Stamps.com 2001 Annual Report Download - page 69

STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Metrofulfillment, Inc. would pay Weigh-Tronix, Inc. $25,000, in return for Weigh-Tronix, Inc. and Metrofulfillment, Inc. dismissing all of their
claims in this lawsuit. In addition, the Company would receive all of the postage scales that Metrofulfillment, Inc. still has in its inventory, the
amount of which are unknown at this time. This settlement agreement is conditioned upon the parties successfully reducing the settlement to a
signed writing. On February 28, 2001, Metro Fulfillment, Inc. filed a lawsuit against the Company stemming from services allegedly performed
by Metro Fulfillment, Inc. under a Fulfillment Services Agreement. The complaint alleges claims for breach of contract, common counts and
negligent misrepresentation. The complaint seeks damages of approximately $1.3 million. The Company filed an answer to the complaint
denying the allegations in the lawsuit. Metrofulfillment, Inc. filed for Bankruptcy protection on December 18, 2001. Attempts to mediate this
case have been unsuccessful as of this date. It is not possible at this time to predict the final outcome of this matter.
In May and June, 2001, the Company was named, together with certain of its current or former board members and/or officers, as a defendant in
eleven purported class-action lawsuits, filed in the United States District Court for the Southern District of New York. The lawsuits allege
violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 in connection with the initial public offering and secondary
offering of the Company's common stock. The lawsuits also name as defendants the principal underwriters in connection with our initial and
secondary public offerings, including Goldman, Sachs & Co. (in some of the lawsuits sued as The Goldman Sachs Group Inc.) and BancBoston
Robertson Stephens, Inc. The lawsuits allege that the underwriters engaged in allegedly improper commission practices and stock price
manipulations in connection with the sale of our common stock. The lawsuits also allege that the Company and/or certain of its officers or
directors knew of or recklessly disregarded these practices by the underwriter defendants, and failed to disclose them in our public filings.
Plaintiffs seek damages and statutory compensation, including prejudgment and post-judgment interest, costs and expenses (including attorneys'
fees), and rescissionary damages. In addition to the class action lawsuits against the Company, over 1,000 similar lawsuits have also been
brought against over 250 companies which issued stock to the public in 1998, 1999, and 2000, and their underwriters. These lawsuits (including
those naming the Company) followed publicized reports that the SEC was investigating the practice of certain underwriters in connection with
initial public offerings. All of these lawsuits have been consolidated for pretrial purposes before Judge Scheindlin of the Southern District of
New York. The Company placed its underwriters on notice of the Company's rights to indemnification, pursuant to the Company's agreements
with the underwriters. The Company also provided notice to its directors and officers insurers, and believes that the Company has insurance
applicable to the lawsuits. The Company also believes that the claims against it and its officers and directors are without merit, and intends to
defend the lawsuits vigorously. The Company cannot estimate a range of probable losses, if any, related to this suit.
F-23
2002. EDGAR Online, Inc.