NetFlix 2012 Annual Report Download - page 71

The Company is involved in other litigation matters not listed above but does not consider the matters to be
material either individually or in the aggregate at this time. The Company’s view of the matters not listed may
change in the future as the litigation and events related thereto unfold.
6. Guarantees—Indemnification Obligations
In the ordinary course of business, the Company has entered into contractual arrangements under which it
has agreed to provide indemnification of varying scope and terms to business partners and other parties with
respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such
agreements and out of intellectual property infringement claims made by third parties. In these circumstances,
payment may be conditional on the other party making a claim pursuant to the procedures specified in the
particular contract.
The Company’s obligations under these agreements may be limited in terms of time or amount, and in some
instances, the Company may have recourse against third-parties for certain payments. In addition, the Company
has entered into indemnification agreements with its directors and certain of its officers that will require it,
among other things, to indemnify them against certain liabilities that may arise by reason of their status or service
as directors or officers. The terms of such obligations vary.
It is not possible to make a reasonable estimate of the maximum potential amount of future payments under
these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and
circumstances involved in each particular agreement. No amount has been accrued in the accompanying financial
statements with respect to these indemnification guarantees.
7. Stockholders’ Equity
On November 2, 2012, the Board of Directors (the “Board”) of the Company authorized and declared a
dividend distribution of one right (a “Right”) for each outstanding share of common stock, par value $0.001 per
share (the “Common Shares”), of the Company to stockholders of record at the close of business on
November 12, 2012 (the “Record Date”). Each Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of Series A Participating Preferred Stock, par value $0.001 per share (the
“Preferred Shares”), of the Company at an exercise price of $350 per one one-thousandth of a Preferred Share,
subject to adjustment (the “Exercise Price”). The Rights become exercisable in the event any person or group
acquires 10% (or 20% in the case of certain institutional investors who report their holdings on Schedule 13G) or
more of the Common Shares without the approval of the Board, and until such time are inseparable from and
trade with the Company’s common stock. The Rights have a de minimus fair value. The Rights Agreement
expires November 5, 2015.
On November 28, 2011, the Company issued 2.9 million shares of common stock upon the closing of a
public offering for $200 million net of issuance costs of $0.5 million.
Preferred Stock
In 2012, the Company designated 1,000,000 shares of its preferred stock with par value of $0.001 per share
as Series A Participating Preferred Stock. The remaining 9,000,000 shares of preferred stock with par value of
$0.001 remain undesignated. None of the preferred shares were issued and outstanding at December 31, 2012 and
2011.
Voting Rights
The holders of each share of common stock shall be entitled to one vote per share on all matters to be voted
upon by the Company’s stockholders.
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