Agreement) or by the Company without Cause (as defined in the
Management Agreement)) (a “Termination”)
prior
to the achievement of the performance goal described on Annex A; provided,
further,
that
any shares of Restricted Stock that do not vest on or prior to June [ ],
2012
shall be forfeited and shall revert back to the Company without any payment
to
the Participant, and the Participant shall thereafter have no rights with
respect to such shares of Restricted Stock; provided,
further,
that
all shares of Restricted Stock shall immediately vest in the event the
Management Agreement is terminated by the Company without Cause or by
ZelnickMedia or its assignee for Good Reason.
(ii) In
the
event of a Change in Control (as defined in the Management Agreement),
then the
Restricted Stock shall vest or be forfeited as follows:
(A)
If a
Change in Control occurs on or prior to March 31, 2009, then (x) 180,000
shares
of Restricted Stock shall become vested and cease to be Restricted Stock
immediately prior to the consummation of such Change in Control, and (y)
the
Committee shall consider in good faith, taking into consideration such
factors
including, but not limited to, the contributions of ZelnickMedia and its
personnel to the Company pursuant to the Management Agreement and otherwise,
and
recommend to the independent members of the Board a number of shares of
Restricted Stock, if any, to become vested and cease to be Restricted Stock
in
connection with such Change in Control. The independent members of the
Board
shall consider such recommendation and determine in good faith, taking
into
consideration such factors including, but not limited to, the contributions
of
ZelnickMedia and its personnel to the Company pursuant to the Management
Agreement and otherwise, the number of additional shares of Restricted
Stock, if
any, which shall become vested and cease to be Restricted Stock in connection
with such Change in Control. Any remaining shares of Restricted Stock shall
be
forfeited to the Company without compensation other than the repayment
of any
par value paid by the Participant for such Shares (if any).
3
(B)
Notwithstanding anything to the contrary in clause (A) of this Section
3(c)(ii),
if (w)
prior
to the Effective Date (as defined in the Second Amendment to the Management
Agreement), the Company shall have received a bona
fide
indication of interest in, or offer to enter into, a business combination
(an
“Offer”)
from a
third party, (x) such Offer shall specify, with some degree of particularity,
the material terms thereof, (y) the existence of the Offer is not publicly
disclosed or confirmed by the Company or such third party prior to the
Effective
Date, and (z)
the
transaction proposed by such Offer is consummated prior to November 14,
2008 and
the consummation of such transaction constitutes a Change in Control, then
Section 3(c)(ii)(A) shall not apply and the Committee shall consider in
good
faith, taking into consideration such factors including, but not limited
to, the
contributions of ZelnickMedia and its personnel to the Company pursuant
to the
Management Agreement and otherwise, and recommend to the independent members
of
the Board a number of shares of Restricted Stock, if any, to become vested
and
cease to be Restricted Stock in connection with such Change in Control.
The
independent members of the Board shall consider such recommendation and
determine in good faith, taking into consideration such factors including,
but
not limited to, the contributions of ZelnickMedia and its personnel to
the
Company pursuant to the Management Agreement and otherwise, the number
of shares
of Restricted Stock, if any, which shall become vested and cease to be
Restricted Stock in connection with such Change in Control and the remaining
shares of Restricted Stock shall be forfeited to the Company without
compensation other than the repayment of any par value paid by the Participant
for such Shares (if any).
(C) If
a
Change in Control occurs on or following April 1, 2009, all shares of Restricted
Stock shall become vested and cease to be Restricted Stock immediately
prior to
the consummation of such Change in Control.
(iii) When
any
Shares of Restricted Stock become vested, the Company shall promptly issue
and
deliver, unless the Company is using a book entry or similar method pursuant
to
Section 8 of this Agreement, to the Participant a new stock certificate
registered in the name of the Participant for such Shares without the legend
set
forth in Section 4 hereof and deliver to the Participant any related other
RS
Property, subject to applicable withholding.
(d) Forfeiture.
The
Participant shall forfeit to the Company, without compensation, other than
repayment of any par value paid by the Participant for such Shares (if
any), any
and all Restricted Stock and RS Property upon the termination of the Management
Agreement by the Company for Cause or by ZelnickMedia or its assignee without
Good Reason. For the avoidance of doubt, any shares of Common Stock which
become
vested and cease to be Restricted Stock pursuant to the terms of Section
3(c)
above shall not be subject to forfeiture pursuant to this Section
3(d).
4
(e) Taxes.
The
Participant shall be solely responsible for all applicable federal, state
and
local or foreign taxes the Participant incurs from the grant or vesting
of the
Restricted Stock.
(f) Section
83(b).
If the
Participant properly elects (as required by Section 83(b) of the Code)
within 30
days after the grant of the Restricted Stock to include in gross income
for
federal income tax purposes in the year of issuance the fair market value
of all
or a portion of such Shares of Restricted Stock, the Participant shall
be solely
responsible for any federal, state or local taxes the Participant incurs
in
connection with such election. The Participant acknowledges that it is
the
Participant’s sole responsibility, and not the Company’s, to file timely and
properly the election under Section 83(b) of the Code and any corresponding
provisions of state tax laws if the Participant elects to utilize such
election.
(g) Delivery
Delay.
The
delivery of any certificate representing the Restricted Stock or other
RS
Property may be postponed by the Company for such period as may be required
for
it to comply with any applicable federal or state securities law, or any
national securities exchange listing requirements and the Company is not
obligated to issue or deliver any securities if, in the opinion of counsel
for
the Company, the issuance of such Shares shall constitute a violation by
the
Participant or the Company of any provisions of any applicable federal
or state
law or of any regulations of any governmental authority or any national
securities exchange.
4. Legend.
All
certificates representing the Restricted Stock shall have endorsed thereon
the
following legends:
(a) “The
anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge of the shares of stock represented hereby are subject
to
the terms and conditions (including forfeiture) of the Take-Two Interactive
Software, Inc. (the “Company”) Incentive Stock Plan (as the same may be amended
or supplemented from time to time, the “Plan”) and an agreement entered into
between the registered owner and the Company evidencing the award under
the
Plan. Copies of such Plan and agreement are on file at the principal office
of
the Company.”
(b) Any
legend required to be placed thereon by applicable blue sky laws of any
state.
Notwithstanding
the foregoing, in no event shall the Company be obligated to issue a certificate
representing the Restricted Stock prior to the vesting dates set forth
above.
5
5. Securities
Representations.
The
Shares are being issued to the Participant and this Agreement is being
made by
the Company in reliance upon the following express representations and
warranties of the Participant.
The
Participant acknowledges, represents and warrants that:
(a) the
Participant has been advised that the Participant may be an “affiliate” within
the meaning of Rule 144 under the Securities Act of 1933, as amended (the
“Act”)
and in
this connection the Company is relying in part on the Participant’s
representations set forth in this section.
(b) If
the
Participant is deemed an affiliate within the meaning of Rule 144 of the
Act,
the Shares must be held indefinitely unless an exemption from any applicable
resale restrictions is available or the Company files an additional registration
statement (or a “re-offer prospectus”) with regard to such Shares and, other
than pursuant to the Management Agreement, the Company is under no obligation
to
register the Shares (or to file a “re-offer prospectus”).
(c) If
the
Participant is deemed an affiliate within the meaning of Rule 144 of the
Act,
the Participant understands that the exemption from registration under
Rule 144
will not be available unless (i) a public trading market then exists for
the
Common Stock of the Company, (ii) adequate information concerning the Company
is
then available to the public, and (iii) other terms and conditions of Rule
144
or any exemption therefrom are complied with; and that any sale of the
Shares
may be made only in limited amounts in accordance with such terms and
conditions.
6. No
Obligation to Continue Service.
This
Agreement is not an agreement of consultancy. This Agreement does not guarantee
that the Company or its affiliates will retain, or continue to retain,
the
Participant during the entire, or any portion of the, term of this Agreement,
including but not limited to any period during which the Restricted Stock
is
outstanding, nor does it modify in any respect the Company or its affiliate’s
right to terminate or modify the Participant’s consultancy or
compensation.
