Stamps.com 2003 Annual Report Download - page 21

Table of Contents
lawsuit. Pursuant to the settlement, we will keep the domain name www.stamps.com and pay the plaintiffs an immaterial amount of cash.
In May and June 2001, we were named, together with certain of our 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 our initial public offering and secondary
offering of our 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 improper commission practices and stock price manipulations in connection
with the sale of our common stock. The lawsuits also allege that we and/or certain of our 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
April 2002, plaintiffs filed a consolidated amended class action complaint against us and certain of our current and former board members
and/or officers. The consolidated amended class action complaint includes similar allegations to those described above and seeks similar relief.
In July 2002, we moved to dismiss the consolidated amended class action complaint. In October 2002, pursuant to a stipulation and tolling
agreement with plaintiffs, our current and former board members and/or officers were dismissed without prejudice. In February 2003, the court
denied our motion to dismiss the consolidated amended class action complaint. In June 2003, we approved a proposed Memorandum of
Understanding among the plaintiffs, issuers and insurers as to terms for a settlement of the litigation against us. The proposed settlement terms
would not require Stamps.com to make any payments. The proposed settlement is subject to approval by the court.
In addition to the class action lawsuits against us, 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 us) followed publicized
reports that the Securities and Exchange Commission was investigating the practice of certain underwriters in connection with initial public
offerings. All of these lawsuits have been consolidated for pretrial purposes before United States District Court Judge Shira Scheindlin of the
Southern District of New York. We have placed our underwriters on notice of our rights to indemnification, pursuant to our agreements with
the underwriters. We have also provided notice to our directors and officers insurers, and believe that we have insurance applicable to the
lawsuits. We also believe that the claims against us and our officers and directors are without merit, and intend to defend the lawsuits
vigorously.
We are not currently involved in any other material legal proceedings, nor have we been involved in any such proceeding that has had or
may have a significant effect on our company. We are not aware of any other material legal proceedings pending against us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the quarter ended December 31, 2003.
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