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Prepared by MERRILL CORPORATION

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EXHIBIT 10.5  

 
 

CONFINITY, INC.
  
    1999 STOCK PLAN
  (as amended February 29, 2000)    
  

    1.  Purposes of the Plan.  The purposes of this Stock Plan are to attract and
retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be
granted under the Plan. 

    2.  Definitions.  As used herein, the following definitions shall apply: 

    (a) "Administrator" means the Board or any of its Committees as shall be administering the Plan in accordance with
Section 4 hereof. 

    (b) "Applicable Laws" means the requirements relating to the administration of stock option plans under U.S. state
corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or
jurisdiction where Options or Stock Purchase Rights are granted under the Plan. 

    (c) "Board" means the Board of Directors of the Company. 

    (d) "Code" means the Internal Revenue Code of 1986, as amended. 

    (e) "Committee" means a committee of Directors appointed by the Board in accordance with Section 4 hereof. 

    (f)  "Common Stock" means the Common Stock of the Company. 

    (g) "Company" means Confinity, Inc., a California corporation. 

    (h) "Consultant" means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or
advisory services to such entity. 

    (i)  "Director" means a member of the Board of Directors of the Company. 

    (j)  "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. 

    (k) "Employee" means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary
of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director's fee
by the Company shall be sufficient to constitute "employment" by the Company. 

    (l)  "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

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    (m) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: 

     (i) If
the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator
deems reliable; 

    (ii) If
the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the
high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or 

    (iii) In
the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. 

    (n) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code. 

    (o) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

    (p) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder. 

    (q) "Option" means a stock option granted pursuant to the Plan. 

    (r) "Option Agreement" means a written or electronic agreement between the Company and an Optionee evidencing the terms
and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. 

    (s) "Option Exchange Program" means a program whereby outstanding Options are exchanged for Options with a lower
exercise price. 

    (t)  "Optioned Stock" means the Common Stock subject to an Option or a Stock Purchase Right. 

    (u) "Optionee" means the holder of an outstanding Option or Stock Purchase Right granted under the Plan. 

    (v) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the
Code, 

    (w) "Plan" means this 1999 Stock Plan. 

    (x) "Restricted Stock" means shares of Common Stock acquired pursuant to a grant of a Stock Purchase Right under
Section 11 below. 

    (y) "Section 16(b)" means Section 16(b) of the Securities Exchange Act of 1934, as amended. 

    (z) "Service Provider" means an Employee, Director or Consultant. 

    (aa) "Share" means a share of the Common Stock, as adjusted in accordance with Section 12 below. 

    (bb) "Stock Purchase Right" means a right to purchase Common Stock pursuant to Section 11 below. 

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    (cc) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in
Section 424(f) of the Code. 

    3.  Stock Subject to the Plan.  Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be subject to option and sold under the Plan is 7,500,000 Shares. The Shares may be authorized but unissued, or reacquired Common Stock. 

    If
an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased
Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon
exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock
are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan. 

    4.  Administration of the Plan.  

    (a)  Administrator.  The Plan shall be administered by the Board or a Committee appointed by the Board,
which Committee shall be constituted to comply with Applicable Laws. 

    (b)  Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a Committee,
the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion: 

     (i) to
determine the Fair Market Value; 

    (ii) to
select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder; 

    (iii) to
determine the number of Shares to be covered by each such award granted hereunder; 

    (iv) to
approve forms of agreement for use under the Plan; 

    (v) to
determine the terms and conditions, of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions,
and any restriction or limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion,
shall determine; 

    (vi) to
determine whether and under what circumstances an Option may be settled in cash under subsection 9(e) instead of Common Stock; 

   (vii) to
reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined
since the date the Option was granted; 

   (viii) to
initiate an Option Exchange Program; 

    (ix) to
prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws; 

    (x) to
allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock 

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Purchase Right that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem
necessary or advisable; and 

    (xi) to
construe and interpret the terms of the Plan and awards granted pursuant to the Plan. 

    (c)  Effect of Administrator's Decision.  All decisions, determinations and interpretations of the
Administrator shall be final and binding on all Optionees. 

    5.  Eligibility.  

    (a) Nonstatutory
Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. For purposes of
this Section 5(a), "Service Providers" shall include prospective Service Providers to whom Options or Stock Purchase Rights are granted in connection with written offers of a service
relationship with the Company or any Parent or Subsidiary. Any person who is not an Employee on the effective date of the grant of an Option may be granted only a Nonstatutory, Stock Option. An
Incentive Stock Option granted to a prospective Employee on the condition that such individual become an Employee shall be deemed granted effective
on the date such person begins service with the Company or any Parent or Subsidiary. The exercise price of such Incentive Stock Option shall be determined as of such date in accordance with
Section 8. 

    (b) Each
Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time of the Option with respect to such Shares is
granted. 

    (c) Neither
the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate such relationship at any time, with or without cause. 

    6.  Term of Plan.  The Plan shall become effective upon its adoption by the
Board. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 14 of the Plan. 

