Electronic Arts Inc. Key Employee Continuity Plan

Exhibit 10.1

ELECTRONIC ARTS INC.

KEY EMPLOYEE CONTINUITY PLAN The Company hereby adopts the Electronic Arts Inc. Key Employee Continuity Plan for the benefit of certain employees of the Company and its Affiliates, on the terms and conditions set forth in this plan. Capitalized terms are defined in Section 1.

SECTION 1. DEFINITIONS. As hereinafter used:

1.1 " Affiliate" shall have the meaning set forth in Rule 12b-2 under Section 12 of the Exchange Act.

1.2 " Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. 1.3 " Board" means the Board of Directors of the Company.

1.4 " Cause" means (i) the continued failure by the Eligible Employee to substantially perform the Eligible Employee' s duties with the Employer (other than any such failure resulting from the Eligible Employee' s incapacity due to physical or mental illness), (ii) the engaging by the Eligible Employee in conduct which is demonstrably injurious to the Company or its Affiliates, monetarily or otherwise, (iii) the Eligible Employee committing any felony or any crime involving fraud, breach of trust or misappropriation or (iv) any breach or violation of any agreement or written code of conduct relating to the Eligible Employee' s employment with the Employer where the Employer, in its sole discretion, determines that such breach or violation materially and adversely affects the Company or any of its Affiliates.

1.5 A " Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred: (i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company other than securities acquired by virtue of the exercise of a conversion or similar privilege or right unless the security being so converted or pursuant to which such right was exercised was itself acquired directly from the Company) representing 50% or more of (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the Company' s then outstanding voting securities entitled to vote generally in the election of directors; or

(ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving on the Board (the " Incumbent Board" ): individuals who, on the Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including, without limitation, a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company' s stockholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or

(iii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation pursuant to which (A) the voting securities of the Company outstanding immediately prior to such merger or consolidation will continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) more than 50% of the outstanding shares of common stock and the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; (B) no Person will become the Beneficial Owner, directly or indirectly, of securities of the Company or such surviving entity or any parent thereof representing 50% or more of the outstanding shares of common stock or the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to such merger or consolidation); and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation (or any parent thereof) resulting from such merger or consolidation; or


(iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company' s assets, other than a sale or disposition by the Company of all or substantially all of the Company' s assets to an entity, (A) more than 50% of the outstanding shares of common stock and the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of which (or of any parent of such entity) is owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale; (B) in which (or in any parent of such entity) no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the outstanding shares of common stock resulting from such sale or disposition or the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to such sale or disposition); and (C) in which (or in any parent of such entity) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors.

1.6 " Code" means the Internal Revenue Code of 1986, as it may be amended from time to time.

1.7 " Company" means Electronic Arts Inc., a Delaware corporation, or any successors thereto.

1.8 " Disability" means long-term disability under the terms of the Employer' s long-term disability plan, as then in effect.

1.9 " Effective Date" means February 7, 2008, the date as of which the Plan has been adopted.


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1.10 " Eligible Employee" means any employee who is a Tier 1, Tier 2, Tier 3 or Tier 4 Employee. For clarification purposes only, Lawrence F. Probst III, the Chairman of the Board of Directors at the time of adoption of the Plan, is not an Eligible Employee. 1.11 " Employer" means the Company or any of its Affiliates that is an employer of an Eligible Employee. 1.12 " Equity Award" means stock options, restricted stock, restricted stock units, stock appreciation rights and other similar equity-based awards, in each case whether settled in stock, cash or otherwise, but excluding any performance share awards and performance cash awards, which are granted to an Eligible Employee under the Electronic Arts Inc. 2000 Equity Incentive Plan and any other equity-based incentive plan or arrangement adopted or assumed by the Company, and any future equity-based incentive plan or arrangement adopted or assumed by the Company at any time prior to a Change in Control. For purposes of this Plan, Equity Awards shall also include any securities acquired upon the exercise of an option, warrant or other similar right that constitutes an Equity Award.

1.13 " ERISA" means the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

1.14 " Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.

1.15 " Good Reason" means:

(i) for all Eligible Employees, the occurrence without the affected Eligible Employee' s written consent, of any of the following on or after the date of a Change in Control:

(A) a change in the location of such Eligible Employee' s principal place of business by more than 50 miles when compared to the Eligible Employee' s principal place of business immediately before the Change in Control; and (B)(1) a more than 10% reduction in the Eligible Employee' s annual base salary in effect immediately before the Change in Control, (2) a more than 10% reduction in the Eligible Employee' s target annual bonus or incentive opportunity from that in effect immediately before the Change in Control, or (3) a more than 10% reduction in the Eligible Employee' s total target annual cash compensation, including without limitation, annual base salary and target annual bonus or incentive opportunity, from that in effect immediately before the Change in Control; and (ii) for Specified Eligible Employees, in addition to the events described in clause (i) above, the occurrence without the affected Specified Eligible Employee' s written consent, on or after the date of a Change in Control, of a material reduction in the Specified Eligible Employee' s authority, duties, or responsibilities, including, without limitation, a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Specified Eligible Employee is required to report, which shall include a requirement that a Specified Eligible Employee report to a corporate officer or employee instead of reporting directly to the board of directors of a corporation (or similar governing body with respect to an entity other than a corporation), when


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compared to the Specified Eligible Employee' s authority, duties, or responsibilities, or the authority, duties or responsibilities of the supervisor to whom the Specified Eligible Employee is required to report, immediately before the Change in Control.

