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Sample Business Contracts

1997 Stock Option Plan - eBay Inc.

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                                  eBAY, INC.
                                        
                            1997 STOCK OPTION PLAN
                                        
                           AS ADOPTED JUNE 20, 1997
                         (AS AMENDED DECEMBER 3, 1997)
                                        

     1.   PURPOSE.  The purpose of this Plan is to provide incentives to 
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attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options. Capitalized terms not defined in
the text are defined in Section 21 hereof. This Plan is intended to be a written
compensatory benefit plan within the meaning of Rule 701 promulgated under the
Securities Act.

     2.   SHARES SUBJECT TO THE PLAN.
          -------------------------- 

          2.1  Number of Shares Available.  Subject to Sections 2.2 and 16
               --------------------------                                 
hereof, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be Two Million One Hundred Ninety-Eight Shares or
such lesser number of Shares as permitted under Section 260.140.45 of Title 10
of the California Code of Regulations.  Subject to Sections 2.2 and 16 hereof,
Shares that are subject to issuance upon exercise of an Option but cease to be
subject to such Option for any reason other than exercise of such Option will be
available for grant and issuance in connection with future Options under this
Plan.  At all times the Company will reserve and keep available a sufficient
number of Shares as will be required to satisfy the requirements of all
outstanding Options granted under this Plan.

          2.2  Adjustment of Shares.  In the event that the number of
               --------------------                                  
outstanding shares of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (a) the number of Shares reserved for issuance under
this Plan and (b) the Exercise Prices of and number of Shares subject to
outstanding Options, will be proportionately adjusted, subject to any required
action by the Board or the shareholders of the Company and compliance with
applicable securities laws; provided, however, that fractions of a Share will
not be issued but will either be paid in cash at the Fair Market Value of such
fraction of a Share or will be rounded down to the nearest whole Share, as
determined by the Committee in its discretion.

     3.   ELIGIBILITY.  ISOs (as defined in Section 5 hereof) may be granted
          -----------
          only to employees (including officers and directors who are also
          employees) of the Company or of a Parent or Subsidiary of the Company.
          NQSOs (as defined in Section 5 hereof) may be granted to employees,
          officers, directors and consultants of the Company or of any Parent or
          Subsidiary of the Company; provided such consultants render bona fide
          services not in connection with the offer and sale of securities in a
          capital-raising transaction. A person may be granted more than one
          Option under this Plan.

     4.   ADMINISTRATION.
          -------------- 

          4.1  Committee Authority.  This Plan will be administered by the
               -------------------                                        
Committee or the Board acting as the Committee.  Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee has full power to implement and carry out this Plan.  Without
limitation, the Committee has the authority to:

          (a)  construe and interpret this Plan, any Stock Option Agreement or
               Exercise Agreement (each as defined in Section 5 hereof) and any
               other agreement or document executed pursuant to this Plan;

          (b)  prescribe, amend and rescind rules and regulations relating to
               this Plan;
<PAGE>
 
          (c)  select persons to receive Options;

          (d)  determine the form and terms of Options;

          (e)  determine the number of Shares or other consideration subject to
               Options;

          (f)  determine whether Options will be granted singly, in combination
               with, in tandem with, in replacement of, or as alternatives to,
               any Options granted under this Plan or any awards under any other
               incentive or compensation plan of the Company or any Parent or
               Subsidiary of the Company;

          (g)  grant waivers of Plan or Option conditions;

          (h)  determine the vesting and exercisability of Options;

          (i)  correct any defect, supply any omission, or reconcile any
               inconsistency in this Plan, any Option or any Stock Option
               Agreement or Exercise Agreement (each as defined in Section 5
               hereof);

          (j)  determine whether an Option has been earned; and

          (k)  make all other determinations necessary or advisable for the
               administration of this Plan.

          4.2  Committee Discretion.  Any determination made by the Committee
               --------------------                                          
with respect to any Option will be made in its sole discretion at the time of
grant of the Option or, unless in contravention of any express term of this Plan
or Option, and subject to Section 5.9 hereof, at any later time, and such
determination will be final and binding on the Company and on all persons having
an interest in any Option under this Plan.  The Committee may delegate to one or
more officers of the Company the authority to grant Options under this Plan.

     5.   OPTIONS.  The Committee may grant Options to eligible persons and will
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determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:

          5.1  Form of Option Grant.  Each Option granted under this Plan will
               --------------------                                           
be evidenced by an Agreement which will expressly identify the Option as an ISO
or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and contain such
provisions (which need not be the same for each Participant) as the Committee
may from time to time approve, and which will comply with and be subject to the
terms and conditions of this Plan.

          5.2  Date of Grant.  The date of grant of an Option will be the date
               -------------                                                  
on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee.  The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.

          5.3  Exercise Period.  Options may be exercisable immediately (subject
               ---------------                                                  
to repurchase pursuant to Section 10 hereof) or may be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
be exercisable after the expiration of ten (10) years from the date the Option
is granted; and provided further that no ISO granted to a person who directly or
by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any Parent or Subsidiary of
the Company ("TEN PERCENT SHAREHOLDER") will be exercisable after the expiration
of five (5) years from the date the ISO is granted.  The Committee may provide
for Options to become exercisable at one time or from time to time, periodically
or otherwise, in such number of Shares or percentage of Shares as the Committee
determines.  Subject to earlier termination of the Option as provided herein,
each Participant who is not an officer, director or consultant of the 

                                       2
<PAGE>
 
Company or of a Parent or Subsidiary of the Company shall have the right to
exercise an Option granted hereunder at the rate of at least twenty percent
(20%) per year over five (5) years from the date such Option is granted.

          5.4  Exercise Price.  The Exercise Price of an Option will be
               --------------                                          
determined by the Committee when the Option is granted and may not be less than
eighty five percent (85%) of the Fair Market Value of the Shares on the date of
grant; provided that (a) the Exercise Price of an ISO will not be less than one
hundred percent (100%) of the Fair Market Value of the Shares on the date of
grant and (b) the Exercise Price of any Option granted to a Ten Percent
Shareholder will not be less than one hundred ten percent (110%) of the Fair
Market Value of the Shares on the date of grant.  Payment for the Shares
purchased must be made in accordance with Section 6 hereof.

          5.5  Method of Exercise.  Options may be exercised only by delivery to
               ------------------                                               
the Company of a written stock option exercise agreement  (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price, and any applicable taxes, for the
number of Shares being purchased.

          5.6  Termination.  Subject to earlier termination pursuant to Sections
               -----------                                                      
16 or 17 hereof and notwithstanding the exercise periods set forth in the Stock
Option Agreement, exercise of an Option will always be subject to the following:

          (a)  If the Participant is Terminated for any reason except death,
               Disability or Cause, then the Participant may exercise such
               Participant's Options, only to the extent that such Options are
               exercisable on the Termination Date and such Options must be
               exercised by the Participant, if at all, as to all or some of the
               Vested Shares calculated as of the Termination Date, within three
               (3) months after the Termination Date (or within such shorter
               time period, not less than thirty (30) days after the Termination
               Date, or such longer time period not exceeding five (5) years
               after the Termination Date as may be determined by the Committee,
               with any exercise after three (3) months after the Termination
               Date deemed to be an NQSO), but in any event, no later than the
               expiration date of the Options.

          (b)  If the Participant is Terminated because of Participant's death
               or Disability (or the Participant dies within three (3) months
               after Participant's Termination other than for Cause), then
               Participant's Options may be exercised, only to the extent that
               such Options are exercisable by Participant on the Termination
               Date and must be exercised by Participant (or Participant's legal
               representative or authorized assignee), if at all, as to all or
               some of the Vested Shares calculated as of the Termination Date,
               within twelve (12) months after the Termination Date (or within
               such shorter time period, not less than six (6) months after the
               Termination Date, or such longer time period not exceeding five
               (5) years after the Termination Date as may be determined by the
               Committee, with any exercise after (i) three (3) months after the
               Termination Date when the Termination is for any reason other
               than the Participant's death or disability, within the meaning of
               Code Section 22(e)(3), or (ii) twelve (12) months after the
               Termination Date when the Termination is because of Participant's
               disability, within the meaning of Code Section 22(e)(3), deemed
               to be an NQSO), but in any event no later than the expiration
               date of the Options.

          (c)  If the Participant is terminated for Cause, then Participant's
               Options shall expire on such Participant's Termination Date, or
               at such later time and on such conditions as are determined by
               the Committee.

                                       3
<PAGE>
 
          5.7   Limitations on Exercise.  The Committee may specify a reasonable
                -----------------------                                         
minimum number of Shares that may be purchased on exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.

          5.8   Limitations on ISOs.  The aggregate Fair Market Value
                -------------------
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company or any
Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair
Market Value of Shares on the date of grant with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year exceeds
$100,000, then the Options for the first $100,000 worth of Shares to become
exercisable in such calendar year will be ISOs and the Options for the amount in
excess of $100,000 that become exercisable in that calendar year will be NQSOs.
In the event that the Code or the regulations promulgated thereunder are amended
after the Effective Date (as defined in Section 17 hereof) to provide for a
different limit on the Fair Market Value of Shares permitted to be subject to
ISOs, then such different limit will be automatically incorporated herein and
will apply to any Options granted after the effective date of such amendment.

          5.9   Modification, Extension or Renewal.  The Committee may modify,
                ----------------------------------                            
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted.  Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code.  Subject to Section 5.10 hereof, the Committee may reduce the
Exercise Price of outstanding Options without the consent of Participants
affected by a written notice to them; provided, however, that the Exercise Price
may not be reduced below the minimum Exercise Price that would be permitted
under Section 5.4 hereof for Options granted on the date the action is taken to
reduce the Exercise Price.

          5.10  No Disqualification.  Notwithstanding any other provision in
                -------------------
this Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

     6.   PAYMENT FOR SHARE PURCHASES.
          --------------------------- 

          6.1  Payment.  Payment for Shares purchased pursuant to this Plan may
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be made in cash (by check) or, where expressly approved for the Participant by
the Committee and where permitted by law:

          (a)  by cancellation of indebtedness of the Company to the
               Participant;

          (b)  by surrender of shares that: (i) either (A) have been owned by
               the Participant for more than six (6) months and have been paid
               for within the meaning of SEC Rule 144 (and, if such shares were
               purchased from the Company by use of a promissory note, such note
               has been fully paid with respect to such shares) or (B) were
               obtained by the Participant in the public market and (ii) are
               clear of all liens, claims, encumbrances or security interests;

          (c)  by tender of a full recourse promissory note having such terms as
               may be approved by the Committee and bearing interest at a rate
               sufficient to avoid imputation of income under Sections 483 and
               1274 of the Code; provided, however, that Participants who are
               not employees or directors of the Company will not be entitled to
               purchase Shares with a promissory note unless the note is
               adequately secured by collateral other than the Shares.

          (d)  by waiver of compensation due or accrued to the Participant for
               services rendered;

          (e)  provided that a public market for the Company's stock exists:

                                       4
<PAGE>
 
               (1)  through a "same day sale" commitment from the Participant
                    and a broker-dealer that is a member of the National
                    Association of Securities Dealers (an "NASD DEALER") whereby
                    the Participant irrevocably elects to exercise the Option
                    and to sell a portion of the Shares so purchased to pay for
                    the Exercise Price, and whereby the NASD Dealer irrevocably
                    commits upon receipt of such Shares to forward the Exercise
                    Price directly to the Company; or

               (2)  through a "margin" commitment from the Participant and an
                    NASD Dealer whereby the Participant irrevocably elects to
                    exercise the Option and to pledge the Shares so purchased to
                    the NASD Dealer in a margin account as security for a loan
                    from the NASD Dealer in the amount of the Exercise Price,
                    and whereby the NASD Dealer irrevocably commits upon receipt
                    of such Shares to forward the Exercise Price directly to the
                    Company; or

          (f)  by any combination of the foregoing.

