SEC FORM 3

SEC Form 3

FORM 3

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

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1. Name and Address of Reporting Person^*

Swad Stephen M

(Last)

(First)

(Middle)

1919 NORTH LYNN STREET

7TH FLOOR

(Street)

ARLINGTON

22209

(City)

(State)

(Zip)

2. Date of Event Requiring Statement (Month/Day/Year)
11/12/2010

3. Issuer Name and Ticker or Trading Symbol
ROSETTA STONE INC [ RST ]

4. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

	Director	10% Owner
X	Officer (give title below)	Other (specify below)
	Chief Financial Officer

5. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Beneficially Owned
1. Title of Security (Instr. 4)	2. Amount of Securities Beneficially Owned (Instr. 4)	3. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	4. Nature of Indirect Beneficial Ownership (Instr. 5)
Common Stock	100,000⁽¹⁾	D

Table II - Derivative Securities Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 4)	2. Date Exercisable and Expiration Date (Month/Day/Year)		3. Title and Amount of Securities Underlying Derivative Security (Instr. 4)		4. Conversion or Exercise Price of Derivative Security	5. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	6. Nature of Indirect Beneficial Ownership (Instr. 5)
1. Title of Derivative Security (Instr. 4)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	4. Conversion or Exercise Price of Derivative Security	5. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	6. Nature of Indirect Beneficial Ownership (Instr. 5)
Employee Stock Option	⁽²⁾	11/09/2020	Common Stock	150,000	$22.39⁽³⁾⁽⁴⁾	D

Explanation of Responses:

1. In accordance with the Executive Employment Agreement entered into between Rosetta Stone Ltd. and Mr. Swad, effective November 9, 2010, these restricted shares will be subject to forfeiture restrictions that lapse one-third per annum beginning one year from November 9, 2010, the date of grant.

2. In accordance with the Executive Employment Agreement entered into by Rosetta Stone Ltd. and Mr. Swad, effective November 9, 2010, Mr. Swad received a one-time new hire equity grant of 150,000 stock options. Options vest at a rate of one-fourth per annum.

3. In accordance with the action of the Compensation Committee of the Rosetta Stone Inc. Board of Directors on October 12, 2010, the exercise price is equal to the Rosetta Stone Inc. stock price at close of business, October 12, 2010.

4. Mr. Swad was designated a Section 16 officer by the Rosetta Stone Inc. Board of Directors on November 12, 2010.

	Michael C. Wu, Attorney-in-fact	11/15/2010
	** Signature of Reporting Person	Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 5 (b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.