EMPLOYMENT AGREEMENT

AGREEMENT dated as February 28, 2007 between Take-Two Interactive Software,
Inc., a Delaware corporation (the "Employer" or the "Company"), and Seth Krauss
(the "Employee").

W I T N E S S E T H :
 
WHEREAS, the Employer desires to employ the Employee as its General Counsel and
to be assured of his services as such on the terms and conditions hereinafter
set forth; and

WHEREAS, the Employee is willing to accept such employment on such terms and
conditions;

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and intending to be legally bound hereby, the Employer
and the Employee hereby agree as follows:

1. Term. Employer hereby agrees to employ Employee, and Employee hereby agrees
to serve Employer for a three-year period commencing effective as of March 12,
2007 (the "Effective Date") (such period being herein referred to as the
"Initial Term," and any year commencing on the Effective Date or any anniversary
of the Effective Date being hereinafter referred to as an "Employment Year").
After the Initial Term, this Agreement shall be renewable automatically for
successive one year periods (each such period being referred to as a "Renewal
Term" and together with the Initial Term referred to as “the Term”), unless, at
least sixty (60) days prior to the expiration of the Initial Term or any Renewal
Term, either the Employee or the Employer give written notice that employment
will not be renewed.

2. Employee Duties.

(a) During the term of this Agreement, the Employee shall serve as Executive
Vice President and General Counsel and have the duties and responsibilities
customarily associated with these positions in a company the size and nature of
the Company. Employee shall report directly to the Chief Executive Officer of
Employer and the Board of Directors of the Employer (the "Board").

(b) The Employee shall devote substantially all of his business time, attention,
knowledge and skills faithfully, diligently and to the best of his ability, in
furtherance of the business and activities of the Company. The principal place
of performance by the Employee of his duties hereunder shall be the Company's
principal executive offices in New York, although the Employee may be required
to travel outside of the area where the Company's principal executive offices
are located in connection with the business of the Company.

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3. Compensation.

(a) During the Term, the Employer shall pay the Employee a salary (the "Salary")
at a rate of $365,000 per annum in respect of each Employment Year, payable in
equal installments semi-monthly, or at such other times as may mutually be
agreed upon between the Employer and the Employee. Such Salary shall be subject
to an annual review by the Board and may be increased from time to time at the
discretion of the Board.

(b) The Employee shall be entitled to a one-time signing bonus of $50,000,
payable on the first business day of the third full month following the
Effective Date. The Employee shall also be entitled to receive a cash bonus
(“Bonus”), with a target payment of 50% of Employee’s Salary in respect of each
fiscal year (such bonus to be pro-rated to the extent a fiscal year incorporates
only part of an Employment Year) during the term of this Agreement, based upon
reasonable and appropriate quantitative and qualitative performance targets for
each fiscal year to be mutually agreed upon in good faith by the Employee and
the Employer. The actual bonus may be less than the target payment based upon
the reasonable assessment of the Employee’s performance against the mutually
agreed targets and the results of operations of the Employer.

(c) The Employee shall receive non-qualified options to purchase 100,000 shares
of the Company’s common stock (the “Options”), to be granted on the first
business day of the first full calendar month following the Effective Date (the
“Grant Date”). The Options shall (i) have an exercise price per share equal to
the closing price of the Company’s common stock on Nasdaq on the Grant Date,
(ii) vest as to one-third of such shares on each of the first, second and third
anniversaries of the Grant Date, (iii) be issued under and subject to the
Employer’s 2002 Stock Option Plan, as amended, and (iv) be subject to the
provisions of Section 6(c) of this Agreement.

(d) The Employee shall be entitled to receive 25,000 shares of restricted common
stock of the Company (the “Shares”) under the Company’s Incentive Stock Plan, as
amended, vesting as to one-third of such shares on each of the first, second and
third anniversaries of the date of grant (as determined in the immediately
succeeding sentence), subject to the provisions of Section 6(c) of this
Agreement. The Shares shall be granted upon the last to occur of (i) the
approval by the Company’s stockholders of an amendment to the Company’s
Incentive Stock Plan increasing the number of shares authorized to be issued
thereunder by at least 1,000,000 shares or (ii) the Grant Date. If the approval
date referred to in clause (i) of the immediately preceding sentence does not
occur prior to the first, second or third anniversaries of the Grant Date, as
the case may be, Employee shall be paid an amount in cash equal to the value of
the shares that would have vested on such anniversary date if the shares had
been granted on the Grant Date.

(e) During the term of this Agreement, the Employee shall be entitled to receive
a car allowance in an amount of up to $1,000 per month.
 
