Exhibit 10.1

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this “Agreement”), dated as of May 20, 2011, is by
and between ZelnickMedia Corporation, a New York corporation (“ZelnickMedia”),
and Take-Two Interactive Software, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company desires to receive financial and management consulting
services from ZelnickMedia, and to obtain the benefit of the experience of
ZelnickMedia in business and financial management of companies engaged in
businesses similar to the Company’s;

 

WHEREAS, ZelnickMedia desires to provide financial and management consulting
services to the Company and the compensation arrangements set forth in this
Agreement are designed to compensate ZelnickMedia for such services;

 

WHEREAS, ZelnickMedia and the Company are parties to that certain Management
Agreement, dated as of March 30, 2007, by and between ZelnickMedia and the
Company, as amended by that certain Amendment to Management Agreement, dated as
of July 27, 2007, and that certain Second Amendment to Management Agreement,
dated as of February 14, 2008 (as amended, the “Original Agreement”), which sets
forth the terms of the existing management services agreement between
ZelnickMedia and the Company;

 

WHEREAS, ZelnickMedia and the Company desire to supersede and replace the
Original Agreement in its entirety (except as otherwise expressly contemplated
herein), effective as of the date of the approval of this Agreement by a
majority of the shares of the Company’s stock having voting power present in
person or represented by proxy (the “Stockholder Approval”) at a meeting of the
stockholders of the Company, at which a quorum is present, as contemplated by
Section 25 hereof; and

 

WHEREAS, ZelnickMedia and the Company contemplate that this Agreement will be
submitted for approval by the Company’s stockholders at the Stockholders Meeting
(as defined below) and, prior to obtaining Stockholder Approval (or if
Stockholder Approval is not obtained), the Company and ZelnickMedia will
continue to abide by and operate under the terms and conditions of the Original
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 agree as follows:

 

1.                                       Engagement.  The Company hereby engages
ZelnickMedia as its financial and management consultant, and ZelnickMedia hereby
agrees to provide financial and management consulting services to the Company,
all on the terms and subject to the conditions set forth below.

 

2.                                       Services of ZelnickMedia.  ZelnickMedia
hereby agrees during the term of this engagement to consult with the board of
directors (the “Board”) and management of the Company and its subsidiaries in
such manner and on such business and financial matters as may be reasonably
requested from time to time by the Board, including but not limited to:

 

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(i)                                     oversee and supervise the operations of
the Company and its subsidiaries in accordance with policies established by the
Board and usual and customary standards of efficient operation and maintenance;

 

(ii)                                  assist in the preparation of operating
budgets and business plans;

 

(iii)                               advise and assist the Company and its
subsidiaries regarding their corporate and financial structure;

 

(iv)                              advise and assist the Company and its
subsidiaries in formulating long-term business strategies;

 

(v)                                 assist the Company in recruiting senior
management;

 

(vi)                              advise and assist the Company in securing
equity and/or debt financing and negotiating and structuring the terms of such
financing;

 

(vii)                           assist the Company and its subsidiaries with
controlled mergers and acquisitions with, and of, third party entities;

 

(viii)                        advise and assist the Company in evaluating
potential sale or exit opportunities, structuring and negotiating a sale of the
Company, or leveraged recapitalization; and

 

(ix)                                respond to Board requests concerning, and
perform any other management services incidental to, the foregoing, or any other
management or advisory services reasonably requested by the Board from time to
time and to which ZelnickMedia agrees.

 

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 Chief Executive
Officer of the Company, 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)                                Karl Slatoff shall serve as Chief Operating
Officer of the Company pursuant to the employment agreement by and between the
Company and Mr. Slatoff dated as of February 14, 2008 and as amended from time
to time by mutual agreement of the Company and Mr. Slatoff.

 

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(C)                                An employee of ZelnickMedia shall serve as a
Vice President or another senior position of the Company (which position is
currently filled by Michael Worosz as Vice President, Strategy and Corporate
Development of the Company).

 

(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. Zelnick or any other
employee of ZelnickMedia acting in an executive capacity for the Company is
unable or unavailable to serve in the applicable capacities set forth in
Section 3(i) above, 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. Zelnick or such other employee of ZelnickMedia, as applicable, is terminated
by the Company without Cause or resigns for Good Reason (in the case of
Mr. Zelnick, each as defined in Section 8 of this Agreement, or, in the case of
any other employee of ZelnickMedia, each as defined in such person’s employment
agreement with the Company); provided further, however, that in no event shall
any action or inaction by ZelnickMedia, Strauss Zelnick, or any other individual
appointed by ZelnickMedia pursuant to Section 3(i) give rise to or constitute
Good Reason with respect to Mr. Zelnick or any such other employee of
ZelnickMedia or, to the extent that such action or failure to act results in a
termination of such individual’s employment by the Company, be deemed a
termination of such individual’s employment by the Company without Cause, in
either case for purposes of this Section 3(ii).  The Compensation Committee of
the Board (the “Committee”) shall reasonably and in good faith 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, except as provided in Section 8 or
Section 24 hereof, 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.

 

4.                                       Management Fee.  On the first day of
each month during the term of this Agreement (each, a “Payment Date”), beginning
on the first day of the month following the month in which the Stockholder
Approval is obtained (the “First Payment Date”), the Company shall pay to
ZelnickMedia a monthly management fee as set forth in the table below (the
“Management Fee”) in immediately available funds:

 

Payment Date

 

Management Fee

First Payment Date through and including March 1, 2012

 

$208,333.33 ($2,500,000.00 per annum)

April 1, 2012 through and including

 

$214,583.33 ($2,575,000.00 per annum)

 

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March 1, 2013

 

 

April 1, 2013 through and including March 1, 2014

 

$221,020.83 ($2,652,250.00 per annum)

April 1, 2014 through and including May 1, 2015

 

$227,651.46 ($2,731,817.50 per annum)

 

5.                                       Annual Bonus.  In addition to the
Management Fee, ZelnickMedia shall receive an annual bonus (the “Annual Bonus”)
for each of the fiscal years of the Company ending March 31, 2012, March 31,
2013, March 31, 2014 and March 31, 2015 (the “Applicable Fiscal Years”).  The
actual amount of the Annual Bonus shall be determined reasonably and in good
faith by the Committee with respect to each Applicable Fiscal Year subject to
the terms set forth herein, and shall be paid within the 15-day period
immediately following the Company’s receipt of its audited financial statements
for the Applicable Fiscal Year but in all events in the fiscal year immediately
following the Applicable Fiscal Year to which the Annual Bonus relates but prior
August 15th of such subsequent fiscal year, as follows:

 

(i)                                     In the event actual results in an
Applicable Fiscal Year are less than 80% of the Target (as defined below), the
Annual Bonus shall be zero.

