eBay 1999 Annual Report Download - page 80

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In accordance with the marketing agreement, NEC will provide marketing and services to eBay Japan in an
effort to deliver a minimum level of confirmed registered users. As compensation for the marketing and other
services performed by NEC, eBay Japan will pay NEC an annual up-front fee of approximately $1.5 million.
The first payment will be made within 10 days of March 31, 2000 and subsequent payments will be payable on
the anniversary of such date in each of the subsequent three years as long as the contract is in effect. If NEC is
unable to deliver the minimum level of confirmed registered users, then eBay will have the right to repurchase
shares of eBay Japan from NEC.
Wells Fargo
On February 24, 2000, Billpoint and Wells Fargo Bank (‘‘Wells Fargo’’) entered into an agreement whereby
Wells Fargo will be the exclusive provider of Internet payment services (as defined) of domestic transactions for
Billpoint’s customers. The service agreement expires February 28, 2007.
In connection with this transaction Billpoint will reincorporate in Delaware and sell 350 shares of common
stock and 1,399,965 shares of Series A Preferred stock to Wells Fargo which represents approximately 35%
ownership in Billpoint. Simultaneously, eBay will exchange 25,999,350 common shares for 2,599,935 shares of
Series A Preferred stock. eBay will continue to consolidate Billpoint due to a majority ownership interest and
will reflect a minority interest for the equity interest of Wells Fargo Bank.
Lease arrangement
On March 1, 2000, the Company entered into a five-year lease for general office facilities located in San
Jose, California. Payment under this lease, which commenced during 2000, are based on the London Interbank
Offering Rate (‘‘LIBOR’’) plus 0.394% applied to the $126.4 million cost of the facility funded by the lessor.
The Company has an option to renew the lease for up to two five-year extensions subject to specific conditions.
Under the terms of the lease agreement, the Company was required to place $126.4 million of cash and
investment securities as collateral for the term of the lease. The cash and investment securities are restricted as
to their withdrawal from the third party trustee.
AutoTrader.com
On March 6, 2000, eBay and Autotrader.com LLC (‘‘Autotrader’’) entered into a marketing and services
agreement whereby eBay and Autotrader will develop a co-branded site and Autotrader will refer customers
desiring an auction pricing format to eBay for a referral fee. Under the terms of the agreement, eBay has
committed to provide certain marketing expenditures for the promotion of the eBay service and additional
automobile related services offered by Autotrader.
The following is a schedule by year of committed marketing and promotional expenditures related to the
agreement (in thousands):
Year1.............................................................. $ 7,000
Year2.............................................................. 8,000
Year3.............................................................. 9,000
Last 6 months ........................................................ 5,000
Total ........................................................... $29,000
Under with the agreement, eBay acquired approximately a 3% equity investment in Autotrader representing
1,173,876 of Autotrader.com Class A units in exchange for cash proceeds of $9.2 million or $7.87 per unit.
eBAY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
75