Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
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Check the appropriate box:
|_| Preliminary proxy statement
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|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Take-Two Interactive Software, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Board of Directors of Take-Two Interactive Software, Inc.
---------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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May 10, 2002
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of Take-Two Interactive Software, Inc. (the "Company") that will be held on
Friday, June 14, 2002 at 10:00 A.M. local time at the Grand Hyatt, Conference
Level, 42nd Street between Lexington and Park Avenues, New York, New York 10017.
The Notice of Annual Meeting and Proxy Statement that follow describe
the business to be conducted at the meeting.
Your Board of Directors unanimously believes that the election of the
nominees as directors and the adoption of the Company's 2002 Stock Option Plan
are in the best interests of the Company and its stockholders and, accordingly,
recommends a vote "FOR" the nominees as directors and "FOR" the adoption of the
Company's 2002 Stock Option Plan on the enclosed proxy card.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted. After reading the enclosed
Notice of Annual Meeting and Proxy Statement, may I urge you to complete, sign,
date and return the enclosed proxy card in the envelope provided. If the address
on the accompanying material is incorrect, please advise our Transfer Agent,
American Stock Transfer & Trust Company, in writing, at 59 Maiden Lane, New
York, New York 10038.
Your vote is very important, and we will appreciate a prompt return of
your signed proxy card. We hope to see you at the meeting and appreciate your
continued support.
Sincerely yours,
Kelly Sumner
Chief Executive Officer
-2-
TAKE-TWO INTERACTIVE SOFTWARE, INC.
575 Broadway
New York, New York 10012
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY, JUNE 14, 2002
--------------------
To the Stockholders of TAKE-TWO INTERACTIVE SOFTWARE, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting ("Annual Meeting") of
Stockholders of Take-Two Interactive Software, Inc. (the "Company") will be held
on Friday, June 14, 2002, at 10:00 A.M. local time at the Grand Hyatt,
Conference Level, 42nd Street between Lexington and Park Avenues, New York, New
York 10017, for the following purposes:
1. To elect eight directors to hold office until the next Annual
Meeting of Stockholders and until their respective successors have been duly
elected and qualified;
2. To consider and vote on a proposal to adopt the Company's 2002 Stock
Option Plan; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on May 6, 2002 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors,
Kelly Sumner
Chief Executive Officer
May 10, 2002
--------------------------------------------------------------
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND
EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
TAKE-TWO INTERACTIVE SOFTWARE, INC.
575 Broadway
New York, New York 10012
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, JUNE 14, 2002
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Take-Two Interactive Software, Inc. (the
"Company") for use at the Annual Meeting of Stockholders (the "Annual Meeting")
to be held on Friday, June 14, 2002, including any adjournment or adjournments
thereof, for the purposes set forth in the accompanying Notice of Meeting.
Management intends to mail this proxy statement and the accompanying
form of proxy to stockholders on or about May 14, 2002.
Proxies in the accompanying form, duly executed and returned to the
management of the Company and not revoked, will be voted at the Annual Meeting.
A proxy given pursuant to such solicitation may be revoked by the stockholder at
any time prior to the voting of the proxy by a subsequently dated proxy, by
written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the Annual Meeting and voting in person.
The address and telephone number of the principal executive offices of
the Company are: 575 Broadway, New York, New York 10012, Telephone No.: (212)
334-6633.
The following questions and answers provide important information about
the Annual Meeting and this proxy statement:
Q. What am I voting on?
A. - Election of directors: Ryan A. Brant, Kelly Sumner, Paul Eibeler, Oliver
R. Grace, Jr., Robert Flug, Todd Emmel, Mark Lewis and Steven Tisch.
- A proposal to adopt the Company's 2002 Stock Option Plan and to provide
for 3,000,000 shares to be reserved for issuance under the plan.
Q. Who is entitled to vote?
A. Stockholders as of the close of business on May 6, 2002 are entitled to
vote at the Annual Meeting. Each stockholder is entitled to one vote for
each share of common stock held.
Q. How do I vote?
A. You may sign and date each paper proxy card you receive and return it in
the prepaid envelope. If you return your signed proxy but do not indicate
your voting preferences, we will vote on your behalf FOR the election of
the directors specified above and the adoption of the Company's 2002 Stock
Option Plan. You have the right to revoke your proxy any time before the
meeting by (1) notifying the Company's Secretary, or (2) returning a
later-dated proxy. You may also revoke your proxy by voting in person at
the Annual Meeting.
You may also vote by telephone or via the Internet. See Voting by Telephone
or via the Internet below for further details. Please note that there are
separate telephone and Internet voting arrangements depending upon whether
shares are registered in your name or in the name of a bank or broker.
Q. How do I sign the paper proxy card?
A. Sign your name exactly as it appears on the proxy card. If you are signing
in a representative capacity (for example, as an attorney, executor,
administrator, guardian, trustee, or the officer or agent of a company),
you should indicate your name and title or capacity. If the stock is held
in custody for a minor (for example, under the Uniform Transfers to Minors
Act), the custodian should sign the proxy card, not the minor. If the stock
is held in joint ownership, one owner may sign on behalf of all the owners.
Q. What does it mean if I receive more than one proxy card?
A. It may mean that you hold shares registered in more than one account. Sign
and return all proxy cards to ensure that all your shares are voted. You
may call American Stock Transfer & Trust Company at 1-800-937-5449 if you
have any questions regarding the share information or your address
appearing on the paper proxy card.
Q. Who will count the votes?
A. A representative of American Stock Transfer & Trust Company will tabulate
the votes and act as independent inspector of election.
Q. What constitutes a quorum?
A. A majority of the outstanding shares present or represented by proxy
constitutes a quorum for the Annual Meeting. As of May 6, 2002, 37,746,998
shares of the Company's common stock were issued and outstanding.
Q. How many votes are needed for the election of directors and to adopt the
2002 Stock Option Plan?
A. Directors will be elected by a plurality of the votes cast at the Annual
Meeting, meaning the nominees receiving the highest number of votes will be
elected directors. Only votes cast for a nominee will be counted, except
that a properly executed proxy that does not specify a vote with respect to
the nominees will be voted for the Company's nominees listed on the proxy
card. Abstentions and broker non-votes (as described below) will have no
effect on the election of directors.
The proposal to adopt the 2002 Stock Option Plan will be approved if the
votes cast for the proposal exceed those cast against the proposal. Broker
non-votes will not be counted as votes cast either for or against the
proposals.
Q. What is a "broker non-vote"?
A. A "broker non-vote" occurs when a broker submits a proxy that does not
indicate a vote for some of the proposals because the broker has not
received instructions from the beneficial owners of how to vote on such
proposals and does not have discretionary authority to vote in the absence
of instructions.
-2-
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on May 6, 2002
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
As of the Record Date, there were issued and outstanding 37,746,998 shares of
the Company's Common Stock, $.01 par value per share (the "Common Stock"). Each
share of Common Stock entitles the holder to one vote on each matter submitted
to a vote at the Annual Meeting.
VOTING PROCEDURES AND PROXY INFORMATION
The directors will be elected by the affirmative vote of a plurality of
the shares of Common Stock present in person or represented by proxy at the
Annual Meeting, provided a quorum exists. A quorum is established if, as of the
Record Date, at least a majority of the outstanding shares of Common Stock are
present in person or represented by proxy at the Annual Meeting. Adoption of the
Company's 2002 Stock Option Plan requires the affirmative vote of a majority of
the votes cast by the holders of shares of Common Stock entitled to vote on the
matter at the Annual Meeting, provided a quorum exists. All other matters at the
meeting will be decided by the affirmative vote of a majority of the shares of
Common Stock present in person or represented by proxy at the meeting and
entitled to vote on the subject matter, provided a quorum exists. Votes will be
counted and certified by one or more Inspectors of Election who are expected to
be employees of American Stock Transfer & Trust Company, the Company's transfer
agent.
In accordance with Delaware law, abstentions and "broker non-votes"
(i.e., proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares as to a matter with respect to which the brokers or nominees do not
have discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum. For purposes of determining approval of a
matter presented at the meeting, abstentions will be deemed present and entitled
to vote and will, therefore, have the same legal effect as a vote "against" a
matter presented at the meeting. Broker non-votes will be deemed not entitled to
vote on the subject matter as to which the non-vote is indicated. Abstentions
and broker non-votes will have no effect on the election of directors. Broker
non-votes will have no effect on the proposal to adopt the 2002 Stock Option
Plan.
The enclosed proxies will be voted in accordance with the instructions
thereon. Unless otherwise stated, all shares represented by such proxy will be
voted as instructed. Proxies may be revoked as noted above.
The entire cost of soliciting proxies, including the costs of
preparing, assembling, printing and mailing this Proxy Statement, the proxy and
any additional soliciting material furnished to stockholders, will be borne by
the Company. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy materials to the
beneficial owners of stock, and these entities may be reimbursed by the Company
for their expenses. Proxies also may be solicited by directors, officers or
employees of the Company in person or by telephone, telegram or other means. No
additional compensation will be paid to such individuals for these services.