          6.2  Loan Guarantees.  The Committee may help the Participant pay for
               ---------------                                                 
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.

     7.   WITHHOLDING TAXES.
          ----------------- 

          7.1  Withholding Generally.  Whenever Shares are to be issued in
               ---------------------                                      
satisfaction of Options granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares.  Whenever, under this Plan,
payments in satisfaction of Options are to be made in cash, such payment will be
net of an amount sufficient to satisfy federal, state, and local withholding tax
requirements.

          7.2  Stock Withholding.  When, under applicable tax laws, the
               -----------------                                       
Participant incurs tax liability in connection with the exercise or vesting of
any Option that is subject to tax withholding and the Participant is obligated
to pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined.  All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee.

     8.   PRIVILEGES OF STOCK OWNERSHIP.
          ----------------------------- 

          8.1  Voting and Dividends.  No Participant will have any of the rights
               --------------------                                             
of a shareholder with respect to any Shares until the Shares are issued to the
Participant.  After Shares are issued to the Participant, the Participant will
be a shareholder and have all the rights of a shareholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that the
Participant will have no right to retain such stock dividends or stock
distributions with respect to Unvested Shares that are repurchased pursuant to
Section 10 hereof. The Company will comply with Section 260.140.1 of Title 10 of
the California Code of Regulations with respect to the voting rights of Common
Stock.

          8.2  Financial Statements.  The Company will provide financial
               --------------------                                     
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Options outstanding, or as otherwise required under Section
260.140.46 of Title 10 of the California Code of Regulations.  Notwithstanding
the foregoing, the Company will not be required to provide such financial
statements to Participants when issuance is limited to key employees whose
services in connection with the Company assure them access to equivalent
information.

                                       5
<PAGE>
 
     9.   TRANSFERABILITY.  Options granted under this Plan, and any interest
          ---------------                                                    
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution.  During the lifetime of the
Participant an Option will be exercisable only by the Participant or
Participant's legal representative and any elections with respect to an Option
may be made only by the Participant or Participant's legal representative.

     10.  RESTRICTIONS ON SHARES.
          ---------------------- 

          10.1  Right of First Refusal.  At the discretion of the Committee, the
                ----------------------                                          
Company may reserve to itself and/or its assignee(s) in the Stock Option
Agreement a right of first refusal to purchase all Shares that a Participant (or
a subsequent transferee) may propose to transfer to a third party, unless
otherwise not permitted by Section 25102(o) of the California Corporations Code,
provided, that such right of first refusal terminates upon the Company's initial
public offering of Common Stock pursuant to an effective registration statement
filed under the Securities Act.

          10.2  Right of Repurchase.  At the discretion of the Committee, the
                -------------------                                          
Company may reserve to itself and/or its assignee(s) in the Stock Option
Agreement a right to repurchase Unvested Shares held by a Participant following
such Participant's Termination at any time within ninety (90) days after
Participant's Termination Date (or in the case of securities issued upon
exercise of an Option after the Participant's Termination Date, within ninety
(90) days after the date of such exercise) for cash and/or cancellation of
purchase money indebtedness, at the Participant's Exercise Price, provided, that
to the extent the Participant is not an officer, director or consultant of the
Company or of a Parent or Subsidiary of the Company such right to repurchase
Unvested Shares lapses at the rate of at least twenty percent (20%) per year
over five (5) years from the date of grant of the Option.

          10.2  Right of Repurchase.  At the discretion of the Committee, the
                -------------------                                          
Company may reserve to itself and/or its assignee(s) in the Stock Option
Agreement a right to repurchase Shares held by a Participant following such
Participant's Termination at any time within ninety (90) days after
Participant's Termination Date (or in the case of securities issued upon
exercise of an Option after the Participant's Termination Date, within ninety
(90) days after the date of such exercise) for cash and/or cancellation of
purchase money indebtedness, at:  (a) with respect to Vested Shares, the Fair
Market Value of such Shares on Participant's Termination Date, provided, that
such right to repurchase Vested Shares terminates when the Company's securities
become publicly traded; or (b) with respect to Unvested Shares, the
Participant's Exercise Price, provided, that to the extent the Participant is
not an officer, director or consultant of the Company or of a Parent or
Subsidiary of the Company such right to repurchase Unvested Shares at the
Exercise Price lapses at the rate of at least twenty percent (20%) per year over
five (5) years from the date of grant of the Option.

     11.  CERTIFICATES.  All certificates for Shares or other securities
          ------------                                                  
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.

     12.  ESCROW; PLEDGE OF SHARES.  To enforce any restrictions on a
          ------------------------                                   
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates.  Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral.  In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the 

                                       6
<PAGE>
 
Committee will from time to time approve. The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis as the
promissory note is paid.

     13.  EXCHANGE AND BUYOUT OF OPTIONS.  The Committee may, at any time or
          ------------------------------                                    
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Options in exchange for the surrender and
cancellation of any or all outstanding Options.  The Committee may at any time
buy from a Participant an Option previously granted with payment in cash, shares
of Common Stock of the Company (including restricted stock) or other
consideration, based on such terms and conditions as the Committee and the
Participant may agree.

     14.  SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.  This Plan is intended
          ----------------------------------------------                        
to comply with Section 25102(o) of the California Corporations Code.  Any
provision of this Plan which is inconsistent with Section 25102(o) shall,
without further act or amendment by the Company or the Board, be reformed to
comply with the requirements of Section 25102(o).  An Option will not be
effective unless such Option is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Option and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable, and/or (b) compliance with any exemption,
completion of any registration or other qualification of such Shares under any
state or federal law or ruling of any governmental body that the Company
determines to be necessary or advisable.  The Company will be under no
obligation to register the Shares with the SEC or to effect compliance with the
exemption, registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.

     15.  NO OBLIGATION TO EMPLOY.  Nothing in this Plan or any Option granted
          -----------------------                                             
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.

     16.  CORPORATE TRANSACTIONS.
          ---------------------- 

          16.1  Assumption or Replacement of Options by Successor or Acquiring
                --------------------------------------------------------------
Company.  In the event of (a) a dissolution or liquidation of the Company, (b) a
-------                                                                         
merger or consolidation in which the Company is not the surviving corporation
(other than a merger or consolidation with a wholly-owned subsidiary, a
 ----- ----                                                            
reincorporation of the Company in a different jurisdiction, or other transaction
in which there is no substantial change in the shareholders of the Company or
their relative stock holdings and the Options granted under this Plan are
assumed, converted or replaced by the successor or acquiring corporation, which
assumption, conversion or replacement will be binding on all Participants), (c)
a merger in which the Company is the surviving corporation but after which the
shareholders of the Company immediately prior to such merger (other than any
shareholder which merges with the Company in such merger, or which owns or
controls another corporation which merges, with the Company in such merger)
cease to own their shares or other equity interests in the Company, or (d) the
sale of all or substantially all of the assets of the Company, any or all
outstanding Options may be assumed, converted or replaced by the successor or
acquiring corporation (if any), which assumption, conversion or replacement will
be binding on all Participants. In the alternative, the successor or acquiring
corporation may substitute equivalent Options or provide substantially similar
consideration to Participants as was provided to shareholders (after taking into
account the existing provisions of the Options). The successor or acquiring
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions and other provisions no less favorable to the
Participant than those which applied to such outstanding Shares immediately
prior to such transaction described in this Section 16.1. In the event such
successor or acquiring corporation (if any) does not assume or substitute
Options, as provided above, pursuant to a transaction described in this Section
16.1, then notwithstanding any other provision in this Plan to the contrary, the
vesting of such Options

                                       7
<PAGE>
 
will accelerate and the Options will become exercisable in full prior to the
consummation of such event at such times and on such conditions as the Committee
determines, and if such Options are not exercised prior to the consummation of
the corporate transaction, they shall terminate in accordance with the
provisions of this Plan.

          16.2  Other Treatment of Options.  Subject to any greater rights
                --------------------------                                
granted to Participants under the foregoing provisions of this Section 16, in
the event of the occurrence of any transaction described in Section 16.1 hereof,
any outstanding Options will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation or sale of assets.

          16.3  Assumption of Options by the Company.  The Company, from time to
                ------------------------------------                            
time, also may substitute or assume outstanding options granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either (a) granting an Option under this Plan in substitution of
such other company's option, or (b) assuming such option as if it had been
granted under this Plan if the terms of such assumed option could be applied to
an Option granted under this Plan.  Such substitution or assumption will be
permissible if the holder of the substituted or assumed option would have been
eligible to be granted an Option under this Plan if the other company had
applied the rules of this Plan to such grant.  In the event the Company assumes
an option granted by another company, the terms and conditions of such option
will remain unchanged (except that the exercise price and the number and nature
                       ------                                                  
of shares issuable upon exercise of any such option will be adjusted
appropriately pursuant to Section 424(a) of the Code).  In the event the Company
elects to grant a new Option rather than assuming an existing option, such new
Option may be granted with a similarly adjusted Exercise Price.

     17.  ADOPTION AND SHAREHOLDER APPROVAL.  This Plan will become effective on
          ---------------------------------                                     
the date that it is adopted by the Board (the "EFFECTIVE DATE").  This Plan will
be approved by the shareholders of the Company (excluding Shares issued pursuant
to this Plan), consistent with applicable laws, within twelve (12) months before
or after the Effective Date.  Upon the Effective Date, the Board may grant
Options pursuant to this Plan; provided, however, that:  (a) no Option may be
exercised prior to initial shareholder approval of this Plan, and (b) no Option
granted pursuant to an increase in the number of Shares approved by the Board
shall be exercised prior to the time such increase has been approved by the
shareholders of the Company.  In the event that initial shareholder approval is
not obtained within twelve (12) months before or after this Plan is adopted by
the Board, all Options granted hereunder will be canceled.

     18.  TERM OF PLAN/GOVERNING LAW.  Unless earlier terminated as provided
          --------------------------                                        
herein, this Plan will terminate ten (10) years from the Effective Date or, if
earlier, the date of shareholder approval.  This Plan and all agreements
hereunder shall be governed by and construed in accordance with the laws of the
State of California.

     19.  AMENDMENT OR TERMINATION OF PLAN.  Subject to Section 5.9 hereof, the
          --------------------------------                                     
Board may at any time terminate or amend this Plan in any respect, including
without limitation amendment of any form of Stock Option Agreement or instrument
to be executed pursuant to this Plan; provided, however, that the Board will
not, without the approval of the shareholders of the Company, amend this Plan in
any manner that requires such shareholder approval pursuant to Section 25102(o)
of the California Corporations Code or the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans.

     20.  NONEXCLUSIVITY OF THE PLAN.  Neither the adoption of this Plan by the
          --------------------------                                           
Board, the submission of this Plan to the shareholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options or any other equity awards outside of this Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.

     21.  DEFINITIONS.  As used in this Plan, the following terms will have the
          -----------                                                          
following meanings:

          "BOARD" means the Board of Directors of the Company.

