Exhibit 10.6


 


OPTION NO.:                


 


ROSETTA STONE INC.

2009 OMNIBUS INCENTIVE PLAN



COVER SHEET TO

NONQUALIFIED STOCK OPTION AWARD AGREEMENT


 


Rosetta Stone Inc., a Delaware corporation (the “Company”), has granted an option (the “Option”) to purchase shares of the Company’s common stock,
$.00005 par value (the “Stock”), to the
individual whose name is set forth below on the “Name of Optionee” line (“Optionee”).  The terms
and conditions of the Option are set forth in this Cover Sheet, in the attached
Nonqualified Stock Option Award Agreement and in the Rosetta Stone Inc. 2009
Omnibus Incentive Plan (the “Plan”).


 


Grant Date:                                            ,
20    


 


Name of Optionee:                                            


 


Optionee’s Employee Identification Number:                 
-                 
-                 


 


Number of Shares of the Stock Covered by the Option:                           


 


Option Price per Share of Stock:  $                
..                 


 


Vesting Start Date:                                
, 20                


 


By signing this Cover Sheet, you agree to, and
agree to be bound by, all of the terms and conditions described in this Cover
Sheet, the attached Nonqualified Stock Option Award Agreement and in the Plan,
a copy of which has been previously made available to you.  You acknowledge that you have had an
opportunity to carefully reviewed the Plan, and agree that the terms of the
Plan will control in the event any provision of this Cover Sheet or the attached
Nonqualified Stock Option Award Agreement is inconsistent with the terms of the
Plan.


 


	
  Optionee:

  	
   

  
	
   

  	
  (Optionee Signature)

  



 


	
  ROSETTA
  STONE INC.

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


Attachment


 


THIS AGREEMENT IS NOT A STOCK
CERTIFICATE OR A NEGOTIABLE INSTRUMENT


 

















 


ROSETTA STONE INC.

2009 OMNIBUS INCENTIVE PLAN



NONQUALIFIED STOCK OPTION AWARD AGREEMENT


 


This NONQUALIFIED STOCK  OPTION AWARD AGREEMENT (this “Agreement”) and the Cover Sheet to which
this Agreement is attached (the “Cover Sheet”)
are entered into between Rosetta Stone Inc., a Delaware corporation (the “Company”), and Optionee (as that term is
defined in the Covered Sheet).  The Board
of Directors of the Company has adopted, and the stockholders of the Company
have approved, the Rosetta Stone Inc. 2009 Omnibus Incentive Plan (the “Plan”), the terms of which are
incorporated by reference herein in their entirety.  Any term used in this Agreement that is not
specifically defined herein shall have the meaning specified in the Plan.


 


IT IS AGREED:


 


1.             Grant of Option.
Subject to the terms of the Plan, this Agreement and the Cover Sheet, on the
Grant Date set forth on the Cover Sheet (the “Grant
Date”), the Company granted to Optionee an option (the “Option”) to purchase that number of shares
of the Company’s common stock, $.00005 par value (the “Stock”), at the Option Price per Share of
Stock set forth on the Cover Sheet (the “Option Price”),
subject to adjustment as provided in the Plan.


 


2.             Type of Option.  The Option is a nonqualified stock option
which is not intended to be governed by section 422 of the Code and will
be interpreted accordingly.


 


3.             Optionee’s Agreement.  In accepting the Option, Optionee accepts and
agrees to be bound by all the terms and conditions of the Plan which pertain to
nonqualified stock options granted under the Plan.


