eBay 2006 Annual Report Download - page 38

We are subject to the risks of owning real property.
We own real property, including land and buildings related to our operations. We have little experience in
managing real property. Ownership of this property subjects us to risks, including:
• the possibility of environmental contamination and the costs associated with fixing any environmental
problems;
• adverse changes in the value of these properties, due to interest rate changes, changes in the neighborhoods
in which the properties are located, or other factors;
• the possible need for structural improvements in order to comply with zoning, seismic, disability act, or other
requirements; and
• possible disputes with tenants, neighboring owners, or others.
Some anti-takeover provisions may affect the price of our common stock.
Our Board of Directors has the authority to issue up to 10,000,000 shares of preferred stock and to determine
the preferences, rights and privileges of those shares without any further vote or action by the stockholders. The
rights of the holders of common stock may be harmed by rights granted to the holders of any preferred stock that
may be issued in the future. Some provisions of our certificate of incorporation and bylaws could have the effect of
making it more difficult for a potential acquirer to acquire a majority of our outstanding voting stock. These include
provisions that provide for a classified board of directors, prohibit stockholders from taking action by written
consent and restrict the ability of stockholders to call special meetings. We are also subject to provisions of
Delaware law that prohibit us from engaging in any business combination with any interested stockholder for a
period of three years from the date the person became an interested stockholder, unless certain conditions are met.
This restriction could have the effect of delaying or preventing a change of control.
ITEM 1B: UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2: PROPERTIES
We own and lease various properties in the United States and in 24 other countries around the world. We use the
properties for executive and administrative offices, data centers, product development offices and customer service
offices. Our corporate headquarters of approximately 150,000 square feet are located in San Jose, California. As of
December 31, 2006, our owned and leased properties provided us with aggregate square footage of approximately
1.5 million and 1.6 million, respectively. As of December 31, 2006, the total square footage generally used by our
Marketplaces, Payments and Communications segments was approximately 1.7 million, 1.1 million and 100,000
respectively.
From time to time we consider various alternatives related to our long-term facilities needs. While we believe
our existing facilities are adequate to meet our immediate needs, it may become necessary to lease or acquire
additional or alternative space to accommodate any future growth.
ITEM 3: LEGAL PROCEEDINGS
In April 2001, two of our European subsidiaries, eBay GmbH and eBay International AG, were sued by
Montres Rolex S.A. and certain of its affiliates in the regional court of Cologne, Germany. The suit subsequently
was transferred to the regional court in Du
¨sseldorf, Germany. Rolex alleged that our subsidiaries were infringing
Rolex’s trademarks as a result of users selling counterfeit Rolex watches through our German website. The suit also
alleged unfair competition. Rolex sought an order enjoining the sale of Rolex-branded watches on the website as
well as damages. In December 2002, a trial was held in the matter and the court ruled in favor of eBay on all causes
of action. Rolex appealed the ruling to the Higher Regional Court of Du
¨sseldorf, and the appeal was heard in
October 2003. In February 2004, the court rejected Rolex’s appeal and ruled in our favor. Rolex appealed the ruling
to the German Federal Supreme Court, a hearing took place before that court in December 2006, and a decision is
34