          "CAUSE" means Termination because of (i) any willful material
violation by the Participant of any law or regulation applicable to the business
of the Company or a Parent or Subsidiary of the Company, the 

                                       8
<PAGE>
 
Participant's conviction for or guilty plea to, a felony or a crime involving
moral turpitude or any willful perpetration by the Participant of a common law
fraud, (ii) the Participant's commission of an act of personal dishonesty which
involves a personal profit in connection with the Company or any other entity
having a business relationship with the Company, (iii) any material breach by
the Participant of any material provision of any agreement or understanding
between the Company or a Parent or Subsidiary of the Company and the Participant
regarding the terms of the Participant's service as an employee, director or
consultant to the Company or a Parent or Subsidiary of the Company, including
without limitation, the willful and continued failure or refusal of the
Participant to perform the material duties required of such Participant as an
employee, director or consultant of the Company or a Parent or Subsidiary of the
Company, other than as a result of having a Disability, or a breach of any
applicable invention assignment and confidentiality agreement or similar
agreement between the Company or a Parent or Subsidiary of the Company and the
Participant, (iv) Participant's intentional disregard of the policies of the
Company or a Parent or Subsidiary of the Company so as to cause loss, damage or
injury to the property, reputation or employees of the Company or a Parent or
Subsidiary of the Company, or (v) any other misconduct by the Participant which
is materially injurious to the financial condition or business reputation of, or
is otherwise materially injurious to, the Company or a Parent or Subsidiary of
the Company.

          "CODE" means the Internal Revenue Code of 1986, as amended.

          "COMMITTEE" means the committee appointed by the Board to administer
this Plan, or if no committee is appointed, the Board.

          "COMPANY"  means eBay, Inc. or any successor or acquiring corporation.

          "DISABILITY" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.

          "EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.

          "FAIR MARKET VALUE" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:

          (a)  if such Common Stock is then quoted on the Nasdaq National
               Market, its closing price on the Nasdaq National Market on the
               date of determination as reported in The Wall Street Journal;
                                                    ----------------------- 

          (b)  if such Common Stock is publicly traded and is then listed on a
               national securities exchange, its closing price on the date of
               determination on the principal national securities exchange on
               which the Common Stock is listed or admitted to trading as
               reported in The Wall Street Journal;
                           ----------------------- 

          (c)  if such Common Stock is publicly traded but is not quoted on the
               Nasdaq National Market nor listed or admitted to trading on a
               national securities exchange, the average of the closing bid and
               asked prices on the date of determination as reported by The Wall
                                                                        --------
               Street Journal (or, if not so reported, as otherwise reported by
               --------------                                                  
               any newspaper or other source as the Board may determine); or

          (d)  if none of the foregoing is applicable, by the Committee in good
               faith.

          "OPTION" means an award of an option to purchase Shares pursuant to
Section 5 hereof.

          "PARENT" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing fifty percent 

                                       9
<PAGE>
 
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.

          "PARTICIPANT" means a person who receives an Option under this Plan.

          "PLAN" means this eBay, Inc. 1997 Stock Option Plan, as amended from
time to time.

          "SEC" means the Securities and Exchange Commission.

          "SECURITIES ACT" means the Securities Act of 1933, as amended.

          "SHARES" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 16 hereof, and
any successor security.

          "SUBSIDIARY" or "SUBSIDIARIES" means any corporation or corporations
(other than the Company) in an unbroken chain of corporations beginning with the
Company if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

          "TERMINATION" or "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director or consultant to the Company
or a Parent or Subsidiary of the Company.  A Participant will not be deemed to
have ceased to provide services in the case of (i) sick leave, (ii) military
leave, or (iii) any other leave of absence approved by the Committee, provided
that such leave is for a period of not more than ninety (90) days, unless
reinstatement (or, in the case of an employee with an ISO, reemployment) upon
the expiration of such leave is guaranteed by contract or statute or unless
provided otherwise pursuant to formal policy adopted from time to time by the
Company and issued and promulgated in writing.  In the case of any Participant
on (i) sick leave, (ii) military leave or (iii) an approved leave of absence,
the Committee may make such provisions respecting suspension of vesting of the
Option while the Participant is on leave from the Company or a Parent or
Subsidiary of the Company as the Committee may deem appropriate, except that in
no event may an Option be exercised after the expiration of the term set forth
in the Stock Option Agreement.  The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "TERMINATION
DATE").

          "UNVESTED SHARES" means "Unvested Shares" as defined in Section 2.2 of
the Stock Option Agreement.

          "VESTED SHARES" means "Vested Shares" as defined in Section 2.2 of the
Stock Option Agreement.

                                       10
<PAGE>
 
                                                              NO. ((OPTION NO))
                                                                  -------------
                                                                                
                                  eBAY, INC.
                                        
                            1997 STOCK OPTION PLAN

                            STOCK OPTION AGREEMENT


          This Stock Option Agreement (this "AGREEMENT") is made and entered
into as of the Date of Grant set forth below (the "DATE OF GRANT") by and
between ebay, inc., a California Corporation (the "COMPANY"), and the
Participant named below ("PARTICIPANT").  Capitalized terms not defined herein
shall have the meanings ascribed to them in the Company's 1997 Stock Option Plan
(the "PLAN").

PARTICIPANT:                               ((NAME))
                                           -------------------------------------

SOCIAL SECURITY NUMBER:                    _____________________________________
                                           
ADDRESS:                                   _____________________________________

                                           _____________________________________

 
TOTAL OPTION SHARES:                       ((No_of_Shares))
                                           -------------------------------------
EXERCISE PRICE PER SHARE:                  ((Price_per_Share))
                                           -------------------------------------
DATE OF GRANT:                             ((Date_of_Grant))
                                           -------------------------------------
FIRST VESTING DATE:                        ((First_Vesting_Date))
                                           -------------------------------------
DATE:                                      ((Expiration_Date))
                                           -------------------------------------
                                           [UNLESS EARLIER TERMINATED UNDER 
                                           SECTION 3 BELOW]

TYPE OF STOCK OPTION
(CHECK ONE):                               [X] INCENTIVE STOCK OPTION
                                           [_] NONQUALIFIED STOCK OPTION
 
          1.   GRANT OF OPTION.  The Company hereby grants to Participant an
               ---------------                                              
option (this "OPTION") to purchase the total number of shares of Common Stock of
the Company set forth above as TotaL Option Shares (the "SHARES") at the
Exercise Price Per Share set forth above (the "EXERCISE PRICE"), subject to all
of the terms and conditions of this Agreement and the Plan.  If designated as an
Incentive Stock Option above, this Option is intended to qualify as an
"incentive stock option" ("ISO") within the meaning of Section 422 of the
internal Revenue Code of 1986, as amended (the "CODE").

          2.   EXERCISE PERIOD.
               --------------- 

               2.1  EXERCISE PERIOD OF OPTION.  This Option is immediately
                    -------------------------                             
exercisable although the Shares issued upon exercise of this Option will be
subject to the restrictions on transfer and Repurchase Options set forth in
Section 7, 8 and 9 below.  Provided Participant continues to provide services to
the Company or to any Parent Or subsidiary of the Company, the Shares issuable
upon exercise of this Option will become vested with respect to twenty-five
percent (25%) of the Shares on ((Spelled_Out_First_Vesting_Date)) (the "FIRST
VESTING DATE") and thereafter at the end of each full succeeding month after the
First Vesting Date an additional 2.08333% of the Shares will become vested until
the shares are vested with respect to 100% of the Shares, provided that if
application of the vesting percentage causes a fractional share, such share
shall be rounded down to the nearest whole share.  Notwithstanding any provision
in the Plan or this Agreement to the contrary, Options for Unvested

                                       11
<PAGE>

Shares (as defined in Section 2.2 of this Agreement) will not be exercisable on 
or after Participant's Termination Date.

               2.2  Vesting of Options.  Shares that are vested pursuant to the
                    ------------------
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED SHARES."
Unvested Shares may not be sold or otherwise transferred by Participant without
the Company's prior written consent.

               2.3  Expiration.  This Option shall expire on the Expiration Date
                    ----------
set forth above and must be exercised, if at all, on or before the Expiration
Date, unless earlier terminated under Section 3 below.

          3.   TERMINATION.
               ----------- 

               3.1  Termination for Any Reason Except Death, Disability or
                     -----------------------------------------------------
Cause. If Participant is Terminated for any reason, except death, Disability or
-----
Cause, this Option, to the extent (and only to the extent) that it is
exercisable by Participant on the Termination Date, may be exercised by
Participant, if at all, as to all or some of the Vested Shares calculated as of
the Termination Date, no later than three (3) months after the Termination Date,
but in any event no later than the Expiration Date.

               3.2  Termination Because of Death or Disability.  If Participant
                    ------------------------------------------                 
is Terminated because of death or Disability of Participant (or the Participant
dies within three (3) months after Termination other than for Cause) this
Option, to the extent that it is exercisable by Participant on the Termination
Date, may be exercised by Participant (or Participant's legal representative),
if at all, as to all or some of the Vested Shares calculated as of the
Termination Date, no later than twelve (12) months after the Termination Date,
but in any event no later than the Expiration Date.  Any exercise beyond three
(3) months after the Termination Date when the Termination is for any reason
other than the Participant's death or disability, within the meaning of Section
22(e)(3) of the Code, is deemed to be an NQSO.

               3.3  Termination for Cause.  If Participant is Terminated for
                    ---------------------                                   
Cause, then this Option will expire on Participant's Termination Date, or at
such later time and on such conditions as are determined by the Committee.

               3.4  No Obligation to Employ.  Nothing in the Plan or this
                    -----------------------                              
Agreement shall confer on Participant any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without Cause.

          4.   MANNER OF EXERCISE.
               ------------------ 

               4.1  Stock Option Exercise Agreement.  To exercise this Option,
                    -------------------------------                           
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
                   ---------                                                 
Company from time to time (the "EXERCISE AGREEMENT"), which shall set forth,
inter alia, Participant's election to exercise this Option, the number of Shares
----- ----                                                                      
being purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws.  If someone other than Participant exercises this Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise this Option.

               4.2  Limitations on Exercise.  This Option may not be exercised
                    -----------------------                                   
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise.  This Option may
not be exercised as to fewer than one hundred (100) Shares, unless it is
exercised as to all Shares as to which this Option is then exercisable.

                                       12
<PAGE>
 
               4.3  Payment.  The Exercise Agreement shall be accompanied by
                    -------
full payment of the Exercise Price for the Shares being purchased in cash (by
check), or where permitted by law:

          (a)  by surrender of shares of the Company's Common Stock that: (1)
               either (A) have been owned by Participant for more than six (6)
               months and have been paid for within the meaning of SEC Rule 144
               (and, if such shares were purchased from the Company by use of a
               promissory note, such note has been fully paid with respect to
               such shares) or (B) were obtained by Participant in the open
               public market and (2) are clear of all liens, claims,
               encumbrances or security interests;

          (b)  by tender of a full recourse promissory note (for not more than
               90% of the aggregate Exercise Price) having such terms as may be
               approved by the Committee and bearing interest at a rate
               sufficient to avoid imputation of income under Sections 483 and
               1274 of the Code; provided, however, that Participants who are
               not employees or directors of the Company shall not be entitled
               to purchase Shares with a promissory note unless the note is
               adequately secured by collateral other than the Shares;

          (c)  provided that a public market for the Company's stock exists, (1)
               through a "same day sale" commitment from Participant and a
               broker-dealer that is a member of the National Association of
               Securities Dealers (an "NASD DEALER") whereby Participant
               irrevocably elects to exercise this Option and to sell a portion
               of the Shares so purchased to pay for the Exercise Price and
               whereby the NASD Dealer irrevocably commits upon receipt of such
               Shares to forward the Exercise Price directly to the Company, or
                                                                             --
               (2) through a "margin" commitment from Participant and an NASD
               Dealer whereby Participant irrevocably elects to exercise this
               Option and to pledge the Shares so purchased to the NASD Dealer
               in a margin account as security for a loan from the NASD Dealer
               in the amount of the Exercise Price, and whereby the NASD Dealer
               irrevocably commits upon receipt of such Shares to forward the
               Exercise Price directly to the Company; or

          (d)  by any combination of the foregoing.