 

(ii)                                  In the event actual results in an
Applicable Fiscal Year are equal to or greater than 80% of the Target but less
than 100% of the Target, the Annual Bonus shall be between the 80% Bonus Amount
(as defined below) and the 100% Bonus Amount (as defined below), 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 an Applicable
Fiscal Year are equal to or greater than 100% of the Target but less than 120%
of the Target, the Annual Bonus shall be between the 100% Bonus Amount (as
defined below) and the 120% Bonus Amount (as defined below), 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 an Applicable
Fiscal Year are equal to or greater than 120% of the Target but less than 150%
of the Target, the Annual Bonus shall be between the 120% Bonus Amount (as
defined below) and the Maximum Bonus Amount (as defined below), pro rated on a
straight-line basis between 120% and 150% based upon the actual percentage of
Target achieved.

 

(v)                                 In the event actual results in an Applicable
Fiscal Year are equal to or greater than 150% of the Target, the Annual Bonus
shall be the Maximum Bonus Amount (as defined below).

 

For purposes of this Section 5, for each respective Applicable Fiscal Year, the
terms “80% Bonus Amount”, “100% Bonus Amount”, “120% Bonus Amount” and “Maximum
Bonus Amount” shall have the values set forth in the table below.

 

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Applicable Fiscal Year

 

80% Bonus Amount

 

100% Bonus Amount

 

120% Bonus Amount

 

Maximum Bonus
Amount

 

Ending March 31, 2012

 

$

0

 

$

1,750,000.00

 

$

2,500,000.00

 

$

3,500,000.00

 

Ending March 31, 2013

 

$

0

 

$

1,802,500.00

 

$

2,575,000.00

 

$

3,605,000.00

 

Ending March 31, 2014

 

$

0

 

$

1,856,575.00

 

$

2,652,250.00

 

$

3,713,150.00

 

Ending March 31, 2015

 

$

0

 

$

1,912,272.25

 

$

2,731,817.50

 

$

3,824,544.50

 

 

For example, if the actual results in the Applicable Fiscal Year ending
March 31, 2012 are 110% of the Target (as defined below), the Annual Bonus shall
be $2,125,000.

 

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 any member of the Board who is a shareholder, affiliate, member
and/or partner of ZelnickMedia, and agreed with ZelnickMedia for an Applicable
Fiscal Year), determined within 30 days of the beginning of that Applicable
Fiscal 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.

 

For purposes of this Agreement, if budgeted EBITDA is used as the Target, the
term “EBITDA” shall be calculated consistent with the Company’s past practices
and on the same basis as utilized by the Company for other employee compensation
purposes; and actual EBITDA with respect to each Applicable Fiscal Year shall be
calculated by the Company acting reasonably and in good faith, after meaningful
consultation with ZelnickMedia, in the same manner as the budgeted EBITDA for
such Applicable Fiscal Year.

 

The Committee shall, acting reasonably and in good faith, after meaningful
consultation with ZelnickMedia, make such adjustments to the calculation of
actual or budgeted EBITDA as it deems equitable in the event the circumstances
upon which budgeted EBITDA is initially calculated change during any Applicable
Fiscal Year.

 

Unless this Agreement is earlier terminated by either ZelnickMedia or the
Company in accordance with Section 8 prior to May 31, 2015, ZelnickMedia shall
receive a pro-rated annual bonus (the “Pro-Rated Bonus”) for the portion of the
fiscal year between March 31, 2015 and May 31, 2015.  The actual amount of the
Pro-Rated Bonus shall be determined by the Committee acting reasonably and in
good faith, after meaningful consultation with ZelnickMedia, in accordance with
the principles set forth in Section 5(i)-(v) and shall be paid within the 15-day
period immediately following the filing of the Company’s Quarterly Report on
Form 10-Q for its first fiscal quarter ending June 30, 2015, based on the actual
results for the period from March 31, 2015 through May 31, 2015 and measured
against the pro-rated Target for the fiscal year ending March 31, 2016, with
such adjustments as the Committee reasonably and in good faith,

 

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after meaningful consultation with ZelnickMedia, deems equitable to reflect
seasonality or other factors that may impact the determination of an appropriate
pro-rated Target.  For purposes of calculating the Pro-Rated Bonus, the terms
“80% Bonus Amount”, “100% Bonus Amount”, “120% Bonus Amount” and “Maximum Bonus
Amount” shall mean $0, $1,969,640.42, $2,813,772.03, and $3,939,280.84,
respectively.

 

The Committee shall, acting reasonably and in good faith, after meaningful
consultation with ZelnickMedia, make such adjustments to this Section 5 as it
deems equitable in the event the Company changes its fiscal year during the term
of this Agreement.

 

6.                                       Equity Award.  ZelnickMedia (or upon
three (3) days prior written notice of ZelnickMedia to the Company, an affiliate
or partner of ZelnickMedia that agrees to be bound by the provisions of this
Section 6) shall be entitled to receive 1,100,000 shares of time-based
restricted stock of the Company and 1,650,000 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 “New Grant Agreements”), to be granted on the Issuance Date
(as defined below).  The New Grant Agreements, together with the grant
agreements attached as Exhibit A and Exhibit B to the Original Agreement
relating to the restricted stock described in Section 6 of the Original
Agreement (the “Original Grant Agreements”), shall be referred to collectively
as the “Grant Agreements.”

 

Until October 31, 2012 or earlier if this Agreement is earlier terminated
pursuant to Section 8 below, ZelnickMedia shall not, and shall cause its
shareholders, partners, members and other affiliates to not, sell or otherwise
dispose (other than to an affiliate or partner of ZelnickMedia that agrees to be
bound by the provisions of this Section 6) of (x) any shares of common stock of
the Company acquired upon exercise of ZelnickMedia’s option granted pursuant to
Section 6 of the Original Agreement (collectively, the “Option Shares”) or
(y) any vested shares of restricted common stock of the Company granted pursuant
to Section 6 of the Original Agreement (collectively, the “Original Vested
Shares”), 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 ZelnickMedia and/or its
shareholders, partners, members and other affiliates to sell or otherwise
dispose of that number of shares of common stock of the Company necessary to
satisfy any taxes imposed on ZelnickMedia, its shareholders, affiliates and/or
its members or partners as a result of the exercise of the option granted
pursuant to Section 6 of the Original Agreement or the vesting of the shares
granted pursuant to Section 6 of the Original Agreement, or in connection with
the transfer of shares by ZelnickMedia to an affiliate or partner thereof.