    7.  Term of Option.  The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time
the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five
(5) years from the date of grant or such shorter term as may be provided in the Option Agreement. 

    8.  Option Exercise Price and Consideration.  

    (a) The
per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject
to the following: 

     (i) In
the case of an Incentive Stock Option 

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    (A) granted
to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 

    (B) granted
to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. 

    (ii) In
the case of a Nonstatutory Stock Option 

    (A) granted
to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 

    (B) granted
to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant. 

    (iii) Notwithstanding
the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate
transaction. 

    (b) The
consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of (1) cash, (2) check, (3) promissory note, (4) other
Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan, (6) by such other consideration as may be approved by the Administrator from time to time to the extent permitted by
Applicable Law or (7) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance
of such consideration may be reasonably expected to benefit the Company. 

    9.  Exercise of Option.  

    (a)  Procedure for Exercise; Rights as a Shareholder.  Any Option granted hereunder shall be exercisable
according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted. Unless the Administrator provides
otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share. 

    An
Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled
to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of
the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option 

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is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan. 

    Exercise
of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number
of Shares as to which the Option is exercised. 

    (b)  Termination of Relationship as a Service Provider.  If an Optionee ceases to be a Service Provider,
such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least thirty (30) days) to the extent that the Option is vested on the
date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for three (3) months following the Optionee's termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered
by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan. 

    (c)  Disability of Optionee.  If an Optionee ceases to be a Service Provider as a result of the
Optionee's Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent the Option is
vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the
Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, on the date
of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does
not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 

    (d)  Death of Optionee.  If an Optionee dies while a Service Provider, the Option may be exercised within
such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent that the Option is vested on the date of death (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement) by the Optionee's estate or by a person who acquires the right to exercise the Option by bequest or inheritance. In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, at the time of death, the Optionee is not vested as
to the entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan. 

    (e)  Buyout Provisions.  The Administrator may at any time offer to buy out for a payment in cash or
Shares, an Option previously granted, based on such terms and conditions as the administrator shall establish and communicate to the Optionee at the time that such offer is made. 

    10.  Non-Transferability of Options and Stock Purchase Rights.  The
Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. 

    11.  Stock Purchase Rights.  

    (a)  Rights to Purchase.  Stock Purchase Rights may be issued either alone, in addition to, or in tandem
with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall 

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advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price
to be paid, and the time within which such person must accept such offer. The terms of the offer shall comply in all respects with Section 260.140.42 of Title 10 of the California Code of
Regulations. The offer shall be accepted by execution of a Restricted Stock purchase agreement in the form determined by the Administrator. 

    (b)  Repurchase Option.  Unless the Administrator determines otherwise, the Restricted Stock purchase
agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the Restricted Stock purchase agreement shall be the original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine. Except with respect to Shares purchased by Officers, Directors and
Consultants, the repurchase option shall in no case lapse at a rate of less than 20% per year over five (5) years from the date of purchase. 

    (c)  Other Provisions.  The Restricted Stock purchase agreement shall contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. 

    (d)  Rights as a Shareholder.  Once the Stock Purchase Right is exercised, the purchaser shall have
rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 12 of the Plan. 

    12.  Adjustments Upon Changes in Capitalization, Merger or Asset Sale.  

    (a)  Changes in Capitalization.  Subject to any required action by the shareholders of the Company, the
number of shares of Common Stock covered by each outstanding Option or Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well as the price per
share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company. The conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock
subject to an Option or Stock Purchase Right. 

    (b)  Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company,
the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have
the right
to exercise his or her Option or Stock Purchase Right until fifteen (15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option
or Stock Purchase Right would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any 

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Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, an Option or Stock Purchase Right will terminate immediately prior to the consummation of such proposed action. 

    (c)  Merger or Asset Sale.  

     (i) Employee and Consultant Options.

    (A)  General.  In the event of (1) a merger or consolidation of the Company with or into any other
corporation or corporations (but excluding any transaction or series of transactions effected solely for the purpose of reincorporating the Company into another jurisdiction and any transaction(s) in
which the shareholders of the Company immediately prior to such transaction(s) control, immediately after consummation of the transaction(s), more than 50% of the voting power of the surviving entity)
or (2) a sale of all or substantially all of the assets of the Company (a "Change of Control"), each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the Successor Corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not
otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the Option or Stock Purchase Right shall be fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option or Stock Purchase Right shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed
if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately
prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase
Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of
assets. 