               4.4  Tax Withholding.  Prior to the issuance of the Shares upon
                    ---------------                                           
exercise of this Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company.  If the
Committee permits, Participant may provide for payment of withholding taxes upon
exercise of this Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld.  In
such case, the Company shall issue the net number of Shares to the Participant
by deducting the Shares retained from the Shares issuable upon exercise.

               4.5  Issuance of Shares.  Provided that the Exercise Agreement
                    ------------------
and payment are in form and substance satisfactory to counsel for the Company,
the Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.

          5.   NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If this Option
               -------------------------------------------------
is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer of
such Shares to Participant upon exercise of this Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of the current wages or other compensation payable to
Participant.

          6.   COMPLIANCE WITH LAWS AND REGULATIONS.  The Plan and this
               ------------------------------------
Agreement are intended to comply with Section 25102(o) of the California
Corporations Code. Any provision of this Agreement which is inconsistent with
Section 25102(o) shall, without further act or amendment by the Company or the
Board, be

                                       13
<PAGE>
 
reformed to comply with the requirements of Section 25102(o).  The exercise of
this Option and the issuance and transfer of Shares shall be subject to
compliance by the Company and Participant with all applicable requirements of
federal and state securities laws and with all applicable requirements of any
stock exchange on which the Company's Common Stock may be listed at the time of
such issuance or transfer.  Participant understands that the Company is under no
obligation to register or qualify the Shares with the SEC, any state securities
commission or any stock exchange to effect such compliance.

          7.   NONTRANSFERABILITY OF OPTION.  This Option may not be transferred
               ----------------------------                                     
in any manner other than by will or by the laws of descent and distribution and
may be exercised during the lifetime of Participant only by Participant or in
the event of Participant's incapacity, by Participant's legal representative.
The terms of this Option shall be binding upon the executors, administrators,
successors and assigns of Participant.

          8.   COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES.  The Company, or
               -----------------------------------------------                  
its assignee, shall have the option to repurchase Participant's Unvested Shares
(as defined in Section 2.2 of this Agreement) on the terms and conditions set
forth in the Exercise Agreement (the "REPURCHASE OPTION FOR UNVESTED SHARES") if
Participant is Terminated (as defined in the Plan) for any reason, or no reason,
including without limitation Participant's death, Disability (as defined in the
Plan), voluntary resignation or termination by the Company with or without
Cause.  Notwithstanding the foregoing, the Company shall retain the Repurchase
Option for Unvested Shares only as to that number of Unvested Shares (whether or
not exercised) that exceeds the number of shares which remain exercisable.

          9.   COMPANY'S RIGHT OF FIRST REFUSAL.  Unvested Shares may not be
               --------------------------------                             
sold or otherwise transferred by Participant without the Company's prior written
consent.  Before any Vested Shares held by Participant or any transferee of such
Vested Shares may be sold or otherwise transferred (including without limitation
a transfer by gift or operation of law), the Company and/or its assignee(s)
shall have an assignable right of first refusal to purchase the Vested Shares to
be sold or transferred on the terms and conditions set forth in the Exercise
Agreement  (the "RIGHT OF FIRST REFUSAL").  The Company's Right of First Refusal
will terminate when the Company's securities become publicly traded.

          10.  TAX CONSEQUENCES.  Set forth below is a brief summary as of the
               ----------------                                               
Effective Date of the Plan of some of the federal and California tax
consequences of exercise of this Option and disposition of the Shares.  THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE.  PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE
OPTION OR DISPOSING OF THE SHARES.

               10.1  Exercise of ISO.  If this Option qualifies as an ISO, there
                     ---------------                                            
will be no regular federal or California income tax liability upon the exercise
of this Option, although the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price will be treated as a tax
preference item for federal alternative minimum tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.

               10.2  Exercise of Nonqualified Stock Option.  If this Option does
                     -------------------------------------                      
not qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of this Option.  Participant will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price.  If Participant is a current or former
employee of the Company, the Company may be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.

               10.3  Disposition of Shares.  The following tax consequences may
                     ---------------------                                     
apply upon disposition of the Shares.

                     a.  Incentive Stock Options.  If the Shares are held for
                         -----------------------                             
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than 

                                       14
<PAGE>
 
two (2) years after the Date of Grant, any gain realized on disposition of the
Shares will be treated as capital gain for federal and California income tax
purposes. The maximum federal capital gain tax rates are twenty eight percent
(28%) for Shares held more than twelve (12) months, but not more than eighteen
(18) months ("MID-TERM CAPITAL GAIN"), and twenty percent (20%) for Shares held
for more than eighteen (18) months ("LONG-TERM CAPITAL GAIN"). If Shares
purchased under an ISO are disposed of within the applicable one (1) year or two
(2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.

                         b.   Nonqualified Stock Options. If the Shares are held
                              --------------------------
for more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as Mid-Term Capital Gain or Long-Term Capital Gain, as
the case may be.

                         c.   Withholding. The Company may be required to
                              -----------
withhold from Participant's compensation or collect from the Participant and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income.

               10.4.     Section 83(b) Election for Unvested Shares. With
                         ------------------------------------------
respect to Unvested Shares, which are subject to the Repurchase Option for
Unvested Shares, unless an election is filed by the Participant with the
Internal Revenue Service (and, if necessary, the proper state taxing
authorities), within 30 days of the purchase of the Unvested Shares, electing
              --------------
pursuant to Code Section 83(b) (and similar state tax provisions, if applicable)
to be taxed currently on any difference between the Exercise Price of the
Unvested Shares and their Fair Market Value on the date of exercise, there may
be a recognition of taxable income (including, where applicable, alternative
minimum taxable income) to the Participant, measured by the excess, if any, of
the Fair Market Value of the Unvested Shares at the time they cease to be
Unvested Shares, over the Exercise Price of the Unvested Shares.

          11.  PRIVILEGES OF STOCK OWNERSHIP.  Participant shall not have any of
               -----------------------------                                    
the rights of a shareholder with respect to any Shares until the Shares are
issued to Participant.

          12.  INTERPRETATION.  Any dispute regarding the interpretation of this
               --------------                                                   
Agreement shall be submitted by Participant or the Company to the Committee for
review.  The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.

          13.  ENTIRE AGREEMENT.  The Plan is incorporated herein by reference.
               ----------------                                                 
This Agreement and the Plan constitute the complete and exclusive statement of
the parties regarding its subject matter and supersedes all prior proposals,
representations, communications, and agreements of the parties, whether oral or
written regarding the grant of stock options or issuances of shares to
Participant.

          14.  NOTICES.  Any notice required to be given or delivered to the
               -------                                                      
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices.  Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company.  All
notices shall be deemed to have been given or delivered upon:  personal
delivery; three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile, rapifax or telecopier.

          15.  SUCCESSORS AND ASSIGNS.  The Company may assign any of its rights
               ----------------------                                           
under this Agreement, including its rights to repurchase Shares under the
Repurchase Option and the Right of First Refusal.  This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
Company.  Subject to the restrictions on transfer set forth herein, this
Agreement shall be binding upon Participant and Participant's heirs, executors,
administrators, legal representatives, successors and assigns.

                                       15
<PAGE>
 
          16.  GOVERNING LAW.  This Agreement shall be governed by and construed
               -------------                                                    
in accordance with the laws of the State of California as such laws are applied
to agreements between California residents entered into and to be performed
entirely within California.  If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.

          17.  ACCEPTANCE.  Participant hereby acknowledges receipt of a copy of
               ----------                                                       
the Plan and this Agreement.  Participant has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement.  Participant acknowledges that there
may be adverse tax consequences upon exercise of this Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Participant has
executed this Agreement in duplicate as of the Date of Grant.


EBAY, INC.                          PARTICIPANT

By:___________________________      ________________________________
                                    (Signature)

                                    ((Name))
______________________________       -------------------------------
(Please print name)                 (Please print name)

______________________________
(Please print title)

                                       16
<PAGE>
 
                                   EXHIBIT A
                                   ---------


                        STOCK OPTION EXERCISE AGREEMENT
<PAGE>
 
                                                                  No.___________

                                  eBAY, INC.

                            1997 STOCK OPTION PLAN
                                        
                        STOCK OPTION EXERCISE AGREEMENT


         This Exercise Agreement (this "EXERCISE AGREEMENT") is made and entered
into as of ______________, 19___ (the "EFFECTIVE DATE") by and between eBay,
Inc., a California corporation (the "COMPANY"), and the Purchaser named below
(the "PURCHASER").  Capitalized terms not defined herein shall have the meanings
ascribed to them in the Company's 1997 Stock Option Plan (the "PLAN").

 
                                                
PURCHASER:                                          ((Name))
                                                  -----------------------------------------------------
 
SOCIAL SECURITY NUMBER:
                                                  _____________________________________________________
 
ADDRESS:
                                                  _____________________________________________________
 
                                                  _____________________________________________________
 
 
TOTAL NUMBER OF SHARES:                             ((No_of_Shares))
                                                  -----------------------------------------------------
 
EXERCISE PRICE PER SHARE:                           ((Price_per_Share))
                                                  -----------------------------------------------------
 
TOTAL EXERCISE PRICE:                               ((Total_Price))
                                                  -----------------------------------------------------
 
OPTION NO. ((OPTION_NO)) AND DATE OF GRANT:         ((Date_of_Grant))
                                                  -----------------------------------------------------


TYPE OF OPTION:                                    [X]  INCENTIVE STOCK OPTION
                                                   [_]  NONQUALIFIED STOCK OPTION
 

         1.   EXERCISE OF OPTION.
              ------------------ 

          1.1      Exercise.  Pursuant to exercise of that certain option
                   --------                                              
("OPTION") granted to Purchaser under the Plan and subject to the terms and
conditions of this Exercise Agreement, Purchaser hereby purchases from the
Company, and the Company hereby sells to Purchaser, the Total Number of Shares
set forth above ("SHARES") of the Company's Common Stock at the Exercise Price
Per Share set forth above ("EXERCISE PRICE").  As used in this Exercise
Agreement, the term "SHARES" refers to the Shares purchased under this Exercise
Agreement and includes all securities received (a) in replacement of the Shares,
(b) as a result of stock dividends or stock splits with respect to the Shares,
and (c) all securities received on account of the Shares in a merger,
recapitalization, reorganization or similar corporate transaction.
<PAGE>
 
              1.2   Title to Shares.  The exact spelling of the name(s) under
                    ---------------                                          
which Purchaser will take title to the Shares is:

          _______________________________________________________ 
          _______________________________________________________ 

Purchaser desires to take title to the Shares as follows:
 
          [_]  Individual, as separate property
          [_]  Husband and wife, as community property
          [_]  Joint Tenants
          [_]  Alone or with spouse as trustee(s) of the
                      following trust (including date):

                      ______________________________________________ 
                      ______________________________________________ 
          [_]  Other; please specify:______________________________
                      ______________________________________________ 
 

              1.3   Payment.  Purchaser hereby delivers payment of the Exercise
                    -------                                                    
Price in the manner permitted in the Stock Option Agreement as follows (check
and complete as appropriate):

          [_]  in cash (by check) in the amount of $((Cash_Amount)), receipt of
               which is acknowledged by the Company;

          [_]  by tender of a Full Recourse Promissory Note in the principal
               amount of $((Note_Amount)), having such terms as may be approved
               by the Committee and bearing interest at a rate sufficient to
               avoid imputation of income under Sections 483 and 1274 of the
               Code and secured by a Pledge Agreement herewith; provided,
               however, that Participants who are not employees or directors of
               the Company shall not be entitled to purchase Shares with a
               promissory note unless the note is adequately secured by
               collateral other than the Shares.