VOTING BY TELEPHONE OR VIA THE INTERNET
For Shares Registered in the Name of a Brokerage Firm or Bank. A number
of brokerage firms and banks are participating in a program provided through ADP
Investor Communication Services that offers telephone and Internet voting
options. This program is different than the program provided by American Stock
Transfer & Trust Company for shares registered in the name of the stockholder.
If your shares are held in an account at a brokerage firm or bank participating
in the ADP program, you may vote those shares telephonically by calling the
telephone number referenced on your voting form. If your shares are held in an
account at a brokerage firm or bank participating in the ADP program, you are
offered the opportunity to elect to vote via the Internet. Votes submitted via
the Internet through the ADP program must be received by 11:59 p.m. (EDT) on
June 13, 2002. The giving of such proxy will not affect your right to vote in
person should you decide to attend the Annual Meeting.
-3-
For Shares Directly Registered in the Name of the Stockholder.
Stockholders with shares registered directly with American Stock Transfer &
Trust Company may vote telephonically by calling American Stock Transfer & Trust
Company at 1-800-776-9437 or you may vote via the Internet at www.voteproxy.com.
The telephone and Internet voting procedures are designed to
authenticate stockholders' identities, to allow stockholders to give their
voting instructions and to confirm that stockholders' instructions have been
recorded properly. Stockholders voting via the Internet through either American
Stock Transfer & Trust Company or ADP Investor Communication Services should
understand that there may be costs associated with electronic access, such as
usage charges from Internet access providers and telephone companies, that must
be borne by the stockholder.
ELECTION OF DIRECTORS
At this year's Annual Meeting of Stockholders, directors will be
elected to hold office for a term expiring at the Annual Meeting of Stockholders
to be held in 2003. It is the intention of the Board of Directors to nominate
Ryan A. Brant, Kelly Sumner, Paul Eibeler, Oliver R. Grace, Jr., Robert Flug,
Mark Lewis, Todd Emmel and Steven Tisch as directors. Each director will be
elected to serve until a successor is elected and qualified or until the
director's earlier resignation or removal.
At this year's Annual Meeting of Stockholders, the proxies granted by
stockholders will be voted individually for the election, as directors of the
Company, of the persons listed below, unless a proxy specifies that it is not to
be voted in favor of a nominee for director. In the event any of the nominees
listed below shall be unable to serve, it is intended that the proxy will be
voted for such other nominees as are designated by the Board of Directors. Each
of the persons named below has indicated to the Board of Directors that he will
be available to serve.
The Board of Directors recommends that stockholders vote FOR the
election of the nominees named below.
Following is information with respect to the nominees for directors:
Ryan A. Brant, age 30, has been Chairman of the Company since 1993. Mr.
Brant served as Chief Executive Officer from 1993 until February 2001. Mr. Brant
received a B.S. degree in Economics from the University of Pennsylvania's
Wharton School of Business.
Kelly Sumner, age 41, has been Chief Executive Officer of the Company
since February 2001 and a director since December 1997. Mr. Sumner was President
of Take-Two Interactive Software Europe Limited, a subsidiary, from July 1997
until February 2001. From April 1993 to July 1997, Mr. Sumner was President and
Chief Operating Officer of Gametek, Inc. From June 1979 to April 1993, Mr.
Sumner held various positions, most recently as Managing Director, of the UK
subsidiary of Commodore Business Machines.
Paul Eibeler, age 46, has been President of the Company since July 2000
and a director since December 2000. Prior to joining the Company, Mr. Eibeler
was a consultant to Microsoft's Xbox launch team, as well as W-Trade, Inc., an
online financial services provider, and Essential Realities, Inc. From 1998 to
1999, Mr. Eibeler served as Acclaim Entertainment's Executive Vice-President and
General Manager. During the seven years prior to that, Mr. Eibeler held various
executive positions with Impact, Inc., a leading supplier of licensed toys and
school supplies. Mr. Eibeler received a B.A. degree from Loyola College in 1978.
Oliver R. Grace, Jr., age 47, has been a director of the Company since
April 1997. Mr. Grace, a private investor, has been the Chairman of the Board of
Andersen Group, Inc., a dental products and video broadcasting equipment
manufacturing company, since 1990. Mr. Grace has also been a director of
Republic Automotive Parts, Inc., a distributor of replacement parts for the
automotive aftermarket, since 1982. Mr. Grace is a general partner of Anglo
American Security Fund, L.P., a private investment fund.
Robert Flug, age 53, has been a director of the Company since February
1998. Mr. Flug has been the President and Chief Operating Officer of S.L.
Danielle, a women's apparel company, since September 1987. Mr. Flug received a
B.S. in Business Administration from New York University.
-4-
Mark Lewis, age 51, has been a director of the Company since May 2001.
For the past fifteen years and until February 2001, Mr. Lewis held various
positions with Electronic Arts, most recently as Senior Vice President of
International Operations. Mr. Lewis has been a director of Muse Communications
Corp., a broadband technology company, since November 1997.
Todd Emmel, age 39, has been a director of the Company and Chairman of
the Audit Committee since February 2002. Since November 1999, Mr. Emmel has been
a First Vice President at Ambac Assurance Corporation, a financial insurance
company. From May 1999 to November 1999, Mr. Emmel was Chief Credit Officer at
Structured Credit Partners, a private credit arbitrage firm. From March 1998 to
May 1999, Mr. Emmel was a Managing Director of DVI Private Capital Group, a
private equity fund. From April 1990 to March 1998, Mr. Emmel held various
positions at Union Bank of Switzerland, most recently as a Managing Director.
Prior to this, Mr. Emmel was an Associate at both Drexel Burnham Lambert, from
June 1988 to February 1990, and at E.F. Hutton from July 1987 to February 1988.
Mr. Emmel received an M.B.A. from Carnegie Mellon University and a B.S. in
accounting from Miami University.
Steven Tisch, age 53, has been a director of the Company since April
2002. Since 1986, Mr. Tisch has been an independent motion picture producer. Mr.
Tisch is the Oscar Award winning producer of Forrest Gump, the 1994 winner for
Best Picture and the fourth-largest grossing domestic box office film of all
time. Since May 2000, Mr. Tisch has been a partner of Escape Artists, a private
independent film company, and a director of Classic Media, an owner of franchise
entertainment properties. Since June 2002, Mr. Tisch has been a director of Film
Roman, Inc., a publicly held television and motion picture production company.
From 1976 to 1986, Mr. Tisch was a principal of Tisch/Avnet Productions, a
production company with credits such as Risky Business. Mr. Tisch is a member of
the Board of Directors of the Tisch School of the Arts at New York University
and The Geffen Theatre in Los Angeles. Mr. Tisch received a B.A. in Sociology
from Tufts University in 1971.
Following is information with respect to certain of the Company's
executive officers:
Karl H. Winters, age 43, has been Chief Financial Officer of the
Company since February 2002. From April 2000 to June 2001, Mr. Winters was the
Chief Financial Officer of ModelWire, Inc., a company engaged in marketing
imaging database products. From September 1993 to December 1999, Mr. Winters
served in various positions, most recently as Vice President of Trace
International Holdings, Inc., a private holding company that held significant
interests in United Auto Group, Inc., a consolidator of new car dealerships, and
Foamex International Inc., a manufacturer of polyurethane products. From 1993 to
1999, Mr. Winters held executive positions at United Auto and Foamex, most
recently as United Auto's Chief Financial Officer and Executive Vice President.
Trace International filed a petition under Chapter 11 of the United States
Bankruptcy Code in July 1999. From 1983 to 1993, Mr. Winters was a Senior Audit
Manager for Cooper's & Lybrand. Mr. Winters is a C.P.A. and received an M.B.A.
from the University of Michigan and a B.A. in business economics with a
concentration in accounting from Calvin College.
Don Leeds, age 51, has been Executive Vice President/Special Projects
of the Company since February 2002. Mr. Leeds was a director from October 2000
to February 2002. Mr. Leeds has been President and Chief Executive Officer of
Ultimate Health Media, LLC, a private health products and services company, from
May 2000 to February 2002. From June 1996 to January 2000, Mr. Leeds was
President and director of Youth Stream Media Networks, Inc., a company engaged
in providing college-based media and marketing services. Prior to this, from
February 1989 to May 1996, Mr. Leeds was a Managing Director of Veronis, Suhler
& Associates, Inc., an investment bank focused on media, marketing and
publishing companies.
Section 16(a) Beneficial Ownership Compliance. Based solely on a review
of Forms 3, 4 and 5 furnished to the Company with respect to its most recent
fiscal year, the Company believes that all reporting persons currently required
to file forms under the Securities Exchange Act of 1934 filed such reports,
except that Mr. Brant did not file a Form 4 (one transaction) and Form 5 (five
transactions that were required to be reported on Form 4) on a timely basis.
Meetings of Directors and Committees. During the fiscal year ended
October 31, 2001, the Board of Directors held nine ten meetings. In addition,
the Board took other action by unanimous written consent. The Company has
established a Compensation Committee of the Board of Directors. The function of
the Compensation Committee of the Board of Directors is to review compensation
policies and procedures of the Company, evaluate the executive officers'
compensation and make recommendations to the Board of Directors regarding
executive compensation. The Compensation Committee is comprised of Messrs. Grace
and Flug. The Compensation Committee held two meetings during the fiscal year
ended October 31, 2001. As described below, the Company has an Audit Committee
that held three meetings during the fiscal year ended October 31, 2001.
