Rosetta Stone 2015 Annual Report Download - page 131

executive of his or her selection for Plan participation in the manner provided by Section 6.08. Each such executive will become a Participant once he or she
signs a copy of his or her notification letter and returns such signed notification letter to the Committee.
Section 3.03 Exclusive Benefits. Any Severance Benefits payable to a Participant under this Plan will be paid solely in lieu of, and not in addition to, any
severance benefits payable under any offer letter, employment agreement, severance arrangement or other program or agreement on account of the
Participant’s termination of employment with the Employer.
Section 3.04 End of Participation
An individual shall cease to be a Participant on the date on which the individual ceases to be an employee of the Employer other than by way of a Qualifying
Termination. A Participant may discontinue his or her status as a Participant at any time by a prospectively or immediately effective written document that is
delivered to the Committee in the manner specified in Section 6.08. Except as provided in the next sentence, the Committee may, by resolution, discontinue
an individual’s status as a Participant; provided, however, that no such discontinuance shall become effective (i) during the one-year period following the
date on which advance written notice of such discontinuance is provided to the affected Participant in the manner specified in Section 6.08, or (ii) during the
period beginning on the effective date of a Change in Control and ending 24 months after the effective date of such Change in Control. In the event that an
individual incurs a Qualifying Termination while still a Participant, such individual shall remain a Participant until all compensation and benefits required to
be provided to the Participant under the terms of the Plan on account of such Qualified Termination have been so provided.
ARTICLE 4
SEVERANCE BENEFITS
Section 4.01 Qualifying Termination
(a) Eligibility. A Participant will be eligible for the Severance Benefits described in this Section 4.01 upon a Qualifying Termination, subject to
the Release requirement specified below. Within seven (7) days following the date of the Separation from Service, the Company shall provide the Participant
with a Release. As a condition of receiving the Severance Benefits described in subsections (b), (c), (d), (e), (f) and (g), the Participant must execute and
deliver the Release to the Company within the Release Consideration Period, the Release Revocation Period must expire without revocation of the Release
by the Participant, and the Participant must comply with the restrictive covenants set out in the Release. In the event the Participant breaches one or more of
such restrictive covenants, the Participant will forfeit any such Severance Benefits that have not been paid or provided to the Participant and must repay to
the Company the amount (or equivalent cash value) of any such Severance Benefit that has been paid to the Participant.
(b) Pro-Rata Bonus for Year of Termination. If, on account of the Participant’s termination of employment with the Employer, the Participant
forfeits the Participant’s right to earn a payment under an annual cash incentive plan maintained by the Employer for the performance period containing the
date of such termination of employment, the Company shall pay to the Participant a lump sum cash payment equal to the amount of the annual cash
incentive payment to which the Participant would have been entitled under such plan for such performance period but for the Participant’s termination of
employment, determined on the basis of actual achievement of the performance goals applicable under such plan for such performance period (the “Actual
Bonus”), multiplied by a fraction (i) the numerator of which equals the number of days in such performance period during which the Participant was
employed by the Employer (rounded up to the next highest number of days in the case of a partial day of employment), and (ii) the denominator of which is
the total number of days in such performance period. This amount shall be paid to the Participant in a lump sum on the later of (x) the date on which the
Actual Bonus would have been paid to the Participant under such plan but for the Participant’s termination of employment during such performance period,
or (y) within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.02(f) and subject to the
requirements of Section 4.02(e)).
(c) Prior Year Bonus. If, on account of the Participant’s termination of employment with the Employer, the Participant forfeits the Participant’s
right to earn a payment under an annual cash incentive plan maintained by the Employer for the performance period ending immediately prior to the date of
such termination of employment, the Company shall pay to the Participant a lump sum cash payment equal to the amount of the annual cash incentive
payment to which the Participant would have been entitled under such plan for such performance period but for the Participant’s termination of employment,
determined on the basis of actual achievement of the performance goals applicable under such plan for such performance period (the “Prior Year Bonus”).
This amount shall be paid to the Participant in a lump sum on the later of (x) the date on which the Prior Year Bonus would have been paid to the Participant
under such plan but for the Participant’s termination of employment during such performance period, or (y) within sixty (60) days following the date of the
Participant’s Separation from Service (except as provided in Section 4.02(f) and subject to the requirements of Section 4.02(e)).
(d) CIC Severance Amount. The Company shall pay to the Participant an amount equal to one (1) times the Base Salary. This amount shall be paid
to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.02(f)
and subject to the requirements of Section 4.02(e)).
(e) COBRA Payments. Upon the Participant’s Separation from Service, the Participant and the Participant’s spouse and eligible dependents, as
applicable, may elect health care coverage for up to eighteen (18) months from the date of the Participant’s Separation from Service pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). Subject to Section 4.02(f) and the requirements of Section 4.02(e), the
Employer will pay for up to eighteen (18) months, on an after-tax basis, the portion of Participant’s COBRA premiums for such coverage that exceeds the
amount that the Participant would have incurred in premiums for such coverage under the Employer’s health plan if then employed by the Employer;