Table of Contents

As filed with the Securities and Exchange Commission on August 27, 2018

Registration No. 333-226978

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Amendment No. 2 to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Eventbrite, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware   7370   14-1888467

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

155 5 th Street, 7 th Floor

San Francisco, California 94103

(415) 692-7779

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Julia D. Hartz

Chief Executive Officer

Eventbrite, Inc.

155 5 th Street, 7 th Floor

San Francisco, California 94103

(415) 692-7779

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Anthony J. McCusker

An-Yen E. Hu

Goodwin Procter LLP

601 Marshall Street

Redwood City, California 94063

(650) 752-3100

 

Samantha E. Harnett

Julia D. Taylor

Eventbrite, Inc.

155 5 th Street, 7 th Floor

San Francisco, California 94103

(415) 692-7779

 

Katharine A. Martin

Rezwan D. Pavri

Andrew T. Hill

Wilson Sonsini Goodrich & Rosati, P.C.

650 Page Mill Road

Palo Alto, California 94304

(650) 493-9300

Approximate date of commencement of proposed sale to the public:

As soon as practicable after this registration statement becomes effective.

 

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer   ☒  (Do not check if a smaller reporting company)    Smaller reporting company  
Emerging growth company       

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act.  ☐

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


Table of Contents

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

Subject to Completion. Dated            , 2018

 

LOGO                         Shares

 

 

Class A Common Stock

 

 

This is an initial public offering of shares of Class A common stock of Eventbrite, Inc.

Prior to this offering, there has been no public market for our Class A common stock. It is currently estimated that the initial public offering price per share will be between $             and $            . We intend to apply to list our Class A common stock on The New York Stock Exchange (NYSE) under the symbol “EB.”

Following this offering, we will have two classes of common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes and is convertible at any time into one share of Class A common stock. The holders of our outstanding Class B common stock will hold approximately             % of the voting power of our outstanding capital stock following this offering, with our directors and executive officers and their affiliates holding approximately             %.

We are an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with reduced reporting requirements for this prospectus and may elect to do so in future filings.

 

 

See the section titled “ Risk Factors ” beginning on page 14 to read about factors you should consider before buying shares of our Class A common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

 

     Per Share      Total  

Initial public offering price

   $                $            

Underwriting discounts(1)

   $        $    

Proceeds, before expenses, to Eventbrite

   $        $    

 

(1)

See the section titled “Underwriting” for additional information regarding compensation payable to the underwriters.

 

 

To the extent that the underwriters sell more than                    shares of Class A common stock, the underwriters have the option to purchase up to an additional                    shares from us at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on            , 2018.

 

Goldman Sachs & Co. LLC   J.P. Morgan   Allen & Company LLC   RBC Capital Markets
SunTrust Robinson Humphrey                    Stifel

 

Prospectus dated              , 2018.


Table of Contents

LOGO

Eventbrite


Table of Contents

LOGO

Started using Eventbrite NOV 2012 Scaled to 7K TICKETS Current lineup in 2018 3 EVENTS in WASHINGTON D.C. Growing events at a 90% CAGR


Table of Contents

LOGO

NO KINGS COLLECTIVE We love using Eventbrite because it’s so streamlined. People trust it and it’s easy to use. PETER CHANG & BRANDON HILL OWNERS/ARTISTS No Kings Collective is a creative agency located in Washington D.C. Their events specialize in experiential design, installations and murals


Table of Contents

LOGO

203MM Tickets issued in 2017 3MM Events in 2017 700K+ Creators served in 2017 170+ Countries in 2017 51% Net Revenue growth (’16-’17) Eventbrite


Table of Contents

TABLE OF CONTENTS

Prospectus

 

     Page  

Prospectus Summary

     1  

Risk Factors

     14  

Special Note Regarding Forward-Looking Statements

     48  

Market and Industry Data

     50  

Use of Proceeds

     51  

Dividend Policy

     52  

Capitalization

     53  

Dilution

     56  

Selected Consolidated Financial Data and Other Data

     59  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     64  

Letter from the Eventbrite Founders

     94  

Business

     109  

Management

     123  

Executive Compensation

     132  

Certain Relationships and Related Party Transactions

     143  

Principal Stockholders

     147  

Description of Capital Stock

     150  

Shares Eligible for Future Sale

     156  

Certain Material U.S. Federal Income Tax Consequences

     159  

Underwriting

     163  

Legal Matters

     171  

Experts

     171  

Additional Information

     171  

Index to Consolidated Financial Statements

     F-1  

 

 

Through and including             , 2018 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

 

 

You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission (SEC). Neither we nor any of the underwriters have authorized anyone to provide any information or make any representations other than those contained in this prospectus or in any free writing prospectus filed with the SEC. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, shares of Class A common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class A common stock. Our business, financial condition, results of operations and prospects may have changed since such date.

For investors outside of the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and to observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States.


Table of Contents

PROSPECTUS SUMMARY

This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class  A common stock. You should read this entire prospectus carefully, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms “Eventbrite,” “the company,” “we,” “us” and “our” in this prospectus refer to Eventbrite, Inc. and its consolidated subsidiaries .

EVENTBRITE, INC.

We founded Eventbrite to bring the world together through live experiences. We believe live experiences are fundamental to fulfilling a human desire to connect. Our company serves event creators—the people who bring others together to share their passions, artistry and causes through live experiences—and we empower their success.

We built a powerful, broad technology platform to enable creators to solve many challenges associated with creating live experiences. Our platform integrates components needed to seamlessly plan, promote and produce live events, thereby allowing creators to reduce friction and costs, increase reach and drive ticket sales. By reducing risk and complexity, we allow creators to focus their energy on producing compelling and successful events.

We succeed when creators succeed. Our business model is simple: we charge creators on a per-ticket basis when an attendee purchases a paid ticket for an event. We grow with creators as they plan, promote and produce more events and grow attendance. In 2017, we helped more than 700,000 creators issue approximately 203 million tickets across approximately three million events in over 170 countries.

We designed our platform for all creators, regardless of the category, country, size, frequency or type of event. We enable events ranging from fundraisers, seminars, wellness activities and music festivals to classes and cultural celebrations all over the world. Anyone can create or discover events on Eventbrite. This allows more creators to produce original and compelling experiences, attracting more attendees to these experiences. As a consequence, we believe we are expanding the global market for live experiences.