-5-
Audit Committee Report
The Company has established an Audit Committee of the Board of
Directors consisting of Messrs. Grace, Flug and Emmel, each of whom is an
independent director as defined under the rules of the National Association of
Securities Dealers, Inc. The Audit Committee supervises the audit and financial
procedures of the Company. The Board of Directors has adopted a written charter
for the Audit Committee, which is attached to this Proxy Statement as Exhibit A.
The Audit Committee has: (1) reviewed and discussed the contents of the
Company's audited financial statements with management; (2) discussed with its
independent auditors the matters required to be discussed by SAS 61, as may be
modified or supplemented; (3) received the written disclosures from such auditor
as required by the Independent Standards Board; and (4) discussed with its
auditor its auditor's independence. Based on such review and discussions, the
Audit Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended October 31, 2001 filed with the Securities and Exchange Commission. The
aggregate fees billed by the Company's independent auditor for the year ended
October 31, 2001 are set forth below. The Audit Committee believes that the
services performed by its independent auditor were compatible with maintaining
its auditor's independence.
Audit Fees (a).............................. $3,283,332
Financial Information Systems Design and
Implementation Fees......................... -
All Other Fees (b).......................... $1,097,554
(a) Consists of audit service fees of $2,381,755 and financial advisory
service fees of $901,577.
(b) Consists of tax and compliance service fees of $706,304; audit related
service fees of $268,750; and other service fees of $122,500.
AUDIT COMMITTEE
Oliver R. Grace, Jr.
Robert Flug
Todd Emmel
-6-
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the
Company during the fiscal years ended October 31, 1999, 2000 and 2001 to its
Chief Executive Officer and four most highly compensated executive officers
other than its Chief Executive Officer, each of whom was serving at the end of
the fiscal year ended October 31, 2001 and whose salary and bonus exceeded
$100,000 (the "Named Executives"):
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Award
---------------------------------------------------------------- ------------
Securities
Year Ended Other Annual Underlying
Name and Principal Position October 31, Salary($) Bonus($) Compensation(1) Options(#)
--------------------------- ----------- --------- -------- --------------- ----------
Ryan A. Brant
Chairman........................ 2001 575,000 790,000 --- 479,560
2000 344,365 705,812 --- 200,000
1999 243,873 516,130 --- 200,000
Kelly Sumner
Chief Executive Officer......... 2001 359,519 19,317 --- 480,000
2000 255,702 147,862 --- 180,000
1999 230,892 120,269 --- 125,000
Paul Eibeler
President....................... 2001 353,819 95,000 170,000
2000 80,208 70,000 --- 275,000
Larry Muller
Vice President of 2001 272,083 225,000 --- 350,000
Operations (2).................. 2000 256,077 133,629 --- 165,000
1999 215,077 200,808 --- 70,000
Barry S. Rutcofsky
Executive Vice President (3).... 2001 271,814 60,000 50,000
2000 251,346 155,000 --- ---
1999 47,743 --- --- 260,000
James H. David Jr. (4).......... 2001 233,000 230,915(5) --- 85,000
2000 105,000 15,000 --- 50,000
(1) The aggregate value of benefits to be reported under the "Other Annual
Compensation" column did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for the Named Executives.
(2) Mr. Muller is no longer employed by the Company.
(3) Mr. Rutcofsky became Executive Vice President of Mergers and Acquisitions,
a non executive position, in May 2001.
(4) Mr. David is no longer employed by the Company.
(5) Includes the cash value of approximately $142,300 of shares of Common
Stock.
-7-
The following table sets forth information concerning options granted
in the fiscal year ended October 31, 2001 to the Named Executives:
Option Grants in Fiscal Year Ended October 31, 2001
Individual Grants
----------------------------------------------------------------------------
Name Percent of Total
Number of Options Granted to Exercise Price Expiration Potential Realizable
Securities Employees in ($/Sh) Date Value at Assumed
Underlying Fiscal Year (%) Annual Rates of Stock
Options Price Appreciation for
Granted (#) Option Term (1)
------------------------- ----------- ------------------ --------------- ----------- -----------------------
5%($) 10%($)
----- ------
Ryan A. Brant ........... 279,560 8.625 11/27/05 666,171 1,472,065
200,000 12.5 13.91 4/30/06 768,615 1,698,439
Kelly Sumner ............ 25,000 12.375 10/30/05 85,475 188,877
250,000 12.5 9.1562 12/19/05 632,422 1,397,488
105,000 8.625 11/27/05 250,207 552,893
100,000 13.91 4/30/06 384,308 849,219
Paul Eibeler ............ 15,000 10.90 11/16/05 45,172 99,818
40,000 4.4 10.00 11/27/05 110,513 244,204
100,000 10.1875 7/20/05 281,462 621,950
15,000 11.875 2/19/06 47,607 105,199
Larry Muller ............ 25,000 10.90 11/16/05 75,287 166,364
25,000 9.1 11.4875 2/19/06 79,345 175,331
300,000 7.00 9/30/06 580,191 1,282,071
Barry S. Rutcofsky ...... 50,000 1.3 13.00 5/3/06 179,583 396,832
James H. David Jr. ...... 65,000 8.625 11/27/06 154,890 342,267
20,000 2.2 13.91 4/30/06 76,862 169,844
(1) The potential realizable value columns of the table illustrate
values that might be realized upon exercise of the options immediately prior to
their expiration, assuming the Common Stock appreciates at the compounded rates
specified over the term of the options. These numbers do not take into account
provisions of certain options providing for termination of the option following
termination of employment or non-transferability of the options and do not make
any provision for taxes associated with exercise. Because actual gains will
depend upon, among other things, future performance of the common stock, there
can be no assurance that the amounts reflected in this table will be achieved.
-8-
The following table sets forth information concerning the value of options
exercised during the fiscal year ended October 31, 2001 and the value of
unexercised stock options held by the Named Executives as of October 31, 2001:
Aggregated Option Exercises and Year End Values
Number of Securities
Shares Underlying Value of Unexercised
Acquired on Value Unexercised Options In-the-Money Options
Name Exercise (#) Realized ($) at October 31, 2001 (#) at October 31, 2001 ($)*
---- ------------ ------------ ----------------------- ------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Ryan A. Brant............ 263,191 4,451,356 -- -- -- --
Kelly Sumner............. 124,400 1,376,890 382,500 277,500 1,526,200 877,238
Paul Eibeler............. 90,000 1,222,074 209,999 145,001 759,484 546,416
Larry Muller............. 106,666 1,097,638 108,855 250,000 504,830 1,732,500
Barry S. Rutcofsky....... 110,000 999,500 166,666 33,334 867,499 187,500
James H. David Jr........ 50,000 582,750 50,834 34,116 163,974 187,500
*Year-end values for unexercised in-the-money options represent the
positive spread between the exercise price of such options and the fiscal
year-end market value of the common stock, which was $13.93 on October 31, 2001.
Director Compensation
Non-employee directors currently receive cash compensation of $16,000
per annum for serving on the Board of Directors and a fee for each meeting
attended. Non-employee directors are also eligible to receive initial option
grants of 25,000 shares and options grants of 10,000 shares for each year served
thereafter. Committee members are entitled to receive additional compensation.
During fiscal 2001, Mr. Leeds received options to purchase 30,000 shares, and
each of Messrs. Grace, Flug and Lewis received options to purchase 50,000
shares.
Employment Agreements
The Company entered into an employment agreement, as amended, with Ryan
A. Brant for a five-year term commencing August 2000. The Agreement provides
that Mr. Brant is entitled to receive an annual salary of $600,000 and a bonus
based on financial performance.
The Company entered into an employment agreement with Kelly Sumner for
a three-year term commencing February 2001. The agreement provides that Mr.
Sumner is entitled to an annual salary of $425,000 and a bonus based on
financial performance.
-9-
The Company entered into an employment agreement, as amended, with Paul
Eibeler for a three-year term commencing July 2000. The agreement provides that
Mr. Eibeler is entitled to receive an annual salary of $375,000 and a bonus
based on financial performance.
The Company entered into an employment agreement with Karl H. Winters
for a three-year term commencing February 2002. The agreement provides that Mr.
Winters is entitled to an annual salary of $300,000 and a bonus based on Mr.
Winter's performance in implementing certain objectives of the Audit Committee
of the Board of Directors. Mr. Winters was also granted options to purchase
200,000 shares of common stock.
The Company entered into an employment agreement with Don Leeds for a
three-year term commencing February 2002. The agreement provides that Mr. Leeds
is entitled to receive an annual salary of $350,000 and such bonus as may be
determined at the discretion of the Board. Mr. Leeds was also granted options to
purchase 400,000 shares of common stock.
The employment agreements provide that if the employment agreement is
terminated under certain circumstances, including in the event of a change of
control, the executive will be entitled certain severance compensation. The
employment agreements also contain confidentiality and non-competition
provisions
Compensation Committee Interlocks And Insider Participation
The Company has a Compensation Committee of the Board of Directors
comprised of non-employee directors and currently consisting of Messrs. Grace
and Flug. Decisions as to executive compensation are made by the Board of
Directors, based primarily upon the recommendation of such Committee. The Board
of Directors (which includes such individuals) has not modified or rejected any
recommendations of the Compensation Committee as to the compensation of the
Company's executive officers. During the fiscal year ended October 31, 2001,
none of the executive officers of the Company has served on the board of
directors or the compensation committee of any other entity, any of whose
officers serves on the Company's Board of Directors or Compensation Committee.