    (B)  Executive Officer Options.  Following an assumption or substitution in connection with a Change of
Control, if an Executive Officer's (a person appointed by the Board of Directors as Executive Officer) status as an employee of the Successor Corporation, as applicable, is terminated by the Successor
Corporation as a result of an involuntary termination (other than for cause) within twelve months following a Change of Control, the Optionee shall fully vest in and have the right to exercise
Optionee's Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which Optionee would not otherwise be vested or exercisable. Thereafter, the Option or Stock Purchase
Right shall remain exercisable in accordance with Section 9. For purposes only of this provision, "Involuntary Termination" shall mean (1) without Optionee's 

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express written consent, a significant reduction of the Optionee's duties, position or responsibilities, as an employee of the Company or the removal of the Optionee from such position and
responsibilities, unless Optionee is provided with a comparable position (i.e., a position of equal or greater organizational level, duties, authority, compensation and status) (the fact that Optionee
may be employed at a divisional or departmental level with the surviving corporation will not by itself determine that there has been a significant reduction in Optionee's duties, position or
responsibilities or that Optionee's position with the surviving corporation is not a comparable position); (2) a significant reduction by the Company in the base salary of the Optionee as in
effect immediately prior to such reduction; (3) a material reduction by the Company in the kind or level of employee benefits to which the Optionee is entitled immediately prior to such
reduction with the result that the Purchaser's overall benefits package is significantly reduced; or (4) without the Optionee's express written consent, the relocation of the Purchaser to a
facility or a location more than twenty-five (25) miles from the Company's offices immediately prior to the date of the Change of Control. Notwithstanding the above, none of the
following shall be factors in determining whether an Involuntary Termination has occurred: the event of a Change of Control itself, the identity of the surviving corporation, or the surviving
corporation's status as a private or public company. 

    (ii)  Outside Director Options.  In the event of a Change of Control, each
outstanding Option and Stock Purchase Right held by an Outside Director (and granted to such person in such capacity) shall fully vest as to all of the Optioned Stock, including Shares as to which the
Outside Director would not otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable as provided in this paragraph, the Administrator shall notify
the optionee in writing or electronically that the Option or Stock Purchase Right shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the
Option or Stock Purchase Rights shall terminate upon the expiration of such period. 

    13.  Time of Granting Options and Stock Purchase Rights.  The date of grant of an
Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined
by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant. 

    14.  Amendment and Termination of the Plan.  

    (a)  Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan. 

    (b)  Shareholder Approval.  The Board shall obtain shareholder approval of any Plan amendment to the
extent necessary and desirable to comply with Applicable Laws. 

    (c)  Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan
shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such
termination. 

    15.  Conditions Upon Issuance of Share.  

    (a)  Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such
compliance. 

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    (b)  Investment Representations.  As a condition to the exercise of an Option, the Administrator may
require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 

    16.  Inability to Obtain Authority.  The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 

    17.  Reservation of Shares.  The Company, during the term of this Plan, shall at
all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 

    18.  Shareholder Approval.  The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws. 

    19.  Information to Optionees and Purchasers.  The Company shall provide to each
Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Optionee or purchaser has one or more Options or Stock Purchase
Rights outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements. The Company
shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information. 

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CONFINITY, INC. 1999 STOCK PLAN (as amended February 29, 2000)Prepared by MERRILL CORPORATION

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EXHIBIT 10.6  

 
  FORM OF LOAN, PLEDGE AND OPTION AGREEMENT    
  

    This LOAN, PLEDGE AND OPTION AGREEMENT (the "Agreement") is made as of July      , 2001 between
            ("Borrower") and PayPal, Inc. ("Lender"). 

    A.  Borrower
desires to borrow and Lender desires to loan the aggregate amount of            Dollars ($            ) on the terms and subject
to the
conditions of this Agreement. 

    B.  To
induce Lender to make such a loan, Borrower desires to grant a call option to Lender on the terms and subject to the conditions of this Agreement. 

    THE
PARTIES AGREE AS FOLLOWS: 

    1.  The Loan.  

    1.1  Advance of Funds.  Subject to the terms and conditions of this Agreement, Lender will advance to
Borrower the sum of            Dollars ($            ) (the "Loan"). As security
for the Loan, Borrower herein assigns as security and
pledges to Lender            (      ) shares (the "Shares") of Common Stock of PayPal, Inc. (the
"Issuer"), as further described in Section 6 below. 

    1.2  Promise to Pay.  On or before July  , 2005 or such earlier date as provided below
(the "Maturity Date"), Borrower promises to pay to Lender the sum of            Dollars
($            ) together with accrued but unpaid
interest as provided herein. Interest shall be due and payable on the date that the principal is due on the outstanding principal balance of the Loan at the rate of 5.02% per annum, compounded
annually (the "Interest"). The principal and Interest payable by Borrower under this Agreement are secured as provided in Section 6 and, other
than such security, constitute a non-recourse obligation of Borrower. 

    2.  Lender's Call Option.  

    2.1  Grant of the Call.  Borrower hereby grants to Lender a call option (the
"Call") to purchase from Borrower            (            ) shares (the
"Call Shares") of
Common Stock of the Issuer. Pursuant to the Call, the per share exercise price for the Call Shares (the "Lender Exercise Price"), payable by Lender,
shall equal Three Dollars ($3.00). 

    2.2  Exercise Period.  The Call may be exercised on one occasion, in whole, but not in part, at any time
after July      , 2002 and before July      , 2005. 

