Document:

EX-4.C

 

Exhibit 4-c

ROCKWELL AUTOMATION, INC.

2008 LONG-TERM INCENTIVES PLAN

Section 1: Purpose

The purpose of the Plan is to promote the interests of the Corporation and its shareowners by
providing incentive compensation opportunities to assist in (i) attracting, motivating and
retaining Employees and Prospective Employees and (ii) aligning the interests of Employees and
Prospective Employees participating in the Plan with the interests of the Corporation’s
shareowners.

Section 2: Definitions

As used in the Plan, the following terms shall have the respective meanings specified below.

	 	a.	 	“Award” means an award granted pursuant to Section 4.
	 
	 	b.	 	“Award Agreement” means a document described in Section 6 setting forth the
terms and conditions applicable to an Award granted to a Participant.
	 
	 	c.	 	“Board of Directors” means the Board of Directors of the Corporation, as it may
be comprised from time to time.
	 
	 	d.	 	“Change of Control” means any of the following:

	 	(i)	 	The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (A) the then outstanding shares of common stock of the
Corporation (the “Outstanding Rockwell Common Stock”) or (B) the combined voting
power of the then outstanding voting securities of the Corporation entitled to
vote generally in the election of directors (the “Outstanding Rockwell Voting
Securities”); provided, however, that for purposes of this subparagraph (i), the
following acquisitions shall not constitute a Change of Control: (w) any
acquisition directly from the Corporation, (x) any acquisition by the
Corporation, (y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation controlled by the
Corporation or (z) any acquisition pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) of this Section 2(d); or
	 
	 	(ii)	 	Individuals who, as of October 1, 2007, constitute the Board of
Directors (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of Directors; provided, however, that any individual becoming
a director subsequent to that date whose election, or nomination for election by
the Corporation’s shareowners, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board of Directors; or

 

 

	 	(iii)	 	Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Corporation or
the acquisition of assets of another entity (a “Corporate Transaction”), in each
case, unless, following such Corporate Transaction, (A) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of the
Outstanding Rockwell Common Stock and Outstanding Rockwell Voting Securities
immediately prior to such Corporate Transaction beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation’s assets either
directly or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Rockwell Common Stock and Outstanding Rockwell Voting Securities, as
the case may be, (B) no Person (excluding any employee benefit plan (or related
trust) of the Corporation or such corporation resulting from such Corporate
Transaction) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the then
outstanding voting securities of such corporation except to the extent that such
ownership existed prior to the Corporate Transaction and (C) at least a majority of
the members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of Directors,
providing for such Corporate Transaction; or
	 
	 	(iv)	 	Approval by the Corporation’s shareowners of a complete liquidation or
dissolution of the Corporation.

	 	e.	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time.
	 
	 	f.	 	“Committee” means the Compensation and Management Development Committee of the
Board of Directors, as it may be comprised from time to time.
	 
	 	g.	 	“Corporation” means Rockwell Automation, Inc. and any successor thereto.
	 
	 	h.	 	“Covered Employee” means a covered employee within the meaning of Code Section
162(m)(3).
	 
	 	i.	 	“Dividend Equivalent” means an amount equal to the amount of cash dividends
payable with respect to a share of Stock after the date specified in an Award Agreement
with respect to an Award settled in Stock or an Award of Restricted Stock Units or
Performance Shares; provided, however, that no Dividend Equivalents shall be
paid in respect of Awards of Options or SARs.
	 
	 	j.	 	“Employee” means an individual who is an employee or a leased employee of, or a
consultant to, the Corporation or a Subsidiary, but excludes members of the Board of
Directors who are not also employees of the Corporation or a Subsidiary.
	 
	 	k.	 	“Exchange Act” means the Securities Exchange Act of 1934, and any successor
statute, as it may be amended from time to time.

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	 	l.	 	“Executive Officer” means an Employee who is an executive officer of the
Corporation as defined in Rule 3b-7 under the Exchange Act as it may be amended from
time to time.
	 
	 	m.	 	“Fair Market Value” means the closing sale price of the Stock as reported in
the New York Stock Exchange—Composite Transactions (or if the Stock is not then traded
on the New York Stock Exchange, the closing sale price of the Stock on the stock
exchange or over-the-counter market on which the Stock is principally trading) on the
date of a determination (or on the next preceding day the Stock was traded if it was
not traded on the date of a determination).
	 
	 	n.	 	“Incentive Stock Option” means an Option (or an option to purchase Stock
granted pursuant to any other plan of the Corporation or a Subsidiary) intended to
comply with Code Section 422.
	 
	 	o.	 	“Non-Qualified Stock Option” means an Option that is not an Incentive Stock
Option.
	 
	 	p.	 	“Option” means an option to purchase Stock granted pursuant to Section 4(a).
	 
	 	q.	 	“Participant” means any Employee or Prospective Employee who has been granted
an Award.
	 
	 	r.	 	“Performance Formula” means, for a Performance Period, one or more objective
formulas or standards established by the Committee for purposes of determining whether
or the extent to which an Award has been earned based on the level of performance
attained with respect to one or more Performance Goals. Performance Formulas may vary
from Performance Period to Performance Period and from Participant to Participant and
may be established on a stand-alone basis, in tandem or in the alternative.
	 
	 	s.	 	“Performance Goal” means the level of performance, whether absolute or relative
to a peer group or index, established by the Committee as the performance goal with
respect to a Performance Measure. Performance Goals may vary from Performance Period to
Performance Period and from Participant to Participant and may be established on a
stand-alone basis, in tandem or in the alternative.
	 
	 	t.	 	“Performance Measure” means one or more of the following selected by the
Committee to measure the performance of the Corporation, a business unit (which may but
need not be a Subsidiary) of the Corporation or both for a Performance Period: basic or
diluted earnings per share; revenue; sales; operating income; earnings before or after
interest, taxes, depreciation or amortization; return on capital; return on invested
capital; return on equity; return on assets; return on net assets; return on sales;
cash flow; operating cash flow; free cash flow; working capital; stock price; and total
shareowner return. Each such measure, to the extent applicable, shall be determined in
accordance with generally accepted accounting principles as consistently applied by the
Corporation and, if so determined by the Committee at the time the Award is granted and
to the extent permitted under Code Section 162(m), adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a business, unusual or
infrequently occurring events and transactions and cumulative effects of changes in
accounting principles. Performance Measures may vary from Performance Period to
Performance Period and from Participant to Participant and may be established on a
stand-alone basis, in tandem or in the alternative.

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	 	u.	 	“Performance Period” means one or more periods of time (of not less than one
fiscal year of the Corporation), as the Committee may designate, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s rights in respect of an Award.
	 
	 	v.	 	“Performance Share” means an Award denominated in Stock granted pursuant to
Section 4(f).
	 
	 	w.	 	“Performance Unit” means an Award denominated in cash granted pursuant to
Section 4(e).
	 
	 	x.	 	“Plan” means this 2008 Long-Term Incentives Plan as adopted by the Corporation
and in effect from time to time.
	 
	 	y.	 	“Prior Plan” means the Rockwell Automation, Inc. 2000 Long-Term Incentives
Plan, as amended.
	 
	 	z.	 	“Prospective Employee” means an individual who at the time of the grant of an
Award has been extended an offer of employment with the Corporation or a Subsidiary but
who has not yet accepted said offer and become an Employee.
	 
	 	aa.	 	“Restricted Stock” means an Award of Stock subject to restrictions granted
pursuant to Section 4(c).
	 
	 	bb.	 	“Restricted Stock Unit” means an Award denominated in Stock granted pursuant to
Section 4(d).
	 
	 	cc.	 	“SAR” means a stock appreciation right granted pursuant to Section 4(b).
	 
	 	dd.	 	“Section 409A” means Code Section 409A, including any regulations and other
guidance issued thereunder by the Department of the Treasury and/or the Internal
Revenue Service.
	 
	 	ee.	 	“Stock” means shares of Common Stock, par value $1 per share, of the
Corporation or any security of the Corporation issued in substitution, exchange or lieu
thereof.
	 
	 	ff.	 	“Subsidiary” means (i) any corporation or other entity in which the
Corporation, directly or indirectly, has ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions of such
corporation or other entity and (ii) any corporation or other entity in which the
Corporation has a significant equity interest and which the Committee has determined to
be considered a Subsidiary for purposes of the Plan.

