UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2017

Stamps.com Inc.
(Exact name of registrant as specified in its charter)

Delaware
000-26427
77-0454966
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

1990 E. Grand Avenue, El Segundo, CA
90245
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code:            (310) 482-5800

Not Applicable
(Former name or former address, if changed since last report)


 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company           

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


 


Item 2.02. Results of Operations and Financial Condition.

On August 2, 2017, Stamps.com Inc. (the “Company”) issued a press release setting forth its financial results for its fiscal quarter ended June 30, 2017.

A copy of such press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b), (c) and (e)

Effective July 31, 2017: (a) Kyle Huebner stepped down as chief financial officer and co-president of the Company, and was appointed as the sole president of the Company; and (b) Jeff Carberry was appointed chief financial officer of the Company. Also effective July 31, 2017, the Company and James Bortnak entered a Consulting Agreement providing for Mr. Bortnak to transition out of his current position as co-president and corporate & business development officer of the Company and commence, when his employment ends in approximately 60 days, a three year period of providing to the Company various consulting services on a compensated basis.

Mr. Bortnak’s agreement, which also provides for certain bonus compensation and other mutual covenants and releases, becomes effective after the expiration of a seven day revocation period for individuals over the age of 40 years. The description of Mr. Bortnak’s agreement in this report is qualified in all respects by reference to the text of the Consulting Agreement, itself, a copy of which is attached hereto as Exhibit 99.2.

Mr. Huebner is 46 years old and had served as the Company’s chief financial officer since 2004 and as the Company’s co-president since January 2012. Previously, Mr. Huebner was the Company’s vice president of marketing from 2001 to 2004, vice president of corporate strategy from 2000 to 2001, and senior director of corporate strategy from 1999 to 2000.

Mr. Carberry is 43 years old and had served as the Company’s vice president, finance since April 2014. Previously, Mr. Carberry was the Company’s senior director of finance from April 2011 to April 2014 and served as director of finance from 2008 to 2011.

On August 1, 2017, the compensation committee of the Company’s board granted an award to Mr. Carberry under the Company’s 2010 Equity Incentive Plan of options to purchase an aggregate of 60,000 shares of the Company’s common stock for $152.15 per share, which is equal to the closing price of the common stock on the date of grant. Such options expire on the tenth anniversary of the grant date and will vest and become exercisable in 36 approximately equal monthly installments commencing on September 1, 2017; provided that Mr. Carberry remains employed by the Company at the relevant times.

There are no transactions, or proposed transactions, to which the Company is or was to be a party and in which Mr. Huebner or Mr. Carberry had a direct or indirect material interest that are required to be disclosed under Item 404(a) of Regulation S-K, nor are there any family relationships between either Mr. Huebner or Mr. Carberry and any of the Company’s other executive officers or directors.

On August 2, 2017, the Company issued a press release regarding certain changes in its officers. A copy of such press release is being furnished as Exhibit 99.3 to this Current Report on Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act.
 


Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are being furnished or filed herewith:

99.1
Press Release of Stamps.com Inc. dated August 2, 2017, announcing Stamps.com Inc.'s financial results for its fiscal quarter ended June 30, 2017. (furnished, not filed)
99.2
Consulting Agreement, dated as of July 31, 2017, between the Company and James Bortnak.
99.3
Press Release of Stamps.com Inc. dated August 2, 2017, announcing the appointment of certain officers. (furnished, not filed)
 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

     
Stamps.com Inc.
 
     
(Registrant)
 
         
 
August 2, 2017
 
/s/ Kenneth McBride
 
 
Date
 
(Signature)
 
         
     
Kenneth McBride,
 
     
Chief Executive Officer
 

 


Exhibit 99.1
 
Investor Contact:
Press Contact:
Jeff Carberry
Eric Nash
Stamps.com Investor Relations
Stamps.com Public Relations
(310) 482-5830
(310) 482-5942
invrel@stamps.com
enash@stamps.com

STAMPS.COM REPORTS SECOND QUARTER 2017 RESULTS

El Segundo, CA – August 2, 2017 – Stamps.com® (Nasdaq: STMP), the leading provider of postage online   and shipping software solutions to over 725 thousand customers, today announced results for the quarter ended June 30, 2017.

Second Quarter 2017 Financial Highlights

·
Total revenue was $116.1 million, up 38% compared to $84.0 million in the second quarter of 2016.

·
GAAP net income was $31.0 million, up 117% compared to $14.3 million in the second quarter of 2016.

·
GAAP net income per fully diluted share was $1.71, up 118% compared to $0.79 in the second quarter of 2016.

·
Non-GAAP adjusted EBITDA was $58.1 million, up 52% compared to $38.2 million in the second quarter of 2016.

·
Non-GAAP adjusted income per fully diluted share was $2.08, up 62% compared to $1.29 (as adjusted) in the second quarter of 2016.

“We are very pleased with the continued strength of our financial performance this quarter,” said Ken McBride, Stamps.com's Chairman and CEO. “In addition to our strong revenue and earnings growth during the second quarter, we reached our highest level of paid customers and average revenue per paid customer, we saw continued strong growth in our shipping business areas, and we experienced strong contributions from all of our subsidiaries. We remain very excited about our future business opportunities which, combined with our second quarter performance, led us to increase our guidance for 2017.”

Second Quarter 2017 Detailed Results

Second quarter 2017 total revenue was $116.1 million, up 38% compared to the second quarter of 2016. Second quarter 2017 Mailing and Shipping revenue (which includes service, product and insurance revenue   but excludes Customized Postage and Other revenue) was $111.8 million, up 37% versus the second quarter of 2016. Second quarter 2017 Customized Postage revenue was $4.3 million, up 73% versus the second quarter of 2016.

Second quarter 2017 GAAP income from operations was $41.7 million and GAAP net income was $31.0 million. GAAP net income per share was $1.71 based on 18.1 million fully diluted shares outstanding. This compares to second quarter 2016 GAAP income from operations of $25.0 million and GAAP net income of $14.3 million or $0.79 per share based on fully diluted shares outstanding of 18.2 million. Second quarter 2017 GAAP income from operations, GAAP net income and GAAP income per fully diluted share increased by 67%, 117% and 118% year-over-year, respectively.
 

Page 2 - Stamps.com Announces Second Quarter 2017 Results
Second quarter 2017 GAAP income from operations included $11.0 million of non-cash stock-based compensation expense and $4.0 million of non-cash amortization of acquired intangibles. Second quarter 2017 GAAP net income also included $93 thousand of non-cash amortization of debt issuance costs. Excluding the non-cash stock-based compensation expense and non-cash amortization of acquired intangibles, second quarter 2017 non-GAAP income from operations was $56.7 million. Also excluding non-cash amortization of debt issuance costs, second quarter 2017 non-GAAP pre-tax income was $56.0 million. Second quarter 2017 non-GAAP income tax expense was $18.2 million, which was $8.3 million higher than the $9.9 million GAAP income tax expense for the quarter. The higher non-GAAP tax expense reflects the tax impact on the non-GAAP pre-tax income at a non-GAAP effective tax rate of 32.5%. See the section later in this press release entitled “About Non-GAAP Financial Measures” for more information on how non-GAAP taxes are calculated. Taking into account the non-GAAP adjustments, second quarter 2017 non-GAAP adjusted income was $37.8 million or $2.08 per share based on 18.1 million fully diluted shares outstanding.

Second quarter 2016 GAAP income from operations included $8.4 million of non-cash stock-based compensation expense, $3.2 million of non-cash amortization of acquired intangibles and $0.5 million of acquisition related expenses. Excluding the non-cash stock-based compensation expense, non-cash amortization of acquired intangibles and acquisition related expenses, second quarter 2016 non-GAAP income from operations was $37.1 million. Second quarter 2016 GAAP pre-tax income also included $93 thousand of non-cash amortization of debt issuance costs. Also excluding non-cash amortization of debt issuance costs, second quarter 2016 non-GAAP pre-tax income was $36.4 million.

Second quarter 2016 non-GAAP income tax expense as reported last year was $1.1 million. In the second quarter of 2016, the Company still had significant tax assets to utilize and was paying the alternative minimum tax; however as of first quarter 2017, the Company had utilized the majority of those tax assets and is expected to be a regular cash taxpayer for 2017. As a result, the Company adopted a new methodology in the first quarter of 2017 for calculating non-GAAP tax expense. See the section later in this press release entitled “About Non-GAAP Financial Measures” for more information on how non-GAAP taxes were calculated in 2016 and 2017. The Company has recast the non-GAAP second quarter of 2016 financial results in this release to conform to the tax methodology used in the second quarter 2017 as the Company believes this presentation is the most useful for investors wishing to compare period over period results. The recast non-GAAP tax expense for the second quarter of 2016 is $13.0 million using the 2016 effective tax rate of 35.7%. As recast, second quarter 2016 non-GAAP adjusted income was $23.4 million or $1.29 per share based on 18.2 million fully diluted shares outstanding.

Therefore, second quarter 2017 non-GAAP income from operations, non-GAAP adjusted income and non-GAAP adjusted income per fully diluted share increased by 53%, 62% and 62% year-over-year, respectively.

