Facebook 2012 Annual Report Page 97

Northern District of Illinois. In the Summit 6 case, the plaintiffs allege that Facebook infringes certain patents
held by the plaintiffs. In the Timelines case, the plaintiffs allege that Facebook infringes a trademark held by the
plaintiffs. In both cases, the plaintiffs are seeking significant monetary damages and equitable relief.

We believe the claims made by the Summit 6 plaintiffs and the Timelines plaintiffs are without merit, and

we intend to continue to defend ourselves vigorously in both cases. Although the outcome of litigation is
inherently uncertain, we do not believe the possibility of loss in either of these cases is probable. We are unable
to estimate a range of loss, if any, that could result were there to be an adverse final decision, and we have not
accrued a liability for either matter. If an unfavorable outcome were to occur in the Summit 6 case and/or the
Timelines case, it is possible that the impact could be material to our results of operations in the period(s) in
which any such outcome becomes probable and estimable.

Indemnifications

In the normal course of business, to facilitate transactions of services and products, we have agreed to

indemnify certain parties with respect to certain matters. We have agreed to hold certain parties harmless against
losses arising from a breach of representations or covenants, or out of intellectual property infringement or other
claims made by third parties. These agreements may limit the time within which an indemnification claim can be
made and the amount of the claim. In addition, we have entered into indemnification agreements with our
officers, directors, and certain employees, and our certificate of incorporation and bylaws contain similar
indemnification obligations.

It is not possible to determine the maximum potential amount under these indemnification agreements due

to the limited history of prior indemnification claims and the unique facts and circumstances involved in each
particular agreement. Historically, payments made by us under these agreements have not had a material impact
on our consolidated financial position, results of operations or cash flows. In our opinion, as of December 31,
2012, there was not at least a reasonable possibility we had incurred a material loss with respect to
indemnification of such parties. We have not recorded any liability for costs related to indemnification through
December 31, 2012.

Note 11. Stockholders' Equity

Initial Public Offering

In May 2012, we completed our IPO in which we issued and sold 180,000,000 shares of Class A common

stock at a public offering price of $38.00 per share and the selling stockholders sold 241,233,615 shares of
Class A common stock. We did not receive any proceeds from the sale of shares by the selling stockholders. The
total net proceeds received from the IPO were $6.8 billion after deducting underwriting discounts and
commissions of $75 million and other offering expenses of approximately $7 million.

Convertible Preferred Stock

Upon the closing of our IPO, all shares of our then-outstanding convertible preferred stock, as shown on the

table below, automatically converted into an aggregate of 545,401,443 shares of our Class B common stock.