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Sample Business Contracts

Investor Rights Agreement - eBay Inc. and Benchmark Capital Management Co. LP

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                                  EBAY, INC.


                           INVESTOR RIGHTS AGREEMENT


                                 JUNE 20, 1997
<PAGE>
 
                               TABLE OF CONTENTS
 
                                                                                                            
                                                                                                               Page
                                                                                                               ----
                                                                                                              
1.       Certain Definitions....................................................................................1

2.       Financial Statements And Reports To Investors..........................................................3

3.       Additional Information.................................................................................3

4.       Inspection.............................................................................................4

5.       Right Of First Refusal.................................................................................4

6.       Termination Of Covenants...............................................................................5

7.       Demand Registration....................................................................................6

         7.1      Request for Registration on Form Other Than Form S-3..........................................6

         7.2      Right of Deferral of Registration on Form Other Than Form S-3.................................6

         7.3      Request for Registration on Form S-3..........................................................6

         7.4      Registration of Other Securities in Demand Registration.......................................7

         7.5      Underwriting in Demand Registration...........................................................7

         7.6      Blue Sky in Demand Registration...............................................................9

8.       Piggyback Registration.................................................................................9

         8.1      Notice of Piggyback Registration and Inclusion of Registrable Securities......................9

         8.2      Underwriting in Piggyback Registration........................................................9

         8.3      Blue Sky in Piggyback Registration...........................................................11

9.       Expenses Of Registration..............................................................................11

10.      Termination Of Registration Rights....................................................................11

11.      Registration Procedures And Obligations...............................................................12

12.      Information Furnished By Holder.......................................................................13
 

                                       i
<PAGE>
 
 
                                                                                                             
13.      Indemnification.......................................................................................13

         13.1     Company's Indemnification of Holders.........................................................13

         13.2     Holder's Indemnification of Company..........................................................14

         13.3     Indemnification Procedure....................................................................14

         13.4     Contribution.................................................................................15

14.      Limitations On Registration Rights Granted To Other Securities........................................15

15.      Transfer Of Rights....................................................................................16

16.      Market Stand-Off......................................................................................16

17.      No-Action Letter Or Opinion Of Counsel In Lieu Of
         Registration; Conversion Of Preferred Stock...........................................................16

18.      Conversion Of Preferred Stock.........................................................................17

19.      Reports Under Exchange Act............................................................................17

20.      Miscellaneous.........................................................................................18

         20.1     Entire Agreement; Successors and Assigns.....................................................18

         20.2     Governing Law................................................................................18

         20.3     Counterparts.................................................................................18

         20.4     Headings.....................................................................................18

         20.5     Notices......................................................................................18

         20.6     Amendment of Agreement.......................................................................29

         20.7     Severability.................................................................................19

         20.8     Aggregation of Stock.........................................................................19
 

                                      ii
<PAGE>
 
                           INVESTOR RIGHTS AGREEMENT

    This INVESTOR RIGHTS AGREEMENT (the "Agreement") is made as of June 20,
1997, by and among eBay, Inc., a California corporation (the "Company"), Pierre
Omidyar and Jeff Skoll (the "Founders") and the persons listed on the attached
Schedule 1.1 who become signatories to this Agreement (collectively, the
"Investors").

                                   RECITALS
                                   --------

    A.  The Company and the Investors have entered into one or more agreements
for sale by the Company and purchase by the Investors of the Company's Series B
Preferred Stock.

    B.  In connection with the purchase and sale of the Company's Series B
Preferred Stock, the Company and the Investors desire to provide for the rights
of the Investors with respect to information about the Company and registration
of the Common Stock issued upon conversion or exercise of the Series B Preferred
Stock according to the terms of this Agreement.

THE PARTIES AGREE AS FOLLOWS:

     1.  Certain Definitions
         -------------------

          As used in this Agreement, the following terms shall have the
following respective meanings:

          1.1  "Commission" shall mean the Securities and Exchange Commission or
                ----------                                                      
any other federal agency at the time administering the Securities Act.

          1.2  "Convertible Securities" shall mean securities of the Company
                ----------------------                                      
(including securities of the Company issuable upon exercise of options granted
by a Founder to an Investor) convertible into or exchangeable for Common Stock
of the Company or into other securities that are convertible into or
exchangeable for Common Stock.

          1.3  "Exchange Act" shall mean the Securities and Exchange Act of
                ------------                                               
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.

          1.4  "Form S-3" shall mean Form S-3 issued by the Commission or any
                --------                                                     
substantially similar form then in effect.

          1.5  "Holder" shall mean any holder of outstanding Registrable
                ------                                                  
Securities which have not been sold to the public, but only if such holder is
one of the Investors or an assignee or transferee of Registration rights as
permitted by Section 15.

          1.6  "Initiating Holders" shall mean Holders who in the aggregate hold
                ------------------                                              
at least two-thirds of the Registrable Securities.
<PAGE>
 
          1.7   "Major Investor" shall mean an investor that, together with any
                 --------------                                                
affiliate, holds not less than 200,000 shares of the Convertible Securities
indoor Registrable Securities (as equitably adjusted for stock splits,
subdivisions, stock dividends, changes, combinations, or the like).

          1.8   "Material Adverse Event" shall mean an occurrence having a
                 ----------------------                                   
consequence that either (a) is materially adverse as to the business,
properties, prospects, or financial condition of the Company or (b) is
reasonably foreseeable, has a reasonable likelihood of occurring, and if it were
to occur might materially adversely affect the business, properties, prospects,
or financial condition of the Company.

