Exhibit 10.1

 

Final Version

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this “Agreement”), dated as of November 17, 2017,
which shall become effective on January 1, 2018 (the “Effective Date”), 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 continue 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 continue 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 10, 2014, and effective as of April 1, 2014, by and
between ZelnickMedia and the Company (the “2014 Agreement”), which sets forth
the terms of the existing management services agreement between ZelnickMedia and
the Company and which superseded and replaced that certain Management Agreement,
dated as of May 20, 2011, by and between ZelnickMedia and the Company (the “2011
Agreement”), which in turn superseded and replaced that certain Management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”);

 

WHEREAS, ZelnickMedia and the Company desire to supersede and replace the 2014
Agreement in its entirety (except as otherwise expressly contemplated herein and
therein and thereunder), effective as of the Effective Date; and

 

WHEREAS, until the Effective Date, the Company and ZelnickMedia will continue to
abide by and operate under the terms and conditions of the 2014 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, financial and operational

 

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matters as may be reasonably requested from time to time by the Board, including
but not limited to:

 

(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
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;

 

(ix)                              provide consulting services in connection with
the business and operations of the Company as requested by the Board; and

 

(x)                                 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 (such agreement not to be unreasonably
withheld, conditioned or delayed).

 

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,
subject to Section 3(ii) below, ZelnickMedia shall make available the following
individuals to provide the described services:

 

(A)                               during the term of this 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;

 

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(B)                               Karl Slatoff shall serve as President 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; and

 

(C)                               other ZelnickMedia personnel, as appropriate,
shall provide services and serve as consultants to the Company on a
project-by-project, as-needed basis.

 

(ii)                                  In the event that Mr. Zelnick, Mr. Slatoff
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 this Agreement; provided, however, that such
costs shall not be deducted from ZelnickMedia’s compensation hereunder if
Mr. Zelnick, Mr. Slatoff 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 Mr. Slatoff or any other employee of ZelnickMedia, each as defined in
such person’s employment or consulting agreement with the Company); provided
further, however, that (A) in no event shall any termination by the Company
without Cause or resignation by an individual for Good Reason caused by any
action or inaction taken not in good faith by ZelnickMedia, Mr. Zelnick,
Mr. Slatoff or any other individual appointed by ZelnickMedia pursuant to
Section 3(i) for the purpose of giving rise to such a termination by the Company
without Cause or a resignation by an individual for Good Reason, be deemed a
termination of such individual’s employment by the Company without Cause or a
resignation by such individual for Good Reason, as applicable, in either case
for purposes of this Section 3(ii), and (B) no more than 60% of the cash and
equity compensation payable to ZelnickMedia hereunder shall be deducted if the
Company replaces Mr. Zelnick in accordance with this Section 3(ii) and no more
than 40% of the cash and equity compensation payable to ZelnickMedia hereunder
shall be deducted if the Company replaces Mr. Slatoff in accordance with 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.  In consideration for
the services to be provided by ZelnickMedia hereunder, the Company shall,
commencing on the Effective Date, pay to ZelnickMedia a management fee of
$3,100,000 per annum during the term of this Agreement (the “Management Fee”)
payable on the first day of each month during the term of this

 

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Agreement in equal monthly installments of $258,333.33 in immediately available
funds.  The Management Fee shall not be decreased during the term of this
Agreement.

 

5.                                      Annual Bonus.  In addition to the
Management Fee, ZelnickMedia shall have an annual bonus opportunity subject to
performance goals (the “Annual Bonus”) for each of the fiscal years of the
Company ending March 31, 2018 (“Fiscal 2018”), March 31, 2019, March 31, 2020,
March 31, 2021, March 31, 2022, March 31, 2023 and March 31, 2024 (each, an
“Applicable Fiscal Year” and collectively the “Applicable Fiscal Years”).  The
target annual bonus opportunity for each Applicable Fiscal Year (other than for
the 2017 Portion of Fiscal 2018 (as defined below)) has been set at 120% of the
Management Fee, or $3,720,000 per annum (the “Target Bonus Amount”).  With
respect to Fiscal 2018, the Annual Bonus for the period from April 1, 2017 to
December 31, 2017 (the “2017 Portion of Fiscal 2018”) will be determined in
accordance with the terms and conditions of Section 5 of the 2014 Agreement
(i.e., based on 75% of $2,376,000), and the Annual Bonus for the period from
January 1, 2018 to March 31, 2018 will be determined in accordance with this
Section 5 (i.e., based on 25% of the Target Bonus Amount), in each case, based
on Fiscal 2018 performance.  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 and within seventy-five (75) days following the end of the
Applicable Fiscal Year, as follows:

 

(i)                                     In the event actual results in an
Applicable Fiscal Year (or portion thereof) 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 (or portion thereof) are equal to or greater than 80% of
the Target but less than 100% of the Target, the Annual Bonus shall be between
zero and the Target Bonus Amount, pro-rated on a straight-line basis between
such amounts based upon the actual percentage of the Target achieved.