7. Power
of Attorney.
The
Company, its successors and assigns, is hereby appointed the attorney-in-fact,
with full power of substitution, of the Participant for the purpose of
carrying
out the provisions of this Agreement and taking any action and executing
any
instruments which such attorney-in-fact may deem necessary or advisable
to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. The Company, as attorney-in-fact
for
the Participant, may in the name and stead of the Participant, make and
execute
all conveyances, assignments and transfers of the Restricted Stock, Shares
and
property provided for herein, and the Participant hereby ratifies and confirms
all that the Company, as said attorney-in-fact, shall do by virtue hereof.
Nevertheless, the Participant shall, if so requested by the Company, execute
and
deliver to the Company all such instruments as may, in the judgment of
the
Company, be advisable for the purpose.
8. Uncertificated
Shares.
Notwithstanding anything else herein, to the extent permitted under applicable
law, the Company may, issue the Restricted Stock in the form of uncertificated
shares. Such uncertificated shares of Restricted Stock shall be credited
to a
book entry account maintained by the Company (or its designee) on behalf
of the
Participant. If thereafter certificates are issued with respect to the
uncertificated shares of Restricted Stock, such issuance and delivery of
certificates shall be in accordance with the applicable terms of this
Agreement.
6
9. Provisions
of Plan Control.
This
Agreement is subject to all the terms, conditions and provisions of the
Plan,
including, without limitation, the amendment provisions thereof, and to
such
rules, regulations and interpretations relating to the Plan as may be adopted
by
the Committee and as may be in effect from time to time. The Plan is
incorporated herein by reference. Capitalized terms in this Agreement that
are
not otherwise defined shall have the same meaning as set forth in the Plan.
If
and to the extent that this Agreement conflicts or is inconsistent with
the
terms, conditions and provisions of the Plan, the Plan shall control, and
this
Agreement shall be deemed to be modified accordingly. This Agreement, the
Plan
and the Management Agreement contain the entire understanding of the parties
with respect to the subject matter hereof and supersedes any prior agreements
between the Company and the Participant with respect to the subject matter
hereof.
10. Notices.
Any
notice or communication given hereunder (each a “Notice”)
shall
be in writing and shall be sent by personal delivery, by courier or by
United
States mail (registered or certified mail, postage prepaid and return receipt
requested), to the appropriate party at the address set forth below:
If
to the
Company, to:
Take-Two
Interactive Software, Inc.
622
Broadway
New
York,
New York 10012
Attention:
General Counsel
If
to the
Participant, to:
or
such
other address or to the attention of such other person as a party shall
have
specified by prior Notice to the other party. Each Notice will be deemed
given
and effective upon actual receipt (or refusal of receipt).
11. Governing
Law.
All
questions concerning the construction, validity and interpretation of this
Agreement will be governed by, and construed in accordance with, the domestic
laws of the State of Delaware, without giving effect to any choice of law
or
conflict of law provision or rule (whether of the State of Delaware or
any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
7
12. Consent
to Jurisdiction.
In the
event of any dispute, controversy or claim between the Company or any affiliate
and the Participant in any way concerning, arising out of or relating to
the
Plan or this Agreement (a “Dispute”),
including without limitation any Dispute concerning, arising out of or
relating
to the interpretation, application or enforcement of the Plan or this Agreement,
the parties hereby (a) agree and consent to the personal jurisdiction of
the
courts of the State of New York located in New York County and/or the Federal
courts of the United States of America located in the Southern District
of New
York (collectively, the “Agreed
Venue”)
for
resolution of any such Dispute, (b) agree that those courts in the Agreed
Venue,
and only those courts, shall have exclusive jurisdiction to determine any
Dispute, including any appeal, and (c) agree that any cause of action arising
out of this Agreement shall be deemed to have arisen from a transaction
of
business in the State of New York. The parties also hereby irrevocably
(i)
submit to the jurisdiction of any competent court in the Agreed Venue (and
of
the appropriate appellate courts therefrom), (ii) to the fullest extent
permitted by law, waive any and all defenses the parties may have on the
grounds
of lack of jurisdiction of any such court and any other objection that
such
parties may now or hereafter have to the laying of the venue of any such
suit,
action or proceeding in any such court (including without limitation any
defense
that any such suit, action or proceeding brought in any such court has
been
brought in an inconvenient forum), and (iii) consent to service of process
in
any such suit, action or proceeding, anywhere in the world, whether within
or
without the jurisdiction of any such court, in any manner provided by applicable
law. Without limiting the foregoing, each party agrees that service of
process
on such party pursuant to a Notice as provided in Section 11 hereof shall
be
deemed effective service of process on such party. Any action for enforcement
or
recognition of any judgment obtained in connection with a Dispute may be
enforced in any competent court in the Agreed Venue or in any other court
of
competent jurisdiction.
13. Counterparts.
This
Agreement may be executed (including by facsimile transmission) with counterpart
signature pages or in separate counterparts each of which shall be an original
and all of which taken together shall constitute one and the same
agreement.
14. Miscellaneous.
(a) This
Agreement shall inure to the benefit of and be binding upon the parties
hereto
and their respective heirs, legal representatives, successors and
assigns.
(b) In
the
event of any stock split, subdivision, dividend or distribution payable
in
shares of Common Stock (or other securities or rights convertible into,
or
entitling the holder thereof to receive directly or indirectly shares of
Common
Stock), combination or other similar recapitalization or event occurring
after
the date hereof, each reference in this Agreement to a number of shares
or a
price per share shall be amended to appropriately account for such
event.
(c) The
failure of any party hereto at any time to require performance by another
party
of any provision of this Agreement shall not affect the right of such party
to
require performance of that provision, and any waiver by any party of any
breach
of any provision of this Agreement shall not be construed as a waiver of
any
continuing or succeeding breach of such provision, a waiver of the provision
itself, or a waiver of any right under this Agreement.
[End
of
text. Signature page follows.]
8
IN
WITNESS WHEREOF,
the
parties have executed this Agreement on the date and year first above
written.
|
COMPANY:
|
|
|
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
PARTICIPANT:
|
|
|
[ZELNICKMEDIA
CORPORATION]
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
[Taxpayer
Identification Number]
|
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9
Annex
A
Vesting
A.
Vesting.
The
Restricted Stock shall become vested and cease to be Restricted Stock (but
shall
remain subject to the other terms of this Agreement and the Plan) in the
amounts
set forth opposite the Vesting Dates listed in the table below; provided,
that
with respect to each tranche, the Committee has determined that the applicable
Measurement Price (as defined below) with respect to the Common Stock on
the
trading date immediately preceding the applicable Vesting Date (each a
“Measurement
Date”)
achieves a Percentile Rank (as defined below) of 75% or higher with respect
to
Total Shareholder Return (as defined below) relative to the Peer Group
(as
defined below) for the period from the Grant Date though the applicable
Measurement Date:
|
Vesting
Date
|
Shares Eligible to Vest
|
|||
|
June
[ ], 2009
|
180,000
|
|||
|
June
[ ], 2010
|
270,000
|
|||
|
June
[ ], 2011
|
405,000
|
|||
|
June
[ ], 2012
|
45,000
|
|||
There
shall be no proportionate or partial vesting prior to any Vesting Date
with
respect to the Shares scheduled to vest on such Vesting Date or
the
achievement of any Percentile Rank with respect to Total Shareholder Return
prior to the applicable Measurement Date.
B.
Catch-Up;
Forfeiture.
In
the
event that the Company does not achieve
a
Percentile Rank of 75% or higher with respect to Total Shareholder Return
relative to the Peer Group as of a Measurement Date, the
Shares of Restricted Stock that otherwise would have vested on the applicable
Vesting Date shall nevertheless vest as of any succeeding Vesting Date
if the
Company achieves
a
Percentile Rank of 75% or higher with respect to Total Shareholder Return
relative to the Peer Group as of the Measurement Date applicable to such
succeeding Vesting Date.