          1.9   The Terms "Register", "Registered", and "Registration" refer to
                           --------    ----------        ------------ 
a registration effected by preparing and filing a regulation statement in
compliance with the Securities Act ("Registration Statement"), and the
declaration or ordering of the effectiveness of such Registration Statement.

          1.10  "Registrable Securities" shall mean all Common Stock issued or
                 ----------------------                                       
issuable upon conversion of the Company's Convertible Securities purchased by or
issued to the Investors, including Common Stock issued pursuant to stools
splits, stock dividends and similar distributions, and any securities of the
Company granted registration rights pursuant to Section 14 of this Agreement
unless such Common Stock has previously been sold to the public; provided,
however, that for purposes of Section 8 of this Agreement, Registrable
Securities shall also include shares of Common Stock or Convertible Securities
held by a Founder.

          1.11  "Registration Expenses" shall mean all expenses incurred by the
                 ---------------------                                         
Company in complying with Sections 7 or 8 of this Agreement, including, without
limitation, all federal and state registration, qualification, and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, fees of special counsel for the Holders if Company counsel
does not males itself available for this purpose, and the expense of any special
audits incident to or required by any such registration.

          1.12  "Securities Act" shall mean the Securities Act of 1933, as
                 --------------                                           
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

          1.13  "Selling Expenses" shall mean all underwriting discounts,
                 ----------------                                        
selling commissions and stock transfer taxes applicable to the sale of
Registrable Securities pursuant to this Agreement.

     2.   Financial Statements and Reports to Investors.
          --------------------------------------------- 

          The Company shall deliver to each Investor:

             (i)    As soon as practicable after the end of each fiscal year of
the Company, and in any event within 90 days thereafter, an audited consolidated
balance sheet of the Company as of the end of such year and audited consolidated
statements of income,
<PAGE>
 
shareholders' equity and cash flow for such year, which year-end financial
reports shall be in reasonable detail and shall be prepared in accordance with
generally accepted accounting principles and accompanied by the opinion of
independent public accountants of nationally recognized standing selected by the
Company;

               (ii)   After the end of each the first three fiscal quarters of
each year, and in any event within 45 days of the end of each such fiscal
quarter, unaudited quarterly financial statements of income, shareholders'
equity, and cash flow for such quarter, which quarterly statements shall be in
reasonable detail and shall be prepared in accordance with generally accepted
accounting principles;

               (iii)  Contemporaneously with delivery to holders of Common
Stock, a copy of each report of the Company delivered to holders of Common
Stock; and

               (iv)   On or before January 31 of each year, an annual
capitalization summary.

     3.   Additional Information.
          ---------------------- 

          The Company shall deliver to each Major Investor:

               (i)    As soon as practicable after the end of each fiscal month,
and in any event within 30 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such month, and
consolidated statements of income and cash flow for such month and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles (other than for accompanying notes) and signed by the
Chief Financial Officer or President of the Company certifying that they fairly
and accurately present the financial condition and results of operation of the
Company, subject to changes resulting from year-end audit adjustment;

               (ii)   As soon as practicable following submission to and
approval by the Board of Directors of the Company an operating budget and plan
(the "Plan") respecting the next fiscal year and a summary of such Plan,
together with any update of the Plan as such update is prepared and approved by
the Board of Directors; and

               (iii)  Such other information relating to the financial
condition, business, prospects, or corporate affairs of the Company as such
Investor may from time to time request, provided, however, that the Company
shall not be obligated under this subsection or any other subsection of Section
3 to provide information which it deems in good faith to be a trade secret or
confidential information unless such Investor executes an appropriate non-
disclosure agreement and is neither a competitor nor a potential competitor of
the Company.

     4    Inspection.
          ---------- 

          The Company shall permit each Investor, at such Investor's expense, to
visit and inspect the Company's properties, to examine its books of account and
records and to discuss the
<PAGE>
 
Company's affairs, finances, and accounts with its officers, all at such
reasonable times as may be requested by each such Investor, provided, however,
that the Company shall not be obligated pursuant to this Section 4 to provide
any information which it reasonably considers to be a trade secret or
confidential information unless such Investor executes an appropriate non-
disclosure agreement and is neither a competitor nor a potential competitor of
the Company. The rights of an Investor under this Section 4 may not be assigned
as part of such Investor's sale of any of the Registrable Securities or
Convertible Securities except in accordance with the provisions of Section 15.

     5.   Right of First Refusal.
          ---------------------- 

          5.1  The Company hereby grants to each Major Investor the right of
first refusal to purchase up to its Pro Rata Share of the New Securities (as
defined below) which the Company may, Tom time to time, propose to sell and
issue.  The Major Investors may purchase said New Securities on the same terms
and at the same price at which the Company proposes to sell the New Securities.
The "Pro Rata Share" of each Major Investor, for purposes of this right of first
refusal, is the ratio of (i) the total number of shares of Common Stock held by
such Major Investor (including any shares of Common Stock into which shares of
the Convertible Securities held by such Major Investor are convertible) to (ii)
the total number of shares of Common Stock outstanding immediately prior to the
issuance of the New Securities (including any shares of Common Stock into which
outstanding shares of the Convertible Securities are convertible and treating as
outstanding the maximum number of shares of Common Stock that can be issued
under the Company's Stock Option Plan).