Section 3: Eligibility

The Committee may grant one or more Awards to any Employee or Prospective Employee designated by it
to receive an Award.

Section 4: Awards

The Committee may grant any one or more of the following types of Awards, and any such Award may be
granted by itself, together with another Award that is linked and alternative to the Award with
which it is granted or together with another Award that is independent of the Award with which it
is granted:

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	a.	 	Options. An Option is an option to purchase a specified number of shares of
Stock exercisable at such time or times and subject to such terms and conditions as the
Committee may determine consistent with the provisions of the Plan, including the
following:

	 	(i)	 	The exercise price per share of an Option shall not be less than 100%
of the Fair Market Value on the date the Option is granted, and no Option may be
exercisable more than 10 years after the date the Option is granted.
	 
	 	(ii)	 	The exercise price of an Option shall be paid in cash or, at the
discretion of the Committee, in Stock valued at the Fair Market Value on the date
of exercise, by withholding shares of Stock for which the Option is exercisable
valued at the Fair Market Value on the date of exercise or through any combination
of the foregoing.
	 
	 	(iii)	 	No fractional shares of Stock will be issued or accepted. The
Committee may impose such other conditions, restrictions and contingencies with
respect to shares of Stock delivered pursuant to the exercise of an Option as it
deems desirable.
	 
	 	(iv)	 	Incentive Stock Options shall be subject to the following additional
provisions:

	 	A.	 	No grant of Incentive Stock Options to any one Employee shall
cover a number of shares of Stock whose aggregate Fair Market Value (determined
on the date the Option is granted), together with the aggregate Fair Market
Value (determined on the respective date of grant of any Incentive Stock
Option) of the shares of Stock covered by any Incentive Stock Options that have
been previously granted under the Plan or any other plan of the Corporation or
any Subsidiary and that are exercisable for the first time during the same
calendar year, exceeds $100,000 (or such other amount as may be fixed as the
maximum amount permitted by Code Section 422(d)); provided, however, that, if
such limitation is exceeded, the Incentive Stock Options granted in excess of
such limitation shall be treated as Non-Qualified Stock Options.
	 
	 	B.	 	No Incentive Stock Option may be granted under the Plan after
December 5, 2017.
	 
	 	C.	 	No Incentive Stock Option may be granted to any Participant who
on the date of grant is not an employee of the Corporation or a corporation
that is a subsidiary of the Corporation within the meaning of Code Section
424(f).

	b.	 	Stock Appreciation Rights (SARs). A SAR is the right to receive a payment
measured by the excess of the Fair Market Value of a specified number of shares of
Stock on the date on which the Participant exercises the SAR over the grant price of
the SAR determined by the Committee, which shall be exercisable at such time or times
and subject to such terms and conditions as the Committee may determine consistent with
the provisions of the Plan, including the following:

	 	(i)	 	The grant price of a SAR shall not be less than 100% of the Fair Market
Value of the shares of Stock covered by the SAR on the date the SAR is granted, and
no SAR may be exercisable more than 10 years after the date the SAR is granted.

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	 	(ii)	 	SARs may be (A) freestanding SARs or (B) tandem SARs granted in
conjunction with an Option, either at the time of grant of the Option or at a later
date, and exercisable at the Participant’s election instead of all or any part of
the related Option.
	 
	 	(iii)	 	The payment to which the Participant is entitled on exercise of a SAR
may be in cash, in Stock valued at the Fair Market Value on the date of exercise or
partly in cash and partly in Stock (as so valued), as the Committee may determine.

	c.	 	Restricted Stock. Restricted Stock is Stock that is issued to a Participant
subject to such restrictions on transfer and such other restrictions on incidents of
ownership as the Committee may determine, which restrictions shall lapse at such time
or times or upon the occurrence of such event or events as the Committee may determine,
including but not limited to the achievement, over a specified period of time, of one
or more specific goals with respect to performance of the Corporation, a business unit
(which may but need not be a Subsidiary) of the Corporation or that Participant.
Subject to the specified restrictions, the Participant as owner of those shares of
Restricted Stock shall have the rights of the holder thereof, except that the Committee
may provide at the time of the Award that any dividends or other distributions paid
with respect to that Stock while subject to those restrictions shall not be payable or
shall be accumulated, with or without interest, or reinvested in Stock and held subject
to the same restrictions as the Restricted Stock and such other terms and conditions as
the Committee shall determine. Shares of Restricted Stock shall be registered in the
name of the Participant and, at the Corporation’s sole discretion, shall be held in
book entry form subject to the Corporation’s instructions or shall be evidenced by a
certificate, which shall bear an appropriate restrictive legend, shall be subject to
appropriate stop-transfer orders and shall be held in custody by the Corporation until
the restrictions on those shares of Restricted Stock lapse.
	 
	d.	 	Restricted Stock Unit. A Restricted Stock Unit is an Award of a right to
receive at a specified future date an amount based on the Fair Market Value of a
specified number of shares of Stock on the payout date, subject to such terms and
conditions as the Committee may establish, including but not limited to the
achievement, over a specified period of time, of one or more specific goals with
respect to performance of the Corporation, a business unit (which may but need not be a
Subsidiary) of the Corporation or the Participant to whom the Restricted Stock Units
are granted. Restricted Stock Units that become payable in accordance with their terms
and conditions shall be paid out in Stock, in cash based on the Fair Market Value of
the Stock underlying the Restricted Stock Units on the payout date (or at the sole
discretion of the Committee, the day immediately preceding that date) or partly in cash
(as so based) and partly in Stock, as the Committee may determine. Any person who
holds Restricted Stock Units shall have no ownership interest in any shares of Stock to
which such Restricted Stock Units relate until and unless payment with respect to such
Restricted Stock Units is actually made in shares of Stock. The Committee may provide
for no deemed accumulation of Dividend Equivalents or for the deemed accumulation of
Dividend Equivalents in cash, with or without interest, or the deemed reinvestment of
Dividend Equivalents in Stock held subject to the same conditions as the Restricted
Stock Unit and/or such other terms and conditions as the Committee shall determine.
	 
	e.	 	Performance Units. A Performance Unit is an Award denominated in cash, the
amount of which may be based on the achievement, over a specified period of time, of
one or more specific goals with respect to performance of the Corporation, a

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business unit (which may but need not be a Subsidiary) of the Corporation or the
Participant to whom the Performance Units are granted. The amount that may be paid to
any one Participant with respect to Performance Units shall not exceed $5 million for
any one Performance Period. Performance Units that become payable in accordance with
their terms and conditions shall be paid out in cash, in Stock valued at the Fair Market
Value on the payout date (or at the sole discretion of the Committee, the day
immediately preceding that date) or partly in cash and partly in Stock (as so valued),
as the Committee may determine.

	f.	 	Performance Shares. A Performance Share is an Award of a right to receive at a
specified future date an amount based on the Fair Market Value of a specified number of
shares of Stock on the payout date, subject to such terms and conditions as the
Committee may establish, including but not limited to the achievement, over a specified
period of time, of one or more specific goals with respect to performance of the
Corporation, a business unit (which may but need not be a Subsidiary) of the
Corporation or the Participant to whom the Performance Shares are granted. Performance
Shares that become payable in accordance with their terms and conditions shall be paid
out in Stock, in cash based on the Fair Market Value of the Stock underlying the
Performance Shares on the payout date (or at the sole discretion of the Committee, the
day immediately preceding that date) or partly in cash (as so based) and partly in
Stock, as the Committee may determine. Any person who holds Performance Shares shall
have no ownership interest in any shares of Stock to which such Performance Shares
relate until and unless payment with respect to such Performance Shares is actually
made in shares of Stock. The Committee may provide for no deemed accumulation of
Dividend Equivalents or for the deemed accumulation of Dividend Equivalents in cash,
with or without interest, or the deemed reinvestment of Dividend Equivalents in Stock
held subject to the same conditions as the Performance Shares and/or such other terms
and conditions as the Committee shall determine.
	 
	g.	 	Performance Compensation Awards.

