<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-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, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
April 6, 1999
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of Take-Two Interactive Software, Inc. (the "Company") which will be held on
Friday, April 30, 1999 at 10:00 A.M. local time at 575 Broadway, New York, New
York 10012.
The Notice of Annual Meeting and Proxy Statement which follow describe
the business to be conducted at the meeting.
Your Board of Directors unanimously believes that (i) the election of
the nominees as directors; and (ii) the approval of an amendment to the
Company's 1997 Stock Option Plan to increase the number of shares reserved for
issuance thereunder are in the best interests of the Company and its
stockholders and, accordingly, recommends a vote "FOR" the foregoing proposals
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 40 Wall Street, New
York, New York 10004.
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,
Ryan A. Brant
Chief Executive Officer
<PAGE>
TAKE-TWO INTERACTIVE SOFTWARE, INC.
575 Broadway
New York, New York 10012
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY, APRIL 30, 1999
--------------------
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, April 30, 1999, at 10:00 A.M. local time at 575 Broadway, New
York, New York 10012, for the following purposes:
1. To elect six 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 approve an amendment to the
Company's 1997 Stock Option Plan to increase the number of shares of Common
Stock reserved for issuance thereunder from 2,000,000 to 3,500,000; 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 April 5, 1999
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors,
Ryan A. Brant
Chief Executive Officer
April 6, 1999
- -------------------------------------------------
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.
<PAGE>
TAKE-TWO INTERACTIVE SOFTWARE, INC.
575 Broadway
New York, New York 10012
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, APRIL 30, 1999
This proxy statement (the "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, April 30, 1999,
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 April 8, 1999.
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.
Any 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)
941-2988.
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on April 5, 1999
(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 18,676,885 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 voting as a single class, 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 amendment to the Company's 1997 Stock Option
Plan requires the affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy 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 the Company or
American Stock Transfer & Trust Company, the Company's transfer agent.
- 1 -
<PAGE>
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.
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 such persons may be reimbursed for their
expenses by the Company. Proxies may also 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.
ELECTION OF DIRECTORS
At this year's Annual Meeting of Stockholders, six directors will be
elected to hold office for a term expiring at the Annual Meeting of Stockholders
to be held in 2000. It is the intention of the Board of Directors to nominate
Ryan A. Brant, Oliver R. Grace, Jr., Neil S. Hirsch, Kelly Sumner, Robert Flug
and Anthony R. Williams 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.
Following is information with respect to the nominees for directors:
Ryan A. Brant, age 27, has been Chief Executive Officer and a director
of the Company since its inception. Mr. Brant received a B.S. degree in
Economics from the University of Pennsylvania's Wharton School of Business.
Anthony R. Williams, age 40, has been a director of the Company since
March 1998. Mr. Williams has been Chief Operating Officer of the Company since
February 1998. Prior to joining the Company, Mr. Williams was employed in
various position at Acclaim Entertainment from April 1988 to February 1998, most
recently as Executive Vice President, Mergers and Acquisitions. Mr. Williams
also serves as a director of the Near East Foundation. Mr. Williams received a
B.A. in Economics from Cambridge University.
Oliver R. Grace, Jr., age 45, 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
- 2 -
<PAGE>
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.
Neil S. Hirsch, age 51, has been a director of the Company since May
1995. Mr. Hirsch has been the President and Chief Executive Officer of Loanet,
Inc., a worldwide communications network managing securities lending
transactions of banks and brokerage firms since March 1994. From 1969 to January
1990, Mr. Hirsch was Chairman, Chief Executive Officer and President of
Telerate, Inc., a financial information provider, which was acquired by Dow
Jones & Co. Inc. Mr. Hirsch served as a consultant to Telerate, Inc. until
September 1993. Mr. Hirsch served on the Board of Directors of Dow Jones & Co.
Inc. from 1990 to May 1993. Mr. Hirsch was elected to the Information Industry
Hall of Fame in 1985.
Kelly Sumner, age 37, has been a director of the Company since December
1997. Mr. Sumner has been President of Take-Two Interactive Software Europe
Limited, a subsidiary of the Company, since July 1997 and Vice President of
International Operations of the Company since February 1999. 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 was Managing Director of the UK
subsidiary of Commodore Business Machines.
Robert Flug, age 51, 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.
Following is information with respect to certain of the Company's
officers:
Larry Muller, age 41, has been Chief Financial Officer of the Company
since January 1999 and Chief Financial Officer and Chief Operating Officer of
Jack of All Games, Inc. (formerly known as Alliance Inventory Management, Inc.),
a subsidiary of the Company, since December 1997. Mr. Muller co-founded Alliance
Distributors in 1989 and served as its Chairman and Chief Financial Officer
until Alliance Distributors was acquired by the Company in December 1997. Mr.