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(f) In addition to the foregoing, the Employee shall be entitled to such other
cash bonuses and such other compensation in the form of stock, stock options or
other property or rights as may from time to time be awarded to him by the Board
during or in respect of his employment hereunder.

4. Benefits.

(a) During the term of this Agreement, the Employee shall have the right to
receive or participate in all benefits and plans which the Company may from time
to time institute during such period for its executive officers and for its
employees in general and for which the Employee is eligible. Nothing paid to the
Employee under any plan or arrangement presently in effect or made available in
the future shall be deemed to be in lieu of the salary or any other obligation
payable to the Employee pursuant to this Agreement.

(b) During the term of this Agreement, the Employee will be entitled to the
number of paid holidays, personal days off, vacation days and sick leave days in
each calendar year as are determined by the Company from time to time (provided
that in no event shall vacation time be fewer than four weeks per year). Such
vacation may be taken in the Employee's discretion with the prior approval of
the Employer, and at such time or times as are not inconsistent with the
reasonable business needs of the Company.

5. Travel Expenses. All travel and other expenses incident to the rendering of
services reasonably incurred on behalf of the Employer by the Employee during
the term of this Agreement shall be paid by the Employer. If any such expenses
are paid in the first instance by the Employee, the Employer shall reimburse him
therefor on presentation of appropriate receipts for any such expenses. All
travel and lodging arrangements shall be made in accordance with Employer’s
regular policies.

6. Termination. Notwithstanding the provisions of Section 1 hereof, the
Employee's employment with the Employer may be earlier terminated as follows:

(a) By action taken by the Board, the Employee may be discharged for Cause (as
herein-after defined), effective as of such time as the Board shall determine.
Upon discharge of the Employee pursuant to this Section 6(a), the Employer shall
have no further obligation or duties to the Employee, except for payment of
Salary through the effective date of termination, and the Employee shall have no
further obliga-tions or duties to the Employer, except as provided in Section 7.

(b) In the event of (i) the death of the Employee or (ii) by action of the Board
and the inability of the Employee, by reason of physical or mental disability,
to continue substantially to perform his duties hereunder for a period of 180
consecutive days, during which 180 day period Salary and any other benefits
hereunder shall not be suspended or diminished. Upon any termination of the
Employee's employment under this Section 6(b), the Employer shall have no
further obligations or duties to the Employee, except as provided in Section
8(g).

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(c) In the event that Employee's employment with the Employer is terminated by
action taken by the Company without Cause (other than in accordance with Section
6(b) above), then the Employer shall have no further obligation or duties to
Employee, except for payment of the amounts described in this Section 6(c) and
as provided in Section 8(g), and Employee shall have no further obligations or
duties to the Employer, except as provided in Section 7. In the event of such
termination, the Employer shall continue to pay Salary to the Employee at the
rate then in effect for a period of twelve (12) months from the date of
termination; provided, however, if such termination occurs prior to the second
anniversary of the Effective Date, such twelve (12) month period shall be
extended to twenty-four (24) months. In the event of such termination without
Cause, all outstanding options and shares of restricted stock granted to the
Employee which have not vested as of the date of such termination shall vest
and, as applicable, become immediately exercisable. Notwithstanding the
foregoing, if such termination without Cause occurs upon or within six months
following a Change in Control (as defined herein), (i) the Employer shall
continue to pay Salary to Employee at the rate then in effect for a period of
eighteen (18) months following such termination (which eighteen (18) month
period shall be extended to twenty-four (24) months in the event such
termination occurs prior to the second anniversary of the Effective Date) and
(ii) all outstanding options and shares of restricted stock granted to the
Employee by the Company which have not vested as of the date of such termination
shall vest and become immediately exercisable, as applicable.    

(d) For purposes of this Agreement, Employee shall be deemed to have been
terminated by the Employer without Cause if (i) the Employer terminates his
employment for any reason other than in accordance with Sections 6(a) or 6(b)
above or (ii) after a material breach of this Agreement by the Employer or a
material diminution in Employee’s title, status, position or responsibilities,
the Employee provides Employer with at least thirty (30) days prior written
notice specifying the grounds for such material breach or material diminution
and the Employer fails to cure such grounds within such thirty (30) day period.