    2.3  Manner of Exercise.  Subject to the terms and conditions herein, Lender may exercise the Call by
delivery of written notice (the "Call Exercise Notice") to Borrower and Pledgeholder (as such term is defined in Section 6 hereof), specifying
the effective date of the exercise (the "Call Exercise Date"), which shall be fifteen (15) days after the date on which Borrower is deemed to
receive the Call Exercise Notice. 

    2.4  Call Payment.  Lender may elect to pay the Lender Exercise Price by (i) cash,
(ii) cancellation of the principal and Interest payable by Borrower under this Agreement, or (iii) any combination of the foregoing. The election of the form of payment shall be made by
Lender in its sole discretion. 

    2.5  Termination of Call.  The Call shall expire upon the earlier of (i) July  ,
2005, or (ii) the sale or transfer of the Collateral pursuant to Section 6.2. 

    3.  Distributions and Adjustments to the Shares.  

     3.1  Changes in Capital Structure.  If the Shares are changed by reason of a
stock split, reverse stock split, stock dividend or recapitalization, or converted or exchanged for other securities as a result of a merger or reorganization of Issuer, the number of Shares and Call
Shares, the class of securities and the Lender Exercise Price shall be appropriately adjusted to 

 

preserve the benefits to the parties under this Agreement, provided that the aggregate Lender Exercise Price shall remain unchanged. 

    3.2  Distributions and Additional Securities.  If any Distribution (as hereinafter defined) of
securities, cash or other property issued in connection with a change described in Section 3.1 shall be received by Borrower, Borrower shall, within five days of receipt, deliver the cash,
certificates or other instruments evidencing title to such Distribution or other securities, together with appropriate instruments of transfer, to Pledgeholder to be held as part of the Pledge. Any
Distribution shall become a part of the Share or Call Share to which it relates and shall therefore, among other things, be subject to the Call and shall constitute additional Collateral (as such term
is defined in Section 6.1 hereof). A "Distribution" means any property receivable by Borrower or other holder of a Share as owner of any Share,
and shall include, without limitation, dividends (whether in cash or other property, such as securities or contract rights), cash, and securities or other property arising from a reorganization,
recapitalization, stock split or merger of the Issuer or the issuer of any security that is a Distribution. 

    3.3.  Determination of Fair Market Value.  For valuation purposes under this Agreement, the
"Value" of each Share on any relevant date shall be equal to the fair market value of such Share as determined in accordance with the following
provisions: 

    (a) If
Issuer's Common Stock at the time is neither listed nor admitted to trading on any stock exchange nor traded in the over-the-counter
market, then the fair market value of each Share shall be equal to the fair market value last determined by the Board of Directors of the Issuer, taking into account any limitations on
transferability, whether due to the size of the block of shares or the restrictions of applicable securities laws. 

    (b) If
Issuer's Common Stock is at the time listed or admitted to trading on any stock exchange, then the fair market value of each Share shall be the closing selling
price of one share of Common Stock on the date in question on the stock exchange serving as the primary market for the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common Stock on such exchange on the date in question, then the fair market value of each Share shall be the closing selling price on the
exchange on the last preceding date for which such quotation exists. 

    (c) If
Issuer's Common Stock is not at the time listed or admitted to trading on any stock exchange but is traded in the over-the-counter
market, the fair market value of each Share shall be the mean between the highest bid and lowest asked prices (or, if such information is available, the closing selling price) of one share of the
Common Stock on the date in question in the over-the-counter market, as such prices are reported by the National Association of Securities Dealers through its Nasdaq system or
any successor system. If there are no reported bid and asked prices (or closing selling price) for the Common Stock on the date in question, then the mean between the highest bid price and lowest
asked price (or the closing selling price) on the last preceding date for which such quotations exist shall be determinative of fair market value of each Share. 

    4.  Certain Rights Respecting Shares.  

    4.1  Rights Notice.  Borrower shall give notice (the "Rights
Notice") to Lender of any right to purchase additional shares or other securities ("Right") granted to Borrower and arising out
of Borrower's ownership of any Shares or Distributions, such Rights Notice to be given within five (5) days after Borrower becomes aware of the existence of any Right. Each Rights Notice shall
state the terms of the Right, including the expiration date for the exercise of the Right, shall state 

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whether the Issuer will allow assignment of the Right to Lender, and shall be accompanied by the notice received by Borrower advising of the existence of the Right. 

    4.2  Rights Exercise Notice.  Lender shall have ten (10) business days after receipt of a Rights
Notice within which to give notice (the "Rights Exercise Notice") to Borrower that Lender wishes Borrower to (i) assign all or a portion of such
Right to Pledgeholder, and/or (ii) exercise all or any portion of the Right. If Lender requests an assignment, Borrower shall, promptly and without further consideration, assign to Pledgeholder
the portion of the Right specified in the Rights Exercise Notice. If Lender requests Borrower to exercise all or any portion of the Right, and provide to Borrower the consideration required to be paid
in connection with the exercise of the Right prior to the expiration date of the Right, then Borrower shall exercise the Right and immediately transfer, assign and deliver to Pledgeholder the
securities received upon exercise in exchange for such consideration. Any amount advanced by Lender pursuant to this section shall be added to the amount of the loan hereunder, and the call price for
such Rights shall equal the amount advanced plus an amount equal to interest at 5.02% per annum compounded annually from the date of such advance. The call for such Rights may not be exercised other
than in connection with a call of a corresponding number of Shares. 