Non-GAAP income from operations, non-GAAP adjusted income and non-GAAP adjusted income per share are described further in the “About Non-GAAP Financial Measures” section of this press release and are reconciled to the corresponding GAAP measures in the following tables (unaudited):
 

Page 3 - Stamps.com Announces Second Quarter 2017 Results
Reconciliation of Non-GAAP to GAAP Financial Measures (Second Quarter 2017)

Second Quarter Fiscal 2017
All amounts in millions except
per share data:
 
GAAP Amounts
   
Stock-Based Compensation Expense
   
Intangible Amortization Expense
   
Debt Amortization Expense
   
Income Tax Adjustments
   
Non-GAAP Amounts
 
                                     
Cost of Revenues
 
$
19.09
   
$
0.45
   
$
-
   
$
-
   
$
-
   
$
18.64
 
Research & Development
   
11.63
     
2.22
     
-
     
-
     
-
     
9.41
 
Sales & Marketing
   
22.28
     
1.97
     
-
     
-
     
-
     
20.31
 
General & Administrative
   
21.45
     
6.33
     
4.00
     
-
     
-
     
11.13
 
Total Expenses
   
74.45
     
10.97
     
4.00
     
-
     
-
     
59.48
 
                                                 
Income (Loss) from Operations
   
41.69
     
(10.97
)
   
(4.00
)
   
-
     
-
     
56.66
 
                                                 
Interest and Other Income (Loss)
   
(0.77
)
   
-
     
-
     
(0.09
)
   
-
     
(0.68
)
                                                 
Benefit (Expense) for Income Taxes
   
(9.88
)
   
-
     
-
     
-
     
8.31
     
(18.19
)
 
                                               
Adjusted Income (Loss)
   
31.04
     
(10.97
)
   
(4.00
)
   
(0.09
)
   
8.31
     
37.79
 
 
                                               
On a diluted per share basis
 
$
1.71
   
$
(0.61
)
 
$
(0.22
)
 
$
(0.01
)
 
$
0.46
   
$
2.08
 
                                                 
Shares used in per share calculation
   
18.12
     
18.12
     
18.12
     
18.12
     
18.12
     
18.12
 

Reconciliation of Non-GAAP to GAAP Financial Measures (Second Quarter 2016 (Recast))

Second Quarter Fiscal 2016 (Recast)
All amounts in millions except
per share data:
 
GAAP Amounts
   
Stock-Based Compensation Expense
   
Intangible Amortization Expense
   
Acquisition Related Expenses
   
Debt Amortization
   
Income Tax Adjustments
   
Non-GAAP Amounts
 
                                           
Cost of Revenues
 
$
13.72
   
$
0.45
   
$
-
   
$
-
   
$
-
   
$
-
   
$
13.27
 
Research & Development
   
8.13
     
1.42
     
-
     
-
     
-
     
-
     
6.71
 
Sales & Marketing
   
20.08
     
1.86
     
-
     
-
     
-
     
-
     
18.22
 
General & Administrative
   
17.11
     
4.68
     
3.24
     
0.52
     
-
     
-
     
8.67
 
Total Expenses
   
59.05
     
8.42
     
3.24
     
0.52
     
-
     
-
     
46.87
 
                                                         
Income (Loss) from Operations
   
24.97
     
(8.42
)
   
(3.24
)
   
(0.52
)
   
-
     
-
     
37.14
 
                                                         
Interest and Other Income (Loss)
   
(0.87
)
   
-
     
-
     
-
     
(0.09
)
   
-
     
(0.78
)
Pre-Tax Income (Loss)
   
24.09
     
(8.42
)
   
(3.24
)
   
(0.52
)
   
(0.09
)
   
-
     
36.36
 
                                                         
Benefit (Expense) for Income Taxes
   
(9.80
)
   
-
     
-
     
-
     
-
     
3.18
     
(12.98
)
 
                                                       
Adjusted Income (Loss)
   
14.29
     
(8.42
)
   
(3.24
)
   
(0.52
)
   
(0.09
)
   
3.18
     
23.38
 
 
                                                       
On a diluted per share basis
 
$
0.79
   
$
(0.46
)
 
$
(0.18
)
 
$
(0.03
)
 
$
(0.01
)
 
$
0.17
   
$
1.29
 
                                                         
Shares used in per share calculation
   
18.19
     
18.19
     
18.19
     
18.19
     
18.19
     
18.19
     
18.19
 

Second Quarter GAAP Net Income and Non-GAAP Adjusted EBITDA

Second quarter 2017 GAAP net income was $31.0 million, up 117% compared to $14.3 million in the second quarter of 2016.
 

Page 4 - Stamps.com Announces Second Quarter 2017 Results
Second quarter 2017 non-GAAP adjusted EBITDA was $58.1 million, up 52% compared to $38.2 million in the second quarter of 2016.

Adjusted EBITDA is a non-GAAP financial measure which is described further in the “About Non-GAAP Financial Measures” section of this press release and is reconciled to GAAP net income in the following table (unaudited):

Reconciliation of Non-GAAP Adjusted EBITDA to GAAP Net Income

Second Quarter
 
Three Months ended
 
All amounts in millions
 
June 30,
 
   
2017
   
2016
 
             
GAAP Net Income (Loss)
 
$
31.04
   
$
14.29
 
                 
Depreciation and Amortization expense
 
$
5.40
   
$
4.33
 
Interest & Other Expense (Income), net
 
$
0.77
   
$
0.87
 
Income Tax Expense (Benefit), net
 
$
9.88
   
$
9.80
 
                 
Stock-based Compensation Expense
 
$
10.97
   
$
8.42
 
Acquisition Related Expenses
 
$
--
   
$
0.52
 
                 
Adjusted EBITDA
 
$
58.06
   
$
38.24
 

Taxes

In the first quarter of 2017, the Company adopted Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share -Based Payment Accounting (ASU 2016-09), which requires us, among other items, to record excess tax benefits as a reduction of the provision for income taxes in the income statements, whereas they were previously recognized in equity. The impact of adoption has been reflected in our income statement for the period ended June 30, 2017.

For the second quarter of 2017, the Company reported a GAAP income tax expense of $9.9 million, representing an effective GAAP tax rate of 24.1%, which was lower than our effective GAAP tax rate of 35.7% for 2016. The lower effective GAAP tax rate was primarily related to the tax benefits resulting from employee option exercises in the second quarter of 2017 and the associated change in accounting treatment under ASU 2016-09. As discussed below under the heading “About Non-GAAP Financial Measures,” we believe our effective non-GAAP tax rate for 2017 will be approximately 32.5%. Accordingly, the second quarter 2017 effective GAAP rate of 24.1% should not be assumed to apply for 2017 as a whole and may not be indicative of our tax rate for the third and fourth quarters. Our second quarter 2017 GAAP net income should also be understood to have been positively impacted by the lower effective tax rate applicable specifically to the quarter.

Share Repurchase and Debt Repayment

During the second quarter of 2017, the Company repurchased approximately 374 thousand shares at a total cost of approximately $44.0 million. During the first half of 2017, the Company repurchased approximately 730 thousand shares at a total cost of approximately $87.9 million. The current Board-approved share repurchase program, which expires in November of 2017, had a remaining authorization of approximately $68.5 million as of June 30, 2017.
 

Page 5 - Stamps.com Announces Second Quarter 2017 Results
During the second quarter of 2017, the Company made a required principal repayment of $1.5 million against the borrowings under the Company’s existing credit agreement related to the Endicia acquisition. As of June 30, 2017, the total debt under the credit agreement excluding debt issuance costs was $135.7 million.

Summary of our Updated Business Outlook

Today the Company increased its 2017 GAAP financial outlook as follows:

·
We expect total 2017 revenue to be in a range of approximately $435 million to $460 million; this compares to previous guidance of $405 million to $430 million.

·
We expect GAAP net income per fully diluted share to be in a range of approximately $5.15 to $6.07; this compares to previous guidance of $4.78 to $5.69.

The above GAAP numbers adjusted as detailed below result in the following non-GAAP financial outlook:

·
We expect non-GAAP adjusted EBITDA to be in a range of approximately $220 million to $240 million; this compares to previous guidance of $205 million to $225 million.

·
We expect non-GAAP adjusted income per fully diluted share to be in a range of $7.50 to $8.50; this compares to previous guidance of $7.00 to $8.00.

Detailed Discussion of our Updated Business Outlook

For 2017, the Company currently expects total revenue to be in a range of approximately $435 million to $460 million; this compares to previous guidance of $405 million to $430 million.

For 2017, the Company currently expects GAAP net income to be in a range of approximately $97 million to $111 million; this compares to previous guidance of $90 million to $103 million. The expected GAAP net income range includes depreciation and amortization expense of approximately $22 million, stock-based compensation expense of approximately $46 million, interest expense and other income, net of approximately $5 million and income tax expense of approximately $47 million to $53 million. In addition, the expected GAAP net income range includes approximately $6 million in executive consulting expense related to our consulting agreement with our former Co-President and Corporate & Business Development Officer which will be recognized in accordance with GAAP in the third quarter of 2017. The expected GAAP net income range also includes a gain of approximately $2 million related to an insurance reimbursement of the Company’s legal fees in relation to its Express One settlement. Excluding the executive consulting expense, insurance proceeds gain, depreciation and amortization expense, stock-based compensation expense, interest expense and other income, net and income tax expense, we expect non-GAAP adjusted EBITDA to be in a range of approximately $220 million to $240 million; this compares to previous guidance of $205 million to $225 million.
 

Page 6 - Stamps.com Announces Second Quarter 2017 Results
The following table is provided to facilitate a reconciliation of 2017 expected non-GAAP adjusted EBITDA to expected GAAP net income:

   
Fiscal Year 2017 Guidance
 
All amounts in millions
 
Low End of Range
   
High End of Range
 
             
GAAP net income
 
$
97.3
   
$
110.8
 
                 
Adjustments to reconcile adjusted EBITDA to GAAP net income:
               
Executive consulting expense
 
$
6.1
   
$
6.1
 
Insurance proceeds gain
 
(2.2
)
 
(2.2
)
Depreciation and amortization expense
 
$
22.0
   
$
22.0
 
Stock-based compensation expense
 
$
45.5
   
$
45.5
 
Interest expense and other income, net
 
$
4.5
   
$
4.5
 
Income tax expense
 
$
46.8
   
$
53.3
 
Total adjustments excluded from adjusted EBITDA
 
$
122.7
   
$
129.2
 
                 
Adjusted EBITDA
 
$
220.0
   
$
240.0
 

For 2017, the Company currently expects GAAP net income per fully diluted share to be in a range of approximately $5.15 to $6.07; this compares to previous guidance of $4.78 to $5.69. The expected GAAP net income per fully diluted share range includes non-cash stock-based compensation expense of approximately $46 million, non-cash amortization of acquired intangibles expense of approximately $16 million and non-cash amortization of debt issuance costs of approximately $0.4 million. In addition, the expected GAAP net income per fully diluted share range includes executive consulting expense of approximately $6 million and includes a gain on insurance proceeds of approximately $2 million. Excluding the stock-based compensation expense, amortization of acquired intangibles expense, amortization of debt issuance costs, executive consulting expense and gain on insurance proceeds, and including higher expected non-GAAP income taxes of approximately $21 million from the expected tax effects of these adjustments at an assumed 32.5% effective tax rate, non-GAAP adjusted income per fully diluted share is expected to be in a range of $7.50 to $8.50; this compares to previous guidance of $7.00 to $8.00.
 

