UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR
15(d) of
the Securities Exchange Act of
1934
Date of
Report (Date of earliest event reported): September 28,
2007
eBay Inc.
(Exact name of registrant as
specified in its charter)
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Delaware
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000-24821
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77-0430924
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(State or other jurisdiction
of
incorporation or organization)
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(Commission File
Number)
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(IRS Employer
Identification No.)
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2145
Hamilton Avenue
San Jose, CA 95125
(Address of principal executive
offices, including zip code)
(408) 376-7400
(Registrant’s telephone
number including area code)
Not
Applicable
(Former name or former address,
if changed since last report)
Check the appropriate box below if the
Form 8-K
filing is intended to simultaneously satisfy the filing
obligations of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
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Soliciting material pursuant to
Rule 14a-12
under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement communications pursuant to
Rule 14d-2(b)
under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications pursuant to
Rule 13e-4(c)
under the Exchange Act (17 CFR
240.13e-4(c))
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TABLE OF CONTENTS
Item 1.01.
Entry into a Material Definitive Agreement
On September 28, 2007, eBay Inc., a Delaware corporation
(“eBay”), and its subsidiaries, Skype
Luxembourg Holdings S.A.R.L., a limited company registered under
the laws of the Grand Duchy of Luxembourg (“Skype
Lux”) and Skype Technologies S.A., a limited company
registered under the laws of the Grand Duchy of Luxembourg
(“Skype”), entered into an Earn Out Settlement
Agreement (the “Earn Out Settlement Agreement”)
with Herho Holding B.V., a company formed under the laws of the
Netherlands (the “Earn Out Representative”),
and each “Earn Out Seller.” An “Earn Out
Seller” is a former holder of shares or options to purchase
shares of Skype who entered into that certain Earn Out
Agreement, dated as of September 11, 2005 (the
“Earn Out Agreement”), with eBay and Skype.
Pursuant to the Earn Out Settlement Agreements: (a) Skype
Lux agreed to pay an aggregate of €375,000,000, or
approximately $530,000,000, to the Earn Out Sellers and the Earn
Out Representative; (b) each of eBay, Skype Lux, the Earn
Out Sellers and the Earn Out Representative, on behalf of itself
and its related parties, agreed to release the other parties and
their related parties from any and all Claims (as defined in the
Earn Out Settlement Agreement) in connection with, arising from
or in any way relating to the Earn Out Agreement or the
transactions contemplated thereby, other than certain excluded
claims; (c) eBay agreed that if, on or prior to
March 31, 2008, eBay sells or transfers securities
representing greater than 50% of the outstanding voting power
of, or economic interest in, Skype or all or substantially all
of the assets of Skype and its subsidiaries, taken as a whole,
eBay or Skype Lux would pay up to an additional
€138,411,300, or approximately $195,159,900, in the
aggregate to the Earn Out Sellers and the Earn Out
Representative; and (d) the Earn Out Agreement was
terminated as of September 28, 2007. This €375,000,000
payment will be accounted for during the three months ended
September 30, 2007 as additional purchase price with an
increase to goodwill. As described in Item 2.06 below, this
€375,000,000 increase in goodwill, along with additional
amounts associated with the acquisition of Skype in October
2005, will be recorded as a goodwill impairment charge during
the three months ended September 30, 2007.
All dollar amounts referenced herein are based on an exchange
rate of €1 to $1.41.
The foregoing description of the Earn Out Settlement Agreement
does not purport to be complete and is qualified in its entirety
by reference to the Earn Out Settlement Agreement which is filed
as Exhibit 10.1 hereto, and is incorporated herein by
reference.
Also in connection with the Earn Out Settlement Agreement (and
the related termination of the Earn Out Agreement), Niklas
Zennström, Janus Friis and Geoffrey Prentice, who served as
Skype’s Chief Executive Officer, SVP Strategy/Innovation
and VP, Strategic Partners and Corporate Development,
respectively, prior to the termination of the Earn Out
Agreement, resigned as officers of Skype, and
Mr. Zennström became non-executive Chairman of Skype.
Item 1.02
Termination of a Material Definitive Agreement
The disclosure set forth in Item 1.01 above is hereby
incorporated herein by reference.
Item 2.06
Material Impairments
The disclosure set forth in Item 1.01 above is hereby
incorporated herein by reference. On September 28, 2007,
eBay concluded that its financial results for the three months
ended September 30, 2007 will reflect a charge associated
with its Skype business of approximately $1.4 billion. This
charge reflects the impairment of goodwill, including the impact
on goodwill of the cash payment referred to in Item 1.01
above (the “Settlement Payment”), arising from
eBay’s acquisition of Skype in October 2005.
This charge is the result of the updated long-term financial
outlook for Skype developed as part of eBay’s strategic
planning cycle conducted annually during its third quarter. This
updated financial outlook for Skype was then reviewed in
conjunction with eBay’s annual goodwill impairment testing
that is undertaken as of August 31st of each year.
Other than the Settlement Payment, eBay does not anticipate any
future cash payments related to the goodwill impairment charge.
Item 9.01.
Financial Statements and Exhibits.
(d) Exhibits
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10
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.1
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Form of Earn Out Settlement
Agreement dated as of September 28, 2007 among Skype
Luxembourg Holdings S.A.R.L., Skype Technologies S.A., eBay
Inc., Herho Holding B.V., and each Earn Out Seller
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99
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.1
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Press Release dated October 1,
2007
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2