          2.   DELIVERY.
               -------- 

               2.1  Deliveries by Purchaser.  Purchaser hereby delivers to the
                    -----------------------                                   
Company (i) this Exercise Agreement, (ii) three (3) copies of a blank Stock
Power and Assignment Separate from Stock Certificate in the form of Exhibit 1
                                                                    ---------
attached hereto (the "STOCK POWERS"), both executed by Purchaser (and
Purchaser's spouse, if any), (iii) if Purchaser is married, a Consent of Spouse
in the form of Exhibit 2 attached hereto (the "SPOUSE CONSENT") executed by
               ---------                                                   
Purchaser's spouse, and (iv) the Exercise Price and payment or other provision
for any applicable tax obligations by delivery of a Secured Full Recourse
Promissory Note in the form of Exhibit 3 and (v) a Stock Pledge Agreement in the
                               ---------                                        
form of Exhibit 5 executed by Purchaser (the "PLEDGE AGREEMENT").
        ---------                                                

               2.2  Deliveries by the Company.  Upon its receipt of the Exercise
                    -------------------------                                   
Price, payment or other provision for any applicable tax obligations and all the
documents to be executed and delivered by Purchaser to the Company under Section
2.1, the Company will issue a duly executed stock certificate evidencing the
Shares in the name of Purchaser, to be placed in escrow as provided in Section
11 to secure payment of Participant's obligation to the Company under the
promissory note and until expiration or termination of the Company's Repurchase
Option and Right of First Refusal described in Sections 8 and 9.

          3.   REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
               -------------------------------------------
and warrants to the Company that:

               3.1  Agrees to Terms of the Plan.  Purchaser has received a copy
                    ---------------------------                                
of the Plan and the Stock Option Agreement, has read and understands the terms
of the Plan, the Stock Option Agreement and this 

                                       3
<PAGE>
 
Exercise Agreement, and agrees to be bound by their terms and conditions.
Purchaser acknowledges that there may be adverse tax consequences upon exercise
of the Option or disposition of the Shares, and that Purchaser should consult a
tax adviser prior to such exercise or disposition.

               3.2  Purchase for Own Account for Investment.  Purchaser is
                    ---------------------------------------               
purchasing the Shares for Purchaser's own account for investment purposes only
and not with a view to, or for sale in connection with, a distribution of the
Shares within the meaning of the Securities Act.  Purchaser has no present
intention of selling or otherwise disposing of all or any portion of the Shares
and no one other than Purchaser has any beneficial ownership of any of the
Shares.

               3.3  Access to Information.  Purchaser has had access to all
                    ---------------------                                  
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.

               3.4  Understanding of Risks. Purchaser is fully aware of: (i)
                    ----------------------
the highly speculative nature of the investment in the Shares; (ii) the
financial hazards involved; (iii) the lack of liquidity of the Shares and the
restrictions on transferability of the Shares (e.g., that Purchaser may not be
                                               --- 
able to sell or dispose of the Shares or use them as collateral for loans); (iv)
the qualifications and backgrounds of the management of the Company; and (v) the
tax consequences of investment in the Shares. Purchaser is capable of evaluating
the merits and risks of this investment, has the ability to protect Purchaser's
own interests in this transaction and is financially capable of bearing a total
loss of this investment.

               3.5  No General Solicitation. At no time was Purchaser presented 
                    -----------------------
with or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Shares.

          4.   COMPLIANCE WITH SECURITIES LAWS.
               ------------------------------- 

               4.1  Compliance with U.S. Federal Securities Laws.  Purchaser
                    --------------------------------------------            
understands and acknowledges that the Shares have not been registered with the
SEC under the Securities Act and that, notwithstanding any other provision of
the Stock Option Agreement to the contrary, the exercise of any rights to
purchase any Shares is expressly conditioned upon compliance with the Securities
Act and all applicable state securities laws.  Purchaser agrees to cooperate
with the Company to ensure compliance with such laws.  The Shares are being
issued under the Securities Act pursuant to the exemption provided by SEC Rule
701.

               4.2  Compliance with California Securities Laws.  THE PLAN, 
                    ------------------------------------------   
THE STOCK OPTION AGREEMENT, AND THIS EXERCISE AGREEMENT ARE INTENDED TO COMPLY
WITH SECTION 25102(o) OF THE CALIFORNIA CORPORATIONS CODE. ANY PROVISION OF THIS
EXERCISE AGREEMENT WHICH IS INCONSISTENT WITH SECTION 25102(o) SHALL, WITHOUT
FURTHER ACT OR AMENDMENT BY THE COMPANY OR THE BOARD, BE REFORMED TO COMPLY WITH
THE REQUIREMENTS OF SECTION 25102(o). THE SALE OF THE SECURITIES THAT ARE THE
SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED WITH THE CALIFORNIA
COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH QUALIFICATION, IS SUBJECT
TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH SECURITIES, AND THE RECEIPT OF
ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL
UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE PARTIES TO THIS EXERCISE AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
BEING AVAILABLE.

          5.   RESTRICTED SECURITIES.
               --------------------- 

               5.1  No Transfer Unless Registered or Exempt.  Purchaser
                    ---------------------------------------            
understands that Purchaser may not transfer any Shares unless such Shares are
registered under the Securities Act or qualified under applicable 

                                       4
<PAGE>
 
state securities laws or unless, in the opinion of counsel to the Company,
exemptions from such registration and qualification requirements are available.
Purchaser understands that only the Company may file a registration statement
with the SEC and that the Company is under no obligation to do so with respect
to the Shares. Purchaser has also been advised that exemptions from registration
and qualification may not be available or may not permit Purchaser to transfer
all or any of the Shares in the amounts or at the times proposed by Purchaser.

               5.2  SEC Rule 144.  In addition, Purchaser has been advised that
                    ------------                                               
SEC Rule 144 promulgated under the Securities Act, which permits certain limited
sales of unregistered securities, is not presently available with respect to the
Shares and, in any event, requires that the Shares be held for a minimum of one
(1) year, and in certain cases two (2) years, after they have been purchased and
                                                                             ---
paid for (within the meaning of Rule 144).  Purchaser understands that Shares
--------                                                                     
paid for with a Note may not be deemed to be fully "paid for" within the meaning
of Rule 144 unless certain conditions are met and that, accordingly, the Rule
144 holding period of such Shares may not begin to run until such Shares are
fully paid for within the meaning of Rule 144.  Purchaser understands that Rule
144 may indefinitely restrict transfer of the Shares so long as Purchaser
remains an "affiliate" of the Company or if "current public information" about
the Company (as defined in Rule 144) is not publicly available.

               5.3  SEC Rule 701. The Shares are issued pursuant to SEC Rule 701
                    ------------
promulgated under the Securities Act and may become freely tradable by non-
affiliates (under limited conditions regarding the method of sale) ninety (90)
days after the first sale of Common Stock of the Company to the general public
pursuant to a registration statement filed with and declared effective by the
SEC, subject to the lengthier market standoff agreement contained in Section 7
of this Exercise Agreement or any other agreement entered into by Purchaser.
Affiliates must comply with the provisions (in addition to the holding period
requirements) of Rule 144.

          6.   RESTRICTIONS ON TRANSFERS.
               ------------------------- 

               6.1  Disposition of Shares.  Purchaser hereby agrees that
                    ---------------------                               
Purchaser shall make no disposition of the Shares (other than as permitted by
this Exercise Agreement) unless and until:

                    (a) Purchaser shall have notified the Company of the
proposed disposition and provided a written summary of the terms and conditions
of the proposed disposition;

                    (b) Purchaser shall have complied with all requirements of
this Exercise Agreement applicable to the disposition of the Shares;

                    (c) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to counsel for the Company, that
(i) the proposed disposition does not require registration of the Shares under
the Securities Act or (ii) all appropriate action necessary for compliance with
the registration requirements of the Securities Act or of any exemption from
registration available under the Securities Act (including Rule 144) has been
taken; and

                    (d) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to the Company, that the proposed
disposition will not result in the contravention of any transfer restrictions
applicable to the Shares pursuant to the provisions of the Commissioner Rules
identified in Section 4.2.

               6.2  Restriction on Transfer.  Purchaser shall not transfer,
                    -----------------------                                
assign, grant a lien or security interest in, pledge, hypothecate, encumber or
otherwise dispose of any of the Shares which are subject to the Company's
Repurchase Option or the Company's Right of First Refusal, except as permitted
by this Exercise Agreement.

               6.3  Transferee Obligations. Each person (other than the Company)
                    ----------------------
to whom the Shares are transferred by means of one of the permitted transfers
specified in this Exercise Agreement must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Company that such
person is

                                       5
<PAGE>
 
bound by the provisions of this Exercise Agreement and that the transferred
Shares are subject to (i) both the Company's Repurchase Option and the Company's
Right of First Refusal granted hereunder and (ii) the market stand-off
provisions of Section 7, to the same extent such Shares would be so subject if
retained by the Purchaser.

          7.   MARKET STANDOFF AGREEMENT.  Purchaser agrees in connection with
               -------------------------                                      
any registration of the Company's securities that, upon the request of the
Company or the underwriters managing any public offering of the Company's
securities, Purchaser will not sell or otherwise dispose of any Shares without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 180 days) after the effective date of
such registration requested by such managing underwriters and subject to all
restrictions as the Company or the underwriters may specify.  Purchaser further
agrees to enter into any agreement reasonably required by the underwriters to
implement the foregoing.

          8.   COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES.  The Company, or
               -----------------------------------------------                  
its assignee, shall have the option to repurchase Purchaser's Unvested Shares
(as defined in Section 2.2 of the Stock Option Agreement) on the terms and
conditions set forth in this Section  (the "Repurchase Option for Unvested
                                            ------------------------------
Shares") if Purchaser is Terminated (as defined in the Plan) for any reason, or
------                                                                         
no reason, including without limitation Purchaser's death, Disability (as
defined in the Plan), voluntary resignation or termination by the Company with
or without Cause.  Notwithstanding the foregoing, the Company shall retain the
Repurchase Option for Unvested Shares only as to that number of Unvested Shares
(whether or not exercised) that exceeds the number of shares which remain
exercisable.

               8.1  Termination and Termination Date.  In case of any dispute as
                    --------------------------------                            
to whether Purchaser is Terminated, the Committee shall have discretion to
determine whether Purchaser has been Terminated and the effective date of such
Termination (the "TERMINATION DATE").

               8.2  Exercise of Repurchase Option for Unvested Shares.  At any
                    -------------------------------------------------         
time within ninety (90) days after the Purchaser's Termination Date, the
Company, or its assignee, may elect to repurchase the Purchaser's Unvested
Shares by giving Purchaser written notice of exercise of the Repurchase Option
for Unvested Shares.

