TAKE-TWO INTERACTIVE SOFTWARE, INC.
Incentive Stock Plan
Section 1. Purpose
The purpose of the Take-Two Interactive Software, Inc. Incentive Stock
Plan is to enable Take-Two Interactive Software, Inc. (the "Company") to offer
to those of its employees and to the employees of its Subsidiaries who are
expected to contribute to the success of the Company, long term equity interests
in the Company, thereby enhancing its ability to attract, retain and reward such
key employees, and to increase the mutuality of interests between those
employees and the shareholders of the Company.
Section 2. Administration
The Plan shall be administered by the Compensation Committee of the
Board of Directors (the "Board"), the membership of which shall consist solely
of two or more members of the Board, each of whom shall serve at the pleasure of
the Board and shall be a "Non-Employee Director," as defined in Rule 16b-3 under
the Securities Exchange Act of 1934, and, if practicable, shall also be an
"outside director," as defined in Section 162(m) of the Internal Revenue Code,
and shall be at all times constituted so as not to adversely affect the
compliance of the Plan with the requirements of Rule 16b-3 or with the
requirements of any other applicable law, rule or regulation.
The Committee shall have the authority to grant, pursuant to the terms
of the Plan, to directors (other than directors serving as members of the
Committee), officers and other employees shares of the Company's Common Stock
("Stock") pursuant to: (i) Section 5 ("Restricted Stock"), (ii) Section 6
("Deferred Stock") and/or (iii) Section 7 ("Other Stock-Based Awards").
Notwithstanding anything in the Plan to the contrary, the Board reserves the
right to make and set the terms of and to interpret the terms of any grant of
Stock under the Plan to directors who are members of the Committee.
For purposes of illustration and not of limitation, the Committee shall
have the authority (subject to the express provisions of the Plan):
(i) to select the directors, officers and other employees of the
Company or any Subsidiary to whom Restricted Stock, Deferred
Stock and/or Other Stock-Based Awards may be from time to time
granted hereunder;
(ii) to determine the Restricted Stock, Deferred Stock and/or Other
Stock-Based Awards, or any combination thereof, if any, to be
granted hereunder to one or more eligible persons;
(iii) to determine the number of shares of Stock to be covered by
each award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder
(including, but not limited to, share price, any restrictions
or limitations, and any vesting acceleration and/or forfeiture
provisions);
(v) to determine the terms and conditions under which awards
granted hereunder are to operate on a tandem basis and/or in
conjunction with or apart from other awards made by the
Company or any Subsidiary outside of the Plan; and
(vi) to determine the extent and circumstances under which Stock
and other amounts payable with respect to an award hereunder
shall be deferred.
Subject to Section 9 hereof, the Committee shall have the authority to
(i) adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable, (ii)
interpret the terms and provisions of the Plan and any award issued under the
Plan (and to determine the form and substance of all agreements relating
thereto), and (iii) to otherwise supervise the administration of the Plan.
Subject to the express provisions of the Plan, all decisions made by
the Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole and absolute discretion and shall be final and binding upon all
persons, including the Company, its Subsidiaries and the Plan participants.
Section 3. Stock Subject to Plan
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 500,000 shares, and shall include
Restricted Stock previously granted by the Committee and Board. Such shares may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
If any shares of Stock that are subject to any Restricted Stock,
Deferred Stock or Other Stock-Based award are forfeited, such shares shall again
be available for distribution under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, extraordinary distribution with
respect to the Stock or other change in corporate structure affecting the Stock,
such substitution or adjustments shall be made in the aggregate number of shares
of Stock reserved for issuance under the Plan.
Subject to the provisions of the immediately preceding paragraph, the
maximum numbers of shares subject to Restricted Stock, Deferred Stock and other
Stock-Based awards to (i) all of the Company's directors and officers (as
determined in accordance with Rule 16a-1(f) of the Securities Exchange Act of
1934) as a group or (ii) each of the Company's chief executive officer and the
four other highest compensated executive officers who are employed by the
Company on the last day of any taxable year of the Company, shall be 250,000
shares during the term of the Plan.