Report On Executive Compensation
As noted above, compensation of the Company's executive officers is
determined by the Board of Directors pursuant to recommendations made by the
Compensation Committee. There is no formal compensation policy for the Company's
executive officers, other than the employment agreements described above.
Base Salary. Compensation for executive officers consists of base
salary, bonus and stock option awards. The base salary of the Company's
executives are fixed pursuant to the terms of their respective employment
agreements with the Company. The Compensation Committee reviews the salary of
executive officers for reasonableness based on job responsibilities and a
limited review of compensation practices for comparable positions at
corporations which compete with the Company in its business or are of comparable
size and scope of operations. The Committee's recommendations to the Board of
Directors are based primarily on informal judgments reasonably believed to be in
the best interests of the Company. In determining the base salaries of the
Company's executives, the Committee considered the Company's significant and
rapid growth. Salaries are reevaluated by the Committee each year to determine
whether such salaries are reasonable in light of each executive's expected
duties.
Bonuses. Bonuses for the Company's executive officers are not
determined through the use of specific criteria. Rather, the Committee
determines bonuses based on the Company's overall performance, profitability,
working capital management and other qualitative and quantitative measurements.
In determining the amount of bonuses awarded, the Committee considers the
Company's revenues and profitability for the applicable period and each
executive's contribution to the success of the Company. The Company's executive
officers received bonuses which were deemed appropriate based upon the Company's
operating results during the fiscal year.
-10-
Stock Options. Stock option awards are intended to attract, retain and
motivate personnel by affording them an opportunity to receive additional
compensation based upon the performance of the Company's Common Stock. The size
and grant of actual awards is determined by the Committee on an informal basis.
The Committee's determination as to the size of actual awards to individual
executives is subjective, after taking into account the relative
responsibilities and contributions of the individual executives. The number or
value of options or "restricted stock" currently held by an executive is not
taken into account in determining the number of stock options granted.
In reviewing Mr. Sumner's performance and determining compensation, the
Committee considered the Company's overall performance, including revenue growth
and the significantly expanded global scope of the Company's operations. Mr.
Sumner's salary, bonus and stock option awards for the year ended October 31,
2001 were based on the Company's overall performance, with no component of such
compensation based on any particular measure of performance.
COMPENSATION COMMITTEE
Oliver R. Grace, Jr.
Robert Flug
-11-
STOCK PERFORMANCE GRAPH
The following line graph compares, from April 14, 1997, the first day on
which the Company's Common Stock was publicly traded, through October 31, 2001,
the cumulative total stockholder return on the Company's Common Stock with the
cumulative total return on the stocks comprising the NASDAQ Market Value Index
and the stocks comprising a Peer Group Index consisting of 3D0 Company, Acclaim
Entertainment, Activision, Inc., Eidos PLC, Electronic Arts, Inc., GT
Interactive Software, Interplay Entertainment, Midway Games and THQ Inc. The
comparison assumes $100 was invested on April 14, 1997 in the Company's Common
Stock and in each of the foregoing indices and assumes reinvestment of all cash
dividends, if any, paid on such securities. The Company has not paid any cash
dividends and, therefore, the cumulative total return calculation for the
Company is based solely upon stock price appreciation and not upon reinvestment
of cash dividends. Historical stock price is not necessarily indicative of
future stock price performance.
[PERFORMANCE GRAPH OMITTED]
4/14/97 10/31/97 10/31/98 10/31/99 10/31/00 10/31/01
------- -------- -------- -------- -------- --------
Take-Two Interactive Software, Inc. $100.00 $114.89 $110.64 $176.60 $211.71 $237.11
Peer Group Index 100.00 133.33 134.80 249.70 223.38 26l.86
NASDAQ Market Value Index 100.00 127.35 144.00 237.68 279.54 140.18
-12-
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of May 6, 2002,
relating to the beneficial ownership of shares of the Company's common
stock by (i) each person or entity who is known to own beneficially 5% or
more of the outstanding common stock, (ii) each director, (iii) each of the
Named Executives currently serving and (iv) all directors and executive
officers as a group.
Number of Shares of Percentage of Outstanding
Name and Common Stock Common Stock
Address of Beneficial Owner(1) Beneficially Owned(2) Beneficially Owned
------------------------------ --------------------- ------------------
FMR Corp (3)...................................... 5,494,650 14.6%
Waddell & Reed Financial Services, Inc. (3)....... 2,199,300 5.8
Kern Capital Management, LLC (3).................. 2,159,300 5.7
Oliver R. Grace, Jr. (4).......................... 704,279 1.8
Ryan A. Brant (5)................................. 428,728 1.1
Kelly Sumner (6).................................. 490,000 1.3
Paul Eibeler (7).................................. 367,500 *
Robert Flug (8)................................... 99,600 *
Mark Lewis (9).................................... 50,000 *
Todd Emmel (10)................................... 33,000 *
Steven Tisch (11)................................. 25,000 *
All directors and executive officers as a
group (ten persons) (12).......................... 2,268,007 5.8%
* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is
Take-Two Interactive Software, Inc., 575 Broadway, New York, New York
10012.
(2) Unless otherwise indicated, we believe that all persons named in the
table have sole voting and investment power with respect to all shares
beneficially owned by them. A person is deemed to be the beneficial
owner of securities that may be acquired by such person within 60 days
from the date of this proxy statement upon the exercise of options.
Each beneficial owner's percentage ownership is determined by assuming
that options that are held by such person (but not those held by any
other person) and which are exercisable within 60 days of the date of
this proxy statement have been exercised.
(3) Based on Schedules l3G filed with the Securities and Exchange
Commission as of December 31, 2001.
-13-
(4) Includes: (i) 591,705 shares owned of record by Anglo American
Security Fund, L.P., of which Mr. Grace is a general partner (ii)
62,574 shares owned by trusts of which Mr. Grace is a possible
beneficiary and (iii) options to purchase 50,000 shares held by Mr.
Grace.
(5) Includes 100,000 shares issuable upon the exercise of options.
(6) Includes 485,000 shares issuable upon the exercise of options.
(7) Includes 335,000 shares issuable upon the exercise of options.
(8) Includes 39,600 shares held by S/L/ Danielle, Inc. and 60,000 shares
of Common Stock issuable upon the exercise of options.
(9) Represents 50,000 shares issuable upon the exercise of options.
(10) Represents 33,000 shares issuable upon the exercise of options.
(11) Represents 25,000 shares issuable upon the exercise of options.
(12) Includes 1,167,250 shares issuable upon exercise of options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's principal executive and administrative office, located at
575 Broadway, New York, New York, is approximately 13,300 square feet of office
space under a five-year lease with 575 Broadway Corporation, a company
controlled by the father of Ryan A. Brant, the Company's Chairman. The Company
pays rent of $474,000 per annum under this lease. The Company believes that the
terms of the lease are no less favorable than those that could have been
obtained from an unaffiliated party.
-14-
PROPOSAL I
ADOPTION OF THE COMPANY'S 2002 STOCK OPTION PLAN
At the Annual Meeting, the Company's stockholders will be asked to
approve the adoption of the Company's 2002 Stock Option Plan and to provide for
3,000,000 shares of Common Stock to be reserved for issuance under the 2002
Stock Option Plan.
The Board believes that in order to enable the Company to continue to
attract and retain personnel of the highest caliber, provide incentive for
officers, directors, key employees and other key persons and continue to promote
the well-being of the Company, it is in the best interest of the Company and its
stockholders to provide to officers, directors, key employees, consultants and
other independent contractors who perform services for the Company, through the
granting of stock options, the opportunity to participate in the value and/or
appreciation in value of the Company's Common Stock. The Board has found that
the grant of options under stock option plans has proven to be a valuable tool
in attracting and retaining key employees. It believes that such authority, in
view of the substantial growth of the Company and need to continue to grow,
should be expanded to include the adoption of the 2002 Stock Option Plan. The
Board believes that such authority will provide the Company with significant
means to continue to attract and retain talented personnel and maintain current
key employees. The Board also believes that the 2002 Stock Option Plan, if
adopted, will provide the Board with more flexibility to set the terms of
individual option grants than the Company's 1997 Stock Option Plan.
To date, no options have been granted under the 2002 Stock Option Plan.
If the 2002 Stock Option Plan is approved by the Company's stockholders, options
to purchase up to 3,000,000 shares of Common Stock may be granted under the plan
by the Board or a Committee of the Board responsible for administering the plan.
The timing and specific terms of any grants and the recipients of any grants
cannot be determined at this time.
The following summary of the 2002 Stock Option Plan does not purport to
be complete and is qualified in its entirety by reference to the full text of
the 2002 Stock Option Plan attached as Exhibit B to this Proxy Statement.