Page 7 - Stamps.com Announces Second Quarter 2017 Results
The following table is provided to facilitate a reconciliation of fiscal year 2017 expected non-GAAP adjusted income per fully diluted share to expected GAAP net income per fully diluted share:

   
Fiscal Year 2017 Guidance
 
All amounts in millions except per share data
 
Low End of Range
   
High End of Range
 
             
GAAP net income per fully diluted share
 
$
5.15
   
$
6.07
 
                 
Adjustments to reconcile non-GAAP to GAAP:
               
Executive consulting expense
 
$
6.1
   
$
6.1
 
Insurance proceeds gain
 
(2.2
)
 
(2.2
)
Stock-based compensation expense
 
$
45.5
   
$
45.5
 
Amortization of acquired intangibles
 
$
16.0
   
$
16.0
 
Amortization of debt issuance costs
 
$
0.4
   
$
0.4
 
Total adjustments excluded from non-GAAP
 
$
65.8
   
$
65.8
 
Effective tax rate
   
32.5
%
   
32.5
%
Increased tax expense from non-GAAP adjustments
 
$
21.4
   
$
21.4
 
Total tax effected adjustments excluded from non-GAAP
 
$
44.4
   
$
44.4
 
                 
Fully diluted shares
   
18.9
     
18.3
 
Total adjustments excluded from non-GAAP adjusted income per fully diluted share
 
$
2.35
   
$
2.43
 
                 
Non-GAAP adjusted income per fully diluted share
 
$
7.50
   
$
8.50
 

This business outlook does not include the impact from potential future acquisitions, including acquisition costs or related financings, or unanticipated events. This business outlook and the related assumptions are forward-looking statements subject to the safe harbor statement contained at the end of this press release, and reflect our views of current and future market conditions. Ranges represent a set of likely assumptions, but actual results could fall outside the range presented. Only a few of our assumptions underlying our guidance are disclosed above, and our actual results will be affected by known and unknown risks, trends, uncertainties and other factors, some of which are beyond our control or ability to predict. Although we believe that the assumptions underlying our guidance are reasonable, they are not guarantees of future performance and some of them will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences could be material.

Company Metrics and Conference Call

2017 Company metrics, updated to include the second quarter, is available at http://investor.stamps.com (under a tab on the left side called Company Information, Metrics). These metrics are not incorporated into this press release.

The Stamps.com financial results conference call will be webcast today at 5:00 p.m. Eastern Time and may be accessed at http://investor.stamps.com . The Company plans to discuss its business outlook during the conference call. Following the conclusion of the webcast, a replay of the call will be available at the same website.
 

Page 8 - Stamps.com Announces Second Quarter 2017 Results
About Stamps.com, Endicia, ShipStation, ShipWorks and ShippingEasy

Stamps.com (Nasdaq: STMP) is the leading provider of postage online   and shipping software solutions to over 725 thousand customers, including consumers, small businesses, e-commerce shippers, enterprises, and high volume shippers. Stamps.com offers solutions that help businesses run their shipping operations more smoothly and function more successfully under the brand names Stamps.com, Endicia , ShipStation , ShipWorks and ShippingEasy .   Stamps.com’s family of brands provides seamless access to mailing and shipping services through integrations with more than 450 unique partner applications.

Endicia is a leading brand for high volume shipping technologies and services for U.S. Postal Service shipping. Under this brand we offer solutions that help businesses run their shipping operations more smoothly and function more successfully. Our Endicia branded solutions also provide seamless access to USPS shipping services through integrations with partner applications.

ShipStation   is a leading web-based shipping solution that helps e-commerce retailers import, organize, process, package, and ship their orders quickly and easily from any web browser. ShipStation features the most integrations of any e-commerce web-based solution with more than 150 shopping carts, marketplaces, package carriers, and fulfillment services. Integration partners include eBay, PayPal, Amazon, Etsy, Square, Shopify, BigCommerce, Volusion, Magento, Squarespace, and carriers such as USPS, UPS, FedEx and DHL. ShipStation has sophisticated automation features such as automated order importing, custom hierarchical rules, product profiles, and fulfillment solutions that enable its customers to complete their orders, wherever they sell, and however they ship.

ShipWorks is a leading brand for client-based shipping solutions that help high volume shippers import, organize, process, fulfill, and ship their orders quickly and easily from any standard PC. With integrations to more than 90 shopping carts, marketplaces, package carriers, and fulfillment services, ShipWorks has the most integrations of any high-volume client shipping solution. Package carriers include USPS, UPS, FedEx, DHL, OnTrac and many more. Marketplace and shopping cart integrations include eBay, PayPal, Amazon, Etsy, Shopify, BigCommerce, Volusion, Channel Advisor, Magento, and many more. ShipWorks has sophisticated automation features such as a custom rules engine, automated order importing, automatic product profile detection, and fulfillment automation, which enable high volume shippers to complete their orders quickly and efficiently.

ShippingEasy   is a leading web-based shipping software solution that allows online retailers and e-commerce merchants to organize, process, fulfill and ship their orders quickly and easily. ShippingEasy integrates with leading marketplaces, shopping carts, and e-commerce platforms to allow order fulfillment and tracking data to populate in real time across all systems. The ShippingEasy software downloads orders from all selling channels and automatically maps custom shipping preferences, rates and delivery options across all supported carriers.

About Non-GAAP Financial Measures

To supplement the Company’s condensed consolidated financial statements presented in accordance with GAAP, Stamps.com uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP income from operations, non-GAAP adjusted income, non-GAAP adjusted income per fully diluted share and adjusted EBITDA. Non-GAAP adjusted income per fully diluted share is calculated as adjusted non-GAAP net income divided by fully diluted shares. Prior to the second quarter 2016, the Company referred to non-GAAP adjusted income as non-GAAP net income. Adjusted EBITDA as calculated in this press release represents earnings before interest and other expense, net, interest and other income, net, income tax expense or benefit, depreciation and amortization and excludes certain items, such as stock-based compensation expense, described in this release used to reconcile GAAP to non-GAAP income from operations. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These non-GAAP financial measures may differ from similarly titled measures used by other companies. Reconciliation of non-GAAP financial measures included in this press release to the corresponding GAAP measures can be found in the financial tables of this earnings release.
 

Page 9 - Stamps.com Announces Second Quarter 2017 Results
Non-GAAP financial measures are provided to enhance investors’ overall understanding of the Company’s financial performance and prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes the non-GAAP measures that exclude certain non-cash items including stock-based compensation expense, amortization of acquired intangibles, amortization of debt issuance costs, contingent consideration charges and income tax adjustments, and exclude certain expenses and gains such as acquisition related expenses, litigation settlement expenses, executive consulting expenses, and gains on insurance proceeds, provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be reflective of our current operating performance. The Company believes that non-GAAP financial measures, when viewed with GAAP results and the accompanying reconciliation, enhance the comparability of operating results against prior periods and allow for greater transparency of operating results. Management uses non-GAAP financial measures in making financial, operating, compensation and planning decisions. The Company believes non-GAAP financial measures facilitate management and investors in comparing the Company’s financial performance to that of prior periods as well as in performing trend analysis over time.

Non-GAAP adjusted income and non-GAAP adjusted income per fully diluted share utilize a fixed annual projected non-GAAP tax rate in order to provide better consistency across the interim reporting periods by eliminating the effects of period-specific items which can vary in size and frequency. When projecting this annual rate, the Company evaluated a one-year financial projection that excludes the following non-cash items: stock-based compensation expense; amortization of intangibles; and amortization of debt issuance costs. The projected annual rate also assumes no new option exercise, and considers other factors including the Company’s tax structure, and its tax positions in various jurisdictions where the Company operates. This expected annual rate is re-evaluated on an annual basis and for any significant events that may materially affect this rate. The expected non-GAAP tax rate for 2017 is 32.5%.

Share Repurchase Timing

The timing of share repurchases, if any, and the number of shares to be bought at any one time will depend on market conditions, the Company’s compliance with the covenants in its Credit Agreement and the Company’s assessment of the risk that its net operating loss asset could be impaired if such repurchases were undertaken. Share repurchases may be made from time to time on the open market or in negotiated transactions at the Company's discretion in compliance with Rule 10b-18 of the United States Securities and Exchange Commission. The Company's purchase of any of its shares may be subject to limitations imposed on such purchases by applicable securities laws and regulations and the rules of the Nasdaq Stock Market.
 

Page 10 - Stamps.com Announces Second Quarter 2017 Results
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that are not historical facts, and may relate to future events or the company’s anticipated results, business strategies or capital requirements, among other things, all of which involve risks and uncertainties. You can identify many (but not all) such forward-looking statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “projects,” “seeks,” “intends,” “plans,” “could,” “would,” “may” or other similar expressions. Important factors, including the Company's ability to successfully integrate and realize the benefits of its past or future strategic acquisitions or investments, to complete and ship its products and to maintain desirable economics for its products, as well as the timing of when the Company will utilize its deferred tax assets, and obtain or maintain regulatory approval, which could cause actual results to differ materially from those in the forward-looking statements, are detailed in filings with the Securities and Exchange Commission made from time to time by Stamps.com, including its Annual Report on Form 10-K for the year ended December 31, 2016, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Matters described in forward-looking statements may also be affected by other known and unknown risks, trends, uncertainties and factors, many of which are beyond the company’s ability to control or predict. Stamps.com undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Trademarks

Stamps.com, the Stamps.com logo, Endicia, ShipStation, ShipWorks, and ShippingEasy are registered trademarks of Stamps.com Inc. and its subsidiaries. All other brands and names used in this release are the property of their respective owners.
 

