Exhibit 10.1

 

Execution Version

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this “Agreement”), dated as of March 10, 2014, which
shall become effective on April 1, 2014 (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 May 20, 2011, by and between ZelnickMedia and the Company
(the “2011 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services agreement between ZelnickMedia and the Company and which superseded and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 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 2011
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 2011 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 matters as may be
reasonably requested from time to time by the Board, including but not limited
to:

 

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

 

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

 

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

 

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

 

(v)                                 assist the Company in recruiting senior
management;

 

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

 

(vii)                           assist the Company and its subsidiaries with
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 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.

 

(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

 

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February 14, 2008, and as amended from time to time by mutual agreement of the
Company and Mr. Slatoff.

 

(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 (i) 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 (ii) 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
$2,970,000 per annum during the term of this Agreement (the “Management Fee”)
payable on the first day of each month during the term of this Agreement in
equal monthly installments of $247,500 in immediately available funds.  The
Management Fee shall not be increased or decreased during the term of this
Agreement.

 

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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, 2015, March 31, 2016, March 31, 2017, March 31, 2018
and March 31, 2019 (each, an “Applicable Fiscal Year” and collectively the
“Applicable Fiscal Years”).  The target annual bonus opportunity has been set at
80% of the Management Fee, or $2,376,000 per annum (the “Target Bonus Amount”). 
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 prior
to August 15  of such subsequent fiscal year, as follows:

 

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

 

(ii)                                  In the event actual results in an
Applicable Fiscal Year are equal to or greater than 80% of the Target but less
than 100% of the Target, the Annual Bonus shall be between 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 are equal to or greater than 100% of the Target but less than 120%
of the Target, the Annual Bonus shall be between Target Bonus Amount and
$3,394,286 (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 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
$4,752,000 (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 are equal to or greater than 150% of the Target, the Annual Bonus
shall be the Maximum Bonus Amount.

 

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

%

$

1,188,000

 

100

%

$

2,376,000

 

110

%

$

2,885,143

 

120

%

$

3,394,286

 

130

%

$

3,846,857

 

140

%

$

4,299,429

 

150

%

$

4,752,000

 

 

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The term “Target” shall mean budgeted EBITDA of the Company (or other
measurement of financial performance reasonably determined by the members of the
Board (excluding any member of the Board who is a shareholder, affiliate, member
and/or partner of ZelnickMedia), 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 EBITDA is used as the Target, the
term “EBITDA” shall be calculated consistent with the Company’s past practices
and on the same basis as utilized by the Company for other employee compensation
purposes; and actual EBITDA with respect to each Applicable Fiscal Year shall be
calculated by the Company acting reasonably and in good faith, after meaningful
consultation with ZelnickMedia, in the same manner as the budgeted EBITDA for
such Applicable Fiscal Year.

 

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

 

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

 

Notwithstanding anything herein to the contrary, the Company and ZelnickMedia
hereby agree that this Agreement shall not supersede or otherwise have any
affect on the Company’s obligation to pay ZelnickMedia any Annual Bonus for the
fiscal year of the Company ending on March 31, 2014 in accordance with the terms
and conditions of the 2011 Agreement.

 

6.                                      Company Equity.

 

(i)                                     Equity Award.  On the Effective 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 determined by dividing
$3,850,000 by the average of the closing prices of the Company’s common stock
for each

 

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trading day during the 10 trading day period immediately prior to the Effective
Date and that number of performance-based restricted units of the Company as is
determined by dividing $4,750,000 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 the Effective Date (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 (i) any grant agreements entered into with respect to
additional grants by the Company in accordance with this Section 6, (ii) the
grant agreements relating to the restricted stock described in Section 6 of the
2011 Agreement and (iii) the grant agreements relating to the restricted stock
described in Section 6 of the Original Agreement, shall be referred to
collectively as the “Grant Agreements.”  Following the grant on the Effective
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 Effective Date.