(e)  For purposes of this Agreement, the Company shall have "Cause" to terminate
the Employee's employment under this Agreement upon (i) the continued failure by
the Employee to substantially perform his duties under this Agreement after
receipt of notice from the Company requesting such performance, (ii) the
criminal conviction of Employee by plea or after trial of having engaged in
criminal misconduct (including embezzlement and fraud) which is demonstrably
injurious to the Company, monetarily or otherwise, (iii) the conviction of the
Employee of a felony; (iv) gross negligence on the part of the Employee
affecting the Company; or (v) failure of the Employee to adhere to the Company’s
written policies or to cooperate in any investigation or inquiry involving the
Company. The Company shall give written notice to the Employee of any proposed
termination for Cause, which notice shall specify the grounds for the proposed
termination, and the Employee shall be given thirty (30) days to cure if the
grounds arise under clauses (i) or (v) above.
 
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(f) For purposes of this Agreement, a "Change in Control" shall be deemed to
occur (i) upon the election of directors constituting a change in a majority of
the Board, which directors were not nominated by the Board immediately in place
prior to such change; (ii) upon the acquisition by any person, entity or group
of beneficial ownership of 50 percent or more of either the outstanding shares
of common stock of the company or the combined voting power of the then
outstanding voting securities of the company entitled to vote generally in the
election of directors; (iii) upon a merger or consolidation of the Company or
any of its subsidiaries with any other corporation, which results in the
stockholders of the Company prior thereto continuing to represent less than 50
percent of the combined voting power of the voting securities of the Company or
the surviving entity after the merger; or (iv) upon the sale of all, or
substantially all, of the assets of the Company.
 
7. Confidentiality; Noncompetition.

(a) The Employer and the Employee acknowledge that the services to be performed
by the Employee under this Agree-ment are unique and extraordinary and, as a
result of such employment, the Employee will be in possession of confidential
information relating to the business practices of the Company. The term
"confidential information" shall mean any and all information (oral and written)
relating to the Company or any of its affiliates, or any of their respective
activities, other than such information which can be shown by the Employee to be
in the public domain (such information not being deemed to be in the public
domain merely because it is embraced by more general information which is in the
public domain) other than as the result of breach of the provisions of this
Section 7(a), including, but not limited to, information relating to: trade
secrets, personnel lists, compensation of employees, financial information,
research projects, services used, pricing, customers, customer lists and
prospects, product sourcing, marketing and selling and servicing. The Employee
agrees that he will not, during or after his termination or expiration of
employment hereunder, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any confidential information
regarding the clients, customers or business prac-tices of the Company acquired
by the Employee during his employ-ment by Employer, without the prior written
consent of Employer. Anything herein to the contrary notwithstanding, the
provisions of this Section 7(a) shall not apply (i) when disclosure is required
by law or by any court, arbitrator, mediator or administrative or legislative
body (including any committee thereof) with actual or apparent jurisdiction to
order the Employee to disclose or make accessible any information, (ii) with
respect to any other litigation, arbitration or mediation involving this
Agreement, including, but not limited to, the enforcement of this Agreement,
(iii) as to information that becomes generally known to the public or within the
relevant trade or industry other than due to the Employee’s violation of this
Section or (iv) as to information that is or becomes available to the Employee
on a non-confidential basis from a source which is entitled to disclose it to
the Employee.

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(b) If permitted by the New York Canon of Ethics, the Employee hereby agrees
that he shall not, during the period of his employment and for a period of one
(1) year following such employment, directly or indirectly, within any county
(or adjacent county) in any State within the United States or territory outside
the United States in which the Company is engaged in business during the period
of the Employee's employment or on the date of termination of the Employee's
employment, engage, have an interest in or render any services to any business
(whether as owner, manager, operator, licensor, licensee, lender, partner,
stockholder, joint venturer, employee, consultant or otherwise) competitive with
the Company's business activities.

(c) The Employee hereby agrees that he shall not, during the period of his
employment and for a period of one (1) year following such employment, directly
or indirectly solicit any of the Company's customers, or persons listed on the
personnel lists of the Company. Except as required by law or legal process, at
no time during the Term, or thereafter shall the Employee, directly or
indirectly, disparage the commercial, business or financial reputation of the
Company. Except as required by law or legal process, at no time during the Term,
or thereafter shall the Employer or any executive officer of the Company,
directly or indirectly, disparage the professional, business, financial or
personal reputation of the Employee.

(d) For purposes of clarification, but not of limitation, the Employee hereby
acknowledges and agrees that the provisions of subparagraphs 7(b) and (c) above
shall serve as a prohibition against him, during the period referred to therein,
directly or indirectly, hiring, offering to hire, enticing, soliciting or in any
other manner persuading or attempting to persuade any officer, employee, agent,
lessor, lessee, licensor, licensee or customer who has been previously contacted
by either a representative of the Company, including the Employee, (but only
those suppliers existing during the time of the Employee's employment by the
Company, or at the termination of his employment), to discontinue or alter his,
her or its relationship with the Company.