Any
Shares of Restricted Stock that have not vested as
of
final
Vesting
Date
shall
automatically be forfeited and shall revert back to
the
Company without compensation to the Participant, other than the repayment
of any
par value paid by the Participant for such Shares (if any).
C.
Definitions.
“Base
Price”
means
the average closing price of the Common Stock or the common stock of a
Peer
Group company, as applicable, for each trading day during the 90 day period
ending on the day immediately prior to the Grant Date.
“Measurement
Price”
means
with respect to a Vesting Date, the average closing price of the Common
Stock or
the common stock of a Peer Group company, as applicable, for each of the
10
trading days ending on (and including) the applicable Measurement
Date.
The
“Peer
Group”
shall
consist of the companies that comprise The NASDAQ Industrial Index on the
applicable Measurement Date.
The
“Percentile
Rank”
of
a
given company’s Total Shareholder Return is defined as the percentage of the
Peer Group companies’ returns falling at or below the company’s Total
Shareholder Return. The formula for calculating the Percentile Rank is
as
follows:
Percentile
Rank = (N-R+1)/N * 100
Where:
|
total
number of companies in the Peer Group
|
|
|
R
=
|
the
numeric rank of the Company’s Total Shareholder Return relative to the
Peer Group, where the highest Total Shareholder Return in the Peer Group
is ranked number 1
|
The
Percentile Rank shall be rounded to the nearest whole percentage, with
(.5)
rounded up.
To
illustrate, if the Company’s Total Shareholder Return is the 25th
highest
in a Peer Group comprised of 100 companies, its Percentile Rank would be
76. The
calculation is: (100 - 25 + 1)/100 x 100 =76.
“Total
Shareholder Return”
means
the percentage change in the value of the Common Stock or the common stock
of a
Peer Group company, as applicable, from the Base Price to the Measurement
Price
on the applicable Measurement Date.
2
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”)
is
entered into on February 14, 2008 (the “Signing
Date”),
by
and between Take-Two Interactive Software, Inc., a Delaware corporation (the
“Company”),
and
Benjamin Feder (the “Employee”).
WITNESSETH:
WHEREAS,
the Company is a party to that certain Management Agreement, dated as of March
30, 2007, by and between the Company and ZelnickMedia Corporation (“ZelnickMedia”),
as
amended on July 26, 2007 and on February 14, 2008 (as further amended from
time
to time following the Signing Date, the “Management
Agreement”);
WHEREAS,
the Employee is currently a principal of ZelnickMedia and has been serving
as
the Chief Executive Officer of the Company on an interim basis;
WHEREAS,
simultaneously with the execution of this Agreement, the Company and
ZelnickMedia are entering into the Second Amendment to Management Agreement
(the
“Second
Amendment”),
pursuant to which ZelnickMedia is agreeing to make the Employee available to
serve as the Chief Executive Officer of the Company under the terms and
conditions of this Agreement which sets forth the duties of such position and
provides for an annual salary of $1.00;
WHEREAS,
the Company desires to continue to employ the Employee as its Chief Executive
Officer during the Term (as defined herein) on the terms and conditions
hereinafter set forth; and
WHEREAS,
the Employee is willing to accept such employment on such terms and
conditions.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, and intending to be legally bound hereby, the Company and the
Employee hereby agree as follows:
1. Term.
The
Company hereby agrees to continue to employ the Employee, and the Employee
hereby agrees to continue to serve the Company, for a period commencing on
the
Signing Date and, unless earlier terminated pursuant to the next sentence or
Section 6 below, ending on the date of termination of the Management Agreement
(such period being herein referred to as the “Term”).
2. Employee
Duties.
(a) During
the Term, the Employee shall serve as the Chief Executive Officer of the Company
and have the duties and responsibilities customarily associated with such
position in a company the size and nature of the Company. Employee shall report
directly to the Chairman of the Board of Directors of the Company (the
“Board”),
as
well as the entire Board.
(b)
The
Employee shall devote such amount of his business time, attention, knowledge
and
skills as are necessary to faithfully, diligently and to the best of his ability
perform his duties hereunder in furtherance of the business and activities
of
the Company. The principal place of performance by the Employee of his duties
hereunder shall be the Company’s principal executive offices in New York, New
York, although the Employee may be required from time to time to travel outside
of the area where the Company’s principal executive offices are located in
connection with the business of the Company. Notwithstanding the foregoing,
nothing in this Agreement shall prevent the Employee from continuing in his
position as a principal of ZelnickMedia and its affiliates; provided that such
activities do not materially interfere with Employee’s duties and
responsibilities under this Agreement or
create
a material conflict of interest with the business of the Company.
The
Employee hereby acknowledges and agrees that the Company shall have no
obligation to pay or provide the Employee any amounts or benefits beyond the
amounts and benefits set forth in Sections 3, 4 and 5 below, and that the
compensation and benefits provided to the Employee by ZelnickMedia in connection
with his duties as a principal thereof provide good
and
valuable consideration for the performance of his duties under this
Agreement.
3. Compensation.
During
the Term, the Company shall pay the Employee a salary (the “Salary”)
at a
rate of $1.00 per annum, payable on the last day of each fiscal year of the
Company. The Employee shall not be entitled to receive an annual bonus from
the
Company.
4. Benefits.
(a) During
the Term, the Employee shall have the right to receive or participate in all
benefits and plans which the Company may from time to time institute during
such
period for its executive officers and for its employees in general and for
which
the Employee is eligible (including the Company’s Medical Expenses Reimbursement
Plan). Nothing paid to the Employee under any plan or arrangement presently
in
effect or made available in the future shall be deemed to be in lieu of the
salary or any other obligation payable to the Employee pursuant to this
Agreement.
(b) During
the Term, the Employee will be entitled to the number of paid holidays, personal
days off, vacation days and sick leave days in each calendar year as are
determined by the Company from time to time (provided that in no event shall
vacation time be fewer than four weeks per year). Such vacation may be taken
in
the Employee’s discretion at such time or times as are not inconsistent with the
reasonable business needs of the Company.
5. Travel
Expenses.
All
travel and other expenses incident to the rendering of services reasonably
incurred on behalf of the Company by the Employee during the Term shall be
paid
by the Company. If any such expenses are paid in the first instance by the
Employee, the Company shall promptly reimburse him therefor on presentation
of
appropriate receipts for any such expenses. All travel and lodging arrangements
shall be made in accordance with Company’s regular policies and the Management
Agreement.
2
6. Termination.
Notwithstanding the provisions of Section 1 hereof, the Employee’s
employment with the Company may be earlier terminated as follows:
(a) By
action
taken by the Board or the Chairman of the Company, the Employee may be
discharged for any reason or no reason effective as of such time as the Board
shall determine. Upon discharge of the Employee pursuant to this
Section 6(a), the Company shall have no further obligation or duties to the
Employee, except as provided in Section 8(g), and the Employee shall have
no further obligations or duties to the Company, except as provided in Section
7.
(b) (i)
In
the event of the death of the Employee or (ii) by action taken by the Board
or
the Chairman of the Company in the event of the Employee’s inability, by reason
of physical or mental disability, to continue substantially to perform his
duties hereunder for a period of 180 consecutive days, during which 180 day
period Salary and any other benefits hereunder shall not be suspended or
diminished. Upon any termination of the Employee’s employment under this Section
6(b), the Company shall have no further obligations or duties to the Employee,
except as provided in Section 8(g).
7. Confidentiality;
Noncompetition; Nonsolicitation.