Summary of the 2002 Stock Option Plan
In April 2002, the Board of Directors approved the 2002 Stock Option
Plan, and recommended that the Company's stockholders adopt the 2002 Stock
Option Plan at the Annual Meeting of Stockholders. Pursuant to the 2002 Stock
Option Plan, officers, directors, employees and consultants of the Company will
be eligible to receive incentive stock options ("Incentive Stock Options") as
provided in Section 422 of the Internal Revenue Code of 1986, as amended, (the
"Code"), and "non-qualified" stock options to purchase up to an aggregate of
3,000,000 shares of Common Stock. The number of shares of Common Stock that may
be granted and the timing of grants to executive officers and non-executive
officers of the Company under the 2002 Stock Option Plan is subject to the
discretion of the Board of Directors or a Committee of the Board that will
administer the plan. On May 8, 2002, the closing price of the Company's Common
Stock as reported by NASDAQ was $ 25.46.
The 2002 Stock Option Plan will be administered by the Board or a
Committee appointed by the Board. The Board or Committee will determine, among
other things, the persons to whom options will be granted, the types of options
granted, the number of shares subject to options and the exercise price,
provided that the exercise price of all Incentive Stock Options and
non-qualified stock options granted must be at least equal to 100% of the fair
market value of the Common Stock on the date of grant (110% in the case of
Incentive Stock Options granted to stockholders who own more than 10% of the
outstanding Common Stock) or earlier as determined by the Board or Committee or
as otherwise set forth in the plan. The Board or Committee also determines the
term of each option, the restrictions or limitations thereof and the manner in
which each option may be exercised. Options granted under the plan will expire
not later than the tenth anniversary of the date of grant (the fifth anniversary
in the case of Incentive Stock Options granted to stockholders who own more than
10% of the outstanding Common Stock). With certain limited exceptions, in the
event that an option holder ceases to be employed by the Company, such option
holder's options terminate. Pursuant to the provisions of the 2002 Stock Option
Plan, the aggregate fair market value, determined as of the date(s) of grant,
for which Incentive Stock Options are first exercisable by an option holder
during any calendar year cannot exceed $100,000.
-15-
In January 1997, the stockholders of the Company approved the 1997
Stock Option Plan, as amended. As of May 6, 2002, there were outstanding options
to purchase 1,782,263 shares of Common Stock under the 1997 Stock Option Plan at
an average exercise price of $11.29. As of such date, no options were available
for grant under the 1997 Stock Option Plan. In addition, as of May 6, 2002,
there were outstanding non-plan options to purchase 3,487,261 shares at an
average exercise price of $11.68.
Certain Federal Income Tax Consequences of the 2002 Stock Option Plan
The following is a brief summary of the Federal income tax aspects of
grants made under the 2002 Stock Option Plan based upon statutes, regulations
and interpretations in effect on the date hereof. This summary is not intended
to be exhaustive, and does not describe state or local tax consequences.
1. Incentive Stock Options. The participant will recognize no taxable
income upon the grant or exercise of an Incentive Stock Option. Upon a
disposition of the shares after the later of two years from the date of grant
and one year after the transfer of the shares to the participant, (i) the
participant will recognize the difference, if any, between the amount realized
and the exercise price as long-term capital gain or long-term capital loss (as
the case may be) if the shares are capital assets in his or her hands; and (ii)
the Company will not qualify for any deduction in connection with the grant or
exercise of the options. The excess, if any, of the fair market value of the
shares on the date of exercise of an Incentive Stock Option over the exercise
price will be treated as an item of adjustment for his or her taxable year in
which the exercise occurs and may result in an alternative minimum tax liability
for the participant. In the case of a disposition of shares in the same taxable
year as the exercise where the amount realized on the disposition is less than
the fair market value of the shares on the date of exercise, there will be no
adjustment since the amount treated as an item of adjustment, for alternative
minimum tax purposes, is limited to the excess of the amount realized on such
disposition over the exercise price which is the same amount included in regular
taxable income.
If Common Stock acquired upon the exercise of an Incentive Stock Option
is disposed of prior to the expiration of the holding periods described above,
(i) the participant will recognize ordinary compensation income in the taxable
year of disposition in an amount equal to the excess, if any, of the lesser of
the fair market value of the shares on the date of exercise or the amount
realized on the disposition of the shares, over the exercise price paid for such
shares; and (ii) the Company will qualify for a deduction equal to any such
amount recognized, subject to the requirements of Section 162(m) of the Code and
that the compensation be reasonable. The participant will recognize the excess,
if any, of the amount realized over the fair market value of the shares on the
date of exercise, if the shares are capital assets in his or her hands, as
short-term or long-term capital gain, depending on the length of time that the
participant held the shares, and the Company will not qualify for a deduction
with respect to such excess.
Subject to certain exceptions for disability or death, if an Incentive
Stock Option is exercised more than three months following the termination of
the participant's employment, the option will generally be taxed as a
Non-Qualified Stock Option.
2. Non-Qualified Stock Options. With respect to non-qualified stock
options (i) upon grant of the option, the participant will recognize no income;
(ii) upon exercise of the option (if the shares are not subject to a substantial
risk of forfeiture), the participant will recognize ordinary compensation income
in an amount equal to the excess, if any, of the fair market value of the shares
on the date of exercise over the exercise price, and the Company will qualify
for a deduction in the same amount, subject to the requirements of Section
162(m) of the Code and that the compensation be reasonable; (iii) the Company
will be required to comply with applicable Federal income tax withholding
requirements with respect to the amount of ordinary compensation income
recognized by the participant; and (iv) on a sale of the shares, the participant
will recognize gain or loss equal to the difference, if any, between the amount
realized and the sum of the exercise price and the ordinary compensation income
recognized. Such gain or loss will be treated as short-term or long-term capital
gain or loss if the shares are capital assets in the participant's hands
depending upon the length of time that the participant held the shares.
-16-
The Board believes that the adoption of the 2002 Stock Option Plan
will help the Company attract and retain qualified officers, directors and key
employees. Accordingly, the Board believes that the adoption of the 2002 Stock
Option Plan is in the best interest of the Company and unanimously recommends a
vote FOR its approval.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP are the Company's independent auditors who
reported on the financial statements of the Company for the fiscal years ended
October 31, 1999, 2000 and 2001. It is currently anticipated that
PricewaterhouseCoopers LLP will be selected by the Board of Directors to examine
and report on the financial statements of the Company for the year ending
October 31, 2002. It is anticipated that a representative of
PricewaterhouseCoopers LLP will be present at the Annual Meeting and will have
an opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders who wish to present proposals appropriate for
consideration at the Company's Annual Meeting of Stockholders to be held in 2003
must submit the proposal in proper form to the Company at its address set forth
on the first page of this Proxy Statement not later than January 10, 2003 in
order for the proposition to be considered for inclusion in the Company's proxy
statement and form of proxy relating to such annual meeting. Any such proposals,
as well as any questions related thereto, should be directed to the Secretary of
the Company.
OTHER INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT, AS AMENDED, FOR THE YEAR ENDED
OCTOBER 31, 2001 IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF RECORD AS OF
THE CLOSE OF BUSINESS ON MAY 6, 2002. COPIES OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K/A WILL BE PROVIDED FOR A NOMINAL CHARGE UPON WRITTEN REQUEST TO:
TAKE-TWO INTERACTIVE SOFTWARE, INC.
575 BROADWAY
NEW YORK, NEW YORK 10012
ATTENTION: KARL H. WINTERS, CHIEF FINANCIAL OFFICER
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board
of Directors,
Kelly Sumner
Chief Executive Officer
May 10, 2002
-17-
Exhibit A
TAKE TWO INTERACTIVE SOFTWARE INC.
AUDIT COMMITTEE CHARTER
Composition
There shall be a committee of the board of directors (the "Board") of Take-Two
Interactive Software, Inc. (the "Company") to be known as the audit committee
which, no later than June 14, 2001, shall have at least three (3) members,
comprised solely of independent directors, as such term is defined in
Marketplace Rule 4200(a)(15) of the National Association of Securities Dealer's,
Inc. ("NASD"), subject to the exception in NASD Marketplace Rule 4460(d)(2)(B).
Each member of the audit committee shall be able to read and understand
fundamental financial statements, including the Company's balance sheet, income
statement and cash flow statement or will become able to do so within a
reasonable period of time after his or her appointment to the audit committee.
In addition, at least one member of the audit committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting or any other comparable experience or background
which results in the individual's financial sophistication, including, but not
limited to, being or having been a chief executive officer, chief financial
officer or other senior officer with financial oversight responsibilities.
The Board shall elect or appoint a chairperson of the audit committee who will
have authority to act on behalf of the audit committee between meetings.