Our platform meets the complex needs of creators through a modular and extensible design. It can be accessed from Eventbrite.com, our mobile apps and through other websites. This modularity facilitates rapid product development and allows third-party developers to integrate features and functionality from Eventbrite into their environments. Our platform also allows developers to seamlessly integrate services from third-party partners such as Salesforce, Facebook and Hubspot. Importantly, we have designed our platform to produce consistent and reliable performance, handling both surges in traffic and transaction volume associated with high-demand on-sales and the load associated with supporting millions of events each year. This approach gives creators a platform that can scale to their needs, offering everything from basic registration and ticketing to a fully-featured event management platform.

This platform approach has allowed us to pioneer a powerful business model that drives our go-to-market strategy and allows us to efficiently serve a large number and variety of creators. We believe our business model will enable us to achieve and grow profitability as we increase our scale. We attract creators to our platform through multiple means, including prior experience as attendees, word of mouth from other creators, our prominence in search engine results, the ability to try our platform for free events and our library of content.



 

1


Table of Contents

More than 95% of creators who used our platform in 2017 signed themselves up for Eventbrite. In 2017, we derived 54% of our net revenue from these creators. We augment this model with a highly-targeted sales team that focuses on acquiring creators with events in specific categories or countries. Substantially all creators who use our platform create and manage events without the need for service or support.

In 2017, our net revenue was $201.6 million, up from $133.5 million in 2016, representing year-over-year net revenue growth of 51.0%. Our net revenue for the six months ended June 30, 2018 was $142.1 million, up from $88.2 million for the six months ended June 30, 2017, representing period-over-period net revenue growth of 61.2%. The growth over these periods was primarily the result of paid ticket growth, fueled in part by recent acquisitions. Our net loss was $40.4 million and $38.5 million in 2016 and 2017, respectively, and $8.3 million and $15.6 million for the six months ended June 30, 2017 and 2018, respectively. Our Adjusted EBITDA was $(17.6) million and $4.2 million in 2016 and 2017, respectively, and $3.7 million and $10.0 million for the six months ended June 30, 2017 and 2018, respectively. In 2017, our net cash provided by operating activities was $29.8 million, and free cash flow was $21.1 million. Our net cash provided by operating activities was $48.8 million for the six months ended June 30, 2018. Our free cash flow, which is computed on a trailing twelve months basis, was $13.2 million for the twelve months ended June 30, 2018.

For more information about Adjusted EBITDA and free cash flow, including the limitations of such measures, and a reconciliation to the most directly comparable measures calculated in accordance with GAAP, see the section titled “Selected Consolidated Financial Data and Other Data—Non-GAAP and Other Data.”

Our Market

The global market for live experiences is large and rapidly increasing in size and diversity. We believe that a significant portion of our market opportunity is represented by categories that were previously not well served by event management technology. The landscape of services to manage the complexities of planning, promoting and producing events is highly fragmented. Creators use a variety of approaches and solutions to achieve these goals. We believe that the breadth of functionality on our platform, combined with its ease of use, has enabled creators to build businesses and introduce new types of live experiences.

Based on market data prepared in conjunction with a third party, we believe that in 2018, our platform will address a current market opportunity in our top 12 markets that is estimated to be 1.1 billion paid tickets generating $3.2 billion in gross ticket fees, along with an additional 1.9 billion free tickets. Fees associated with the sale of tickets on our platform are gross ticket fees, which are the total fees generated from paid ticket sales, before adjustments for refunds, credits and amortization of non-recoupable signing fees.

This reflects our target market: the millions of events that happen all over the world that lie between the two ends of the spectrum of live events. Specifically, we address the broad range of events between those where the venue dictates the ticketing relationship, like professional sports and blockbuster concerts, and those where there are often no formal venue or event management needs, like small, personal gatherings.

Trends in Our Favor

A combination of trends in consumer behavior and technology is increasing the role and importance of live experiences and provides a tailwind for our market opportunity. We call this the “experience economy.”

Consumer Preferences Shifting to Experiences

 

   

According to the U.S. Bureau of Economic Analysis, growth in consumer spending on experiences in the United States has consistently outpaced overall growth in consumer spending for the last few



 

2


Table of Contents
 

decades, even during periods of economic recession. In a proprietary report that we commissioned, over 70% of adults surveyed in our top four geographic markets in April 2017 reported they would rather spend money on experiences as compared to material goods.

Rising Importance of Experiential Marketing

 

   

According to a 2017 eMarketer survey, events were rated as one of the most effective marketing channels used by business-to-business marketers to engage with potential customers and nearly 70% of marketing decision makers in the United States planned to increase spending on events in the coming year.

Content Owners Extending Monetization

 

   

Thanks to the rise of digital distribution of content, today, traditional media companies and content owners enjoy a closer relationship with some of their end users. As a result, these media companies and content owners increasingly leverage data with direct marketing capabilities to target these end users with live experiences.

Technology Acting as an Enabler

 

   

Recent advances in mobile, social media, cloud software and other digital technologies act as a catalyst for live experiences. For example, online and mobile ticketing reduces the discovery and transactional friction associated with acquiring tickets while social media serves as a low-cost promotion tool and distribution channel.

Our Value Proposition

Our platform supports a wide range of creators through a simple interface with capabilities that are powerful and reliable and scale with their needs, delivering the following benefits:

Streamlined Creator Experience

 

   

Our platform is designed to be powerful, yet easy to use, and to seamlessly support the entire lifecycle of an event. Creators are able to use our platform without training, support or professional services and, as a result, are able to reduce the time and effort necessary to produce live experiences. Our platform scales with creators. Many creators begin to use our platform for free gatherings and evolve to paid events of various sizes.

Reduced Cost to Manage Events

 

   

Our platform is available for anyone to use for free for free events, and we offer a range of attractively-priced packages to serve a variety of creator needs.

Real-Time Insights

 

   

Platform analytics brings insight to creators about multiple dimensions of an event, allowing them to make real-time decisions that directly impact attendance, revenue, profitability and the attendee experience.

Trusted Attendee Experience

 

   

Attendees are able to register, purchase and access their tickets in a few taps of a smartphone or clicks on their computer. Our digital tickets remove friction associated with traditional box offices and enable streamlined entry through a variety of technological improvements in access control and queueing.



 

3


Table of Contents

Extended Creator Reach

 

   

Search and browse functionality allows attendees who are in the market for a particular event to easily find it on Eventbrite or through our search engine prominence. Our platform supports social sharing and has deep integrations with distribution partners. Additionally, we offer creators access to a number of paid marketing channels to drive additional sales.

Our Strengths

We believe we have multiple competitive strengths, including:

Our Comprehensive Platform Serves Any Creator

 

   

Our platform combines deep functionality designed to serve sophisticated creators yet is intuitive and easy to use for creators of all types. This platform is modular and extensible, allowing us to build new capabilities quickly and to integrate with best-in-class third-party services.