	 	(i)	 	The Committee may, at the time of grant of an Award (other than an
Option or SAR) designate such Award as a “Performance Compensation Award” in order
that such Award constitute qualified performance-based compensation under Code
Section 162(m); provided, however, that no Performance Compensation Award may be
granted to a Prospective Employee or an Employee who on the date of grant is a
leased employee of, or a consultant to, the Corporation or a Subsidiary. With
respect to each such Performance Compensation Award, the Committee shall (on or
before the 90th day of the applicable Performance Period or such other
period as may be required by Code Section 162(m)) establish, in writing, a
Performance Period, Performance Measure(s), Performance Goal(s) and Performance
Formula(s). Once established for a Performance Period, such items shall not be
amended or otherwise modified if and to the extent such amendment or modification
would cause the compensation payable pursuant to the Award to fail to constitute
qualified performance-based compensation under Code Section 162(m).
	 
	 	(ii)	 	A Participant shall be eligible to receive payment in respect of a
Performance Compensation Award only to the extent that the Performance Goal(s) for
that Award are achieved and the Performance Formula as applied against such
Performance Goal(s) determines that all or some portion of such Participant’s Award
has been earned for the Performance Period. As soon as practicable after the close
of each Performance Period, the Committee shall review and determine

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whether, and to what extent, the Performance Goal(s) for the Performance Period have
been achieved and, if so, determine the amount of the Performance Compensation Award
earned by the Participant for such Performance Period based upon such Participant’s
Performance Formula. The Committee shall then determine the actual amount of the
Performance Compensation Award to be paid to the Participant and, in so doing, may in
its sole discretion decrease, but not increase, the amount of the Award otherwise
payable to the Participant based upon such performance. The maximum Performance
Compensation Award for any one Participant for any one Performance Period shall be
determined in accordance with Sections 4(e) and 5(g), as applicable.

	 	h.	 	Deferrals. The Committee may require or permit Participants to defer the
issuance or vesting of shares of Stock or the settlement of Awards under such rules and
procedures as it may establish under the Plan. The Committee may also provide that
deferred settlements include the payment or crediting of interest on the deferral
amounts or the payment or crediting of Dividend Equivalents on deferred settlements in
shares of Stock. Notwithstanding the foregoing, no deferral will be permitted if it
will result in the Plan becoming an “employee pension benefit plan” under Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is
not otherwise exempt under Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. In
addition, notwithstanding the foregoing, it is the intent of the Corporation that any
deferral made under this Section 4(h) shall (A) satisfy the requirements for exemption
under Section 409A or (B) satisfy the requirements of Section 409A.
	 
	 	i.	 	Other Section 409A Provisions. In addition to the provisions related to the
deferral of Awards under the Plan set forth in Section 4(h) and notwithstanding any
other provision of the Plan to the contrary, the following provisions shall apply to
Awards:

	 	(i)	 	To the extent not otherwise set forth in the Plan, it is the intent of
the Corporation that the Award Agreement for each Award shall set forth (or shall
incorporate by reference to the Corporation’s Deferred Compensation Plan) such
terms and conditions as are necessary to (A) satisfy the requirements for exemption
under Section 409A or (B) satisfy the requirements of Section 409A.
	 
	 	(ii)	 	Without limiting the generality of the foregoing, it is the intent of
the Corporation that any payment of dividends on Restricted Stock or any payment of
Dividend Equivalents on Restricted Stock Units or Performance Shares shall (A)
satisfy the requirements for exemption under Section 409A or (B) satisfy the
requirements of Section 409A, including without limitation, to the extent
necessary, the establishment of a separate written arrangement providing for the
payment of such dividends or Dividend Equivalents.
	 
	 	(iii)	 	Notwithstanding any other provision of the Plan to the contrary, the
Corporation makes no representation that the Plan or any Award will be exempt from
or comply with Section 409A and makes no undertaking to preclude Section 409A from
applying to the Plan or any Award.

Section 5: Stock Available under Plan

	 	a.	 	Subject to the adjustment provisions of Section 9 and the provisions of this
Section 5, the aggregate number of shares of Stock available for delivery pursuant to
the Plan shall be 4.1 million plus any shares of Stock remaining available for delivery
pursuant to the Prior Plan as of the date of approval of the Plan by the Corporation’s

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	 	 	 	shareowners, of which no more than 1.4 million shares of Stock may be available for
delivery pursuant to Awards granted in any form provided for under the Plan other than
Options or SARs. In addition, subject to the adjustment provisions of Section 9, (i) no
more than 1.4 million shares of Stock shall be granted in the form of Restricted Stock
or delivered in payment of Restricted Stock Units or Performance Shares; and (ii) SARs
shall be granted with respect to no more than 100,000 shares of Stock.
	 
	 	b.	 	For purposes of this Section 5, if an Award (other than a Dividend Equivalent)
is denominated in shares of Stock, the number of shares of Stock covered by such Award,
or to which such Award relates (or in the case of Restricted Stock Units or Performance
Shares, the maximum number of shares of Stock deliverable pursuant thereto), shall be
counted on the date of grant of such Award against the aggregate number of shares of
Stock available for delivery pursuant to the Plan.
	 
	 	c.	 	For purposes of this Section 5, Dividend Equivalents denominated in shares of
Stock, dividends on Restricted Stock receivable in shares of Stock and Awards not
denominated, but potentially payable, in shares of Stock shall be counted against the
aggregate number of shares of Stock available for delivery pursuant to the Plan in such
amount and at such time as the Dividend Equivalents, dividends and such Awards are
settled in shares of Stock.
	 
	 	d.	 	For purposes of this Section 5, notwithstanding anything herein to the
contrary, Awards that operate in tandem with (whether granted simultaneously with or at
a different time from), or that are substituted for, other Awards or awards granted
under the Prior Plan may only be counted once against the aggregate number of shares
available for delivery pursuant to the Plan, and the Committee shall adopt procedures,
as it deems appropriate, in order to avoid double counting.
	 
	 	e.	 	For purposes of this Section 5, notwithstanding anything herein to the contrary
(other than as provided in the following sentence), (i) any shares of Stock covered by
or related to Awards or awards granted under the Prior Plan that terminate by
expiration, forfeiture, cancellation, or otherwise without the issuance or delivery of
such shares of Stock, are settled in cash in lieu of shares of Stock, or are exchanged
with the Committee’s permission, prior to the issuance of shares of Stock, for Awards
not involving shares of Stock, shall be available again for delivery pursuant to the
Plan and (ii) with respect to any Award described in Section 5(b), upon exercise,
settlement or payment thereof with shares of Stock in an amount less than the number of
shares of Stock counted on the date of grant against the aggregate number of shares of
Stock available for delivery pursuant to the Plan, a number of shares of Stock equal to
such deficit shall be available again on the date of such exercise, settlement or
payment for delivery pursuant to the Plan. Notwithstanding the foregoing, (x) shares
of Stock that are delivered to or withheld by the Corporation to pay all or any portion
of the exercise price or withholding taxes under Awards or awards granted under the
Prior Plan shall not be made available again for delivery pursuant to the Plan and
(y) there shall be no adjustment to the number of shares of Stock available for
delivery pursuant to the Plan upon the exercise or settlement of SARs in whole or in
part in shares of Stock, regardless of the number of shares of stock issued or
delivered in connection with such exercise or settlement.
	 