 


4.             Vesting of Option.  Subject to the provisions of the Plan and the
provision of this Agreement (including the requirement in Section 6 that
Optionee continue to be employed by the Company on the dates set forth below),
the Option will be exercisable in accordance with the following schedule:


 


(a)           on
the first anniversary of the Vesting Start Date (as set forth on the Cover
Sheet) the Option will vest with respect to, and may be exercised for up to,
[one-fourth (1/4th)]
[                 ]
of the total number of shares of the Stock subject to the Option as set forth
on the Cover Sheet (the “Option Shares”);


 


[Note: subparagraphs (b) and (c) are
alternative paragraphs]


 


(b)           [on
each succeeding anniversary of the Vesting Start Date the Option will vest with
respect to, and may be exercised for up to, an additional [one-fourth (1/4th)] [                 ]
of the Option Shares so that on the [fourth] [                ]
anniversary of the Vesting Start Date the Option shall be exercisable in full;
and]


 

















 


(c)           [on
the last day of each succeeding three-month period beginning on the first
anniversary of the Vesting Start Date the Option will vest with respect to, and
may be exercised for up to, an additional one-sixteenth (1/16th) of the Option
Shares (and as of the last day of each such quarter the resulting aggregate
number of vested Option Shares will be rounded [down] to the nearest whole
number of Option Shares) so that on the day before the fifth anniversary of the
Vesting Start Date the Option shall be exercisable in full; and]


 


(d)           to
the extent not exercised, installments shall be cumulative and may be exercised
in whole or in part.


 


5.             Manner of Exercise.


 


(a)           To
the extent that the Option is vested and exercisable in accordance with Section 4
of this Agreement, the Option may be exercised by Optionee at any time, or from
time to time, in whole or in part, on or prior to the termination of the Option
(as set forth in Section 6 of this Agreement) upon payment of the Option
Price for the Option Shares to be acquired in accordance with the terms and
conditions of this Agreement and the Plan.


 


(b)           If
Optionee is entitled to exercise the vested and exercisable portion of the
Option, and wishes to do so, in whole or part, Optionee shall (i) deliver
to the Company a fully completed and executed notice of exercise, in such form
as may be designated by the Company in its sole discretion, specifying the
exercise date and the number of Option Shares to be purchased pursuant to such
exercise and (ii) remit to the Company in a form satisfactory to the
Company, in its sole discretion, the Option Price for the Option Shares to be
acquired on exercise of the Option, plus an amount sufficient to satisfy any
withholding tax obligations of the Company that arise in connection with such
exercise (as determined by the Company) in accordance with the provisions of
the Plan.


 


(c)           The
Company’s obligation to deliver shares of the Stock to Optionee under this
Agreement is subject to and conditioned upon Optionee satisfying all tax
obligations associated with Optionee’s receipt, holding and exercise of the
Option.  Unless otherwise approved by the
Committee, all such tax obligations shall be payable in accordance with the
provisions of the Plan.


 


(d)           The
Company and its Affiliates and subsidiaries, as applicable, shall be entitled
to deduct from any compensation otherwise due to Optionee the amount necessary
to satisfy all such taxes.


 


(e)           Upon
full payment of the Option Price and satisfaction of all applicable tax
obligations, and subject to the applicable terms and conditions of the Plan and
the terms and conditions of this Agreement, the Company shall cause
certificates for the shares purchased hereunder to be delivered to Optionee or
cause an uncertificated book-entry representing such shares to be made.


 


6.             Termination of Option.  Unless the Option terminates earlier as
provided in this Section 6 the Option shall terminate and become null and
void at the close of business at the Company’s principal business office on the
day before the date of the tenth anniversary of the Grant Date (the “Option General Expiration Date”).  If Optionee ceases to be an employee of the 


 


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Company
for any reason the Option shall not continue to vest after such cessation of
service as an employee of the Company.


 


(a)           If
Optionee ceases to be an employee of the Company and any Subsidiary Corporation
due to death or Disability, (i) the portion of the Option that was exercisable
on the date of such cessation shall remain exercisable for, and shall otherwise
terminate and become null and void at the close of business at the Company’s
principal business office on the day that is six (6) months after the
date of such death or Disability, but in no event after the Option General
Expiration Date; and (ii) the portion of the Option that was not
exercisable on the date of such cessation shall be forfeited and become null
and void immediately upon such cessation.