Muller received a B.A. in Economics from Stonybrook University in 1979.
Barbara A. Ras, CPA, age 36, has served as the Chief Accounting Officer
of the Company since October 1998 and Secretary of the Company since April 1997.
From October 1994 to October 1998, Ms. Ras served as Controller of the Company.
Prior to joining the Company, Ms. Ras was employed as a tax accountant from
September 1992 to September 1994, and as an internal auditor with The New York
Times Company from March 1988 to June 1991. Ms. Ras holds a B.S. degree in
Accounting from St. John's University, and a Masters degree in Taxation from the
State University of New York at Albany.
During the fiscal year ended October 31, 1998, the Board of Directors
held four meetings. The meetings were attended by all of the directors, either
in person or by telephone, except that Messrs. Hirsch and Flug were absent for
one meeting. In addition, the Board took other action by unanimous written
consent. The Company has established a Compensation Committee and an Audit
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 Company's Executive Officers' compensation and make
recommendations to the Board of Directors regarding executive compensation. The
Audit Committee of the Board of Directors supervises the audit and financial
procedures of the Company. Both the Compensation Committee and the Audit
Committees are comprised of Messrs. Brant, Grace and Flug, and neither held any
meetings during the fiscal year ended October 31, 1998. The Company does not
have a nominating committee.
- 3 -
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the Company
during the fiscal years ended October 31, 1996, 1997 and 1998 to its Chief
Executive Officer and its 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, 1998 (the "Named Executives"):
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Award
Annual Compensation ------------
------------------------------------------------------------------ Securities
Year Ended Other Annual Underlying
Name and Principal Position October 31, Salary($) Bonus($) Compensation(1) Options(#)
- --------------------------- ----------- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Ryan A. Brant
Chief Executive Officer............. 1998 158,667 218,785 -- --
1997 125,000 -- -- 50,000(2)
1996 119,319 -- -- --
Larry Muller
Chief Financial Officer(3).......... 1998 161,933 25,122 -- 20,000(2)
Anthony R. Williams
Chief Operating Officer(4).......... 1998 164,039(5) -- -- 150,000(6)
Barbara A. Ras
Chief Accounting Officer
and Secretary..................... 1998 114,167 -- -- 30,000(2)
1997 100,000 10,000 -- 25,000(2)
1996 82,233 -- -- --
Kelly Sumner
Vice President of International
Operations(7)..................... 1998 166,220 119,175 -- 125,000(8)
1997 43,447 51,106 -- --
</TABLE>
- ------------
(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) Represents options granted under the Company's 1997 Stock Option Plan.
(3) Mr. Muller joined the Company in December 1997.
(4) Mr. Williams joined the Company in February 1998.
(5) Includes $15,200 paid as consulting fees prior to employment with the
Company.
(6) Represents options to purchase 120,000 shares granted under the Company's
1997 Stock Option Plan and non-plan options to purchase 30,000 shares.
(7) Mr. Sumner joined the Company in July 1997.
(8) Represents options to purchase 85,000 shares granted under the Company's
1997 Stock Option Plan and non-plan options to purchase 40,000 shares.
- 4 -
<PAGE>
The following table sets forth information concerning options granted in
the fiscal year ended October 31, 1998 to the Named Executives:
Option Grants in Fiscal Year Ended October 31, 1998
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------
Number of Potential Realizable
Securities Percent of Total Value at Assumed
Underlying Options Granted Exercise Annual Rates of Stock
Options to Employees in Price Expiration Price Appreciation for
Name Granted (#) Fiscal Year(%) ($/Sh) Date Option Term (1)
- ---- ----------- ---------------- -------- ---------- ------------------------
5%($) 10%($)
----- ------
<S> <C> <C> <C> <C> <C> <C>
Ryan A. Brant............ -- -- -- -- -- --
Larry Muller............. 20,000 1.2 5.1875 8/31/2003 28,600 63,400
Anthony R. Williams...... 30,000 2.50 8/31/2003 20,700 45,900
120,000 9.1 5.1875 8/31/2003 171,600 380,400
Barbara A. Ras........... 30,000 1.8 5.1875 8/31/2003 42,900 95,100
Kelly Sumner............. 40,000 5.00 12/31/2002 55,200 122,000
85,000 7.6 5.1875 12/31/2002 121,550 269,450
</TABLE>
- -------------------
(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 Company's 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 nontransferability 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.