 

(ii)                                  Stock Ownership Requirement — 5X
Management Fee.  Until the earlier of (A) March 31, 2019, (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 five times (5X) 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”) and shall, and shall cause its Subject
Persons who own Applicable Shares, and shall use

 

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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 (i) 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 (ii) 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)).

 

(v)                                 Plan Amendment.  The Company will include a
proposal for the approval of an amendment of the Company’s 2009 Stock Incentive
Plan, as amended and restated effective as of July 24, 2013 (the “Plan”) to
amend the definition of “Consultants” in the Plan to include corporations,
limited liability companies and other non-natural persons (in a form reasonably
acceptable to ZelnickMedia) (the “Proposal”) in the proxy statement for the
Company’s 2014 annual meeting of stockholders to consider and vote upon the
Proposal.  In the event the Proposal is approved by the requisite vote of the
Company’s stockholders, the Company may then elect to settle the Equity Awards
in shares of the Company’s common stock in accordance with the New Grant
Agreement which shares shall be issued under the Plan.

 

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, 2019 (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 notice requirement
will be waived following a Change in Control).  If this Agreement is terminated
by the Company or ZelnickMedia prior to March 31, 2019, ZelnickMedia will be
entitled to the following: (a) if this

 

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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) 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 stock or restricted units
granted pursuant to the Grant Agreements shall vest; and (iii) all
performance-based restricted stock or 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
stock or restricted units granted on or following the Effective 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, for performance-based restricted stock
or restricted units that vest based on Total Shareholder Return, 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 stock and
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 upon such expiration; provided that the vesting of any
such performance-based restricted stock or restricted units granted on or
following the Effective 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, for performance-based restricted stock or restricted units that vest
based on Total Shareholder Return, 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 shall only be in accordance with this Section 8, and (ii) all
unvested restricted stock or restricted units granted pursuant to the Grant
Agreements (including time-based and performance-based restricted stock or
restricted units) will vest in accordance with the terms of the applicable Grant
Agreement; provided, that (a) the vesting of any such restricted stock or
restricted units granted on or following the Effective 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 stock or restricted units
granted on or following the Effective 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)

 

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(which positions are currently filled by Strauss Zelnick or Karl Slatoff,
respectively) of any felonious criminal act (other than traffic-related offenses
or as a result of vicarious liability), (b) fraud, or (c) any act or omission
involving malfeasance or gross negligence by ZelnickMedia in the performance of
its obligations hereunder, in the case of each of clauses (b) through (c) above,
that relates to and damages the Company and, if capable of being cured so that
the Company is not materially damaged, is not so cured within 15 days after
receipt by ZelnickMedia of written notice thereof.

 

“Good Reason” means (a) a condition that materially impairs the ability of
ZelnickMedia, Strauss Zelnick, Karl Slatoff or any other individual appointed by
ZelnickMedia pursuant to Section 3(i)(A)-(B) to perform their respective duties
or responsibilities, as applicable, as contemplated herein, (b) assigning
Strauss Zelnick, 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

 

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effective date of the first event, action or transaction leading to one of the
results described above.

 

As the parties hereto do not intend that actions taken by ZelnickMedia or any of
its employees, shareholders, members, partners or other affiliates could give
rise to a right on the part of ZelnickMedia to terminate this Agreement for Good
Reason, the Company and ZelnickMedia hereby agree that, in no event shall any
conduct or actions undertaken by ZelnickMedia or any of 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 March 30, 2007 and ending one year after the
date of termination of this Agreement, except in the event this Agreement is
terminated by the Company without Cause or by ZelnickMedia for Good Reason,
ZelnickMedia shall not in any capacity, either individually or in association
with others, employ or solicit for employment (other than in any general
solicitation) any person who is an employee of the Company or its affiliates at
the level of vice president or higher immediately prior to such employment or
during such solicitation.

 

10.                               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

 

10

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loss, claim, liability, damage or expense to the extent determined by the final
judgment of a court of competent jurisdiction to have been caused from the gross
negligence, fraud, bad faith or willful misfeasance of ZelnickMedia or its
affiliates.