               8.3  Calculation of Repurchase Price for Unvested Shares.  The
                    ---------------------------------------------------      
Company or its assignee shall have the option to repurchase from Purchaser (or
from Purchaser's personal representative as the case may be) the Unvested Shares
at the Purchaser's Exercise Price, proportionately adjusted for any stock split
or similar change in the capital structure of the Company as set forth in
Section 2.2 of the Plan.

               8.4  Payment of Repurchase Price.  The repurchase price shall be
                    ---------------------------                                
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness of Purchaser to
the Company or such assignee, or by any combination thereof.  The repurchase
price shall be paid without interest within sixty (60) days after exercise of
the Repurchase Option for Unvested Shares.

               8.5  Right of Termination Unaffected.  Nothing in this Exercise
                    -------------------------------                           
Agreement shall be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company (or any Parent or Subsidiary of the
Company) to terminate Purchaser's employment or other relationship with Company
(or the Parent or Subsidiary of the Company) at any time, for any reason or no
reason, with or without Cause.

          9.   COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold
               --------------------------------
or otherwise transferred by Purchaser without the Company's prior written
consent. Before any Vested Shares held by Purchaser or any transferee of such
Vested Shares (either being sometimes referred to herein as the "HOLDER") may be
sold or otherwise transferred (including without limitation a transfer by gift
or operation of law), the Company and/or its assignee(s) shall have an
assignable right of first refusal to purchase the Vested Shares to be sold or
transferred (the "OFFERED SHARES") on the terms and conditions set forth in this
Section (the "RIGHT OF FIRST REFUSAL").

               9.1  Notice of Proposed Transfer.  The Holder of the Offered
                    ---------------------------                            
Shares shall deliver to the Company a written notice (the "NOTICE") stating:
(i) the Holder's bona fide intention to sell or otherwise transfer 

                                       6
<PAGE>
 
the Offered Shares; (ii) the name of each proposed bona fide purchaser or other
transferee ("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be
transferred to each Proposed Transferee; (iv) the bona fide cash price or other
consideration for which the Holder proposes to transfer the Offered Shares (the
"OFFERED PRICE"); and (v) that the Holder will offer to sell the Offered Shares
to the Company and/or its assignee(s) at the Offered Price as provided in this
Section.

          9.2    Exercise of Right of First Refusal.  At any time within
                 ----------------------------------                     
thirty (30) days after the date of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all
(or, with the consent of the Holder, less than all) the Offered Shares proposed
to be transferred to any one or more of the Proposed Transferees named in the
Notice, at the purchase price determined as specified below.

          9.3    Purchase Price.  The purchase price for the Offered Shares
                 --------------                                            
purchased under this Section will be the Offered Price.  If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such non-
cash consideration as determined in good faith by the Board.

          9.4    Payment.  Payment of the Offered Price will be payable, at
                 -------                                                   
the option of the Company and/or its assignee(s) (as applicable), by check or by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or to such assignee, in the case of a purchase of Offered Shares
by such assignee) or by any combination thereof.  The Offered Price will be paid
without interest within sixty (60) days after the Company's receipt of the
Notice, or, at the option of the Company and/or its assignee(s), in the manner
and at the time(s) set forth in the Notice.

          9.5    Holder's Right to Transfer.  If all of the Offered Shares
                 --------------------------                               
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
                                                               --------     
such sale or other transfer is consummated within 120 days after the date of the
Notice, and provided further, that (i) any such sale or other transfer is
            -------- -------                                             
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee.  If the
Offered Shares described in the Notice are not transferred to the Proposed
Transferee within such 120 day period, then a new Notice must be given to the
Company, and the Company will again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.

          9.6    Exempt Transfers.  Notwithstanding anything to the contrary
                 ----------------                                           
in this Section, the following transfers of Vested Shares will be exempt from
the Right of First Refusal: (i) the transfer of any or all of the Vested Shares
during Purchaser's lifetime by gift or on Purchaser's death by will or intestacy
to Purchaser's "immediate family" (as defined below) or to a trust for the
benefit of Purchaser or Purchaser's immediate family, provided that each
transferee or other recipient agrees in a writing satisfactory to the Company
that the provisions of this Section will continue to apply to the transferred
Vested Shares in the hands of such transferee or other recipient; (ii) any
transfer of Vested Shares made pursuant to a statutory merger or statutory
consolidation of the Company with or into another corporation or corporations
(except that the Right of First Refusal and Repurchase Option will continue to
apply thereafter to such Vested Shares, in which case the surviving corporation
of such merger or consolidation shall succeed to the rights of the Company under
this Section unless the agreement of merger or consolidation expressly otherwise
provides); or (iii) any transfer of Vested Shares pursuant to the winding up and
dissolution of the Company.  As used herein, the term "IMMEDIATE FAMILY" will
mean Purchaser's spouse, the lineal descendant or antecedent, father, mother,
brother or sister, child, adopted child, grandchild or adopted grandchild of the
Purchaser or the Purchaser's spouse, or the spouse of any child, adopted child,
grandchild or adopted grandchild of Purchaser or the Purchaser's spouse.

          9.7    Termination of Right of First Refusal.  The Company's Right
                 -------------------------------------                      
of First Refusal will terminate when the Company's securities become publicly
traded.

                                       7
<PAGE>
 
          10.  RIGHTS AS SHAREHOLDER.  Subject to the terms and conditions of
               ---------------------                                         
this Exercise Agreement, Purchaser will have all of the rights of a shareholder
of the Company with respect to the Shares from and after the date that Shares
are issued to Purchaser until such time as Purchaser disposes of the Shares or
the Company and/or its assignee(s) exercise(s) the Repurchase Option or Right of
First Refusal.  Upon an exercise of the Repurchase Option or the Right of First
Refusal, Purchaser will have no further rights as a holder of the Shares so
purchased upon such exercise, except the right to receive payment for the Shares
so purchased in accordance with the provisions of this Exercise Agreement, and
Purchaser will promptly surrender the stock certificate(s) evidencing the Shares
so purchased to the Company for transfer or cancellation.

          11.  ESCROW.  As security for Purchaser's faithful performance of this
               ------                                                           
Exercise Agreement, Purchaser agrees, immediately upon receipt of the stock
certificate(s) evidencing the Shares, to deliver such certificate(s), together
with the Stock Powers executed by Purchaser and by Purchaser's spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company
or other designee of the Company ("ESCROW HOLDER"), who is hereby appointed to
hold such certificate(s) and Stock Powers in escrow and to take all such actions
and to effectuate all such transfers and/or releases of such Shares as are in
accordance with the terms of this Exercise Agreement.  Purchaser and the Company
agree that Escrow Holder will not be liable to any party to this Exercise
Agreement (or to any other party) for any actions or omissions unless Escrow
Holder is grossly negligent or intentionally fraudulent in carrying out the
duties of Escrow Holder under this Exercise Agreement.  Escrow Holder may rely
upon any letter, notice or other document executed by any signature purported to
be genuine and may rely on the advice of counsel and obey any order of any court
with respect to the transactions contemplated by this Exercise Agreement.  The
Shares will be released from escrow upon termination of both the Repurchase
Option and the Right of First Refusal provided, however, that the Shares will be
                                      --------  -------                         
retained in escrow so long as they are subject to the Pledge Agreement.

          12.  RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
               -------------------------------------------- 

               12.1 Legends. Purchaser understands and agrees that the Company
                    -------
will place the legends set forth below or similar legends on any stock
certificate(s) evidencing the Shares, together with any other legends that may
be required by state or U.S. Federal securities laws, the Company's Articles of
Incorporation or Bylaws, any other agreement between Purchaser and the Company
or any agreement between Purchaser and any third party:

         THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE
         SECURITIES LAWS OF CERTAIN STATES.  THESE SECURITIES ARE SUBJECT TO
         RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
         OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE
         STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
         INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
         FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
         THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
         FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
         PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT
         AND ANY APPLICABLE STATE SECURITIES LAWS.

         THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
         RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, AND RIGHT OF REPURCHASE AND
         RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER AND/OR ITS
         ASSIGNEE(S) AS SET FORTH IN A STOCK OPTION EXERCISE AGREEMENT BETWEEN
         THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY
         BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.  SUCH PUBLIC SALE
         AND TRANSFER RESTRICTIONS AND THE RIGHT OF REPURCHASE AND RIGHT OF
         FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

                                       8
<PAGE>
 
               12.2   Stop-Transfer Instructions. Purchaser agrees that, to
                      -------------------------- 
ensure compliance with the restrictions imposed by this Exercise Agreement, the
Company may issue appropriate "stop-transfer" instructions to its transfer
agent, if any, and if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.

               12.3   Refusal to Transfer. The Company will not be required (i)
                      -------------------
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Exercise Agreement or (ii) to
treat as owner of such Shares, or to accord the right to vote or pay dividends
to any purchaser or other transferee to whom such Shares have been so
transferred.

          13.  TAX CONSEQUENCES. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER
               ---------------- 
ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF
THE SHARES. PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH ANY TAX
ADVISER PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION
OF THE SHARES AND THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX
ADVICE. IN PARTICULAR, IF THE UNVESTED SHARES ARE SUBJECT TO REPURCHASE BY THE
COMPANY, PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH PURCHASER'S TAX
ADVISER CONCERNING THE ADVISABILITY OF FILING AN 83(b) ELECTION WITH THE
INTERNAL REVENUE SERVICE. Set forth below is a brief summary as of the date the
Plan was adopted by the Board of some of the U.S. Federal and California tax
consequences of exercise of the Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. PURCHASER SHOULD CONSULT A TAX ADVISER BEFORE EXECUTING THIS OPTION
OR DISPOSING OF THE SHARES.

               13.1   Exercise of Incentive Stock Option. If the Option
                      ----------------------------------
qualifies as an ISO, there will be no regular U.S. Federal income tax liability
or California income tax liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price will be treated as a tax preference item for U.S.
Federal alternative minimum tax purposes and may subject Purchaser to the
alternative minimum tax in the year of exercise.

               13.2   Exercise of Nonqualified Stock Option. If the Option
                      ------------------------------------- 
does not qualify as an ISO, there may be a regular U.S. Federal income tax
liability and a California income tax liability upon the exercise of the Option.
Purchaser will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Purchaser is a
current or former employee of the Company, the Company may be required to
withhold from Purchaser's compensation or collect from Purchaser and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

               13.3   Disposition of Shares.  The following tax consequences may
                      ---------------------                                     
apply upon disposition of the Shares.

                      a.   Incentive Stock Options.  If the Shares are held for
                           -----------------------                             
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an ISO and are disposed of more than two (2) years
after the Date of Grant, any gain realized on disposition of the Shares will be
treated as capital gain for federal and California income tax purposes.  The
maximum federal capital gain tax rates are twenty eight percent (28%) for Shares
held more than twelve (12) months, but not more than eighteen (18) months ("MID-
TERM CAPITAL GAIN"), and twenty percent (20%) for Shares held for more than
eighteen (18) months ("LONG-TERM CAPITAL GAIN").  If Shares purchased under an
ISO are disposed of within the applicable one (1) year or two (2) year period,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
Fair Market Value of the Shares on the date of exercise over the Exercise Price.

                                       9
<PAGE>
 
                    b.   Nonqualified Stock Options.  If the Shares are held for
                         --------------------------                             
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as Mid-Term Capital Gain or Long-Term Capital Gain, as
the case may be.

                    c.   Withholding.  The Company may be required to withhold
                         -----------                                          
from the Participant and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income.