    4.3  Borrower's Right to Exercise.  If the Lender fails to give a Rights Exercise Notice in accordance
with Section 4.2 with respect to any Right, or portion of a Right, Borrower shall be free to exercise or assign such Right or portion of a Right for its own account. 

    5.  Loan Payment Terms.  

    5.1  Acceleration.  Lender may, at its option and in its sole discretion declare the
then-outstanding principal balance of the Loan, together with all accrued and unpaid interest thereon, to be immediately due and payable ninety (90) days following the occurrence of
any of the following (each of which is referred to herein as an "Event of Default"): 

    (a) the
failure of Borrower to pay any amount under this Agreement when due; 

    (b) the
commencement of any proceeding against Borrower in bankruptcy, or otherwise seeking any reorganization, arrangement or similar relief, or the appointment of a
receiver, trustee, or liquidator to take possession of the assets of Borrower, or the commencement of any other proceeding under any law for the relief of creditors; 

    (c) any
assignment by Borrower for the benefit of Borrower's creditors; or 

    (d) any
liquidation of Borrower. 

    5.2  Payment.  Borrower may prepay amounts due under this Agreement without the consent of Lender;  provided, however, that no such prepayment shall affect the validity or exercisability of the Call. If
payment is due on a Saturday, Sunday, or a public holiday under the laws of the State of California, such payment shall be made on the next succeeding business day and such extension of time shall be
included in computing interest in connection with such payment. The date specified for payment under this Section 5.2 may be accelerated as provided in Section 5.1. 

    6.  Pledge as Security.  

    6.1  Pledge.  As security for all of Borrower's obligations and liabilities to Lender whether now
existing or hereafter arising under this Agreement, including without limitation the Call (the "Obligations"), Borrower herein assigns as security and
pledges to Lender the Shares and grants Lender a security interest in Borrower's right, title and interest in and to the Shares and any Distributions thereon, the proceeds (from disposition or
otherwise) thereof and all proceeds (from disposition or otherwise) of proceeds (collectively the "Collateral"). Borrower agrees to take such 

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additional actions as may be necessary or advisable at the reasonable request of Lender to perfect and continue Lender's security interest in the Collateral. 

    6.2  Default; Non-Recourse Obligation.  If an Event of Default has occurred, Lender is
authorized to purchase the Collateral or to sell, assign and deliver at Lender's discretion, from time to time, all or any part of the Collateral at any private or public sale, on not less than ten
(10) days' written notice to Borrower and Pledgeholder (as such term is defined in Section 6.3 hereof), at such price or prices and upon such terms as Lender may deem advisable, and
Lender shall have all the rights and remedies of a secured creditor under the provisions of the California Uniform Commercial Code. At any such public sale, Lender may bid for, and become the
purchaser of, the whole or any part of the Collateral offered for sale. The parties agree that, prior to the establishment of a public market for the Common Stock of
the Issuer, the securities laws affecting sale of the Shares make a public sale of the Shares commercially unreasonable. The parties further agree that the repurchasing of such Shares by the Issuer,
or by any person to whom the Issuer may have assigned its rights under this Agreement, is commercially reasonable if made at a price at least equal to the Value of the Shares. In case of any sale,
after deducting the costs, counsel fees and other expenses of sale and delivery, the remaining proceeds of such sale shall be applied to the satisfaction of the Obligations; provided, however, that
after satisfaction in full of the Obligations, the balance of the proceeds of sale then remaining shall be paid to Borrower. The Obligations are non-recourse obligations and Borrower shall
not be personally liable for any deficiency if the proceeds of the sale of the Collateral are insufficient to discharge the amount of principal and interest due under this Agreement. 

    6.3  Appointment of Pledgeholder.  Lender hereby appoints the Secretary of the Issuer, or his designee,
as "Pledgeholder" to accept and hold the Collateral on its behalf. To assure Borrower's ability to perform Borrower's Obligations under this Agreement,
Borrower will, concurrently with the delivery of this Agreement, deliver the stock certificate representing the Shares, together with a duly executed blank assignment separate from certificate for
such certificate, to Pledgeholder, such documents to be held in pledge (the "Pledge"). 

