eBay 2008 Annual Report Download - page 110

resolve, could require expensive changes in our methods of doing business, or could require us to enter into costly
royalty or licensing agreements.
From time to time, we are involved in other disputes or regulatory inquiries that arise in the ordinary course of
business. The number and significance of these disputes and inquiries are increasing as our business expands and
our company grows larger. Any claims or regulatory actions against us, whether meritorious or not, could be time
consuming, result in costly litigation, require significant amounts of management time, and result in the diversion of
significant operational resources.
Indemnification Provisions
In the ordinary course of business, we have included limited indemnification provisions in certain of our
agreements with parties with whom we have commercial relations, including our standard marketing, promotions
and application-programming-interface license agreements. Under these contracts, we generally indemnify, hold
harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party in
connection with claims by a third party with respect to our domain names, trademarks, logos and other branding
elements to the extent that such marks are applicable to our performance under the subject agreement. In a limited
number of agreements, we have provided an indemnity for other types of third-party claims, which are indemnities
mainly related to various intellectual property rights. In our PayPal business, we have provided an indemnity to our
payment processors in the event of certain third-party claims or card association fines against the processor arising
out of conduct by PayPal or PayPal’s customers. It is not possible to determine the maximum potential loss under
these indemnification provisions due to our limited history of prior indemnification claims and the unique facts and
circumstances involved in each particular provision. To date, no significant costs have been incurred, either
individually or collectively, in connection with our indemnification provisions.
Note 12 — Related Party Transactions:
We have entered into indemnification agreements with each of our directors, executive officers and certain
other officers. 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 affiliation with us.
All contracts with related parties are at rates and terms that we believe are comparable with those entered into
with independent third parties. There were no material related party transactions in 2006, 2007 and 2008. As of
December 31, 2008, there were no significant amounts payable or amounts receivable from related parties.
Note 13 — 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, 2007 and 2008, there were 10 million shares of
$0.001 par value Preferred Stock authorized for issuance, and no shares issued or outstanding.
Note 14 — Common Stock:
Our Certificate of Incorporation, as amended, authorizes us to issue 3.6 billion shares of common stock. A
portion of the shares issued and outstanding are subject to repurchase or forfeiture over a four-year period from the
earlier of the issuance date or employee hire date, as applicable. At December 31, 2008 there were 154,892 shares
subject to repurchase rights or forfeiture, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)