Our Business Model Has Cost Advantages in Creator Acquisition and Operations

 

   

Creators become aware of Eventbrite through word of mouth, exposure from purchasing tickets as attendees, our search engine prominence, a free offering that drives paid adoption and our relevant professional content. More than 95% of creators who used our platform in 2017 signed themselves up for Eventbrite. Our single global system combined with self-service functionality allows us to reduce cost of operations and optimize service delivery.

Our Commitment to Creators Shapes Our Culture

 

   

Our creator-centric culture drives innovation, high performance and global sensibility. Creators inspire product evolution and help us to attract a mission-driven talent base with similar passion and commitment. This unique environment and focus on people and culture feeds the productivity and engagement of our team, driving long-term success for creators and our business.

Our Growth Strategy

Key elements of our growth strategy include our plans to:

Attract New Creators to Our Platform

 

   

We will continue to broaden the reach of our platform by efficiently attracting new creators. By serving these new creators, we aim to benefit from the variety of high quality events they bring to our platform and enhance our reputation, driving further creator acquisition through word of mouth and referrals.

Add Capabilities to Better Serve Specific Categories

 

   

We will continue to strategically add category-specific capabilities, expanding the breadth and depth of our platform.

Add Capabilities to Better Serve Specific Countries

 

   

As we serve more creators in specific countries, we intend to localize our platform by adding new capabilities, often around local payment methods or supporting local tax systems, in order to further scale in these markets.



 

4


Table of Contents

Develop New Revenue Streams Based on Complementary Offerings

 

   

We plan to develop new capabilities and solutions to allow us to better serve creators, unlocking additional revenue streams and developing opportunities with attendees directly.

Selectively Acquire Businesses Focused on Serving Creators

 

   

We will continue to selectively acquire businesses to expand our global position and offer new capabilities to existing creators.

Risks Affecting Us

Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. These risks include:

 

   

Our continued growth depends on our ability to attract new creators and retain existing creators.

 

   

We have a history of losses and we may not be able to generate sufficient revenue to achieve and maintain profitability.

 

   

Further expansion into markets outside of the United States is important to the growth of our business, and if we do not manage the risks of international expansion effectively, our business and results of operations will be harmed. Furthermore, our expansion into jurisdictions where we have limited operating experience may subject us to increased business and economic risks that could harm our business and our results of operations.

 

   

Acquisitions, investments or significant commercial arrangements could result in operating and financial difficulties.

 

   

If we do not continue to maintain and improve our platform or develop successful new solutions and enhancements or improve existing ones, our business will suffer.

 

   

Our payments system depends on third-party providers and is subject to risks that may harm our business.

 

   

We may pay up front creator signing fees and creator advances to certain creators when entering into exclusive ticketing or services agreements and if these arrangements do not perform as we expect, our business, results of operations and financial condition may be harmed.

 

   

Our results vary from quarter-to-quarter and year-to-year. Our results of operations in certain financial quarters or years may not be indicative of, or comparable to, our results of operations in subsequent financial quarters or years.

 

   

Data loss or security breaches could harm our business, reputation, brand and results of operations.

 

   

The processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing applications of privacy regulations.

 

   

Our industry is highly fragmented. We compete against traditional solutions to event management and may face significant competition from both established and new companies. If we are not able to maintain or improve our competitive position, our business could suffer.

 

   

Our business is subject to a wide range of laws and regulations. Our failure to comply with those laws and regulations could harm our business.

 

   

The dual class structure of our common stock has the effect of concentrating voting control with our directors, executive officers and their affiliates and that may depress the trading price of our Class A common stock.



 

5


Table of Contents

If we are unable to adequately address these and other risks we face, our business, results of operations, financial condition and prospects may be harmed.

Channels for Disclosure of Information

Following the completion of this offering, we intend to announce material information to the public through filings with the SEC, the investor relations page on our website (eventbrite.com), press releases, public conference calls and public webcasts.

Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. Information contained on or accessible through our website is not incorporated by reference into this prospectus, and inclusion of our website address in this prospectus is an inactive textual reference only. You should not consider information contained on our website to be part of this prospectus or in deciding whether to purchase shares of our Class A common stock.

Corporate Information

Mollyguard Corporation was incorporated in 2003. We launched operations as part of Mollyguard Corporation in 2006, and in 2009, we changed our name to Eventbrite, Inc. In October 2009, we reincorporated as a Delaware corporation. Our principal executive offices are located at 155 5 th Street, 7 th Floor, San Francisco, California 94103, and our telephone number is (415) 692-7779.

“Eventbrite” is our registered trademark in the United States and Argentina, Brazil, Chile, China, Canada, European Union, Hong Kong, India, Israel, Japan, South Korea, Mexico, Australia, New Zealand, Russia, Singapore, Switzerland and Turkey. Other trademarks and trade names referred to in this prospectus are the property of their respective owners.

Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise generally applicable to public companies. These reduced reporting requirements include:

 

   

an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting;

 

   

an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding a supplement to the auditor’s report providing additional information about the audit and the financial statements;

 

   

reduced disclosure about our executive compensation arrangements;

 

   

an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or golden parachute arrangements; and

 

   

extended transition periods for complying with new or revised accounting standards.

We may take advantage of these provisions until we are no longer an emerging growth company. We would cease to be an “emerging growth company” upon the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (ii) the date we qualify as a large accelerated filer, with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have, in any three-



 

6


Table of Contents

year period, issued more than $1.0 billion in non-convertible debt securities and (iv) the last day of the fiscal year ending after the fifth anniversary of this offering. We may choose to take advantage of some but not all of these reduced reporting burdens. We have taken advantage of certain reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use this extended transition period until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

For certain risks related to our status as an emerging growth company, see the section titled “Risk Factors—Risks Related to Our Business—We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our Class A common stock less attractive to investors.”



 

7


Table of Contents

THE OFFERING

 

Class A common stock offered by us                     shares

Class A common stock to be outstanding after this offering

                    shares

Class B common stock to be outstanding after this offering

                    shares

Total Class A common stock and Class B common stock
to be outstanding after this offering

  

 

                 shares (or                  shares if the underwriters’ option to purchase additional shares in this offering is exercised in full), including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus.

Option to purchase additional shares of Class A
common stock from us

  

 

We have granted the underwriters an option, exercisable for 30 days after the date of this prospectus, to purchase up to an additional                  shares from us.

