Rosetta Stone 2010 Annual Report Download - page 38

Table of Contents
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 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, 2010, we also had site licenses for 259 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 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 have appealed the District Court's decision to the U.S. Court of Appeals for the Fourth
Circuit. 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 other persons similarly situated who are or were employed by us as salaried
managers in its retail locations in California are due unpaid wages and other relief for the Company's violations of state wage and hour laws. Plaintiffs moved
to amend their complaint to include a nationwide class on January 21, 2011. We intend to vigorously defend this matter. However, we cannot predict the
timing and the ultimate outcome of this matter. Even if the plaintiffs are unsuccessful in their claims against us, we will incur legal fees and other costs in
defense of these claims.
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.
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