The following table sets forth information concerning the value of
options exercised during the fiscal year ended October 31, 1998 and the value of
unexercised stock options held by the Named Executives as of October 31, 1998:
Aggregated Option Exercises and Year End Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Value Unexercised Options In-the-Money Options
Shares Realized at October 31, 1998 (#) at October 31, 1998 ($)*
Acquired on -------- ---------------------------------- --------------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------- ---------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ryan A. Brant.......... 112,000 642,960 391,880 30,000 2,095,090 30,000
Larry Muller........... -- -- -- 20,000 -- 26,250
Anthony R. Williams.... -- -- -- 150,000 -- 277,500
Barbara A. Ras......... -- -- 70,243 25,000 205,844 35,625
Kelly Sumner........... -- -- 10,000 115,000 15,000 156,563
</TABLE>
* 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 $6.50 on October 31, 1998.
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<PAGE>
Director Compensation
Non-employee directors currently receive no cash compensation for
serving on the Board of Directors other than reimbursement of reasonable
expenses incurred in attending meetings. In December 1998, the Company issued to
Mr. Flug options to purchase 10,000 shares of Common Stock at a price of $5.875
per share.
Employment Agreements
Ryan A. Brant entered into an employment agreement with the Company for
a five-year term commencing August 1, 1998. Pursuant to the employment
agreement, Mr. Brant agreed to devote his full time to the business of the
Company as its Chief Executive Officer. The employment agreement provides that
Mr. Brant is entitled to receive a base salary of $233,000 and a bonus equal to
$20,000 per fiscal quarter in the event the Company achieves certain earnings
levels. The Company also agreed to issue to Mr. Brant options to purchase
100,000 shares of Common Stock at an exercise price of $6.25 per share. In the
event the employment agreement is terminated under certain circumstances
(including in the event of a change of control), Mr. Brant will be entitled to
receive certain severance compensation. Mr. Brant's employment agreement
contains confidentiality and non-competition provisions.
Anthony R. Williams entered into an employment agreement with the
Company for a three-year term commencing August 1, 1998. Mr. Williams agreed to
devote his full time to the Company's business as its Chief Operating Officer.
The employment agreement provides that Mr. Williams is entitled to receive a
base salary of $233,000 and a bonus based on the Company's financial
performance. In the event the employment agreement is terminated under certain
circumstances (including in the event of a change of control), Mr. Williams will
be entitled to receive certain severance compensation. The employment agreement
with Mr.
Williams contains confidentiality and non-competition provisions.
Larry Muller entered into an employment agreement with the Company for
a three-year term commencing January 29, 1998. Mr. Muller agreed to devote his
full time to the business of the Company as its Chief Financial Officer. The
agreement provides that Mr. Muller is entitled to receive a base salary of
$233,000 and a bonus based on the Company's financial performance. The Company
also agreed to issue Mr. Muller options to purchase 10,000 shares of Common
Stock at an exercise price of $5.875 per share. In the event the employment
agreement is terminated under certain circumstances (including in the event of a
change of control), Mr. Muller will be entitled certain severance compensation.
Mr. Muller's employment agreement contains confidentiality and non-competition
provisions.
In July 1997, Take-Two Interactive Software Europe Limited, a
wholly-owned subsidiary of the Company, entered into an employment agreement
with Kelly Sumner, an executive officer of Take-Two Interactive Software Europe
Limited, Vice President of International Operations of the Company and a
director of the Company, pursuant to which Mr. Sumner agreed to devote his full
time as President and Managing Director for a three-year term. The agreement
provides that Mr. Sumner is entitled to an annual salary of $233,000 and a bonus
equal to $15,000 per fiscal quarter in the event Take-Two Interactive Software
Europe Limited achieves certain earnings levels. Mr. Sumner's employment
agreement contains confidentiality and non-competition provisions.