Use of proceeds    The principal purposes of this offering are to increase our capitalization, increase our financial flexibility, create a public market for our Class A common stock and enable access to the public equity markets for our stockholders and us. We estimate that the net proceeds from the sale of shares of our Class A common stock that we are selling in this offering will be approximately $            million (or approximately $            million if the underwriters’ option to purchase additional shares in this offering is exercised in full), based upon an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
   We currently intend to use the net proceeds of this offering (i) to repay our outstanding indebtedness, including prepayment penalties, under our term loan facilities, which are described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Term Loans,” and (ii) for working capital and other general corporate purposes. We may use some of the net proceeds to satisfy tax withholding obligations related to the vesting and settlement of restricted


 

8


Table of Contents
   stock units (RSUs). We may also use a portion of the net proceeds to acquire or invest in complementary businesses, products, services, technologies or other assets. We have not entered into any agreements or commitments with respect to any material acquisitions or investments at this time. See the section titled “Use of Proceeds” for additional information.
Voting rights    Shares of our Class A common stock are entitled to one vote per share.
   Shares of our Class B common stock are entitled to ten votes per share.
   Holders of our Class A common stock and Class B common stock will generally vote together as a single class, unless otherwise required by law or our amended and restated certificate of incorporation. The holders of our outstanding Class B common stock will hold approximately     % of the voting power of our outstanding capital stock following the completion of this offering and will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction. See the sections titled “Principal Stockholders” and “Description of Capital Stock” for additional information.
Concentration of ownership    Upon completion of this offering, our executive officers and directors, and their affiliates, will beneficially own, in the aggregate, approximately     % of our outstanding shares of common stock representing approximately     % of the voting power.
Risk factors    See the section titled “Risk Factors” for a discussion of factors you should carefully consider before deciding to invest in our Class A common stock.
Proposed NYSE trading symbol    “EB”

The number of shares of Class A and Class B common stock that will be outstanding after this offering is based on no shares of our Class A common stock and 65,073,532 shares of our Class B common stock outstanding as of June 30, 2018, and excludes:

 

   

18,442,924 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock that were outstanding as of June 30, 2018 with a weighted-average exercise price of $6.17 per share;

 

   

4,878,897 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock that were granted after June 30, 2018 with an exercise price of $13.72 per share;



 

9


Table of Contents
   

the net issuance of                  shares of our Class B common stock issuable pursuant to the vesting and settlement of 802,900 RSUs subject to performance conditions outstanding as of June 30, 2018, based upon an assumed initial public offering price of $         per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus;

 

   

230,000 shares of our Class B common stock issuable under RSUs that were outstanding as of June 30, 2018 and subject to performance and service conditions;

 

   

81,161 shares of our Class B common stock issued after June 30, 2018 in connection with a business acquisition; and

 

   

                 shares of our Class A common stock reserved for future issuance under our stock-based compensation plans to be adopted in connection with this offering, consisting of:

 

   

                 shares of our Class A common stock reserved for future issuance under our 2018 Stock Option and Incentive Plan (2018 Plan); and

 

   

                 shares of our Class A common stock reserved for future issuance under our 2018 Employee Stock Purchase Plan (ESPP).

Our 2018 Plan and ESPP each provides for annual automatic increases in the number of shares reserved thereunder.

Except as otherwise indicated, all information in this prospectus assumes:

 

   

the filing and effectiveness of our amended and restated certificate of incorporation in Delaware and the adoption of our amended and restated bylaws, each of which will occur immediately prior to the completion of this offering;

 

   

the automatic conversion of 33,446,250 shares of our redeemable convertible preferred stock outstanding as of June 30, 2018 (other than our Series G redeemable convertible preferred stock) into the same number of shares of our common stock, the conversion of which will occur immediately prior to the completion of this offering;

 

   

the automatic conversion and reclassification of all 8,181,957 outstanding shares of our Series G redeemable convertible preferred stock into the same number of shares of our Class B common stock immediately prior to the completion of this offering. If the initial public offering price is equal to the midpoint of the estimated offering price range set forth on the cover page of this prospectus, the shares of our Series G redeemable convertible preferred stock would convert into             shares of our Class B common stock. A $1.00 decrease in the initial public offering price would increase the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by                     , and a $1.00 increase in the initial public offering price would decrease the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by                     ; provided, however that in no event would the 8,181,957 outstanding shares of our Series G redeemable convertible preferred stock convert and reclassify into fewer than 8,181,957 shares of our Class B common stock;

 

   

the automatic exercise of outstanding warrants to purchase 933,269 shares of our redeemable convertible preferred stock outstanding as of June 30, 2018 into the same number of shares of our common stock, which will occur immediately prior to the completion of this offering;

 

   

the reclassification of our outstanding common stock into an equivalent number of shares of our Class B common stock, which will occur immediately prior to the completion of this offering; and

 

   

no exercise by the underwriters of their option to purchase up to an additional            shares of Class A common stock from us in this offering.



 

10


Table of Contents

SUMMARY CONSOLIDATED FINANCIAL DATA AND OTHER DATA

The following tables summarize our consolidated financial data and other data. We derived the summary consolidated statements of operations data for the years ended December 31, 2016 and 2017 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the consolidated statements of operations data for the six months ended June 30, 2017 and 2018 and the summary consolidated balance sheet data as of June 30, 2018 from our unaudited interim consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited interim consolidated financial statements on the same basis as the audited consolidated financial statements and have included all adjustments, consisting only of normal recurring adjustments that, in our opinion, are necessary to state fairly the financial information set forth in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future and the results for the six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year or any other period. The following summary consolidated financial data and other data should be read in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

 

     Year Ended
December 31,
    Six Months Ended
June 30,
 
     2016     2017     2017     2018  
    

(in thousands, except percentages and per share data)

 

Consolidated Statements of Operations

        

Net revenue

   $ 133,499     $ 201,597     $ 88,153     $ 142,068  

Cost of net revenue (1)

     55,689       81,667       35,302       57,947  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     77,810       119,930       52,851       84,121  

Operating expenses:

        

Product development (1)

     22,723       30,608       11,481       19,815  

Sales, marketing and support (1)

     48,391       55,170       23,171       35,623  

General and administrative (1)

     41,749       67,559       26,546       44,994  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     112,863       153,337       61,198       100,432  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (35,053     (33,407     (8,347     (16,311

Interest expense

     (3,513     (6,462     (1,958     (5,562

Change in fair value of redeemable convertible preferred stock warrant liability

     —         (2,200     —         (6,071

Gain on extinguishment of promissory note

     —         —         —         16,340  

Other income (expense), net

     (1,695     3,509       1,904       (3,176
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision for (benefit from) income taxes