Page 11 - Stamps.com Announces Second Quarter 2017 Results
STAMPS.COM INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data: unaudited)

   
Three Months ended
June 30,
   
Six Months ended
June 30,
 
   
2017
   
2016
   
2017
   
2016
 
Revenues:
                       
Service
 
$
102,685
   
$
72,590
   
$
195,105
   
$
141,696
 
Product
   
4,763
     
4,851
     
10,477
     
10,406
 
Insurance
   
4,393
     
4,082
     
8,833
     
8,593
 
Customized postage
   
4,276
     
2,467
     
6,718
     
5,104
 
Other
   
23
     
23
     
47
     
51
 
Total revenues
   
116,140
     
84,013
     
221,180
     
165,850
 
                                 
Cost of revenues:
                               
Service
   
12,726
     
8,857
     
25,402
     
18,151
 
Product
   
1,593
     
1,642
     
3,395
     
3,440
 
Insurance
   
1,213
     
1,266
     
2,581
     
2,629
 
Customized postage
   
3,557
     
1,955
     
5,449
     
4,122
 
Total cost of revenues
   
19,089
     
13,720
     
36,827
     
28,342
 
Gross profit
   
97,051
     
70,293
     
184,353
     
137,508
 
Operating expenses:
                               
Sales and marketing
   
22,280
     
20,082
     
45,430
     
41,479
 
Research and development
   
11,628
     
8,131
     
22,150
     
16,468
 
General and administrative
   
21,451
     
17,113
     
40,433
     
32,375
 
Total operating expenses
   
55,359
     
45,326
     
108,013
     
90,322
 
Income from operations
   
41,692
     
24,967
     
76,340
     
47,186
 
                                 
Interest expense
   
(932
)
   
(905
)
   
(1,812
)
   
(1,820
)
Interest income and other income
   
159
     
31
     
189
     
74
 
Income before income taxes
   
40,919
     
24,093
     
74,717
     
45,440
 
Income tax expense
   
9,879
     
9,802
     
10,539
     
17,911
 
Net income
 
$
31,040
   
$
14,291
   
$
64,178
   
$
27,529
 
Net income per share:
                               
Basic
 
$
1.83
   
$
0.82
   
$
3.79
   
$
1.58
 
Diluted
 
$
1.71
   
$
0.79
   
$
3.54
   
$
1.49
 
Weighted average shares outstanding:
                               
Basic
   
16,930
     
17,384
     
16,916
     
17,370
 
Diluted
   
18,125
     
18,192
     
18,147
     
18,428
 
 

Page 12 - Stamps.com Announces Second Quarter 2017 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)

   
June 30,
   
December 31,
 
   
2017
   
2016
 
             
ASSETS
           
Cash and investments
 
$
110,343
   
$
108,443
 
Accounts receivable
   
65,897
     
62,756
 
Other current assets
   
23,188
     
13,081
 
Property and equipment, net
   
38,199
     
36,829
 
Goodwill and intangible assets, net
   
328,714
     
336,732
 
Deferred taxes, net
   
45,044
     
48,782
 
Other assets
   
5,127
     
3,506
 
Total assets
 
$
616,512
   
$
610,129
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Liabilities:
               
Accounts payable and accrued expenses
 
$
75,503
   
$
86,205
 
Debt, net of debt issuance costs
   
134,447
     
147,354
 
Deferred revenue
   
3,851
     
3,858
 
Total liabilities
 
$
213,801
   
$
237,417
 
                 
Stockholders' equity:
               
Common stock
   
54
     
53
 
Additional paid-in capital
   
907,787
     
855,344
 
Treasury Stock
   
(341,699
)
   
(252,981
)
Accumulated deficit
   
(163,438
)
   
(229,715
)
Accumulated other comprehensive income
   
7
     
11
 
Total stockholders' equity
   
402,711
     
372,712
 
                 
Total liabilities and stockholders' equity
 
$
616,512
   
$
610,129
 

 


Exhibit 99.2
 
CONSULTING AGREEMENT

This Consulting Agreement (the “Agreement”) is entered into by and between James Bortnak (hereinafter “Consultant”) and Stamps.com Inc., along with its corporate affiliates, related entities, and their respective owners, officers, directors, shareholders, agents, employees, attorneys, and subsidiaries (hereinafter collectively referred to as “the Company”; Consultant and the Company are sometimes referred to herein as the “Parties”) with reference to the following facts:

WHEREAS, Consultant has significant experience with the Company’s business as a result of his long service with the Company in senior executive roles.

WHEREAS, Consultant and Company wish to restructure the terms of Consultant’s service going forward so that the Company can receive the benefit of Consultant’s services on a consulting basis.

WHEREAS, in recognition of Consultant’s significant contributions to the Company, the Company is paying Consultant a special bonus in connection with the Effective Date ( as defined below).

NOW THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, and intending to be legally bound, the Parties hereto agree as follows, effective as of the Effective Date (as defined in Paragraph 22 below):

1.
Separation of Employment; Interim Period; Special Bonus . Consultant’s last day of employment with the Company shall be September 30, 2017 (“the Separation Date”). Between the Effective Date and the Separation Date (the “Interim Period”), Consultant shall remain employed by the Company, receiving as sole compensation his current base salary rate and benefits, which shall continue to be payable in accordance with the current terms and manner of payment. The Company shall pay Consultant a special, one-time bonus of $1,000,000.00, less legally required tax withholdings, which shall be paid in a single lump sum payment within five (5) business days after the Effective Date. In addition, the Company shall pay Consultant additional amounts in the aggregate equal to $3,197,363.27 (“Additional Bonus”), which shall be paid in thirty-six (36) equal monthly installments, less legally required tax withholdings, over a thirty-six (36) consecutive month period, with the first installment paid on the Company’s first payroll date that falls immediately after October 15, 2017, and subsequent installments paid on the corresponding monthly payroll date during each of the next thirty five (35) months thereafter, all in accordance with the Company’s normal payroll practices. The Company and Consultant agree that the special, one-time bonus and the Additional Bonus do not relate in any way to the Services to be provided pursuant to Section 2(b) below.
 
1

2.
Consulting Arrangement. The Company shall retain Consultant as a consultant in the manner and for the period of time described below.

(a)            Term of Consulting Arrangement . The Company shall retain Consultant as a consultant for a thirty-six (36) month period beginning from the Separation Date, unless sooner terminated pursuant to this Paragraph 2 (“the Consulting Period”).

(b)            Scope of Consulting Duties. During the Consulting Period, Consultant shall make himself available to the Company, on a regular basis not to exceed twenty (20) hours per week by phone and email during regular work hours, to consult and perform Services (as defined in Paragraph 2(h) below) as reasonably requested by the Company and consistent with the Consultant’s skill, experience and expertise. During the Consulting Period, Consultant shall report to the Chief Marketing Officer, or the current Company employee performing similar duties to the current CMO (collectively the “CMO”), and shall take instructions only from the CMO or his identified designee. Consultant shall have no authority to bind the Company to any third person or otherwise to act in any way as the Company’s representative during the Consulting Period without the Company’s specific written instruction. Consultant agrees that, during the Consulting Period, Consultant will not, without the prior written consent of the Company, (i) serve as a partner, employee, consultant, officer, manager, agent, associate, investor for, (ii) directly or indirectly, own, purchase, organize or take proprietary steps for the organization of, or (iii) build, design, finance, acquire, lease, operate, manage, invest in, work or consult for or otherwise affiliate himself with, any enterprise or business engaged in the business of (a) USPS payment technologies (for example, PC postage or ePostage), (b) USPS-focused or (whether or not USPS-focused) multi-carrier mailing and shipping services or software, or (c) USPS discount rate services, such as USPS consolidators or other shipping discount rate services.

(c)            Consulting Fee. In exchange for Consultant’s agreement to provide the Services in accordance with this Agreement, and in further consideration for Consultant’s other promises and covenants herein, Consultant shall be paid a consulting fee of $41,666.67 per month, with the first payment to be paid on the last business day of the month following the month in which the Separation Date occurs, and thereafter on a monthly basis in arrears), during the Consulting Period. The payments set forth in this Paragraph shall be referred to as the “Consulting Fee.” During the Consulting Period, Consultant shall be treated as an independent contractor and the Company shall not withhold amounts for taxes from the Consulting Fee, and the Consulting Fee shall be reported on form 1099-MISC, unless otherwise agreed by the parties. The Consulting Fee shall be payable to Consultant hereunder regardless of the level of Services for which the Company utilizes Consultant hereunder. As an independent contractor, Consultant agrees and acknowledges that he shall not be eligible to participate in, and shall not accrue benefits under, any of the Company’s employee benefit plans or programs during the Consulting Period except for the continued vesting of the Option (as defined below) or as otherwise specifically provided by this Agreement.
 