Section 4. Eligibility
Directors, officers and other employees of the Company or any Parent or
Subsidiary (but excluding any person whose eligibility would adversely affect
the compliance of the Plan with the requirements of Rule 16b-3) who are at the
time of the grant of an award under the Plan employed by the Company or any
Subsidiary and who are responsible for or contribute to the management, growth
and/or profitability of the business of the Company or any Parent or Subsidiary,
are eligible to be granted awards under the Plan. Eligibility under the Plan
shall be determined by the Committee.
The Committee may, in its sole discretion, include additional
conditions and restrictions in connection with awards under the Plan. The grant
of an award under the Plan, and any determination made in connection therewith,
shall be made on a case by case basis and can differ among grantees. The grant
of an award under the Plan is a privilege and not a right and the determination
of the Committee can be applied on a non-uniform (discretionary) basis.
Section 5. Restricted Stock
(a) Grant and Exercise. Shares of Restricted Stock may be issued
either alone or in addition to or in tandem with other awards
granted under the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at which
grants of Restricted Stock will be made, the number of shares
to be awarded, the price (if any) to be paid by the recipient,
the time or times within which such awards may be subject to
forfeiture (the "Restriction Period"), the vesting schedule
and rights to acceleration thereof, and all other terms and
conditions of the awards. The Committee may condition the
grant of Restricted Stock upon the attainment of such factors
as the Committee may determine.
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(b) Terms and Conditions. Each Restricted Stock award shall be
subject to the following terms and conditions:
(i) Restricted Stock, when issued, will be represented by
a stock certificate or certificates registered in the
name of the holder to whom such Restricted Stock
shall have been awarded. During the Restriction
Period, the Restricted Stock shall be subject to such
restrictions, terms and conditions as may be
established by the Committee.
(ii) Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate
purposes, and the issuance thereof shall be made for
at least the minimum consideration (if any) necessary
to permit the shares of Restricted Stock to be deemed
to be fully paid and nonassessable. The holder will
have the right to vote such Restricted Stock, to
receive and retain all regular cash dividends and
other cash equivalent distributions as the Board may
in its sole discretion designate, pay or distribute
on such Restricted Stock and to exercise all other
rights, powers and privileges of a holder of Stock
with respect to such Restricted Stock, with the
exceptions that (A) other than regular cash dividends
and other cash equivalent distributions as the Board
may in its sole discretion designate, pay or
distribute, the Company will retain custody of all
distributions ("Retained Distributions") made or
declared with respect to the Restricted Stock (and
such Retained Distributions will be subject to the
same restrictions, terms and conditions as are
applicable to the Restricted Stock) until such time,
if ever, as the Restricted Stock with respect to
which such Retained Distributions shall have been
made, paid or declared shall have become vested and
with respect to which the Restriction Period shall
have expired; (B) the holder may not sell, assign,
transfer, pledge, exchange, encumber or dispose of
the Restricted Stock or any Retained Distributions
during the Restriction Period; and (C) a breach of
any of the restrictions, terms or conditions
contained in the Plan or any agreement referred to in
Section 5(b)(iv) below, or otherwise established by
the Committee with respect to any Restricted Stock or
Retained Distributions will cause a forfeiture of
such Restricted Stock and any Retained Distributions
with respect thereto. Notwithstanding anything to the
contrary in this Plan, the Committee may grant
Restricted Stock awards outright, without any
restrictions and conditions, except those
restrictions under federal securities laws.
