Rosetta Stone 2015 Annual Report Download - page 132

provided, however, the Employer’s obligation shall only apply to the extent COBRA coverage is elected and in effect during such period. Following the
eighteen (18) months of coverage, the Participant will be responsible for the full amount of all future premium payments should he or she wish to continue
COBRA coverage. However, if the Participant or the Participant’s spouse becomes eligible for group health coverage sponsored by another employer
(regardless of whether such coverage is actually elected) or for any other reason the Participant’s COBRA coverage terminates, the Employer shall not be
obligated to pay any portion of the premiums provided hereunder for periods after the Participant or the Participant’s spouse becomes eligible for such other
coverage or the Participant’s COBRA coverage terminates. The Participant shall have the obligation to notify the Employer if he or she or the Participant’s
spouse becomes eligible for group health coverage sponsored by another employer.
(f) Equity and Long-Term Incentives. With respect to any outstanding stock options held by the Participant, any portion of the shares of Stock that
are subject to such stock options that have not previously vested shall vest and such stock options shall be exercisable in full. Any such stock options held
by the Participant shall remain exercisable until, and shall otherwise terminate and become null and void at the close of business at the Company’s principal
business office on the later of (i) the day that is sixty (60) days after the date of the Participant’s Separation from Service, or (ii) the day that is thirty (30) after
any blackout period(s) under the Company’s Insider Trading Compliance Policy (as in effect from time to time) to the extent the Participant is then subject to
any such blackout period(s), but in no event after the close of business at the Company’s principal business office on the day before the date of the tenth
anniversary of the applicable grant date for each such stock option. With respect to any other outstanding equity or long-term compensation grants or awards
held by the Participant, such grants or awards shall vest and all remaining forfeiture restrictions applicable to such grants or awards shall lapse.
(g) Outplacement. Subject to the requirement of Section 4.02(e), within sixty (60) days following the date of the Participant’s Separation from
Service, the Employer shall provide professional outplacement and counseling services through an outplacement firm chosen by the Employer for twelve
(12) months from the date of the Participant’s Separation from Service to assist the Participant in his or her search for other employment.
Section 4.02 Section 409A
(a) To the extent necessary to ensure compliance with Code Section 409A, the provisions of this Section 4.02 shall govern in all cases over any
contrary or conflicting provision in the Plan.
(b) It is the intent of the Company that this Plan comply with the requirements of Code Section 409A and all guidance issued thereunder by the
U.S. Internal Revenue Service with respect to any nonqualified deferred compensation subject to Code Section 409A. The Plan shall be interpreted and
administered to maximize the exemptions from Code Section 409A and, to the extent the Plan provides for deferred compensation subject to Code Section
409A, to comply with Code Section 409A and to avoid the imposition of tax, interest and/or penalties upon any Participant under Code Section 409A.
(c) The Company does not, however, assume any economic burdens associated with Code Section 409A. Although the Company intends to
administer the Plan to prevent taxation under Code Section 409A, it does not represent or warrant that the Plan complies with any provision of federal, state,
local, or non-United States law. The Company, the Subsidiaries, and their respective directors, officers, employees and advisers will not be liable to any
Participant (or any other individual claiming a benefit through the Participant) for any tax, interest, or penalties the Participant may owe as a result of
participation in the Plan. Neither the Company nor any of its Affiliates have any obligation to indemnify or otherwise protect any Participant from any
obligation to pay taxes under Code Section 409A.
(d) The right to a series of payments under the Plan will be treated as a right to a series of separate payments. Each such payment that is made
within 2-1⁄2 months following the end of the year that contains the date of the Participant’s Separation from Service is intended to be exempt from Code
Section 409A as a short-term deferral within the meaning of the final regulations under Code Section 409A. Each such payment that is made later than 2-1⁄2
months following the end of the year that contains the date of the Participant’s Separation from Service is intended to be exempt under the two-times
exception of Treasury Reg. § 1.409A-1(b)(9)(iii), up to the limitation on the availability of that exception specified in the regulation. Then, each payment
that is made after the two-times exception ceases to be available shall be subject to delay, as necessary, in accordance with Section 4.02(f) below.
(e) To the extent necessary to comply with Code Section 409A, in no event may a Participant, directly or indirectly, designate the taxable year of
payment. In particular, to the extent necessary to comply with Code Section 409A, if any payment to a Participant under this Plan is conditioned upon the
Participant’s executing and not revoking a Release and if the designated payment period for such payment begins in one taxable year and ends in the next
taxable year, the payment will be made in the later taxable year.
(f) To the extent necessary to comply with Code Section 409A, references in this Plan to “termination of employment” or “terminates
employment” (and similar references) shall have the same meaning as Separation from Service, and no payment subject to Code Section 409A that is payable
upon a termination of employment shall be paid unless and until (and not later than applicable in compliance with Code Section 409A) the Participant incurs
a Separation from Service. In addition, if the Participant is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) at the time of his or
her Separation from Service, any nonqualified deferred compensation subject to Code Section 409A that would otherwise have been payable on account of,
and within the first six months following, the Participant’s Separation from Service, and not by reason of another event under Code Section 409A(a)(2)(A),
will become payable on the first business day after six months following the date of the Participant’s Separation from Service or, if earlier, the date of the
Participant’s death.
(g) To the extent that any reimbursement by the Employer to a Participant of eligible expenses under this Plan constitutes a “deferral of
compensation” within the meaning of Code Section 409A (a “Reimbursement”) (i) the Participant must request the Reimbursement (with substantiation of