(a) The
Company and the Employee acknowledge that the services to be performed by the
Employee under this Agreement are unique and extraordinary and, as a result
of
such employment, the Employee will be in possession of confidential information
relating to the business practices of the Company. The term “confidential
information” shall mean any and all information (oral and written) relating to
the Company or any of its affiliates, or any of their respective activities,
other than such information which can be shown by the Employee to be in the
public domain (such information not being deemed to be in the public domain
merely because it is embraced by more general information which is in the public
domain) other than as the result of breach of the provisions of this Section
7(a), including, but not limited to, information relating to: trade secrets,
personnel lists, compensation of employees, financial information, research
projects, services used, pricing, customers, customer lists and prospects,
product sourcing, marketing and selling and servicing. Notwithstanding the
foregoing “confidential information” shall not include information relating to
the general methodology and mechanics employed by Employee in the performance
of
his duties with the Company or that Employee can reasonably demonstrate was
known to him prior to his employment with the Company. The Employee agrees
that
he will not, during or after his termination or expiration of employment
hereunder, directly or indirectly, use, communicate, disclose or disseminate
to
any person, firm or corporation any confidential information regarding the
clients, customers or business practices of the Company acquired by the Employee
during his employment by the Company, without the prior written consent of
the
Company. Anything herein to the contrary notwithstanding, the provisions of
this
Section 7(a) shall not apply (i) when disclosure is required by law or by any
court, arbitrator, mediator, administrative or legislative body (including
any
committee thereof), or any other governmental agency with actual or apparent
jurisdiction to order the Employee to disclose or make accessible any
information, (ii) with respect to any other litigation, arbitration or mediation
involving this Agreement, including, but not limited to, the enforcement of
this
Agreement, (iii) as to information that becomes generally known to the public
or
within the relevant trade or industry other than due to the Employee’s violation
of this Section or (iv) as to information that is or becomes available to the
Employee on a non-confidential basis from a source which is entitled to disclose
it to the Employee.
3
(b) The
Employee hereby agrees that he shall not, during the period of his employment
and, in the event that the Employee is terminated for Cause (as defined below)
or resigns without Good Reason (as defined below), for a period of one (1)
year
following such employment, within
any county (or adjacent county) in any State within the United States or
territory outside of the United States in which the Company is engaged in
business during the period of the Employee’s employment or on the date of
termination of the Employee’s employment, engage, have an interest in or render
any services to any business (whether as owner, manager, operator, licensor,
licensee, lender, partner, stockholder, joint venturer, employee, consultant
or
otherwise) directly competitive with the Company's business activities;
provided,
however,
that
the foregoing prohibition shall not apply to any existing business relationship
or portfolio companies of ZelnickMedia or
its
affiliates
as of
the Signing Date; provided,
further,
that
Employee shall not be in breach of this Section 7 solely as a result of
ZelnickMedia’s (or any
of
its affiliates’)
investment in, ownership of, or provision of services to, any business that
is
competitive with the Company so long as the Employee does not serve as a
principal officer of such business. Except
as
required by law or legal process, at no time during the Term or thereafter,
(i)
no authorized spokesperson or executive officer of the Company shall, directly
or indirectly, disparage (or cause any other person to disparage) the personal,
commercial, business or financial reputation of the Employee and (ii) the
Employee shall not, directly or indirectly, disparage (or cause any other person
to disparage) the personal, commercial, business or financial reputation of
the
Company or any of its executive officers.
(c) The
Employee hereby agrees that he shall not, during the period of his employment
and, in the event that the Employee is terminated for Cause or resigns without
Good Reason, for a period of one (1) year following such employment, directly
entice, solicit or in any other manner persuade or attempt to persuade any
officer, employee or customer, to discontinue or reduce his, her or its
relationship with the Company; provided,
that the foregoing shall not be violated by general advertising not targeted
at
officers,
employees, or customers
of the
Company.
(d) Following
the termination of the Employee’s employment for any reason whatsoever and upon
receipt of a written request from the Company, all documents, records,
notebooks, equipment, employee lists, price lists, specifications, programs,
customer and prospective customer lists and other materials which refer or
relate to any aspect of the business of the Company which are in the possession
of the Employee including all copies thereof, shall be promptly returned to
the
Company or, with the prior approval of the Company, destroyed by the Employee
and the Employee shall certify in writing to the Company as to such destruction.
Anything to the contrary notwithstanding, nothing in this Section 7(d) shall
prevent the Employee from retaining a home computer and security system, papers
and other materials of a personal nature, including personal diaries, calendars
and Rolodexes, information relating to the Employee’s compensation or relating
to reimbursement of expenses, information that the Employee reasonably believe
may be needed for tax purposes, and copies of plans, programs and agreements
relating to the Employee’s employment.
4
(e) The
products and proceeds of the Employee’s services hereunder that the Employee may
acquire, obtain, develop or create during the Term that relate to the Company’s
business, or that are otherwise made at the direction of the Company or with
the
use of the Company’s or its affiliates’ (other than ZelnickMedia and those of
its affiliates which, other than by reason of common control by ZelnickMedia,
are not affiliates of the Company ) facilities or materials, including,
but not limited to, all materials, ideas, concepts, formats, suggestions,
developments, packages, programs and other intellectual properties
(collectively, “Works”),
shall
be considered a “work
made for hire,”
as
that term is defined under the United States Copyright Act, and the Employee
shall be considered an employee for hire of the Company, and all rights in
and
to the Works, including the copyright thereto, shall be the sole and exclusive
property of the Company, as the sole author and owner thereof, and the copyright
thereto may be registered by the Company in its own name. In the event that
any
part of the Works shall be determined not to be a work made for hire or shall
be
determined not to be owned by the Company, the Employee hereby irrevocably
assigns and transfers to the Company, its successors and assigns, the following:
(a) the entire right, title and interest in and to the copyrights, trademarks
and other rights in any such Work and any rights in and to any works based
upon,
derived from, or incorporating any such Work (“Derivative
Work”);
(b)
the exclusive right to obtain, register and renew the copyrights or copyright
protection in any such Work or Derivative Work; (c) all income, royalties,
damages, claims and payments now or hereafter due or payable with respect to
any
such Work and Derivative Work; and (d) all causes of action in law or equity,
past and future, for infringements or violation of any of the rights in any
such
Work or Derivative Work, and any recoveries resulting therefrom. The Employee
also hereby waives in writing any moral or other rights that he has under state
or federal laws, or under the laws of any foreign jurisdiction, which would
give
him any rights to constrain or prevent the use of any Work or Derivative Work,
or which would entitle him to receive additional compensation from the Company.
The Employee shall execute all documents, including without limitation copyright
assignments and applications and waivers of moral rights, and perform all acts
that the Company may request, in order to assist the Company in perfecting
its
rights in and to any Work and Derivative Work anywhere in the world. The
Employee hereby appoints the officers of the Company as the Employee’s
attorney-in-fact to execute documents on behalf of the Employee for this limited
purpose
(f) The
parties hereto hereby acknowledge and agree that (i) the Company may be
irreparably injured in the event of a breach by the Employee of any of his
obligations under this Section 7, (ii) monetary damages may not be an adequate
remedy for any such breach, and (iii) the Company shall be entitled to seek
injunctive relief, in addition to any other remedy which it may have, in the
event of any such breach.
(g) It
is the
intent of the parties hereto that the covenants contained in this Section 7
shall be enforced to the fullest extent permissible under the laws and public
policies of each jurisdiction in which enforcement is sought (the Employee
hereby acknowledging that said restrictions are reasonably necessary for the
protection of the Company). Accordingly, it is hereby agreed that if any of
the
provisions of this Section 7 shall be adjudicated to be invalid or unenforceable
for any reason whatsoever, said provision shall be construed by limiting and
reducing it so as to be enforceable to the extent permissible, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of said provision in any other
jurisdiction.
5
(h) As
used
herein, “Cause”
shall
mean (i) the conviction of, or a plea of guilty or nolo
contendere
by, the
Employee of any felonious criminal act (other than traffic-related offenses
or
as a result of vicarious liability), (ii) fraud, or (iii) any act or omission
involving malfeasance or gross negligence by the Employee in the performance
of
his obligations hereunder, in the case of each of clauses (ii) through (iii)
above, that relates to and damages the Company and, if capable of being cured
so
that the Company is not materially damaged, is not so cured within 15 days
after
receipt by the Employee of written notice thereof.