               13.4. Section 83(b) Election for Unvested Shares. With respect to
                     ------------------------------------------
Unvested Shares, which are subject to the Repurchase Option, unless an election
is filed by the Purchaser with the Internal Revenue Service (and, if necessary,
the proper state taxing authorities), within 30 days of the purchase of the
                                      --------------                       
Unvested Shares, electing pursuant to Code Section 83(b) (and similar state tax
provisions, if applicable) to be taxed currently on any difference between the
Exercise Price of the Unvested Shares and their Fair  Market Value on the date
of purchase, there may be a recognition of taxable income (including, where
applicable, alternative minimum taxable income) to the Purchaser, measured by
the excess, if any, of the Fair Market Value of the Unvested Shares at the time
they cease to be Unvested Shares, over the Exercise Price of the Unvested
Shares.

          14.  COMPLIANCE WITH LAWS AND REGULATIONS.  The issuance and transfer
               ------------------------------------                            
of the Shares will be subject to and conditioned upon compliance by the Company
and Purchaser with all applicable state and U.S. Federal laws and regulations
and with all applicable requirements of any stock exchange or automated
quotation system on which the Company's Common Stock may be listed or quoted at
the time of such issuance or transfer.

          15.  SUCCESSORS AND ASSIGNS.  The Company may assign any of its rights
               ----------------------                                           
under this Exercise Agreement, including its rights to repurchase Shares under
the Repurchase Option and the Right of First Refusal.  This Exercise Agreement
shall be binding upon and inure to the benefit of the successors and assigns of
the Company.  Subject to the restrictions on transfer herein set forth, this
Exercise Agreement will be binding upon Purchaser and Purchaser's heirs,
executors, administrators, legal representatives, successors and assigns.

          16.  GOVERNING LAW; SEVERABILITY.  This Exercise Agreement shall be
               ---------------------------                                   
governed by and construed in accordance with the internal laws of the State of
California as such laws are applied to agreements between California residents
entered into and to be performed entirely within California.  If any provision
of this Exercise Agreement is determined by a court of law to be illegal or
unenforceable, then such provision will be enforced to the maximum extent
possible and the other provisions will remain fully effective and enforceable.

          17.  NOTICES.  Any notice required to be given or delivered to the
               -------                                                      
Company shall be in writing and addressed to the Corporate Secretary of the
Company at its principal corporate offices.  Any notice required to be given or
delivered to Purchaser shall be in writing and addressed to Purchaser at the
address indicated above or to such other address as Purchaser may designate in
writing from time to time to the Company.  All notices shall be deemed
effectively given upon personal delivery, three (3) days after deposit in the
United States mail by certified or registered mail (return receipt requested),
one (1) business day after its deposit with any return receipt express courier
(prepaid), or one (1) business day after transmission by rapifax or telecopier.

          18.  FURTHER INSTRUMENTS.  The parties agree to execute such further
               -------------------                                            
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Exercise Agreement.

          19.  HEADINGS.  The captions and headings of this Exercise Agreement
               --------                                                       
are included for ease of reference only and will be disregarded in interpreting
or construing this Exercise Agreement.  All references herein to Sections will
refer to Sections of this Exercise Agreement.

          20.  ENTIRE AGREEMENT.  The Plan, the Stock Option Agreement and this
               ----------------                                                
Exercise Agreement, together with all of its Exhibits, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between the parties hereto with respect to the specific
subject matter hereof.

                                      10
<PAGE>
 
          IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to
be executed in duplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in duplicate as of the Effective Date.


EBAY, INC.                          PURCHASER


By:____________________________     ______________________________
                                    (Signature)
[[Signature Name]]
-------------------------------
(Please print Name)                 [[Name]]
                                    ------------------------------
                                    (Please print name)
[[Title]]
-------------------------------
(Please print title)

          SIGNATURE PAGE TO eBAY, INC. STOCK OPTION EXERCISE AGREEMENT

                                      11
<PAGE>
 
                                LIST OF EXHIBITS
                                ----------------


Exhibit 1:  Stock Power and Assignment Separate From Stock Certificate

Exhibit 2:  Spouse Consent

Exhibit 3:  Copy of Purchaser's Check And/or Secured Full Recourse Promissory
               Note

Exhibit 4:  Section 83(b) Election

Exhibit 5:  Stock Pledge Agreement

                                      12
<PAGE>
 
                                   EXHIBIT 1
                                   ---------

                          STOCK POWER AND ASSIGNMENT
                          --------------------------
                        SEPARATE FROM STOCK CERTIFICATE
                        -------------------------------
<PAGE>
 
                          STOCK POWER AND ASSIGNMENT
                          --------------------------
                        SEPARATE FROM STOCK CERTIFICATE
                        -------------------------------


          FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement No. ___ dated as of _______________, 19___, (the "EXERCISE
AGREEMENT"), the undersigned hereby sells, assigns and transfers unto
_______________________________, shares of the Common Stock of eBay, Inc., a
California corporation (the "COMPANY"), standing in the undersigned's name on
the books of the Company represented by Certificate No(s).  ______ delivered
herewith, and does hereby irrevocably constitute and appoint the Secretary of
the Company as the undersigned's attorney-in-fact, with full power of
substitution, to transfer said stock on the books of the Company.  THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE EXERCISE AGREEMENT AND ANY
EXHIBITS THERETO.


Dated:  _______________, 19____

                                    PURCHASER

                                  
                                    _________________________________       
                                    (Signature)

                                    (Name)
                                    _________________________________       
                                    (Please Print Name)

                                    _________________________________       
                                    (Spouse's Signature, if any)

                                    _________________________________       
                                    (Please Print Spouse's Name)



INSTRUCTIONS:  Please do not fill in any blanks other than the signature line.
------------                                                                   
The purpose of this Stock Power and Assignment is to enable the Company to
acquire the shares upon a default under Purchaser's Note and to exercise its
"Repurchase Option" and/or "Right of First Refusal" set forth in the Exercise
Agreement without requiring additional signatures on the part of the Purchaser
or Purchaser's Spouse.
<PAGE>
 
                                   EXHIBIT 2
                                   ---------

                                SPOUSE CONSENT
                                --------------
<PAGE>
 
                                SPOUSE CONSENT
                                --------------


          The undersigned spouse of Purchaser has read, understands, and hereby
approves the Stock Option Exercise Agreement between Purchaser and the Company
(the "EXERCISE AGREEMENT").  In consideration of the Company's granting my
spouse the right to purchase the Shares as set forth in the Exercise Agreement,
the undersigned hereby agrees to be irrevocably bound by the Exercise Agreement
and further agrees that any community property interest I may have in the Shares
and any other property pursuant to the Exercise Agreement shall similarly be
bound by the Exercise Agreement.  The undersigned hereby appoints Purchaser as
my attorney-in-fact with respect to any amendment or exercise of any rights
under the Exercise Agreement.




Date:____________________           (Name)
                                    -------------------------------------
                                    Name of Purchaser - Print

                                    -------------------------------------
                                    Signature of Purchaser's Spouse

                        Address:    ------------------------------------

                                    ------------------------------------
<PAGE>
 
                                   EXHIBIT 3
                                   ---------

                       COPY OF PURCHASER'S CHECK AND/OR
                       --------------------------------
                     SECURED FULL RECOURSE PROMISSORY NOTE
                     -------------------------------------


                                       2
<PAGE>
 
                                   EXHIBIT 3
                                    FORM OF
                                    -------
                     SECURED FULL RECOURSE PROMISSORY NOTE
                     -------------------------------------


                             San Jose, California



  $__________________                                                     [Date]


         1.   OBLIGATION.  In exchange for the issuance to the undersigned
              ----------                                                  
("PURCHASER") of Eight Hundred Thousand shares (the "SHARES") of the Common
Stock of eBay, Inc., a California corporation (the "COMPANY"), receipt of which
is hereby acknowledged, Purchaser hereby promises to pay to the order of the
Company on or before _____________________, at the Company's principal place of
business at 2005 Hamilton Avenue, Suite 350, San Jose, California 95125, or at
such other place as the Company may direct, the principal sum of
____________________ Dollars ($_______________) together with interest
compounded semi-annually on the unpaid principal at the rate of _________
percent (__%), which rate is not less than the minimum rate established pursuant
to Section 1274(d) of the Internal Revenue Code of 1986, as amended, on the
earliest date on which there was a binding contract in writing for the purchase
of the Shares; provided, however, that the rate at which interest will accrue on
               --------  -------                                                
unpaid principal under this Note will not exceed the highest rate permitted by
applicable law; and provided further that interest on the unpaid principal shall
be due and payable on December 1 of each year.

         2.   SECURITY.  Payment of this Note is secured by a security interest
              --------                                                         
in the Shares granted to the Company by Purchaser under a Stock Pledge Agreement
dated of even date herewith between the Company and Purchaser (the "PLEDGE
AGREEMENT").  This Note is being tendered by Purchaser to the Company as part of
the Exercise Price of the Shares pursuant to that certain Stock Option Exercise
Agreement between Purchaser and the Company dated of even date with this Note
(the "PURCHASE AGREEMENT").

         3.   DEFAULT; ACCELERATION OF OBLIGATION.  Purchaser will be deemed to
              -----------------------------------                              
be in default under this Note and the principal sum of this Note, together with
all interest accrued thereon, will immediately become due and payable in full:
(a) upon Purchaser's failure to make any payment when due under this Note; (b)
in the event Purchaser is Terminated (as defined in the Company's 1997 Stock
Option Plan) for any reason; (c) upon any transfer of any of the Shares (except
a transfer to the Company); (d) upon the filing by or against Purchaser of any
voluntary or involuntary petition in bankruptcy or any petition for relief under
the U.S. Federal bankruptcy code or any other state or U.S. Federal law for the
relief of debtors; or (e) upon the execution by Purchaser of an assignment for
the benefit of creditors or the appointment of a receiver, custodian, trustee or
similar party to take possession of Purchaser's assets or property.

         4.   REMEDIES ON DEFAULT.  Upon any default of Purchaser under this
              -------------------                                           
Note, the Company will have, in addition to its rights and remedies under this
Note and the Pledge Agreement, full recourse against any real, personal,
tangible or intangible assets of Purchaser, and may pursue any legal or
equitable remedies that are available to it.

         5.   PREPAYMENT.  Prepayment of principal and/or interest due under
              ----------                                                    
this Note may be made at any time without penalty.  Unless otherwise agreed in
writing by the Company, all payments will be made in lawful tender of the United
States and will be applied first to the payment of accrued interest, and the
remaining balance of such payment, if any, will then be applied to the payment
of principal.  If Purchaser prepays all or a portion of the principal amount of
this Note, the Shares paid for by the portion of principal so paid will continue
to be held in pledge under the Pledge Agreement to serve as independent
collateral for the outstanding portion of this Note and for that Secured Non-
Recourse Promissory Note of even date.
<PAGE>
 
         6.   GOVERNING LAW; WAIVER.  The validity, construction and performance
              ---------------------                                             
of this Note will be governed by the internal laws of the State of California,
excluding that body of law pertaining to conflicts of law.  Purchaser hereby
waives presentment, notice of non-payment, notice of dishonor, protest, demand
and diligence.

         7.   ATTORNEYS' FEES.  If suit is brought for collection of this Note,
              ---------------                                                  
Purchaser agrees to pay all reasonable expenses, including attorneys' fees,
incurred by the holder in connection therewith whether or not such suit is
prosecuted to judgment.