 

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

19 West 44th Street, 18th Floor

 

11

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New York, NY 10036

Telephone:  (212) 223-1383

Facsimile:  (212) 223-1384

Attention:  Strauss Zelnick

 

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

 

Simpson Thacher & Bartlett LLP

1999 Avenue of the Stars — 29th Floor

Los Angeles, CA 90067

Telephone:  (310) 407-7500

Facsimile:  (310) 407-7502

Attention:  Daniel Clivner

 

If to the Company:

 

Take-Two Interactive Software, Inc.

622 Broadway

New York, NY 10012

Telephone:  (646) 536-2842

Facsimile:  (646) 536-2926

Attention:  General Counsel

 

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

 

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Telephone:  (212) 728-8129

Facsimile:  (212) 728-9129

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 2011 Agreement and the Original
Agreement; provided that, notwithstanding the foregoing, (i) ZelnickMedia shall
be entitled to receive such Annual Bonus for the fiscal year of the Company
ending March 31, 2014 as ZelnickMedia would have been entitled to receive
pursuant to Section 5 of the 2011 Agreement, (ii) Section 23 (Registration
Statement) of the 2011 Agreement shall survive the execution of the this
Agreement and (iii) to the extent expressly provided therein, each of the grant
agreements attached as Exhibit A and Exhibit B to the 2011 Agreement relating to
restricted stock described in Section 6 of the 2011 Agreement and the grant
agreements attached as Exhibit A and Exhibit B to the Original Agreement
relating to restricted stock described in Section 6 of the Original Agreement
shall remain in full force and effect in accordance with the terms thereof and
shall not be superseded

 

12

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by this Agreement or by the New 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.  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’ 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 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,

 

14

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

 

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

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

 

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

 

 

ZELNICKMEDIA CORPORATION

 

 

 

 

 

 

 

By:

/s/ Strauss Zelnick

 

 

Name:

Strauss Zelnick

 

 

 

 

 

 

TAKE-TWO INTERACTIVE SOFTWARE, INC.

 

 

 

 

 

 

By:

/s/ Seth D. Krauss

 

 

Name:

Seth D. Krauss

 

 

Title:

EVP and General Counsel

 

[Signature Page to 2014 Management Agreement]

 

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ANNEX A

 

Clawback Policy

 

Recovery of Improperly-Awarded Incentive Compensation

 

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

 

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

 

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

 

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

 

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EXHIBIT A

 

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FORM OF RESTRICTED UNIT AGREEMENT

 

This Restricted Unit Agreement (this “Agreement”), dated as of April 1, 2014
(the “Grant Date”), is made by and between Take-Two Interactive Software, Inc.
(the “Company”) and ZelnickMedia Corporation (the “Participant”).

 

WITNESSETH:

 

WHEREAS, pursuant to the Management Agreement between the Participant and the
Company, effective as of April 1, 2014 (the “Management Agreement”), the Company
has agreed to grant to the Participant restricted units (“Restricted Units”),
each representing the right to receive, upon vesting, an amount equal the Fair
Market Value (as defined below) of one (1) share of the common stock, par value
$0.01 per share (the “Common Stock”) of the Company (a “Share”).

 

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 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; 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 (as defined in the
Take-Two Interactive Software, Inc. 2009 Stock Incentive Plan, as amended
through the date hereof (the “Plan”)) 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.

 

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

 

7.                                      Adjustments.  The Company shall make any
adjustments to the Restricted Units upon any changes in capital structure of the
Company, as determined by the Company’s Board of Directors (the “Board”) in good
faith and in a manner consistent with adjustments made to Awards (as defined in
the Plan) granted under the Plan.  The Company hereby agrees that in the event
that the Company takes any action with respect to outstanding Awards under the
Plan pursuant to Section 4.2 of the Plan, the Restricted Units shall receive the
same treatment as applied to all other Shares or Awards in respect of Shares.