	 	f.	 	For purposes of this Section 5, any shares of Stock that are delivered by the
Corporation, and any Awards that are granted by, or become obligations of, the
Corporation, through the assumption by the Corporation or a Subsidiary of, or in
substitution for, outstanding awards previously granted by an acquired company,

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	 	 	 	shall not be counted against the aggregate number of shares of Stock available for
delivery pursuant to the Plan.
	 
	 	g.	 	Subject to the adjustment provisions of Section 9, no single Participant shall
receive Awards, in any fiscal year of the Corporation, in the form of (i) Options or
SARs that would result in the number of shares of Stock that relate to Options, SARs
and options to purchase Stock or stock appreciation rights under any other plan of the
Corporation or a Subsidiary granted to such Participant during such fiscal year
exceeding 650,000 shares; and (ii) Restricted Stock, Restricted Stock Units or
Performance Shares that would result in the number of shares of Stock granted as
Restricted Stock, deliverable in payment of Restricted Stock Units or Performance
Shares granted and granted as restricted stock or deliverable in payment of restricted
stock units or performance shares granted under any other plan or program of the
Corporation or a Subsidiary to such Participant during such fiscal year exceeding
250,000 shares.
	 
	 	h.	 	The Stock that may be delivered on grant, exercise or settlement of an Award
under the Plan may consist, in whole or in part, of shares held in treasury or
authorized but unissued shares. At all times the Corporation will reserve and keep
available a sufficient number of shares of Stock to satisfy the requirements of all
outstanding Awards made under the Plan.

Section 6: Award Agreements

Each Award under the Plan shall be evidenced by an Award Agreement. Each Award Agreement shall set
forth the terms and conditions applicable to the Award, including but not limited to (i) provisions
for the time at which the Award becomes exercisable or otherwise vests; (ii) provisions for the
treatment of the Award in the event of the termination of a Participant’s status as an Employee;
(iii) any special provisions applicable in the event of an occurrence of a Change of Control, as
determined by the Committee consistent with the provisions of the Plan; and (iv) in the Committee’s
sole discretion, any additional provisions as may be necessary to (A) satisfy the requirements for
exemption under Section 409A or (B) satisfy the requirements of Section 409A.

Section 7: Amendment and Termination

The Board of Directors may at any time amend, suspend or terminate the Plan, in whole or in part;
provided, however, that, without the approval of the shareowners of the Corporation, no such action
shall (i) increase the number of shares of Stock available for delivery pursuant to the Plan as set
forth in Section 5 (other than adjustments pursuant to Section 9), or (ii) materially increase the
benefits accruing to Participants under the Plan, or otherwise be effective to the extent that such
approval is necessary to comply with any tax or regulatory requirement applicable to the Plan,
including applicable requirements of the New York Stock Exchange; and provided, further, that,
subject to Section 9, no such action shall impair the rights of any holder of an Award without the
holder’s consent. The Committee may, subject to the Plan, at any time alter or amend any or all
Award Agreements to the extent permitted by applicable law; provided, however, that, subject to
Section 9, no such alteration or amendment shall impair the rights of any holder of an Award
without the holder’s consent. Notwithstanding the foregoing, neither the Board of Directors nor the
Committee shall (except pursuant to Section 9) amend the Plan or any Award Agreement to reprice any
Option or SAR whose exercise price is above the then Fair Market Value of the Stock subject to the
Award, whether by decreasing the exercise price, canceling the Award and granting a substitute
Award, repurchasing the Award for cash, or otherwise.

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Section 8: Administration

	 	a.	 	The Plan and all Awards shall be administered by the Committee.
	 
	 	b.	 	Any member of the Committee who, at the time of any proposed grant of one or
more Awards, is not both an “outside director” as defined for purposes of Code Section
162(m) and a “Non-Employee Director” as defined in Rule 16b-3(b)(3)(i) under the
Exchange Act shall abstain from and take no part in the Committee’s action on the
proposed grant.
	 
	 	c.	 	The Committee shall have full and complete authority, in its sole and absolute
discretion, (i) to exercise all of the powers granted to it under the Plan, (ii) to
construe, interpret and implement the Plan and any related document, (iii) to
prescribe, amend and rescind rules relating to the Plan, (iv) to make all
determinations necessary or advisable in administering the Plan, and (v) to correct any
defect, supply any omission and reconcile any inconsistency in the Plan. The actions
and determinations of the Committee on all matters relating to the Plan and any Awards
will be final and conclusive. The Committee’s determinations under the Plan need not be
uniform and may be made by it selectively among Employees or Prospective Employees who
receive, or who are eligible to receive, Awards under the Plan, whether or not such
persons are similarly situated.
	 
	 	d.	 	The Committee and others to whom the Committee has delegated such duties shall
keep a record of all their proceedings and actions and shall maintain all such books of
account, records and other data as shall be necessary for the proper administration of
the Plan.
	 
	 	e.	 	The Corporation shall pay all reasonable expenses of administering the Plan,
including but not limited to the payment of professional fees.
	 
	 	f.	 	It is the intent of the Corporation that the Plan and Awards hereunder satisfy,
and be interpreted in a manner that satisfy: (i) in the case of Participants who are or
may be Executive Officers, the applicable requirements of Rule 16b-3 under the Exchange
Act, so that such persons will be entitled to the benefits of Rule 16b-3, or other
exemptive rules under Section 16 of the Exchange Act, and will not be subjected to
avoidable liability under Section 16(b) of the Exchange Act; (ii) in the case of
Performance Compensation Awards to Covered Employees, the applicable requirements of
Code Section 162(m); and (iii) either the requirements for exemption under Section 409A
or the requirements of Section 409A. If any provision of the Plan or of any Award
Agreement would otherwise frustrate or conflict with the intent expressed in this
Section 8(f), that provision to the extent possible shall be interpreted and deemed
amended so as to avoid such conflict. To the extent of any remaining irreconcilable
conflict with such intent and to the extent legally permitted, such provision shall be
deemed void as to the applicable Participant.
	 
	 	g.	 	The Committee may appoint such accountants, counsel, and other experts as it
deems necessary or desirable in connection with the administration of the Plan.
	 
	 	h.	 	The Committee may delegate, and revoke the delegation of, all or any portion of
its authority and powers under the Plan to the Chief Executive Officer of the
Corporation, except that the Committee may not delegate any discretionary authority
with respect to Awards granted to the Chief Executive Officer of the Corporation or
substantive decisions or functions regarding the Plan or Awards to the extent

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	 	 	 	inconsistent with the intent expressed in Section 8(f) or to the extent prohibited by
applicable law.

Section 9: Adjustment Provisions

	 	a.	 	In the event of any change in or affecting the outstanding shares of Stock by
reason of a stock dividend or split, merger or consolidation (whether or not the
Corporation is a surviving corporation), recapitalization, reorganization, combination
or exchange of shares or other similar corporate changes or an extraordinary dividend
in cash, securities or other property, the Board of Directors shall make such
amendments to the Plan and outstanding Awards and Award Agreements and make such
equitable and other adjustments and take such actions thereunder as are applicable
under the circumstances. Such equitable adjustments as they relate to outstanding
Awards shall be required to ensure that the intrinsic value of each outstanding Award
immediately after any of the aforementioned events is equal to the intrinsic value of
each outstanding Award immediately prior to any of such aforementioned events. Such
amendments, adjustments and actions shall include, without limitation, as applicable,
changes in the number of shares of Stock then remaining available for delivery pursuant
to the Plan, the maximum number of shares of Stock that may be granted or delivered as
or in payment of Awards to any single Participant pursuant to the Plan, including those
that are then covered by outstanding Awards, the number of shares of Stock subject to
outstanding Awards, the Option exercise price under outstanding Options and the SAR
grant price under outstanding SARs, and accelerating the vesting of outstanding Awards.
	 
	 	b.	 	The existence of the Plan and the Awards granted hereunder shall not affect or
restrict in any way the right or power of the Board of Directors or the shareowners of
the Corporation to make or authorize any adjustment, recapitalization, reorganization
or other change in its capital structure, any merger or consolidation of the
Corporation, any issue of bonds, debentures, preferred or prior preference stock ahead
of or affecting the Stock or the rights thereof, the dissolution or liquidation of the
Corporation or any sale or transfer of all or any part of its assets or business, any
dividend of Stock, cash, securities or other property, or any other corporate act or
proceeding.