Responsibilities
The responsibilities of the audit committee are as follows:
o Ensure its receipt from the outside auditor of a formal
written statement, delineating all relationships between the
outside auditor and the Company consistent with the
Independence Standards Board Standard 1.
o Actively engage in a dialogue with the outside auditor with
respect to any disclosed relationships or services that may
impact the objectivity and independence of the outside auditor
and be responsible for taking, or recommending that the Board
take, appropriate action to oversee the independence of the
outside auditor.
o In view of the outside auditor's ultimate accountability to
the Board and the audit committee, as representatives of the
stockholders, the audit committee, acting together with the
Board, has the ultimate authority and responsibility to
select, evaluate, and, where appropriate, replace the outside
auditor (or, if applicable, nominate an outside auditor for
stockholder approval in any Company proxy statement).
o Review with the outside auditor, the company's internal
auditor (if any), and financial and accounting personnel, the
adequacy and effectiveness of the accounting and financial
controls of the Company, and elicit any recommendations for
the improvement of such internal control procedures or
particular areas where new or more detailed controls or
procedures are desirable.
o Consider, in consultation with the outside auditor and
management of the Company, the audit scope and procedures.
o Review the financial statements contained in the annual report
to stockholders with management and the outside auditor to
determine that the outside auditor is satisfied with the
disclosure and content of the financial statements to be
presented to the stockholders.
o Discuss with independent auditors matters requiring discussion
under both SAS No. 61 and SAS No. 90. Review the financial
statements contained in the annual report to stockholders with
management and the outside auditor.
o Meet with the internal auditor (if any), outside auditor or
the management privately to discuss any matters that the audit
committee, the internal auditor (if any), the outside auditor
or the management believe should be discussed privately with
the audit committee.
o Review and reassess the adequacy of the audit committee's
charter annually.
o Prepare a report of the audit committee to be included in the
Company's proxy statement in accordance with applicable
Securities and Exchange Commission regulations.
o Make such other recommendations to the Board on such matters,
within the scope of its functions, as may come to its
attention and which in its discretion warrant consideration by
the Board.
Limitations
The audit committee is responsible for the duties set forth in this
charter but is not responsible for either the preparation of the financial
statements or the auditing of the financial statements. Management has the
responsibility for preparing the financial statements and implementing internal
controls and the independent accountants have the responsibility for auditing
the financial statements and monitoring the effectiveness of the internal
controls. The review of the financial statements by the audit committee is not
an audit nor is it of the same quality as an audit. The audit is performed by
the Company's independent outside auditors. In carrying out its
responsibilities, the audit committee believes its policies and procedures
should remain flexible in order to best react to a changing environment.
-2-
Exhibit B
2002 STOCK OPTION PLAN
OF
TAKE-TWO INTERACTIVE SOFTWARE, INC.
1. Purpose. Take-Two Interactive Software, Inc. (the "Company") desires to
attract and retain the best available talent and encourage the highest level of
performance in order to continue to serve the best interests of the Company, and
its stockholders. By affording key personnel and other persons who are expected
to contribute to the success of the Company the opportunity to acquire
proprietary interests in the Company and by providing them incentives to put
forth maximum efforts for the success of the Company, the 2002 Stock Option Plan
of the Company (the "2002 Plan") is expected to contribute to the attainment of
those objectives.
The word "Subsidiary" or "Subsidiaries", as used herein, shall
have the meaning set forth in Section 424(f) of the Internal Revenue Code of
1986, as amended (the "Code"), or any successor thereto.
The word "Parent" as used herein, shall have the meaning set
forth in Section 424(e) of the Code, or any successor thereto.
2. Scope and Duration. Options under the 2002 Plan may be granted in the form of
incentive stock options ("Incentive Options") as provided in Section 422 of the
Code, or in the form of nonqualified stock options ("Non-Qualified Options").
(Unless otherwise indicated, references in the 2002 Plan to "options" include
Incentive Options and Non-Qualified Options.) The maximum aggregate number of
shares as to which options may be granted from time to time under the 2002 Plan
is 3,000,000 shares of the common stock of the Company ("Common Stock"), which
shares may be, in whole or in part, authorized but unissued shares or shares
reacquired by the Company. The maximum number of shares with respect to which
options may be granted under the 2002 Plan to any individual employee of the
Company or a subsidiary of the Company during the term of the 2002 Plan is
500,000. If an option shall expire, terminate or be surrendered for cancellation
for any reason without having been exercised in full, the shares represented by
the option or portion thereof not so exercised shall (unless the 2002 Plan shall
have been terminated) become available for subsequent option grants under the
2002 Plan. As provided in Paragraph 13 hereof, the 2002 Plan shall become
effective on April 25, 2002, and unless terminated sooner pursuant to Paragraph
14 hereof, the 2002 Plan shall terminate on April 24, 2012, and no option shall
be granted hereunder after that date.
3. Administration. The 2002 Plan shall be administered by the Board of Directors
of the Company, or, at their discretion, by a committee that is appointed by the
Board of Directors to perform such function (the "Committee"). The Committee
shall consist solely of at least two members of the Board of Directors, each of
whom shall serve at the pleasure of the Board of Directors and shall be a
"Non-Employee Director" as defined in Rule l6b-3 pursuant to the Securities
Exchange Act of 1934 (the "Act") or any successor rule and, if practicable,
shall be "outside directors" as defined in Section 162(m) of the Code. Vacancies
occurring in the membership of the Committee shall be filled by appointment by
the Board of Directors.
The Board of Directors or the Committee, as the case may be,
shall have plenary authority in its sole discretion, subject to and not
inconsistent with the express provisions of the 2002 Plan, to grant options, to
determine the purchase price of the Common Stock covered by each option, the
term of each option, the persons to whom, and the time or times at which,
options shall be granted and the number of shares to be covered by each option;
to designate options as Incentive Options or Non-Qualified Options; to interpret
the 2002 Plan; to prescribe, amend and rescind rules and regulations relating to
the 2002 Plan; to determine the terms and provisions of the option agreements
(which need not be identical) entered into in connection with options under the
2002 Plan; and to make all other determinations deemed necessary or advisable
for the administration of the 2002 Plan. The Board of Directors or the
Committee, as the case may be, may delegate to one or more of its members or to
one or more agents such administrative duties as it may deem advisable, and the
Board of Directors or the Committee, as the case may be, or any person to whom
it has delegated duties as aforesaid may employ or engage one or more persons to
render advice with respect to any responsibility the Board of Directors or the
Committee, as the case may be, or such person may have under the 2002 Plan.
4. Eligibility; Factors to be Considered in Granting Options. Incentive Options
shall be limited to persons who are employees of the Company or its present and
future Subsidiaries or, if applicable, its present and future Parent and at the
date of grant of any option are in the employ of the Company or its present and
future Subsidiaries or Parent. In determining the employees to whom Incentive
Options shall be granted and the number of shares to be covered by each
Incentive Option, the Board of Directors or the Committee, as the case may be,
shall take into account the nature of employees' duties, their present and
potential contributions to the success of the Company and such other factors as
it shall deem relevant in connection with accomplishing the purposes of the 2002
Plan. An employee who has been granted an option or options under the 2002 Plan
may be granted an additional option or options, subject, in the case of
Incentive Options, to such limitations as may be imposed by the Code on such
options. Except as provided below, a Non-Qualified Option may be granted to any
person, including, but not limited to, employees, independent agents,
consultants, attorneys and advisors, who the Board of Directors or the
Committee, as the case may be, believes has contributed, or will contribute, to
the success of the Company.
5. Option Price. The purchase price of the Common Stock covered by each option
shall be determined by the Board of Directors or the Committee, as the case may
be, and shall not be less than 100% of the Fair Market Value (as defined in
Paragraph 15 hereof) of a share of the Common Stock on the date on which the
option is granted. Such price shall be subject to adjustment as provided in
Paragraph 12 hereof. The Board of Directors or the Committee, as the case may
be, shall determine the date on which an option is granted; in the absence of
such a determination, the date on which the Board of Directors or the Committee,
as the case may be, adopts a resolution granting an option shall be considered
the date on which such option is granted.
6. Term of Options. The term of each option shall be not more than 10 years from
the date of grant, as the Board of Directors or the Committee, as the case may
be, shall determine, subject to earlier termination as provided in Paragraphs 10
and 11 hereof.
7. Exercise of Options. (a) Subject to the provisions of the 2002 Plan, options
granted under the 2002 Plan shall become exercisable as determined by the Board
of Directors or Committee, as the case may be. In its sole discretion, the Board
of Directors or the Committee, as the case may be, may, in any case or cases,
prescribe that options granted under the 2002 Plan become exercisable in
installments or provide that an option may be exercisable in full immediately
upon the date of its grant or at a later date. The Board of Directors or the
Committee, as the case may be, may, in its sole discretion, also provide that an
option granted pursuant to the 2002 Plan shall immediately become exercisable in
full upon the happening of any of the following events or such other events as
the Board of Directors or the Committee, as the case may be, determines: (i) a
"change in control" of the Company as hereafter defined; or (ii) with respect to
an employee, on his 65th birthday. In the event of a question or controversy as
to whether or not any of the events hereinabove described has taken place, a
determination by the Board of Directors or the Committee, as the case may be,
that such event has or has not occurred shall be conclusive and binding upon the
Company and participants in the 2002 Plan.
