Stamps.com 2001 Annual Report Download - page 67

STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
opinion the existing models do not necessarily provide a reliable single measure of the fair value of the Company's options.
Employee Stock Purchase Plan
In June 1999, the Company's Board of Directors adopted an Employee Stock Purchase Plan ("ESPP" or "Purchase Plan") which allows eligible
employees of the Company and eligible employees of the Company's participating subsidiaries to purchase shares of common stock, at
semi-annual intervals, with their accumulated payroll deductions.
Eligible participants may contribute up to 15% of cash earnings through payroll deductions, and the accumulated deductions will be applied to
the purchase of shares on each semi-annual purchase date. The purchase price per share will be equal to 85% of the fair market value per share
on the participant's entry date into the offering period or, if lower, 85% of the fair market value per share on the semi-annual purchase date.
Upon adoption of the plan, 300,000 shares of common stock were reserved for issuance. This reserve will automatically increase on the first
trading day in January each year, beginning in calendar year 2000, by an amount equal to 1% of the total number of outstanding shares of the
Company's common stock on the last trading day in December in the prior year. The increase on January 1, 2000 was 409,851 shares based on
40,985,054 shares outstanding on December 31, 1999. The increase on January 1, 2001 was 496,542 based upon 49,654,227 shares outstanding
on December 31, 2000. In no event will any annual increase exceed 521,571 shares.
Total shares of common stock issued during 2001 and 2000 were 132,295 and 137,772, respectively. During 1999, no shares were issued under
the ESPP.
Savings Plan
During 1999, the Company implemented a savings plan for all eligible employees, which qualifies under Section 401(k) of the Internal Revenue
Code. Participating employees may contribute up to 15% of their pretax salary, but not more than statutory limits. The Company matches 50%
of the first 4% a participant contributes. The Company expensed $238,000, $200,000 and $67,000 in 2001, 2000 and 1999, respectively,
related to this plan.
15. Legal Proceedings
On June 16, 1999, Pitney Bowes sued the Company for alleged patent infringement in the United States District Court for the District of
Delaware. The suit originally alleged that the Company is infringing two patents held by Pitney Bowes related to postage application systems
and electronic indicia. The suit seeks treble damages, a preliminary and permanent injunction from further alleged infringement, attorneys' fees
and other unspecified damages. The Company answered the complaint on August 6, 1999, denying the allegations of patent infringement and
asserting a number of affirmative defenses. On April 13, 2000, Pitney Bowes asked the court for permission to amend its complaint to drop
allegations of patent infringement with respect to one patent and to add allegations of patent infringement with respect to three other patents. On
July 28, 2000 the court entered Pitney Bowes' amended complaint.
On September 18, 2000 Pitney Bowes filed another patent infringement lawsuit against the Company in the United States District Court for the
Eastern District of Texas, alleging that the Company is infringing four patents owned by Pitney Bowes related to multi-carrier shipping. The
suit seeks unspecified damages and a permanent
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2002. EDGAR Online, Inc.