Rosetta Stone 2009 Annual Report Download - page 40

Table of Contents
written consent. Our second amended and restated bylaws require that any stockholder proposals or nominations for election to our board of directors must
meet specific advance notice requirements and procedures, which make it more difficult for our stockholders to make proposals or director nominations.
Item 2. Properties
Our corporate headquarters are located in Arlington, Virginia, where we sublease approximately 31,281 square feet of space. The term of this sublease
runs through December 31, 2013 and we have the right to extend that lease for an additional three years. We believe that our headquarters space will be
adequate for the foreseeable future.
We continue to lease approximately 14,541 square feet of space in Arlington, Virginia, which was the site of our corporate headquarters until late 2008.
This space consists of multiple leased spaces with lease obligations with terms ending between December 31, 2009 and August 31, 2013. We intend to
continue to attempt to sublease a portion of this space, but we cannot assure you that we will be able to sublease any of this space or that, if we do, it will be
on terms that will cover our rent expense related to the space.
We currently own a facility with approximately 62,000 square feet of usable space in Harrisonburg, Virginia, that serves as our operations office, where
we perform most of our product development. In addition, we lease a facility with approximately 40,000 square feet in Harrisonburg, Virginia for use as a
packing and distribution center for all of our U.S. and some of our international fulfillment. We are seeking additional space in Harrisonburg to support our
future growth.
We also lease space for our three full service retail outlets in Missouri, New Jersey, and New York and for small offices in Boulder, Colorado, Tokyo,
Japan, Seoul, South Korea, Munich, Germany and London, United Kingdom. Our Boulder office serves as a research and development location while our
Tokyo, Seoul and London offices serve as our regional sales offices.
As of December 31, 2009, we also had site licenses for 242 kiosks. Most of our kiosk site licenses have terms of three to six months and provide for a
minimum rent plus a percentage rent based upon sales after certain minimum thresholds have been achieved. These site licenses generally require that we pay
insurance, utilities, real estate taxes and repair and maintenance expenses. Some of the site licenses also contain early termination options, which can be
exercised by us or the licensor under certain conditions.
Item 3. Legal Proceedings
In July 2009, we filed a lawsuit in the United States District Court for the Eastern District of Virginia against Google Inc., seeking, among other things,
to prevent Google from infringing upon our trademarks. In this lawsuit, we assert, among other things, that Google allows third parties, including individuals
involved in software piracy operations, to purchase the right to use our trademarks or other terms confusingly similar in Google's Adwords advertising
program. This lawsuit seeks, among other things, injunctive relief to prevent Google from selling our trademarks or other terms confusingly similar for use in
Google's Adwords advertising program. To date, Google has not made any counterclaims for damages against us, however, we expect to incur material legal
fees and other costs and expenses in pursuit of our claims against Google.
From time to time, we have been subject to various claims and legal actions in the ordinary course of our business. We are not currently involved in any
legal proceeding the ultimate outcome of which, in our judgment based on information currently available, would have a material adverse impact on our
business, financial condition or results of operations.
38