          5.2  "New Securities" shall mean any capital stock of the Company,
whether authorized or not, and any rights, options, or warrants to purchase said
capital stock, and securities of any type whatsoever that are, or may become,
convertible into said capital stock; provided that "New Securities" does not
include (i) the Series B Preferred Stock issued pursuant to that certain Series
B Preferred Stock Purchase Agreement Fox as of June 20, 1997 or the Common Stock
issuable upon conversion of any Convertible Securities; (ii) securities offered
pursuant to the registration statement filed under the Securities Act; (iii)
securities issued by the Company pursuant to the acquisition of another
corporation by merger, purchase of substantially all of the assets, or other
reorganization; (iv) shares issued or issuable to employees, directors
consultants, advisers and others performing services for the Company or its
subsidiaries, pursuant to a plan or arrangement approved by the Company's Board
of Directors; (v) shares issued without consideration pursuant to a stock
dividend, stock split, or similar transaction; (vi) warrants, and shares
issuable upon exercise of such warrants, issued in connection with equipment
leasing or credit transactions with commercial lending institutions and approved
by the Company's Board of Directors provided such transactions are not primarily
for equity financing purposes; and (vii) Registrable Securities issued or
issuable upon conversion, exercise, or exchange of New Securities.

          5.3  In the event the Company proposes to undertake an issuance of New
Securities, it shall give to each Major Investor written notice (the "Notice")
of its intention, describing the type of New Securities, the price, the terms
upon which the Company proposes to
<PAGE>
 
issue the same, the number of shares which Major Investor is entitled to
purchase, and a statement that each Major Investor shall have twenty (20) days
to respond to such Notice. Each Major Investor shall have twenty (20) days from
the date of receipt of the Notice to agree to purchase any portion of or all of
its Pro Rata Share of the New Securities for the price and upon the terms
specified in the Notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased and forwarding payment
for such New Securities to the Company if immediate payment is Squired by such
terms.

          5.4  In the event a Major Investor fails to exercise in full the right
of first refusal within said twenty (20) day period, the Company shall have
sixty (60) days thereafter to sell or eater into an agreement (pursuant to which
the sale of New Securities covered thereby shall be closed, if at all, within
thirty (30) days from date of said agreement) to sell the New Securities
respecting which such Major Investor's rights were not exercised, at a price and
upon general terms no more favorable to the purchaser thereof than specified in
the Notice.  In the event the Company has not sold the New Securities within
said sixty (60) day period (or sold and issued New Securities in accordance with
the foregoing within thirty (30) days from the date of said agreement), the
Company shall not thereafter issue or sell any New Securities without first
offering such securities to such Major Investor in the manner provided above.

          5.5  The right of first refusal granted under this Section 5 is
assignable by the Major Investors to (i) any transferee of a minimum of 200,000
shares of Common Stock (including any shares of Common Stock into which shares
of Convertible Securities then held by it are convertible), (ii) any wholly
owned subsidiary or parent of, or any corporation or entity that is, within the
meaning of the Securities Act, controlling, controlled by or under common
control with, any such Major Investor, or (iii) any Major Investor.

     6.   Termination of Covenants.
          ------------------------ 

          The covenants of the Company set forth in Sections 2, 3, 4, and 5
shall be terminated and be of no further force or effect immediately prior to
the closing of the first public offering office Common Stock of the Company that
is effected pursuant to a Registration Statement filed with, and declared
effective by, the Commission under the Securities Act (other than either a
public offering limited solely to employees of the Company or an offering
pursuit to Rule 145 under the Securities Act), and such covenants shall
terminate as to any Investor as of the date such Investor no longer holds any
shares of the capital stock of the Company.

     7.   Demand Registration.
          ------------------- 

          7.1  Request for Registration on Form Other Than Form S-3.  Subject to
               ----------------------------------------------------             
the terms of this Agreement, in the event that the Company shall receive from
the Initiating Holders at any time after the earlier of (a) June 20, 2001 and
(b) six months after the closing of the Company's initial public offering of
shares of Common Stock under a Registration Statement, a written request that
the Company effect any Registration with respect to all or a part of the
Registrable Securities on a Form other than Form S-3 for an offering of at least
50% of the then outstanding Registrable Securities (or any lesser percent if the
reasonably anticipated aggregate offering price to the public would exceed
$7,500,000), the Company shall (i) promptly give
<PAGE>
 
written notice of the proposed Registration to all other Holders and shall (ii)
use its best efforts to effect as soon as practicable, and in any event within
60 days of the receipt of such request, Registration of the Registrable
Securities specified in such request, together with any Registrable Securities
of any Holder joining in such request as are specified in a written request
given within 20 days after written notice from the Company. The Company shall
not be obligated to take any action to effect any such registration pursuant to
this Section 7.1 (i) for the six (6) month period immediately following the
effective date of a Registration pertaining to securities of the Company (other
than a registration of securities in a Rule 145 transaction or with respect to
an employee benefit plan) provided that the Company is employing all reasonable
efforts in good faith to cause such Registration to become effective or (ii)
after the Company has effected two such Registrations pursuant to this Section
7.1 and such Registrations have been declared effective. The substantive
provisions of Section 7.5 shall be applicable to each Registration initiated
under this Section 7.1.