    6.4  Duties After an Event of Default.  Pledgeholder shall have no duty to determine the existence of an
Event of Default, but may, without any liability whatsoever, rely upon the written notice of Lender that an Event of Default has occurred. If, following an Event of Default, Lender shall elect to
exercise its right to realize on the Shares, Pledgeholder shall, upon the receipt of written notice from Lender of the number of Shares sold and sale price, (i) date the stock assignments
necessary for each transfer in question, (ii) fill in the number of Shares being transferred and (iii) deliver the same, together with the certificate(s) evidencing the Shares to be
transferred to the purchaser against the simultaneous delivery to Pledgeholder of the purchase price for the number of the Shares then being purchased. In connection with each such sale, Pledgeholder
shall deliver from the Pledge the specific Shares which are designated by Lender; provided, however, that Pledgeholder's duties hereunder are subject to the cooperation of Borrower, Issuer and
Issuer's transfer agent or counsel with respect to furnishing to Pledgeholder all necessary stock certificates and other related instruments as appropriate. Following an Event of Default, Pledgeholder
shall dispose of the Collateral other than the Shares in accordance with written instructions of Lender. After deducting the costs, counsel fees and other expenses of such sale and delivery,
Pledgeholder shall pay the remaining proceeds of such sale to Lender to the extent of the Obligations of Borrower under this Agreement as specified by Lender. Any remaining proceeds of such sale shall
be paid to Borrower. 

    6.5  Duties of Pledgeholder Upon Exercise of Call.  If Pledgeholder is given a valid Call Exercise
Notice, Pledgeholder shall, on the Call Exercise Date (i) date the stock assignment necessary for the transfer in question, (ii) fill in the number of Shares being transferred and 

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(iii) deliver to Lender the assignment, together with the certificate for the Shares being transferred. 

    6.6  Return of Collateral.  Upon Borrower's satisfaction of the Obligations, Lender shall instruct
Pledgeholder to return to Borrower all Collateral, if any, then in Pledgeholder's possession. 

    6.7  Return of Property.  If, at the time of termination of the Pledge, Pledgeholder has in its
possession any documents, securities, or other property belonging to Borrower, then it shall deliver all of same to Borrower and shall be discharged of all further obligations hereunder. 

    6.8  Attorney-In-Fact; Additional Stock Assignments.  The parties hereby
irrevocably constitute and appoint Pledgeholder as their attorney-in-fact and agent for the term of this Pledge to execute, with respect to the securities and other property
that are deposited with Pledgeholder hereunder, all documents necessary or appropriate to make any such securities negotiable and complete any transaction contemplated herein. Borrower shall deliver
to Pledgeholder from time to time any instruments of transfer duly executed by Borrower as may be requested by Lender or Pledgeholder. 

    6.9  Duties.  Pledgeholder shall carry out its duties hereunder to the best of its ability and shall be
liable only for gross negligence or willful misconduct. Pledgeholder's duties hereunder may be altered, amended, modified or revoked only by a written instrument signed by Lender, Borrower and
Pledgeholder. 

    6.10  Obligations.  Pledgeholder shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties. Pledgeholder shall not be personally liable for any act it may do or omit to do hereunder as Pledgeholder or as attorney-in-fact for Borrower or
Lender while acting in good faith and in the exercise of its own judgment, and any act done or omitted by Pledgeholder pursuant to the advice of its own attorneys shall be conclusive evidence of such
good faith. 

    6.11  Authorization to Act.  Pledgeholder is hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey
orders, judgments or decrees of any court. In case Pledgeholder obeys or complies with any such order, judgment or decree of any court, it shall not be liable to any of the parties hereto or to any
other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction. 

    6.12  Authority to Invest.  Any cash received by Pledgeholder pursuant to this Agreement and designated
by Lender as a Distribution shall be invested in an interest-bearing savings account and the interest thereon shall constitute a part of such Distribution. 

    6.13  Bankruptcy.  Bankruptcy, insolvency, dissolution or absence of any party hereto shall not affect
Pledgeholder's performance hereunder. 

    6.14  Statute of Limitations.  Pledgeholder shall not be liable for the lapse of any rights because of
any Statute of Limitation applicable with respect to this Agreement or any documents deposited with Pledgeholder. 

    6.15  Legal Counsel.  Pledgeholder shall be entitled to employ such legal counsel and other experts as it
may deem necessary to advise it properly in connection with its obligations hereunder, 

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may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor, for which Pledgeholder shall be reimbursed 50% by Lender and 50% by Borrower. 

    6.16  Termination of Duties; Successor.  Pledgeholder's responsibilities as Pledgeholder hereunder shall
terminate if (i) Pledgeholder shall resign by thirty (30) days written notice to Borrower and Lender, (ii) Borrower and Lender jointly agree as to Pledgeholder's termination and
appoint Pledgeholder's successor, or (iii) Pledgeholder dies or is disabled. In the event of such termination by resignation, death or disability, Lender shall appoint a successor. Upon receipt
of notice of appointment of a successor, all documents, shares and other property then in Pledgeholder's possession pursuant to this Agreement shall be delivered to such successor. 

    6.17  Further Instruments.  If Pledgeholder reasonably requires other or further instruments in
connection with this Agreement or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 

    6.18  Disputes.  If any dispute arises with respect to the delivery and/or ownership or right of
possession of the securities or other property held by Pledgeholder hereunder, Pledgeholder may, at Pledgeholder's option, be relieved from all liability to Borrower and Lender by depositing all
documents held hereunder with the Clerk of the California Superior Court for the County of San Mateo for the purpose of permitting the Borrower and Lender to litigate their respective rights in such
court. The receipt of the Clerk of such court of such documents shall discharge Pledgeholder from all liability to Borrower and Lender, and the same may be pleaded as a bar to any action by Borrower
or Lender against Pledgeholder. 