(b) For purposes of the 2002 Plan, a "change in control of the Company"
shall be deemed to occur, unless previously consented to in writing by the
optionee or any person entitled to act under Paragraph 11 hereof, upon (i) the
actual acquisition or the execution of an agreement to acquire 50% or more of
the voting securities of the Company by any person or entity not affiliated with
the grantee, or any person entitled to act under Paragraph 11 hereof (other than
pursuant to a bona fide underwriting agreement relating to a public distribution
of securities of the Company), (ii) the commencement of a tender or exchange
offer for more than 50% of the voting securities of the Company by any person or
entity not affiliated with the grantee, or any persons entitled to act under
Paragraph 11 hereof, (iii) the commencement of a proxy contest against the
management for the election of a majority of the Board of Directors of the
Company if the group conducting the proxy contest owns, has or gains the power
to vote at least 50% of the voting securities of the Company, (iv) a vote by the
Board of Directors to merge, consolidate, sell all or substantially all of the
assets of the Company to any person or entity not affiliated with the grantee,
or any persons entitled to act under Paragraph 11 hereof, or (v) the election of
directors constituting a majority of the Board of Directors who have not been
nominated or approved by the Company; provided, however, for purposes of the
2002 Plan, it shall not be deemed a change in control of the Company if such
person or entity acquires 50% or more of the voting securities of the Company
(A) as a result of a combination of the Company or a wholly-owned subsidiary of
Company with another entity owned or controlled by such persons or entity
(whether effected by a merger, sale of assets or exchange of stock or otherwise)
(the "Combination") and (B) after completion of the Combination and for a
continuous period of not less than twelve (12) months thereafter (I) executive
officers of the Company (as designated in the Company's most recent Annual
Report on Form 10-K or its most recent Proxy Statement filed with the Securities
and Exchange Commission with respect to its Annual Meeting of Stockholders)
immediately prior to the Combination constitute not less than 50% of the
executive officers of the Company after the Combination or (II) the members of
the Board of Directors of Company immediately prior to the Combination
constitute not less than 50% of the membership of the Board of Directors of the
Company after the Combination. For purposes of calculating the executive
officers of the Company after the Combination, those executive officers who are
terminated by the Company for cause or who terminate their employment without
good reason, as determined by the Board of Directors or Committee shall be
excluded from the calculation entirely.
-2-
(c) Any option at any time granted under the 2002 Plan may contain a
provision to the effect that the optionee (or any persons entitled to act under
Paragraph 11 hereof) may, at any time at which Fair Market Value is in excess of
the exercise price and prior to exercising the option, in whole or in part,
request that the Company purchase all or any portion of the option as shall then
be exercisable at a price equal to the difference between (i) an amount equal to
the option price multiplied by the number of shares subject to that portion of
the option in respect of which such request shall be made and (ii) an amount
equal to such number of shares multiplied by the fair market value of the
Company's Common Stock (within the meaning of Section 422 of the Code and the
treasury regulations promulgated thereunder) on the date of purchase. The
Company shall have no obligation to make any purchase pursuant to such request,
but if it elects to do so, such portion of the option as to which the request is
made shall be surrendered to the Company. The purchase price for the portion of
the option to be so surrendered shall be paid by the Company, less any
applicable withholding tax obligations imposed upon the Company by reason of the
purchase, at the election of the Board of Directors or the Committee, as the
case may be, either in cash or in shares of Common Stock (valued as of the date
and in the manner provided in clause (ii) above), or in any combination of cash
and Common Stock, which may consist, in whole or in part, of shares of
authorized but unissued Common Stock or shares of Common Stock held in the
Company's treasury. No fractional share of Common Stock shall be issued or
transferred and any fractional share shall be disregarded. Shares covered by
that portion of any option purchased by the Company pursuant hereto and
surrendered to the Company shall not be available for the granting of further
options under the 2002 Plan. All determinations to be made by the Company
hereunder shall be made by the Board of Directors or the Committee, as the case
may be.
Any option granted under the 2002 Plan may also contain a
provision to the effect that the payment of the exercise price may be made by
delivery to the Company by the optionee of an executed exercise form together
with irrevocable instructions to a broker-dealer to sell or margin a sufficient
portion of the shares sold or margined and deliver the sale or margin loan
proceeds directly to the Company to pay for the exercise price.
(d) An option may be exercised, at any time or from time to time
(subject, in the case of Incentive Options, to such restrictions as may be
imposed by the Code), as to any or all full shares as to which the option has
become exercisable until the expiration of the period set forth in Paragraph 6
hereof, by the delivery to the Company, at its principal place of business, of
(i) written notice of exercise in the form specified by the Board of Directors
or the Committee, as the case may be, specifying the number of shares of Common
Stock with respect to which the option is being exercised and signed by the
person exercising the option as provided herein, (ii) payment of the purchase
price; and (iii) in the case of Non-Qualified Options, payment in cash of all
withholding tax obligations imposed on the Company by reason of the exercise of
the option. Upon acceptance of such notice, receipt of payment in full, and
receipt of payment of all withholding tax obligations, the Company shall cause
to be issued a certificate representing the shares of Common Stock purchased. In
the event the person exercising the option delivers the items specified in (i)
and (ii) of this Subsection (d), but not the item specified in (iii) hereof, if
applicable, the option shall still be considered exercised upon acceptance by
the Company for the full number of shares of Common Stock specified in the
notice of exercise but the actual number of shares issued shall be reduced by
the smallest number of whole shares of Common Stock which, when multiplied by
the Fair Market Value of the Common Stock as of the date the option is
exercised, is sufficient to satisfy the required amount of withholding tax.
-3-
(e) If the payment of the purchase price is to be made in cash, the
cash purchase price of the shares as to which an option is exercised shall be
paid in full at the time of exercise. Payment shall be made in cash, which may
be paid by check or other instrument acceptable to the Company; in addition,
subject to compliance with applicable laws and regulations and such conditions
as the Board of Directors or the Committee, as the case may be, may impose, the
Board of Directors or the Committee, as the case may be, in its sole discretion,
may on a case-by-case basis elect to accept payment in shares of Common Stock of
the Company which are already owned by the option holder and have been owned by
the option holder for at least six months (or such other period as the Board or
Committee, as the case may be, determines), valued at the Fair Market Value
thereof (as defined in Paragraph 15 hereof) on the date of exercise; provided,
however, that with respect to Incentive Options, no such discretion may be
exercised unless the option agreement permits the payment of the purchase price
in that manner.
(f) Except as provided in Paragraphs 10 and 11 hereof, no option
granted to an employee may be exercised at any time by such employee unless such
employee is then an employee of the Company or a Subsidiary or Parent.
8. Incentive Options.
(a) With respect to Incentive Options granted, the aggregate Fair
Market Value (determined in accordance with the provisions of Paragraph 15
hereof at the time the Incentive Option is granted) of the Common Stock or any
other stock of the Company or its current or future Subsidiaries or Parent with
respect to which incentive stock options, as defined in Section 422 of the Code,
are exercisable for the first time by any employee during any calendar year
(under all incentive stock option plans of the Company and its parent and
subsidiary corporations, as those terms are defined in Section 424 of the Code)
shall not exceed $100,000.
(b) No Incentive Option may be awarded to any employee who immediately
prior to the date of the granting of such Incentive Option owns more than 10% of
the combined voting power of all classes of stock of the Company or any of its
Subsidiaries unless the exercise price under the Incentive Option is at least
110% of the Fair Market Value of the Common Stock on the date of grant and the
option expires within 5 years from the date of grant.
(c) In the event of amendments to the Code or applicable regulations
relating to Incentive Options subsequent to the date hereof, the Company may
amend the provisions of the 2002 Plan, and the Company and the employees holding
options may agree to amend outstanding option agreements, to conform to such
amendments.
9. Non-Transferability of Options. Except as may be otherwise provided by the
Board or Committee at or after the date of grant with respect to a Non-Qualified
Option, options granted under the 2002 Plan shall not be transferable otherwise
than by will or the laws of descent and distribution, and options may be
exercised during the lifetime of the optionee only by the optionee. No transfer
of an option by the optionee by will or by the laws of descent and distribution
shall be effective to bind the Company unless the Company shall have been
furnished with written notice thereof and a copy of the will and such other
evidence as the Company may deem necessary to establish the validity of the
transfer and the acceptance by the transferor or transferees of the terms and
conditions of such option.
10. Termination of Employment. In the event that the employment of an employee
to whom an option has been granted under the 2002 Plan shall be terminated
(except as set forth below or in Paragraph 11 hereof), such option may be,
subject to the provisions of the 2002 Plan, exercised (to the extent that the
employee was entitled to do so at the termination of his employment) at any time
within ninety (90) days after such termination (or such longer or shorter period
as may be determined by the Board or Committee, as the case may be, at or at any
time after the date of grant of the option), but not later than the date on
which the option terminates; provided, however, that any option which is held by
an employee whose employment is terminated for cause or voluntarily without the
consent of the Company (for purposes of the 2002 Plan termination due to
retirement at or after age 65 shall be deemed to be with the consent of the
Company) shall, to the extent not theretofore exercised, automatically terminate
as of the date of termination of employment. As used herein, "cause" shall mean
conduct amounting to fraud, dishonesty, negligence, or engaging in competition
or solicitations in competition with the Company and breaches of any applicable
employment agreement between the Company or any Subsidiary or Parent and the
optionee. Options granted to employees under the 2002 Plan shall not be affected
by any change of duties or position so long as the holder continues to be a
regular employee of the Company or any of its current or future Subsidiaries.
Any option agreement or any rules and regulations relating to the 2002 Plan may
contain such provisions as the Board of Directors or the Committee, as the case
may be, shall approve with reference to the determination of the date employment
terminates and the effect of leaves of absence. The Board of Directors, or
Committee, as the case may be, shall, in its sole discretion, determine for
purposes of the 2002 Plan whether the Company has consented to the departure of
an employee who voluntarily leaves the employ of the Company.