(iii) Upon the expiration of the Restriction Period with
respect to each award of Restricted Stock and the
satisfaction of any other applicable restrictions,
terms and conditions (A) all or part of such
Restricted Stock shall become vested in accordance
with the terms of any agreement referred to in
Section 5(b)(iv) below or as otherwise established by
the Committee, and (B) any Retained Distributions
with respect to such Restricted Stock shall become
vested to the extent that the Restricted Stock
related thereto shall have become vested. Any such
Restricted Stock and Retained Distributions that do
not vest shall be forfeited to the Company and the
holder shall not thereafter have any rights with
respect to such Restricted Stock and Retained
Distributions that shall have been so forfeited.
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(iv) Restricted Stock awards may be confirmed by, and may
be subject to the terms of, an agreement executed by
the Company and the participant.
Section 6. Deferred Stock
(a) Grant and Exercise. Deferred Stock may be awarded either alone
or in addition to or in tandem with other awards granted under
the Plan. The Committee shall determine the eligible persons
to whom and the time or times at which Deferred Stock shall be
awarded, the number of shares of Deferred Stock to be awarded
to any person, the duration of the period (the "Deferral
Period") during which, and the conditions under which, receipt
of the Deferred Stock will be deferred, and all the other
terms and conditions of the awards. The Committee may
condition the grant of the Deferred Stock upon the attainment
of such factors or criteria as the Committee shall determine.
(b) Terms and Conditions. Each Deferred Stock award shall be
subject to the following terms and conditions:
(i) Subject to the provisions of the Plan, any agreement
referred to in Section 6(b)(vii) below and any
conditions otherwise established by the Committee,
Deferred Stock awards may not be sold, assigned,
transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the
Deferral Period (or the Additional Deferral Period
referred to in Section 6(b)(vi) below, where
applicable), share certificates shall be delivered to
the participant, or his legal representative, in a
number equal to the shares of Stock covered by the
Deferred Stock award.
(ii) As determined by the Committee at the time of award,
amounts equal to any dividends declared during the
Deferral Period (or the Additional Deferral Period
referred to in Section 6(b)(vi) below, where
applicable) with respect to the number of shares
covered by a Deferred Stock award may be paid to the
participant currently or deferred and deemed to be
reinvested in additional Deferred Stock.
(iii) Subject to the provisions of any agreement referred
to in Section 6(b)(vii) below and this Section 6 and
Section 11(g) below, upon termination of a
participant's employment with the Company or any
Parent or Subsidiary for any reason during the
Deferral Period (or the Additional Deferral Period
referred to in Section 6(b)(vi) below, where
applicable) for a given award, the Deferred Stock in
question will vest or be forfeited in accordance with
the terms and conditions established by the Committee
at the time of grant.
(iv) The Committee may, after grant, accelerate the
vesting of all or any part of any Deferred Stock
award and/or waive the deferral limitations for all
or any part of a Deferred Stock award.
(v) In the event of hardship or other special
circumstances of a participant whose employment with
the Company or any Parent or Subsidiary is
involuntarily terminated (other than for cause), the
Committee may waive in whole or in part any or all of
the remaining deferral limitations imposed hereunder
or pursuant to any agreement referred to in Section
6(b)(vii) below with respect to any or all of the
participant's Deferred Stock.
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(vi) A participant may request to, and the Committee may
at any time, defer the receipt of an award (or an
installment of an award) for an additional specified
period or until a specified period or until a
specified event (the "Additional Deferral Period").
Subject to any exceptions adopted by the Committee
such request must be made at least one year prior to
expiration of the Deferral Period for such Deferred
Stock award (or such installment).
(vii) Deferred Stock awards may be confirmed by, and may be
subject to the terms of, an agreement executed by the
Company and the participant.
Section 7. Other Stock-Based Awards
(a) Grant and Exercise. Other Stock-Based Awards, which may
include performance shares and shares valued by reference to
the performance of the Company or any Subsidiary, may be
granted either alone or in addition to or in tandem with
Restricted Stock or Deferred Stock. The Committee shall
determine the eligible persons to whom, and the time or times
at which, such awards shall be made, the number of shares of
Stock to be awarded pursuant to such awards, and all other
terms and conditions of the awards. The Committee may also
provide for the grant of Stock under such awards upon the
completion of a specified performance period.
