WebEx 2002 Annual Report Download - page 48

WEBEX COMMUNICATIONS, INC.
December 31, 2002, 2001 and 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands except share and per share amounts)
NOTE 3. SHORT-TERM DEBT
On March 29, 2001 WebEx entered into a loan agreement with a bank that allows WebEx to borrow up to
$7,500 or 80% of eligible accounts receivable, as defined in the agreement. Under this agreement, WebEx could
initially borrow up to $2,000 under a revolving credit line bearing interest at 1.5% above the prime rate maturing
April 30, 2002, and up to $5,500 on term advances bearing interest at 1.75% above the prime rate maturing
September 30, 2003.
Effective September 6, 2001, the agreement was amended to convert the entire $7,500 of borrowing
capacity to a revolving credit line. As of December 31, 2002, available borrowings under the agreement were up
to $7,500. Amounts borrowed under the revolving credit line bear interest at the prime rate plus 0.75% and may
be repaid and reborrowed at any time prior to the maturity date. The credit agreement expires on June 30, 2003.
The credit agreement is collateralized by all tangible and intangible assets of WebEx and is subject to compliance
with covenants, including a minimum liquidity ratio, minimum cash balance, minimum tangible net worth,
maximum quarterly operating losses excluding equity-based compensation charges, and minimum quarterly
revenue. As of December 31, 2002, WebEx had no outstanding borrowings under the credit line.
NOTE 4. STOCKHOLDERS’ EQUITY
(a) Initial public offering
On August 2, 2000, the Company completed its initial public offering of 3,500,000 shares of common stock
at a price of $14 per share. On August 3, 2000, the managing underwriters of the offering exercised an over-
allotment option for 525,000 shares of common stock at a price of $14 per share. Net proceeds of the offering
were approximately $50,482 after deducting underwriter discounts, commissions and other offering expenses.
(b) Warrants
In March 2000, WebEx issued fully vested and exercisable warrants to purchase 339,915 shares of Series D
preferred stock at an exercise price per share of $12.50 to a distribution partner in connection with an exclusive
distribution, advertising and promotion agreement. These warrants to purchase preferred stock were converted
into warrants to purchase common stock as a result of the initial public offering. Under the agreement, the
distribution partner was required to include and promote WebEx services as part of its portal services. The fair
value of the warrants was determined to be $1,737 using the Black-Scholes option pricing model. The fair value
of the warrants was recorded as deferred equity-based compensation and was amortized over the one-year term
beginning on the effective launch date of the portal arrangement.
In December 2001, the warrants were exercised using a net exercise provision resulting in the issuance of
207,131 shares of common stock to the distribution partner.
(c) Private Placement
During May and June 2001, the Company sold an additional two million shares of common stock to private
investors for cash proceeds of $20.5 million, net of offering expenses.
(d) Stock Plans
The Company has granted stock options to employees, directors and consultants under the 1998 Stock
Option Plan and the 2000 Stock Incentive Plan. Under the 1998 Stock Option Plan and the 2000 Stock Incentive
Plan, the Company has authorized a total of 23,349,594 shares available for grant. Incentive stock options and
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