 

(iii)                               In the event actual results in an Applicable
Fiscal Year (or portion thereof) are equal to or greater than 100% of the Target
but less than 120% of the Target, the Annual Bonus shall be between the Target
Bonus Amount and $5,314,286 (the “120% Bonus Amount”), prorated on a
straight-line basis between the Target Bonus Amount and the 120% Bonus Amount
based upon the actual percentage of the Target achieved.

 

(iv)                              In the event actual results in an Applicable
Fiscal Year (or portion thereof) 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 and $7,440,000 (the “Maximum Bonus Amount”), prorated on a
straight-line basis between 120% Bonus Amount and the Maximum Bonus Amount based
upon the actual percentage of the Target achieved.

 

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

 

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For illustration, the following table sets forth the amount of Annual Bonus that
would be payable to ZelnickMedia for each 10% increment of achievement of the
Target:

 

Percentage of Target Obtained

 

Amount of Annual Bonus

 

80%

 

Zero

 

90%

 

$

1,860,000

 

100%

 

$

3,720,000

 

110%

 

$

4,517,143

 

120%

 

$

5,314,286

 

130%

 

$

6,022,857

 

140%

 

$

6,731,429

 

150%

 

$

7,440,000

 

 

The term “Target” shall mean budgeted adjusted 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), on the one hand, and ZelnickMedia, on the other
hand, with respect to 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 adjusted 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 adjusted 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 adjusted 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 adjusted EBITDA as it deems equitable in the event the
circumstances upon which budgeted adjusted EBITDA is initially calculated change
during any Applicable Fiscal Year.  If requested by the Company, ZelnickMedia
shall discuss with the Company in good faith whether any adjustments are
necessary for the Annual Bonus and any equity awards granted under the Grant
Agreements to achieve beneficial tax treatment for the parties.

 

6.                                      Company Equity.

 

(i)                                     Equity Award.  On April 13, 2018
(the “Initial Grant Date”), 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 that number of time-based restricted units of the Company as is

 

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determined by dividing $8,775,000 by the average of the closing prices of the
Company’s common stock for each trading day during the 10 trading day period
immediately prior to April 1, 2018 and that number of performance-based
restricted units of the Company as is determined by dividing $10,725,000 by the
average of the closing prices of the Company’s common stock for each trading day
during the 10 trading day period immediately prior to April 1, 2018 (such
awards, the “Equity Awards”), pursuant to and in accordance with the terms and
conditions of the agreement attached as Exhibit A hereto (the “New Grant
Agreement”).  The New Grant Agreement, together with (A) any grant agreements
entered into with respect to additional grants by the Company in accordance with
this Section 6, and (B) the grant agreements relating to the restricted units
described in Section 6 of the 2014 Agreement, shall be referred to collectively
as the “Grant Agreements.”  Following the grant on the Initial Grant Date,
additional equity awards may be granted, in amounts determined at the discretion
of the Committee in accordance with Section 3 hereof, to ZelnickMedia (or an
affiliate or partner thereof in accordance with this Section 6) annually on each
anniversary of the Initial Grant Date.

 

(ii)                                  Stock Ownership Requirement — 6X
Management Fee.  Until the earlier of (A) March 31, 2024, (B) a Change in
Control (as defined below) or (C) the termination of this Agreement pursuant to
Section 8 below, ZelnickMedia shall not, and shall cause each Subject Person (as
defined below) to agree in writing not to, sell or otherwise dispose of (other
than, upon not less than three (3) days’ prior written notice to the Company, to
a Subject Person that agrees to be bound by the provisions of this Section 6)
any shares of the Company’s common stock if, after giving effect to such
proposed sale or other disposition, the shares of Company common stock
(including options, restricted stock and restricted units, which restricted
units will be counted at the target number of shares if subject to
performance-based vesting) owned by ZelnickMedia and each Subject Person in the
aggregate (collectively, “Applicable Shares”), as of the trading day immediately
preceding the date of the proposed sale or disposition, would have a Market
Value (as defined below) less than six times (6X) the Management Fee; provided,
however, that the foregoing shall not limit the right of ZelnickMedia and/or the
Subject Persons to sell or otherwise dispose of that number of shares of common
stock of the Company necessary to satisfy any taxes imposed on ZelnickMedia or
such Subject Person as a result of the exercise of options, vesting of
restricted stock or restricted units, or in connection with the transfer by
ZelnickMedia to a Subject Person of any Applicable Shares in accordance with
this paragraph.

 

For purposes of this Agreement, (A) the term “Subject Person” shall mean
shareholders, partners, members, employees and other affiliates of ZelnickMedia
who hold any Applicable Shares, including any person to whom any Applicable
Shares were transferred in accordance with this Section 6(ii) and (B) “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 10 trading 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).

 

(iii)                               Securities Trading Policy.  ZelnickMedia
hereby acknowledges the Company’s “Securities Trading Policy” (as in effect from
time to time, the “Trading Policy”)

 

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and shall, and shall cause its Subject Persons who own Applicable Shares, 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.