(i) As
used
herein, “Good
Reason”
means
(i) a condition that materially impairs the ability of the Employee to perform
his duties as contemplated herein, (ii) the failure by the Company to perform
any of its material obligations under this Agreement or the Management
Agreement, or (iii) the requirement that the Employee’s place of service be
located outside a 10-mile radius of New York City, NY.
8. General.
This
Agreement is further governed by the following provisions:
(a) Notices.
All
notices relating to this Agreement shall be in writing and shall be either
personally delivered, sent by facsimile (receipt confirmed) or nationally
recognized overnight carrier or mailed by certified mail, return receipt
requested, to be delivered at such address as is indicated below, or at such
other address or to the attention of such other person as the recipient has
specified by prior written notice to the sending party. Notice shall be
effective when so personally delivered, one business day after being sent by
telecopy or five days after being mailed.
If
to
the Company:
Take-Two
Interactive Software, Inc.
622
Broadway
New
York,
New York 10012
Attention:
General Counsel
If
to
the Employee:
To
the
Employee’s address on the books and records of the Company.
(b) Parties
in Interest.
(i) Employee
may not delegate his duties or assign his rights hereunder.
(ii) This
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective heirs, legal representatives, successors and permitted
assigns.
(iii) No
rights
or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be
assigned or transferred pursuant to a merger, consolidation or similar
transaction in which the Company is not the continuing entity, or a sale or
liquidation of all or substantially all of the assets and business of the
Company; provided,
that
the assignee or transferee is the successor to all or substantially all of
the
assets and business of the Company and such assignee or transferee assumes
the
liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law.
6
(c) Entire
Agreement.
This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto, with respect to the employment of the Employee
by
the Company, other than the Management Agreement. This Agreement together with
the Management Agreement (as in effect on the Signing Date after giving effect
to the Second Amendment) contain all of the covenants and agreements between
the
parties with respect to such employment in any manner whatsoever. Any
modification or termination of this Agreement, or the Management Agreement
with
respect to the Employee’s employment by the Company, will be effective only if
it is in writing signed by the party to be charged.
(d) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York. Employee agrees to and hereby does submit to jurisdiction
before any state or federal court of record in New York County.
(e) Warranty.
Employee hereby warrants and represents as follows:
(i) That
the
execution of this Agreement and the discharge of Employee’s obligations
hereunder will not breach or conflict with any other contract, agreement, or
understanding between Employee and any other party or parties.
(ii) Employee
has ideas, information and know-how relating to the type of business conducted
by Company, and Employee’s disclosure of such ideas, information and know-how to
Company will not conflict with or violate the rights of any third party or
parties.
(iii) Employee
will not disclose any trade secrets relating to the business conducted by any
previous Company and agrees to indemnify and hold Company harmless for any
liability arising out of Employee’s use of any such trade secrets.
(f) Severability.
In the
event that any term or condition in this Agreement shall for any reason be
held
by a court of competent jurisdiction to be invalid, illegal or unenforceable
in
any respect, such invalidity, illegality or unenforceability shall not affect
any other term or condition of this Agreement, but this Agreement shall be
construed as if such invalid or illegal or unenforceable term or condition
had
never been contained herein.
7
(g) Indemnification.
The
Employee shall be entitled to the benefits of all provisions of the Certificate
of Incorporation and Bylaws of the Company, each as amended, that provide for
indemnification of officers and directors of the Company. In addition, without
limiting the indemnification provisions of the Certificate of Incorporation
or
Bylaws, to the fullest extent permitted by law, the Company shall indemnify
and
save and hold harmless the Employee from and against, and pay or reimburse,
any
and all claims, demands, liabilities, costs and expenses, including judgments,
fines or amounts paid on account thereof (whether in settlement or otherwise),
and reasonable expenses, including attorneys’ fees actually and reasonably
incurred (including, but not limited to, investigating, preparing, pursuing
or
defending any action, suit, investigation, proceeding, claim or liability if
the
Employee is made or threatened to be made a party to or witness in any action,
suit, investigation or proceeding, or if a claim or liability is asserted or
threatened to be asserted against Employee (whether or not in the right of
the
Company), by reason of the fact that he was or is a director, officer or
employee, or acted in such capacity on behalf of the Company, or the rendering
of services by the Employee pursuant to this Agreement or the Employee’s prior
employment agreement with the Company, whether or not the same shall proceed
to
judgment or be settled or otherwise brought to a conclusion (except only if
and
to the extent that such amounts shall be finally adjudged to have been caused
by
Employee’s willful misconduct or gross negligence). Upon the Employee’s request,
the Company will advance any reasonable expenses or costs, subject to the
Employee undertaking to repay any such advances in the event there is an
unappealable final determination that Employee is not entitled to
indemnification for such expenses. Employee shall be entitled to indemnification
under this Section regardless of any subsequent amendment of the Certificate
of
Incorporation or of the Bylaws of the Company. Further, Employee shall be
entitled to be covered by any directors’ and officers’ liability insurance
policies which the Company maintains for the benefit of its directors and
officers, subject to the limitations of such policies. This provision shall
survive the expiration or termination of this Agreement.
(h) Withholding.
The
Company may withhold from any and all amounts payable under this Agreement
such
federal, state and local taxes as may be required to be withheld pursuant to
any
applicable law or regulation.
(i) Execution
in Counterparts.
This
Agreement may be executed by the parties in one or more counterparts, each
of
which shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement, and shall become effective when one
or
more counterparts has been signed by each of the parties hereto and delivered
to
each of the other parties hereto.
[End
of
text - signature page follows]
8
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
|
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
|
||
|
By:
|
/s/ Michael Dornemann | |
|
|
Name:
Michael Dornemann
|
|
|
|
Title:
Director
|
|
|
By:
|
/s/ Seth D. Krauss | |
|
|
Name:
Seth D. Krauss
|
|
|
|
Title:
Executive Vice President
and
General Counsel
|
|
/s/
Benjamin
Feder
|
||
|
Benjamin
Feder
|
||
9
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”)
is
entered into on February 14, 2008 (the “Signing
Date”),
by
and between Take-Two Interactive Software, Inc., a Delaware corporation (the
“Company”),
and
Karl Slatoff (the “Employee”).
WITNESSETH:
WHEREAS,
the Company is a party to that certain Management Agreement, dated as of
March
30, 2007, by and between the Company and ZelnickMedia Corporation
(“ZelnickMedia”), as amended on July 26, 2007 and on February 14, 2008 (as
further amended from time to time following the Signing Date, the “Management
Agreement”);
WHEREAS,
the Employee is currently a principal of ZelnickMedia and has been providing
services to the Company on an as needed basis;
WHEREAS,
simultaneously with the execution of this Agreement, the Company and
ZelnickMedia are entering into the Second Amendment to Management Agreement
(the
“Second
Amendment”),
pursuant to which ZelnickMedia is agreeing to make the Employee available
to
serve as an Executive Vice President of the Company under the terms and
conditions of this Agreement which sets forth the duties of such position
and
provides for an annual salary of $1.00;
WHEREAS,
the Company desires to employ the Employee as an Executive Vice President
during
the Term (as defined herein) on the terms and conditions hereinafter set
forth;
and
WHEREAS,
the Employee is willing to accept such employment on such terms and
conditions.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, and intending to be legally bound hereby, the Company and the
Employee hereby agree as follows:
1. Term.
The
Company hereby agrees to continue to employ the Employee, and the Employee
hereby agrees to continue to serve the Company, for a period commencing on
the
Signing Date and, unless earlier terminated pursuant to the next sentence
or
Section 6 below, ending on the date of termination of the Management Agreement
(such period being herein referred to as the “Term”).
2. Employee
Duties.