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<PAGE>
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 5, 1999,
relating to the beneficial ownership of shares of Common Stock by (i) each
person or entity who is known by the Company to own beneficially 5% or more of
the outstanding Common Stock, (ii) each of the Company's directors, (iii) each
of the Named Executives and (iv) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage of Outstanding
of Common Stock Common Stock
Name and Address of Beneficial Owner(1) Beneficially Owned(2) Beneficially Owned
- --------------------------------------- --------------------- -------------------------
<S> <C> <C>
Peter M. Brant(3)............................... 3,048,749 16.3%
BMG Entertainment............................... 1,850,000 9.9
Robert Alexander(4)............................. 1,425,000 7.6
David Rosenbaum(5).............................. 1,252,500 6.7
Oliver R. Grace, Jr.(6)......................... 781,338 4.2
Ryan A. Brant(7)................................ 718,563 3.8
Neil S. Hirsch(8)............................... 222,276 1.2
Larry Muller(9)................................. 164,167 *
Robert Flug(10)................................. 110,000 *
Anthony R. Williams(11)......................... 100,000 *
Barbara A. Ras(12).............................. 70,243 *
Kelly Sumner(13)................................ 62,500 *
All directors and executive officers as a
group (eight persons)(14)....................... 2,229,087 11.5
</TABLE>
- ------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is 575
Broadway, New York, New York 10012.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities which may be acquired by such person within
60 days from the date of this proxy statement upon the exercise of options,
warrants or convertible securities. 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) Includes 1,941,930 shares of Common Stock held by Brant Allen Industries
Incentive Profit Sharing Plan.
- 7 -
<PAGE>
(4) Includes 50,000 shares of Common Stock issuable upon the exercise of
options granted under the 1997 Plan which are currently exercisable.
(5) Includes 15,000 shares of Common Stock issuable upon the exercise of
options granted under the 1997 Plan which are currently exercisable.
(6) Includes: (i) 653,678 shares of Common Stock owned of record by Anglo
American Security Fund, L.P. ("Anglo American"), of which Mr. Grace is a
general partner, (ii) 17,960 shares of Common Stock issuable upon the
exercise of options owned by Anglo American, (iii) 88,913 shares of Common
Stock owned by an affiliated entity and (iv) 20,787 shares of Common Stock
issuable upon the exercise of options owned by Mr. Grace.
(7) Includes (i) 371,880 shares of Common Stock issuable upon the exercise of
options granted under the 1994 Plan which are currently exercisable and
(iii) 80,000 shares of Common Stock issuable upon the exercise of options
granted under the 1997 Plan which are currently exercisable.
(8) Represents shares of Common Stock held by Bridgehampton Holdings, Inc., an
entity controlled by Mr. Hirsch.
(9) Includes 16,667 shares of Common Stock issuable upon the exercise of
options granted under the 1997 Plan which are currently exercisable.
(10) Includes 48,500 shares of Common Stock held by S.L. Danielle, Inc. and
10,000 shares of Common Stock issuable upon the exercise of options granted
under the 1997 Plan which are currently exercisable.
(11) Represents 60,000 shares of Common Stock issuable upon the exercise of
options granted under the 1997 Plan which are currently exercisable and
15,000 shares of Common Stock issuable upon the exercise of non-plan
options which are currently exercisable.
(12) Includes 40,000 shares of Common Stock issuable upon the exercise of
options granted under the 1997 Plan, which are currently exercisable.
(13) Represents 62,500 shares of Common Stock issuable upon the exercise of
options.
(14) Includes currently exercisable options to purchase an aggregate of 694,794
shares of Common Stock.
- 8 -
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with a private financing in September 1996, Peter M.
Brant, a principal stockholder of the Company, Neil Hirsch, a director of the
Company, and Anglo American, of which Oliver R. Grace, Jr., a director of the
Company, is a general partner, purchased $1,565,180, $72,228 and $212,867,
respectively, principal amount of notes and received five-year warrants to
purchase 312,339, 14,413 and 42,387 shares, respectively, at an exercise price
of $.01 per share. In April 1997, the Company repaid $212,867 principal amount
of such notes to Anglo American. In January 1997, Peter M. Brant agreed to
extend the repayment of his portion of such notes until May 14, 1998, in
consideration for which extension, the interest rate on the note held by Mr.
Brant was increased to 14% per annum. In October 1998, the Company repaid
$72,228 principal amount of such notes to Mr. Hirsch. In August 1997, the
Company repaid $750,000 principal amount of such indebtedness to Mr. Brant and,
in September 1997, obtained bank financing to repay the balance of $815,180
principal amount of such indebtedness.
The Company leases its office space in New York from 575 Broadway
Corporation, a corporation controlled by Peter M. Brant.
In February 1997, Anglo American, of which Oliver R. Grace, Jr., a
director of the Company, is a general partner, agreed to convert shares of
Series B Convertible Preferred Stock into 409,791 shares of Common Stock. As an
inducement to enter into such agreement, the Company issued to Anglo American
options to purchase 38,746 shares of Common Stock at an exercise price of $2.41
per share. In addition, the Company entered into a three-year consulting
agreement with an affiliate of Anglo American, pursuant to which such affiliate
agreed to provide management consulting services to the Company in consideration
of the payment of $100,000 over the term of the agreement, of which $33,333 was
paid in April 1997 and $16,667 was paid in fiscal 1998. The Company also paid
$35,000 to Anglo American in dividends on the Series B Preferred Stock.