 

(iv)                              Allocation of Compensation.  In order to
ensure that the persons providing services under this Agreement are properly
incentivized, ZelnickMedia covenants and agrees that the aggregate compensation
payable to ZelnickMedia or any person providing services on its behalf hereunder
(whether in the form of Management Fee, Annual Bonus or Equity Awards) shall
only be paid, payable or otherwise conveyed (directly or indirectly), whether by
the Company, ZelnickMedia or otherwise, such that (A) no more than 60% of such
aggregate compensation shall be received by or conveyed to Mr. Zelnick (or such
other employee of ZelnickMedia that serves as Executive Chairman and Chief
Executive Officer of the Company in accordance with Section 3(ii)) and (B) no
more than 40% of such aggregate compensation shall be received by or conveyed to
Mr. Slatoff (or such other employee of ZelnickMedia that serves as President of
the Company in accordance with Section 3(ii)).

 

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 partners, shareholders, members, officers,
employees, affiliates, 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 reimburse ZelnickMedia for all reasonable and
documented 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 Effective Date through March 31, 2024 (the “Initial Term”), 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 requirement for
written notice will be waived following a Change in Control).  If this Agreement
is terminated by the Company or ZelnickMedia prior to March 31, 2024,
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 the Grant Agreements shall be forfeited for no
consideration and ZelnickMedia shall be paid on the date of termination (i) the
earned but unpaid portion of the Management Fee and (ii) any accrued but unpaid
Annual Bonus for a completed fiscal year, and ZelnickMedia and/or any Subject
Persons, as applicable, shall retain the vested portion of all equity granted
pursuant to the Grant Agreements; (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) 

 

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the earned but unpaid portion of the Management Fee, (y) any accrued but unpaid
Annual Bonus for a completed fiscal year, and (z) three times (3X) the sum of
(A) the Management Fee plus (B) the Target Bonus Amount; (ii) all unvested
time-based restricted units granted pursuant to the Grant Agreements shall vest;
and (iii) all performance-based restricted units granted pursuant to the Grant
Agreements will vest in accordance with the terms of the applicable Grant
Agreement, provided that the vesting of any such performance-based restricted
units granted on or following the Initial Grant Date shall be determined based
on the assumption that the applicable performance measure was achieved at the
target level of performance for the applicable performance period or, prior to a
Change in Control, based on the actual level of performance achieved for each
applicable performance measure as of the date of termination.  Notwithstanding
anything to the contrary contained in this Agreement, if the parties fail to
enter into a new agreement with respect to services by ZelnickMedia provided
hereunder on substantially similar terms in the aggregate upon the expiration of
the Initial Term or otherwise agree to extend the Initial Term, all unvested
time-based restricted units granted pursuant to the Grant Agreements shall vest,
and all performance-based restricted units granted pursuant to the Grant
Agreements shall vest in accordance with the terms of the applicable Grant
Agreement upon such expiration; provided that the vesting of any such
performance-based restricted units granted on or following the Initial Grant
Date shall be determined based on the assumption that the applicable performance
measure was achieved at the target level of performance for the applicable
performance period or, prior to a Change in Control, based on the actual level
of performance achieved for each applicable performance measure as of such
vesting date. Upon a Change in Control, (i) this Agreement shall not terminate,
and any termination of this Agreement (which, if done by the Company for any
reason other than for Cause, shall be deemed a termination of this Agreement by
the Company without Cause) shall only be in accordance with this Section 8, and
(ii) all unvested restricted units granted pursuant to the Grant Agreements
(including time-based and performance-based restricted units) will vest in
accordance with the terms of the applicable Grant Agreement; provided, that
(a) the vesting of any such restricted units granted on or following the Initial
Grant Date shall occur upon the earlier of (x) a termination of this Agreement
by the Company without Cause or by ZelnickMedia for Good Reason or (y) the
second anniversary of the date such awards were granted pursuant to the Grant
Agreements (irrespective of whether this Agreement has been terminated for any
reason after such date) and (b) the vesting of any such performance-based
restricted units granted on or following the Initial Grant Date shall be
determined based on the assumption that the applicable performance measure was
achieved at the target level of performance for the applicable performance
period.

 

“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.

 

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“Good Reason” means (a) a condition that materially impairs the ability of
ZelnickMedia, Strauss Zelnick, Karl Slatoff or any other individual appointed by
ZelnickMedia pursuant to Section 3(i)(A)-(B) (other than a condition solely
created by ZelnickMedia or such individuals) to perform their respective duties
or responsibilities, as applicable, as contemplated herein, (b) assigning
Strauss Zelnick, Karl Slatoff 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; provided, however, that in each
ZelnickMedia provides not less than 30 days’ written notice to the Company
(within 60 days of ZelnickMedia, Strauss Zelnick, Karl Slatoff or any other
individual appointed by ZelnickMedia pursuant to Section 3(i)(A)-(B) becoming
aware of the initial existence of the facts or circumstances constituting Good
Reason) of its intention to terminate this Agreement for Good Reason, such
notice to state in detail the particular act or acts or failure or failures to
act that constitute the grounds on which the proposed termination for Good
Reason is based, and such termination shall be effective at the expiration of
such 30 day notice period only if the Company has not fully cured such act or
acts or failure or failures to act that give rise to Good Reason during such
period.

 

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

 

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hereby agree that, in no event shall any conduct or actions undertaken by
ZelnickMedia or any of 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.

 

No termination of this Agreement 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 the date of this Agreement 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.                               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.