          7.2  Right of Deferral of Registration on Form Other Than Form S-3.
               -------------------------------------------------------------  
If the Company shall furnish to all such Holders who joined in the request a
certificate signed by the President of the Company stating that, in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company for any Registration to be effected as requested
under Section 7.1, the Company shall have the right, exercisable not more than
once in any twelve-month period, to defer the filing of a Registration Statement
with respect to such offering for a period of not more than 90 days from
delivery of the request of the Initiating Holders.

          7.3  Request for Registration on Form S-3.
               ------------------------------------ 

               (a)  If the Initiating Holders request that the Company file a
Registration Statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of Registrable Securities the reasonably anticipated
aggregate price to the public of which would not be less than $1,000,000, and
the Company is a registrant entitled to use Form S-3 to register the Registrable
Securities for such an offering, the Company shall (i) promptly give written
notice of the proposed registration to all other Holders, and (ii) use all
reasonable efforts to cause such Registrable Securities to be Registered for the
offering on such form and to cause such Registrable Securities to be qualified
in such jurisdictions as the Holder or Holders may reasonably request; provided,
however, that the Company shall not be required to effect more than one
Registration pursuant to this Section 7.3 in any six (6) month period. The
substantive provisions of Section 7.5 shall be applicable to each Registration
initiated under this Section 7.3.

               (b)  Notwithstanding the foregoing, the Company shall not be
obligated to file a registration statement pursuant to this Section 7.3:

                    (i)  in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification, or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
<PAGE>
 
                    (ii)   if the Company, within ten (10) days of the receipt
of the request of the Initiating Holders, gives notice of its bona fide
intention to effect the filing of a Registration Statement with the Commission
within sixty (60) days of receipt of such request (other the with respect to a
Registration Statement relating to a Rule 145 transaction or an offering solely
to employees), provided that the Company is actively employing in good faith all
reasonable efforts to malice such Registration Statement to become effective;

                    (iii)  within six months immediately following the effective
date of any Registration Statement pertaining to the securities of the Company
(other than a registration of securities in a Rule 145 transaction or with
respect to an employee benefit plan); or

                    (iv)   if the Company shall furnish to such Initiating
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its shareholders for a Registration Statement to be filed in
the near future, then the Company's obligation to use its best efforts to file a
Registration Statement shall be deferred for a period not to exceed 60 days from
the receipt of the request to file such registration by such Holder provided
that the Company shall not exercise the right contained in this paragraph (iv)
more than once in any twelve (12) month period.

          7.4  Registration of Other Securities in Demand Registration.
               ------------------------------------------------------- 

               Any Registration Statement filed pursuant to the request of the
Initiating Holders under this Section 7 may, subject to the provisions of
Section 7.5, include securities of the Company other than Registrable
Securities.

          7.5  Underwriting in Demand Registration
               -----------------------------------

               (a)  Notice of Underwriting. If the Initiating Holders intend to
                    ----------------------                                     
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 7, and the Company shall include such information in
the written notice referred to in Section 7.1 or 7.3. The right of any Holder to
Registration pursuant to Section 7 shall be conditioned upon such Holder's
agreement to participate in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting.

               (b)  Inclusion of Other Holders in Demand Registration.  If the
                    -------------------------------------------------         
Company, officers, or directors of the Company holding Common Stock other than
Registrable Securities, or holders of securities other than Registrable
Securities, request inclusion in such Registration, the Initiating Holders, to
the extent they deem advisable and consistent with the goals of such
Registration and subject to Section 7.5(d), may, in their sole discretion, on
behalf of all Holders, offer to any or all of the Company, such officers or
directors, and such holders of securities other than Registrable Securities that
such securities other than Registrable Securities be included in the
underwriting and may condition such offer on the acceptance by such persons of
the terms of this Section 7.  In the event, however, that the number of shares
so included
<PAGE>
 
exceeds the number of shares of Registrable Securities included by all Holders,
such Registration shall be treated as governed by Section 8 hereof rather than
Section 7, and it shall not count as a Registration for purposes of Section 7.1
hereof.

               (c)  Selection of Underwriter in Demand Registration. The Company
                    -----------------------------------------------
shall (together with all Holders and other security holders, if any, proposing
to distribute their securities through such underwriting) enter into an
underwriting agreement with the representative ("Underwriter's Representative")
of the underwriter or underwriters selected for such underwriting by the Company
and reasonably acceptable to the Holders of a majority of the Registrable
Securities being registered by the Initiating Holders.

               (d)  Marketing Limitation in Demand Registration. In the event
                    -------------------------------------------
the Underwriter's Representative advises the Initiating Holders in writing that
market factors (including, without limitation, the aggregate number of shares of
Common Stock requested to be Registered, the general condition of the market,
and the status of the persons proposing to sell securities pursuant to the
Registration) require a limitation of the number of shares to be underwritten,
the underwriter and the Company may limit the number of Registrable Securities
to be included in the Registration and underwriting; provided, however, that no
Registrable Securities shall be so excluded unless (i) first, the Common Stock
(other than Registrable Securities) held by officers or employees of the
Company, (ii) second, the securities other than Registrable Securities, and
(iii) third the securities requested to be registered by the Company, shall be
excluded from such Registration to the extent required by such limitation. If a
limitation of the number of shares is still required, the Company shall so
advise all Holders and the number of shares of Registrable Securities that may
be included in the Registration and underwriting shall be allocated among all
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities otherwise entitled to inclusion in such Registration held
by such Holders at the time of filing the Registration Statement. No Registrable
Securities or other securities excluded from the underwriting by reason of this
Section 7.5(d) shall be included in such Registration Statement.

