Stamps.com 2010 Annual Report Download - page 88

TABLE OF CONTENTS
STAMPS.COM INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Employee Stock Plans – (continued)
As of December 31, 2010, there was $2.6 million of total unrecognized compensation cost related to nonvested share-based
compensation arrangements, which is expected to be recognized over a weighted-average period of 2.0 years.
Employee Stock Purchase Plan
In June 1999, our Board of Directors adopted an Employee Stock Purchase Plan (ESPP), which allows our eligible
employees 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 is 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, 150,000 shares of common stock were reserved for issuance. This reserve automatically increases
on the first trading day in January each year, by an amount equal to 1% of the total number of outstanding shares of our common
stock on the last trading day in December in the prior year. In no event will any annual increase exceed 260,786 shares.
In July 2009, our board of directors amended our ESPP to extend it for a period of ten years beyond its original expiration
date of July 31, 2009. Under this amendment, the total shares available for issuance may not increase. As of December 31, 2009,
we had 1.9 million shares available for issuance under our ESPP. Total shares of common stock issued pursuant to the ESPP
during 2010, 2009 and 2008 were approximately 48,000, 43,000 and 39,000, respectively.
Savings Plan
During 1999, we 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 20% of their pretax salary, but not more than statutory limits. We
match 50% of the first 4% a participant contributes. We expensed approximately $228,000, $233,000 and $209,000 in 2010,
2009 and 2008, respectively, related to this plan.
12. Legal Proceedings
On November 22, 2006, we filed a lawsuit against Endicia, Inc. and PSI Systems, Inc. in the United States District Court for
the Central District of California for infringement of eleven of our patents covering, among other things, Internet postage
technology. We seek an injunction, unspecified damages, and attorneys’ fees. On November 10, 2008, we were required to select
fifteen claims (from over six hundred claims available) to be the subject of the trial. On November 9, 2009, the Court granted the
summary judgment motion of Endicia, Inc. and PSI Systems, Inc. that the fifteen claims we selected are invalid. We have filed
an appeal.
On August 8, 2008, PSI Systems, Inc. filed a lawsuit against us in the same court, alleging that we infringed three PSI
Systems patents related to Internet postage technology. PSI Systems seeks an injunction, unspecified damages, and attorneys’
fees. On September 16, 2008, we filed counterclaims for infringement of four more of our patents. In our counterclaim, we seek
an injunction, unspecified damages, and attorneys’ fees. The Court issued a “Markman order” to determine the meaning of the
claims on May 14, 2010. The Court has scheduled a trial commencement date of June 21, 2011.
On October 22, 2004, Kara Technology Incorporated filed suit against us in the United States District Court for the Southern
District of New York, alleging, among other claims, that we infringed certain Kara Technology patents and that we
misappropriated trade secrets owned by Kara Technology, most particularly with respect to our NetStamps feature. On October
6, 2010, we entered into the final settlement agreement with Kara Technology Incorporated and Mr. Salim Kara to resolve all
outstanding litigation among the parties. Under the terms of the agreement, we made a $5.1 million payment for settlement of all
claims asserted in the
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