 

10

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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,
the 2014 Agreement, the 2011 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, the 2014 Agreement, the 2011 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 this
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):

 

If to ZelnickMedia:

 

ZelnickMedia Corporation
110 East 59th Street, 24th Floor
New York, NY 10022

11

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Telephone:  (212) 223-1383
Attention:  Strauss Zelnick

 

with a copy to (which shall not constitute notice):

 

Sidley Austin LLP
1999 Avenue of the Stars, 17th Floor
Los Angeles, CA 90067
Telephone: (310) 595-9525
Attention: Daniel Clivner

 

If to the Company:

 

Take-Two Interactive Software, Inc.
110 West 44th Street
New York, NY 10036
Telephone:  (646) 536-2842
Attention:  General Counsel

 

with a copy to (which shall not constitute notice):

 

Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Telephone:  (212) 728-8129
Attention:  Adam Turteltaub

 

14.                               Entire Agreement; Modification.  Effective as
of the Effective Date, this Agreement and the Grant Agreements 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 2014 Agreement, the 2011 Agreement and
the Original Agreement; provided that, notwithstanding the foregoing, (i) with
respect to Fiscal 2018, the Annual Bonus for the period from April 1, 2017 to
December 31, 2017 shall be determined in accordance with Section 5 of the 2014
Agreement based on Fiscal 2018 performance, (ii) Section 23 (Registration
Statement) of both the 2014 Agreement and the 2011 Agreement shall survive the
execution of this Agreement and (iii) to the extent expressly provided therein,
each of the grant agreements attached as Exhibit A to the 2014 Agreement
relating to the restricted units described in Section 6 of the 2014 Agreement
(which, for the avoidance of doubt, shall include the (1) Restricted Unit
Agreement, dated as of April 1, 2014, as amended by the Amendment to the
Restricted Unit Agreement, effective as of March 31, 2016, (2) Amended and
Restated Restricted Unit Agreement, dated as of June 30, 2015, as amended by the
Amendment to the Amended and Restated Restricted Unit Agreement, dated as of
February 7, 2017, effective as of December 8, 2016, (3) Restricted Unit
Agreement, dated as of May 20, 2016, and (4) the Restricted Unit Agreement,
dated as of May 25, 2017) shall remain in full force and effect in accordance
with the terms thereof and shall not be superseded by this Agreement or by the
New

 

12

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Grant Agreement, including without limitation with respect to the grant, vesting
or termination of any equity awards contemplated therein.  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.

 

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 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.

 

13

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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
any Subject Person, 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, 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 the New Grant Agreement and any grant agreements
entered into with respect to additional grants by the Company in accordance with
Section 6.  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 tradable.

 

24.                               Dodd-Frank.  ZelnickMedia hereby acknowledges
(i) the section in the Company’s 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 three-year period preceding the date on which the issuer is required
to prepare an accounting restatement, based on the erroneous

 

14

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

 

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 or who receive any portion of the Equity Awards, 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.

 

* * * * *

 

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/ Daniel P. Emerson

 

 

Name:

Daniel P. Emerson

 

 

Title:

EVP and General Counsel

 

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

 

EXHIBIT A

 

Final Version

 

RESTRICTED UNIT AGREEMENT
PURSUANT TO THE
TAKE-TWO INTERACTIVE SOFTWARE, INC.
2017 STOCK INCENTIVE PLAN

 

This Restricted Unit Agreement (this “Agreement”), dated as of April 13, 2018,
is made by and between Take-Two Interactive Software, Inc. (the “Company”) and
ZelnickMedia Corporation (the “Participant”).

 

W I T N E S S E T H:

 

WHEREAS, the Company has adopted the Take-Two Interactive Software, Inc. 2017
Stock Incentive Plan (as amended and restated from time to time, the “Plan”), a
copy of which has been delivered to the Participant, which is administered by a
committee appointed by the Company’s Board of Directors (the “Committee”);

 

WHEREAS, pursuant to Section 7 of the Plan, the Committee may grant restricted
stock units (“Restricted Units”), each representing the right to receive one
(1) share (a “Share”) of the Company’s common stock, par value $0.01 per share
(“Common Stock”), or the cash value of one (1) share of Common Stock, as
determined by the Committee, on a specified settlement date, to Consultants; and

 

WHEREAS, pursuant to the Management Agreement between the Participant and the
Company, dated as of November 17, 2017, and effective as of January 1, 2018
(the “Management Agreement”), the Company has agreed to grant Restricted Units
to the Participant.