               (e)  Right of Withdrawal in Demand Registration. If any Holder of
                    ------------------------------------------                  
Registrable Securities, or a holder of other securities entitled (upon request)
to be included in such Registration, disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the Underwriter's Representative and the Initiating Holders
delivered at least seven days prior to the effective date of the Registration
Statement. The securities so withdrawn shall also be withdrawn from the
Registration Statement. If the remaining Holders are not Initiating Holders,
then the Company may discontinue the Registration.

               7.6  Blue Sky in Demand Registration. In the event of any
                    ------------------------------- 
Registration pursuant to this Section 7, the Company will exercise its best
efforts to Register and qualify the securities covered by the Registration
Statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably appropriate for the distribution of such securities;
provided, however, that (i) the Company shall not be required to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions unless the Company is 
<PAGE>
 
already subject to service in such jurisdiction and except as may be required by
the Securities Act, and (ii) notwithstanding anything in this Agreement to the
contrary, in the event any jurisdiction in which the securities shall be
qualified imposes a non-waivable requirement that expenses incurred in
connection with the qualification of the securities be borne by selling
shareholders, such expenses shall be payable pro rata by selling shareholders.

     8.  Piggyback Registration.
         ---------------------- 

         8.1  Notice of Piggyback Registration and Inclusion of Registrable
              -------------------------------------------------------------
Securities. Subject to the terms of this Agreement, in the event the Company
----------                                                                  
decides to Register any of its Common Stock (either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights other than pursuant to Section 7 hereof) on a form that
would be suitable for a registration involving Registrable Securities, the
Company will: (i) promptly give each Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify such securities under the applicable Blue Sky or other state securities
laws) and (ii) include in such Registration (and any related qualification under
Blue Sky laws or other compliance), and in any underwriting involved therein,
all the Registrable Securities specified in a written request delivered to the
Company by any Holder within 20 days after delivery of such written notice from
the Company.

          8.2  Underwriting in Piggyback Reparation.
               ------------------------------------ 

               (a)  Notice of Underwriting in Piggyback Registration. If the
                    ------------------------------------------------        
Registration of which the Company gives notice is for a Registered public
offering involving an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 8.1 In such event, the
right of any Holder to Registration shall be conditioned upon such underwriting
and the inclusion of such Holder's Registrable Securities in such underwriting
to the extent provided in this Section 8. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting) enter
into an underwriting agreement with the Underwriter's Representative for such
offering. The Holders shall have no right to participate in the selection of the
underwriters for an offering pursuant to this Section 8.

               (b)  Marketing Limitation in Piggyback Registration. In the event
                    ----------------------------------------------
the Underwriter's Representative advises the Company that market factors
(including, without limitation, the aggregate number of shares of Common Stock
requested to be Registered, the general condition of the market, and the status
of the persons proposing to sell securities pursuant to the Registration)
require a limitation of the number of shares to be underwritten, the
Underwriter's Representative and the Company (subject to the allocation priority
set forth in Section 8.2(c)) may:

                    (i)  in the case of the Company's initial Registered public
offering, exclude some or all Registrable Securities from such registration and
underwriting; and

                    (ii) in the case of any Registered public offering
subsequent to the initial public offering, limit the number of shares of
Registrable Securities to be included in
<PAGE>
 
such Registration and underwriting to not less than twenty percent (20%) of the
securities included in such Registration (based on aggregate market values).

                    (c)  Allocation of Shares in Piggyback Registration. In the
                         ---------------------------------------------- 
event that the Underwriter's Representative and the Company limit the number of
shares to be included in a Registration pursuant to Section 8.2(b), the shares
(other than Registrable Securities) held by officers or employees of the Company
shall be excluded from such registration and underwriting to the extent required
by such limitation. If a limitation of the number of shares is still required
after such exclusion, the number of shares held by all other holders of
securities (other than Registrable Securities) requesting and legally entitled
to include such securities in such Registration shall be excluded from such
registration and underwriting to the extent required by such limitation, in
proportion, as nearly as practicable, to the respective amounts of securities
which such other holders would otherwise be entitled to include in such
Registration. If a limitation of the number of shares is still required after
such exclusion, first Registrable Securities held by Founders shall be excluded
from such registration and underwriting to the extent required by such
limitation and, thereafter, the number of shares held by all other Holders
thereof requesting and legally entitled to include such securities in such
Registration of securities shall be excluded from such registration and
underwriting to the extent required by such limitation, in proportion, as nearly
as practicable, to the respective amounts of securities (including Registrable
Securities) which such other holders would otherwise be entitled to include in
such Registration; provided, however, that in the case of an offering to which
Section 7.5(b) applies, the number of shares of Registrable Securities held by
Initiating Holders to be included in such Registration and underwriting shall
not be limited to less than twenty percent (20%) of the securities included in
such Registration (based on aggregate market value). No Registrable Securities
or other securities excluded from the underwriting by reason of this Section
8.2(c) shall be included In the Registration Statement.