    7.  Representations, Warranties and Covenants of Borrower.  

    7.1  Ownership of Shares; No Conflicts.  Borrower represents and warrants as of this date, and covenants,
for the period beginning on this date and ending on the Expiration Date (as such term is defined in Section 8.5 hereof), that (i) Borrower has and will have the right to transfer to
Lender all or any part of the Shares and Distributions, free and clear of any lien, claim, encumbrance or restriction of any type or nature whatsoever (other than such as are presently held by the
Lender or may arise under this Agreement, and restrictions on resale that may arise under applicable federal and state securities laws); (ii) the Shares are not, and the Shares and
Distributions will not be, subject to any right of first refusal, right of repurchase or any similar right granted to, or retained by any person other than the Lender; and (iii) there is no
provision of any existing agreement, and Borrower will not enter into an agreement by which the Borrower is or would be bound (or to which the Borrower is or would become subject), that conflicts or
would conflict with this Agreement or the performance of Borrower's obligations under this Agreement. 

    7.2  Further Assurances.  Upon the reasonable request of Pledgeholder or Lender, Borrower will prepare,
execute and deliver any further instruments and do any further acts that may be necessary to carry out more effectively the purposes of this Agreement, including, if necessary, the preparation and
execution of applications to the California Department of Corporations. 

    7.3  Acknowledgement.  Borrower hereby acknowledges that he has had access to all of the information that
Borrower needs in order to make an informed decision to enter into this Agreement and that he has not relied on any information provided to him by Lender in reaching such decision. 

    8.  Miscellaneous.  

    8.1  Assignment.  

    (a)  By Borrower.  Except as otherwise provided herein, Borrower may not sell, assign, transfer,
hypothecate, pledge or otherwise encumber, in any manner, prior to the Expiration Date (as such term is defined in Section 8.5 hereof), this Agreement or any of the Shares or 

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Distributions or Collateral. Any attempt to sell, assign, transfer, hypothecate, pledge or otherwise encumber this Agreement, any interest therein or any such Shares or Distributions or Collateral and
any levy of execution, attachment, or similar process on the Shares or such Distributions or Collateral shall be null and void. Subject to the foregoing, the Call shall be binding on and inure to the
benefit of the heirs, executors, and personal representatives of Borrower. 

    (b)  By Lender.  Lender may assign its right, title and interest in this Agreement, in whole or in part,
effective upon notice to Borrower and Pledgeholder. Following such assignment, this Agreement shall be binding upon and inure to the benefit of any such assignee. Such assignment shall be conditioned
on compliance with any applicable state and federal securities laws and, upon request by Borrower, Lender shall furnish an opinion of counsel to such effect, reasonably satisfactory to the Issuer and
Borrower. 

    8.2  Amendment.  Except as provided in Section 6.9 with respect to Pledgeholder's duties, this
Agreement may only be amended by a writing signed by Borrower and Lender. 

    8.3  Governing Law; Consent to Jurisdiction.  This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts entered into and wholly to be performed in the State of California. Each party hereto hereby agrees that any action that, in
whole or in part, in any way arises under this Agreement shall be brought in the Superior Court of the State of California for the County of Santa Clara or the United States District Courts for the
Northern District of California. Each party hereby submits itself to the exclusive jurisdiction and venue of such Courts for purposes of any such action and agrees that any notice, document or
complaint in any such action may be served on it by delivery in the manner provided for the delivery of notices under this Agreement. 

    8.4  Notices.  All notices and other communications under this Agreement shall be in writing, and shall
be deemed to have been duly given on the date of delivery if delivered personally or by confirmed facsimile, or on the next day after dispatch via overnight messenger or courier, or on the second day
after mailing if mailed to the party to whom notice is to be given by first class mail, registered or certified, postage prepaid, and addressed as follows (until any such address is changed by notice
duly given): 

	 
	 
	 

	 	If to Borrower:	«Purchaser»

«Address1»

«Address2»
	

 	

If to Lender:	

PayPal, Inc.

1840 Embarcadero Road

Palo Alto, CA 94303

Attn: Chief Financial Officer

Facsimile: (650) 251-1222
	

 	

If to Pledgeholder:	

PayPal, Inc.

1840 Embarcadero Road

Palo Alto, CA 94303

Attn: Secretary

Facsimile: (650) 251-1222

    8.5  Term.  This Agreement shall terminate at 5 p.m. Pacific Time, on July  , 2005
(the "Expiration Date"); provided, however, that such
termination shall not affect Borrower's obligation to repay principal plus accrued but unpaid Interest (whether accruing before or after the Expiration Date) on the Loan. 

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    8.6  Voluntary Execution of Agreement.  Borrower and Lender each acknowledge that: (a) Borrower
and Lender have read this Agreement; (b) Borrower and Lender have been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or have
voluntarily declined to seek such counsel; and (c) Borrower and Lender are fully aware of the legal and binding effect of this Agreement. 

