eBay 1998 Annual Report Download - page 55

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unvested shares if his employment terminates. His shares vested as to 4,462,497 shares on February 1, 1997 and vest
as to 637,500 shares on the first day of each month thereafter through the close of business on June 30, 2000, at
which time all of the shares will be vested. The vesting of shares accelerates such that any unvested shares become
fully vested in the event of a Sale of the Company. In addition to the foregoing, under the Co-Sale Agreement, the
vesting of shares will accelerate upon termination of employment, such that immediately prior to such termination
an additional 3,825,000 shares will become vested and not subject to repurchase by the Company. See “Principal
and Selling Stockholders.”
Series B Preferred Stock. In June 1997, the Company sold an aggregate of 877,374 and 122,626 shares of
Series B Preferred Stock at a purchase price of $3.00 per share and issued warrants to purchase 350,950 and 49,050
shares of Series B Preferred Stock at an exercise price of $5.00 per share to Benchmark Capital Partners, L.P. and
Benchmark Founders’ Fund, L.P., respectively, for an aggregate purchase price of $3,000,000, which amount was
paid in cash. Benchmark Capital Partners, L.P. and Benchmark Founders’ Fund, L.P. each exercised all of their
warrants in May 1998 for an aggregate purchase price of $2,000,000, which amount was paid in cash. Upon
completion of the Company’ s initial public offering in September 1998, all of the Series B Preferred Stock was
automatically converted to an aggregate of 12,600,000 shares of Common Stock. See “Principal and Selling
Stockholders.”
Investor Rights Agreement. In June 1997, the Company, the Investors and the Founders entered into an
Investor Rights Agreement under which the Investors and Founders have certain registration rights with respect to
their shares of Common Stock. See “Description of Capital Stock—Registration Rights.”
Officer Loans. In December 1996, as discussed above, Mr. Skoll purchased 30,600,000 shares of the
Company’ s Common Stock for $68,000 under the terms of a Loan and Pledge Agreement effective as of December
1996 between Mr. Skoll and the Company. From January 1998 through June 1998, in connection with the exercise
of stock options granted under the 1996 Plan and the 1997 Plan, the Company permitted Margaret C. Whitman, the
Company’ s President and Chief Executive Officer since February 1998, to purchase 7,200,000 shares of Common
Stock in exchange for a $60,000 cash payment, a $180,000 Secured Full Recourse Promissory Note dated February
3, 1998 and a $240,000 Secured Non-Recourse Promissory Note dated February 3, 1998; Steven P. Westly, the
Company’ s Vice President Marketing and Business Development since August 1997, to purchase 2,484,000 shares
of Common Stock in exchange for cash payments totaling $17,920 and Secured Full Recourse Promissory Notes
dated January 27, 1998, May 21, 1998, May 26, 1998 and June 26, 1998 in the amounts of $71,280, $16,200, $7,200
and $50,400, respectively; Michael K. Wilson, the Company’ s Vice President Product Development and Site
Operations since January 1997, to purchase 1,800,000 shares of Common Stock in exchange for a $1,000 cash
payment and a Secured Full Recourse Promissory Note dated January 28, 1998 in the amount of $9,000 and Gary F.
Bengier, the Company’ s Chief Financial Officer and Vice President Operations since November 1997, to purchase
1,575,000 shares of Common Stock in exchange for a $5,250 cash payment and a Secured Full Recourse Promissory
Note dated January 26, 1998 in the amount of $47,250. Each note is secured by the Common Stock purchased with
the note except for Ms. Whitman’ s notes which are each secured by all the shares purchased with both the full
recourse and the non-recourse notes. Each note bears interest at the rate of 8%, compounded semi-annually. Interest
on the unpaid principal is due on December 1 of each year and the principal balance is due in full on December 1,
2002. The maximum amount of indebtedness during 1998 for Ms. Whitman, Mr. Westly and Mr. Wilson was
$447,501, $152,629 and $9,488 respectively. Ms. Whitman, Mr. Westly, Mr. Bengier and Mr. Wilson have paid off
the full principal and accrued interest on his or her respective notes on, respectively, January 27, 1999, December 1,
1998, December 23, 1998 and March 15, 1999. See “Principal and Selling Stockholders.”
Stock to Service Provider. In connection with the recruiting of its Chief Executive Officer, the Company
engaged the services of Ramsey Beirne Associates, Inc., an executive search firm affiliated with Benchmark Capital
Partners, L.P. and Benchmark Founders’ Fund, L.P. As partial payment for its services, on March 13, 1998 the
Company issued to this firm 15,416 shares of Series B Preferred Stock, which was valued at $6.00 per share. This
stock converted at the Company’ s initial public offering into 138,744 shares of Common Stock.