Take-Two Settles Class-Action Lawsuit with Stockholder

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Take-Two was being sued by one of its stockholders, a Mr. Patrick Solomon who on March 7, 2008 filed a purported class action complaint in the Court of Chancery of the State of Delaware (the " Delaware Court ") against Take-Two and certain of its officers and directors (the " Solomon Stockholder Complaint ").

NOTE: It’s a lot of reading but I thought it was quite interesting. In the end Take-Two did not agree there was any wrongdoing and have not made any payments. I did edit some of this for brevity as I’m sure most of you wouldn’t read through the whole thing. Now that I’ve given you the conclusion you needn’t read on if you don’t wish to do so.

He alleged that there was some wrong doing in Take-Two’s refusal to explore premium offers by Electronic Arts, Inc. who wanted to acquire all outstanding share of the company’s Common Stock.

In April 2008, St. Clair Shores General Employees Retirement System, a stockholder, filed a purported derivative action on behalf of the Company in the Delaware Court against the directors and ZelnickMedia. The allegations are essentially the same as those in the Solomon Stockholder Complaint, with an additional complaint about the "poison pill" of six months duration adopted by our board in March 2008, and an additional claim against ZelnickMedia for aiding and abetting the directors’ alleged breach of fiduciary duty. Because the action was duplicative, the plaintiff agreed to stay all proceedings in the case in favor of the Solomon case. Also in April 2008, Michael Maulano, an alleged stockholder, filed a purported class action in New York Supreme Court, New York County, against us and our directors. This action was also stayed in favor of the Solomon Stockholder Complaint.

Take-Two believes none of the claims have merit.

        On December 19, 2008, the plaintiff filed a supplement to the Solomon Stockholder Complaint, which added ZelnickMedia as a defendant. The supplement contained allegations that the disclosure concerning ZelnickMedia’s compensation under the Second Amendment was misleading and incomplete and that the Board of Directors established and maintained an inappropriate record date for the 2008 annual meeting of stockholders. The supplement sought, among other things, to invalidate the amendment to the Incentive Stock Plan that stockholders of the Company approved at the 2008 annual meeting, the Second

        On February 17, 2009 the Company, the directors and ZelnickMedia filed motions to dismiss in their entirety all claims in both the Solomon Stockholder Complaint and the December 19, 2008 supplement to that complaint. On March 4, 2009, the plaintiff filed a motion for leave to file a second supplement to the Solomon Stockholder Complaint. The proposed second supplement contained additional allegations of breaches of fiduciary duties by the directors, and alleged misleading and incomplete disclosure in the Proxy Statement, including allegations similar to those raised in the December 19, 2008 supplement to the Solomon Stockholder Complaint with respect to the 2008 annual meeting. The proposed second supplement also sought to enjoin the vote on the 2009 Stock Incentive Plan at the Annual Meeting and a declaration that the 2009 Stock Incentive Plan is invalid and void.

        On April 3, 2009, the Company entered into a settlement in principle of the Solomon Stockholder Complaint and the two supplements to the Solomon Stockholder Complaint, subject to approval by the Delaware Court. The settlement provides, among other things, for additional disclosure which is contained in this Supplement to the Proxy Statement.

The Settlement does not provide for a payment of monetary damages to the plaintiff or the purported class. The Company intends to oppose any application by the plaintiff’s counsel for fees and expenses and expects that any award of fees or expenses will be covered by the Company’s existing insurance policies.

The Company, the directors and ZelnickMedia believe that the claims in the Solomon Stockholder Complaint and the two supplements are wholly without merit, but have entered into the settlement arrangement solely to save the time and expense of continued litigation.

        Neither Take-Two nor any of its directors and officers believes that the Proxy Statement was misleading or incomplete in any material respect. Nevertheless, to avoid any argument that any information contained in the Proxy Statement was misleading or incomplete and in connection with the settlement of the Solomon Stockholder Complaint, the Company is providing you [the SEC and stockholders] with this Supplement.

        This Supplement is being made available to Take-Two stockholders who are entitled to vote at the Annual Meeting to be held on April 23, 2009. All holders of record of Common Stock at the close of business on the record date, February 25, 2009, are entitled to vote at the Annual Meeting and any adjournment thereof. The record date to determine stockholders entitled to notice of and to vote at the Annual Meeting has not been changed by this supplement and remains fixed at February 25, 2009.

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