eBay 2000 Annual Report Download - page 81

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In July 2000, eBay had also entered into an agreement whereby eBay purchased shares representing
beneÑcial interest of less than Ñve percent of a company aÇliated with a director of eBay. Additionally, eBay
received a warrant that, if exercised, eBay's beneÑcial interest would remain at less than Ñve percent. eBay
recorded the investment at cost. Separately, eBay entered into a commercial agreement whereby eBay
provided approximately $1.3 million of advertising services to the related party. The amount is included in the
accompanying consolidated statements of income.
In April 2000, eBay entered into an agreement with a company that is aÇliated with a director of eBay,
eBay recorded approximately $4.1 million in income relating to advertising services. eBay also entered into an
agreement whereby eBay purchased shares representing less than one percent of the related party's total shares
outstanding. Additionally, eBay received a warrant that, if exercised, eBay s beneÑcial interest would remain at
less than one percent.
All contracts with related parties are at rates and terms that management believes are comparable with
those entered into with independent third parties.
Note receivable from stockholders
At December 31, 1999, eBay held a note receivable from an employee totaling $11,000 which was fully
paid at December 31, 2000. Note receivable from stockholders represented amounts owed to eBay from the
exercise of stock options. These full recourse notes were collateralized by common stock and interest was at a
rate of 8% per annum.
Notes receivable from eBay executive oÇcers
At December 31, 2000, eBay held notes receivable from two executive oÇcers of eBay totaling
$3.2 million. The promissory note held by one oÇcer of eBay as of December 31, 1999 was amended in 2000.
The amended note bears interest at a rate of 6.37% per annum as compared to the previous rate of 5.43% and
remains collateralized by a Deed of Trust, held by eBay. The other note bears interest at a rate of 6.40% per
annum and is collateralized by a Deed of Trust, held by eBay. Both notes' outstanding principal and interest
are due and payable by 2004.
Note 12 Ì Preferred Stock:
Preferred Stock
eBay is authorized, subject to limitations prescribed by Delaware law, to provide for the issuance of
Preferred Stock in one or more series, to establish from time to time the number of shares included within
each series, to Ñx the rights, preferences and privileges of the shares of each wholly unissued series and any
qualiÑcations, limitations or restrictions thereon, and to increase or decrease the number of shares of any such
series (but not below the number of shares of such series then outstanding) without any further vote or action
by the stockholders. At December 31, 1999 and 2000 there were 10,000,000 shares of Preferred Stock
authorized for issuance, and no shares issued or outstanding.
Note 13 Ì Common Stock:
eBay's CertiÑcate of Incorporation, as amended, authorizes eBay to issue 900,000,000 shares of common
stock. A portion of the shares outstanding are subject to repurchase by eBay over a four-year period from the
earlier of the issuance date or employee hire date, as applicable. At December 31, 1999 and 2000, there were
25,356,000 and 7,509,000 shares, respectively, subject to repurchase rights at an average price of $0.06 and
$0.12, respectively, per share.
76