(e) Upon the termination of the Employee's employment for any reason whatsoever,
all documents, records, notebooks, equipment, employee lists, price lists,
specifications, programs, customer and prospective customer lists and other
materials which refer or relate to any aspect of the business of the Company
which are in the possession of the Employee including all copies thereof, shall
be promptly returned to the Company. Anything to the contrary notwithstanding,
nothing in this Section 7(e) shall prevent the Employee from retaining a home
computer and security system, papers and other materials of a personal nature,
including personal diaries, calendars and Rolodexes, information relating to the
Employee’s compensation or relating to reimbursement of expenses, information
that the Employee reasonably believe may be needed for tax purposes, and copies
of plans, programs and agreements relating to the Employee’s employment.

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(f)  The products and proceeds of Employees services hereunder that Employee may
acquire, obtain, develop or create during the term of this Agreement, or that
are otherwise made at the direction of the Company or with the use of the
Company’s or its affiliates’ facilities or materials, including, but not limited
to, all materials, ideas, concepts, formats, suggestions, developments,
packages, programs and other intellectual properties (collectively, “Works”),
shall be considered a "work made for hire," as that term is defined under the
United States Copyright Act, and Employee shall be considered an employee for
hire of the Company, and all rights in and to the Works, including the copyright
thereto, shall be the sole and exclusive property of Company, as the sole author
and owner thereof, and the copyright thereto may be registered by Company in its
own name. In the event that any part of the Works shall be determined not to be
a work made for hire or shall be determined not to be owned by the Company,
Employee hereby irrevocably assigns and transfers to the Company, its successors
and assigns, the following: (a) the entire right, title and interest in and to
the copyrights, trademarks and other rights in any such Work and any rights in
and to any works based upon, derived from, or incorporating any such Work
(“Derivative Work”); (b) the exclusive right to obtain, register and renew the
copyrights or copyright protection in any such Work or Derivative Work; (c) all
income, royalties, damages, claims and payments now or hereafter due or payable
with respect to any such Work and Derivative Work; and (d) all causes of action
in law or equity, past and future, for infringements or violation of any of the
rights in any such Work or Derivative Work, and any recoveries resulting
therefrom. Employee also hereby waives in writing any moral or other rights that
he has under state or federal laws, or under the laws of any foreign
jurisdiction, which would give him any rights to constrain or prevent the use of
any Work or Derivative Work, or which would entitle him to receive additional
compensation from the Company. Employee shall execute all documents, including
without limitation copyright assignments and applications and waivers of moral
rights, and perform all acts that the Company may request, in order to assist
the Company in perfecting its rights in and to any Work and Derivative Work
anywhere in the world. Employee hereby appoints the officers of the Company as
Employee’s attorney-in-fact to execute documents on behalf of Employee for this
limited purpose

(g) The parties hereto hereby acknowledge and agree that (i) the Company would
be irreparably injured in the event of a breach by the Employee of any of his
obligations under this Section 7, (ii) monetary damages would not be an adequate
remedy for any such breach, and (iii) the Company shall be entitled to
injunctive relief, in addition to any other remedy which it may have, in the
event of any such breach.

(h) The parties hereto hereby acknowledge that, in addition to any other
remedies the Company may have under Section 7(g) hereof, the Company shall have
the right and remedy to require the Employee to account for and pay over to the
Company all compensation, profits, monies, accruals, increments or other
benefits (collectively, "Benefits") derived or received by the Employee as the
result of any transactions constituting a breach of any of the provisions of
Section 7, and the Employee hereby agrees to account for any pay over such
Benefits to the Company.

(i) Each of the rights and remedies enumerated in Section 7(g) and 7(h) shall be
independent of the other, and shall be severally enforceable, and all of such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity.

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(j) If any provision contained in this Section 7 is hereafter construed to be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid portions.

(k) If any provision contained in this Section 7 is found to be unenforceable by
reason of the extent, duration or scope thereof, or otherwise, then the court
making such determi-nation shall have the right to reduce such extent, duration,
scope or other provision and in its reduced form any such restriction shall
thereafter be enforceable as contemplated hereby.

