eBay 2004 Annual Report Download - page 121

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
IndemniÑcation Provisions
In the ordinary course of business, we have included limited indemniÑcation 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 indemniÑed party for losses suÅered or incurred by the
indemniÑed party in connection with claims by any 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, including agreements under which we have developed
technology for certain commercial parties, we have provided an indemnity for other types of third-party
claims, substantially all of which are indemnities related to our copyrights, trademarks, and patents. To date,
no signiÑcant costs have been incurred, either individually or collectively, in connection with our indemniÑca-
tion provisions.
Note 11 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 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 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
$200,000 in 2002 and none in 2003 and 2004. 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 2000, we invested $3.0 million in capital stock of a privately held 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 eÅected an initial
public oÅering of its common stock in 2004.
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 $1,348,000 in January 2003 in accordance with the terms
of the agreement. In addition, in July 2003, the 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 $156,251 of revenue in 2003, and $323,184 of revenue in 2004. The revenues expected
to be recognized by us is approximately $35,500 per month for the remainder of the term, which is through
May 2006.
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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