Rosetta Stone 2011 Annual Report Download - page 216

Registration Statement on Form S-8. A Prospectus describing the Plan and the Shares is available from the Company.
4. Vesting.
(a) The Shares that are granted hereby shall be subject to the Forfeiture Restrictions. The Forfeiture Restrictions shall
lapse as to the Shares that are granted hereby in accordance with the following schedule, provided that Employee's employment with
the Company or its direct or indirect subsidiaries has not terminated prior to the applicable lapse date. On the first anniversary of the
Vesting Start Date (as set forth in the Cover Sheet), and on each succeeding anniversary of the Vesting Start Date (each such
anniversary date being referred to as a "lapse date"), the Forfeiture Restrictions shall lapse with respect to one-fourth (1/4th) of the total
number of Restricted Shares granted hereby, rounded to the nearest whole number, except that on the fourth anniversary of the
Vesting Start Date the Forfeiture Restrictions shall lapse with respect to the then remaining number of Restricted Shares granted
hereby for which the Forfeiture Restrictions have not previously lapsed.
(b) Upon the lapse of the Forfeiture Restrictions with respect to the Shares granted hereby the Company shall cause to
be delivered to Employee such Shares in electronic book entry form, and such Shares shall be transferable by Employee (except to the
extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable
securities law).
(c) If Employee ceases to be employed by the Company or a subsidiary for any reason before the applicable lapse date
including death or disability of Employee, the Forfeiture Restrictions then applicable to the Restricted Shares shall not lapse and all
the Restricted Shares shall be forfeited to the Company.
5. Capital Adjustments and Reorganizations. The existence of the Restricted Shares shall not affect in any way the
right or power of the Company or any company the stock of which is awarded pursuant to this Agreement to make or authorize any
adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or
consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part
of its assets or business, or engage in any other corporate act or proceeding.
6. Tax Withholding. To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions
results in income to Employee for federal, state, local or foreign income, employment or other tax purposes with respect to which the
Company or its Affiliates or subsidiaries have a withholding obligation, Employee shall deliver to the Company at the time of such
receipt or lapse, as the case may be, such amount of money as the Company or any Affiliate may require to meet such obligation under
applicable tax laws or regulations, and, if Employee fails to do so, the Company and its Affiliates and subsidiaries are authorized to
withhold from the Shares granted hereby or from any cash or stock remuneration then or thereafter payable to Employee in any
capacity any tax required to be withheld by reason of such taxable income, sufficient to satisfy the withholding obligation.
7. Section 83(b) Election. Employee shall not exercise the election permitted under section 83(b) of the Internal
Revenue Code of 1986, as amended, with respect to the Restricted
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