 

8.                                      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:

 

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Take-Two Interactive Software, Inc.
622 Broadway
New York, New York 10012
Attention: General Counsel

 

If to the Participant, to:

 

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

 

9.                                      Governing Law.  All questions concerning
the construction, validity, and interpretation of this Agreement will be
governed by, and construed in accordance with, the domestic laws of the State of
Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.

 

10.                               Consent to Jurisdiction.  In the event of any
dispute, controversy, or claim between the Company or any affiliate and the
Participant in any way concerning, arising out of or relating to this Agreement
(a “Dispute”), including without limitation any Dispute concerning, arising out
of, or relating to the interpretation, application, or enforcement of 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 8 hereof shall be deemed effective service of
process on such party.  Any action for enforcement or recognition of

 

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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.

 

11.                               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.

 

12.                               Amendment.  The Board may, 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, in any manner
which is consistent with the terms of the Plan with respect to the amendment,
suspension or termination thereof or of Awards granted pursuant thereto.  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, unless such modification or waiver would be permitted without such a
writing pursuant to the Plan with respect to its provisions or the provisions of
Awards granted pursuant thereto.

 

13.                               Miscellaneous.

 

(i)                                     This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
legal representatives, successors, and assigns.

 

(ii)                                  This Agreement, the Management Agreement
and, to the extent referenced herein, the Plan, 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.  By signing and returning this Agreement, the Participant
agrees to comply with its terms and all applicable laws and regulations.

 

(iii)                               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.

 

(iv)                              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.

 

(v)                                 Except to the extent the Proposal is
approved by the Company’s stockholders and any Shares become deliverable to the
Participant hereunder as contemplated in Section E of Annex A attached hereto,
the Restricted Units are not intended to be an award made

 

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under any stock incentive plan adopted by the Company, including the Plan as in
effect on the date hereof. Notwithstanding the preceding sentence, this
Agreement and the Restricted Units shall be construed as if this grant had been
granted under the Plan in accordance with and consistent with, and subject to,
the provisions of the Plan, a copy of which has been made available to the
Participant, and the terms of which are incorporated into this Agreement, except
as otherwise specifically stated herein.  The Participant agrees to be bound by
the terms and conditions of this Agreement and the Plan and any future
amendments to the Plan which do not materially impair the Participant’s rights
hereunder.  Notwithstanding the foregoing, for the avoidance of doubt, in the
event of any inconsistency between the Plan and this Agreement, the provisions
of this Agreement shall govern, and in the event of any inconsistency between
this Agreement and the Management Agreement, the provisions of the Management
Agreement shall govern.  References in this Agreement to any specific Plan
provision will not be construed as limiting the applicability of any other Plan
provision.

 

[End of text.  Signature page follows.]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date and
year first above written.

 

 

COMPANY:

 

 

 

TAKE-TWO INTERACTIVE SOFTWARE, INC.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

PARTICIPANT:

 

 

 

By:

 

 

 

Name:

 

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Annex A

 

Vesting

 

A.                                    Time Based Vesting.

 

Subject to Section C, [          ] of the Restricted Units shall become vested
on the second (2nd) anniversary of the Grant Date (the “Time-Based Units”).

 

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 “New IP Performance-Based
Units”), and Section (B)(iii) (the “Major IP Performance-Based Units,” and
together with the TSR Performance-Based Units and the New IP 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 second (2nd)
anniversary of the Grant 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, rounded down to the
nearest whole TSR Performance-Based Unit.

 

(ii)                                  New IP Performance-Based Units.  The
target number of New IP Performance-Based Units that shall be eligible to vest
pursuant to this Section B(ii) shall be [          ], and the maximum number of
New IP Performance-Based Units that shall be eligible to vest pursuant to this
Section B(ii) shall be [          ].  Subject to Section C, on the second (2nd)
anniversary of the Grant Date, a number of New IP Performance-Based Units shall
become vested equal to the product of (x) the target number of New IP
Performance-Based Units in such vesting tranche multiplied by (y) the New IP
Vesting Percentage, rounded down to the nearest whole New IP Performance-Based
Unit.