 

In addition to the restrictions contained in the preceding paragraph, until the
earlier of (A) May 31, 2015, (B) a Change in Control or (C) the termination of
this Agreement pursuant to Section 8 below, ZelnickMedia shall not, and shall
cause its shareholders, partners, members and other affiliates to not, sell or
otherwise dispose (other than, upon not less than three (3) days’ prior written
notice to the Company, to an affiliate or partner of ZelnickMedia that agrees to
be bound by the provisions of this Section 6) of any Option Shares, Original
Vested Shares or any vested shares of restricted common stock of the Company
granted pursuant to Section 6 of this Agreement if the Market Value (as defined
below) of all shares of the Company (including but

 

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not limited to (i) the Option Shares, (ii) vested or unvested shares of
time-based restricted stock of the Company granted pursuant to Section 6 of the
Original Agreement or Section 6 of this Agreement and (iii) vested shares of
performance-based restricted stock of the Company granted pursuant to Section 6
of the Original Agreement or Section 6 of this Agreement, but excluding unvested
shares of performance-based restricted stock of the Company granted pursuant to
Section 6 of the Original Agreement or Section 6 of this Agreement) that would,
after giving effect to such proposed sale or other disposition, be owned by
ZelnickMedia, its shareholders, partners, members and other affiliates
(including former shareholders, partners, members or affiliates to whom such
shares were transferred by ZelnickMedia in accordance with this paragraph or the
immediately preceding paragraph) (collectively, “Applicable Shares”), as of the
trading day immediately preceding the date of the proposed sale or disposition,
be less than four times (4X) the then current per annum Management Fee;
provided, however, that the foregoing shall not limit the right of ZelnickMedia
and/or its shareholders, partners, members and other affiliates to sell or
otherwise dispose of that number of shares of common stock of the Company
necessary to satisfy any taxes imposed on ZelnickMedia, its shareholders,
affiliates and/or its members or partners as a result of the exercise of the
option granted pursuant to Section 6 of the Original Agreement, vesting of the
shares granted pursuant to Section 6 of the Original Agreement or vesting of the
shares granted pursuant to Section 6 of this Agreement, or in connection with
the transfer of shares by ZelnickMedia to an affiliate or partner thereof.  For
purposes of this Section 6, “Market Value” of a number of shares of the
Company’s common stock shall equal the number of shares of common stock
multiplied by the average of the closing prices of the Company’s common stock
for each trading day during the 90-day period ending on the day as of which
Market Value is being determined (which, in the case of a sale or other
disposition, shall be the trading day immediately preceding the date of such
sale or other disposition).

 

ZelnickMedia hereby acknowledges the Company’s “Securities Trading Policy” (as
in effect from time to time, the “Trading Policy”) and shall, and shall cause
its shareholders, partners, members and other affiliates, and shall use
commercially reasonable efforts to cause its employees (including by making
compliance a condition to the employees’ continued employment), to comply at all
times with the Trading Policy as if such Persons (as defined below) were
executive officers of the Company under the terms of the Trading Policy.

 

In order to ensure that the persons providing services under this Agreement are
properly incentivized, ZelnickMedia covenants and agrees that no more than 50%
of the aggregate compensation payable to ZelnickMedia hereunder (whether in the
form of Management Fee, Annual Bonus or Equity Awards) will be paid, payable or
otherwise conveyed (directly or indirectly) to any one individual providing
services hereunder.

 

7.                                       Expenses.  The Company shall
(i) promptly reimburse ZelnickMedia for all reasonable out-of-pocket fees and
expenses as have been or may be incurred (before or after the date of this
Agreement) by ZelnickMedia, its directors, officers, employees, counsel, agents
and representatives in connection with ZelnickMedia’s engagement hereunder and
the rendering of services hereunder (including, but not limited to, attorneys’
fees in connection with the negotiation and performance of this Agreement and
fees and expenses incurred in attending Company-related meetings) and
(ii) reimburse ZelnickMedia for all travel expenses in accordance with the
Company’s “Travel and Entertainment Policy”.  The Company shall

 

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reimburse ZelnickMedia for all attorneys’ fees incurred by ZelnickMedia in
connection with the negotiation of this Agreement as soon as practicable after
the date hereof.

 

8.                                       Term.  This Agreement will continue
from the date hereof until May 31, 2015, unless earlier terminated by either
ZelnickMedia or the Company in accordance with this Section 8.  This Agreement
may be terminated immediately by the Company for Cause (as defined below) or by
ZelnickMedia for Good Reason (as defined below), and may be terminated by the
Company without Cause or by ZelnickMedia without Good Reason, in each case upon
30 days’ written notice (which notice requirement will be waived following a
Change in Control).  If this Agreement is terminated by the Company or
ZelnickMedia prior to May 31, 2015, ZelnickMedia will be entitled to the
following: (a) if this Agreement is terminated by the Company for Cause or by
ZelnickMedia without Good Reason, all unvested equity granted under Section 6
above or Section 6 of the Original Agreement shall be forfeited for no
consideration and ZelnickMedia shall be paid on the date of termination (i) all
earned but unpaid Management Fees and (ii) any accrued but unpaid Annual Bonus
for a completed fiscal year, and ZelnickMedia shall retain the vested portion of
all equity granted under Section 6 above or Section 6 of the Original Agreement;
(b) if this Agreement is terminated by the Company without Cause or by
ZelnickMedia for Good Reason (whether before or after a Change in Control),
(i) ZelnickMedia shall be paid on the date of termination (x) all earned but
unpaid Management Fees and (y) any accrued but unpaid Annual Bonus for a
completed fiscal year, plus the lesser of (A) all Management Fees that would
have been paid through May 31, 2015, plus the amount of all Annual Bonuses not
yet accrued or paid that would have been payable in respect of any Applicable
Fiscal Years through May 31, 2015 assuming the 100% Bonus Amounts would be
payable in each such Applicable Fiscal Year and (B) three times (3X) the sum of
the then current per annum Management Fee plus the then current 100% Bonus
Amount; (ii) all unvested time-based restricted stock granted pursuant to the
New Grant Agreements shall vest; and (iii) all performance-based restricted
stock granted pursuant to the New Grant Agreements will vest in accordance with
the terms of the applicable New Grant Agreements.  Notwithstanding anything to
the contrary contained in this Section 8, upon any termination of this Agreement
or Change in Control, the shares of restricted stock granted pursuant to the
Original Grant Agreements shall vest in accordance with the terms of the
applicable Original Grant Agreements and the Original Agreement (which terms
shall survive the termination of the Original Agreement in accordance with
Section 25); provided, however, that in the event a Change in Control occurs at
any time prior to June 13, 2012, notwithstanding the terms of the applicable
Original Grant Agreements and the Original Agreement, ZelnickMedia agrees on
behalf of itself and any transferee of shares pursuant to Section 6 of this
Agreement that the number of then unvested shares of the performance-based
restricted stock granted pursuant to Section 6 of the Original Agreement that is
equal to the number of shares of the performance-based restricted stock granted
pursuant to Section 6 of this Agreement that have vested as of immediately prior
to such Change in Control, or that will become Vesting-Eligible Shares (as
defined in the New Grant Agreements) upon such a Change in Control, shall be
automatically forfeited for no consideration upon the consummation of such
Change in Control; provided that the number of shares of the performance-based
restricted stock that may be forfeited pursuant to this sentence shall not
exceed 450,000 shares, as adjusted to give affect to any stock splits, stock
dividends and similar adjustments.