(a) During
the Term, the Employee shall serve as an Executive Vice President of the
Company
and have the duties and responsibilities customarily associated with such
position in a company the size and nature of the Company. Employee shall
report
directly to the Chief Executive Officer and the Chairman of the Board of
Directors of the Company (the “Board”).
(b) The
Employee shall devote such amount of his business time, attention, knowledge
and
skills as are necessary to faithfully, diligently and to the best of his
ability
perform his duties hereunder in furtherance of the business and activities
of
the Company. The principal place of performance by the Employee of his duties
hereunder shall be the Company’s principal executive offices in New York, New
York, although the Employee may be required from time to time to travel outside
of the area where the Company’s principal executive offices are located in
connection with the business of the Company. Notwithstanding the foregoing,
nothing in this Agreement shall prevent the Employee from continuing in his
position as a principal of ZelnickMedia and its affiliates; provided that
such
activities do not materially interfere with Employee’s duties and
responsibilities under this Agreement or
create
a material conflict of interest with the business of the Company.
The
Employee hereby acknowledges and agrees that the Company shall have no
obligation to pay or provide the Employee any amounts or benefits beyond
the
amounts and benefits set forth in Sections 3, 4 and 5 below, and that the
compensation and benefits provided to the Employee by ZelnickMedia in connection
with his duties as a principal thereof provide good
and
valuable consideration for the performance of his duties under this
Agreement.
3. Compensation.
During
the Term, the Company shall pay the Employee a salary (the “Salary”)
at a
rate of $1.00 per annum, payable on the last day of each fiscal year of the
Company. The Employee shall not be entitled to receive an annual bonus from
the
Company.
4. Benefits.
(a) During
the Term, the Employee shall have the right to receive or participate in
all
benefits and plans which the Company may from time to time institute during
such
period for its executive officers and for its employees in general and for
which
the Employee is eligible (including the Company’s Medical Expenses Reimbursement
Plan). Nothing paid to the Employee under any plan or arrangement presently
in
effect or made available in the future shall be deemed to be in lieu of the
salary or any other obligation payable to the Employee pursuant to this
Agreement.
(b) During
the Term, the Employee will be entitled to the number of paid holidays, personal
days off, vacation days and sick leave days in each calendar year as are
determined by the Company from time to time (provided that in no event shall
vacation time be fewer than four weeks per year). Such vacation may be taken
in
the Employee’s discretion at such time or times as are not inconsistent with the
reasonable business needs of the Company.
5. Travel
Expenses.
All
travel and other expenses incident to the rendering of services reasonably
incurred on behalf of the Company by the Employee during the Term shall be
paid
by the Company. If any such expenses are paid in the first instance by the
Employee, the Company shall promptly reimburse him therefor on presentation
of
appropriate receipts for any such expenses. All travel and lodging arrangements
shall be made in accordance with Company’s regular policies and the Management
Agreement.
2
6. Termination.
Notwithstanding the provisions of Section 1 hereof, the Employee’s
employment with the Company may be earlier terminated as follows:
(a) By
action
taken by the Board or the Chairman of the Company, the Employee may be
discharged for any reason or no reason effective as of such time as the Board
shall determine. Upon discharge of the Employee pursuant to this
Section 6(a), the Company shall have no further obligation or duties to the
Employee, except as provided in Section 8(g), and the Employee shall have
no further obligations or duties to the Company, except as provided in Section
7.
(b) (i)
In
the event of the death of the Employee or (ii) by action taken by the Board
or
the Chairman of the Company in the event of the Employee’s inability, by reason
of physical or mental disability, to continue substantially to perform his
duties hereunder for a period of 180 consecutive days, during which 180 day
period Salary and any other benefits hereunder shall not be suspended or
diminished. Upon any termination of the Employee’s employment under this Section
6(b), the Company shall have no further obligations or duties to the Employee,
except as provided in Section 8(g).
7. Confidentiality;
Noncompetition; Nonsolicitation.
(a) The
Company and the Employee acknowledge that the services to be performed by
the
Employee under this Agreement are unique and extraordinary and, as a result
of
such employment, the Employee will be in possession of confidential information
relating to the business practices of the Company. The term “confidential
information” shall mean any and all information (oral and written) relating to
the Company or any of its affiliates, or any of their respective activities,
other than such information which can be shown by the Employee to be in the
public domain (such information not being deemed to be in the public domain
merely because it is embraced by more general information which is in the
public
domain) other than as the result of breach of the provisions of this Section
7(a), including, but not limited to, information relating to: trade secrets,
personnel lists, compensation of employees, financial information, research
projects, services used, pricing, customers, customer lists and prospects,
product sourcing, marketing and selling and servicing. Notwithstanding the
foregoing “confidential information” shall not include information relating to
the general methodology and mechanics employed by Employee in the performance
of
his duties with the Company or that Employee can reasonably demonstrate was
known to him prior to his employment with the Company. The Employee agrees
that
he will not, during or after his termination or expiration of employment
hereunder, directly or indirectly, use, communicate, disclose or disseminate
to
any person, firm or corporation any confidential information regarding the
clients, customers or business practices of the Company acquired by the Employee
during his employment by the Company, without the prior written consent of
the
Company. Anything herein to the contrary notwithstanding, the provisions
of this
Section 7(a) shall not apply (i) when disclosure is required by law or by
any
court, arbitrator, mediator, administrative or legislative body (including
any
committee thereof), or any other governmental agency with actual or apparent
jurisdiction to order the Employee to disclose or make accessible any
information, (ii) with respect to any other litigation, arbitration or mediation
involving this Agreement, including, but not limited to, the enforcement
of this
Agreement, (iii) as to information that becomes generally known to the public
or
within the relevant trade or industry other than due to the Employee’s violation
of this Section or (iv) as to information that is or becomes available to
the
Employee on a non-confidential basis from a source which is entitled to disclose
it to the Employee.
3
(b) The
Employee hereby agrees that he shall not, during the period of his employment
and, in the event that the Employee is terminated for Cause (as defined below)
or resigns without Good Reason (as defined below), for a period of one (1)
year
following such employment, within
any county (or adjacent county) in any State within the United States or
territory outside of the United States in which the Company is engaged in
business during the period of the Employee’s employment or on the date of
termination of the Employee’s employment, engage, have an interest in or render
any services to any business (whether as owner, manager, operator, licensor,
licensee, lender, partner, stockholder, joint venturer, employee, consultant
or
otherwise) directly competitive with the Company's business activities;
provided,
however,
that
the foregoing prohibition shall not apply to any existing business relationship
or portfolio companies of ZelnickMedia or
its
affiliates
as of
the Signing Date; provided,
further,
that
Employee shall not be in breach of this Section 7 solely as a result of
ZelnickMedia’s (or any
of
its affiliates’)
investment in, ownership of, or provision of services to, any business that
is
competitive with the Company so long as the Employee does not serve as a
principal officer of such business. Except
as
required by law or legal process, at no time during the Term or thereafter,
(i)
no authorized spokesperson or executive officer of the Company shall, directly
or indirectly, disparage (or cause any other person to disparage) the personal,
commercial, business or financial reputation of the Employee and (ii) the
Employee shall not, directly or indirectly, disparage (or cause any other
person
to disparage) the personal, commercial, business or financial reputation
of the
Company or any of its executive officers.
(c) The
Employee hereby agrees that he shall not, during the period of his employment
and, in the event that the Employee is terminated for Cause or resigns without
Good Reason, for a period of one (1) year following such employment, directly
entice, solicit or in any other manner persuade or attempt to persuade any
officer, employee or customer, to discontinue or reduce his, her or its
relationship with the Company; provided,
that the foregoing shall not be violated by general advertising not targeted
at
officers,
employees, or customers
of the
Company.
(d) Following
the termination of the Employee’s employment for any reason whatsoever and upon
receipt of a written request from the Company, all documents, records,
notebooks, equipment, employee lists, price lists, specifications, programs,
customer and prospective customer lists and other materials which refer or
relate to any aspect of the business of the Company which are in the possession
of the Employee including all copies thereof, shall be promptly returned
to the
Company or, with the prior approval of the Company, destroyed by the Employee
and the Employee shall certify in writing to the Company as to such destruction.
