Document:

Exhibit 10.13

 

ROSETTA STONE INC.

2009 OMNIBUS INCENTIVE PLAN

COVER SHEET TO

RESTRICTED STOCK AWARD AGREEMENT

 

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

 

Grant Date:                          
, 20                  

 

Name of Employee:                                     

 

Employee’s Employee Identification Number:             
-              -             

 

Number of Shares of Restricted Stock Granted:                                     

 

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 Restricted Stock 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 Restricted Stock Award Agreement is inconsistent with the terms of the
Plan.

 

	
  Employee:

  	
   

  
	
   

  	
  (Employee
  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

  RESTRICTED STOCK AWARD AGREEMENT

 

This RESTRICTED
STOCK AWARD AGREEMENT (this “Agreement”) and
the Cover Sheet to which this Agreement is attached (the “Cover Sheet”)
is made by and between Rosetta Stone Inc., a Delaware corporation (the “Company”), and Employee (as that term is
defined in the Covered Sheet), effective as of the Grant Date set forth on the
Cover Sheet (the “Grant Date”), pursuant
to the Rosetta Stone Inc. 2009 Omnibus Incentive Plan (the “Plan”), a copy of which previously has
been made available to Employee and the terms and provisions of which are
incorporated by reference herein.

 

WHEREAS, the Company desires to grant to Employee
the shares of the Company’s common stock, $.00005 par value, set forth on the “Number
of Shares of Restricted Stock Granted” line on the Cover Sheet (the “Shares”), subject to the terms and conditions of this
Agreement; and

 

WHEREAS, Employee desires to have the
opportunity to hold the Shares subject to the terms and conditions of this
Agreement;

 

NOW, THEREFORE, in consideration of the premises,
mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound hereby, agree as follows:

 

1.             Definitions.  For purposes of this Agreement, the following
terms shall have the meanings indicated:

 

(a)           “Forfeiture Restrictions”
shall mean the prohibitions and restrictions set forth herein with respect to
the sale or other disposition of the Shares issued to Employee hereunder and
the obligation to forfeit and surrender such Shares to the Company.

 

(b)           “Period of Restriction”
shall mean the period during which Restricted Shares are subject to Forfeiture
Restrictions and during which Restricted Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered.

 

(c)           “Restricted Shares”
shall mean the Shares that are subject to the Forfeiture Restrictions under
this Agreement.

 

Capitalized terms not
otherwise defined in this Agreement shall have the meanings given to such terms
in the Plan.

 

2.             Grant of Restricted Shares.  Effective as of the Grant Date, the Company
shall cause to be issued in Employee’s name the Shares as Restricted Shares.  The Company shall cause certificates
evidencing the Restricted Shares, and any shares of the Stock or 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
certificates shall bear a restrictive legend to the effect that 

 

1

 

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 Employee shall not be entitled to receive 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”) and the Company shall
accumulate and retain all Retained Cash Distributions until 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. 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 the stock certificate or certificates representing 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 Restricted 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 and
Restricted Cash Distributions during the Period of Restriction.  Upon issuance the certificates 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 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 and its subsidiaries has not terminated prior to the applicable lapse
date:

 

2

 

	
  Lapse Date

  	
   

  	
  Number of Restricted Shares

  as to Which Forfeiture Restrictions Lapse

  
	
   

  	
   

  	
   

  
	
                          ,
  20   

  	
   

  	
   

  
	
                          ,
  20   

  	
   

  	
   

  
	
                          ,
  20   

  	
   

  	
   

  
	
                          ,
  20   

  	
   

  	
   

  

 

(b)           Upon the lapse of the Forfeiture Restrictions with respect
to the Shares granted hereby the Company shall cause to be delivered to Employee
a stock certificate representing such Shares, 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 due to the
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 Shares without the prior written
approval of the Chief Financial Officer or the General Counsel of the
Company.  If the Chief Financial Officer or
the General Counsel of the Company permits the election, Employee shall timely
pay the Company the amount necessary to satisfy the Company’s attendant tax
withholding obligations, if any.

 

3

 

8.             No Fractional Shares.  All provisions of this Agreement concern
whole Shares.  If the application of any
provision hereunder would yield a fractional share, such fractional share shall
be rounded down to the next whole share if it is less than 0.5 and rounded up to
the next whole share if it is 0.5 or more.

 

9.             Employment Relationship.  For purposes of this Agreement, Employee
shall be considered to be in the employment of the Company and its Affiliates
as long as Employee 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
agreement, and no provision of this Agreement shall be construed or interpreted
to create an employment relationship between Employee and the Company or any
Affiliate, to guarantee the right to remain employed by the Company or any
Affiliate for any specified term or require the Company or any Affiliate to
employ Employee for any period of time.

 

11.           Legend.  Employee consents to the placing on the
certificate for the Shares of an appropriate legend restricting resale or other
transfer of the Shares except in accordance with all applicable securities laws
and rules thereunder.

 

12.           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 Employee at Employee’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.

 

13.           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 Employee.  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 officer of the
Company other than Employee.  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.

 

4

 

14.           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.

 

15.           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.

 

16.           Successors and Assigns.  Subject to the limitations which this
Agreement imposes upon the transferability of the Shares granted hereby, this
Agreement shall bind, be enforceable by and inure to the benefit of the Company
and its successors and assigns, and to Employee, Employee’s permitted assigns,
executors, administrators, agents, legal and personal representatives.

 

17.           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.

 

5

 

Irrevocable
Stock Power

 

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, For
Value Received, has bargained, sold, assigned and transferred
and by these presents does bargain, sell, assign and transfer unto Rosetta
Stone Inc., a Delaware corporation (the “Company”), the
Shares transferred pursuant to the Restricted Stock Award Agreement dated
effective                      ,
20    , between the Company and the undersigned; and subject to and in accordance
with such Restricted Stock Award Agreement the undersigned does hereby
constitute and appoint the Secretary of the Company the undersigned’s true and
lawful attorney, IRREVOCABLY, to sell, assign, transfer, hypothecate, pledge
and make over all or any part of such Shares and for that purpose to make and
execute all necessary acts of assignment and transfer thereof, and to
substitute one or more persons with like full power, hereby ratifying and
confirming all that said attorney or his substitutes shall lawfully do by
virtue hereof.

 

In Witness Whereof, the undersigned has executed this Irrevocable Stock
Power effective the             
day of                                           ,
20      .

 

 

	
   

  	
   

  
	
   

  	
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  Exhibit 10.1    
    

2009
Annual Incentive Program 

        For
2009, the Company established an annual incentive program (the "2009 Annual Incentive Program") covering all non-union employees. This Program replaced all prior annual
cash incentive programs for non-union employees. 

        The
2009 Annual Incentive Program provides employee with a target opportunity based on the competitive level of target opportunity of employees in similar jobs at market reference
companies that is payable in cash if certain company financial performance, division financial performance, and individual performance targets during 2009 are attained. Depending on the level of
attainment, payment of the target opportunity may be from 0% to 150%. Payments are to be made in cash during the first two quarters following the year. 

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Exhibit 10.1

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