Document:

Exhibit 10.22

 

AMENDMENT

TO

EXECUTIVE EMPLOYMENT AGREEMENT

 

AMENDMENT (“Amendment”) made effective on December 22, 2011 to the Executive Employment Agreement, dated as of November 9, 2010 (the “Employment Agreement”), among Rosetta Stone Ltd., a Delaware corporation (together with its successors and assigns, the “Company”), and Stephen Swad (the “Executive”).

 

WHEREAS, the Company and the Executive have previously entered into the Employment Agreement; and

 

WHEREAS, the Company and the Executive desire to amend the Employment Agreement to modify the excise tax gross-up provision in the Employment Agreement.

 

NOW, THEREFORE, in consideration for continued employment by the Company and for other good and valuable consideration as described below, the Executive and the Company agree that the Employment Agreement shall be amended as follows, effective on the date set forth above.

 

Recitals

 

A.          If the Executive signs this Amendment, then the Company shall pay the Executive the sum of $1.00, which will be subject to all applicable taxes and withholdings.  This amount shall be paid in a single payment on the Company’s normal and customary payroll date which is coincident with, or immediately follows, the execution of this Amendment.

 

B.          The Executive acknowledges that he must sign this Amendment as a condition of continued employment with the Company.

 

C.          The Executive further agrees and acknowledges that the consideration stated in this Amendment is adequate and sufficient consideration for this Amendment.

 

1.

 

Section [13] of the Employment Agreement is amended by deleting it in its entirety and substituting the following therefor:

 

“[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 Company shall bear all expenses with respect to the determinations by the Accounting Firm required to be made hereunder.

 

(c)           The Accounting Firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and Eligible Executive within fifteen (15) business days after the date on which right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive. Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Executive.”

 

2.

 

Except with respect to the subject matters covered herein, this Amendment does not otherwise amend, supplement, modify, or terminate the Employment Agreement, which remains in full force and effect.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date set forth below.

 

	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stephen Swad
    
	
 
    	
 
    	
Stephen Swad
    
	
 
    	
 
    
	
 
    	
Date:   
    	
12/22/2011
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ROSETTA   STONE LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Tom Adams
    
	
 
    	
 
    	
Tom   Adams
    
	
 
    	
 
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
Date:
    	
12/22/2011Exhibit 10.23

 

SECOND AMENDMENT

TO

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS SECOND AMENDMENT (the “Amendment”) made effective on February 22, 2012 to the Executive Employment Agreement, dated as of November 9, 2010 (“Employment Agreement”), as amended by the Amendment to the Executive Employment Agreement, dated December 22, 2011, among Rosetta Stone Ltd., a Virginia corporation (together with its successors and assigns, the “Company”), and Stephen M. Swad (the “Executive”).

 

WHEREAS, the Company and the Executive have previously entered into the Employment Agreement; and

 

WHEREAS, the Company and the Executive desire to amend the Employment Agreement in connection with Executive’s promotion to President and Chief Executive Officer.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises contained herein, the parties agree as follows:

 

1.               Recital A. of the Employment Agreement is amended by deleting it in its entirety and substituting the following therefor:

 

A.                               The Company and Executive desire to enter into an agreement pursuant to which the Company will employ Executive as its President and Chief Executive Officer subject to the terms and conditions of this Agreement.

 

2.               Section 1. of the Employment Agreement is amended by deleting the reference to “Chief Financial Officer” and substituting the position with “President and Chief Executive Officer.”

 

3.               Section 2. of the Employment Agreement is amended by deleting it in its entirety and substituting the following therefor:

 

2.                                       Duties.

 

During the Service Term, Executive, as President and Chief Executive Officer of the Company, shall have all the duties and responsibilities customarily rendered by chief executive officers of companies of similar size and nature and such other duties and responsibilities as may be delegated from time to time by the Board in its sole discretion.  Executive will report to the Board.

 

Executive will devote his best efforts and substantially all of his business time and attention (except for vacation periods and periods of illness or other incapacity) to the business of the Company and its Affiliates. With the prior consent of the Board, Executive will be permitted to serve on the boards of other companies so long as such service does not unreasonably interfere with his duties to the Company.

 

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4.               Section 3. of the Employment Agreement is amended by deleting the first paragraph in its entirety and substituting the following thereof.

 

3.                                      Salary, Bonus and Benefits.

 

The Board shall make all decisions related to Executive’s base salary and the payment of bonuses, if any.  Executive’s Annual Base Salary and other compensation will be reviewed by the Board at least annually.

 

5.               Section 3. (a) of the Employment Agreement is amended by deleting the words “the CEO and” from the second line and replacing “$400,000” with “$500,000” in the third line of the section.

 

6.               Section 3. (b) of the Employment Agreement is amended by replacing “60%” with “100%” in the eighth line of the section.

 

7.               Section 3. (d) of the Employment Agreement is amended by deleting the following sentences: “The grants shall have such terms as are determined by the Board in accordance with the current stock plan in place at time of grant. Executive will be eligible to participate in a pending executive long-term performance plan that will be approved by the Board.  Executive will receive a minimum of 12.5% of the executive grant pool pursuant to the terms of the long term incentive program.”

 

8.               Section 5. (c) of the Employment Agreement is amended by replacing “CEO” with “Board” in the fifth line of the section.

 

9.               Section 5. (d) of the Employment Agreement is amended by replacing “CEO” with “Board” in the second line of the section.

 

10.         Section 5. (d) (i) is amended by deleting “or the CEO” from the fifth, eleventh, and twentieth lines of the subsection.

 

11.         Section 5. (e) is amended by deleting “the CEO or” from the sixth line of the section.

 

12.         Section 6. (a) (i) (3) and (4) are amended by replacing “(y) 12” with “(y) 18” in the third line of each subsection.

 

13.         Section 6. (a) (iii) is amended by replacing “twelve” with “eighteen” in the fourth and seventh lines on the subsection.

 

14.         Section 8. (a) is amended by replacing “CEO’s” with “Board’s” in the twelfth line of the section.

 

15.         Section 8. (b) is amended by replacing “CEO” with “Board” in the sixteenth and seventeenth lines of the section.

 

16.         Section 8. (c) is amended by replacing “CEO” with “Board” in the eleventh line of the section.

 

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17.         Section 9. (a) is amended by replacing “twelve (12)” with “eighteen (18)” in the second line of the section and replacing “12-month” with “18-month” in the tenth line of the section.

 

18.         Section 9. (c) is amended by replacing “Chief Financial Officer” with “President and Chief Executive Officer” in the fourth line of the section.

 

19.         Section 11. is amended so that notices to the Company shall be addressed to the Chairman of the Board of Directors.

 

20.         Section 12. (b) is amended by deleting it in its entirety and substituting the following therefor:

 

(b)                                 Complete Agreement.  This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

21.         Except as amended or modified hereby, all terms and conditions in the Employment Agreement, as amended, shall remain in full force and effect.

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date set forth below.

 

 

	
 
    	
EXECUTIVE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 /s/ Stephen Swad
    
	
 
    	
 
    	
  Stephen   Swad
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
President   and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
  2/22/2012
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ROSETTA   STONE LTD.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
   /s/   Tom P.H. Adams
    
	
 
    	
 
    	
    Tom   P.H. Adams
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
Chairman   of the Board of Directors
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
  2/22/2012
    
				

 

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