Anything to the contrary notwithstanding, nothing in this Section 7(d) shall
prevent the Employee from retaining a home computer and security system,
papers
and other materials of a personal nature, including personal diaries, calendars
and Rolodexes, information relating to the Employee’s compensation or relating
to reimbursement of expenses, information that the Employee reasonably believe
may be needed for tax purposes, and copies of plans, programs and agreements
relating to the Employee’s employment.
4
(e) The
products and proceeds of the Employee’s services hereunder that the Employee may
acquire, obtain, develop or create during the Term that relate to the Company’s
business, or that are otherwise made at the direction of the Company or with
the
use of the Company’s or its affiliates’ (other than ZelnickMedia and those of
its affiliates which, other than by reason of common control by ZelnickMedia,
are not affiliates of the Company ) facilities or materials, including,
but not limited to, all materials, ideas, concepts, formats, suggestions,
developments, packages, programs and other intellectual properties
(collectively, “Works”),
shall
be considered a “work
made for hire,”
as
that term is defined under the United States Copyright Act, and the Employee
shall be considered an employee for hire of the Company, and all rights in
and
to the Works, including the copyright thereto, shall be the sole and exclusive
property of the Company, as the sole author and owner thereof, and the copyright
thereto may be registered by the Company in its own name. In the event that
any
part of the Works shall be determined not to be a work made for hire or shall
be
determined not to be owned by the Company, the Employee hereby irrevocably
assigns and transfers to the Company, its successors and assigns, the following:
(a) the entire right, title and interest in and to the copyrights, trademarks
and other rights in any such Work and any rights in and to any works based
upon,
derived from, or incorporating any such Work (“Derivative
Work”);
(b)
the exclusive right to obtain, register and renew the copyrights or copyright
protection in any such Work or Derivative Work; (c) all income, royalties,
damages, claims and payments now or hereafter due or payable with respect
to any
such Work and Derivative Work; and (d) all causes of action in law or equity,
past and future, for infringements or violation of any of the rights in any
such
Work or Derivative Work, and any recoveries resulting therefrom. The Employee
also hereby waives in writing any moral or other rights that he has under
state
or federal laws, or under the laws of any foreign jurisdiction, which would
give
him any rights to constrain or prevent the use of any Work or Derivative
Work,
or which would entitle him to receive additional compensation from the Company.
The Employee shall execute all documents, including without limitation copyright
assignments and applications and waivers of moral rights, and perform all
acts
that the Company may request, in order to assist the Company in perfecting
its
rights in and to any Work and Derivative Work anywhere in the world. The
Employee hereby appoints the officers of the Company as the Employee’s
attorney-in-fact to execute documents on behalf of the Employee for this
limited
purpose
(f) The
parties hereto hereby acknowledge and agree that (i) the Company may be
irreparably injured in the event of a breach by the Employee of any of his
obligations under this Section 7, (ii) monetary damages may not be an adequate
remedy for any such breach, and (iii) the Company shall be entitled to seek
injunctive relief, in addition to any other remedy which it may have, in
the
event of any such breach.
(g) It
is the
intent of the parties hereto that the covenants contained in this Section
7
shall be enforced to the fullest extent permissible under the laws and public
policies of each jurisdiction in which enforcement is sought (the Employee
hereby acknowledging that said restrictions are reasonably necessary for
the
protection of the Company). Accordingly, it is hereby agreed that if any
of the
provisions of this Section 7 shall be adjudicated to be invalid or unenforceable
for any reason whatsoever, said provision shall be construed by limiting
and
reducing it so as to be enforceable to the extent permissible, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of said provision in any other
jurisdiction.
5
(h) As
used
herein, “Cause”
shall
mean (i) the conviction of, or a plea of guilty or nolo
contendere
by, the
Employee of any felonious criminal act (other than traffic-related offenses
or
as a result of vicarious liability), (ii) fraud, or (iii) any act or omission
involving malfeasance or gross negligence by the Employee in the performance
of
his obligations hereunder, in the case of each of clauses (ii) through (iii)
above, that relates to and damages the Company and, if capable of being cured
so
that the Company is not materially damaged, is not so cured within 15 days
after
receipt by the Employee of written notice thereof.
(i) As
used
herein, “Good
Reason”
means
(i) a condition that materially impairs the ability of the Employee to perform
his duties as contemplated herein, (ii) the failure by the Company to perform
any of its material obligations under this Agreement or the Management
Agreement, or (iii) the requirement that the Employee’s place of service be
located outside a 10-mile radius of New York City, NY.
8. General.
This
Agreement is further governed by the following provisions:
(a) Notices.
All
notices relating to this Agreement shall be in writing and shall be either
personally delivered, sent by facsimile (receipt confirmed) or nationally
recognized overnight carrier or mailed by certified mail, return receipt
requested, to be delivered at such address as is indicated below, or at such
other address or to the attention of such other person as the recipient has
specified by prior written notice to the sending party. Notice shall be
effective when so personally delivered, one business day after being sent
by
telecopy or five days after being mailed.
If
to
the Company:
Take-Two
Interactive Software, Inc.
622
Broadway
New
York,
New York 10012
Attention:
General Counsel
If
to
the Employee:
To
the
Employee’s address on the books and records of the Company.
(b) Parties
in Interest.
(i) Employee
may not delegate his duties or assign his rights hereunder.
(ii) This
Agreement shall inure to the benefit of, and be binding upon, the parties
hereto
and their respective heirs, legal representatives, successors and permitted
assigns.
(iii) No
rights
or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be
assigned or transferred pursuant to a merger, consolidation or similar
transaction in which the Company is not the continuing entity, or a sale
or
liquidation of all or substantially all of the assets and business of the
Company; provided,
that
the assignee or transferee is the successor to all or substantially all of
the
assets and business of the Company and such assignee or transferee assumes
the
liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law.
6
(c) Entire
Agreement.
This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto, with respect to the employment of the Employee
by
the Company, other than the Management Agreement. This Agreement together
with
the Management Agreement (as in effect on the Signing Date after giving effect
to the Second Amendment) contain all of the covenants and agreements between
the
parties with respect to such employment in any manner whatsoever. Any
modification or termination of this Agreement, or the Management Agreement
with
respect to the Employee’s employment by the Company, will be effective only if
it is in writing signed by the party to be charged.
(d) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York. Employee agrees to and hereby does submit to jurisdiction
before any state or federal court of record in New York County.
(e) Warranty.
Employee hereby warrants and represents as follows:
(i) That
the
execution of this Agreement and the discharge of Employee’s obligations
hereunder will not breach or conflict with any other contract, agreement,
or
understanding between Employee and any other party or parties.
(ii) Employee
has ideas, information and know-how relating to the type of business conducted
by Company, and Employee’s disclosure of such ideas, information and know-how to
Company will not conflict with or violate the rights of any third party or
parties.
(iii) Employee
will not disclose any trade secrets relating to the business conducted by
any
previous Company and agrees to indemnify and hold Company harmless for any
liability arising out of Employee’s use of any such trade secrets.
(f) Severability.
In the
event that any term or condition in this Agreement shall for any reason be
held
by a court of competent jurisdiction to be invalid, illegal or unenforceable
in
any respect, such invalidity, illegality or unenforceability shall not affect
any other term or condition of this Agreement, but this Agreement shall be
construed as if such invalid or illegal or unenforceable term or condition
had
never been contained herein.
7
(g) Indemnification.
