Rosetta Stone 2011 Annual Report Download - page 215

rights to acquire shares of the Stock distributed by the Company in respect of Restricted Shares during any Period of Restriction (the
"Retained Stock Distributions"), to be issued in Employee's name. During the Period of Restriction such electronic book entries shall
contain a restrictive legend notation to the effect that ownership of such Restricted Shares (and any Retained Stock Distributions), and
the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions provided in the Plan and this
Agreement. During the Period of Restriction any regular dividends paid in cash or property (other than Retained Stock Distributions)
with respect to the Restricted Shares and Retained Stock Distributions (the "Retained Cash Distributions") shall not be paid to
Employee but instead shall be accumulated by the Company until the date the Forfeiture Restrictions applicable to the Restricted
Shares and Retained Stock Distributions with respect to which such Retained Cash Distributions shall have been made, paid, or
declared shall have become vested and then on that date such Retained Cash Distributions shall be paid to Employee. Employee shall
have the right to vote the Restricted Shares awarded to Employee and to exercise all other rights, powers and privileges of a holder of
the Shares, with respect to such Restricted Shares, with the exception that (a) Employee shall not be entitled to delivery of such
Restricted Shares until the Forfeiture Restrictions applicable thereto shall have expired, (b) the Company shall retain custody of all
Retained Stock Distributions made or declared with respect to the Restricted Shares and Retained Cash Distributions made or declared
with respect to the Restricted Shares and the Retained Stock Distributions (and such Retained Stock Distributions and Retained Cash
Distributions shall be subject to the same restrictions, terms and conditions as are applicable to the Restricted Shares) until such time,
if ever, as the Restricted Shares with respect to which such Retained Stock Distributions and Restricted Cash Distributions shall have
been made, paid, or declared shall have become vested, and such Retained Stock Distributions and Retained Cash Distributions shall
not bear interest or be segregated in separate accounts and (c) Employee may not sell, assign, transfer, pledge, exchange, encumber, or
dispose of the Restricted Shares or any Retained Stock Distributions or any Restricted Cash Distributions during the Period of
Restriction. Upon issuance the book entry representing the Restricted Shares shall be delivered to such depository as may be
designated by the Committee as a depository for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture
Restrictions lapse, together with stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer
to the Company of all or any portion of the Restricted Shares and any securities constituting Retained Stock Distributions which shall
be forfeited in accordance with the Plan and this Agreement. In accepting the award of the Shares set forth in this Agreement
Employee accepts and agrees to be bound by all the terms and conditions of the Plan and this Agreement.
3. Transfer Restrictions. The Shares granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or
otherwise transferred, encumbered or disposed of, to the extent then subject to the Forfeiture Restrictions. Any such attempted sale,
assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and
the Company shall not be bound thereby. Further, the Shares granted hereby that are no longer subject to Forfeiture Restrictions may
not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable securities laws. Employee also
agrees that the Company may (a) refuse to cause the transfer of the Shares to be registered on the applicable stock transfer records of
the Company if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any
applicable securities law and (b) give related instructions to the transfer agent, if any, to stop registration of the transfer of the Shares.
The Shares are registered with the Securities and Exchange Commission under a
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