Stamps.com 2010 Annual Report Download - page 22

TABLE OF CONTENTS
firm, that is already a “5% shareholder” of ours cannot make any additional purchases of our stock without a waiver from our
board of directors. These NOL protective measures contained in our certificate of incorporation (the “NOL Protective
Measures”) are more particularly discussed in our Definitive Proxy Statement filed with the Securities and Exchange
Commission on April 2, 2008.
On July 22, 2010, our Board of Directors suspended the NOL Protective Measures by approving a waiver from the NOL
Protective Measures to all persons and entities, including companies and investment firms. As a result, our stockholders are now
allowed to become “5% shareholders” and existing “5% shareholders” are allowed to make additional purchases of our stock
each without having to comply with the restrictions contained in the NOL Protective Measures. This waiver may be revoked by
our Board of Directors at any time if the Board deems the revocation necessary to protect against a Section 382 “change of
ownership” that would limit our ability to utilize future NOLs. For complete details about this waiver from the NOL Protective
Measures, please see our Form 8-K filed on July 28, 2010. As of February 28, 2011, we had 14,542,481 shares outstanding, and
therefore ownership of approximately727, 000 shares or more would currently constitute a “5% shareholder”. We strongly urge
that any stockholder contemplating becoming a 5% or more shareholder contact us before doing so.
Even if we revoke the existing waiver to make the NOL Protective Measures operate again to prevent new “5%
shareholders”, we cannot ensure that an “ownership change” will not occur.
Section 382 of the Internal Revenue Code is an extremely complex provision with respect to which there are many
uncertainties. Accordingly, if the existing waiver were revoked so that the measures were to operate again to prevent new “5%
shareholders”, the NOL Protective Measures might not prevent all transfers that might result in an “ownership change.”
Alternatively, a court could find that some or all of the NOL Protective Measures are not enforceable, either in general or as to a
particular fact situation. Even if the NOL Protective Measures are enforced by state courts, we have not requested a ruling from
the Internal Revenue Service (“IRS”) regarding the effectiveness of the NOL Protective Measures, and we cannot ensure that the
IRS will agree that the NOL Protective Measures are effective for purposes of Section 382. Moreover, our board of directors
could still permit a transfer or transfers that result in or contribute towards an “ownership change” if it were to determine that
such a transfer is in our best interests. As a result of these and other factors, the NOL Protective Measures, if operative, would
serve to reduce, but not eliminate, the risk that we could undergo an “ownership change.” Accordingly, even in such event, we
could not assure you that upon audit, the IRS would agree that all of our NOLs are allowable.
Our charter documents could deter a takeover effort, which could inhibit your ability to receive an acquisition premium
for your shares.
The provisions of our certificate of incorporation, bylaws and Delaware law could make it difficult for a third party to
acquire us, even if it would be beneficial to our stockholders. In addition, we are subject to the provisions of Section 203 of the
Delaware General Corporation Law, which could prohibit or delay a merger or other takeover of our company, and discourage
attempts to acquire us.
In addition, if the existing waiver of our NOL Protective Measures were revoked so that the measures operated again to
prevent new “5% shareholders”, the NOL Protective Measures could be deemed to have an “anti-takeover” effect because,
among other things, they would restrict the ability of a person, entity or group to accumulate more than 5% of our common stock
and the ability of persons, entities or groups now owning more than 5% of our common stock to acquire additional shares of our
common stock without the approval of our board of directors. As a result, our board of directors might be able to prevent any
future takeover attempt. Therefore, the NOL Protective Measures could discourage or prevent accumulations of substantial
blocks of shares in which our stockholders might receive a substantial premium above market value and might tend to insulate
management against the possibility of removal.
The USPS may object to a change of control of our common stock.
The USPS may raise national security or similar concerns to prevent foreign persons from acquiring significant ownership of
our common stock or of our company. The USPS also has regulations regarding the change of control of approved PC Postage
providers. These concerns may prohibit or delay a merger or other
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