 


(b)           If
Optionee ceases to be an employee of the Company or a Subsidiary Corporation
due to Cause, all of the Option shall be forfeited and become null and void
immediately upon such cessation, whether or not then exercisable.  For purposes of this Section 6(b) the
term “Cause” means the occurrence
of one of the following events:  (i) commission
of a felony or a crime involving moral turpitude or the commission of any other
act or omission involving dishonesty in the performance of his duties to the
Company, an Affiliate or Subsidiary Corporation or fraud; (ii) substantial
and repeated failure to perform duties of the office held by Optionee as
reasonably directed by the Company; (iii) gross negligence or willful
misconduct with respect to the Company or any Subsidiary Corporations; (iv) material
breach of any employment agreement between Optionee and the Company that is not
cured within ten (10) days after receipt of written notice thereof from
the Company; (v) failure, within ten (10) days after receipt by
Optionee of written notice thereof from the Company, to correct, cease or
otherwise alter any failure to comply with instructions or other action or
omission which the Board reasonably believes does or may materially or
adversely affect its business or operations; (vi) misconduct which is of
such a serious or substantial nature that a reasonable likelihood exists that
such misconduct will materially injure the reputation of the Company or its
Subsidiary Corporations if Optionee was to remain employed by the Company; (vii) harassing
or discriminating against the Company’s employees, customers or vendors in
violation of the Company’s policies with respect to such matters; and/or (viii) misappropriation
of funds or assets of the Company for personal use or willful violation of Company
policies or standards of business conduct as determined in good faith by the
Board.


 


(c)           If
Optionee ceases to be an employee of the Company or a Subsidiary Corporation
for any reason other than death, Disability, or Cause, (i) the portion of
the Option that was exercisable on the date of such cessation shall remain
exercisable for, and shall otherwise terminate and become null and void at the
close of business at the Company’s principal business office on the day that is
30-days after the date of such cessation, but in no event after the Option
General Expiration Date, and (ii) the portion of the Option that was not
exercisable on the date of such cessation shall be forfeited and become null
and void immediately upon such cessation.


 


(d)           Upon
the death of Optionee prior to the expiration of the Option, Optionee’s
executors, administrators or any person or persons to whom the Option may be
transferred by will or by the laws of descent and distribution, shall have the
right, at any time prior to the termination of the Option to exercise the
Option with respect to the number of shares that Optionee would have been
entitled to exercise if he were still alive.


 


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7.             Tax Withholding.  To the extent that the receipt of the Option,
this Agreement or the Cover Sheet, the vesting of the Option or the exercise of
the Option results in income to Optionee for federal, state, local or foreign
income, employment or other tax purposes with respect to which the Company or
its subsidiaries or any Affiliate has a withholding obligation, Optionee shall
deliver to the Company at the time of such receipt, vesting or exercise, as the
case may be, such amount of money as the Company or its subsidiaries or any
Affiliate may require to meet its obligation under applicable tax laws or
regulations, and, if Optionee fails to do so, the Company or its subsidiaries
or any Affiliate is authorized to withhold from the shares subject to the
Option (based on the Fair Market Value of such shares as of the date the amount
of tax to be withheld is determined) or from any cash or stock remuneration
then or thereafter payable to Optionee any tax required to be withheld by
reason of such taxable income, sufficient to satisfy the withholding obligation.


 


8.             Capital Adjustments and
Reorganizations. The existence of the Option 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.


 


9.             Employment Relationship. For
purposes of this Agreement, Optionee shall be considered to be in the
employment of the Company and its Affiliates as long as Optionee has an
employment relationship with the Company and its Affiliates.  The Committee shall determine any questions
as to whether and when there has been a termination of such employment
relationship, and the cause of such termination, under the Plan and the
Committee’s determination shall be final and binding on all persons.


 


10.           Not an Employment Agreement.  This Agreement is not an employment or
service agreement, and no provision of this Agreement shall be construed or
interpreted to create an employment or other service relationship between
Optionee and the Company, its subsidiaries or any of its Affiliates or
guarantee the right to remain employed by the Company, its subsidiaries or any
of its Affiliates, for any specified term or require the Company or any
Affiliate to employ Employee for any period of time.