The Company believes that all of such transactions and arrangements
were advantageous to the Company and were on terms no less favorable to the
Company than could have been obtained from unaffiliated third parties.
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<PAGE>
PROPOSAL I
AMENDMENT OF 1997 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES RESERVED FOR
ISSUANCE THEREUNDER FROM 2,000,000 TO 3,500,000
At the Annual Meeting, the Company's stockholders will be asked to
approve an amendment to the Company's 1997 Stock Option Plan to increase the
number of shares of Common Stock reserved for issuance under the Plan from
2,000,000 to 3,500,000.
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 the 1997 Stock Option Plan 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 increase the number of options which may be
granted under the 1997 Stock Option Plan. The Board believes that such authority
will provide the Company with significant means to attract and retain talented
personnel and maintain current key employees.
Summary of the 1997 Stock Option Plan
In January 1997, the stockholders of the Company approved the 1997
Stock Option Plan, as adopted by the Board of Directors, and as amended in April
1998, pursuant to which officers, directors, employees and consultants of the
Company are eligible to receive incentive stock options and non-qualified stock
options to purchase up to an aggregate of 2,000,000 shares of Common Stock. As
of February 16, 1999, no options were available for grant pursuant to the 1997
Stock Option Plan.
The 1997 Stock Option Plan provides that the exercise price of each
incentive stock option 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 stockholders who
own more than 10% of the outstanding Common Stock), and requires that options
expire not later than the tenth anniversary of the date of grant (the fifth
anniversary in the case of 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 or engages in or is involved with
any business similar to that of the Company, such option holder's incentive
options immediately terminate. Pursuant to the provisions of the 1997 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.
The 1997 Stock Option Plan requires that the exercise price of all
non-qualified stock options be at least equal to 100% of the fair market value
of the Common Stock on the date of grant, provided that non-qualified options
may be issued at a lower exercise price (but in no event less than 85% of fair
market value) if the net pre-tax income of the Company in the full fiscal year
immediately preceding the date of grant exceeded 125% of the mean annual average
net pre-tax income of the Company for the three fiscal years immediately
preceding such year. Non-qualified options must have an expiration date not
later than the eighth anniversary of the date of the grant. With certain limited
exceptions, in the event that the option holder ceases to be associated with the
Company or engages in or becomes involved with any business similar to that of
the Company, such option holder's non-qualified options immediately terminate.
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<PAGE>
Certain Federal Income Tax Consequences of the 1997 Stock Option Plan
The following is a brief summary of the Federal income tax aspects of
grants made under the 1997 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. See "Non-Qualified and Non-Plan Stock Options."
2. Non-Qualified and Non-Plan Stock Options. With respect to
Non-Qualified and Non-Plan 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.
The approval of the proposed amendment to the Company's 1997 Stock
Option Plan requires the affirmative vote of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting, provided
a quorum exists.
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<PAGE>
The Board believes that the Proposed Amendment to the 1997 Stock
Option Plan will help the Company attract and retain qualified officers,
directors and key employees. Accordingly, the Board believes that the Amendment
to the 1997 Stock Option Plan is in the best interest of the Company and
unanimously recommends a vote FOR its approval.
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<PAGE>
INDEPENDENT AUDITORS
PriceWaterhouseCoopers LP are the Company's independent auditors who
reported on the financial statements of the Company for the fiscal years ended
October 31, 1997 and 1998. It is currently anticipated that
PriceWaterhouseCoopers LP 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, 1999. Representatives of PriceWaterhouseCoopers LP are expected to
be present at the Annual Meeting, will have the opportunity to make a statement
if they desire to do so, and are expected to 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 2000
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 December 1, 1999 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 FOR THE YEAR ENDED OCTOBER 31,
1998 IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF RECORD AS OF THE CLOSE
OF BUSINESS ON APRIL 5, 1999. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-
KSB WILL BE PROVIDED FOR A NOMINAL CHARGE UPON WRITTEN REQUEST TO:
TAKE-TWO INTERACTIVE SOFTWARE, INC.
575 BROADWAY
NEW YORK, NEW YORK 10012
ATTENTION: BARBARA RAS, CHIEF ACCOUNTING 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,
Ryan A. Brant
Chief Executive Officer
April 6, 1999
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