Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
March
3, 2008, the Compensation Committee of the Board of Directors (the “Board”) of
Take-Two Interactive Software, Inc. (the “Company”) adopted the Take-Two
Interactive Software, Inc. Change in Control Employee Severance Plan (the
“Plan”). The Plan provides that, except as set forth in the next sentence, all
employees of the Company and its affiliates (collectively, the “Employer”),
including those in countries other than the United States, on the date of a
Change in Control (as defined below) will be entitled to receive certain
payments and benefits if their employment is terminated under the circumstances
described below following a Change in Control. Individuals who are providing
services to the Company pursuant to the Management Agreement between the Company
and ZelnickMedia Corporation dated March 30, 2007, as amended, will not be
eligible to receive benefits under the Plan. The foregoing includes Strauss
Zelnick, Executive Chairman, Ben
Feder, Chief
Executive Officer, and Karl
Slatoff, Executive
Vice President.
The
Plan
provides that in the event of a termination without Cause (as defined below)
or
for Good Reason (as defined below) within 12 months following a Change in
Control, employees covered in the categories set forth in the chart below will
receive, at a minimum:
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·
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severance
payments paid in installments during the applicable Continuation
Period
set forth in the chart below following the date of their termination
of
employment, in an amount equal to:
|
- the
employees’ (i) base salary plus (ii) annual bonus for the year in which a Change
in Control occurs, as in effect immediately prior to the Change in Control,
and
with any bonus that is based on a range and/or subject to the achievement
of
performance goals deemed achieved at the target level without regard to the
actual level of performance achieved; times
- the
applicable multiple set forth in the chart below; and
|
·
|
continued
group health plan coverage pursuant to COBRA paid by the Company
during
the applicable Continuation Period, or until the earlier of the employee
ceasing to be eligible for COBRA or becoming eligible under a subsequent
employer’s health plan:
|
|
Category
|
Employees
|
Multiple
|
Continuation
Period
|
|
Tier
1
|
Chief
Executive Officer, Section 16 officers and any other employee designated
by the Company
|
1.5
|
18
months
|
|
Tier
2
|
Senior
Vice Presidents, Studio Heads and any other employee designated by
the
Company
|
1.0
|
12
months
|
|
Tier
3
|
Vice
Presidents and any other employee designated by the
Company
|
0.5
|
6
months
|
All
other
employees will be in Tier 4 and upon a termination of their employment
without Cause within 12 months following a Change in Control, such employees
will receive, at a minimum, severance payments equal to two
weeks
of base salary for every completed year of service (maximum of 26 weeks), paid
in installments over the same period.
In
addition to the foregoing, the Plan provides that employees eligible for
benefits under the Plan will receive accelerated vesting of all unvested equity
awards held by the employee at the time of the Change in Control. Such vesting
will occur upon termination of their employment without Cause or, other than
in
the case of employees in Tier 4, for Good Reason, and in each case, within
12
months following a Change in Control.
The
Plan
provides that all severance benefits will be provided in a manner intended
to
comply with, or be exempt from, Section 409A of the Internal Revenue Code,
including delaying certain benefits to specified employees for a period of
six
months following termination. Severance benefits provided under the Plan will
be
subject to reduction to avoid any excise tax on “parachute payments” under
Section 280G of the Internal Revenue Code if the employee would benefit from
such reduction as opposed to paying the excise tax. Employees with separate
severance agreements will receive, on a benefit-by-benefit basis, the greater
of
the benefits under the Plan and the benefits under such agreement. All
employees who accept severance payments and, if applicable, the continued health
coverage under the Plan will be required to sign a release
and will be subject to restrictions on the solicitation of employees and
customers of the Company for a period of six months following termination and
a
non-disparagement obligation. In addition, all employees who accept any benefits
under the Plan will be
subject to a duty to reasonably cooperate with the Company in any litigation
as
to
matters which the employee was personally involved.
The
Company's management, with the approval of the chairman of the Compensation
Committee of the Board, may at any time prior to a Change in Control, adopt
special guidelines and provisions for foreign employees to comply with the
applicable laws of such other countries.
The
Plan
shall not reduce any statutory or contractual payment or benefit that employees
are entitled to receive uopn a termination of employment in accordance with
applicable law.
The
Plan
may be terminated or amended at any time, except that (i) the Plan may not
be
terminated or amended to reduce benefits under the Plan prior to the Plan’s 18
month anniversary and (ii) the Plan cannot be amended or terminated during
a
period of 18 months following the occurrence of (x) a Change in Control or
(y)
the date the Company enters into a definitive agreement that could result in
a
Change in Control, unless the potential Change in Control is abandoned (as
publicly announced by the Company), and further in the case of (x) or (y) above,
the Plan cannot be terminated until all severance benefits under the Plan have
been paid.
