Rosetta Stone 2011 Annual Report Download - page 40

Table of Contents
taken by stockholders must be taken at a duly called meeting of stockholders and may not be taken by 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 1B. Unresolved Staff Comments
None.
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.
We continue to lease approximately 8,038 square feet of space in Arlington, Virginia, which was the site of our corporate headquarters until late 2008,
with lease terms ending August 31, 2013. We intend to occupy this space until the end of the lease term.
We currently own two facilities with approximately 62,000 and 14,500 square feet of usable space in Harrisonburg, Virginia, that serve as our operations
offices. In addition, we lease two facilities with approximately 56,000 and 6,000 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, in addition to sales operations.
We also lease space for our three full service retail outlets in California, New Jersey, and Virginia, and small offices in Boulder, Colorado, Tokyo, Japan,
Seoul, South Korea, Munich, Germany, London, United Kingdom, Shanghai, China and Sao Paulo, Brazil. Our Boulder office serves as a research and
development location while our Tokyo, Seoul, Sao Paulo and London offices serve as regional sales offices. Our Shanghai, China office is representative.
As of December 31, 2011, we also had site licenses for 174 kiosks. Most of our kiosk site licenses have terms of one to 89 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. Based on our evaluation of historical and forecasted kiosk sales performance, during 2012, we plan to
significantly reduce the size of our worldwide kiosk program, in addition to continually reviewing the performance of remaining kiosk locations.
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 August 2010, the U.S. District Court for the Eastern District of Virginia issued its final order
dismissing our trademark infringement lawsuit against Google. We appealed the District Court's decision to the U.S. Court of Appeals for the Fourth Circuit.
The U.S. Court of Appeals heard oral argument on the Company's appeal on September 22, 2011 and the decision is pending. We have incurred, and may
continue to incur material legal fees and other costs and expenses in pursuit of our claims against Google.
On or about April 28, 2010, a purported class action lawsuit was filed against us in the Superior Court of the State of California, County of Alameda for
unspecified damages, injunctive relief and restitution in the matter of Michael Pierce, Patrick Gould, individually and on behalf of all others similarly situated
v. Rosetta Stone Ltd. and DOES 1 to 50. The complaint alleges that plaintiffs and
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