(b) Terms and Conditions. Each Other Stock-Based Award shall be
subject to the following terms and conditions:
(i) Shares of Stock subject to an Other Stock-Based Award
may not be sold, assigned, transferred, pledged or
otherwise encumbered prior to the date on which the
shares are issued, or, if later, the date on which
any applicable restriction or period of deferral
lapses.
(ii) The recipient of an Other Stock-Based Award shall be
entitled to receive, currently or on a deferred
basis, dividends or dividend equivalents with respect
to the number of shares covered by the award, as
determined by the Committee at the time of the award.
The Committee may provide that such amounts (if any)
shall be deemed to have been reinvested in additional
Stock.
(iii) Any Other Stock-Based Award and any Stock covered by
any Other Stock-Based Award shall vest or be
forfeited to the extent so provided in any agreement
referred to in Section 7(b)(v) below or as otherwise
determined by the Committee.
(iv) In the event of the participant's retirement,
disability or death, or in cases of special
circumstances, the Committee may waive in whole or in
part any or all of the limitations imposed hereunder
(if any) with respect to any or all of an Other
Stock-Based Award.
(v) Other Stock-Based Awards may be confirmed by, and may
be subject to the terms of, an agreement executed by
the Company and by the participant.
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Section 8. Change of Control Provisions
(a) A "Change of Control" shall be deemed to have occurred on the
tenth day after:
(i) any individual, corporation or other entity or group
(as defined in Section 13(d)(3) of the Exchange Act),
becomes, directly or indirectly, the beneficial owner
(as defined in the General Rules and Regulations of
the Securities and Exchange Commission with respect
to Sections 13(d) and 13(g) of the Exchange Act) of
more than 50% of the then outstanding shares of the
Company's capital stock entitled to vote generally in
the election of directors of the Company; or
(ii) the commencement of, or the first public announcement
of the intention of any individual, firm, corporation
or other entity or of any group (as defined in
Section 13(d)(3) of the Exchange Act) to commence, a
tender or exchange offer subject to Section 14(d)(1)
of the Exchange Act for any class of the Company's
capital stock; or
(iii) the shareholders of the Company approve (A) a
definitive agreement for the merger or other business
combination of the Company with or into another
corporation pursuant to which the shareholders of the
Company do not own, immediately after the
transaction, more than 50% of the voting power of the
corporation that survives, or (B) a definitive
agreement for the sale, exchange or other disposition
of all or substantially all of the assets of the
Company, or (C) any plan or proposal for the
liquidation or dissolution of the Company;
provided, however, that a "Change of Control" shall not be
deemed to have taken place if beneficial ownership is acquired
(A) directly from the Company, other than an acquisition by
virtue of the exercise or conversion of another security
unless the security so converted or exercised was itself
acquired directly from the Company, or (B) by, or a tender or
exchange offer is commenced or announced by, the Company, any
profit-sharing, employee ownership or other employee benefit
plan of the Company; or any trustee of or fiduciary with
respect to any such plan when acting in such capacity.
(b) In the event of a "Change of Control" as defined in Section
8(a) above, all restrictions and deferral limitations
contained in Restricted Stock, Deferred Stock and Other
Stock-Based Awards granted under the Plan shall lapse, unless
the provisions of this Section 8 are suspended or terminated
by an affirmative vote of a majority of the Board prior to the
occurrence of such a "Change of Control."
Section 9. Amendments and Termination
The Board may at any time, and from time to time, amend any of the
provisions of the Plan, and may at any time suspend or terminate the Plan. The
Committee may amend the terms of any award heretofore granted under the Plan;
provided, however, that subject to Section 3 above, no such amendment may be
made by the Committee which in any material respect impairs the rights of the
participant without the participant's consent, except for such amendments which
are made to cause the Plan to qualify for the exemption provided by Rule 16b-3.