 


11.           No Rights As Stockholder.  Optionee shall not have any rights as a
stockholder with respect to any Option Shares until the date of the issuance of
such shares following Optionee’s exercise of the Option pursuant to its terms
and conditions and payment of all amounts for and with respect to the
shares.  No adjustment shall be made for
dividends or other rights for which the record date is prior to the date a
certificate or certificates are issued for such shares or an uncertificated
book-entry representing such shares is made.


 


12.           Legend.  Optionee consents to the placing on the
certificate for any Option Shares of an appropriate legend restricting resale
or other transfer of such shares except in accordance with the Securities Act
of 1933 and all applicable rules thereunder.


 


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13.           Notices.  Any notice, instruction, authorization,
request, demand or other communications required hereunder shall be in writing,
and shall be delivered either by personal delivery, by telegram, telex,
telecopy or similar facsimile means, by certified or registered mail, return
receipt requested, or by courier or delivery service, addressed to the Company
at the Company’s principal business office address to the attention of the
Company’s General Counsel and to Optionee at Optionee’s residential address as
it appears on the books and records of the Company, or at such other address
and number as a party shall have previously designated by written notice given
to the other party in the manner hereinabove set forth.  Notices shall be deemed given when received,
if sent by facsimile means (confirmation of such receipt by confirmed facsimile
transmission being deemed receipt of communications sent by facsimile means);
and when delivered (or upon the date of attempted delivery where delivery is
refused), if hand-delivered, sent by express courier or delivery service, or
sent by certified or registered mail, return receipt requested.


 


14.           Amendment and Waiver.
Except as otherwise provided herein or in the Plan or as necessary to implement
the provisions of the Plan, this Agreement may be amended, modified or
superseded only by written instrument executed by the Company and Optionee.  Only a written instrument executed and
delivered by the party waiving compliance hereof shall waive any of the terms
or conditions of this Agreement.  Any
waiver granted by the Company shall be effective only if executed and delivered
by a duly authorized director or officer of the Company other than
Optionee.  The failure of any party at
any time or times to require performance of any provisions hereof shall in no
manner effect the right to enforce the same. 
No waiver by any party of any term or condition, or the breach of any
term or condition contained in this Agreement, in one or more instances, shall
be construed as a continuing waiver of any such condition or breach, a waiver
of any other condition, or the breach of any other term or condition.


 


15.           Dispute Resolution.  In the event of any difference of opinion
concerning the meaning or effect of the Plan or this Agreement, such difference
shall be resolved by the Committee.


 


16.           Governing Law  and Severability. The
validity, construction and performance of this Agreement shall be governed by
the laws of the State of Delaware, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this
Agreement to the substantive law of another jurisdiction.  The invalidity of any provision of this
Agreement shall not affect any other provision of this Agreement, which shall
remain in full force and effect.


 


17.           Transfer Restrictions.
The Option Shares may not be sold or otherwise disposed of in any manner that
would constitute a violation of any applicable federal or state securities
laws.  Optionee also agrees (a) that
the Company may refuse to cause the transfer of Option Shares to be registered
on the applicable stock transfer records if such proposed transfer would in the
opinion of counsel satisfactory to the Company constitute a violation of any
applicable securities law and (b) that the Company may give related
instructions to the transfer agent, if any, to stop registration of the
transfer of the Option Shares.


 


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18.           Successors and Assigns.  This Agreement shall, except as herein stated
to the contrary, inure to the benefit of and bind the legal representatives,
successors and assigns of the parties hereto.


 


19.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be an original for all purposes but all of
which taken together shall constitute but one and the same instrument.


 


20.           Option Transfer Prohibitions.  The Option granted to Optionee under this
Agreement shall not be transferable or assignable by Optionee other than by
will or the laws of descent and distribution, and shall be exercisable during
Optionee’s lifetime only by him.


 


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