For
the
purposes of the Plan, the following terms will have the meanings set forth
below:
“Cause”
means the occurrence of any of the following:
|
·
|
continued
failure to substantially perform duties following notice requesting
performance;
|
|
·
|
a
criminal conviction for engaging in criminal misconduct demonstrably
injurious to the Employer;
|
|
·
|
conviction
of a felony;
|
|
·
|
gross
negligence affecting the Employer;
or
|
|
·
|
failure
to adhere to the Employer’s written policies or to cooperate in any
investigation or inquiry involving the
Employer.
|
A
“Change
in Control” will be deemed to have occurred if any of the following have
occurred:
|
·
|
an
acquisition of 50% of either the Company’s outstanding shares of common
stock or the combined voting power of the Company’s then outstanding
securities;
|
|
·
|
a
change in the majority of the Board in a two-year period (unless the
new members are supported by 2/3 of the directors then still in office
who
either were directors at the beginning of the two-year period or
whose
election or nomination for election was previously so
approved);
|
|
·
|
a
merger or consolidation resulting in a change of more than 50% of
the
combined voting power of the voting securities of the Company or
such
surviving entity or such surviving entity’s parent outstanding immediately
after such merger or consolidation;
or
|
|
·
|
stockholder
approval of an agreement for the sale or disposition of all or
substantially all of the Company's
assets.
|
Only
one
Change in Control may occur under the Plan.
“Good
Reason”
means
the occurrence of any of the following events without the employee’s express
written consent, provided the employee provides notice of event within 90 days
after the employee has knowledge of the event and event is not fully corrected
in all material respects within 30 days following notice:
|
·
|
a
material diminution in
base
salary;
|
|
·
|
a
material diminution in authority, duties or
responsibilities;
|
|
·
|
a
material diminution in the authority, duties, or responsibilities
of the
supervisor the employee reports to, including a requirement to report
to a
corporate officer or an employee instead of reporting directly to
the
Board;
|
|
·
|
a
material diminution in the budget over which the employee retains
authority;
|
|
·
|
a
relocation of the employee’s principal business location more than 50
miles from the employee’s principal business location immediately prior to
the Change in Control;
|
|
·
|
any
other action or inaction that constitutes a material breach by the
Employer of the Plan or of an employment agreement between the Employer
and the employee; or
|
|
·
|
if
the employee has a separate severance agreement, then the occurrence
of
any event that constitutes good reason under such
agreement.
|
The
foregoing description of the Plan is only a summary and is qualified in its
entirety by reference to the Plan, a copy of which is attached as
Exhibit 10.1 hereto and incorporated by reference into this Item 5.02.
Item
7.01. Regulation FD Disclosure.
On
March
7, 2008, Strauss Zelnick, Executive Chairman of Take-Two Interactive Software,
Inc. (the “Company”), and Ben Feder, Chief Executive Officer of the Company,
distributed an email to the employees of the Company regarding the Company’s
adoption of the Take-Two Interactive Software, Inc. Change in Control Employee
Severance Plan (the “Plan”).
A
copy of
the email sent to Company employees is furnished with this Form 8-K and attached
hereto as Exhibit 99.1. Exhibit 99.1 shall not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or otherwise subject to the liabilities under that Section
and shall not be deemed to be incorporated by reference into any filing of
the
Company under the Securities Act of 1933, as amended, or the Exchange Act.
Item
9.01 Financial
Statements and Exhibits.
|
(d)
|
Exhibits:
|
||
|
|
|||
|
10.1
|
Take-Two
Interactive Software, Inc. Change in Control Employee Severance
Plan
|
||
|
99.1
|
Email
from the Executive Chairman and Chief Executive Officer to Take-Two
Interactive Software, Inc. Employees dated March 7,
2008.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
TAKE-TWO
INTERACTIVE SOFTWARE, INC.
|
|
|
|
(Company)
|
|
|
|
By:
|
/s/
Daniel P. Emerson
|
|
|
Daniel
P. Emerson
|
|
|
|
Vice
President, Associate General Counsel and
Secretary
|
|
|
Date:
March 7, 2008
|
||
EXHIBIT
INDEX
|
Exhibit
|
Description
|
|
10.1
|
Take-Two
Interactive Software, Inc. Change in Control Employee Severance
Plan
|
|
99.1
|
Email
from the Executive Chairman and Chief Executive Officer to Take-Two
Interactive Software, Inc. Employees dated March 7,
2008.
|