2

(d)            Stock Options . During the term of his employment with the Company, Consultant was granted stock options to purchase shares of the Company’s Common Stock (“the Option”), of which a portion of the shares remain unexercised (“the Option Shares”). The Option and the Option Shares are described on Annex A hereto. The grants were made pursuant and subject to the terms and conditions of the Company’s 2010 Equity Incentive Plan, as amended (“the Plan”), copies of which plans were previously provided to Consultant. The Option grants were made pursuant to Stock Option Agreements between Consultant and the Company (“the Option Agreements”). The Company and Consultant agree that, pursuant to the terms of the Plan, the Option shall remain outstanding and continue to vest in accordance with the original vesting schedule in the Option Agreements, with no change or acceleration resulting from this Agreement or the matters contemplated herein. Upon termination of the Consulting Period for any reason, the Option shall cease to vest and Consultant shall then be considered to have a “Termination of Service” (as defined in the Plan) for purposes of the Plan and the Option Agreements. The Option Shares, to the extent vested, must be exercised, if at all, within the time periods and pursuant to the terms and conditions otherwise set forth in the Plan and the Option Agreements, including the time periods for exercise following Termination of Service, and if any portion of the Option is not timely and properly exercised, such portion of the Option and the related Option Shares shall be forfeited. To the extent permitted by and subject to the terms of the Plan, Consultant shall have the right to direct the Company in writing, delivered to the Company at least five (5) business days prior to any exercise of the Option, to withhold a portion of the Option Shares to be issued upon such exercise having a fair market value sufficient to satisfy applicable federal and state income and employment tax withholding obligations with respect to any such award. To the extent permitted by and subject to the terms of the Plan, Consultant shall also have the right to transfer his Options, and Option Shares to any legal entity that he or his immediate family members own(s) or control(s) at any time during the Consulting Period. Consultant agrees that for an eighteen (18) month period commencing on the Effective Date he will continue to hold and own, and will not sell, assign, short sell, hedge, pledge or otherwise dispose of, directly or indirectly, 1,679 Option Shares or any interest therein, and the Company may place physical and/or electronic stop payment legends and/or instructions on any such Option Shares during such period (the obligations and rights described in this sentence, the “Holding Obligations”). Such number of Option Shares shall be equitably and proportionately adjusted in the event of any stock split, stock dividend or like event after the Effective Date, and the Holding Obligations of the Parties shall promptly be adjusted accordingly by adding or removing shares from the Holding Obligations.
 
3

(e)           Consultant acknowledges and agrees that, except as set forth in this Paragraph 2 and its subparts (including Annex A), and except for stock of the Company that he already owns (through his participation in the Company’s Employee Stock Participation Plan or otherwise), he is not entitled to, nor shall he make any claim for, any other equity interest in the Company of any type whatsoever, including, but not limited to, any other stock options, any shares of any class or series of capital stock in the Company or any security of the Company. Consultant further acknowledges and agrees that he waives any claim of right to any other equity interest in the Company not specifically set forth in this Paragraph 2 and its subparts (including Annex A), but without affecting any of Consultant’s rights to stock of the Company that he already owns (through his participation in the Company’s Employee Stock Participation Plan or otherwise).

(f)           Consultant agrees, to the maximum extent allowed by law: (i) that he shall be solely liable for and shall pay any and all taxes, costs, interest, assessments, penalties, damages, attorneys’ fees or other losses to which he is or may be subject by reason of the payments by the Company to him identified in Paragraph 2 of this Agreement and its subparts, and by reason of the equity interest identified in Paragraph 2 of this Agreement and its subparts; (ii) to indemnify and hold the Company harmless from any and all taxes, costs, assessments, interest, penalties, damages, attorneys’ fees or other losses (not including consequential or other special damages) to which the Company is or may be subject (including, but not limited to any claim or claims against the Company for failure to withhold or under-withholding of taxes or for failure to pay or under-payment of any employer or employment taxes) by reason of Consultant’s failure to pay taxes, costs, interest, assessments or penalties related to any payment by the Company to him under this Agreement when and as due; (iii) not to seek or make any claim or claims against the Company for contribution, indemnity, compensation, recompense, damages, taxes, costs, interest, penalties, attorneys’ fees or other losses if a determination is made that withholdings should have been made from any payments to Consultant or that self-employment taxes should not have been owed by Consultant; and (iv) in connection with Consultant’s failure to pay taxes, costs, interest, assessments or penalties related to any payment by the Company to him under this Agreement when and as due, to assume responsibility for contesting and defending, and in all other cases, to reasonably cooperate at the Company’s expense in the defense of, any claim or assertion against the Company that withholdings should have been made from any payment provided to Consultant hereunder, or that the Company owes taxes thereon for any reason. In addition, Consultant confirms he has consulted his own tax advisors regarding tax implications of this Agreement and the structure of payments to him hereunder, including those implications arising under Internal Revenue Code section 409A, and agrees that the Company is not responsible for any such tax implications or any related taxes, interest, penalties or other amounts due, and he will not make any claims to the contrary.
 
4

(g)            Termination .

(I)           The Consulting Period, and all of Company’s obligations in Paragraphs 1 and 2 (including paying the Additional Bonus and Consulting Fees), may, without prejudice to all of the Company’s other rights and remedies at law or under this Agreement, be terminated by the Company only if Consultant materially breaches this Agreement and (i) the Company first provides Consultant written notice of the material breach, and such breach (if reasonably curable) is not cured in a reasonable period of time not to exceed ninety (90) days after the Consultant receives the written notice from the Company describing the breach in reasonable detail and (ii) after such reasonable cure period the Company first initiates in good faith formal legal action by submitting the dispute to arbitration in accordance with Paragraph 18 hereof, including submitting a bona fide claim against Consultant alleging such material breach through the arbitration process.

(II)          The Consulting Period, and all of Consultant’s obligations in Paragraphs 1 and 2 (including the non-compete), may, without prejudice to all of the Consultant’s other rights and remedies at law or under this Agreement, be terminated by the Consultant only if the Company materially breaches this Agreement and (i) the Consultant first provides the Company written notice of the material breach, and such breach (if reasonably curable) is not cured in a reasonable period of time not to exceed ninety (90) days after the Company receives the written notice from the Consultant describing the breach in reasonable detail and (ii) after such reasonable cure period the Consultant first initiates in good faith formal legal action by submitting the dispute to arbitration in accordance with Paragraph 18 hereof, including submitting a bona fide claim against the Company alleging such material breach through the arbitration process. Additionally, only if the Company becomes bankrupt or insolvent, or makes an assignment to creditors, has a receiver or receiver manager appointed by any creditor or government agency, or materially breaches this Agreement (where the Consultant has not materially breached this Agreement) related to any payment obligation hereunder and such breach is not cured (if reasonably curable) within a reasonable period of time not to exceed ninety (90) days (or, in the case of any material breach related to any payment obligation hereunder, thirty (30) days) after the Company has received a written notice from Consultant describing the breach in reasonable detail), as the exclusive remedy for such matters, the Consultant may, at his option, terminate only his future Services obligations under this Agreement and accelerate all remaining payments to be given to him under this Agreement at any time, and may commence action to obtain immediate payment thereof, without prejudice (except as set forth in this sentence) to all of his other rights and remedies at law or under this Agreement. Consultant shall have the right to direct the Company to pay any accelerated portion of the Additional Bonus into a rabbi trust, in a form reasonably acceptable to the Consultant, with a third party financial institution as trustee, and the parties agree that any payments hereunder are intended to comply with or be exempt from, Section 409A, and shall be construed and interpreted in accordance with such intent.
 
5

(III)        Pending the resolution of any arbitration under this Agreement, all Parties shall continue to comply with their respective obligations under this Agreement, except that as to any arbitration initiated to terminate either a payment or a performance obligation under Paragraph 1 or 2, the Company shall pay all Consulting Fees and Additional Bonus amounts remaining to be paid hereunder into a reasonably acceptable escrow account pending resolution of such arbitration proceeding.

(h)           “Services” means the consulting services provided by Consultant to the Company during the term of this Agreement. Upon reasonable request by the Company, and consistent with Consultant’s skill, experience, and expertise, the Services shall include corporate strategy and advisory services relating to: (i) strategic and business planning and advice, (ii) recommendations for optimizing the Company’s strategic and business opportunities during the Consulting Period, and (iii) personnel development in strategic business areas.

(i)           The Company agrees to indemnify and hold harmless the Consultant from any and all damages, costs, claims, expenses or other liability (including reasonable attorneys’ fees) (not including consequential or other special damages incurred by Consultant) arising from or relating to any third party claims related to Consultant’s provision of Services hereunder except to the extent of any such Losses that are caused by Consultant engaging in fraud, gross negligence, willful misconduct or breaching his obligations hereunder related to his Services. Consultant will reasonably cooperate in connection with any such indemnity as to procedural matters and to mitigate any Losses.

3.
Warranty . Other than the payments and consideration set forth in this Agreement that are to be provided on or after the Effective Date, Consultant acknowledges that he has received all monies and other benefits due him as a result of his employment with and separation from the Company, including payment for any accrued but unused vacation time and reimbursement for any appropriately incurred work-related expenses.
 
6

4.
Release of Claims by Consultant .

(a)
Consultant acknowledges and agrees that the foregoing consideration represents settlement in full of all outstanding obligations alleged to be owed to him by the Company with respect to his employment and the termination of his employment relationship with the Company. Consultant, on behalf of himself and his representatives, agents, heirs and assigns, waives, releases, discharges and promises never to assert any and all claims, liabilities, obligations or causes of action (whether contract, tort, property, statutory, common law, securities, tax or any other legal theory) relating to any matters of any kind and nature, whether known or unknown, suspected or unsuspected, that he ever had, now has or might have, in any capacity (employee, stockholder or otherwise), arising from or related to any omissions, acts or facts that have occurred up until and including the Effective Date against the Company, its predecessors, successors, affiliated entities, shareholders, investors, agents, attorneys, directors, officers, employees or assigns. Consultant will reaffirm Paragraph 4 and the releases herein in writing as of, and through, the Separation Date, in the form of Exhibit A.