 

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 Restricted Units.  Subject to
the restrictions, terms and conditions of this Agreement, the Company hereby
awards to the Participant [     ] Restricted Units, subject to adjustment,
forfeiture and the other terms and conditions set forth below.  The Restricted
Units constitute an unfunded and unsecured promise of the Company to deliver (or
cause to be delivered) to the Participant, subject to the terms of this
Agreement, cash, Shares or a combination of cash and Shares, in the discretion
of the Company, on the applicable vesting date for such Restricted Units as
provided herein.  Until such delivery, the Participant shall have only the
rights of a general unsecured creditor, and no rights as a shareholder of the
Company; provided, that if prior to the settlement of any Restricted Unit,
(a) the Company pays a cash dividend (whether regular or extraordinary) or
otherwise makes a cash distribution to a shareholder in respect of a Share, then
the Company shall credit, in respect of each then-outstanding Restricted Unit
held by the Participant, an amount equal to any such cash dividend

 

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

 

or distribution to a book entry account on behalf of the Participant, provided
that such cash dividend or distribution shall not be deemed to be reinvested in
shares of Common Stock and will be held uninvested and without interest and paid
in cash at the same time as such Restricted Unit vests and is settled under
Section 2 below (and the Participant shall forfeit any such right to such cash
if such Restricted Unit is forfeited prior to vesting), and (b) the Company pays
a non-cash dividend (whether regular or extraordinary) or otherwise makes a
non-cash distribution in Shares or other property to a shareholder in respect of
a Share, then the Company shall provide the Participant, in respect of each
then-outstanding Restricted Unit held by the Participant, an amount equal to the
Fair Market Value of such Shares or an amount equal to the fair market value of
such other property as reasonably determined by the Company in good faith, as
applicable, at the same time as such Restricted Unit vests and is settled under
Section 2 below (and the Participant shall forfeit any such right to such amount
if such Restricted Unit is forfeited prior to vesting).

 

2.                                      Vesting.  The Restricted Units shall
become vested and settled in accordance with the terms set forth on Annex A
attached hereto.

 

3.                                      Taxes.  The Participant shall be solely
responsible for all applicable federal, state, local, and foreign taxes the
Participant incurs from the grant, vesting or settlement of the Restricted
Units.

 

4.                                      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 Units are
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.

 

5.                                      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 Units, 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.

 

6.                                      Uncertificated Shares.  Notwithstanding
anything else herein, to the extent permitted under applicable law, the Company
may issue Shares in the form of uncertificated shares.  Such uncertificated
Shares 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

 

2

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

 

respect to the uncertificated Shares, such issuance and delivery of certificates
shall be in accordance with the applicable terms of this Agreement.

 

7.                                      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.  By signing and returning this Agreement, the
Participant acknowledges having received and read a copy of the Plan and agrees
to comply with it, this Agreement and all applicable laws and regulations. 
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.

 

8.                                      Adjustments.  The Company shall make any
adjustments to the Restricted Units upon any changes in capital structure of the
Company, as determined by the Committee in good faith and in a manner consistent
with the Plan.

 

9.                                      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.
110 West 44th Street
New York, New York 10036
Telephone: (646) 536-2842
Attention: General Counsel

 

If to the Participant, to:

 

ZelnickMedia Corporation
110 East 59th Street, 24th Floor
New York, NY 10022
Telephone:  (212) 223-1383
Attention:  Strauss Zelnick

 

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).

 

10.                               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

 

3

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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.

 

11.                               Consent to Jurisdiction.  Notwithstanding
anything in the Plan to the contrary, 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 9 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.

 

12.                               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.

 

13.                               Amendment.  The Committee may, subject to the
terms of the Plan, at any time and from time to time amend, in whole or in part,
any or all of the provisions of this Agreement, and may also suspend or
terminate this Agreement, subject to the terms of the Plan.  Except as otherwise
provided in the Plan, no modification or waiver of any of the provisions of this
Agreement shall be effective unless in writing by the party against whom it is
sought to be enforced.

 

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.

 

4

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(b)                                 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.

 

(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)                                 Although the Company makes no guarantee with
respect to the tax treatment of the Restricted Units, the Company intends that
the Restricted Units shall not constitute “nonqualified deferred compensation”
subject to Section 409A of the Internal Revenue Code of 1986, as amended, and
any successor provision or any Treasury Regulation promulgated thereunder
(“Section 409A”) and this Agreement shall be interpreted, administered and
construed consistent with such intent.  If, and only to the extent that, (i) the
Restricted Units constitute “deferred compensation” within the meaning of
Section 409A and (ii) the Participant is deemed to be a “specified employee” (as
such term is defined in Section 409A and as determined by the Company), the
payment of Restricted Units on termination of the Management Agreement shall not
be made until the first business day of the seventh month following such
termination or, if earlier, the date of the Participant’s death.

 

[End of text.  Signature page follows.]

 

5

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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: Daniel P. Emerson

 

 

Title: EVP and General Counsel

 

 

 

 

PARTICIPANT:

 

 

 

ZELNICKMEDIA CORPORATION

 

 

 

 

By:

 

 

 

Name: Karl Slatoff

 

 

Title: Partner

 

6

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Annex A

 

Vesting

 

A.                                    Time Based Vesting.

 

Subject to Section C, [     ] of the Restricted Units (the “Time-Based Units”)
shall become vested on April 13, 2020 (the “Vesting Date”).

 

 

B.                                    Performance Based Vesting.

 

Subject to Section C, certain of the Restricted Units shall be subject to
performance-based vesting in accordance with Section (B)(i) (the “TSR
Performance-Based Units”), Section (B)(ii) (the “Recurrent Consumer Spending
Performance-Based Units”), and Section (B)(iii) (the “IP Performance-Based
Units,” and together with the TSR Performance-Based Units and the Recurrent
Consumer Spending Performance-Based Units, the “Performance-Based Units”).

