Stamps.com 2005 Annual Report Download - page 58

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STAMPS.COM INC.
NOTES TO FINANCIAL STATEMENTS (continued)
9. Commitments and Contingencies
Operating Leases
The following is a schedule of future minimum lease payments under operating leases at December 31, 2005 (in thousands):
Total rent expense from operations for the years ended December 31, 2005, 2004 and 2003 were $646,000, $1.1 million, and $935,000,
respectively.
In November 2003, we entered into a facility lease agreement commencing on March 2004 for our corporate headquarters with aggregate
lease payments of approximately $4.0 million through February 2010. As of December 31, 2005, the Company maintained a letter of credit for
the facility lease in the amount of $554,000.
10.
Years Ending December 31:
Operating
2006
632
2007
694
2008
751
2009
794
2010
134
Thereafter —
$
3,005
Employee Stock Plans
Stock Incentive Plans
The 1999 Stock Incentive Plan (the “1999 Plan”) serves as the successor to the 1998 Stock Plan (the “Predecessor Plan”). The 1999 Plan
became effective in June 1999. At that time, all outstanding options under the Predecessor Plan were transferred to the 1999 Plan, and no
further option grants can be made under the Predecessor Plan. All outstanding options under the Predecessor Plan continue to be governed by
the terms and conditions of the existing option agreements for those grants, unless the Company’s compensation committee decides to extend
one or more features of the 1999 Plan to those options.
As of December 31, 2005, the total number of shares authorized for issuance under the 1999 Plan is approximately 9,436,689 which
amount includes an automatic annual increase to the share reserve of 3% of the Company’s outstanding common shares on the last trading day
in December. The automatic increase on January 1, 2005 was 673,894 shares based upon 22,463,154 shares outstanding on the last day of
2004.
In no event will this annual increase exceed 782,358 shares. In addition, no participant in the 1999 Plan may be granted stock options or
direct stock issuances for more than 562,500 shares of common stock in total in any calendar year.
Options granted under the 1999 Plan generally vest 25% per year, and the Board of Directors has the discretion with respect to vesting
periods applicable to a particular grant. Each option granted has a 10 year contractual life. On November 3, 2004, the Company issued options
to purchase 1,000,000 shares of common stock vesting immediately at a price of $17.50, representing an exercise price that was $3.14 higher
than the fair market value on the date of grant of $14.36. During 2005, 2004 and 2003, the Company issued options to purchase a total of
265,500, 1,220,626 and 422,475 shares of common stock, respectively, at prices at or above the market price at the date of grant.
F-17