The
Employee shall be entitled to the benefits of all provisions of the Certificate
of Incorporation and Bylaws of the Company, each as amended, that provide for
indemnification of officers and directors of the Company. In addition, without
limiting the indemnification provisions of the Certificate of Incorporation
or
Bylaws, to the fullest extent permitted by law, the Company shall indemnify
and
save and hold harmless the Employee from and against, and pay or reimburse,
any
and all claims, demands, liabilities, costs and expenses, including judgments,
fines or amounts paid on account thereof (whether in settlement or otherwise),
and reasonable expenses, including attorneys’ fees actually and reasonably
incurred (including, but not limited to, investigating, preparing, pursuing
or
defending any action, suit, investigation, proceeding, claim or liability
if the
Employee is made or threatened to be made a party to or witness in any action,
suit, investigation or proceeding, or if a claim or liability is asserted
or
threatened to be asserted against Employee (whether or not in the right of
the
Company), by reason of the fact that he was or is a director, officer or
employee, or acted in such capacity on behalf of the Company, or the rendering
of services by the Employee pursuant to this Agreement or the Employee’s prior
employment agreement with the Company, whether or not the same shall proceed
to
judgment or be settled or otherwise brought to a conclusion (except only
if and
to the extent that such amounts shall be finally adjudged to have been caused
by
Employee’s willful misconduct or gross negligence). Upon the Employee’s request,
the Company will advance any reasonable expenses or costs, subject to the
Employee undertaking to repay any such advances in the event there is an
unappealable final determination that Employee is not entitled to
indemnification for such expenses. Employee shall be entitled to indemnification
under this Section regardless of any subsequent amendment of the Certificate
of
Incorporation or of the Bylaws of the Company. Further, Employee shall be
entitled to be covered by any directors’ and officers’ liability insurance
policies which the Company maintains for the benefit of its directors and
officers, subject to the limitations of such policies. This provision shall
survive the expiration or termination of this Agreement.
(h) Withholding.
The
Company may withhold from any and all amounts payable under this Agreement
such
federal, state and local taxes as may be required to be withheld pursuant
to any
applicable law or regulation.
(i) Execution
in Counterparts.
This
Agreement may be executed by the parties in one or more counterparts, each
of
which shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement, and shall become effective when one
or
more counterparts has been signed by each of the parties hereto and delivered
to
each of the other parties hereto.
[End
of
text - signature page follows]
8
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
|
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
|
||
|
By:
|
/s/ Michael Dornemann | |
|
|
Name:
Michael Dornemann
|
|
|
|
Title:
Director
|
|
|
By:
|
/s/ Seth D. Krauss | |
|
|
Name:
Seth D. Krauss
|
|
|
|
Title:
Executive Vice President
and
General Counsel
|
|
/s/
Karl
Slatoff
|
||
|
Karl
Slatoff
|
||
9
FOR
IMMEDIATE RELEASE
CONTACT:
Meg
Maise
(Corporate Press/Investor Relations)
Take-Two
Interactive Software, Inc.
(646)
536-2932
meg.maise@take2games.com
Take-Two
Interactive Software, Inc. Announces
Executive
Appointments
New
York, NY - February 15, 2008
-
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) today announced several
executive appointments to ensure that the Company has the management resources
in place to continue its growth and development, and to take maximum advantage
of opportunities in the interactive entertainment marketplace.
The
Board
of Directors named Strauss Zelnick, currently Non-Executive Chairman, to the
position of Executive Chairman, and entered into an employment agreement with
Ben Feder, currently serving as Chief Executive Officer in connection with
the
services provided by ZelnickMedia pursuant to a management agreement with
Take-Two, to serve as CEO through October 31, 2012. In addition, Karl Slatoff
was named Executive Vice President, with key responsibilities in the area of
general management, administration and corporate development.
The
services of these executives are provided to Take-Two under an amended
management agreement with ZelnickMedia, and employment agreements with Ben
Feder
and Karl Slatoff, as detailed in the Company’s Form 8-K filed
today.
Strauss
Zelnick has served as Non-Executive Chairman of Take-Two and a member of the
Company’s Board since March 2007. He is the founding partner of ZelnickMedia, a
media and entertainment investment firm. Mr.
Zelnick and his partners have led the successful execution of several
operational turnarounds, including Columbia Music Entertainment of Japan and
Time-Life. Prior to founding ZelnickMedia in 2001, Mr. Zelnick held
several senior-level media industry positions, including president and chief
executive officer of BMG Entertainment, president and chief executive officer
of
Crystal Dynamics, and president and chief operating officer of 20th Century
Fox.
Ben
Feder
has been Acting CEO and a Board member of Take-Two since March 2007. A
co-founder of ZelnickMedia, Mr. Feder was previously chief executive officer
of
MessageClick, Inc., a leading provider of voice messaging technology for next
generation telephone networks. He previously served as a senior executive at
News Corp., where he held senior executive positions with News MCI Internet
Ventures, as well as the Fox film, television and cable division. Mr.
Feder also serves on the Board of Directors of Columbia Music
Entertainment.
Karl
Slatoff is a partner at ZelnickMedia, with expertise in the areas of music,
direct marketing, broadcast, interactive entertainment and new media. In
connection with the ZelnickMedia management agreement, for the past year Mr.
Slatoff has devoted significant time and energy to Take-Two and worked closely
with members of the Company’s management team, focusing on restructuring and
cost saving initiatives, and mergers and acquisitions. Previously, Mr. Slatoff
served as Vice President, New Media for BMG Entertainment. Before joining BMG,
he worked in strategic planning at the Walt Disney Company, where he focused
on
the consumer products, studio and broadcast divisions, as well as several
initiatives in the educational, publishing and new media sectors. Earlier,
he worked in the corporate finance and mergers and acquisitions units at Lehman
Brothers.
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Michael
Dornemann, Chairman of the Compensation Committee of the Company’s Board of
Directors, commented, “Take-Two has made enormous strides since the ZelnickMedia
team became involved in the Company approximately one year ago. Today’s
announcement reflects the Company’s progress since then, its evolving needs, as
well as its prospects for future growth. All three of these individuals have
devoted significant effort to revitalize Take-Two, and the management of the
Company has demanded a greater portion of their time, attention and energy
than
we contemplated at the outset. By naming Strauss Zelnick as Executive Chairman
and Ben Feder as CEO, and adding Karl Slatoff in a key role, we are ensuring
that Take-Two has the leadership to continue our positive momentum and leverage
the exciting opportunities in our industry.”
About
Take-Two Interactive Software
Headquartered
in New York City, Take-Two Interactive Software, Inc. is a global developer,
marketer, distributor and publisher of interactive entertainment software games
for the PC, PLAYSTATION®3 and PlayStation®2 computer entertainment systems, PSP®
(PlayStation®Portable) system, Xbox 360® and Xbox® video game and entertainment
systems from Microsoft, Wii™, Nintendo GameCube™, Nintendo DS™ and Game Boy®
Advance. The Company publishes and develops products through its wholly owned
labels Rockstar Games, 2K Games, 2K Sports and 2K Play, and distributes
software, hardware and accessories in North America through its Jack of All
Games subsidiary. Take-Two's common stock is publicly traded on NASDAQ under
the
symbol TTWO. For more corporate and product information please visit our website
at www.take2games.com.
All
trademarks and copyrights contained herein are the property of their respective
holders.
Safe
Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release contains forward-looking statements made in reliance upon
the
safe harbor provisions of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. The
statements contained herein which are not historical facts are considered
forward-looking statements under federal securities laws. Such forward-looking
statements are based on the beliefs of our management as well as assumptions
made by and information currently available to them. The Company has no
obligation to update such forward-looking statements. Actual results may vary
significantly from these forward-looking statements based on a variety of
factors. These risks and uncertainties include the matters relating to the
Special Committee’s investigation of the Company’s stock option grants and the
restatement of our consolidated financial statements. The investigation and
conclusions of the Special Committee may result in claims and proceedings
relating to such matters, including previously disclosed shareholder and
derivative litigation and actions by the Securities and Exchange Commission
and/or other governmental agencies and negative tax or other implications for
the Company resulting from any accounting adjustments or other factors. Other
important factors are described in the Company’s Annual Report on Form 10-K for
the fiscal year ended October 31, 2007, in the section entitled “Risk Factors.”
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