Section 10: Miscellaneous

	 	a.	 	Change of Control. Except as otherwise determined by the Committee at the time
of the grant of an Award, and except as is necessary to satisfy the requirements for
exemption under Section 409A or the requirements of Section 409A (in which event, the
Committee may determine to modify the definition of Change of Control in order to
satisfy such requirements), upon a Change of Control, all outstanding Options and SARs
shall become vested and exercisable; all restrictions on Restricted Stock shall lapse;
all performance goals applicable to Awards shall be deemed achieved at levels
determined by the Committee and all other terms and conditions met; all Performance
Units, Restricted Stock Units and Performance Shares shall be paid out as promptly as
practicable; and all other Awards shall be delivered or paid.
	 
	 	b.	 	Nonassignability. Except as otherwise provided by the Committee, no Award shall
be assignable or transferable except by will or by the laws of descent and
distribution; provided, however, that under no circumstances shall an Award be
transferrable for value or consideration to the Participant.

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	 	c.	 	Other Payments or Awards. Nothing contained in the Plan shall be deemed in any
way to limit or restrict the Corporation or a Subsidiary from making any award or
payment to any person under any other plan, arrangement or understanding, whether now
existing or hereafter in effect.
	 
	 	d.	 	Payments to Other Persons. If payments are legally required to be made to any
person other than the person to whom any payment is provided to be made under the Plan,
then payments shall be made accordingly; provided however, to the extent that such
payments would cause an Award to fail to satisfy the requirements for exemption under
Section 409A or the requirements of Section 409A, the Committee may determine in its
sole discretion not to make such payments in such manner. Any such payment shall be a
complete discharge of the liability hereunder.
	 
	 	e.	 	Unfunded Plan. The Plan shall be unfunded. No provision of the Plan or any
Award Agreement shall require the Corporation or a Subsidiary, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made or otherwise to segregate any
assets, nor shall the Corporation or a Subsidiary maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes. Participants shall have no rights
under the Plan other than as unsecured general creditors of the Corporation or a
Subsidiary, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same rights as
other employees under generally applicable law.
	 
	 	f.	 	Limits of Liability. Any liability of the Corporation or a Subsidiary to any
Participant with respect to an Award shall be based solely upon contractual obligations
created by the Plan and the Award Agreement related thereto. Neither the Corporation or
its Subsidiaries, nor any member of the Board of Directors or of the Committee, nor any
other person participating in any determination of any question under the Plan, or in
the interpretation, administration or application of the Plan, shall have any liability
to any party for any action taken, or not taken, in good faith under the Plan.
	 
	 	g.	 	Rights of Employees and Prospective Employees. Status as an eligible Employee
or Prospective Employee shall not be construed as a commitment that any Award shall be
made under the Plan to such eligible Employee or Prospective Employee or to eligible
Employees or Prospective Employees generally. Nothing contained in the Plan or in any
Award Agreement shall confer upon any Employee or Prospective Employee any right to
continue in the employ or other service of the Corporation or a Subsidiary or
constitute any contract of employment or limit in any way the right of the Corporation
or a Subsidiary to change such person’s compensation or other benefits or to terminate
the employment or other service of such person with or without cause. A transfer of an
Employee from the Corporation to a Subsidiary, or vice versa, or from one Subsidiary to
another, and a leave of absence, duly authorized by the Corporation, shall not be
deemed a termination of employment or other service; provided, however, that, to the
extent that Section 409A is applicable to an Award, Section 409A’s definition of
“separation of service”, to the extent contradictory, may apply to determine when a
Participant becomes entitled to a distribution upon termination of employment.
	 
	 	h.	 	Rights as a Shareowner. A Participant shall have no rights as a shareowner with
respect to any Stock covered by an Award until the date the Participant becomes the
holder of record thereof. Except as provided in Section 9, no adjustment shall be

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	 	 	 	made for dividends or other rights, unless the Award Agreement specifically requires
such adjustment.

	 	i.	 	Withholding. Applicable taxes, to the extent required by law, shall be withheld
in respect of all Awards. A Participant may satisfy the withholding obligation by
paying the amount of any taxes in cash or, with the approval of the Committee, shares
of Stock may be delivered to the Corporation or deducted from the payment to satisfy
the obligation in full or in part. The amount of the withholding and the number of
shares of Stock to be delivered to the Corporation or deducted in satisfaction of the
withholding requirement shall be determined by the Corporation with reference to the
Fair Market Value of the Stock when the withholding is required to be made; provided,
however, that the amount of withholding to be paid in respect of Options exercised
through the cashless method in which shares of Stock for which the Options are
exercised are immediately sold may be determined by reference to the price at which
said shares are sold. The Corporation shall have no obligation to deliver any Stock
pursuant to the grant or settlement of any Award until it has been reimbursed for all
required withholding taxes.
	 
	 	j.	 	Section Headings. The section headings contained herein are for the purpose of
convenience only, and in the event of any conflict, the text of the Plan, rather than
the section headings, shall control.
	 
	 	k.	 	Construction. In interpreting the Plan, the masculine gender shall include the
feminine, the neuter gender shall include the masculine or feminine, and the singular
shall include the plural unless the context clearly indicates otherwise. Any reference
to a statutory provision or a rule under a statute shall be deemed a reference to that
provision or any successor provision unless the context clearly indicates otherwise.
	 
	 	l.	 	Invalidity. If any term or provision contained herein or in any Award Agreement
shall to any extent be invalid or unenforceable, such term or provision will be
reformed so that it is valid, and such invalidity or unenforceability shall not affect
any other provision or part thereof.
	 
	 	m.	 	Applicable Law. The Plan, the Award Agreements and all actions taken hereunder
or thereunder shall be governed by, and construed in accordance with, the laws of the
State of Delaware without regard to the conflict of law principles thereof.
	 
	 	n.	 	Compliance with Laws. Notwithstanding anything contained in the Plan or in any
Award Agreement to the contrary, the Corporation shall not be required to sell, issue
or deliver shares of Stock hereunder or thereunder if the sale, issuance or delivery
thereof would constitute a violation by the Participant or the Corporation of any
provisions of any law or regulation of any governmental authority or any national
securities exchange; and as a condition of any sale or issuance the Corporation may
require such agreements or undertakings, if any, as the Corporation may deem necessary
or advisable to assure compliance with any such law or regulation.
	 
	 	o.	 	Supplementary Plans. The Committee may authorize supplementary plans applicable
to Employees or Prospective Employees subject to the tax laws of one or more countries
other than the United States and providing for the grant of Non-Qualified Stock
Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units or
Performance Shares to such Employees or Prospective Employees on terms and conditions,
consistent with the Plan, determined by the Committee, which may differ from the terms
and conditions of other Awards pursuant to the Plan for the purpose of complying with
the conditions for qualification of

14

 

	 	 	 	Awards for favorable treatment under foreign tax laws. Notwithstanding any other
provision hereof, Options granted under any supplementary plan shall include provisions
that conform with Sections 4(a)(i), (ii) and (iii); SARs granted under any supplementary
plan shall include provisions that conform with Section 4(b); Restricted Stock granted
under any supplementary plan shall include provisions that conform with Section 4(c);
Restricted Stock Units granted under any supplementary plan shall include provisions
that conform with Section 4(d); Performance Units granted under any supplementary plan
shall include provisions that conform with Section 4(e) and Performance Shares granted
under any supplementary plan shall include provisions that conform with Section 4(f).
	 
	 	p.	 	Effective Date and Term. The Plan was adopted by the Board of Directors on
December 5, 2007 and will become effective upon approval by the Corporation’s
shareowners. The Plan shall remain in effect until all Awards under the Plan have been
exercised or terminated under the terms of the Plan and applicable Award Agreements;
provided, however, that Awards under the Plan may be granted only within ten (10) years
from the effective date of the Plan.