 

(iii)                               Major IP Performance-Based Units.  The
target number of Major IP Performance-Based Units that shall be eligible to vest
pursuant to this Section B(iii) shall be [          ], and the maximum number of
Major IP Performance-Based Units that shall be eligible to vest pursuant to this
Section B(iii) shall be [          ].  Subject to Section C, on the second (2nd)
anniversary of the Grant Date, a number of Major IP Performance-Based Units
shall become vested equal to the product of (x) the target number of Major IP
Performance-Based Units in such vesting tranche multiplied by (y) the Major IP
Vesting Percentage, rounded down to the nearest whole Major 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 second (2nd) anniversary
of the Grant Date or (y) a Change in Control (as defined in the

 

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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 New IP Performance-Based Units and Major IP
Performance-Based Units hereunder, and the target number of such New IP
Performance-Based Units and Major 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 second (2nd) anniversary of the Grant Date or (y) a
Qualifying Termination, all Time-Based Units and the target number of
Performance-Based 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 second (2nd) anniversary of the Grant 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 second (2nd) anniversary of the Grant 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 second (2nd) anniversary of the Grant
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

 

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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 date), 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), if and only to
the extent that the Company’s stockholders approve the Proposal (as defined in
the Management Agreement), 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 the
Proposal is approved by the Company’s stockholders and 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 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 ancillary to such IP, either in the form of
expansion packs or micro-content and 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 New IP Performance-Based
Units, the New IP Vesting Percentage, and (iii) with respect to Major IP
Performance-Based Units, the Major IP Vesting Percentage.

 

“Existing IP” means any IP commercially released prior to April 1, 2014 and any
products released on or after April 1, 2014 that are derived from or use the
branding, environments or characters of such products (e.g., Sequels and
subsequent Individual Releases).

 

“Individual Release” means any IP released 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 interactive entertainment product.

 

“Major IP” means Existing IP or New IP.

 

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“Major IP Vesting Percentage” as of a given date is a function of the Company’s
Sell-In Performance or Sales Performance, as applicable, for any Individual
Release of Major IP calculated as of such date, determined by reference to the
following tables.  For the avoidance of doubt, the Major IP Vesting Percentage
shall be determined based on the Company’s Sell-In Performance or Sales
Performance, as applicable, with respect to one Individual Release of Major IP. 
If multiple Individual Releases of Major IP occur during the relevant
measurement period, the Major IP Vesting Percentage shall be determined based on
the Individual Release of Major IP (whether Regular Price IP, Reduced Price IP
or Other IP) that results in the highest Major IP Vesting Percentage.  Without
limiting the generality of the foregoing, in no event shall (i) the Company’s
Sell-In Performance and/or Sales Performance with respect to multiple Individual
Releases of Major IP or (ii) the Major IP Vesting Percentages attributable to
multiple Individual Releases of Major IP, be aggregated for purposes of
determining the Major IP Vesting Percentage.  By way of example, if, during the
relevant measurement period, the Company has an Individual Release of Major IP
that is Regular Price IP that results in a Sell-In Performance of 4,000,000
units, as well as an Individual Release of Major IP that is Other IP that
results in Sales Performance of $150,000,000, the Major IP Vesting Percentage
will be 100% (i.e., the highest Major IP Vesting Percentage attributable to an
Individual Release of Major IP).

 

(x)                                 For any Individual Release of Major IP that
is Regular Price IP:

 

Major IP Sell-In Performance

 

Major IP Vesting Percentage

 

Less than 4,000,000 units

 

0%

 

4,000,000 units

 

50%

 

5,000,000 units

 

100%

 

6,000,000 units

 

200%

 

 

In the event that the Major IP Sell-In Performance is less than 4,000,000 units,
the Major IP Vesting Percentage shall be zero percent (0%).  In the event that
the Major IP Sell-In Performance falls between any of the values listed in the
table above, the Major IP Vesting Percentage shall be based on a straight line
interpolation between such two values.

