Rosetta Stone 2015 Annual Report Download - page 127

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Article 1
FOREWORD
Section 1.01 Purpose of the Plan
The Company considers it essential to the best interests of its shareholders to foster the continued employment of key management personnel in the face of a
possible change in control of the Company. As such, in accordance with the terms of this Plan, effective November 1, 2015, the Company will provide
Severance Benefits to an eligible employee in the event of the Qualifying Termination of the eligible employee’s employment in connection with a Change
in Control. No benefits will be provided pursuant to this Plan for any purpose whatsoever except upon the occurrence of a Change in Control.
Capitalized terms used throughout the Plan have the meanings set forth in Article Two, except as otherwise defined in the Plan or where the context clearly
requires otherwise.
ARTICLE 2
DEFINITIONS
Where the following words and phrases appear in this Plan with initial capital letters, they shall have the meaning set forth below, unless a different meaning
is plainly required by the context.
Section 2.01 “Accounting Firm” means a nationally recognized accounting firm that (i) is not serving as accountant or auditor for the person who acquires
ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Code) or any
Affiliate of such person, and (ii) is agreed upon by the Company and the Participant.
Section 2.02 “Affiliate” means, with respect to any particular Person, any other Person controlling, controlled by or under common control with such
Particular Person. A Subsidiary of the Company shall be an Affiliate of the Company.
Section 2.03 “Base Salary” means, with respect to a Participant, the Participant’s annual base salary in effect on the date of the Participant’s Separation from
Service; provided, however, that if the Participant’s Separation from Service is for Good Reason due to a reduction in the Participant’s annual base salary
pursuant to Section 2.18(i), the Participant’s Base Salary will be the Participant’s annual base salary in effect immediately before such reduction.
Section 2.04 “Board” means the Board of Directors of the Company.
Section 2.05 “Cause” means, with respect to a Participant, the Participant’s Separation from Service for any of the following:
(i) the Participant commits a felony or a crime involving moral turpitude or commits any other act or omission involving fraud,
embezzlement or any other act of dishonesty in the course of Participant’s employment by the Employer which conduct damages the Employer or
any of its Affiliates;
(ii) the Participant substantially and repeatedly fails to perform duties of the office held by Participant as reasonably directed by the
Board and/or the Chief Executive Officer;
(iii) the Participant commits gross negligence or willful misconduct with respect to the Employer or any of its Affiliates;
(iv) the Participant commits a material breach of the Participant’s employment agreement, if any, with the Employer or any of its
Affiliates that is not cured within ten (10) days after receipt of written notice thereof from the Board and/or Chief Executive Officer;
2