Rosetta Stone 2011 Annual Report Download - page 165

(l) Taxes; Withholding of Taxes on Behalf of Executive. Executive shall be solely responsible for any and all taxes
imposed on Executive by reason of any compensation and benefits provided under this Agreement, and all such compensation and
benefits shall be subject to applicable withholding. Without limiting the scope of the preceding sentence, the Company and its
Affiliates shall be entitled to deduct or withhold from any amounts owing from the Company or any of its Affiliates to Executive any
federal, state, provincial, local or foreign withholding taxes, excise taxes, or employment taxes imposed with respect to Executive's
compensation or other payments from the Company or any of its Affiliates or Executive's ownership interest in the Company,
including, but not limited to, wages, bonuses, dividends, the receipt or exercise of stock options and/or the receipt or vesting of
restricted stock.
(m) Waiver of Jury Trial. BOTH PARTIES TO THIS AGREEMENT AGREE THAT ANY ACTION, DEMAND, CLAIM OR
COUNTERCLAIM RELATING TO THE TERMS AND PROVISIONS OF THIS AGREEMENT, OR TO ITS BREACH, MAY BE
COMMENCED IN THE COMMONWEALTH OF VIRGINIA IN A COURT OF COMPETENT JURISDICTION. BOTH PARTIES TO THIS
AGREEMENT FURTHER AGREE THAT ANY ACTION, DEMAND, CLAIM OR COUNTERCLAIM SHALL BE RESOLVED BY A JUDGE
ALONE, AND BOTH PARTIES HEREBY WAIVE AND FOREVER RENOUNCE THAT RIGHT TO A TRIAL BEFORE A CIVIL JURY.
13. Certain Additional Payments by the Company; Code Section 280G.
(a) Anything in this Agreement to the contrary notwithstanding, if any payment or benefit Executive would receive
pursuant to this Agreement ("Payment") would (i) constitute a "parachute payment" within the meaning of Section 280G of the Code,
and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then such Payment
shall be reduced to the Reduced Amount. The "Reduced Amount" shall be either (x) the largest portion of the Payment that would
result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the
Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the
Excise Tax (all computed at the highest applicable marginal rate), results in Executive's receipt, on an after-tax basis, of the greater
amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in
payments or benefits constituting "parachute payments" is necessary so that the Payment equals the Reduced Amount, reduction shall
occur in the following order: (A) cash payments shall be reduced first and in reverse chronological order such that the cash payment
owed on the latest date following the occurrence of the event triggering such Excise Tax will be the first cash payment to be reduced;
and (B) employee benefits shall be reduced last (but only to the extent such benefits may be reduced under applicable law, including,
but not limited to the Code and the Employee Retirement Income Security Act of 1974, as amended) and in reverse chronological
order such that the benefit owed on the latest date following the occurrence of the event triggering such Excise Tax will be the first
benefit to be reduced.
(b) The determinations and calculations required hereunder shall be made by nationally recognized accounting firm
that is (i) not be 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) agreed upon by the Company and Executive (the "Accounting Firm") The
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