 

(y)                                 For any Individual Release of Major IP that
is Reduced Price IP:

 

Major IP Sell-In Performance

 

Major IP Vesting Percentage

 

Less than Reduced Price Major IP Minimum Number

 

0%

 

Reduced Price Major IP Minimum Number

 

50%

 

Reduced Price Major IP Target Number

 

100%

 

Reduced Price Major IP Maximum Number

 

200%

 

 

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

 

(z)                                  For any Individual Release of Major IP that
is Other IP:

 

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Major IP Sales Performance

 

Major IP Vesting Percentage

 

Less than $120,000,000

 

0%

 

$ 120,000,000

 

50%

 

$ 150,000,000

 

100%

 

$ 180,000,000

 

200%

 

 

In the event that the Major IP Sales Performance is less than $120,000,000, the
Major IP Vesting Percentage shall be zero percent (0%).  In the event that the
Major IP Sales Performance falls between any of the values listed in the table
above, the Major 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.

 

“New IP” means any IP commercially released on or after April 1, 2014 that is
not Existing IP.  Sequels and subsequent Individual Releases of New IP occurring
after April 1, 2014 shall qualify as New IP for purposes of this Agreement.

 

“New IP Vesting Percentage” as of a given date is a function of the Company’s
Sell-In Performance or Sales Performance, as applicable, for any Individual
Release of New IP calculated as of such date, determined by reference to the
following tables.  For the avoidance of doubt, the New IP Vesting Percentage
shall be determined based on the Company’s Sell-In Performance or Sales
Performance, as applicable, with respect to one Individual Release of New IP. 
If multiple Individual Releases of New IP occur during the relevant measurement
period, the New IP Vesting Percentage shall be determined based on the
Individual Release of New IP (whether Regular Price IP, Reduced Price IP, or
Other IP) that results in the highest New IP Vesting Percentage.  Without
limiting the generality of the foregoing, in no event shall (i) the Company’s
Sell-In Performance and/or Sales Performance with respect to multiple Individual
Releases of New IP or (ii) the New IP Vesting Percentages attributable to
multiple Individual Releases of New IP, be aggregated for purposes of
determining the New IP Vesting Percentage.  By way of example, if, during the
relevant measurement period, the Company has an Individual Release of New IP
that is Regular Price IP that results in a Sell-In Performance of 2,000,000
units, as well as an Individual Release of New IP that is Other IP that results
in Sales Performance of $90,000,000, the New IP Vesting Percentage will be 100%
(i.e., the highest New IP Vesting Percentage attributable to an Individual
Release of New IP).

 

(x)                                 For any Individual Release of New IP that is
Regular Price IP:

 

New IP Sell-In Performance

 

New IP Vesting Percentage

 

Less than 2,000,000 units

 

0%

 

2,000,000 units

 

50%

 

3,000,000 units

 

100%

 

4,000,000 units

 

200%

 

 

In the event that the New IP Sell-In Performance is less than 2,000,000 units,
the New IP Vesting Percentage shall be zero percent (0%).  In the event that the
New IP Sell-In

 

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Performance falls between any of the values listed in the table above, the New
IP Vesting Percentage shall be based on a straight line interpolation between
such two values.

 

(y)                                 For any Individual Release of New IP that is
Reduced Price IP:

 

New IP Sell-In Performance

 

New IP Vesting Percentage

 

Less than Reduced Price New IP Minimum Number

 

0%

 

Reduced Price New IP Minimum Number

 

50%

 

Reduced Price New IP Target Number

 

100%

 

Reduced Price New IP Maximum Number

 

200%

 

 

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

 

(z)                                  For any Individual Release of New IP that
is Other IP:

 

New IP Sales Performance

 

New IP Vesting Percentage

 

Less than $60,000,000

 

0%

 

$ 60,000,000

 

50%

 

$ 90,000,000

 

100%

 

$ 120,000,000

 

200%

 

 

In the event that the New IP Sales Performance is less than $60,000,000, the New
IP Vesting Percentage shall be zero percent (0%).  In the event that the New IP
Sales Performance falls between any of the values listed in the table above, the
New IP Vesting Percentage shall be based on a straight line interpolation
between such two values.