     (40,261     (38,560     (8,401     (14,780

Income tax provision (benefit)

     131       (13     (55     800  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stockholders

   $ (40,392   $ (38,547   $ (8,346   $ (15,580
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to common stockholders, basic and diluted (2)

   $ (2.48 )   $ (1.98   $ (0.44   $ (0.73
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted (2)

     16,291     19,500       18,961       21,289  
  

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma net loss per share attributable to common stockholders, basic and diluted (2)

     $                     $    
    

 

 

     

 

 

 

Pro forma weighted-average shares outstanding used to compute pro forma net loss per share attributable to common stockholders, basic and
diluted (2)

        
    

 

 

     

 

 

 


 

11


Table of Contents
     Year Ended
December 31,
    Six Months Ended
June 30,
 
     2016     2017     2017      2018  
    

(in thousands, except percentages and per share data)

 

Supplemental pro forma net loss per share attributable to common stockholders, basic and diluted (2)

     $        $    
    

 

 

      

 

 

 

Supplemental pro forma weighted-average shares outstanding used to compute supplemental pro forma net loss per share attributable to common stockholders, basic and
diluted (2)

         
    

 

 

      

 

 

 

Non-GAAP and Other Data

         

Paid tickets (3)

     44,572       71,046       30,274        46,697  

Retention rate (4)

     93     97     N/A        N/A  

Adjusted EBITDA (5)

   $ (17,591   $ 4,206     $ 3,700      $ 10,024  

Free cash flow (for the trailing twelve months) (6)

   $ (5,681   $ 21,143     $ 8,552      $ 13,162  

 

(1)

Amounts include stock-based compensation expense as follows:

 

     Year Ended
December 31,
     Six Months
Ended June 30,
 
     2016      2017      2017      2018  
    

(in thousands)

 

Cost of net revenue

   $ 134      $ 200      $ 65      $ 124  

Product development

     2,020        2,411        836        1,348  

Sales, marketing and support

     1,767        2,364        774        1,578  

General and administrative

     4,610        5,883        2,086        5,058  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation

   $ 8,531      $ 10,858      $ 3,761      $ 8,108  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(2)

Please refer to Note 14 to our consolidated financial statements for an explanation of the method used to compute the historical, pro forma and supplemental pro forma net loss per share attributable to common stockholders and the number of shares used in the computation of the per share amounts.

(3)

We define paid tickets as the number of tickets that generate ticket fees for us.

(4)

To obtain our retention rate, we determine (i) the gross ticket fees generated by all creators in the year prior to the year of measurement (Prior Year Gross Ticket Fees) and (ii) the gross ticket fees those same creators generated in the year of measurement (Measurement Year Gross Ticket Fees). We calculate our retention rate for a measurement year by dividing the Measurement Year Gross Ticket Fees by the Prior Year Gross Ticket Fees. Fees associated with the sale of tickets on our platform are gross ticket fees, which are the total fees generated from paid ticket sales, before adjustments for refunds, credits and amortization of non-recoupable signing fees. We calculate retention rate on an annual basis only.

(5)

Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. See the section titled “—Non-GAAP Financial Measures—Adjusted EBITDA” for information regarding Adjusted EBITDA, including the limitations of such measure, and a reconciliation of Adjusted EBITDA to net income (loss).

(6)

Free cash flow is a financial measure that is not calculated in accordance with GAAP. See the section titled “—Non-GAAP Financial Measures—Free Cash Flow” for information regarding free cash flow, including the limitations of such measure, and a reconciliation of free cash flow to net cash provided by operating activities.



 

12


Table of Contents

See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics” for further information on our key metrics.

 

     As of June 30, 2018  
     Actual     Pro
Forma (1)
     Pro Forma
As
Adjusted (2)(3)
 
Consolidated Balance Sheet Data    (in thousands)  

Cash (4)

   $ 258,720     $ 258,720     

Working capital

     34,113       

Total assets

     637,645       637,645     

Total debt

     66,360       66,360     

Redeemable convertible preferred stock warrant liability

     17,945       —       

Redeemable convertible preferred stock

     334,018       —       

Total stockholders’ equity (deficit)

     (151,183     

 

(1)

The pro forma column in the consolidated balance sheet data as of June 30, 2018 reflects the (i) the filing and effectiveness of our amended and restated certificate of incorporation, (ii) the automatic conversion of 41,628,207 shares of our redeemable convertible preferred stock into                 shares of our common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), (iii) the automatic exercise of outstanding warrants to purchase 933,269 shares of our redeemable convertible preferred stock into the same number of shares of our common stock, (iv) the net issuance of              shares of common stock issuable pursuant to the vesting and settlement of 802,900 RSUs subject to performance conditions outstanding as of June 30, 2018, based upon an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, (v) the increase in other accrued liabilities and an equivalent decrease in additional paid-in capital of $             million in connection with tax withholding obligations related to such RSUs, based upon an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus and (vi) the reclassification of our outstanding common stock as Class B common stock, all of which will occur immediately prior to the completion of this offering, as if such events had occurred on June 30, 2018.

 

The pro forma column in the consolidated balance sheet data as of June 30, 2018 reflects the conversion and reclassification of all 8,181,957 outstanding shares of our Series G redeemable convertible preferred stock as of June 30, 2018 into an aggregate of              shares of our Class B common stock, which conversion and reclassification will occur immediately prior to the completion of this offering, based on an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. A $1.00 decrease in the initial public offering price would increase the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by             , and a $1.00 increase in the initial public offering price would decrease the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by              , provided, however that in no event would the 8,181,957 outstanding shares of our Series G redeemable convertible preferred stock convert and reclassify into fewer than 8,181,957 shares of our Class B common stock.

(2)

The pro forma as adjusted column in the consolidated balance sheet data as of June 30, 2018 gives effect to (i) the pro forma adjustments set forth above, (ii) the sale and issuance by us of    shares of our Class A common stock in this offering, based on an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us and (iii) the repayment of our outstanding indebtedness, including prepayment penalties, under our term loan facilities.

(3)

Each $1.00 increase or decrease in the assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the cash; working capital; total assets and total stockholders’ equity by $            million, assuming that the number of shares of our Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions payable by us. An increase or decrease of 1.0 million shares of our Class A common stock offered by us would increase or decrease, as applicable, the cash; working capital; total assets; and total stockholders’ equity by $            million, assuming an initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions payable by us.