Section 10. Unfunded Status of Plan
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant by the Company, nothing contained herein shall give any such
participant any rights that are greater than those creditor of the Company.
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Section 11. General Provisions
(a) The Committee may require each person acquiring shares of
Stock pursuant to an award under the Plan to represent to and
agree with the Company in writing that the participant is
acquiring the shares for investment without a view to
distribution thereof.
All certificates for shares of Stock delivered under the Plan
shall be subject to such stop transfer orders and other
restrictions as the Committee may deem to be advisable under
the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange or
association upon which the Stock is then listed or traded, any
applicable Federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate
reference to such restrictions.
(b) Nothing contained in the Plan shall prevent the Board from
adopting such other or additional incentive arrangements as it
may deem desirable, including, but not limited to, the
granting of stock options and the awarding of stock and cash
otherwise than under the Plan; and such arrangements may be
either generally applicable or applicable only in specific
cases.
(c) Nothing contained in the Plan or in any award hereunder shall
be deemed to confer upon any employee of the Company or any
Parent or Subsidiary any right to continued employment with
the Company or any Parent or Subsidiary, nor shall it
interfere in any way with the right of the Company or any
Parent or Subsidiary to terminate the employment of any of its
employees at any time.
(d) No later than the date as of which an amount first becomes
includable in the gross income of the participant for Federal
income tax purposes with respect to any award under the Plan,
the participant shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any
Federal, state and local taxes of any kind required by law to
be withheld or paid with respect to such amount. If permitted
by the Committee tax withholding or payment obligations may be
settled with Stock, including Stock that is part of the award
that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional
upon such payment or arrangements, and the Company shall, to
the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to the
participant from the Company or any Parent or Subsidiary.
(e) The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws
of the State of New York (without regard to choice of law
provisions).
(f) Any award made under the Plan shall not be deemed compensation
for purposes of computing benefits under any retirement plan
of the Company or any Parent or Subsidiary and shall not
affect any benefits under any other benefit plan now or
subsequently in effect under which the availability or amount
of benefits is related to the level of compensation (unless
required by specific reference in any such other plan to
awards under the Plan).
(g) A leave of absence, unless otherwise determined by the
Committee prior to the commencement thereof, shall not be
considered a termination of employment. Any awards made under
the Plan shall not be affected by any change of employment, so
long as the holder continues to be an employee of the Company
or any Parent or Subsidiary.
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(h) Except as otherwise expressly provided in the Plan or in any
agreement, no right or benefit under the Plan may be
alienated, sold, assigned, hypothecated, pledged, exchanged,
transferred, encumbranced or charged, and any attempt to
alienate, sell, assign, hypothecate, pledge, exchange,
transfer, encumber or charge the same shall be void. No right
or benefit hereunder shall in any manner be subject to the
debts, contracts or liabilities of the person entitled to such
benefit.
(i) The obligations of the Company with respect to all awards
under the Plan shall be subject to (A) all applicable laws,
rules and regulations, and such approvals by any governmental
agencies as may be required, and (B) the rules and regulations
of any securities exchange or association on which the Stock
may be listed or traded.
(j) If any of the terms or provisions of the Plan conflicts with
the requirements of Rule 16b-3 as in effect from time to time,
or with the requirements of any other applicable law, rule or
regulation, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the
requirements of said Rule 16b-3.
Section 12. Effective Date of Plan
The Plan shall be effective as of the date of the approval and adoption
thereof at a meeting of the Board, provided that the Plan shall cover Restricted
Stock previously granted by the Committee and Board.
Section 13. Term of Plan
No award shall be granted pursuant to the Plan after the tenth
anniversary of the effective date of the Plan, but awards granted on or prior to
such tenth anniversary may extend beyond that date.
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