Notwithstanding the foregoing, Good Reason shall exist only if the following conditions are met: (A) the Eligible Employee gives the Employer written notice, pursuant to Section 5.8, of his or her intention to terminate employment with the Employer for Good Reason; (B) such notice is delivered to the Employer within 90 days of the initial existence of the condition giving rise to the right to terminate for Good Reason, and at least 30 days in advance of the date of termination; (C) the Employer fails to cure the alleged Good Reason to the reasonable satisfaction of the Eligible Employee prior to the Eligible Employee' s termination, and (D) the events described in the preceding sentence, singly or in combination, result in a material negative change in the Executive' s employment relationship with the Employer, so that the Executive' s termination effectively constitutes an involuntary separation from service within the meaning of Section 409A of the Code.

1.16 " Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

1.17 " Plan" means the Electronic Arts Inc. Key Employee Continuity Plan, as set forth herein (including Schedule A), as it may be amended from time to time.

1.18 " Plan Administrator" means the person or persons appointed from time to time by the Board which appointment may be revoked at any time by the Board. If no Plan Administrator has been appointed by the Board (or if the Plan Administrator has been removed by the Board and no new Plan Administrator has been appointed by the Board), the Compensation Committee of the Board shall be the Plan Administrator.

1.19 A " Potential Change in Control" shall be deemed to have occurred if the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control.

1.20 " Potential Change in Control Period" means the period of time beginning on the date of a Potential Change in Control and ending on either the date that such Change in Control occurs, or the date of termination of the agreement that constituted the Potential Change in Control.

1.21 " Severance" means:

(i) during the time period beginning on the Change in Control and ending on the first anniversary of the Change in Control, a termination of an Eligible Employee' s employment with the Employer (A) by the Employer without Cause or (B) by the Eligible Employee for Good Reason; or


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(ii) during the two (2) months immediately preceding a Change in Control, a termination of an Eligible Employee' s employment with the Employer by the Employer without Cause, which termination is made in connection with the Change in Control, as determined by the Plan Administrator in its sole discretion; provided that in the case of either clause (i) or clause (ii) of this definition, such employment termination meets the criteria for a " separation from service" as defined in Treas. Reg. a7 1.409A-1(h). Termination of an Eligible Employee' s employment on account of death or Disability shall not be treated as a Severance. 1.22 " Severance Agreement and Release" means the written separation agreement and release substantially in the form attached hereto as Appendix I, as may be amended from time to time.

1.23 " Severance Date" means, subject to the terms of Section 1.21, the effective date on which an Eligible Employee' s employment by the Employer terminates due to a Severance as specified in a prior written notice by the Company or the Eligible Employee, as the case may be, delivered to the other pursuant to Section 5.8.

1.24 " Severance Payment" means the payment determined pursuant to Section 2.1. 1.25 " Severed Employee" is an Eligible Employee once he or she incurs a Severance. 1.26 " Specified Eligible Employee" means any Eligible Employee that serves in one or more of the positions or roles for the Company set forth on Schedule A, as such list may be amended from time to time by the Plan Administrator. The Tier level of each Specified Eligible Employee will be determined in accordance with such employee' s corporate title or level or in the absence thereof, as designated by the Plan Administrator.

1.27 " Tier 1 Employee" means the Chief Executive Officer of the Company, and any other employee of the Company or any of its Affiliates designated as such by the Plan Administrator in writing.

1.28 " Tier 2 Employee" means any President or Executive Vice President of the Company or any of its Affiliates, and any other employee of the Company or any of its Affiliates designated as such by the Plan Administrator in writing.

1.29 " Tier 3 Employee" means any Senior Vice President of the Company or any of its Affiliates, and any other employee of the Company or any of its Affiliates designated as such by the Plan Administrator in writing.

1.30 " Tier 4 Employee" means any Vice President of the Company or any of its Affiliates, and any other employee of the Company or any of its Affiliates designated as such by the Plan Administrator in writing.


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SECTION 2. SEVERANCE PAYMENT; BENEFITS. 2.1 Each Eligible Employee who incurs a Severance shall be entitled, subject to the timely execution, return, and non-revocation of the Severance Agreement and Release, to receive from the Company, subject to the conditions set forth in Sections 2.8, 2.11 and 4.2, a cash payment equal to the product of (A) the sum of (x) such Eligible Employee' s annual base salary as in effect immediately prior to the Severance Date, plus (y) such Eligible Employee' s target annual bonus or incentive opportunity for the year in which the Severance Date occurs; multiplied by (B) in the case of a Tier 1 Employee or a Tier 2 Employee, 1.5; in the case of a Tier 3 Employee, 1; and in the case of a Tier 4 Employee, 0.5. For purposes of clauses (x) and (y) above, annual base salary and target annual bonus or incentive opportunity shall be the amount in effect immediately prior to the Severance Date without regard to any reductions therein which constitute Good Reason. The Severance Payment shall be paid to a Severed Employee in a cash lump sum within 74 days of the Severance Date, provided that the Severed Employee signs and can no longer revoke the Severance Agreement and Release during that 74 day period.