                    (d)  Withdrawal in Piggyback Registration. If any Holder
                         ------------------------------------
disapproves of the terms of any such underwriting, such person may elect to
withdraw therefrom by written notice to the Company and the Underwriter's
Representative delivered at least seven days prior to the effective date of the
Registration Statement. Any Registrable Securities or other securities excluded
or withdrawn from such underwriting shall be withdrawn from such Registration.

          8.3  Blue Sky in Piggyback Registration.
               ---------------------------------- 

               In the event of any Registration of Registrable Securities
pursuant to this Section 8, the Company will exercise its best efforts to
Register and qualify the securities covered by the Registration Statement under
such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably appropriate for the distribution of such securities; provided,
however, that (i) the Company shall not be required to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act, and (ii)
notwithstanding anything in this Agreement to the contrary, in the event any
jurisdiction in which the securities shall be qualified impose a non-waivable
requirement that expenses incurred
<PAGE>
 
in connection with the qualification of the securities be borne by selling
shareholders, such expenses shall be payable pro rata by selling shareholders.

     9.  Expenses of Registration.
         ------------------------ 

         All Registration Expenses incurred in connection with all Registrations
pursuant to Section 7 and Section 8 shall be borne by the Company.
Notwithstanding the above, the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 7 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (which Holders shall
bear such expenses unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to such registration), provided however,
that if at the tine of such withdrawal, the Holders have learned of a Material
Adverse Event with respect to the condition, business, or prospects of the
Company not known to the Holders at the time of their request, then the Holders
shall not be required to pay any of such expenses and shall retain their rights
pursuant to Section 7.

     10.  Termination of Registration Rights.
          ---------------------------------- 

          The rights to cause the Company to register securities granted under
Sections 7 and 8 of this Agreement shall terminate, with respect to each Holder
seven (7) years after the closing date of the Company's initial public offering;
provided, however, that a Holder's rights provided for under Sections 7 and 8
shall terminate earlier when (i) such Holder owns less than one percent (1%) of
the outstanding securities of the Company, (ii) such Holder may sell all its
shares in a three (3) month period under Rule 144 of the Act, and (iii) the
Company is then subject to the reporting requirements of Section 13(a) or 1 5(d)
of the Exchange Act.

     11.  Registration Procedures and Obligations.
          --------------------------------------- 

          Whenever required under this Agreement to effect the registration of
any Registrable Securities, the Company shall, as expeditiously as reasonably
possible:

               (i)    Prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities and use its best efforts
to cause such Registration Statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such Registration Statement effective for up to one hundred
twenty (120) days.

               (ii)   Prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.

               (iii)  Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
<PAGE>
 
               (iv)   Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.

               (v)    In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

               (vi)   Notify each Holder of Registrable Securities covered by
such Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

               (vii)  Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such Registration Statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration.

               (viii) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Agreement, on the date
that such Registrable Securities are delivered for sale in connection with a
registration pursuant to this Agreement, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration in form
and substance as is customarily given to underwriters in an underwritten public
offering, and (ii) a letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily given
by independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters.

     12.  Information Furnished by Holder.
          ------------------------------- 

          It shall be a condition precedent of the Company's obligations under
this Agreement, with respect to each Holder, that such Holder of Registrable
Securities included in any Registration furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder or Holders as
the Company may reasonably request.

     13.  Indemnification.
          --------------- 

          13.1  Company's Indemnification of Holders.
                ------------------------------------ 

                To the extent permitted by law, the Company will indemnify each
Holder, each of its officers, directors, and constituent partners, legal counsel
for the Holders, and each person controlling such Holder (within the meaning of
the Securities Act), with respect to which Registration, qualification, or
compliance of Registrable Securities has been effected pursuant to
<PAGE>
 
this Agreement, and each underwriter, if any, and each person who controls any
underwriter against all claims, losses, damages, or liabilities (or actions in
respect thereof) to the extent such claims, losses, damages, or liabilities
arise out of or are based upon any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus or other document
(including any related Registration Statement) incident to any such
Registration, qualification, or compliance, or are based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act or
the Exchange Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such Registration, qualification,
or compliance; and the Company will reimburse each such Holder, each such
underwriter, and each person who controls any such Holder or underwriter, for
any legal and any other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating or defending any such claim, loss,
damage, liability, or action; provided, however, that the indemnity contained in
this Section 13.1 shall not apply to amounts paid in settlement of any such
claim, loss, damage, liability, or action if settlement is effected without the
consent of the Company (which consent shall not unreasonably be withheld); and
provided, further, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability, or expense arises out of or
is based upon any untrue statement or omission based upon written information
furnished to the Company by such Holder, underwriter, or controlling person and
stated to be for use in connection with the offering of securities of the
Company.