 

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“Cause” means (a) the conviction of, or a plea of guilty or nolo contendere by
any of the individuals provided by ZelnickMedia to serve in the positions set
forth in Section 3(i)(A)-(B) (which positions are currently filled by Strauss
Zelnick or Karl Slatoff, respectively) of any felonious criminal act (other than
traffic-related offenses or as a result of vicarious liability), (b) fraud, or
(c) any act or omission involving malfeasance or gross negligence by
ZelnickMedia in the performance of its obligations hereunder, in the case of
each of clauses (b) through (c) 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 ZelnickMedia of written notice
thereof.

 

“Good Reason” means (a) a condition that materially impairs the ability of
ZelnickMedia, Strauss Zelnick or any other individual appointed by ZelnickMedia
pursuant to Section 3(i)(A)-(B) to perform their respective duties or
responsibilities, as applicable, as contemplated herein, (b) assigning Strauss
Zelnick or any other individual appointed by ZelnickMedia pursuant to
Section 3(i)(A)-(B) duties materially inconsistent with their respective
positions (including status, offices, titles and reporting requirements),
authorities or responsibilities or any other action by the Company which results
in a material diminution of their respective positions, authorities, duties or
responsibilities (and in making this determination with respect to Mr. Zelnick,
factors may include Mr. Zelnick ceasing to be the most senior executive in any
controlled group containing the Company), (c) the failure by the Company to
perform any of its material obligations under this Agreement or (d) the
requirement that ZelnickMedia’s place of service be located outside a 30-mile
radius of New York City, NY.

 

A “Change in Control” means any transaction or occurrence (or series of related
transactions or occurrences) which results at any time in any of (i) a sale of
all or substantially all of the consolidated assets of the Company and of its
subsidiaries, or a consolidation, reorganization, merger, or other business
combination of the Company with or into, any other Person (as defined below) if,
after such transaction the stockholders of the Company immediately prior to such
transaction beneficially hold, directly or indirectly, less than a majority of
the outstanding voting units of the purchasing or surviving parent entity in
such transaction, on a fully diluted basis, (ii) a change in the majority of the
members of the Board to Persons who were neither (x) nominated or appointed by
the current Board nor (y) nominated or appointed by directors so nominated or
appointed, or (iii) an acquisition by any individual, general partnership,
limited partnership, limited liability company, corporation, trust, estate, real
estate investment trust association or any other entity (each, a “Person”) or
group of Persons (other than the Company or any subsidiary of the Company or any
of their affiliates) of the outstanding securities of the Company in a
transaction or series of transactions, if immediately thereafter such acquiring
Person or group has, or would have, beneficial ownership of more than fifty
percent (50%) of the combined equity interests or voting power of the Company;
provided that mere formation of a group will not itself constitute a Change in
Control.  A Change in Control shall be deemed to occur as of the effective date
of the first event, action or transaction leading to one of the results
described above.

 

As the parties hereto do not intend that actions taken by ZelnickMedia or any of
its employees, shareholders, members, partners or other affiliates could give
rise to a right on the part of ZelnickMedia to terminate this Agreement for Good
Reason, the Company and ZelnickMedia hereby agree that, in no event shall any
conduct or actions undertaken by ZelnickMedia or any of

 

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its employees, shareholders, members, partners or other affiliates, or any
failure by such Persons to act, give rise to or constitute Good Reason hereunder
or, to the extent that such conduct, actions, or failure to act results in a
termination of this Agreement, be deemed a termination of this Agreement by the
Company without Cause.

 

This Agreement (other than the Binding Provision (as defined below)) shall
automatically terminate if the Stockholder Approval shall not have been obtained
after a vote of the Company’s stockholders has been taken and completed at the
Stockholders Meeting contemplated by Section 25 hereof or at any adjournment or
postponement thereof.

 

For the avoidance of doubt, if this Agreement is terminated at any time and the
Stockholder Approval has not been obtained as of such date, in no circumstance
shall this Agreement or the Original Agreement be deemed terminated by the
Company without Cause or by ZelnickMedia for Good Reason on account of such
failure to obtain the Stockholder Approval.

 

No termination of this Agreement, whether pursuant to this paragraph or
otherwise, shall affect the Company’s obligations with respect to any and all
reasonable fees, costs and expenses incurred by ZelnickMedia in rendering
services hereunder and not reimbursed by the Company as of the effective date of
such termination or the Company’s indemnification and contribution obligations.

 

9.                                       Confidentiality; Non-Solicitation. 
ZelnickMedia shall not at any time during or after the term of this Agreement,
directly or indirectly, except as in good faith deemed necessary or desirable to
perform any of its obligations hereunder, to defend its own rights or as
required by applicable law or legal process, disclose or use for its own benefit
or purposes or the benefit or purposes of any other person, firm, partnership,
joint venture, association, corporation or other business organization, entity
or enterprise other than the Company and any of its subsidiaries or affiliates,
any trade secrets, information, data, or other information, including, without
limitation, relating to customers, development programs, costs, marketing,
trading, investment, sales activities, promotion, credit and financial data,
manufacturing processes, financing methods, plans, or the business and affairs
of the Company, or of any subsidiary or affiliate of the Company; provided, that
the foregoing shall not apply to information which is generally known to the
industry or the public (other than as a result of ZelnickMedia’s breach of this
covenant) or information obtained by ZelnickMedia prior to March 30, 2007 or not
in connection with its performance of its obligations under this Agreement. 
ZelnickMedia agrees that upon termination of this Agreement, upon the Company’s
request, it shall immediately return to the Company all memoranda, books,
papers, plans, information, letters and other data, and all copies thereof or
therefrom, in any way relating to the business of the Company and its
affiliates, except that ZelnickMedia may retain such personal notes, notebooks
and diaries that do not contain confidential information of the type described
above.  For a period beginning on March 30, 2007 and ending one year after the
date of termination of this Agreement, except in the event this Agreement is
terminated by the Company without Cause or by ZelnickMedia for Good Reason,
ZelnickMedia shall not in any capacity, either individually or in association
with others, employ or solicit for employment (other than in any general
solicitation) any person who is an employee of the Company or its affiliates at
the level of vice president or higher immediately prior to such employment or
during such solicitation.

 

10

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10.                                 Liability.  Neither ZelnickMedia nor any of
its affiliates, directors, officers, employees, counsel, agents or
representatives shall be liable to the Company or its subsidiaries or affiliates
for any loss, claim, liability, damage or expense arising out of or in
connection with the performance of services contemplated by this Agreement,
other than any loss, claim, liability, damage or expense to the extent
determined by the final judgment of a court of competent jurisdiction to have
been caused from the gross negligence, fraud, bad faith or willful misfeasance
of ZelnickMedia or its affiliates.