15EX-10.1

 

Exhibit 10.1

EXECUTION COPY

March 31, 2008

Mr. Jim Wilson

4 West 21st Street, Apt. 11B

New York, NY 10010

646.808.4240

jimW@rolomedia.com

Dear Mr. Wilson:

On behalf of Atari, Inc. (“Atari”), I am very pleased to extend to you an offer of
employment with our company, with a start date of March 31, 2008 (the “Employment Date”).
We believe that you will be a tremendous addition to the team, and we are all very excited about
the prospect of you joining us. The purpose of this letter is to confirm the terms and conditions
of our offer of employment to you.

	1.	 	Position. You will serve in an exclusive full-time capacity as Chief Executive
Officer and President, reporting to Atari’s Board of Directors (the “Board”).
	 
	2.	 	Base Salary. Your annual base salary for this position is four hundred thousand
dollars ($400,000.00), minus the deductions required by law, which will be paid to you in
equal installments in accordance with Atari’s customary payroll practices. It is our current
practice to pay our employees on a semi-monthly basis; typically, the 5th and the
20th of each month.
	 
	3.	 	Annual Bonus.

     (a) You will also be eligible to receive an annual bonus of (i) sixty percent (60%) of
your then-current annual base salary if specified “performance goals” for the applicable
fiscal year are satisfied (the “Standard Bonus”), plus (ii) up to an additional one
hundred forty percent (140%) of your then-current annual base salary depending on the degree
to which the specified “performance goals” are exceeded for the applicable fiscal year. The
“performance goals” for the annual bonus will be based both upon achievements by Atari of
specified financial objectives and your attainment of individual objectives, over the course
of the relevant fiscal year. Your individual objectives and the Atari financial objectives
(including milestones upon which your bonus percentage will increase and the specific
amounts of such increase) will be determined by the Board (or

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the Compensation Committee thereof) in its discretion, in consultation with you and
giving due consideration to your recommendations, and shall be set forth in writing and
furnished to you (A) within sixty (60) days of the Employment Date with respect to the
fiscal year ending March 31, 2009, and (B) by April 30th of each subsequent
fiscal year. The evaluation of your performance and Atari’s financial performance shall be
determined by the Board (or Compensation Committee thereof) in its sole discretion. Each
bonus will be paid within two and one-half (21/2 ) months of the end of Atari’s fiscal year
for which the bonus is earned. You must be an active employee at the time that bonuses are
paid in order to receive any bonus payment for the applicable fiscal year. Should your
employment terminate before that time, except as provided in Section 8(a)(iv)
hereof, you will not be eligible to receive any payment or pro-ration of the annual bonus
payment.

(b) Notwithstanding Section 3(a), fifty percent (50%) of your Standard Bonus
for the fiscal year ending March 31, 2009 shall be guaranteed and will be paid to you within
thirty (30) days following your first year anniversary date, provided that you are still an
active employee on that date.

	4.	 	Stock Options.

     (a) Effective on the Employment Date, Atari will grant to you, subject to the terms and
conditions of the standard option award agreement and the 2005 Stock Incentive Plan
previously provided to you, options to purchase 687,146 shares of Atari’s common stock (the
“Atari Option”). The exercise price of shares granted under the Atari Option shall
be equal to the last sales price of the common stock on the date of grant. The Atari Option
will vest 6.25% per quarter (commencing with the quarter ending June 30, 2008), subject to
your continued employment with Atari as of each applicable vesting date. Upon the
occurrence of a Change in Control (as defined under the 2005 Stock Incentive Plan), any
unvested portion of the Atari Option shall become fully vested and immediately exercisable,
except that, the acquisition transaction contemplated between Atari and Infogrames
Entertainment, S.A. (“IESA”) (as more fully described in Section 4(c) below)
shall not constitute a Change in Control and consequently shall not trigger immediate
vesting or exercisability.

     (b) All unvested stock options (whether granted pursuant to the Atari Option, or
otherwise thereafter) and all vested but unexercised stock options will terminate in
accordance with the provisions of the applicable stock plan pursuant to which they were
granted. All stock options shall expire on the tenth anniversary of the grant date.

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     (c) If Atari’s majority shareholder, IESA, shall successfully complete an acquisition
of the minority interests in Atari (as previously announced), Atari’s Board will use its
best efforts to cause IESA to agree to grant to you a stock option with respect to the stock
of IESA (the “IESA Option”), in substitution of the Atari Option. The IESA Option
shall have an exercise price per share equal to the fair market value of the IESA stock on
the date of grant, and shall have the same vesting schedule and term of exercise as the
Atari Option. The number of shares subject to the IESA Option shall be determined such that
the present value of the IESA Option shall be approximately equal to the present value of
the Atari Option, using a Black-Scholes or other reasonable option valuation methodology.
You hereby agree to the grant of such IESA Option in substitution for and cancellation of
the Atari Option.

	5.	 	Benefits. As a full-time employee, you are eligible to participate in our benefits
program, and shall commence participation on the Employment Date or as soon as permitted
thereafter under the terms of any individual plan. This program includes life, medical,
dental, vision and disability insurance, a 401(k) account plan (which includes a company
match), medical and dependent care reimbursement accounts, paid holidays and vacation. In
accordance with current Atari policy, you will initially be entitled to fifteen (15) vacation
days and five (5) sick days per year, to be accrued and taken in accordance with company
policy. All of these benefits are subject to Atari policies and the applicable plan
documents, which may be amended and/or terminated by Atari at any time, and the highlights of
which are provided in the Benefit Overview document, which you have been provided. We will
review our benefit information with you in detail and answer any questions that you may have
when you begin your employment.

	6.	 	Business Expenses. You will be entitled to receive prompt reimbursement of all
reasonable out-of-pocket expenses properly incurred by you during your employment in
connection with your duties, including reasonable expenses of entertainment and travel,
provided that such expenses are properly documented and reported in accordance with the
applicable business expense policies and procedures of Atari.

	7.	 	Employment. Your employment relationship with Atari is “at will”, and you have the
right to terminate that employment relationship at any time. Although we hope you will remain
with us and be successful here, Atari retains the right to terminate the employment
relationship at any time, with or without notice and with or without Cause (as defined below).

	8.	 	Severance. Notwithstanding Section 7, above, the following shall apply if,
and only if, you are terminated by Atari without Cause, you choose to terminate your
employment

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	 	 	with Atari for Good Reason or your employment is terminated due to a Disability (as each of
those terms is defined below).

     (a) Severance Payments and Benefits:

     (i) You will be eligible for the continuation of your annual base salary for
the period of twelve (12) months (the “Severance Period”). This amount
shall be paid ratably over the Severance Period in accordance with Atari’s customary
payroll practices, and subject to tax withholding.