2.2 Subject to the conditions set forth in Sections 2.8, 2.11 and 4.2, and to the extent not vested and exercised or paid out in connection with the Change in Control, in the event an Eligible Employee incurs a Severance, on the Severance Date, the Severed Employee shall become fully vested in all outstanding Equity Awards, including without limitation, stock options, restricted stock, restricted stock units, and stock appreciation rights (notwithstanding any provision of the Company' s applicable equity plans to the contrary). Notwithstanding the foregoing, in the event of a Severance within two (2) months preceding a Change in Control, the Severed Employee shall not forfeit or further vest in any unvested Equity Awards between the Severance Date and the date of the Change in Control but all such awards shall vest in full upon the Change in Control.

(i) In the case of an Equity Award consisting of a stock option or stock appreciation right, such stock option or stock appreciation right shall continue to be exercisable for a period of three years from the Severance Date (or such longer period as may be prescribed in the plan or agreement governing such option), but in no event later than the earlier of the expiration date of such option or stock appreciation right or the tenth anniversary of the grant date of such option or stock appreciation right (ii) In the case of an Equity Award consisting of restricted stock not subject to performance criteria, the Company shall remove any restrictions (other than restrictions required by Federal securities law) or conditions in respect of the restricted stock vested on or before the later of the Severance Date and the Change in Control. (iii) In the case of an Equity Award consisting of restricted stock units, the Company shall remove any restrictions (other than restrictions required by Federal securities law) or conditions in respect of the restricted stock units vested on or before the later of the Severance Date and the Change in Control, but any such restricted stock unit shall be settled in accordance with its terms.


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2.3 Subject to the conditions set forth in Sections 2.8, 2.11 and 4.2, each Eligible Employee who incurs a Severance shall be entitled, in full satisfaction of any performance cash awards granted to such Eligible Employee for any incomplete performance cycle as of the Eligible Employee' s Severance Date, such amount in cash, subject to the Company' s achievement of the applicable performance measures for such awards, for the completed fiscal years prior to the beginning of the fiscal year in which the Severance Date occurs, as determined by the Compensation Committee of the Board in its sole discretion, multiplied by a fraction the numerator of which shall be the number of days the Eligible Employee was employed by the Employer during the applicable performance cycle and the denominator of which shall be the total number of days in the performance cycle. Any such performance cash award shall be paid in accordance with its terms.

2.4 Subject to the conditions set forth in Sections 2.8, 2.11 and 4.2, each Eligible Employee who incurs a Severance shall be entitled to receive from the Company, in full satisfaction of any performance share awards granted to such Eligible Employee for any incomplete performance cycle as of the Eligible Employee' s Severance Date, such number of shares of restricted stock, subject to the Company' s achievement of the applicable performance measures for such awards, for the completed fiscal years prior to the beginning of the fiscal year in which the Severance Date occurs, as determined by the Compensation Committee of the Board in its sole discretion, multiplied by a fraction the numerator of which shall be the number of days the Eligible Employee was employed by the Employer during the applicable performance cycle and the denominator of which shall be the total number of days in the performance cycle. The Company shall remove any restrictions (other than restrictions required by Federal securities law) or conditions in respect of any such restricted shares as of the later of the Severance Date and the Change in Control.

2.5 Subject to the conditions set forth in Sections 2.8, 2.11 and 4.2, in the event an Eligible Employee incurs a Severance, and provided that the Eligible Employee timely elects continued coverage under the Consolidated Omnibus Budge Reconciliation Act of 1985 (" COBRA" ), the Company shall pay the COBRA premiums of such Eligible Employee' s group medical, dental and vision coverage (including coverage for the Eligible Employee' s eligible dependents who were covered as of the Severance Date), commencing on the date immediately following such Eligible Employee' s Severance Date and continuing for the period set forth in the last sentence of this Section (the " Continuation Period" ). Such COBRA premium payments shall continue for the duration of the Continuation Period; provided, however, that no such COBRA premium payments shall be made following an event which terminates the Eligible Employee' s continuation coverage under COBRA, including, but not limited to, the Eligible Employee' s coverage by a medical, dental or vision insurance plan of a subsequent employer. Each Eligible Employee shall be required to notify the Company immediately if the Eligible Employee becomes covered by a medical, dental or vision insurance plan of a subsequent employer or otherwise becomes ineligible for COBRA continuation coverage. The Employer will provide benefits under this Section for the following durations: (i) in the case of a Tier 1 Employee or a Tier 2 ...