This release includes, without limitation, any claims arising from or related to Consultant’s employment relationship with the Company, the termination of that relationship, any prior agreements between the parties not expressly reserved herein, any ownership of securities of the Company, and any claims arising from or related to the execution of this Agreement. The claims released also specifically include, without limitation,

(i)
any and all claims for wages, compensation, bonuses, severance, benefits, wrongful discharge of employment; breach of contract, both expressed and implied; breach of a covenant of good faith and fair dealing, both expressed and implied; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; retaliation, fraud; interference with contractual relationships; and defamation;

(ii)
any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefits Protection Act of 1990 (“the ADEA”), Section 1981 of Title 42 of the United States Codes, the Employee Retirement Income Security Act of 1974, the Fair Labor Standards Act, the Federal Family and Medical Leave Act, the California Family Rights Act, the California Labor Code, the California Fair Employment and Housing Act, and related discrimination statutes and ordinances, and any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;
 
7

(iii)
any and all claims for attorneys’ fees and costs;

(iv)
any and all claims for equity awards, equity interests, stock options, shares of any class or series of capital stock, or any securities of the Company of any kind except as provided in this Agreement;

(v)
any and all claims arising from or related to Consultant’s ownership of stock, options or other securities of the Company;

(vi)
any and all claims for fraud (common law or other) and any and all claims arising under US, state or foreign laws, rules, statutes and regulations, including corporate, antitrust, tax or securities laws;

(vii)
any and all claims for ownership of any Company property or assets; and

(viii)
Consultant further acknowledges that he is not suffering from any work related injuries or ailments that would give rise to a claim under California’s Workers’ Compensation Act or any similar law.

Consultant agrees that the release set forth in this Paragraph 4 will be and remain in effect in all respects as a complete and general release as to the matters released. Consultant shall not bring or threaten to bring, in any forum or via judicial or non-judicial means, a claim released hereby, nor will he indirectly participate in any such claim (other than, if required by a legal process, providing testimony or submitting to depositions or responding to subpoenas), such as by being party to any lawsuit brought on a class or group basis.

Notwithstanding anything in this Agreement or an incorporated agreement to the contrary, nothing contained in this Agreement shall prohibit or limit Consultant from reporting possible violations of federal, state or local securities or employment, workplace or discrimination laws to, or from filing a charge or complaint with, the Securities and Exchange Commission, the EEOC or any state equivalent thereof (“Agencies”), or from cooperating with such agencies in any investigation or proceeding. Consultant agrees that any such reporting must be done in good faith and Consultant must use his reasonable best efforts to effectuate any such disclosure in a manner that prevents the dissemination of such information beyond those persons necessary to make the report or filing, such as filing such information under seal and otherwise using his reasonable best efforts to prevent it from being publicly disclosed. Consultant further understands that this Agreement does not prohibit or limit Consultant’s cooperation with any Agencies, nor does it preclude or limit Consultant’s right to receive an award from any Agencies for information provided to any Agencies or as a result of any claim filed with any Agencies, including whistleblower awards under Section 21F of the Securities Exchange Act. By entering into this Agreement, however, Consultant is waiving rights to individual monetary or financial relief directly from the Company arising from any Agency proceeding that relates to the matters released by this Agreement, unless prohibited by law. For purposes of this Paragraph and of this entire Agreement, Consultant confirms he has been advised by sophisticated securities and employment counsel and understands the terms of this Agreement, including this Paragraph. Consultant’s reporting, cooperation and award receipt rights with respect to Agencies set forth in this Paragraph are referred to as “Agency Reporting Rights.”
 
8

In addition, the release under this Paragraph 4 of this Agreement does not apply to claims Consultant might have for (i) unemployment compensation benefits, workers compensation benefits, health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), (ii) claims with regard to vested benefits under a retirement plan governed by the Employee Retirement Income Security Act (ERISA), or (iii) any rights to enforce the provisions of this Agreement, including, but not limited to, continued exercisability and vesting of any Options under Paragraph 2(d) above and any rights to indemnification to the extent provided under his Indemnification Agreement dated April 29, 2014 with the Company (the “D&O Indemnity Agreement”), or, as in effect from time to time, under the Company’s certificate of incorporation, by-laws and insurance for indemnification and/or defense as an employee, officer or director of the Company. In addition, nothing in this Agreement shall be construed or enforced in a manner that would interfere with Consultant’s rights under the National Labor Relations Act, if any, to discuss or comment on the terms and conditions of his employment.

5.
Release of Claims by the Company .
 
9

The Company, on behalf of itself and its related entities, and their respective owners, officers, directors, shareholders, agents, employees, attorneys, affiliates and subsidiaries (collectively, the “Company Releasees”), waives, releases, discharges and promises never to assert any and all claims, liabilities, obligations or causes of action (whether contract, tort, property, statutory, common law, securities, tax or any other legal theory) relating to any matters of any kind and nature, whether known or unknown, suspected or unsuspected, that it ever had, now has, or might have arising from or related to any omissions, acts or facts that have occurred up until and including the date of execution of this Agreement against Consultant, and his representatives, agents, heirs and assigns. Company will reaffirm Paragraph 5 and the releases herein in writing as of, and through, the Separation Date, in the form of Exhibit B.

This release includes, without limitation, any claims arising from or related to Consultant’s employment relationship with the Company, the termination of that relationship, any prior agreements between the parties not expressly reserved herein, and any claims arising from or related to the execution of this Agreement. The claims released also specifically include, without limitation, any and all claims for breach of contract, both expressed and implied; breach of a covenant of good faith and fair dealing, both expressed and implied; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; fraud; interference with contractual relationship; and defamation. The claims released specifically include, without limitation:

(a)           any and all claims for attorney’s fees and costs;

(b)           any and all claims for fraud (common law or other) and any and all claims arising under US, state or foreign laws, rules, statutes and regulations, including corporate, antitrust, tax or securities laws; and

(c)           any and all claims for breach of any statute, rules and regulations of any kind under US, state, local or foreign laws.

The Company agrees that the release set forth in this Paragraph 5 will be and remain in effect in all respects as a complete and general release as to the matters released. The Company shall not bring or threaten to bring, in any forum or via judicial or non-judicial means, a claim released hereby.

Notwithstanding the foregoing, nothing contained in this Agreement shall prohibit or limit the Company from reporting possible violations of federal, state or local law to, or from filing a complaint with any Agencies. Nor does this Agreement prohibit or limit the Company’s cooperation with any Agencies.
 
10

The release under this Paragraph 5 of this Agreement does not apply to claims the Company might have for any rights to enforce the provisions of this Agreement or under the any of the other agreements or instruments reserved hereunder by the Company or Consultant.

6.
Civil Code Section 1542 or Similar Statute . The Parties represent that they are not aware of any claims against each other, other than the claims that are released by Paragraphs 4 and 5 of this Agreement. All Parties hereto expressly acknowledge and agree that the releases herein are general in nature and as broad as may be granted under applicable law, and that this Agreement fully and finally settles and forever resolves all of the claims released hereby, even those which are unknown, unanticipated or unsuspected. Upon the advice of legal counsel, the Parties hereto hereby acknowledge that they understand, and expressly waive, all benefits and protections under Section 1542 of the Civil Code of California, as well as under any other statutes, legal decisions or common law principles of similar effect to the extent that such benefits or protections may contravene the provisions of this Agreement. Section 1542 of the Civil Code of California states:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

The Parties hereto acknowledge that the foregoing waiver was separately bargained for and is a key element and material term of this Agreement.

7.
Continuing Effect of Confidentiality Agreement . All of the requirements of the Confidential Information and Invention Assignment Agreement previously entered into between Consultant and the Company on or about October 6, 1999 (“Confidentiality Agreement”) remain in full force and effect, binding on Consultant and shall continue to apply throughout the Consulting Period, as well as thereafter in accordance with the terms thereof, it being understood that the “Relationship” referred to therein is continuing during the Consulting Period. Consultant represents and warrants that he has complied with his obligations under that Confidentiality Agreement, there have been no amendments thereto and that he will continue to comply with such obligations in accordance with the terms thereof. The Company and Consultant agree that although the “Relationship” referred to therein shall continue during the Consulting Period, Consultant shall nevertheless return property (including, without limitation, mobile phones, computers, physical and electronic files, documents, emails and other communications, and all other tangible and intangible property belonging to the Company) and deliver a Termination Certificate, as required by Section 5 of the Confidentiality Agreement, upon the Effective Date and, upon request of the Company, again at the conclusion of the Consulting Period. For the avoidance of doubt, this Agreement controls over any “employment at-will” provisions in the Confidentiality Agreement.
 
11

8.
Cooperation. As part of this Agreement, without additional compensation, Consultant agrees reasonably to cooperate with the Company in the prosecution or defense of all threatened claims or actual litigation in which the Company is or may become a party, whether now pending or hereafter brought, in which Consultant has knowledge of relevant facts or issues. This cooperation may include, but is not limited to, conferring with and assisting the Company in preparatory work in litigation matters and providing factual information to the Company. The Company will promptly reimburse the Consultant for any out-of-pocket expenses reasonably incurred by him to provide the cooperation requested under this Paragraph 8.

9.
Governing Law . This Agreement shall be construed under the laws of the State of California, both procedural and substantive.

10.
Waiver . The failure to enforce any provision of this Agreement shall not be construed to be a waiver of such provision or to affect the validity of this Agreement or the right of any party to enforce this Agreement.

11.
Modification . No amendments to this Agreement will be valid unless written and signed by Consultant and the Chief Executive Officer or other authorized representative of the Company.

12.
Severability . If any sentence, phrase, paragraph, subparagraph or portion of this Agreement is found to be illegal or unenforceable, such action shall not affect the validity or enforceability of the remaining sentences, phrases, paragraphs, subparagraphs or portions of this Agreement; provided, however, that if a court of competent jurisdiction or arbitrator holds that Paragraphs 4 or 5 and/or (in relation to Paragraphs 4 or 5), Paragraph 6 are substantially and materially illegal, invalid, or unenforceable, then this Agreement shall become null and void, and no further Consulting Fee that is not yet paid shall be required to be paid pursuant to Paragraph 2 (and its subparts) above.