     (ii) Your medical, dental and vision benefits will be maintained during the
Severance Period (as defined above) and subsidized by Atari in order that your
premiums will be the same as for active employee status, which shall be provided in
the same manner as Atari provides such benefits to its full-time employees, to the
extent permitted by those plans. And, if not permitted by those plans (as
applicable), Atari will reimburse you for your COBRA premiums during the Severance
Period in an amount equal to the employer’s contribution of premium as of your last
date of active employment.

     (iii) You will be able to exercise vested stock options as set forth in the
applicable Atari stock plan or agreement.

     (iv) You will be eligible for a pro rata portion of the Standard Bonus for the
fiscal year in which your employment terminates. The amount will be prorated based
on the number of days you are employed during the relevant fiscal year as a
percentage of the total number of days in such fiscal year.

     (b) Condition upon Payments and Benefits: The severance payments and benefits provided
in this Section 8 shall be conditioned upon you signing Atari’s standard Termination
and General Release Agreement, or any other substantially similar general release in a form
to be provided by Atari.

     (c) Definitions: For purposes of this letter agreement, the following terms shall have
the meanings indicated:

     (i) “Cause” shall mean: (A) your willful failure, refusal or gross
neglect to perform your material duties and obligations as Chief Executive Officer
and President and as reasonably assigned by the Board; (B) your breach of any
material provision of this letter agreement or Atari policy (including, without
limitation, the Proprietary Information and Inventions Agreement and the Code of
Ethics, Standards of Conduct and Confidentiality policy); or (C) your conviction

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of any felony (excluding a minor traffic violation); provided, however, that in
no event will a violation of items (A) and (B) constitute Cause unless Atari has
provided you with written notice of the event on which Cause is based within ninety
(90) days of Atari’s discovery of its most recent occurrence, and you fail to remedy
the event within thirty (30) days of receipt of such notice.

     (ii) “Disability” shall mean a physical or mental condition that
prevents you from performing the essential functions of your job, with or without
reasonable accommodations, for a period of six (6) consecutive months, or for
shorter periods aggregating six (6) months during any twelve (12) month period; and

     (iii) “Good Reason” shall mean: (A) a material adverse change in your
reporting relationship from that provided in Section 1, (B) a material
reduction in job responsibilities; (C) a material reduction in your base
compensation, or (D) in the event that the IESA transaction referred to in
Section 4(c) shall occur, the failure of Atari to cause IESA to grant the
IESA Option, unless your other compensation (including the Atari Option) is adjusted
or supplemented on a basis that takes into account the value of the IESA Option (or
any portion thereof that is not granted), as determined by Atari in good faith;
provided, however, that in no event will any of the foregoing
constitute Good Reason unless you have provided Atari with notice of the event on
which Good Reason is based within ninety (90) days of its occurrence, and Atari
fails to remedy the event within thirty (30) days of receipt of such notice.

     (d) No other Obligation or Offset: No payments or benefits will be made by reason of a
termination of your employment for any reason other than a termination without Cause, for
Good Reason or due to a Disability (as described above) and except as otherwise required by
law. Atari’s obligation to make the payments provided for in this Section 8 and
otherwise to perform its obligations hereunder shall not be affected by any setoff,
counterclaim, recoupment, defense or other claim, right or action which Atari and/or any of
its affiliates may have against you.

	9.	 	Conditions of Employment. As a condition of your employment, you agree to the
following protections:

     (a) You will sign and abide by all of the provisions of Atari’s Proprietary Information
and Inventions Agreement, as well as the Code of Ethics, Standards of Conduct and
Confidentiality, which are attached to this letter agreement and incorporated in and made a
part hereof as Exhibit A and Exhibit B, respectively.

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     (b) You agree to hold in confidence any proprietary or confidential information
received as an employee of Atari, and you agree that, as your employer, Atari shall own any
and all of the products, proceeds and results of your services, including all ideas or
suggestions and other intellectual property (collectively, “IP”) related to Atari’s
business, including game, media or the electronic entertainment business that you create or
make while employed by Atari; to the extent Atari is not deemed the owner of such IP by
virtue of the employment relationship, you hereby irrevocably assign each such IP and all
rights therein to Atari as if each such IP were a work-for-hire commissioned by and for
Atari.

     (c) You will not bring to Atari or use on behalf of Atari any confidential materials
and/or proprietary from any of your former employers, and you will not violate any other
obligations to any of your former employers.

     (d) In the event of any conflict between any agreements set forth in this Section
9, including as attached hereto, and any other agreements between you and Atari
concerning the subject matter hereof, all such agreements shall be interpreted together in a
manner that will give Atari the greatest protections.

	10.	 	Employee Covenants.

     (a) Non-Solicitation/Non-Hire: For a period of six (6) months after the termination of
your employment with Atari, regardless of the reason for termination, you will not, directly
or indirectly, solicit any employee of Atari to terminate his or her employment with Atari,
or hire any person who is, and was when your employment ended, an employee of Atari. This
paragraph will not, however, prevent a company with which you are associated after the
termination of your employment from advertising employment opportunities in trade
publications, publications of general circulation or other media of general circulation
(such as internet sites), so long as those advertisements are not targeted at employees of
Atari or its affiliates/subsidiaries, nor prevent a company with which you are associated
from soliciting or hiring any employee of Atari, so long as you are not directly involved in
such solicitation or hiring or in causing such solicitation or hiring.

     (b) Non-Competition: (1) For a period of six (6) months after the termination of your
employment with Atari, regardless of the reason for termination, you will not, directly or
indirectly, whether as an employee, an owner or otherwise, be involved with or give
assistance to any person or entity that develops, publishes or distributes video games in
the United States of America, including publishing or distributing video games over the
internet. Nothing in this paragraph will, however, prevent you from owning as a

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passive
investor less than one percent (1%) of the outstanding shares of a company, the shares of which are listed on a national securities exchange, or traded on a national
trading market, in the United States of America.

     (2) Atari acknowledges that you own a twenty-five percent (25%) interest in GameSocial
Holdings, LLC, a company which provides an online games social network (together with its
affiliates or any successor, “GameSocial”). You hereby acknowledge and agree that
during the term of your employment hereunder and for six (6) months after your employment
ceases, you shall only have a passive investment interest in GameSocial, such that you
exercise no voting rights, provide no advice or services, make no strategic or management
decisions, and do not increase your holdings in GameSocial, and within thirty (30) days from
the Employment Date you shall deposit your holdings in a blind trust pursuant to which an
executor(s) other than yourself shall have sole discretion over, and knowledge of, the
assets.

     (3) Atari further acknowledges its receipt of a copy of related contracts between you
and Sony BMG and Time Life, pursuant to which you were engaged through December 1, 2008, to
assist in the sale of certain non-core assets (the “Sony Contracts”). Those assets,
together with the time frame for the respective sale transactions, are set forth on
Schedule A hereto, which you represent is entirely complete and accurate. You agree
that you will terminate the Sony Contracts by the earlier of (i) ninety (90) days from the
Employment Date, or (ii) the date upon which the last sale transaction set forth on
Schedule A is completed. You agree that until such termination you will spend no
more than three (3) hours per week completing the tasks required of you under the Sony
Contract. You further agree that your services under the Sony Contracts will not prevent
you from performing your duties as CEO of Atari and will not result in any conflict of
interest with your obligations to Atari. You agree that you will not renew or extend the
Sony Contracts, nor will you accept further work from Sony BMG or Time Life or any other
third party during the term of your employment.

     (4) Notwithstanding the foregoing provisions of this Section 10(b), in the
event that IESA transaction referred to in Section 4(c) shall occur, and upon or
within six (6) months following the consummation of such transaction your employment is
terminated either by Atari without Cause or by you for Good Reason in accordance with the
terms of this letter agreement, then (i) the six (6) month post-employment noncompetition
restriction provided in paragraph 10(b)(1) above shall not apply, and (ii) the six (6) month
post-employment restriction with respect to GameSocial provided in paragraph 10(b)(2) above
shall not apply.