Signature
Page Follows 

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    IN WITNESS WHEREOF, the parties hereto have duly executed this Loan, Pledge and Option Agreement as of the date first written above. 

	 
	 	 
	 	 
	 

	 	 	BORROWER:	 	«PURCHASER»
	

 	
 	

 	
 	

 	

 
	 	 	 	 	
 (Signature)
	

 	
 	

SPOUSE:	
 	

 	

 
	

 	
 	

 	
 	

 	

 
	 	 	 	 	
 (Signature)
	

 	
 	

LENDER:	
 	

PAYPAL, INC.
	

 	
 	

 	
 	

By:
	 	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	 	

	 	 	 	 	Title:
	 	 	 	 	 	

SIGNATURE PAGE TO LOAN AND OPTION AGREEMENT  

    Consent by P1edgeholder.  The undersigned, as Secretary of PayPal, Inc., agrees to act as Pledgeholder under this
Loan, Pledge and Option Agreement pursuant to Section 6 and agrees to be bound only by such Section 6 and Section 8. 

	 
	 	 

	 	 	JOHN D. MULLER
	

	
 	

 
	

 	
 	

 
 

FORM OF AMENDMENT TO LOAN, PLEDGE AND OPTION AGREEMENT    
  

    WHEREAS, PayPal, Inc. ("Lender") and [Employee Name] ("Borrower") entered into a Loan, Pledge and Option Agreement dated
[June 30,] 2001 (the "Agreement"). 

    WHEREAS,
Section 8.2 of the Agreement provides that it may be amended by a writing signed by Lender and Borrower. 

    WHEREAS,
Lender and Borrower desire to amend the Agreement as set forth below. 

    NOW
THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, Lender and Borrower, intending to be legally bound, hereby agree as
follows 

    1.  Continued Effectiveness of Agreement.  All capitalized terms, unless otherwise defined in this
Amendment, shall have the meaning ascribed to them in the Agreement. As amended herein, the Agreement remains in full force and effect. 

    2.  Exercise Date of Call.  Sections 2.2 and 2.3 of the Agreement are amended to read as follows: 

    2.2  Exercise Period.  The Call may be exercised on one occasion, in whole, but not in part, at any time
after September 1, 2001 and before July 1, 2005.. 

    2.3  Manner of Exercise.  Subject to the terms and conditions herein, Lender may exercise the Call by
delivery of written notice (the "Call Exercise Notice") to Borrower and Pledgeholder (as such term is defined in Section 6 hereof), specifying the
effective date of the exercise (the "Call Exercise Date"), which shall be two (2) days after the date on which Borrower is deemed to receive the Call
Exercise Notice. 

    3.  Termination of Call.  Section 2.5 of the Agreement is amended to read as follows: 

    2.5  Termination of Call.  The Call shall expire upon the earlier of (i) July ___, 2005,
(ii) the sale or transfer of the Collateral pursuant to Section 6.2, or (iii) repayment in full of the Loan, including accrued interest. 

    4.  Additional Event of Acceleration.  Lender may, at its option and in its sole discretion, declare the
remaining balance of the Loan, including all accrued and unpaid interest thereon, to be immediately due and payable upon exercise of the Call. 

    IN
WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of September __, 2001. 

	 	 	BORROWER:	 	 	 	 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

 	
 	

 (Signature)
	

 	
 	

SPOUSE:	
 	

 	
 	

 
	

 	
 	

 	
 	

 	
 	

 (Signature)
	

 	
 	

LENDER:	
 	

 	
 	

PAYPAL, INC.
	

 	
 	

 	
 	

By:	
 	

 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

Name:	
 	

 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

Title:	
 	

 
	 	 	 	 	 	 	

Schedule to Exhibit 10.6 

    The
following borrowers signed the form of Loan, Pledge and Option Agreement on the date and with the terms specified below. Each also executed the form of Amendment to the Loan,
Pledge and Option Agreement. 

	Borrower
 
	 	Date
	 	Number of Shares Held as Collateral
	 	Loan Amount

	Reid Hoffman	 	7/2/01	 	333,333	 	$	500,000
	David Sacks	 	6/29/01	 	300,000	 	$	450,000
	Henry David Johnson	 	7/2/01	 	160,000	 	$	240,000
	Jack Selby	 	6/30/01	 	160,000	 	$	240,000
	James Templeton	 	7/5/01	 	160,000	 	$	240,000
	Sandeep Lal	 	7/5/01	 	80,000	 	$	120,000
	Todd Pearson	 	6/29/01	 	80,000	 	$	120,000
	Roelof Botha	 	6/30/01	 	75,000	 	$	112,500
	Sarah Imbach	 	7/5/01	 	72,248	 	$	108,372

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FORM OF LOAN, PLEDGE AND OPTION AGREEMENT

FORM OF AMENDMENT TO LOAN, PLEDGE AND OPTION AGREEMENT

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