-4-
Notwithstanding the foregoing, the Board of Directors or
Committee, as the case may be, either at or any time after the date of grant of
an option, may, in its discretion, provide for longer or shorter periods than
the periods specified above during which an option held by an employee may be
exercised by the employee after the employee ceases to be employed by the
Company or a Subsidiary or Parent. Any such determination shall be based upon
such factors as the Board of Directors or the Committee, as the case may be,
shall determine, provided, however, that no such discretion shall be exercised
with respect to an employee whose employment with the Company or Subsidiary or
Parent has been terminated for cause.
11. Death or Disability of Employee. If an employee to whom an option has been
granted under the 2002 Plan shall die while employed by the Company or a
Subsidiary or Parent or within ninety (90) days (or such longer or shorter
period as the Board of Directors, or the Committee, as the case may be, shall
determine at or any time after the date of grant of the option) after the
termination of such employment (other than termination for cause or voluntary
termination without the consent of the Company), such option may be exercised,
to the extent exercisable by the employee on the date of death, by a legatee or
legatees of the employee under the employee's last will, or by the employee's
personal representative or distributees, at any time within one year after the
date of the employee's death, but not later than the date on which the option
terminates. In the event that the employment of an employee to whom an option
has been granted under the 2002 Plan shall be terminated as the result of a
disability (the determination of which shall be made by the Board of Directors
or Committee, as the case may be), such option may be exercised, to the extent
exercisable by the employee on the date of such termination, at any time within
one year after the date of such termination, but not later than the date on
which the option terminates.
Notwithstanding the foregoing, the Board of Directors, or
Committee, as the case may be, either at or at any time after the date of grant
of an option, may, in its discretion, provide for longer or shorter periods than
the one year period specified above in which an option held by an employee who
ceases to be employed by the Company as a result of death or disability may be
exercised. Any such determination shall be based upon such factors as the Board
or the Committee, as the case may be, shall determine, provided, however, that
no such discretion shall be exercised with respect to an employee who dies after
the employee's employment with the Company or Parent or Subsidiary has been
terminated for cause.
12. Adjustments Upon Changes in Capitalization, Etc. Notwithstanding any other
provision of the 2002 Plan, the Board of Directors or the Committee, as the case
may be, may, at any time, make or provide for such adjustments to the 2002 Plan,
to the number and class of shares issuable thereunder or to any outstanding
options as it shall deem appropriate to prevent dilution or enlargement of
rights, including adjustments in the event of changes in the outstanding Common
Stock by reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations, liquidations and the like. In the event of any offer to holders
of Common Stock generally relating to the acquisition of their shares, the Board
of Directors or the Committee, as the case may be, may make such adjustment as
it deems equitable in respect of outstanding options and rights, including in
its sole discretion revision of outstanding options and rights so that they may
be exercisable for the consideration payable in the acquisition transaction. Any
such determination by the Board of Directors or the Committee, as the case may
be, shall be conclusive and binding upon the Company and the participants in the
2002 Plan. Any fractional shares resulting from such adjustments shall be
eliminated.
-5-
13. Effective Date. The 2002 Plan shall become effective on April 25, 2002, the
date of adoption by the Board of Directors of the Company, subject to approval
by the stockholders of the Company on or before April 24, 2003.
14. Termination and Amendment. The Board of Directors of the Company may
suspend, terminate, modify or amend the 2002 Plan, provided that any amendment
that would increase the aggregate number of shares which may be issued under the
2002 Plan or materially modify the requirements as to eligibility for
participation in the 2002 Plan, shall be subject to the approval of the
Company's stockholders, except that any such increase or modification that may
result from adjustments authorized by Paragraph 12 hereof does not require such
approval. No suspension, termination, modification or amendment of the 2002 Plan
may, without the consent of the person to whom an option shall theretofore have
been granted, adversely affect the rights of such person under such option.
15. Miscellaneous. As said term is used in the 2002 Plan, the "Fair Market
Value" of a share of Common Stock on any day means: (a) if the principal market
for the Common Stock is a national securities exchange or the National
Association of Securities Dealers Automated Quotations System ("NASDAQ), the
closing sales price of the Common Stock on such day as reported by such exchange
or market system, or on a consolidated tape reflecting transactions on such
exchange or market system, or (b) if the principal market for the Common Stock
is not a national securities exchange and the Common Stock is not quoted on
NASDAQ, the mean between the highest bid and lowest asked prices for the Common
Stock on such day as reported by the National Quotation Bureau, Inc.; provided
that if clauses (a) and (b) of this paragraph are both inapplicable, or if no
trades have been made or no quotes are available for such day, the Fair Market
Value of the Common Stock shall be determined by the Board of Directors or the
Committee, as the case may be, and shall be conclusive as to the Fair Market
Value of the Common Stock.
In the event the Company is the subject of an acquisition,
merger or consolidation or similar transaction where the Company is not the
surviving entity, the Board or Committee, as the case may be, may in its sole
discretion, but shall not be required to, request that as a condition of the
transaction the surviving entity assume the obligations of the Company with
respect to the options then outstanding under the 2002 Plan.
The Board of Directors or the Committee, as the case may be,
may require, as a condition to the exercise of any options granted under the
2002 Plan, that to the extent required at the time of exercise, (i) the shares
of Common Stock reserved for purposes of the 2002 Plan shall be duly listed,
upon official notice of issuance, upon stock exchange(s) on which the Common
Stock is listed, (ii) a Registration Statement under the Securities Act of 1933,
as amended, with respect to such shares shall be effective, and/or (iii) the
person exercising such option deliver to the Company such documents, agreements
and investment and other representations as the Board of Directors or the
Committee, as the case may be, shall determine to be in the best interests of
the Company.
During the term of the 2002 Plan, the Board of Directors or
the Committee, as the case may be, in its sole discretion, may offer one or more
option holders the opportunity to surrender any or all unexpired options for
cancellation or replacement. If any options are so surrendered, the Board of
Directors or the Committee, as the case may be, may then grant new Non-Qualified
or Incentive Options to such holders for the same or different numbers of shares
at higher or lower exercise prices than the surrendered options. Such new
options may have a different term and shall be subject to the provisions of the
2002 Plan the same as any other option.
Anything herein to the contrary notwithstanding, the Board of
Directors or the Committee, as the case may be, may, in its sole discretion,
impose more restrictive conditions on the exercise of an option granted pursuant
to the 2002 Plan, including the ability of an option holder to exercise an
option after cessation of employment; however, any and all such conditions shall
be specified in the option agreement limiting and defining such option. The
Board of Directors or the Committee, as the case may be, may also amend the
terms of any option previously granted under the 2002 Plan, provided that the
terms of any such amended option are not inconsistent with any provisions of the
2002 Plan and that no such amendment shall adversely affect the rights of the
person to whom the option has been granted without the consent of such person
or, if applicable, the permitted transferee of such optionee or any person
entitled to act under Paragraph 11 hereof.
-6-
Nothing in the 2002 Plan or in any option granted pursuant to
the 2002 Plan shall confer upon any employee any right to continue in the employ
of the Company or any of its Subsidiaries or parent or affiliated companies or
interfere in any way with the right of the Company or any such Subsidiary or
parent or affiliated companies to terminate such employment at any time.
16. Compliance with SEC Regulations. It is the Company's intent that the 2002
Plan comply in all respects with Rule 16b-3 of the Act or any successor rule and
any regulations promulgated thereunder. If any provision of the 2002 Plan is
later found not to be in compliance with said Rule, the provisions shall be
deemed null and void.
-7-
TAKE-TWO INTERACTIVE SOFTWARE, INC.
575 Broadway
New York, New York 10012
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 14, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints RYAN A. BRYANT and KELLY SUMNER and
each of them, Proxies, with full power of substitution in each of them, in the
name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Take-Two Interactive Software, Inc. (the "Company") on Friday,
June 14, 2002, at the Grand Hyatt Hotel, Conference Level, 42nd Street between
Lexington and Park Avenues, New York, NY 10017 or at any adjournment or
adjournments thereof, according to the number of notes that the undersigned
would be entitled to vote if personally present, upon the following matters:
(Continued and to be signed on reverse side)
--------------------------------------------------------------------------------
[X] Please mark your votes as in this example using dark ink only.
FOR all nominees list at WITHHOLD AUTHORITY to vote
right (except as marked to all nominees listed at
the contrary below) right
1. ELECTION OF DIRECTORS: |_| |_| NOMINEES:
Ryan A. Brant
Oliver R. Grace, Jr.
Kelly Sumner
Robert Flug
Paul Eibeler
Mark Lewis
Todd Emmel
Steven Tisch
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the
space provided below:
-----------------------------------------------------------
2. Approval of the FOR AGAINST ABSTAIN
Company's 2002 Stock |_| |_| |_|
Option Plan.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THOSE NOMINEES AND THE
PROPOSALS LISTED ABOVE.
Please mark, sign, date and return this proxy card using the enclosed envelope.
Signature: ___________________ Signature if filed jointly: ___________________ DATED: _______, 2002
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.