 

11.                                 Indemnification; D&O Insurance.  To the
fullest extent permitted by applicable law, the Company shall indemnify and hold
harmless ZelnickMedia and its affiliates, and each of their respective members,
managers, directors, officers, employees, counsel, agents, representatives,
contractors and affiliates (each such individual or entity to be referred to
hereinafter as an “Indemnified Person”), from and against any loss, claim,
damage or liability, joint or several, and any action in respect thereof,
whether or not involving a third party, to which an Indemnified Person may be
subject, insofar as such loss, claim, damage, liability or action relates to,
arises out of or results from any Covered Event (as such term is defined below)
or alleged Covered Event, and will reimburse such Indemnified Person upon
request for all expenses (including, without limitation, reasonable attorneys’
fees and disbursements) incurred by such Indemnified Person in connection with
investigating, defending or preparing to defend against any such loss, claim,
damage, liability or action, as such expenses are incurred or paid.  The term
“Covered Event” shall mean (a) any action taken, or services performed, by an
Indemnified Person, related to or consistent with the terms of this Agreement or
the Original Agreement, or (b) any action taken, or omitted to be taken, by the
Company or any of its managers, directors, officers, employees, agents or
affiliates, in connection with any matter in which an Indemnified Person has
been involved pursuant to this Agreement or the Original Agreement; provided,
that the term “Covered Event,” with respect to an Indemnified Person, shall
exclude any loss, claim, damage, liability or expense to the extent determined
by the final judgment of a court of competent jurisdiction to have been caused
from the gross negligence, fraud, bad faith or willful misfeasance of such
Indemnified Person or any affiliate thereof.  The Company shall cover the
designees of ZelnickMedia under directors and officers’ liability insurance both
during and, while potential liability exists, after the term of the Agreement in
amounts reasonably requested by ZelnickMedia.

 

12.                                 Independent Contractor.  ZelnickMedia and
the Company agree that ZelnickMedia shall perform services hereunder as an
independent contractor, retaining control and direction over and responsibility
for its own operations and personnel.  Neither ZelnickMedia nor their directors,
officers or employees shall be considered employees or agents of the Company or
its subsidiaries as a result of this Agreement nor shall any of them have
authority to contract in the name of or bind the Company, except as expressly
agreed to in writing by the Company, including as provided in this Agreement.

 

13.                                 Notices.  Any notice, report or payment
required or permitted to be given or made under this Agreement by one party to
the other shall be deemed to have been duly given or made if personally
delivered or, if mailed, when mailed by registered or certified mail, postage
prepaid, to the other party at the following addresses (or at such other address
as shall be given in writing by one party to the other):

 

11

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If to ZelnickMedia:

 

ZelnickMedia Corporation
19 West 44th Street, 18th Floor
New York, NY 10036
Telephone:  (212) 223-1383
Facsimile:  (212) 223-1384
Attention:  Strauss Zelnick

 

If to the Company:

 

Take-Two Interactive Software, Inc.
622 Broadway
New York, NY 10012
Telephone:  (646) 536-2842
Facsimile:  (646) 536-2926
Attention:  General Counsel

 

14.                                 Entire Agreement; Modification.  Effective
as of the Effective Date, this Agreement, the Grant Agreements and the terms of
the Original Agreement that survive termination as contemplated by Section 25
hereof shall (a) contain the complete and entire understanding and agreement of
ZelnickMedia and the Company with respect to the subject matter hereof; and
(b) supersede all prior and contemporaneous understandings, conditions and
agreements, oral or written, express or implied, respecting the engagement of
ZelnickMedia in connection with the subject matter hereof, including the
Original Agreement.  This Agreement may be amended or modified, or any of the
terms, covenants or conditions hereof may be waived, only by a written
instrument executed by ZelnickMedia and the Company, or in the case of a waiver,
by the party or parties waiving compliance.  Any waiver by any party of any
condition, or of the breach of any provision, term or covenant contained in this
Agreement, in any one or more instances, shall not be deemed to be nor construed
as a further or continuing waiver of any such condition, or the breach of any
other provision, term or covenant of this Agreement.

 

15.                                 Waiver of Breach.  The waiver by either
party of a breach of any provision of this Agreement by the other party shall
not operate or be construed as a waiver of any subsequent breach of that
provision or any other provision hereof.

 

16.                                 Assignment.  ZelnickMedia may assign its
rights or obligations under this Agreement only with the express written consent
of the Company, such consent not to be unreasonably withheld.  The Company may
not assign its rights or obligations under this Agreement.  The Company hereby
agrees to the assignment by ZelnickMedia of all of its rights and obligations
under this 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 this Agreement. In the event
ZelnickMedia elects to effect such assignment to ZM Capital, it shall cause ZM
Capital to execute a joinder agreement to this Agreement in form and substance
reasonably acceptable to the Company.

 

12

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17.                                 Successors.  This Agreement and all the
obligations and benefits hereunder shall inure to the successors and permitted
assigns of the parties.

 

18.                                 Failure to Pay.  If for any reason the
Company does not pay the Management Fee, Annual Bonus, Pro-Rated Bonus or any
other amount due under this Agreement when due, then such amount shall accrue
interest at a rate of 1% per month and shall continue to be payable and shall be
paid by the Company as soon as it can be paid.  The preceding sentence shall not
limit any other remedies of ZelnickMedia in the event amounts are not paid when
due.

 

19.                                 Counterparts.  This Agreement 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.

 

20.                                 Choice of Law.  This Agreement 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.  Each party consents to the in
personam jurisdiction of the Court of Chancery or other courts of the State of
Delaware and the United States District Court located in the State of Delaware
in connection with any claim or dispute arising under or in connection with this
Agreement.

 

21.                                 Severability.  If any provision of this
Agreement is or becomes illegal, invalid or unenforceable under any law or
regulation of any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to the least degree necessary to conform to the requirements of such
law or regulation, or if for any reason it is not deemed so modified, it shall
be illegal, invalid or unenforceable only to the extent set forth in the law or
regulation without affecting the legality, validity or enforceability of such
provision in any other jurisdiction or the remaining provisions of this
Agreement.

 

22.                                 Section 409A.  Notwithstanding anything to
the contrary contained in this Agreement, in the event that one or more payments
under this Agreement are subject to Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and would cause ZelnickMedia to incur any
additional tax or interest under Section 409A of the Code or any regulations or
Treasury guidance promulgated thereunder, the Company shall, at no additional
cost to the Company, after consulting with ZelnickMedia and receiving
ZelnickMedia’s approval, reform and appropriately adjust such provision;
provided that the Company agrees to maintain, to the maximum extent practicable
without any such additional cost to the Company, the original intent and
economic benefit to ZelnickMedia of the applicable provision without violating
the provisions of Section 409A of the Code.

 

23.                                 Registration Statement.  Subject to
reasonable blackout periods and the receipt of necessary information from
ZelnickMedia (or its designated partner or affiliate, if applicable) for
inclusion in such filing, the Company shall, at any time following the first
anniversary of the date hereof and within 45 days following the written request
of ZelnickMedia,

 

13

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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 and Section 6
of the Original Agreement, including the shares of common stock issuable upon
exercise of the option granted pursuant to Section 6 of the Original Agreement. 
Subject to reasonable blackout periods, the Company shall use its reasonable
best efforts to prepare and file with the Securities and Exchange Commission
(“SEC”) 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.

