eBay 2002 Annual Report Download - page 132

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (CONTINUED)
services from us totaling $7 million over a three-year period ending June 2004. Through December 31,
2002, we have recognized $4.3 million in sales and marketing expenses for advertising services received,
incurred $3.0 million for Microsoft software products used to support our operations and recognized
$5.4 million in revenues for advertising services delivered to Microsoft.
Note 12 Ì Related Party Transactions:
We have entered into indemniÑcation agreements with each of our directors, executive oÇcers and
certain other oÇcers. These agreements require us to indemnify such individuals, to the fullest extent
permitted by Delaware law, for certain liabilities to which they may become subject as a result of their
aÇliation with us.
Commercial agreements
A member of our Board of Directors and the Audit and Compensation Committees of our Board of
Directors, is a general partner of certain venture capital funds that beneÑcially hold in the aggregate a
greater than 10% equity interest in several public and private companies. We engaged in the following
transactions with such companies:
In December 1999, we entered into an Internet marketing agreement with a privately held company
that facilitates buying decisions for consumers. Under this agreement, we paid fees approximating $4,000
in 2000, $503,000 in 2001, and none in 2002 for the promotion of eBay.
In April 2000, we entered into an advertising and promotions agreement with a privately held
company that provides a marketplace for live advice. Under this agreement, we recognized revenues of
approximately $4.1 million in 2000, $1.0 million in 2001, and $200,000 in 2002. In 1999, we invested
$2.0 million in capital stock of such company and received a warrant to purchase additional shares, which
if exercised would bring our total ownership to less than 5% of its capital stock.
In July 2000, we entered into an advertising and promotions agreement, which we subsequently
amended in December 1999 and April 2000, with a privately held company that provides a real estate
solution to home buyers and sellers. Under the terms of this agreement, we recognized revenues of
approximately $1.3 million in 2000, $441,000 in 2001, and none in 2002. The member of our Board of
Directors mentioned above is also a member of such company's Board of Directors. In 2000, we invested
$3.0 million in capital stock of such company and received a warrant to purchase additional shares, which
if exercised would bring our total ownership to less than 5% of its capital stock.
In February 2001, our wholly owned subsidiary Half.com, entered into a content licensing and
inventory sales agreement with a company that provides order management and fulÑllment solutions.
Under this agreement, such company agreed to list its inventory on Half.com's website and to allow
Half.com to use such company's catalog data to supplement Half.com's existing catalog data. Half.com
paid such company approximately $100,000 in 2001 and $25,000 in 2002 under this agreement.
Separately, a member of our Board of Directors is a director and Chairman of the Executive
Committee of the Board of Directors of a company with whom PayPal, in September 2000, prior to eBay's
acquisition of PayPal, entered into a strategic marketing agreement. PayPal paid the company
approximately $670,000 in 2002 under this agreement. The agreement was terminated in December 2002,
and PayPal paid the company an early termination fee of $1,348,000 in January 2003 in accordance with
the terms of the agreement.
All contracts with related parties are at rates and terms that we believe are comparable with those
entered into with independent third parties.
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