 

(i)                                     TSR Performance-Based Units.  The target
number of TSR Performance-Based Units that shall be eligible to vest pursuant to
this Section B(i) shall be [     ], and the maximum number of TSR
Performance-Based Units that shall be eligible to vest pursuant to this
Section B(i) shall be [     ].  Subject to Section C, on the Vesting Date, a
number of TSR Performance-Based Units shall become vested equal to the product
of (x) the target number of TSR Performance-Based Units eligible to vest
pursuant to this Section B(i) multiplied by (y) the TSR Vesting Percentage as of
March 31, 2020, rounded down to the nearest whole TSR Performance-Based Unit.

 

A-1

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(ii)                                  Recurrent Consumer Spending
Performance-Based Units.  The target number of Recurrent Consumer Spending
Performance-Based Units that shall be eligible to vest pursuant to this
Section B(ii) shall be [     ], and the maximum number of Recurrent Consumer
Spending Performance-Based Units that shall be eligible to vest pursuant to this
Section B(ii) shall be [     ].  Subject to Section C, on the Vesting Date, a
number of Recurrent Consumer Spending Performance-Based Units shall become
vested equal to the product of (x) the target number of Recurrent Consumer
Spending Performance-Based Units in such vesting tranche multiplied by (y) the
Recurrent Consumer Spending Vesting Percentage as of March 31, 2020, rounded
down to the nearest whole Recurrent Consumer Spending Performance-Based Unit.

 

(iii)                               IP Performance-Based Units.  The target
number of IP Performance-Based Units that shall be eligible to vest pursuant to
this Section B(iii) shall be [     ], and the maximum number of IP
Performance-Based Units that shall be eligible to vest pursuant to this
Section B(iii) shall be [     ].  Subject to Section C, on the Vesting Date, a
number of IP Performance-Based Units shall become vested equal to the product of
(x) the target number of IP Performance-Based Units in such vesting tranche
multiplied by (y) the IP Vesting Percentage on March 31, 2020, rounded down to
the nearest whole IP Performance-Based Unit.

 

 

C.                                    Qualifying Termination; Change in Control.

 

(i)                                     Termination.  In the event of a
Qualifying Termination prior to the earlier of (x) the Vesting Date or (y) a
Change in Control (as defined in the Management Agreement): (a) the effective
date of such Qualifying Termination shall serve as the vesting date for all
Time-Based Units hereunder, and all such Time-Based Units shall vest as of such
date; (b) the effective date of such Qualifying Termination shall serve as the
vesting date for all TSR Performance-Based Units hereunder and the given date
for purposes of the Measurement Price, and the number of such TSR
Performance-Based Units that shall vest as of such date shall be calculated in
accordance with Section B(i) above based upon the Percentile Rank through the
effective date of such Qualifying Termination; and (c) the effective date of
such Qualifying Termination shall serve as the vesting date for all Recurrent
Consumer Spending Performance-Based Units and IP Performance-Based Units
hereunder, and the target number of such Recurrent Consumer Spending
Performance-Based Units and IP Performance-Based Units (as set forth in Sections
B(ii) and B(iii), as applicable) shall vest as of such date without regard to
the application of the Applicable Vesting Percentage.

 

(ii)                                  Change in Control.  If a Change in Control
occurs while the Management Agreement remains in effect, in any case prior to
the earlier of (x) the Vesting Date or (y) a Qualifying Termination, all
Time-Based Units and the target number of Performance-Based

 

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Units (as set forth in Sections B(i), B(ii) and B(iii), as applicable) shall
remain eligible to vest and shall vest (without regard to the application of the
Applicable Vesting Percentage, in the case of Performance-Based Units), in each
case, as of the earlier of (a) a Qualifying Termination or (b) the Vesting
Date.  Each Restricted Unit that remains eligible to vest following a Change in
Control pursuant to the foregoing sentence shall be referred to as a
“Vesting-Eligible Unit.”  Upon the occurrence of a Change in Control, each
Vesting-Eligible Unit shall be converted into an amount in cash equal to the
Market Value of the consideration payable in the Change in Control in respect of
each such Vesting-Eligible Unit, and such consideration shall be paid to the
Participant promptly following the satisfaction of the vesting conditions set
forth in this Section C(ii) (i.e., in full on the Vesting Date, or if earlier,
upon a Qualifying Termination), and shall automatically be forfeited and shall
revert back to the Company if such vesting conditions are not satisfied.

 

D.                                    Forfeiture.

 

(i)                                     Any Restricted Units that have not
vested as of the termination of the Management Agreement for any reason other
than a Qualifying Termination shall automatically be forfeited and shall revert
back to the Company without compensation to the Participant.

 

(ii)                                  Any Performance-Based Units that (x) have
not vested as of the earlier of (a) the Vesting Date or (b) the effective date
of a Qualifying Termination, or (y) do not become Vesting-Eligible Units upon
the occurrence of a Change in Control (i.e., any Performance-Based Units above
the target numbers set forth in Sections B(i), B(ii) and B(iii), as applicable),
shall automatically be forfeited and shall revert back to the Company without
compensation to the Participant.