         8.   RULE 144 HOLDING PERIOD.  PURCHASER UNDERSTANDS THAT THE HOLDING
              -----------------------                                         
PERIOD SPECIFIED UNDER RULE 144(d) OF THE SECURITIES AND EXCHANGE COMMISSION
WILL NOT BEGIN TO RUN WITH RESPECT TO SHARES PURCHASED WITH THIS NOTE UNTIL
EITHER (A) THE EXERCISE PRICE OF SUCH SHARES IS PAID IN FULL IN CASH OR BY OTHER
PROPERTY ACCEPTED BY THE COMPANY, OR (B) THIS NOTE IS SECURED BY COLLATERAL,
OTHER THAN THE SHARES THAT HAVE NOT BEEN FULLY PAID FOR, HAVING A FAIR MARKET
VALUE AT LEAST EQUAL TO THE AMOUNT OF PURCHASER'S THEN OUTSTANDING OBLIGATION
UNDER THIS NOTE (INCLUDING ACCRUED INTEREST).


         IN WITNESS WHEREOF, Purchaser has executed this Note as of the date and
year first above written.



__________________________                  __________________________
Purchaser's Name                            Purchaser's Signature



                   SIGNATURE PAGE TO eBAY, INC. SECURED FULL
                            RECOURSE PROMISSORY NOTE

                                      -2-
<PAGE>
 
                                   EXHIBIT 4
                                   ---------

                            SECTION 83(B) ELECTION
                            ----------------------
                                        
<PAGE>
 
                                 [FOR REGULAR INCOME TAX - NONQUALIFIED OPTIONS]
       [FOR AMT AND DISQUALIFYING DISPOSITION PURPOSES - INCENTIVE STOCK OPTION]


                      ELECTION UNDER SECTION 83(B) OF THE
                             INTERNAL REVENUE CODE

The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include the excess, if any, of the
fair market value of the property described below at the time of transfer over
the amount paid for such property, as compensation for services in the
calculation of: (1) regular gross income; (2) alternative minimum taxable income
or (3) disqualifying disposition gross income, as the case may be.

1.  TAXPAYER'S NAME:               (Name)
                                    -----------------------------------------

    TAXPAYER'S ADDRESS:             _________________________________________
         
                                    _________________________________________

    SOCIAL SECURITY NUMBER:         _________________________________________

2.  The property with respect to which the election is made is described as
    follows: (No-of-Shares) shares of Common Stock of eBay, Inc., a California
    corporation which were transferred upon exercise of an option (the
    "COMPANY"), which is Taxpayer's employer or the corporation for whom the
    Taxpayer performs services.

3. The date on which the shares were transferred pursuant to the exercise of the
   option was ________, _______ and this election is made for calendar year
   ________.

4.  The shares received upon exercise of the option are subject to the following
    restrictions:  The Company may repurchase all or a portion of the shares at
    the Taxpayer's original purchase price under certain conditions at the time
    of Taxpayer's termination of employment or services.

5.  The fair market value of the shares (without regard to restrictions other
    than restrictions which by their terms will never lapse) was $________ per
    share at the time of exercise of the option.

6.  The amount paid for such shares upon exercise of the option was
    (Price-per-Share) per share.

7.  The Taxpayer has submitted a copy of this statement to the Company.

THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS"), AT THE
OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS AFTER
                                                           --------------      
THE DATE OF TRANSFER OF THE SHARES, AND MUST ALSO BE FILED WITH THE TAXPAYER'S
INCOME TAX RETURNS FOR THE CALENDAR YEAR.  THE ELECTION CANNOT BE REVOKED
WITHOUT THE CONSENT OF THE IRS.

Dated:  ________________             ____________________________________
                                     Taxpayer's Signature
<PAGE>
 
                                   EXHIBIT 5
                                   ---------

                            STOCK PLEDGE AGREEMENT
                            ----------------------
<PAGE>
 
                                   EXHIBIT 5
                                   ---------

                                    FORM OF
                                    -------
                            STOCK PLEDGE AGREEMENT
                            ----------------------


    This Exercise Agreement is made and entered into as of _________________
between eBay, Inc., a California corporation (the "COMPANY"), and
___________________ ("PLEDGOR").

                                R E C I T A L S
                                - - - - - - - -

         A.   In exchange for Pledgor's Secured Full Recourse Promissory Note
and Secured Non-Recourse Promissory Note to the Company of even date herewith
(the "NOTE"), the Company has issued and sold to Pledgor ____________________
shares of its Common Stock (the "SHARES") pursuant to the terms and conditions
of that Stock Option Exercise Agreement between the Company and Pledgor of even
date herewith (the "PURCHASE AGREEMENT").

         B.   Pledgor has agreed that repayment of the Note will be secured by
the pledge of the Shares pursuant to this Exercise Agreement.

         NOW, THEREFORE, the parties agree as follows:

         1.   CREATION OF SECURITY INTEREST.  Pursuant to the provisions of the
              -----------------------------                                    
California Commercial Code, Pledgor hereby grants to the Company, and the
Company hereby accepts, a first and present security interest in the Shares as
collateral to secure the payment of Pledgor's obligation to the Company under
the Note.  Pledgor herewith delivers to the Company Common Stock certificate(s)
No(s). _________, representing all the Shares, together with one stock power for
each certificate in the form attached as an Exhibit to the Purchase Agreement,
duly executed (with the date and number of shares left blank) by Pledgor and
Pledgor's spouse, if any.  For purposes of this Exercise Agreement, the Shares
pledged to the Company hereby, together with any additional collateral pledged
pursuant to Sections 5 and 6 hereof, will hereinafter be collectively referred
to as the "COLLATERAL."  Pledgor agrees that the Collateral pledged to the
Company will be deposited with and held by the Escrow Holder (as defined in the
Purchase Agreement) and that, notwithstanding anything to the contrary in the
Purchase Agreement, for purposes of carrying out the provisions of this Exercise
Agreement, Escrow Holder will act solely for the Company as its agent.

         2.   REPRESENTATIONS AND WARRANTIES.  Pledgor hereby represents and
              ------------------------------                                
warrants to the Company that Pledgor has good title (both record and beneficial)
to the Collateral, free and clear of all claims, pledges, security interests,
liens or encumbrances of every nature whatsoever, and that Pledgor has the right
to pledge and grant the Company the security interest in the Collateral granted
under this Exercise Agreement.  Pledgor further agrees that, until the entire
principal sum and all accrued interest due under the Note has been paid in full,
Purchaser will not, without the Company's prior written consent, (i) sell,
assign or transfer, or attempt to sell, assign or transfer, any of the
Collateral, or (ii) grant or create, or attempt to grant or create, any security
interest, lien, pledge, claim or other encumbrance with respect to any of the
Collateral.

         3.   RIGHTS ON DEFAULT.  In the event of default (as defined in the
              -----------------                                             
Note) by Pledgor under the Note, the Company will have full power to sell,
assign and deliver the whole or any part of the Collateral at any broker's
exchange or elsewhere, at public or private sale, at the option of the Company,
in order to satisfy any part of the obligations of Pledgor now existing or
hereinafter arising under the Note.  On any such sale, the Company or its
assigns may purchase all or any part of the Collateral.  In addition, at its
sole option, the Company may elect to retain all the Collateral in full
satisfaction of Pledgor's obligation under the Note, in accordance with the
provisions and procedures set forth in the California Commercial Code.

         4.   ADDITIONAL REMEDIES.  The rights and remedies granted to the
              -------------------                                         
Company herein upon default under the Note will be in addition to all the
rights, powers and remedies of the Company under the
<PAGE>
 
California Commercial Code and applicable law and such rights, powers and
remedies will be exercisable by the Company with respect to all of the
Collateral. Pledgor agrees that the Company's reasonable expenses of holding the
Collateral, preparing it for resale or other disposition, and selling or
otherwise disposing of the Collateral, including attorneys' fees and other legal
expenses, will be deducted from the proceeds of any sale or other disposition
and will be included in the amounts Pledgor must tender to redeem the
Collateral. All rights, powers and remedies of the Company will be cumulative
and not alternative. Any forbearance or failure or delay by the Company in
exercising any right, power or remedy hereunder will not be deemed to be a
waiver of any such right, power or remedy and any single or partial exercise of
any such right, power or remedy hereunder will not preclude the further exercise
thereof.

         5.   DIVIDENDS; VOTING.  All dividends hereinafter declared on or
              -----------------                                           
payable with respect to the Collateral during the term of this pledge (excluding
only ordinary cash dividends, which will be payable to Pledgor so long as
Pledgor is not in default under the Note) will be immediately delivered to the
Company to be held in pledge under this Exercise Agreement.  Notwithstanding
this Exercise Agreement, so long as Pledgor owns the Shares and is not in
default under the Note, Pledgor will be entitled to vote any shares comprising
the Collateral, subject to any proxies granted by Pledgor.

         6.   ADJUSTMENTS.  In the event that during the term of this pledge,
              -----------                                                    
any stock dividend, reclassification, readjustment, stock split or other change
is declared or made with respect to the Collateral, or if warrants or any other
rights, options or securities are issued in respect of the Collateral, then all
new, substituted and/or additional shares or other securities issued by reason
of such change or by reason of the exercise of such warrants, rights, options or
securities, will be immediately pledged to the Company to be held under the
terms of this Exercise Agreement in the same manner as the Collateral is held
hereunder.

         7.   RIGHTS UNDER PURCHASE AGREEMENT.  Pledgor understands and agrees
              -------------------------------                                 
that the Company's rights to repurchase the Collateral under the Purchase
Agreement, if any, will continue for the periods and on the terms and conditions
specified in the Purchase Agreement, whether or not the Note has been paid
during such period of time, and that to the extent that the Note is not paid
during such period of time, the repurchase by the Company of the Collateral may
be made by way of cancellation of all or any part of Pledgor's indebtedness
under the Note.

         8.   REDELIVERY OF COLLATERAL.  Upon payment in full of the entire
              ------------------------                                     
principal sum and all accrued interest due under the Note, and subject to the
terms and conditions of the Purchase Agreement, the Company will immediately
redeliver the Collateral to Pledgor and this Exercise Agreement will terminate;
provided, however, that all rights of the Company to retain possession of the
--------  -------                                                            
Shares pursuant to the Purchase Agreement will survive termination of this
Exercise Agreement.

         9.   SUCCESSORS AND ASSIGNS.  This Exercise Agreement will inure to the
              ----------------------                                            
benefit of the respective heirs, personal representatives, successors and
assigns of the parties hereto.

         10.  GOVERNING LAW; SEVERABILITY.  This Exercise Agreement will be
              ---------------------------                                  
governed by and construed in accordance with the internal laws of the State of
California, excluding that body of law relating to conflicts of law.  Should one
or more of the provisions of this Exercise Agreement be determined by a court of
law to be illegal or unenforceable, the other provisions nevertheless will
remain effective and will be enforceable.

         11.  MODIFICATION; ENTIRE AGREEMENT.  This Exercise Agreement will not
              ------------------------------                                   
be amended without the written consent of both parties hereto.  This Exercise
Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
related to such subject matter.
<PAGE>
 
         IN WITNESS WHEREOF, the parties hereto have executed this Stock Pledge
Agreement as of the date and year first above written.

eBAY, INC.                          PLEDGOR


By:_______________________          __________________________
                                    (Signature)


(Signature Name)                    ((Name))
__________________________          --------------------------
(Please print name)                 (Please print name)

(Title)
__________________________
(Please print title)



              SIGNATURE PAGE TO eBAY, INC. STOCK PLEDGE AGREEMENT