Rosetta Stone 2010 Annual Report Download - page 129

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tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that
if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to
Executive, on an interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes
for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested
amount. The Company shall not direct Executive to pay such a claim and sue for a refund if, due to the prohibitions of section 402 of
the Sarbanes-Oxley Act of 2002, the Company may not advance to Executive the amount necessary to pay such claim. The
Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Taxing Authority. The costs and
expenses that are subject to be paid pursuant to this Section 13(c) shall not be limited as a result of when the costs or expenses are
incurred. The amounts of costs or expenses that are eligible for payment pursuant to this Section 13(c)(iv) during a given taxable year
of Executive shall not affect the amount of costs or expenses eligible for payment in any other taxable year of Executive. The right to
payment of costs and expenses pursuant to this Section 13(c)(iv) is not subject to liquidation or exchange for another benefit. Any
payment due under this Section 13(c)(iv) to reimburse Executive for any taxes shall be made to Executive by the Company by the end
of Executive's taxable year following Executive's taxable year in which Executive remits the related taxes to the applicable taxing
authorities.
(d) If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 13(c), Executive
becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Company's complying with the
requirements of Section 13(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto. If, after the receipt by Executive of an amount advanced by the Company pursuant to
Section 13(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company
does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall not be required to be repaid.
14. Compliance with IRC Section 409A.
This agreement is intended to comply with Section 409A and will be interpreted in a manner intended to comply with Section 409A,
to the extent that the requirements of Section 409A are applicable thereto. Notwithstanding anything herein to the contrary, (i) if at
the time of Executive's termination of employment with the Company she is a "specified employee" as defined in Section 409A (and
any related regulations or other pronouncements thereunder) and the deferral of the commencement of any payments or benefits
otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or
additional tax under Section 409A, then the Company will defer the commencement of the payment of any such payments or benefits
hereunder (without any reduction in such payments or benefits ultimately paid or provided to Executive) until the date that is six
months following her termination of employment with the Company (or the earliest date as is permitted under Section 409A) and
(ii) if any other payments of money or other benefits due to Executive hereunder
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