 

E.                                     Settlement.  Subject to the last sentence
of Section C(ii), upon vesting pursuant to Sections A, B, and C, the Company
shall deliver to the Participant an amount in cash having a value equal to the
aggregate value of a number of Shares equal to the number of Restricted Units
vesting on such date, based on the closing price of the Shares on such
settlement date on the principal national securities exchange on which the
Shares are traded on such date (or if the Shares are not traded on such date,
the immediately preceding trading day), provided that the Participant has
satisfied any tax withholding obligations as described in this Agreement. 
Notwithstanding anything herein to the contrary, but subject to the last
sentence of Section C(ii), each Restricted Unit (including any amount provided
for pursuant to Section 1(a) of the Agreement) may, at the election of the
Company, be settled in Shares issued pursuant to the Plan (subject to any
required delay in issuance as required under the Plan).  To the extent any
Shares become deliverable to the Participant hereunder the Participant shall be
deemed the beneficial owner of any Share issued upon settlement of a Restricted
Unit at the close of business on any settlement date and shall be entitled to
any dividend or distribution that has not already been made with respect to such
Share if the record date for such dividend or distribution is after the close of
business on such settlement date, and the Company shall promptly issue and
deliver, unless the Company is using a book entry or similar method pursuant to
Section 6 of the Agreement (in which case the Company shall upon request
promptly issue and deliver upon the Participant’s request), to the Participant a
new stock certificate registered in the name of the Participant for any Shares
issued upon settlement of Restricted Units and deliver to the

 

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Participant such Shares, in each case free of all liens, claims and other
encumbrances (other than those created by the Participant).

 

F.                                      Definitions.

 

“Add-On Content” in respect of any IP means all interactive software
entertainment products that are sold as a supplement (including as part of a
bundle or special/premium edition) to a full game release of such IP, including
but not limited to expansion packs and micro-content (or, in the case of
free-to-play game software programs, that are sold in connection with such IP),
which are not playable separately from such IP, but excluding any Sequel of such
IP.

 

“Applicable Vesting Percentage” means (i) with respect to TSR Performance-Based
Units, the TSR Vesting Percentage, (ii) with respect to Recurrent Consumer
Spending Performance-Based Units, the Recurrent Consumer Spending Vesting
Percentage, and (iii) with respect to IP Performance-Based Units, the IP Vesting
Percentage.

 

“Individual Release” means any IP released at any time prior to or following the
date of this Agreement across any and all gaming platforms and all SKUs released
of any IP, including, for the avoidance of doubt, any bundles, anniversary
editions or “game of the year” editions of such IP but excluding (i) any Add-On
Content in respect of such IP and (ii) any expansion packs that are playable
separately from such IP, with each such expansion pack being deemed to be a
separate Individual Release.

 

“IP” means any commercially-released interactive entertainment product,
including any commercially-released products that are derived from or use the
branding, environments or characters of such products (e.g., Sequels and
subsequent Individual Releases).

 

“IP Vesting Percentage” as of a given date is a function of the Company’s
Sell-In Performance for any Individual Release of IP calculated as of such date,
determined by reference to the following table.  For the avoidance of doubt, the
IP Vesting Percentage shall be determined based on the Company’s Sell-In
Performance with respect to one Individual Release of IP.  If multiple
Individual Releases of IP occur during the relevant measurement period, the IP
Vesting Percentage shall be determined based on the Individual Release of IP
that results in the highest IP Vesting Percentage.  Without limiting the
generality of the foregoing, in no event shall (i) the Company’s Sell-In
Performance with respect to multiple Individual Releases of IP or (ii) the IP
Vesting Percentages attributable to multiple Individual Releases of IP, be
aggregated for purposes of  determining the IP Vesting Percentage.  By way of
example, if, during the relevant measurement period, the Company has an
Individual Release of IP that results in a Sell-In Performance of 6,000,000
units, as well as an Individual Release of IP that results in Sell-In
Performance of 8,000,000 units, the IP Vesting Percentage will be 100% (i.e.,
the highest IP Vesting Percentage attributable to an Individual Release of IP). 
For purposes of calculating the IP Vesting Percentage under Section B(iii) of
this Annex A, except where such calculation is not required as provided in
Section C of this Annex A, the relevant measurement date will be March 31, 2020.

 

(x)                                 For any Individual Release of IP:

 

A-4

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IP Sell-In Performance

 

IP Vesting Percentage

Less than 6,000,000 units

 

0%

6,000,000 units

 

50%

8,000,000 units

 

100%

10,000,000 units or greater

 

200%

 

In the event that the IP Sell-In Performance is less than 6,000,000 units, the
IP Vesting Percentage shall be zero percent (0%).  In the event that the IP
Sell-In Performance falls between any of the values listed in the table above,
the IP Vesting Percentage shall be based on a straight line interpolation
between such two values.

 

“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 30 trading days ending on (and including) such date.  For
purposes of calculating the TSR Vesting Percentage under Section B(i) of this
Annex A, except where such calculation is not required as provided in Section C
of this Annex A, the given date for the definition of Measurement Price will be
March 31, 2020.

