EBay (EBAY)

Stock Options

The following table summarizes stock option activity for the three-month period ended March 31, 2009 (in thousands):

Stock options granted under our equity incentive plans generally vest 25% one year from the date of grant (for new hires) and 12.5% six months from the date of grant (for existing employees) and the remainder generally vest at a rate of 2.08% per month thereafter, in either case based on the optionee’s continuing service to eBay, and generally expire seven to ten years from the date of grant. The weighted average exercise price of stock options granted and assumed during the period was $10.72 per share and the related weighted average grant date fair value was $4.05 per share.

5.2 Stock Options.

(a) Within 30 days after the Acceptance Time (or, if there is a subsequent offering period with respect to the Offer, within 30 days after the expiration date of the subsequent offering period, as it may be extended), Parent shall make an offer to each holder of then outstanding Company Options that were granted prior to January 1, 2009, whether or not vested, to grant to such holder, in exchange for such holder’s agreement in writing to the cancellation of such holder’s Company Option, a newly-issued option (a “Pre-2009 Replacement Option”) to purchase shares of common stock, par value $0.001, of Parent (“Parent Common Stock”) having the terms set forth in this Section 5.2. With respect to each Pre-2009 Replacement Option granted by Parent to a holder of a Company Option pursuant to such offer: (i) the number of shares of Parent Common Stock subject to such Pre-2009 Replacement Option shall be determined by multiplying the number of Company Shares that were subject to such holder’s Company Option immediately prior to the cancellation thereof by the Pre-2009 Option Conversion Ratio (as defined below), and rounding the resulting number down to the nearest whole number of shares of Parent Common Stock; (ii) the per share exercise price for the Parent Common Stock issuable upon exercise of such Pre-2009 Replacement Option shall be determined by multiplying (A) the quotient of the per share exercise price in Korean Won of Company Shares subject to such Company Option, as in effect immediately prior to the cancellation thereof, divided by the Pre-2009 Option Conversion Ratio; by (B) the average of the US Dollar/Korean Won exchange rate quoted in the Western Edition of the Wall Street Journal for each of the 20 consecutive business days immediately preceding the date of this Agreement, and rounding the resulting exercise price up to the nearest whole cent; (iii) the vesting schedule of such Pre-2009 Replacement Option shall be as set forth on Schedule 5.2 and (iv) such Pre-2009 Replacement Option shall have the same term and exercisability as such Company Option.

32

The “Pre-2009 Option Conversion Ratio” shall be equal to the fraction: (1) having a numerator equal to the Offer Price, subject to adjustment for any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction involving the Company Shares between (or having a record date between) the Acceptance Time and the date of grant of the Pre-2009 Replacement Options; and (2) having a denominator equal to the average of the closing sale prices of a share of Parent Common Stock as reported on the NASDAQ Global Select Market for each of the 20 consecutive trading days ending on (and including) the trading day immediately preceding the date of grant of the Pre-2009 Replacement Options, subject to adjustment for any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction involving shares of Parent Common Stock between (or having a record date between) the date of this Agreement and the date of grant of the Pre-2009 Replacement Options.

(b) Within 30 days after the Acceptance Time (or, if there is a subsequent offering period with respect to the Offer, within 30 days after the expiration date of the subsequent offering period, as it may be extended), Parent shall make an offer to each holder of then outstanding Company Options that were granted on or after January 1, 2009, whether or not vested, to grant to such holder, in exchange for such holder’s agreement in writing to the cancellation of such holder’s Company Option, a newly-issued option (a “2009 Replacement Option”) to purchase shares of Parent Common Stock having the terms set forth in this Section 5.2. With respect to each 2009 Replacement Option granted by Parent to a holder of a Company Option pursuant to such offer: (i) the number of shares of Parent Common Stock subject to such 2009 Replacement Option shall be determined by multiplying the number of Company Shares that were subject to such holder’s Company Option immediately prior to the cancellation thereof by the 2009 Option Conversion Ratio (as defined below), and rounding the resulting number down to the nearest whole number of shares of Parent Common Stock; (ii) the per share exercise price for the Parent Common Stock issuable upon exercise of such 2009 Replacement Option shall be the closing price of Parent Common Stock on the date of grant of such 2009 Replacement Option; (iii) the vesting schedule of such 2009 Replacement Option shall be as set forth on Schedule 5.2; and (iv) such 2009 Replacement Option shall have the same term and exercisability as such Company Option. The “2009 Option Conversion Ratio” shall be equal to the fraction: (A) having a numerator equal to the average of the closing sale prices of a Company ADS as reported on the NASDAQ Global Select Market for each of the 20 consecutive trading days ending on (and including) the trading day immediately preceding the date of this Agreement, subject to adjustment for any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction involving the Company Shares between (or having a record date between) the date of this Agreement and the date of grant of the 2009 Replacement Options; and (B) having a denominator equal to the average of the closing sale prices of a share of Parent Common Stock as reported on the NASDAQ Global Select Market for each of the 20 consecutive trading days ending on (and including) the trading day immediately preceding the date of this Agreement, subject to adjustment for any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction involving the shares of Parent Common Stock between (or having a record date between) the date of this Agreement and the date of grant of the 2009 Replacement Options.