eBay 2005 Annual Report Download - page 114

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
A member of our Board of Directors is a general partner of certain venture capital funds that beneficially
hold in the aggregate a greater than 10% equity interest in several public and private companies. In 2000, we
invested $3.0 million in capital stock of one such private company that provides a real estate solution to home
buyers and sellers and received a warrant to purchase additional shares, which if exercised, would bring our
total ownership to less than 5% of its capital stock. The member of our Board of Directors referred to above is
also a member of such company's Board of Directors. Such company effected an initial public offering of its
common stock in 2004 and we sold all of the shares we owned in such company in 2005.
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. The agreement was terminated in December 2002, and
PayPal paid the company an early termination fee of $1.3 million in January 2003 in accordance with the
terms of the agreement. In addition, in July 2003, such company purchased an entity with which eBay had a
pre-existing data licensing agreement. In June 2004, this contract was amended to extend the term of the
agreement and to update the fees. Under the terms of eBay's agreement, as amended, with the purchased
entity, eBay recognized $156,000 of revenue in 2003, $323,000 of revenue in 2004, and $143,000 of revenue in
2005. The revenues expected to be recognized by us is approximately $35,500 per quarter for the remainder of
the term, which is through May 2006.
As of December 31, 2005, there were no significant amounts payable or amounts receivable under these
arrangements. All contracts with related parties are at rates and terms that we believe are comparable with
those entered into with independent third parties.
Note 10 Ì Preferred Stock:
We are authorized, subject to limitations prescribed by Delaware law: to issue Preferred Stock in one or
more series; to establish the number of shares included within each series; to fix the rights, preferences and
privileges of the shares of each wholly unissued series and any related qualifications, limitations or restrictions;
and to increase or decrease the number of shares of any series (but not below the number of shares of a series
then outstanding) without any further vote or action by the stockholders. At December 31, 2004 and 2005,
there were 10 million shares of $0.001 par value Preferred Stock authorized for issuance, and no shares issued
or outstanding.
Note 11 Ì Common Stock:
Our Certificate of Incorporation, as amended, authorizes us to issue 3,580 million shares of common
stock. A portion of the shares outstanding are subject to repurchase over a four-year period from the earlier of
the issuance date or employee hire date, as applicable. At December 31, 2004 and 2005 there were 140,000
and 40,000 shares subject to repurchase rights, respectively.
At December 31, 2005, we had reserved 222.6 million shares of common stock available for future
issuance under our stock option plans, including 129.1 million shares related to outstanding stock options. In
addition, as of December 31, 2005, we had reserved approximately 4.0 million shares of common stock
available for future issuance under our deferred stock unit plan, and approximately 5.8 million shares of
common stock available for future issuance under our employee stock purchase plan.
Note 12 Ì Employee Benefit Plans:
Employee Stock Purchase Plan
We have an employee stock purchase plan for all eligible employees. Under the plan, shares of our
common stock may be purchased over an offering period with a maximum duration of two years at 85% of the
lower of the fair market value on the first day of the applicable offering period or on the last day of the six-
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