 

24.                                 Dodd-Frank.  ZelnickMedia hereby
acknowledges (i) the section in the Company’ Corporate Governance Guidelines
entitled “Recovery of Improperly-Awarded Incentive Compensation”, a copy of
which is attached hereto as Annex A (the “Clawback Policy”) and (ii) Section 954
of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the
“Dodd-Frank Act”), which requires that the SEC, by rule, direct the national
securities exchanges and national securities associates to prohibit the listing
of any security of an issuer that fails to implement a “clawback” policy
providing that “in the event that the issuer is required to prepare an
accounting restatement due to the material noncompliance of the issuer with any
financial reporting requirement under the securities laws, the issuer will
recover from any current or former executive of the issuer who received
incentive-based compensation (including stock options awarded as compensation)
during the 3-year period preceding the date on which the issuer is required to
prepare an accounting restatement, based on the erroneous data, in excess of
what would have been paid to the executive officer under the accounting
restatement.”  ZelnickMedia shall, and shall cause its shareholders, partners,
employees, members and other affiliates who are deemed “Executives” under the
Clawback Policy, to comply with the Clawback Policy, including as may be amended
or superseded by the Board after the date hereof to the extent required to
comply with any rules adopted by the SEC in response to Section 954 of the
Dodd-Frank Act.

 

25.                                 Effective Date.  The Company will include a
proposal for the approval of this Agreement (the “Proposal”) in the proxy
statement for the Company’s 2011 annual meeting of stockholders or otherwise
take all action necessary to convene a meeting of its stockholders prior to
October 31, 2011 to consider and vote upon the Proposal (any such meeting at
which the Proposal is considered and voted upon, the “Stockholders Meeting”). 
The independent members of the Board of the Company have approved this Agreement
and determined to recommend that the stockholders of the Company adopt this
Agreement and vote “FOR” the Proposal at the Stockholders Meeting and to include
such recommendation in the proxy statement containing the Proposal.  In the
event this Agreement is approved by the stockholders of the Company, then
(i) this Agreement shall become effective on and as of the date of the
Stockholders Meeting (the “Effective Date”), (ii) the Original Agreement shall
be deemed terminated as of the Effective Date (except for those provisions that
expressly survive as set forth herein), and (iii) the shares of restricted stock
described in Section 6 above shall be granted on the earlier of (x) the fifth
trading day following the filing of the Company’s Quarterly Report on Form 10-Q
for its second fiscal quarter (ending September 30, 2011), currently anticipated
to be in November 2011 and (y) November 30, 2011 (such earlier date, the
“Issuance Date”).  If the Proposal is not approved at

 

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the 2011 annual meeting, then this Agreement will be null and void and the
parties will have no obligations hereunder and the Original Agreement will
continue in full force and effect in accordance with its terms; provided that
the Company’s obligations set forth in the last sentence of Section 7 shall
survive any failure to obtain the Stockholder Approval at the Stockholders
Meeting (the “Binding Provision”).  Other than the first two sentences of this
Section 25 and the Binding Provision, prior to the Effective Date, this
Agreement shall be of no force or effect and no provision of this Agreement
shall be binding upon ZelnickMedia or the Company.  ZelnickMedia and the Company
acknowledge and agree that the only condition to the effectiveness of this
Agreement in its entirety shall be the receipt of the Stockholder Approval.

 

* * * * *

 

15

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IN WITNESS WHEREOF, the parties hereto have caused this Management Agreement to
be duly executed and delivered on the date and year first above written.

 

 

 

ZELNICKMEDIA CORPORATION

 

 

 

 

 

 

 

 

 

 

By:

/s/ Strauss Zelnick

 

 

 

Name:

Strauss Zelnick

 

 

 

 

 

 

 

 

 

 

TAKE-TWO INTERACTIVE SOFTWARE, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Seth D. Krauss

 

 

 

Name:

Seth D. Krauss

 

 

 

Title:

EVP and General Counsel

 

 

 

 

By:

/s/ Michael Dornemann

 

 

 

Name:

Michael Dornemann

 

 

 

Title:

Lead Independent Director

 

 

 

 

By:

/s/ Michael Sheresky

 

 

 

Name:

Michael Sheresky

 

 

 

Title:

Director

 

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EXHIBIT A

 

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RESTRICTED STOCK AGREEMENT
PURSUANT TO THE
TAKE-TWO INTERACTIVE SOFTWARE, INC.
2009 INCENTIVE STOCK PLAN

 

This Restricted Stock Agreement (this “Agreement”), dated as of [              
    ], 2011, 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 Article VIII 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 May 20, 2011 (the “Management
Agreement”), the Company agreed to issue to ZelnickMedia or one its designated
affiliates or partners, 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 One Million, One Hundred Thousand (1,100,000)
shares of duly authorized, validly issued, fully paid, and non-assessable Common
Stock (the “Shares”).  Pursuant to Sections 2 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.  The Participant shall not sell,
transfer, pledge, hypothecate, assign, or otherwise dispose of the Restricted
Stock, except as set forth in the Plan, this Agreement, or the Management
Agreement.  Any attempted sale, transfer, pledge, hypothecation, assignment, or
other disposition of the Restricted Stock in violation of the Plan, this
Agreement, or the Management 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 or partner 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.

 

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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.”

 

(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

 

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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 the Plan, this
Agreement, and the Management Agreement) 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)) prior to such date; provided, further, that all shares of
Restricted Stock shall immediately vest and cease to be Restricted Stock 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

 

 

 

 

 

April 1, 2012

 

275,000

 

April 1, 2013

 

275,000

 

April 1, 2014

 

275,000

 

April 1, 2015

 

275,000

 

 

(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)          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 that 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, local, and foreign taxes the Participant incurs from
the grant or vesting of the Restricted Stock.

 

3

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(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, and
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”) 2009 Incentive Stock Plan
(as the same may be amended or supplemented from time to time, the “Plan”), an
agreement entered into between the registered owner and the Company evidencing
the award under the Plan, and that certain Management Agreement between
ZelnickMedia Corporation and the Company, dated as of May 20, 2011
(the “Management Agreement”).  Copies of such Plan, agreement, and the
Management 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.

 

4

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(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, and 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 reasonably 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 reasonable 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

 

5

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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.

 

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

 

6

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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 10 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.

 

(d)           The parties acknowledge and agree that, except as otherwise
expressly provided in this Agreement or in the Plan, (i) Shares of Restricted
Stock issued pursuant to this Agreement that are vested at the time of (or
become vested in connection with) any Change in Control (as defined in the
Management Agreement) shall be treated in the same manner as other vested shares
of Common Stock in such transaction and (ii) Shares of Restricted Stock issued
pursuant to this Agreement that will not have vested in connection with any such
Change in Control shall be treated in the same manner as any other shares of
unvested Restricted Stock in such transaction.

 

[End of text.  Signature page follows.]