 

The “Peer Group” shall consist of the companies that comprise The NASDAQ
Composite Index on March 31, 2018; provided, that (i) subject to clause
(ii) below, if a member of the Peer Group ceases to be publicly traded for any
reason following March 31, 2018 and prior to the applicable date on which the
Measurement Price is calculated, that member of the Peer Group shall be deleted
as a member of the Peer Group and shall not be counted for purposes of the TSR
Vesting Percentage and related calculations and (ii) if a member of the Peer
Group becomes bankrupt following March 31, 2018 and prior to the applicable date
on which the Measurement Price is calculated, that member of the Peer Group
shall remain a member of the Peer Group and shall be attributed a Total
Shareholder Return of -100% for purposes of the TSR Vesting Percentage and
related calculations (even if such member of the Peer Group ceases to be
publicly traded upon or following its bankruptcy).

 

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.

 

A-5

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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.

 

The “Port” of an IP means a substantially similar version of such IP developed
to operate on a platform other than the platform for which such IP had
theretofore been developed to operate.

 

“Qualifying Termination” means (i) a termination of the Management Agreement by
the Company without Cause (as defined in the Management Agreement), including
any termination by the Company (other than for Cause) in connection with a
Change in Control, or by ZelnickMedia or its assignee for Good Reason (as
defined in the Management Agreement) or (ii) the failure of the Company and
ZelnickMedia to enter into a new management agreement, on terms substantially
similar in the aggregate to the terms of the Management Agreement, upon the
expiration of the Initial Term (as defined therein) or to otherwise agree to
extend the Initial Term.

 

“Recurrent Consumer Spending” as of a given date shall mean the consolidated net
bookings generated by the Company that are supplemental to the sale of any full
game release from the sale of virtual currency, add-on content,
microtransactions and similar items, calculated on a basis consistent with how
the Company calculates recurrent consumer spending for its management
reporting.  For the avoidance of doubt, Recurrent Consumer Spending shall not
include full-game digital downloads.

 

“Recurrent Consumer Spending Vesting Percentage” is a function of the Company’s
Recurrent Consumer Spending and is determined by reference to the following
tables.  The first table measures the percentage change between Recurrent
Consumer Spending for the fiscal year ended March 31, 2018 and the two-year
average Recurrent Consumer Spending for the fiscal years ending March 31, 2019
and March 31, 2020, while the second table measures two-year average Recurrent
Consumer Spending for the fiscal years ending March 31, 2019 and March 31, 2020
as a percentage of two-year average total net bookings for the fiscal years
ending March 31, 2019 and March 31, 2020, and reflects a Relative Recurrent
Consumer Spending Vesting Percentage.  For the avoidance of doubt, the Recurrent
Consumer Spending Vesting Percentage shall be equal to either the Absolute
Recurrent Consumer Spending Vesting Percentage or the Relative Recurrent
Consumer Spending Vesting Percentage, whichever is greater.

 

Absolute Recurrent Consumer Spending Growth
(during the relevant measurement period)

 

Absolute Recurrent Consumer
Spending Vesting Percentage

Less than 3%

 

0%

3%

 

50%

6%

 

100%

9% or greater

 

200%

 

In the event that the Absolute Recurrent Consumer Spending Growth is less than
3%, the Absolute Recurrent Consumer Spending Vesting Percentage shall be zero
percent (0%).  In the event that the Absolute Recurrent Consumer Spending Growth
falls between any of the values

 

A-6

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listed in the table above, the Absolute Recurrent Consumer Spending Vesting
Percentage shall be based on a straight line interpolation between such two
values.

 

Relative Recurrent Consumer Spending (as a
percentage of two-year average total net bookings)

 

Relative Recurrent Consumer
Spending Vesting Percentage

Less than 27.5%

 

0%

27.5%

 

50%

37.5%

 

100%

47.5% or greater

 

200%

 

In the event that the Relative Recurrent Consumer Spending Growth is less than
27.5%, the Relative Recurrent Consumer Spending Vesting Percentage shall be zero
percent (0%).  In the event that the Relative Recurrent Consumer Spending Growth
falls between any of the values listed in the table above, the Relative
Recurrent Consumer Spending Vesting Percentage shall be based on a straight line
interpolation between such two values.

 

“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 of the 30
trading days ending on (and including) March 31, 2018.

 

“Sell-In Performance” as of a given date means, with respect to any Individual
Release of IP, the number of units “sold-in” during the period beginning on
April 1, 2018 and ending on March 31, 2020.

 

“Sequel” means with respect to any IP, any game software program, other than any
Port or Add-On Content, in any medium that is derived from such IP within the
same genre, utilizing the same game play, and based on the same themes and using
the same brand name as such IP where the visual display(s), character(s),
background(s), virtual environment(s), or other visual or video elements
accessible to the end-user of the game software program are derived from
comparable elements of such IP.

 

“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.

 

“TSR 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

 

TSR Vesting Percentage

Less than 40th Percentile

 

0%

40th Percentile

 

50%

50th Percentile

 

100%

75th Percentile or greater

 

200%

 

A-7

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In the event that the Percentile Rank is less than 40th Percentile, the TSR
Vesting Percentage shall be zero percent (0%).  In the event that the Percentile
Rank falls between any of the values listed in the table above, the TSR Vesting
Percentage shall be based on a straight line interpolation between such two
values.

 

A-8

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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) the 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 any amount 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

 

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

 

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