(l) It is the intent of the parties hereto that the covenants contained in this
Section 7 shall be enforced to the fullest extent permissible under the laws and
public policies of each jurisdiction in which enforcement is sought (the
Employee hereby acknowledging that said restrictions are reasonably necessary
for the protection of the Company). Accordingly, it is hereby agreed that if any
of the provisions of this Section 7 shall be adjudicated to be invalid or
unenforceable for any reason whatsoever, said provision shall be (only with
respect to the operation thereof in the particular jurisdiction in which such
adjudication is made) construed by limiting and reducing it so as to be
enforceable to the extent permissible, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of said
provision in any other jurisdiction.

8. General. This Agreement is further governed by the following provisions:

(a) Notices. All notices relating to this Agreement shall be in writing and
shall be either personally delivered, sent by facsimile (receipt confirmed) or
nationally recognized overnight carrier or mailed by certified mail, return
receipt requested, to be delivered at such address as is indicated below, or at
such other address or to the attention of such other person as the recipient has
specified by prior written notice to the sending party. Notice shall be
effective when so personally delivered, one business day after being sent by
telecopy or five days after being mailed.

To the Employer:
 

     
Take-Two Interactive Software, Inc.
622 Broadway
New York, New York 10012
Attention: Chief Executive Officer

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To the Employee:
 
 
(b) Parties in Interest. Employee may not delegate his duties or assign his
rights hereunder. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective heirs, legal representatives,
successors and permitted assigns.

(c) Entire Agreement. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto, with respect to the
employment of the Employee by the Employer and contains all of the covenants and
agreements between the parties with respect to such employment in any manner
whatsoever. Any modification or termination of this Agreement will be effective
only if it is in writing signed by the party to be charged.

(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Employee agrees to and hereby
does submit to jurisdiction before any state or federal court of record in New
York County or in the state and county in which such violation may occur, at
Employer's election.

(e) Warranty. Employee hereby warrants and represents as follows:

(i) That the execution of this Agreement and the discharge of Employee's
obligations hereunder will not breach or conflict with any other contract,
agreement, or understanding between Employee and any other party or parties
except as otherwise disclosed to the Employer regarding Employee’s Notice Period
with his current employer.

(ii) Employee has ideas, information and know-how relating to the type of
business conducted by Employer, and Employee's disclosure of such ideas,
information and know-how to Employer will not conflict with or violate the
rights of any third party or parties.

(iii)  Employee will not disclose any trade secrets relating to the business
conducted by any previous employer and agrees to indemnify and hold Employer
harmless for any liability arising out of Employee's use of any such trade
secrets.

(f) Severability. In the event that any term or condition in this Agreement
shall for any reason be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other term or condition of this Agreement,
but this Agreement shall be construed as if such invalid or illegal or
unenforceable term or condition had never been con-tained herein.

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(g)  Indemnification. The Employee shall be entitled to the benefits of all
provisions of the Certificate of Incorporation and Bylaws of the Company, each
as amended, that provide for indemnification of officers and directors of the
Company. In addition, without limiting the indemnification provisions of the
Certificate of Incorporation or Bylaws, to the fullest extent permitted by law,
the Company shall indemnify and save and hold harmless the Employee from and
against, and pay or reimburse, any and all claims, demands, liabilities, costs
and expenses, including judgments, fines or amounts paid on account thereof
(whether in settlement or otherwise), and reasonable expenses, including
attorneys’ fees actually and reasonably incurred if the Employee is made a party
to or witness in any action, suit or proceeding, or if a claim or liability is
asserted against Employee (whether or not in the right of the Company), by
reason of the fact that he was or is a director, officer or employee, or acted
in such capacity on behalf of the Company, or the rendering of services by the
Employee pursuant to this Agreement or the Employee’s prior employment agreement
with the Company, whether or not the same shall proceed to judgment or be
settled or otherwise brought to a conclusion (except only if and to the extent
that such amounts shall be finally adjudged to have been caused by Employee’s
willful misconduct or gross negligence). Upon the Employee’s request, the
Company will advance any reasonable expenses or costs, subject to the Employee
undertaking to repay any such advances in the event there is an unappealable
final determination that Employee is not entitled to indemnification for such
expenses. This provision shall survive the expiration or termination of this
Agreement.

(h) Execution in Counterparts. This Agreement may be executed by the parties in
one or more counterparts, each of which shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement, and
shall become effective when one or more counterparts has been signed by each of
the parties hereto and delivered to each of the other parties hereto.

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
 

        TAKE-TWO INTERACTIVE SOFTWARE, INC.  
   
   
    By:   /s/ Paul Eibeler  

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Name: Paul Eibeler   Title:   President & CEO 

 

          /s/ Seth D. Krauss  

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Seth D. Krauss

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