(4)

To calculate our available liquidity at any date, we add funds receivable and creator advances, net, to our cash balance and reduce this by our accounts payable, creators. As of June 30, 2018, we had funds receivable of $37.1 million, creator advances, net, of $21.6 million, and accounts payable, creators, of $277.6 million. This provided us with $39.8 million of available liquidity as of June 30, 2018.



 

13


Table of Contents

RISK FACTORS

Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, before making a decision to invest in our Class A common stock. The risks and uncertainties described below may not be the only ones we face. If any of the risks actually occur, our business, results of operations, financial condition and prospects could be harmed. In that event, the trading price of our Class A common stock could decline, and you could lose part or all of your investment.

Risks Related to Our Business and Industry

Our continued growth depends on our ability to attract new creators and retain existing creators.

Our success depends on our ability to attract new creators and retain existing creators. We may fail to attract new creators and retain existing creators due to a number of factors outlined in this section, including:

 

   

our ability to maintain and continually enhance our platform and provide services that are valuable and helpful to creators, including helping them to attract and retain attendees;

 

   

competitive factors, including the actions of new and existing competitors in our industry, such as competitors buying exclusive ticketing rights or entering into or expanding within the market in which we operate;

 

   

our ability to convince creators to migrate to our platform from their current practices, which include online ticketing platforms, venue box offices and do-it-yourself spreadsheets and forms;

 

   

changes in our relationships with third parties, including our partners, developers and payment processors, that make our platform less effective for creators;

 

   

the quality and availability of key payment and payout methods;

 

   

our ability to manage fraud risk that negatively impacts creators; and

 

   

our ability to adapt to changes in market practices or economic incentives for creators, including larger or more frequent signing fees.

If we are unable to effectively manage these risks as they occur, creators may seek other solutions and we may not be able to retain them or acquire additional creators to offset any such departures, which would adversely affect our business and results of operations. Furthermore, the loss of creators and our inability to replace them with new creators and events of comparable quality and standing would harm our business and results of operations.

We have a history of losses and we may not be able to generate sufficient revenue to achieve and maintain profitability.

We incurred net losses of $40.4 million and $38.5 million in 2016 and 2017, respectively. We incurred net losses of $8.3 million and $15.6 million in the six months ended June 30, 2017 and 2018, respectively. In 2016 and 2017, our net revenue was $133.5 million and $201.6 million, respectively, representing a 51.0% growth rate. Our net revenue was $88.2 million and $142.1 million during the six months ended June 30, 2017 and 2018, respectively, representing a 61.2% growth rate. We expect that our revenue growth rate will decline or fluctuate in the future as a result of a variety of factors, including a reduction in revenue contributed from acquisitions in a particular period. You should not rely on the revenue growth of any prior quarterly or annual period as an indication of our future performance. We also expect our costs to increase in future periods as we continue to expend substantial financial resources on technology infrastructure, product and services development and enhancement, international expansion and localization efforts, business development and acquisitions, sales and marketing and general administration, including legal and accounting expenses. These investments may not

 

14


Table of Contents

result in increased revenue or growth in our business. If we are unable to maintain adequate revenue growth and to manage our expenses effectively, we may incur significant losses in the future and may not be able to achieve and maintain profitability. As a result, we may continue to generate losses and we cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will be able to maintain profitability.

Further expansion into markets outside of the United States is important to the growth of our business, and if we do not manage the risks of international expansion effectively, our business and results of operations will be harmed. Furthermore, our expansion into jurisdictions where we have limited operating experience may subject us to increased business and economic risks that could harm our business and our results of operations.

In 2016 and 2017, we derived 27.0% and 30.0%, respectively, of our net revenue from outside of the United States. During the six months ended June 30, 2017 and 2018, we derived 29.9% and 26.5%, respectively, of our net revenue from outside of the United States. Outside the U.S. we currently have 12 offices, including offices in the United Kingdom, Ireland, Spain, Belgium, Germany, the Netherlands, Australia, Argentina and Brazil. We have large engineering and business development teams in Argentina and Spain. Our international operations and results are subject to a number of risks, including:

 

   

currency exchange restrictions or costs and exchange rate fluctuations and the risks and costs inherent in hedging such exposures;

 

   

new and modified laws and regulations regarding data privacy, data protection and information security;

 

   

exposure to local economic or political instability, threatened or actual acts of terrorism and violence and changes in the rights of individuals to assemble;

 

   

compliance with U.S. and non-U.S. regulations, laws and requirements relating to anti-corruption, antitrust or competition, economic sanctions, data content and privacy, consumer protection, employment and labor laws, health and safety and advertising and promotions;

 

   

compliance with additional U.S. laws applicable to U.S. companies operating internationally and interpretations of U.S. and international tax laws;

 

   

weaker enforcement of our contractual and intellectual property rights;

 

   

preferences by local populations for local providers;

 

   

laws and business practices that favor local competitors or prohibit or limit foreign ownership of certain businesses; and

 

   

slower adoption of the Internet as a ticketing, advertising and commerce medium, which could limit our ability to migrate international operations to our existing systems.

We plan to continue to expand our international operations as part of our growth strategy. Despite our experience operating internationally, future expansion efforts into new countries may not be successful. Our international expansion has placed, and our expected future international growth will continue to place, a significant strain on our management, customer service, product development, sales and marketing, administrative, financial and other resources. We cannot be certain that the investment and additional resources required in expanding our international operations will be successful or produce desired levels of revenue or profitability in a timely manner, or at all. Furthermore, certain international markets in which we operate have lower margins than more mature markets, which could have a negative impact on our margins as our revenue from these markets grows over time.

We may choose in certain instances to localize our platform to the unique circumstances of such countries and markets in order to achieve market acceptance, which can be complex, difficult and costly and divert

 

15


Table of Contents

management and personnel resources. Our failure to adapt our practices, platform, systems, processes and contracts effectively to the creator and attendee preferences or customs of each country into which we expand could slow our growth. If we are unable to manage our international growth successfully, our results of operations could be harmed.

Acquisitions, investments or significant commercial arrangements could result in operating and financial difficulties.

