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The following is an excerpt from a DEF 14A SEC Filing, filed by EBAY INC on 5/17/2004.
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EBAY INC - DEF 14A - 20040517 - PROPOSAL_4

PROPOSAL 4

PROPOSED AMENDMENT TO OUR CERTIFICATE OF INCORPORATION

    Our Board of Directors has adopted, subject to stockholder approval, an amendment and restatement of our Certificate of Incorporation attached as Appendix D to increase the authorized number of shares of common stock from 900,000,000 shares to 1,790,000,000 shares.

    The additional shares of common stock would have rights identical to the currently outstanding common stock. Adoption of the proposed amendment and any issuance of the common stock would not affect the rights of the holders of currently outstanding common stock, except for effects incidental to increasing the outstanding number of shares of the common stock, such as dilution of the earnings per share and voting rights of current holders of common stock. In addition to the 657,360,256 shares of common stock outstanding at April 30, 2004, we have reserved 114,373,019 shares for issuance upon the exercise of options and rights granted or to be granted under our stock option and stock purchase plans.

    Our Certificate of Incorporation also authorizes 10,000,000 shares of preferred stock. There are no outstanding shares of preferred stock, and this amendment would not change the number of authorized shares of preferred stock.

    If this amendment to increase the authorized number of shares of common stock is approved by the stockholders, it will become effective when we file the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.

    In May 2000 and again in August 2003, we effected two-for-one stock splits in the form of a stock dividend. These stock splits used a substantial portion of the currently authorized 900,000,000 shares of common stock. Without increasing the number of authorized but unissued shares of common stock, we will be unable to effect any stock splits in the form of a stock dividend in the

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future. We believe that it is advisable and in the best interests of the stockholders to have available additional authorized but unissued shares of common stock in an amount adequate to provide for our future needs. We currently have no specific plans to issue the additional shares of common stock that would be authorized by this proposal. However, these shares will provide additional flexibility to use our capital stock for business and financial purposes in the future. The additional shares may be used for various purposes, including similar stock dividends and the following:

  raising capital;
 
  providing equity incentives to employees, officers, or directors;
 
  establishing strategic relationships with other companies; and
 
  expanding our business or product lines through the acquisition of other businesses or products.

    We could also use the additional shares of common stock to oppose a hostile takeover attempt or delay or prevent changes in control or management. For example, without further stockholder approval, we could adopt a “poison pill” that would, under certain circumstances related to an acquisition of shares that we did not approve, give certain holders the right to acquire additional shares of common stock at a low price. We also could strategically sell shares of common stock in a private transaction to purchasers who would oppose a takeover or favor the current Board. This proposal to increase the authorized number of shares of common stock has been prompted by business and financial considerations, and not by the threat of any hostile takeover attempt (nor are we currently aware of any such attempts directed at us). However, you should be aware that approval of this proposal could facilitate future efforts to prevent changes in control of the Board, including transactions in which you might otherwise receive a premium for your shares over then current market prices.

    The affirmative vote of the holders of a majority of the shares of common stock will be required to approve these amendments to our Certificate of Incorporation. As a result, abstentions and broker non-votes will have the same effect as negative votes.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE IN FAVOR OF PROPOSAL 4.

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