 

7

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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]

 

8

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EXHIBIT B

 

--------------------------------------------------------------------------------

 

PERFORMANCE BASED RESTRICTED STOCK AGREEMENT
PURSUANT TO THE
TAKE-TWO INTERACTIVE SOFTWARE, INC.
2009 INCENTIVE STOCK PLAN

 

This Performance Based Restricted Stock Agreement (this “Agreement”), dated as
of [                   ], 2011 (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. 2009
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 Article VIII 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 May 20, 2011 (the “Management
Agreement”), the Company agreed to issue to ZelnickMedia or one its designated
affiliates or partners, 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 One Million, Six Hundred
Fifty Thousand (1,650,000) shares of duly authorized, validly issued, fully
paid, and non-assessable Common Stock (the “Shares”).  Pursuant to Sections 2
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.  The
Participant shall not sell, transfer, pledge, hypothecate, assign, or otherwise
dispose of the Restricted Stock, except as set forth in the Plan, this
Agreement, or the Management Agreement.  Any attempted sale, transfer, pledge,
hypothecation, assignment, or other disposition of the Restricted Stock in
violation of the Plan, this Agreement, or the Management 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 or partner 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.

 

--------------------------------------------------------------------------------

 

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.”

 

(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

 

2

--------------------------------------------------------------------------------

 

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
the Plan, this Agreement, and the Management Agreement) in accordance with the
terms set forth on Annex A attached hereto.

 

(ii)                                  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 that 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, local, and 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, and 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

 

3

--------------------------------------------------------------------------------

 

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”) 2009
Incentive Stock Plan (as the same may be amended or supplemented from time to
time, the “Plan”), an agreement entered into between the registered owner and
the Company evidencing the award under the Plan, and that certain Management
Agreement between ZelnickMedia Corporation and the Company, dated as of May 20,
2011 (the “Management Agreement”).  Copies of such Plan, agreement, and the
Management 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.

 

(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.

 

4

--------------------------------------------------------------------------------

 

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, and
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 reasonably 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 reasonable 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.

 

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:

 

5

--------------------------------------------------------------------------------

 

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 10 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.

 

6

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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.

 

(d)                                 The parties acknowledge and agree that,
except as otherwise expressly provided in Annex A of this Agreement or in the
Plan, (i) Shares of Restricted Stock issued pursuant to this Agreement that are
vested at the time of (or become vested in connection with) any Change in
Control (as defined in the Management Agreement) shall be treated in the same
manner as other vested shares of Common Stock in such transaction and
(ii) Shares of Restricted Stock issued pursuant to this Agreement that will not
have vested, but will have become Vesting-Eligible Shares (as defined in Annex A
of this Agreement), in connection with any such Change in Control shall be
treated in the same manner as any other shares of unvested Restricted Stock in
such transaction.

 

[End of text.  Signature page follows.]

 

7

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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]

 

 

8

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Annex A

 

Vesting

 

A.                                   Vesting.

 

For purposes of vesting of the Restricted Shares, there shall be four Vesting
Tranches of 412,500 Shares, each having a Reference Date and an Initial Vesting
Date as set forth in the following table.

 

Vesting Tranche

 

Number of Shares

 

Reference Date

 

Initial Vesting Date

Tranche 1

 

412,500

 

April 1, 2011

 

April 1, 2012

Tranche 2

 

412,500

 

April 1, 2012

 

April 1, 2013

Tranche 3

 

412,500

 

April 1, 2013

 

April 1, 2014

Tranche 4

 

412,500

 

April 1, 2014

 

April 1, 2015

 

On the Initial Vesting Date for each Vesting Tranche, a number of Shares of
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) equal to the
product of (i) the total number of Shares in such Vesting Tranche multiplied by
(ii) the Vesting Percentage, rounded down to the nearest whole Share.

 

B.                                     Catch-Up Vesting.

 

In the event that fewer than 100% of the Shares in any of Vesting Tranches 1, 2,
and 3 vest as of the Initial Vesting Date for such Vesting Tranche, the unvested
Shares in any such Vesting Tranche shall nevertheless remain eligible to vest as
of each yearly anniversary of the applicable Initial Vesting Date (each,
a “Subsequent Vesting Date”) based upon the Percentile Rank through such
Subsequent Vesting Date (in each case calculated using April 1, 2011, as the
Reference Date).  The number of such Shares in a given Vesting Tranche that vest
as of any such Subsequent Vesting Date shall equal (x) the product of (i) the
total number of Shares in such Vesting Tranche multiplied by (ii) the Vesting
Percentage reduced by (y) the total number of Shares in such Vesting Tranche
that have vested prior to such Subsequent Vesting Date, rounded down to the
nearest whole Share.

 

C.                                     Termination; Change in Control;
Forfeiture.

 

In the event that the Management Agreement is terminated by the Company without
Cause or by ZelnickMedia or its assignee for Good Reason, in any case prior to a
Change in Control and prior to April 1, 2015, the effective date of such
termination shall serve as the Initial Vesting Date or Subsequent Vesting Date,
as applicable, for all then-unvested Shares of Restricted Stock hereunder, and
the number of Shares of Restricted Stock that vest as of such date shall be
calculated in accordance with Section A or B above, as applicable, based upon
the applicable Percentile Rank through the effective date of such termination
(in each case calculated using April 1, 2011, as the Reference Date).  Any
Shares remaining unvested after the application of the immediately preceding
sentence shall (1) remain outstanding following the date of termination (but
shall not vest or otherwise be eligible to vest pursuant to Section B

 

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above in connection with any Subsequent Vesting Date occurring thereafter) and,
if the Board approves a definitive agreement that will result in a Change in
Control or the Company publicly announces an intention to consummate a Change in
Control, in either case within the 90-day period following the date of such
termination, then, effective upon and subject to the consummation of such Change
in Control, an additional number of Shares in each Vesting Tranche shall vest
based upon the Percentile Rank through the consummation of such Change in
Control (calculated using April 1, 2011, as the Reference Date), equal to
(x) the product of (i) the total number of Shares in such Vesting Tranche
multiplied by (ii) the Vesting Percentage reduced by (y) the total number of
Shares in such Vesting Tranche that have vested prior to the consummation of
such Change in Control, rounded down to the nearest whole Share, and (2) any
Shares that do not vest in accordance with clause (1) of this sentence shall be
automatically 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), as of immediately prior to the
Change in Control.