We have acquired or entered into commercial arrangements with a number of businesses in the past. For example, since 2015 we have acquired seven companies, including ticketscript and Ticketfly in 2017 and Ticketea and Picatic in 2018. Our future growth may depend, in part, on future acquisitions, investments or significant commercial arrangements, any of which could be material to our results of operations and financial condition. Financial and operational risks related to acquisitions, investments and significant commercial arrangements that may have an impact on our business include:

 

   

use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions may limit other potential uses of our cash, including for retirement of outstanding indebtedness, stock repurchases and dividend payments;

 

   

difficulties and expenses in assimilating the operations, products, data, technology, privacy, data protection systems and information security systems, information systems or personnel of the acquired company;

 

   

failure of the acquired company to achieve anticipated benefits, revenue, earnings or cash flows or our failure to retain key employees from an acquired company;

 

   

the assumption of known and unknown risks, debt and liabilities of the acquired company, deficiencies in systems or internal controls, impairment of goodwill or other intangible assets and costs associated with litigation or other claims arising in connection with the acquired company;

 

   

failure to properly and timely integrate acquired companies and their operations, reducing our ability to achieve, among other things, anticipated returns on our acquisitions through cost savings and other synergies;

 

   

adverse market reaction to acquisitions;

 

   

failure to consummate such transactions; and

 

   

other expected and unexpected risks with pursuing acquisitions, including litigation or regulatory exposure, unfavorable accounting treatment, increases in taxes due, a loss of anticipated tax benefits, costs or delays to obtain governmental approvals, diversion of management’s attention or other resources from our existing business and other adverse effects on our business, results of operations or financial condition.

When we acquire companies or other businesses, we face the risk that creators of the acquired companies or businesses may not migrate to our platform or may choose to decrease their level of usage of our platform post migration. We have previously experienced customer loss in the process of integrating and migrating acquired companies for a variety of reasons. The pace and success rate of migration may be influenced by many factors, including the pace and quality of product development, our ability to operationally support the migrating creators and our adoption of business practices outside of our platform that matter to the creator.

Moreover, we rely heavily on the representations and warranties and related indemnities provided to us by our acquired targets and their equity holders, including as they relate to creation, ownership and rights in intellectual property, compliance with laws, contractual requirements and the ability of the acquisition target to continue exploiting material intellectual property rights and technology after the acquisition. If any such representations are inaccurate or such warranties are breached, or if we are unable to fully exercise our

 

16


Table of Contents

indemnification rights, we may incur additional liabilities, disruptions to the operations of our business and diversion of our management’s attention.

Our failure to address these risks or other problems encountered in connection with past or future acquisitions, investments and significant commercial arrangements could cause us to fail to realize the anticipated benefits of such transactions, incur unanticipated liabilities and harm our business, results of operations and financial condition.

If we do not continue to maintain and improve our platform or develop successful new solutions and enhancements or improve existing ones, our business will suffer.

Our ability to attract and retain creators depends in large part on our ability to provide a user-friendly and effective platform, develop and improve our platform and introduce compelling new solutions and enhancements. Our industry is characterized by rapidly changing technology, new service and product introductions and changing demands of creators. We spend substantial time and resources understanding creators’ needs and responding to them. Building new solutions is costly and complex, and the timetable for commercial release is difficult to predict and may vary from our historical experience. In addition, after development, creators may not be satisfied with our enhancements or perceive that the enhancements do not adequately respond to their needs. The success of any new solution or enhancement to our platform depends on several factors, including timely completion and delivery, competitive pricing, adequate quality testing, integration with our platform, creator awareness and overall market acceptance and adoption. If we do not continue to maintain and improve our platform or develop successful new solutions and enhancements or improve existing ones, our business will suffer.

Our payments system depends on third-party providers and is subject to risks that may harm our business.

We rely on third-party providers to support our payments system. Approximately 90% of revenue on our platform is associated with payments processed through our internal payment processing capabilities, called Eventbrite Payment Processing (EPP). EPP uses a combination of multiple external vendors to provide a single, seamless payments option for creators and attendees. Beyond EPP, the remainder of creators’ paid ticket sales are processed through linked, creator-owned, third-party accounts, including PayPal and Authorize.net, which we call Facilitated Payment Processing (FPP).

We partner with third-party vendors to support EPP. For example, in September 2017, we announced a partnership with Square where Square would become our primary online payment processing partner for EPP in the United States, Canada, Australia, the United Kingdom as well as any new territories Square enters into over time. Square will also become our exclusive payment processing partner for all of our point-of-sale solutions in those same territories. We may supplement Square in these markets by working with other payment providers if there are local payment methods that Square does not support. We estimate that the first online transaction will be processed through EPP using Square in 2019. Our agreement with Square has an initial term of five years and automatically renews for additional one-year periods thereafter. Under the agreement, we will pay Square a percentage of each transaction processed using Square’s services plus Square’s third-party costs to process and settle such transactions. Either we or Square may terminate the partnership arrangement at any time for cause, or, after an initial no termination period of two years if terminated by Square or four years if terminated by us, for any or no reason with six months’ prior written notice to the other party. We also partner with other payment processors for EPP in the United States, Canada, Australia and the United Kingdom, as well as in other jurisdictions.

As a complex, multi-vendor system with proprietary technology added, EPP relies on banks and third-party payment processors to process transactions and access various payment card networks to allow creators to manage payments in an easy and efficient manner. We also rely on our providers to process transactions as a payment facilitator of a payment network. Any of our payment providers and vendors that do not operate well

 

17


Table of Contents

with our platform could adversely affect our payments systems and our business. We have multiple integrations in place at one time allowing for back up processing on EPP if a single provider is unable or unwilling to process any given transaction, payment method or currency. However, if any or some of these providers do not perform adequately, determine certain types of transactions as prohibitive for any reason or fail to identify fraud, if these providers’ technology does not interoperate well with our platform, or if our relationships with these providers were to terminate unexpectedly, creators may find our platform more difficult to use and the ability of creators using our platform to sell tickets could be adversely affected, which could cause creators to use our platform less and harm our business.

We must also continually integrate various payment methods used both within the United States and internationally into EPP. To enhance our acceptance in certain international markets we have in the past adopted, and may in the future adopt, locally-preferred payment methods and integrate such payment methods into EPP, which may increase our costs and also require us to understand and protect against unique fraud and other risks associated with these payment methods. For example, in Brazil we localized our platform to allow the use of Boleto as a payment method, and we invested capital and management attention to achieve this. If we are not able to integrate new payment methods into EPP effectively, our business may be harmed.

Our payment processing partners require us to comply with payment card network operating rules, which are set and interpreted by the payment card networks. The payment card networks could adopt new operating rules or interpret or re-interpret existing rules in ways that might prohibit us from providing certain services to some creators, be costly to implement or difficult to follow. We have agreed to reimburse our payment processors for fines they are assessed by payment card networks if we or creators using our platform violate these rules, such as our processing of various types of transactions that may be interpreted as a violation of certain payment card network operating rules.