          13.2  Holder's Indemnification of Company.
                ----------------------------------- 

                To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
Registration, qualification or, compliance is being effected pursuant to this
Agreement, indemnify the Company, each of its directors and officers, each legal
counsel and independent accountant of the Company, each underwriter, if any, of
the Company's securities covered by such a Registration Statement, each person
who controls the Company or such underwriter within the meaning of the
Securities Act, and each other such Holder, each of its officers, directors, and
constituent partners, and each person controlling such other Holder (within the
meaning of the Securities Act), against all claims, losses, damages, and
liabilities (or actions in respect thereof) arising out of or based upon any
untrue statement (or alleged untrue statement) of a material fact contained in
any such Registration Statement, prospectus, offering circular, or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by such Holder of any rule or regulation
promulgated under the Securities Act or the Exchange Act applicable to such
Holder and relating to action or inaction required of such Holder in connection
with any such Registration, qualification, or compliance, and will reimburse the
Company, such Holders, such directors, officers, partners, persons, law and
accounting firms, underwriters or control persons for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action, in each case to the extent, but
in each case only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such Registration
Statement, prospectus, offering circular, or other
<PAGE>
 
document in reliance upon and in conformity with written information furnished
to the Company by such Holder ant states to be specifically for use in
connection with the offering of securities of the Company, provided, however,
that the indemnity contained in this Section 13.2 shall not apply to amounts
paid in settlement of any such claim loss, damage, liability or action if
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld) and provided, further, that each Holder's
liability under this Section 13.2 shall not exceed such Holder's proceeds from
the offering of securities made in connection with such Registration.

          13.3  Indemnification Procedure
                -------------------------

                Promptly after receipt by an indemnified party under this
Section 13 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 13, notify the indemnifying party in writing of the
commencement thereof and genially summarize such action. The indemnifying party
shall have the right to participate in and to assume the defense of such claim;
provided, however, that the indemnifying party shall be entitled to select
counsel for the defense of such claim with the approval of any parties entitled
to indemnification, which approval shall not be unreasonably withheld; provided
further, however, that if either party reasonably determines that there may be a
conflict between the position of the Company and the Holders in conducting the
defense of such action, suit, or proceeding (such conflict being related to
claims for indemnity under this Section 13), then counsel for such party shall
be entitled to conduct the defense to the extent reasonably determined by such
counsel to be necessary to protect the interest of such party. The failure to
notify an indemnifying party promptly of the commencement of any such action, if
prejudicial to the ability of the indemnifying party to defend such action,
shall relieve such indemnifying party, to the extent so prejudiced, of any
liability to the indemnified party under this Section 13, but the omission so to
notify the indemnifying party will not relieve such party of any liability that
such party may have to any indemnified party otherwise other than under this
Section 13.

          13.4  Contribution.
                ------------ 

                If the indemnification provided for in this Section 13 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations, provided that each Holder's contribution under this Section 13.4
shall not exceed such Holder's proceeds from the offering of securities made in
connection with such Registration. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying
<PAGE>
 
party or by the indemnified party and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement or
omission.

     14.  Limitations on Registration Rights Granted to Other Securities.
          -------------------------------------------------------------- 

          From and after the date of this Agreement, the Company shall not enter
into any agreement with any holder or prospective holder of any securities of
the Company providing for the granting to such holder of any Registration
rights, except that, with the consent of the Holders of a majority of the
Registrable Securities then outstanding, additional holders may be added as
parties to this Agreement with regard to any or all securities of the Company
held by them. Any such additional parties shall execute a counterpart of this
Agreement, and upon execution by such additional parties and by the Company,
shall be considered an Investor for all purposes of this Agreement.  The
additional parties and the additional Registrable Securities shall be identified
in an amendment to Schedule A hereto.

     15.  Transfer of Rights.
          ------------------ 

          15.1  The right to cause the Company to Register Securities granted by
the Company to the Investors under this Agreement may be assigned by any Holder
to (i) any partner or retired partner of any Holder which is a partnership, (ii)
any family member or trust for the benefit of any individual Holder, or (iii)
any transferee or assignee of any Convertible Securities or Registrable
Securities not sold to the public acquiring at least 250,000 shares of such
Holder's Registrable Securities (equitably adjusted for any stock splits,
subdivisions, stock dividends, changes, combinations or the like); provided,
however, that the Company must receive written notice prior to the time of said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such information and
Registration rights are being assigned, and the transferee or assignee of such
rights must not be a person deemed by the Board of Directors of the Company, in
its best judgment, to be a competitor or potential competitor of the Company.

          15.2  Notwithstanding the limitation set forth in the foregoing
subsection (a), any Holder which is a partnership or a limited liability company
("L.L.C.") may transfer such Holder's Registration rights to such Holder's
constituent partners or the L.L.C. members without restriction as to the number
or percentage of shares acquired by any such constituent partner or member and
any Holder who is an individual may transfer such rights to a member of Holder's
immediate family or to a trust for the benefit of Holder or of a member of
Holder's immediate family without restriction as to the number or percentage of
shares acquired by any such person or trust.

     16.  Market Stand-Off.
          ---------------- 

          Each Holder hereby agrees that, if so requested by the Company and the
Underwriter's Representative (if any) in connection with the Company's first
public offering, such Holder shall not sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise transfer or dispose of any
Registrable Securities or other securities of the Company without the prior
written consent of the Company and the Underwriter's Representative for such
<PAGE>
 
offerings for such period of time (not to exceed 180 days) following the
effective date of a Registration Statement of the Company filed under the
Securities Act as may be requested by such Underwriter's Representative.  The
obligations of Holders under this Section 16 shall be conditioned upon similar
agreements being in effect with each other shareholder who is an employee, or 2%
shareholder of the Company.