13.
Confidentiality of Agreement . The Parties agree: (i) not to disclose the existence of this Agreement or any of its terms, or any facts, circumstances, writings, documents or events leading up to or relating to this Agreement, to anyone other than their respective attorneys, accountants and, in the case of Consultant, immediate family members; (ii) to keep all such matters referred to in clause (i) strictly confidential; and (iii) that they will inform such attorneys, accountants and immediate family members about this confidentiality provision and be responsible for any breach by them hereof as if they were parties hereto; provided, however, solely to the extent compelled by an order of a court of competent jurisdiction or a subpoena issued under the authority thereof or other governmental authority having statutory or other jurisdiction to compel disclosure, a Party may disclose only such portion of such items as, upon written advice of counsel, it or he is so compelled by law to disclose if, prior to any such disclosure, the Company or Consultant, as applicable, (unless prohibited by law) first notifies the other Party in writing and reasonably cooperate with the other Party, at such Party’s expense, to obtain confidential treatment or other appropriate protection to ensure the confidentiality of such matters. The Parties agree that this confidentiality obligation is a material term of this Agreement. Notwithstanding the foregoing, the (i) Company may publicly disclose all or a portion of this Agreement by a filing with the SEC (if the Company determines it is legally required to do so, as it presently believes to be the case) and only that public information shall no longer be subject to this Paragraph 13, (ii) Consultant may disclose such confidential information only to the extent required to satisfy tax and immigration legal requirements, and (iii) Consultant’s Agency Reporting Rights are not limited by this Paragraph.
 
12

14.
Expenses . Each Party shall bear its own fees, costs and expenses (legal or otherwise) in connection with this Agreement and any and all related matters (including any expenses that relate to this Agreement or any circumstance related hereto that could be reimbursable under any other agreement with or policy of the Company); provided however, that on the Effective Date, the Company agrees to reimburse Consultant for solely those legal fees that are shown as the “Total This Invoice” on that certain invoice, number 3063291, received by the Company on the date hereof, and dated the date hereof, from his counsel, entitled “Total Paragraph 14 Invoice,” but no other fees, costs or expenses (legal or otherwise).

15.
Non-solicitation of Employees. The non-solicitation provisions of the Confidentiality Agreement shall remain in full force and effect both during the Consulting Period and for a period of twenty-four (24) months after the end of the Consulting Period.

16.
Non-Disparagement. Consultant agrees that he will not make any negative, disparaging, detrimental or derogatory remarks or comments to any third party concerning the Company, or its current and former officers, directors, employees, agents, representatives, affiliates or subsidiaries or products. The Company agrees that no member of its Board of Directors or any executive officer will, and no agent or other employee who has been authorized by the Company to speak for it concerning Consultant will, make any negative, disparaging, detrimental or derogatory comments to any third party concerning Consultant. The Parties agree that any statements a Party makes regarding Consultant’s departure shall be materially consistent with the mutually agreed press release issued on or about the date hereof regarding Consultant’s separation from the Company. Nothing contained in this Paragraph or Agreement shall prevent (i) Consultant’s Agency Reporting Rights or (ii) either Consultant or the Company from making truthful statements regarding the other to any governmental entity or regulatory agency where compelled by legal process in the form of a court order, an order from a regulatory agency or similar legal process, or where required by the rules and regulations of the Securities and Exchange Commission. If any Party believes that the other party has breached this Paragraph, and intends to seek to remedy such alleged breach, such Party shall first be required to contact the other Party and request a retraction or other appropriate response prior to commencing any action to enforce this Paragraph. Additionally, any ensuing action to enforce this Paragraph shall be limited to actual damages and/or equitable relief designed to stop violations of this Paragraph, but shall not in any way seek to invalidate or otherwise impair the releases, financial obligations or other provisions of this Agreement, and no Party shall be required to accept any remedy that invalidates or impairs this Agreement’s release provisions, financial obligations or any other provisions of this Agreement.
 
13

17.
Entire Agreement/Integration . This Agreement, the Confidentiality Agreement and the Option Agreements together constitute the entire agreement between Consultant and the Company concerning the terms of Consultant’s employment with and separation from the Company and the compensation related thereto. No other covenants, agreements, representations, or warranties of any kind have been made to any Party hereto with respect to such matters. All prior discussions and negotiations regarding such matters have been and are merged and integrated into, and are superseded by, this Agreement. Without limiting the foregoing, this Agreement specifically supersedes any existing separation terms and any existing or prior agreements between Consultant and the Company relating to such matters (other than the Confidentiality Agreement, the D&O Indemnity Agreement and the Option Agreements), which shall not be of any force or effect. Nothing herein supersedes or affects the Confidentiality Agreement, the D&O Indemnity Agreement or the Option Agreements, which remain in full force and effect in accordance with their terms.

18.
Arbitration; Jurisdiction . Any and all disputes or claims arising out of or in any way related to Consultant’s employment with or separation from the Company or this Agreement including, without limitation, fraud in the inducement of this Agreement, or relating to this Agreement (including validity, enforcement or otherwise), shall be resolved exclusively through binding arbitration at a mutually convenient office of JAMS or other mutually agreeable alternative dispute resolution service in Los Angeles, California, in accordance with the rules of that body; provided, a Party may seek provisional remedies, including injunctive relief, pursuant to California Code of Civil Procedure §1281.8(b) in a court of law, but in doing so, must file under seal to the maximum extent permitted by law without materially compromising their position. A Party will initiate arbitration by sending written notice of an intent to arbitrate by registered or certified mail to all parties and to JAMS or the different service mutually selected. The notice must contain a description of the dispute, the amount involved and the remedy sought. Each Party shall be responsible for its own costs and attorney’s fees incurred by reason of such arbitration. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The Parties shall request, to the maximum extent possible under JAMS rules and applicable law, that the arbitration be conducted confidentially, and each shall take all reasonable steps to preserve such confidentiality. Subject to the foregoing requirements as to arbitration, each Party hereby consents to the exclusive jurisdiction of the Federal courts of the United States sitting in the state of California in any action on a claim between or among any of the Parties arising out of, under or in connection with this Agreement or the transactions contemplated by this Agreement. If, for any reason, such Federal courts will not or cannot hear any such action or proceeding, it may only be brought and enforced in the state courts of California. Each Party further agrees that personal jurisdiction over him or it may be effected by service of process by registered or certified mail addressed as provided in this Agreement, and that when so made, shall be as if served upon him or it personally within the state of California.
 
14

19.
Voluntary Execution of the Agreement . Consultant acknowledges that he is entering into this Agreement knowingly and voluntarily, with the full intent of releasing all known and unknown claims against the Company and without any duress or undue influence. Consultant acknowledges that he has been advised of his right to consult with counsel of his choice regarding the terms of this Agreement. Consultant further acknowledges that (i) he has read this entire Agreement, (ii) he understands the terms and consequences of this Agreement and of the releases it contains; (iii) he is fully aware of the legal and binding effect of this Agreement; (iv) he acknowledges that he is knowingly and voluntarily waiving and releasing any rights that he may have under the ADEA, as amended; and (v) that the consideration he is receiving is in addition to anything of value to which he was already entitled.
 
15

20.
Immigration Status . The Company agrees that, during the Interim Period and the Consulting Period, it will take any and all commercially reasonable and necessary steps generally consistent with its past immigration practice for Consultant to support Consultant’s legal employment and immigration status within the United States, including such commercially reasonable additional steps requested by Consultant in writing even if not previously taken by Company on behalf of Consultant as an employee. Commencing immediately after the Effective Date, Company agrees to promptly prepare and provide to Consultant substantially the same immigration documentation prepared by, and take substantially the same immigration actions previously taken by, the Company consistent with its past practice for Consultant, in form and content approved by Consultant, reasonably required to sponsor Consultant for a TN visa under the “management consultant” category, including, without limitation, filing any required petition documents and reasonably cooperating with the applicable U.S. immigration authorities, and agrees to take such other commercially reasonable actions otherwise to support and facilitate Consultant’s efforts to secure an appropriate U.S. immigration visa permitting Consultant to perform the Services. Consultant will provide true and accurate information to Company for inclusion on such documents. If and to the extent there is any period of time during the Consulting Period, up to 180 days (the “Suspension Period”), when Consultant is not eligible to provide Services under applicable U.S. immigration law (“Non-Eligibility”), Consultant’s obligation to provide Services (but not Consultant’s obligation to comply with all of the other provisions of this Agreement), and all of the Company’s related obligations to pay Consulting Fees, may, at Consultant’s option upon advance written notice, be suspended for up to the duration of the Suspension Period and the Parties shall reasonably cooperate in Consultant’s efforts to obtain an appropriate U.S. visa, at which time his obligation to provide Services and the related payment obligations under this Agreement will be reinstated, with an additional period of Service equal to the portion of the Suspension Period during which such obligation were suspended, and the monthly payments hereunder shall resume, and shall be adjusted accordingly, based on the number of months remaining in the Consulting Period as extended by such portion of the Suspension Period, so that all payments required to be made hereunder have been made by the end of the Consulting Period as extended by such portion of the Suspension Period. Notwithstanding any other provisions of this Agreement to the contrary, if Consultant is unable to obtain an appropriate U.S. visa permitting him to perform the Services within the U.S. he may, at his option (and, if the Suspension Period has been fully utilized, shall), provide the Services from outside of the U.S. and all obligations of the Parties under this Agreement will remain in full force and effect, (ii) (ii) Consultant agrees that nothing in this Paragraph requires the Company to spend any amounts of money (except to the extent of its personnel complying with the Company’s obligations hereunder) or take any legal positions adverse to the Company, and (iii) Company shall have only contractual obligations, as set forth in this Paragraph, related to the matters discussed in this Paragraph and has no duty of care or otherwise to Consultant regarding such matters, and Consultant agrees that the Company does not assure and is not responsible for the outcome of any immigration decision by the government.
 
16

21.
Review Period . Consultant acknowledges that he has been advised that he has twenty-one (21) days to consider this Agreement and that he was informed that he has the right to consult with counsel regarding this Agreement, was encouraged by the Company to consult with counsel, and specifically was represented by counsel during the course of the negotiation of this Agreement. To the extent Consultant has taken fewer than twenty-one (21) days to consider this Agreement, Consultant acknowledges that he has had sufficient time to consider this Agreement and to consult with his counsel and that he does not desire additional time.

