eBay 2010 Annual Report Download - page 123

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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. In connection with the sale of Skype, we
made certain customary warranties to the buyer in the purchase agreement. Our liability to the buyer for
inaccuracies in these warranties is generally subject to certain limitations. With respect to certain specified
litigation matters involving Skype that were pending as of the closing of the transaction, we also agreed, among
other things, to bear 50% of the cost of any monetary judgment that is rendered in respect of those matters. It is
not possible to determine the maximum potential loss under these indemnification or other 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 14 — 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 that could
be entered into with independent third parties. There were no material related party transactions in 2008. We sold
Skype to an investor group in November 2009. Based on our approximately 30% equity stake in the entity to
which we sold Skype, Skype meets the definition of a related party. Accordingly, certain of our transactions with
Skype in 2009 and 2010 in connection with and following the completion of the sale of Skype constitute related
party transactions. For details related to our related party transactions with Skype, please see “Note 4 — Skype
Related Transactions.” As of December 31, 2010, there were no significant amounts payable to or amounts
receivable from related parties.
Note 15 — Stockholders’ Equity:
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 our stockholders. At December 31, 2009 and 2010, there were 10.0 million
shares of $0.001 par value preferred stock authorized for issuance, and no shares issued or outstanding.
Common Stock
Our Certificate of Incorporation, as amended, authorizes us to issue 3.6 billion shares of common stock.
Note 16 — Stock Repurchase Program:
In January 2008, our Board of Directors authorized a stock repurchase program that provides for the
repurchase of up to $2.0 billion of our common stock with no expiration from the date of authorization. In
September 2010, our Board authorized an additional stock repurchase program that provides for the repurchase
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