 

If a Change in Control occurs while the Management Agreement remains in effect,
a number of Shares of Restricted Stock in each Vesting Tranche
(the “Vesting-Eligible Shares”) shall remain eligible to vest, and shall vest in
full, upon the Initial Vesting Date or next Subsequent Vesting Date, as
applicable, for such Vesting Tranche thereafter, based upon the Percentile Rank
through the consummation of such Change in Control (calculated using April 1,
2011, as the Reference Date), equal to (x) the product of (i) the total number
of Shares in such Vesting Tranche multiplied by (ii) the Vesting Percentage
reduced by (y) the total number of Shares in such Vesting Tranche that have
vested prior to the consummation of such Change in Control, rounded down to the
nearest whole Share; provided, however, that if the Management Agreement is
terminated by the Company without Cause or by ZelnickMedia or its assignee for
Good Reason following such Change in Control but prior to April 1, 2015, all
then-unvested Vesting-Eligible Shares will become fully vested on the date of
such termination.  Notwithstanding the foregoing, if requested by the
Participant, each Vesting-Eligible Share shall be canceled upon the occurrence
of a Change in Control, and the Company shall deposit an amount in cash equal to
the Market Value of the consideration payable in the Change in Control in
respect of each such canceled Vesting-Eligible Share into a bankruptcy-remote
“secular” trust, and such consideration shall be paid from the trust, net of any
applicable tax withholding, to the Participant in accordance with the vesting
provisions set forth in this paragraph (i.e., in full upon the Initial Vesting
Date or next Subsequent Vesting Date, as applicable, for such Vesting Tranche,
or if earlier, upon a termination of the Management Agreement by the Company
without Cause or by ZelnickMedia for Good Reason).  Any Shares of Restricted
Stock that do not become Vesting-Eligible Shares shall be automatically
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), as of immediately prior to the Change in Control.

 

Any Shares (including Vesting-Eligible Shares) that have not vested as of the
earlier of April 1, 2015, and the termination of the Management Agreement other
than by the Company without Cause or by ZelnickMedia or its assignee for Good
Reason 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).

 

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D.                                    Definitions.

 

“Market Value” means, as to any consideration payable in a Change in Control in
respect of a canceled Vesting-Eligible Share—

 

(i) if the consideration consists of a security listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Market Value shall be the closing sales price for such security (or the
closing bid, if no sales were reported) as quoted on such exchange or market (or
the exchange or market with the greatest volume of trading in the security) on
the last market trading day prior to the date of the Change in Control, as
reported in The Wall Street Journal or other publication agreed to in good faith
by the Participant and the Company; or

 

(ii) if the consideration consists of anything other than a security listed on
any established stock exchange or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, the Market Value shall be the value of such
consideration as determined in good faith by the Board after meaningful
consultation with ZelnickMedia.  In determining such Market Value, no discount
shall be taken on account of minority ownership, illiquidity or any restrictions
on transfer.

 

“Measurement Price” as of a given date means the average of the closing prices
of the Common Stock or the common stock of a Peer Group company, as applicable,
for each of the 90 trading days ending on (and including) such date; provided,
however, that the Measurement Price upon a Change in Control shall equal the
per-Share consideration received or to be received by the Company’s shareholders
in connection therewith, as determined by the Committee in good faith.

 

The “Peer Group” shall consist of the companies that comprise The NASDAQ
Composite Index on the applicable measurement date.

 

The “Percentile Rank” of the 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:

 

N =                             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 (0.5)
rounded up.

 

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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 × 100 = 76.

 

“Reference Price” means the average of the closing prices 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 Reference Date; provided, however, that
for purposes of determining the Reference Price of the Common Stock in any
circumstance where the Reference Date is April 1, 2011, “Reference Price” means
$15.

 

“Total Shareholder Return” as of a given date means the percentage change in the
value of the Common Stock or the common stock of a Peer Group company, as
applicable, from the Reference Price to the Measurement Price on such date.

 

“Vesting Percentage” as of a given date is a function of the Company’s
Percentile Rank among the Peer Group calculated as of such date, determined by
reference to the following table:

 

Percentile Rank

 

Vesting Percentage

 

50th Percentile

 

50

%

75th Percentile

 

100

%

 

In the event that the Percentile Rank is less than 50th, the Vesting Percentage
shall be zero percent (0%).  In the event that the Percentile Rank falls between
any of the ranks listed in the table above, the Vesting Percentage shall be
based on a straight line interpolation between such two values (i.e., for each
whole percentile increase in rank between the 50th percentile and the
75th percentile, the Vesting Percentage shall increase by 2.0 percentage
points).  For example, if the Company’s Percentile Rank among the Peer Group
upon a given vesting date is at the 60th percentile, the Vesting Percentage
would equal seventy percent (70%).

 

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ANNEX A

 

Clawback Policy

 

Recovery of Improperly-Awarded Incentive Compensation

 

The Company will use commercially reasonable efforts to implement the following
policy through the insertion of contractual provisions in new agreements with
applicable employees and through any amendments that may be entered into after
the date of the adoption of this policy on November 12, 2010 to existing
agreements with Executives (as defined below).

 

The Board may require the reimbursement of any bonus or incentive compensation
awarded to an Executive and/or effect the cancellation of unvested restricted
stock or outstanding stock option awards previously granted to an Executive, in
each case, on or after the adoption of this policy on November 12, 2010, but in
no event more than four years after the award of such compensation where:
(1) they payment was predicated upon achieving certain financial results that
were subsequently determined to have been erroneously reported; (2) the Board
determines that the Executive engaged in knowing or intentional fraudulent or
illegal conduct that caused or substantially caused such erroneous reporting to
have occurred; and (3) a lower payment would have been made to the Executive
based upon the corrected financial results. In each instance, the Board may, to
the extent practicable under applicable law, seek to recover from such Executive
on or after the adoption of this policy that was subsequently reduced due to the
correction of erroneous reporting and/or effect the cancellation of outstanding
restricted stock or stock option awards previously granted to such Executive on
or after the date of the adoption of this policy in the amount by which such
Executive’s bonus or incentive payments for the relevant period exceeded the
lower payment that would have been made based on the corrected financial
results.

 

The Board shall render a determination pursuant to this policy in each instance
where both an erroneous report of financial results has affected the size of a
bonus or incentive compensation awarded to an Executive, and where the Board is
aware of credible evidence that the Executive may have engaged in such
fraudulent or illegal conduct. In determining whether to recover a payment, the
Board shall take into account such considerations as it deems appropriate,
including, without limitation, whether the assertion of a claim against the
Executive could violate applicable law or prejudice the Company’s overall
interests and whether other penalties or punishments are being imposed on the
Executives, including by third parties, such as law enforcement agencies,
regulators or other authorities. The Board shall have sole discretion in
determining whether an Executive’s conduct has or has not met any particular
standard of conduct under law of Company policy. Any recovery under this policy
may be in addition to any other remedies that may be available to the Company
under applicable law, including disciplinary actions up to and including
termination of employment.

 

For purposes of this policy, the term “Executive” means an “executive officer”
as defined in Rule 3b-7 of the Securities Exchange Act of 1934. The right of the
Board to assert a recovery claim under this policy shall not survive the
occurrence of a change in control of the Company as defined in the relevant
incentive compensation plan. This policy shall apply in addition to any right of
recovery against the Chief Executive Officer and the Chief Financial Officer
under Section 304 of the Sarbanes-Oxley Act of 2002. The Board may delegate one
or more of the

 

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duties or powers described in this policy to one or more committees of the Board
consisting of solely independent directors.

 

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