22.
Right to Revoke . This Agreement is revocable by Consultant for a period of seven (7) days following Consultant’s execution of this Agreement. The revocation by Consultant of this Agreement must be in writing, must specifically revoke this Agreement, and must be received by the Company prior to the eighth (8 th ) day following the execution of this Agreement by Consultant. This Agreement becomes effective, enforceable and irrevocable on the eighth (8 th ) day following Consultant’s execution of the Agreement (the “Effective Date”).

23.
No Admissions. This Agreement does not constitute an admission of any kind by the Company or Consultant of any liability or that it or he violated any law or any duty to the other party.

24.
Miscellaneous . All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. No presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular Party or its counsel. Numbered or lettered articles, paragraphs and subparagraphs herein contained refer to articles, paragraphs and subparagraphs of this Agreement unless otherwise expressly stated. Any notice to be given or to be served upon any party hereto in connection with this Agreement must be in writing (which may include facsimile and email) and will be deemed to have been given and received when delivered to the address, facsimile number or email address specified by the party to receive the notice. Any Party may, at any time by giving five business (5) days’ prior written notice to the other Party, designate any other address, facsimile number and/or email address in substitution of the foregoing address, facsimile number and/or email address to which such notice will be given. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. The remedies under this Agreement are cumulative and shall not exclude any other remedies to which any person may be lawfully entitled. A Party shall be entitled to equitable or injunctive relief in addition to any remedies or damages available at law.
 
17

25.
Payment . Any payment to be made by Company to Consultant hereunder shall, at Consultant’s option expressed in writing to the Company and signed by Consultant, and effective as soon as reasonably practicable after such notice, be paid to an entity legal entity owned or controlled by Consultant or his immediate family. Consultant shall confirm that the entity is so owned or controlled in such notice.

PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. THE UNDERSIGNED AGREE TO THE TERMS OF THIS AGREEMENT AND VOLUNTARILY ENTER INTO IT WITH THE INTENT TO BE BOUND THEREBY.

James Bortnak
 
     
     
James Bortnak
 
Dated: July 31, 2017
 
     
Address for Notice:
 
[Omitted]
 
     
STAMPS.COM INC.
 
     
By:
   
Seth Weisberg, Chief Legal Officer
 
Dated: July 31, 2017
 
     
Address for Notice:
 
Stamps.com Inc.
 
1990 E. Grand Avenue
 
El Segundo, CA 90245
 
Attn: Seth Weisberg, Chief Legal Officer
 
 
18

ANNEX A

OPTION AND OPTION SHARE HOLDINGS

James Bortnak Stock Options to Purchase Common Stock of Stamps.com Inc.

Award ID
Award Date
Award Type
Award Amount
Award Price
Exercisable
Unvested
Outstanding
Vest Template
1669
09/19/2014
NQ
93,830
$32.410000
498
8,348
8,846
Equal through 24 months
1688
09/19/2014
NQ
46,915
$32.410000
15
0
15
Equal through 12 months
1911
04/09/2015
ISO
1,508
$66.280000
0
1,508
1,508
Equal through 36 mo.
1920
04/09/2015
NQ
18,492
$66.280000
10,555
7,937
18,492
Equal through 36 mo.
         
11,068
17,793
28,861
 
 
19

EXHIBIT A

REAFFIRMATION OF RELEASE

By his signature below, James Bortnak (hereinafter “Consultant”) hereby reaffirms the releases by him contained in the Consulting Agreement recently entered into between him, on the one hand, and Stamps.com Inc., on the other hand (“the Agreement”), and reissues such release as of and through the Separation Date as if the phrase “up until and including the Effective Date” in Paragraph 4(a) of the Agreement read “up until and including the Separation Date.”. Nothing herein is intended to include matters in the releases which are, pursuant to the Agreement, excluded from the releases as set forth in the Agreement, or to change any terms or conditions of the releases.

The Consultant is executing this Reaffirmation of Release pursuant to the Agreement, in exchange for the consideration described therein.

Accepted and Agreed:
__________________________
James Bortnak (Name Printed)

________________________
James Bortnak (Signature)

Date: ____________________, 2017
 
20

EXHIBIT B

REAFFIRMATION OF RELEASE

By its signature below, Stamps.com Inc. (hereinafter “Company”) hereby reaffirms the releases by it contained in Consulting Agreement recently entered into between it, on the one hand, and James Bortnak, on the other hand (“the Agreement”), and, reissues such release as of and through the Separation Date as if the phrase “up until and including the Effective Date” in Paragraph 5(a) of the Agreement read “up until and including the Separation Date.”. Nothing herein is intended to include matters in the releasesd which are, pursuant to the Agreement, excluded from the releases as set forth in the Agreement, or to change any terms or conditions of the releases.

The Company is executing this Reaffirmation of Release pursuant to the Agreement, in exchange for the consideration described therein.

Accepted and Agreed:

STAMPS.COM INC.

By: __________________________
Name:________________________
Its:__________________________

Date: ____________________, 2017
 
 
21

Exhibit 99.3
 
Investor Contact:
Press Contact:
Suzanne Park
Eric Nash
Stamps.com Investor Relations
Stamps.com Public Relations
(310) 482-5830
(310) 482-5942
invrel@stamps.com
enash@stamps.com

STAMPS.COM ANNOUNCES APPOINTMENT OF KYLE HUEBNER AS PRESIDENT; JEFF CARBERRY AS CFO; AND JR VEINGKEO AS CHIEF ACCOUNTING OFFICER

El Segundo, CA – August 2, 2017 – Stamps.com® (Nasdaq: STMP), the leading provider of postage online   and shipping software solutions to over 725 thousand customers, today announced that Kyle Huebner assumed the role of President of Stamps.com. In addition, Jeff Carberry assumed the role of Chief Financial Officer and JR Veingkeo assumed the role of Chief Accounting Officer. Previously, Kyle Huebner served as Co-President and Chief Financial Officer, Jeff Carberry served as VP of Finance, and JR Veingkeo served as VP of Accounting. In addition, Stamps.com is announcing James Bortnak's departure from his role as Co-President and Corporate & Business Development Officer. Mr. Bortnak will continue to work with Stamps.com as a consultant.

“I'd like to congratulate Kyle, Jeff and JR for their promotions,” said Ken McBride, Stamps.com's chairman and CEO. “In addition, I'd like to thank Jim for his 17 years of service and significant contributions at Stamps.com and we look forward to continue working together."

About Stamps.com, Endicia, ShipStation, ShipWorks and ShippingEasy

Stamps.com (Nasdaq: STMP) is the leading provider of postage online   and shipping software solutions to over 725 thousand customers, including consumers, small businesses, e-commerce shippers, enterprises, and high volume shippers. Stamps.com offers solutions that help businesses run their shipping operations more smoothly and function more successfully under the brand names Stamps.com, Endicia , ShipStation, ShipWorks and ShippingEasy . Stamps.com’s family of brands provides seamless access to mailing and shipping services through integrations with more than 450 unique partner applications.

Endicia is a leading brand for high volume shipping technologies and services for U.S. Postal Service shipping. Under this brand we offer solutions that help businesses run their shipping operations more smoothly and function more successfully. Our Endicia branded solutions also provide seamless access to USPS shipping services through integrations with partner applications.

ShipStation   is a leading web-based shipping solution that helps e-commerce retailers import, organize, process, package, and ship their orders quickly and easily from any web browser. ShipStation features the most integrations of any e-commerce web-based solution with more than 150 shopping carts, marketplaces, package carriers, and fulfillment services. Integration partners include eBay, PayPal, Amazon, Etsy, Square, Shopify, BigCommerce, Volusion, Magento, Squarespace, and carriers such as USPS, UPS, FedEx and DHL. ShipStation has sophisticated automation features such as automated order importing, custom hierarchical rules, product profiles, and fulfillment solutions that enable its customers to complete their orders, wherever they sell, and however they ship.
 


ShipWorks is a leading brand for client-based shipping solutions that help high volume shippers import, organize, process, fulfill, and ship their orders quickly and easily from any standard PC. With integrations to more than 90 shopping carts, marketplaces, package carriers, and fulfillment services, ShipWorks has the most integrations of any high-volume client shipping solution. Package carriers include USPS, UPS, FedEx, DHL, OnTrac and many more. Marketplace and shopping cart integrations include eBay, PayPal, Amazon, Etsy, Shopify, BigCommerce, Volusion, Channel Advisor, Magento, and many more. ShipWorks has sophisticated automation features such as a custom rules engine, automated order importing, automatic product profile detection, and fulfillment automation, which enable high volume shippers to complete their orders quickly and efficiently.

ShippingEasy   is a leading web-based shipping software solution that allows online retailers and e-commerce merchants to organize, process, fulfill and ship their orders quickly and easily. ShippingEasy integrates with leading marketplaces, shopping carts, and e-commerce platforms to allow order fulfillment and tracking data to populate in real time across all systems. The ShippingEasy software downloads orders from all selling channels and automatically maps custom shipping preferences, rates and delivery options across all supported carriers.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that are not historical facts, and may relate to future events or the company’s anticipated results, business strategies or capital requirements, among other things, all of which involve risks and uncertainties. You can identify many (but not all) such forward-looking statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “projects,” “seeks,” “intends,” “plans,” “could,” “would,” “may” or other similar expressions. Important factors, including the Company's ability to successfully integrate and realize the benefits of its past or future strategic acquisitions or investments, to complete and ship its products and to maintain desirable economics for its products, as well as the timing of when the Company will utilize its deferred tax assets, and obtain or maintain regulatory approval, which could cause actual results to differ materially from those in the forward-looking statements, are detailed in filings with the Securities and Exchange Commission made from time to time by Stamps.com, including its Annual Report on Form 10-K for the year ended December 31, 2016, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Matters described in forward-looking statements may also be affected by other known and unknown risks, trends, uncertainties and factors, many of which are beyond the company’s ability to control or predict. Stamps.com undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Trademarks

Stamps.com, the Stamps.com logo, Endicia, ShipStation, ShipWorks, and ShippingEasy are registered trademarks of Stamps.com Inc. and its subsidiaries. All other brands and names used in this release are the property of their respective owners.