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     (c) Non-Disparagement: During and after your employment with Atari, you will not take
any action which is intended, or would reasonably be expected, to harm Atari’s reputation or
which would reasonably be expected to lead to unwanted or unfavorable publicity regarding
Atari. Nothing in this Section 10(c) will, however, (i) preclude you from making
non-defamatory statements regarding Atari and taking other actions in the course of engaging
in legitimate activities not prohibited by this letter agreement, or (ii) preclude you from
testifying truthfully and completely, or from fully complying with any legal process, in any
judicial or quasi-judicial proceeding or with regard to any governmental inquiry.

     (d) Injunctive Relief: By signing this letter agreement, you acknowledge that if you
breach any of the provisions of Section 9 or this Section 10, Atari is
likely to suffer irreparable damages, the amount of which cannot readily be determined.
Therefore, you agree that Atari will be entitled to injunctive relief or other equitable
relief with regard to any threatened or ongoing violation of these provisions. Such relief
will be in addition to, and not instead of, any other relief to which Atari is entitled.

	11.	 	Legal Right To Work. Federal law requires that you provide satisfactory proof of
eligibility for employment within the United States, by completing the Employment Eligibility
Verification Form I-9. Please bring in original documentation with you on your first day of
employment.

	12.	 	Code Section 409A. The intent of the parties is that payments and benefits under
this letter agreement comply with Internal Revenue Code Section 409A and applicable guidance
promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the
maximum extent permitted, this letter agreement shall be interpreted to be in compliance
therewith. If you notify Atari (with specificity as to the reason therefor) that you believe
that any provision of this letter agreement would cause you to incur any additional tax or
interest under Code Section 409A, and Atari concurs with such belief or Atari (without any
obligation whatsoever to do so) independently makes such determination, Atari shall, after
consulting with you, reform such provision to attempt to comply with Code Section 409A through
good faith modifications to the minimum extent reasonably appropriate to conform with Code
Section 409A, including, but not limited to, delaying the commencement of any payment under
this Agreement for six (6) months from your termination of employment if it is determined that
you are a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Internal Revenue
Code and applicable guidance thereunder, and such amounts are deemed to be deferred
compensation subject to the requirements of Code Section 409A. In no event whatsoever shall
Atari be liable for any additional tax, interest or penalties that may be imposed on

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	 	 	you by Code Section 409A or any damages for failing to comply with Code Section 409A.

	13.	 	Miscellaneous.

     (a) Relocation: In the event that during your employment Atari changes the location of
its principal office such that it is more than fifty (50) miles from its current location in
New York City, and you are required to relocate, Atari shall reimburse you for the
reasonable and necessary costs of such relocation, including expenses incurred for movement
of household goods, broker fees on the sale of property, and the reasonable cost of
temporary housing for a period not to exceed six (6) months. Any such reimbursement shall
be subject to applicable tax requirements.

     (b) Legal Fees: You will be reimbursed for the legal fees incurred in the negotiation
and review of this letter agreement, which is not to exceed five thousand dollars
($5,000.00). Your attorney shall submit an invoice to Atari directly for such fees, which
invoice Atari shall pay within thirty (30) days of receipt thereof.

     (c) No Conflict: You represent and warrant that neither your employment with Atari nor
your performance of any of your obligations under this letter agreement will conflict with
or violate any obligations you have to any other person, whether under an agreement or
otherwise.

     (d) Cooperation: Following termination of your employment with Atari, you will
cooperate with Atari, as reasonably requested by Atari and subject to Atari’s reimbursement
of your reasonable out-of-pocket expenses, to effect an orderly transition of your
responsibilities and to ensure that Atari is aware of all material matters being handled by
you. During and after your employment, you will, at Atari’s expense, provide all
information and other assistance that Atari may reasonably request in connection with any
legal, quasi-legal or other governmental proceeding, including any external or internal
investigation, involving Atari or any of its affiliates relating to activities in which you
were involved during your employment and in which your interests are not adverse to those of
Atari.

     (e) Entire Agreement: This letter agreement contains the entire agreement between the
parties regarding the subject matter of this letter agreement and supersedes any prior
agreements or understandings between the parties regarding that subject matter.

     (f) Assignment: Atari may not assign any of its rights or obligations under this
letter agreement, except that Atari may assign its rights and obligations under this

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letter agreement to any affiliated entity, purchaser, or person who otherwise becomes
the owner, of all or substantially all of Atari’s business or assets and which is obligated
to fulfill Atari’s obligations under this letter agreement by operation of law, agreement,
or otherwise. You may not assign or delegate any of your rights or obligations under this
letter agreement.

     (g) Amendment: This letter agreement may be amended only by a writing which makes
express reference to this letter agreement and which is signed by you and by Atari.

     (h) Severability: If any provision of this letter agreement is held to be invalid or
unenforceable in whole or in part, the remainder of this letter agreement will remain in
full force and effect, and the invalid or unenforceable provision will be deemed modified to
the extent necessary to make the provision valid and enforceable while carrying out to the
fullest extent possible the intent of the parties expressed in the original provision.

     (i) Notices: Any notice or other communication under or with respect to this letter
agreement must be in writing and will be deemed given when it is delivered in person or sent
by facsimile, or on the third day after the day on which it is mailed, to Atari or to you,
as the case may be, addressed to Atari at Atari’s principal offices or to you at the home
address in Atari’s personnel files (or, if you have not specified a home address, at Atari’s
principal offices).

     (j) Counterparts: This letter agreement may be executed counterparts, each of which
may contain a signature of one party or may contain a facsimile copy of the signature of
other party. Each of those counterparts will be an original copy of this letter agreement,
but both of them together will constitute one and the same agreement.

     (k) Governing Law: This letter agreement and all matters related to your employment
with Atari will be governed by and construed according to the laws of the State of New York
as applied to agreements entered into and to be performed within the State of New York.
Venue for any action arising under this letter agreement shall be New York, New York.

     (l) Insurance and Indemnification:

     (i) Atari will include you as an insured under any directors and officers
liability insurance policy maintained by Atari during your employment.

     (ii) To the fullest extent permitted by law and its certificate of
incorporation and by-laws (each, as amended), Atari will indemnify you with

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regard to claims or liabilities during the term of your employment or relating
to your acts as an officer and employee of Atari during your employment and will
advance all reasonable costs and expenses of defense incurred by you in connection
with any action, suit, or proceeding with respect to which you may be entitled to
indemnification under this provision, subject to reimbursement if it is later
determined that you are not entitled to such indemnification. The indemnity and
defense provisions of this Section 13(l) will indefinitely survive the
termination of this letter agreement and your employment.

We at Atari are delighted to welcome you as a member of our team. We have achieved our outstanding
reputation largely through the efforts of our employees and believe that you will play an important
role in our continued success. In return, we believe that you will be both challenged and rewarded
by your job opportunities during your employment with us.

We look forward to you joining Atari and anxiously await your response to this offer which will
remain in effect for seven (7) days from the date on this letter agreement. Please signify your
acceptance of our offer by signing and returning to me one (1) of the enclosed copies of this
letter agreement and signed copies of the Proprietary Information and Inventions Agreement and Code
of Ethics, Standards and Conduct. In the meantime, should you have any questions, please do not
hesitate to contact me.

	 	 	 	 	 
	Sincerely,

ATARI, INC.

 	 
	By:  	                    /s/ Curtis G. Solsvig, III
 	 
	 	Curtis G. Solsvig, III 	 
	 	Chief Restructuring Officer 	 
	 

Agreed and Accepted:

I am pleased to accept the terms and conditions as stated above.

	 	 	 	 	 	 	 
	/s/ Jim Wilson

	 	Date:
	 	3/31/08
	 	 
	 

	 	 	 	 	 	 
	Jim Wilson
	 	 	 	 	 	 

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