 

“Other IP” means any IP that is not Reduced Price IP or Regular Price IP, which
has a primary business model of not charging for the basic release and is meant
to create revenue based on follow-on transactions as the primary business model.

 

The “Peer Group” shall consist of the companies that comprise The NASDAQ
Composite Index on the Grant Date; provided, that (i) subject to clause
(ii) below, if a member of the Peer Group ceases to be publicly traded for any
reason following the Grant Date 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 the Grant Date 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 the TSR Vesting Percentage and related
calculations.

 

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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.

 

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 a termination of the Management Agreement by the
Company without Cause (as defined in the Management Agreement) or by
ZelnickMedia or its assignee for Good Reason (as defined in the Management
Agreement).(1)

 

“Reduced Price IP” means any IP that is not Regular Price IP or Other IP.

 

“Reduced Price Major IP Target Number” means, for any Individual Release of
Reduced Price Major IP, a number of units equal to the product of (i) 5,000,000
and (ii) a fraction, the numerator of which is 29.99 and the denominator of
which is the numeric value of the original wholesale price in the United States
per unit.

 

“Reduced Price Major IP Maximum Number” means, for any Individual Release of
Reduced Price Major IP, a number of units equal to the product of (i) 6,000,000
and (ii) a fraction, the numerator of which is 29.99 and the denominator of
which is the numeric value of the original wholesale price in the United States
per unit.

 

“Reduced Price Major IP Minimum Number” means, for any Individual Release of
Reduced Price Major IP, a number of units equal to the product of (i) 4,000,000
and (ii) a fraction, the numerator of which is 29.99 and the denominator of
which is the numeric value of the original wholesale price in the United States
per unit.

 

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(1)  For future grants, non-renewal of the Management Agreement will be included
as a Qualifying Termination event.

 

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“Reduced Price New IP Maximum Number” means, for any Individual Release of
Reduced Price New IP, a number of units equal to the product of (i) 4,000,000
and (ii) a fraction, the numerator of which is 29.99 and the denominator of
which is the numeric value of the original wholesale price in the United States
per unit.

 

“Reduced Price New IP Minimum Number” means, for any Individual Release of
Reduced Price New IP, a number of units equal to the product of (i) 2,000,000
and (ii) a fraction, the numerator of which is 29.99 and the denominator of
which is the numeric value of the original wholesale price in the United States
per unit.

 

“Reduced Price New IP Target Number” means, for any Individual Release of
Reduced Price New IP, a number of units equal to the product of (i) 3,000,000
and (ii) a fraction, the numerator of which is 29.99 and the denominator of
which is the numeric value of the original wholesale price in the United States
per unit.

 

“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) the Grant Date.

 

“Regular Price IP” means any IP that is not Reduced Price IP or Other IP, with a
SKU that had an original wholesale price in the United States per unit equal to
or in excess of $29.99.

 

“Sales Performance” as of a given date means, with respect to any Individual
Release of Other IP, the revenue generated during the period beginning on the
Grant Date and ending on the second (2nd) anniversary of the Grant Date.

 

“Sell-In Performance” as of a given date means, with respect to any Individual
Release of Regular Price IP or Reduced Price IP, as applicable, the number of
units “sold-in” during the period beginning on the Grant Date and ending on the
second (2nd) anniversary of the Grant Date.

 

“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:

 

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Percentile Rank

 

TSR Vesting Percentage

Less than 40th Percentile

 

0%

40th Percentile

 

50%

50th Percentile

 

100%

75th Percentile

 

200%

 

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.

 

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