     17.  No-Action Letter or Opinion of Counsel in Lieu of Registration:
          ---------------------------------------------------------------
Conversion of Preferred Stock.
----------------------------- 

          Notwithstanding anything else in this Agreement, if the Company shall
have obtained from the Commission a "no-action" letter in which the Commission
has indicated that it will take no action if, without Registration under the
Securities Act, any Holder disposes of Registrable Securities covered by any
request for Registration made under this Section in the specific manner in which
such Holder proposes to dispose of the Registrable Securities included in such
request (such as including, without limitation, inclusion of such Registrable
Securities in an underwriting initiated by either the Company or the holders)
and that such Registrable Securities may be sold to the public without
Registration, or if in the opinion of counsel for the Company concurred in by
counsel for such Holder, which concurrence shall not be unreasonably withheld,
Registration under the Securities Act is required in connection with such
disposition and that such Registrable Securities may be sold to the public
without Registration, the Registrable Securities included in such request shall
not be eligible for Registration under this Agreement; provided, however, that
any Registrable Securities not so disposed of shall be eligible for Regulation
in accordance with the terms of this Agreement with respect to other proposed
dispositions to which this Section 17 does not apply.  The Registration rights
of the Holders of the Registrable Securities set forth in this Agreement are
conditioned upon the conversion of the Registrable Securities with respect to
which Registration is sought into Common Stock prior to the effective date of
the Registration Statement.

     18.  Conversion of Preferred Stock.
          ----------------------------- 

          The Registration rights of the Holders of the Shares set forth in this
Agreement are conditioned upon the conversion of the Shares with respect to
which Registration is sought into Common Stock prior to the effective date of
the Registration Statement.

     19.  Reports Under Exchange Act.
          -------------------------- 

          With a view to making available to the Holders the benefits of Rule
144 promulgated under the Securities Act and any other rule or regulation of the
Commission that may at any time permit a Holder to sell securities of the
Company to the public without Registration or pursuant to a registration on Form
S-3, the Company agrees to:

               (i)  make and keep public information available, as those terms
are understood and defined in Rule 144 after the effective date of the first
Registration Statement filed by the Company for the offering of its securities
to the general public;
<PAGE>
 
          (ii)   take such action, including the voluntary registration of its
Common Stock under Section 12 of the Exchange Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the first Registration Statement
filed by the Company for the offering of its securities to the general public is
declared effective;

          (iii)  file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and

          (iv)   furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act, and the Exchange Act (at any time after it has become subject to
such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the Commission which permits the selling of any such
securities without Registration or pursuant to such form.

     20.  Miscellaneous.
          ------------- 

          20.1  Entire Agreement: Successors and Assigns.
                ---------------------------------------- 

                This Agreement constitutes the entire contract between the
Company and the Investors relative to the subject matter hereof. Any previous
agreement between the Company and any Investor concerning Registration rights
and rights to information is superseded by this Agreement. Subject to the
exceptions specifically set forth in this Agreement, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
executors, administrators, heirs, successor, and assigns of the parties.

          20.2  Governing Law.
                ------------- 

                This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California excluding those laws that direct the
application of the laws of another jurisdiction.

          20.3  Counterparts.
                ------------ 

                This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

          20.4  Headings.
                -------- 

                The headings of the Sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
<PAGE>
 
          20.5  Notices.
                ------- 

                Any notice required or permitted hereunder shall be given in
writing and shall be conclusively deemed effectively given upon personal
delivery, or five days after deposit in the United States mail, by registered or
certified mail, postage prepaid, addressed (i) if to the Company, as set forth
below the Company's name on the signature page of this Agreement, and (ii) if to
an Investor, at such Investor's address as set forth on Schedule 1.1, or at such
other address as the Company or such Investor may designate by ten (10) days
advance written notice to the Investors or the Company, respectively.

          20.6  Amendment of Agreement.
                ---------------------- 

                Any provision of this Agreement may be amended (and the rights
of first refusal provided in Section 5 waived) only by a written instrument
signed by the Company and by persons holding a majority of the Registrable
Securities .

          20.7  Severability.
                ------------ 

                In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
rereading provisions shall not in any way be affected or impaired thereby.

          20.8  Aggregation of Stock.
                -------------------- 

                All shares of Registrable Securities held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights
Agreement as of the day and year first above written

          Company:       EBAY, INC.

                         a California corporation

                         By:       /s/ PIERRE OMIDYAR
                                 ---------------------------------------
                                   Pierre Omidyar, Chief Executive Officer

                         Address:  2005 Hamilton Avenue
                                   Suite 270
                                   San Jose, CA  95125

          Investors:     BENCHMARK CAPITAL PARTNERS, L.P.

                         By: BENCHMARK CAPITAL MANAGEMENT CO.,
                         L.L.C.
                         Its General Partner

                         By:       /s/ ROBERT C. KAGLE
                                 ---------------------------------------
                                   Robert Kagle, Member

                         Address:  2480 Sand Hill Road
                                   Suite 200
                                   Menlo Park, CA  94025

                         BENCHMARK FOUNDERS' FUND, L.P.

                         By: BENCHMARK CAPITAL MANAGEMENT CO.,
                         L.L.C.
                         Its General Partner

                         By:       /s/ ROBERT C. KAGLE
                                 ---------------------------------------
                                   Robert Kagle, Member

                         Address:  2480 Sand Hill Road
                                   Suite 200
                                   Menlo Park, CA  94025


                  SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT
<PAGE>
 
                                 SCHEDULE 1.1
                                 ------------

           Name of Investor             Number of Shares
           ----------------             ----------------

Benchmark Capital Partners, L.P.             877,374
Benchmark Founders Fund, L.P.                122,626