In addition, payment card networks and payment processing partners could increase the fees they charge us for their services or for an attendee using one of their cards, which would increase our operating costs and reduce our margins. If we are unable to negotiate favorable economic terms with these partners, our business and results of operations may be harmed.

We may pay up front creator signing fees and creator advances to certain creators when entering into exclusive ticketing or services agreements and if these arrangements do not perform as we expect, our business, results of operations and financial condition may be harmed.

We may pay one-time, up front non-recoupable or recoupable signing fees to certain creators in order to incentivize them to organize certain events on our platform or obtain exclusive rights to ticket their events. These payments are common practice in certain segments of the ticketing industry and are typically made to a creator upon entering into a multi-year exclusive ticketing or service contract with us. The multi-year exclusive arrangements that we entered into between 2013 and 2017 had an average term of 36 months and were typically for exclusive ticketing rights. A creator who receives a non-recoupable fee, which we refer to as creator signing fees, net, keeps the entire signing fee, so long as the creator complies with the terms of the creator’s contract with us, including performance of an event. If a creator does not comply with the terms of the contract or perform an event, such fees are refundable to us. Creator signing fees, net, including noncurrent balances, were $6.9 million and $10.4 million as of December 31, 2016 and 2017, respectively, and, as of December 31, 2017, these payments are being amortized over a weighted-average remaining life of 3.1 years on a straight line basis. Creator signing fees, net, including noncurrent balances, were $13.3 million as of June 30, 2018. For recoupable fees, which we refer to as creator advances, net, we are entitled to recoup the entire signing fee by withholding all or a portion of the ticket sales sold by the creator to whom the recoupable signing fee was previously paid. Creator advances, net, were $7.6 million, $20.1 million and $21.6 million as of December 31, 2016 and 2017 and June 30, 2018, respectively. We pay these signing fees based on the expectations of future ticket sales on our platform by such creators. We make the decision to make these payments based on our assessment of the past success of the creator, past event data, future events the creator is producing and other financial information. We include commercial and legal protections in our contracts

 

18


Table of Contents

that include signing fees, such as issuing the signing fee only after the creator begins selling tickets on our platform and requiring a third-party to guarantee the obligations and liabilities of the creator receiving such a payment, to mitigate the financial risk of making these payments. However, event performance may vary greatly from year-to-year and from event to event. If our assumptions and expectations with respect to event performance prove wrong or if a counterparty defaults or an event is not successful, our return on these signing fees will not be realized and our business and results of operations will be harmed.

Our results vary from quarter-to-quarter and year-to-year. Our results of operations in certain financial quarters or years may not be indicative of, or comparable to, our results of operations in subsequent financial quarters or years.

Our quarterly results of operations have fluctuated significantly in the past due to these factors and a variety of other factors, many of which are outside of our control and difficult to predict. It is difficult for us to forecast the level or source of our revenue accurately. Because our results may vary significantly from quarter-to-quarter and year-to-year, our financial results for one quarter or year cannot necessarily be compared to another quarter or year and may not be indicative of our future financial performance in subsequent quarters or years. Period-to-period comparisons of our results of operations may not be meaningful, and you should not rely upon them as an indication of future performance. In addition to other risk factors listed in this “Risk Factors” section, factors that may cause our results of operations to fluctuate include:

 

   

creator acquisition and retention;

 

   

new solution introductions and expansions, or challenges with introduction;

 

   

acquisition of companies and the success, or lack thereof, of migration of such companies’ creators;

 

   

changes in pricing or packages;

 

   

the development and introduction of new products or services by us or our competitors;

 

   

increases in operating expenses that we may incur to grow and expand our operations and to remain competitive;

 

   

system failures or breaches of security or privacy;

 

   

changes in stock-based compensation expenses;

 

   

adverse litigation judgments, settlements or other litigation-related costs;

 

   

changes in the legislative or regulatory environment, including with respect to privacy or data protection, or enforcement by government regulators, including fines, orders or consent decrees;

 

   

fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;

 

   

fluctuations in the market values of our portfolio investments and interest rates;

 

   

changes in our effective tax rate;

 

   

announcements by competitors or other third parties of significant new products or acquisitions or entrance into certain markets; our ability to make accurate accounting estimates and appropriately recognize revenue for our solutions for which there are no relevant comparable products;

 

   

changes in accounting standards, policies, guidance, interpretations, or principles; and

 

   

changes in business or macroeconomic conditions.

In addition, the seasonality of our business could create cash flow management risks if we do not adequately anticipate and plan for periods of decreased activity, which could negatively impact our ability to execute on our strategy, which in turn could harm our results of operations. For example, we experience more cash flow generally in the first and third quarters of a fiscal year.

 

19


Table of Contents

Data loss or security breaches could harm our business, reputation, brand and results of operations.

Security breaches, computer malware and computer hacking attacks have become more prevalent across industries and may occur on our systems or those of our third-party service providers or partners. Despite the implementation of security measures, our internal computer systems and those of our third-party service providers and partners are vulnerable to damage from computer viruses, hacking and other means of unauthorized access, denial of service and other attacks, natural disasters, terrorism, war and telecommunication and electrical failures. Attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. In addition to unauthorized access to or acquisition of personal data, confidential information, intellectual property, or other sensitive information, such attacks could include the deployment of harmful malware and ransomware, and may use a variety of methods, including denial-of-service attacks, social engineering and other means, to attain such unauthorized access or acquisition or otherwise affect service reliability and threaten the confidentiality, integrity and availability of information. Furthermore, the prevalent use of mobile devices increases the risk of data security incidents. In addition, misplaced, stolen or compromised mobile devices used at events for ticket scanning, or otherwise, could lead to unauthorized access to the device and data stored on or accessible through such device. We have in the past experienced breaches of our security measures and our platform and systems are at risk for future breaches as a result of third-party action or employee, service provider, partners or contractor error or malfeasance. For example, in June 2018, we publicly announced that a criminal was able to penetrate the Ticketfly website and steal certain consumer data, including names, email addresses, shipping addresses, billing addresses and phone numbers. For a short time, we disabled the Ticketfly platform to contain the risk of the cyber incident, which disabled ticket sales through Ticketfly during that period. Because of this incident, we have incurred costs related to responding to and remediating this incident and have suffered a loss of revenue for the period during which the Ticketfly platform was disabled. In the six months ended June 30, 2018, we recorded a liability of $6.6 million for potential costs associated with this incident, of which $6.3 million was recorded as a reduction to net revenue and $0.3 million was recorded as an operating expense. We may experience reputational harm and have suffered customer loss related to this incident. In the future, our financial performance may be impacted further if we face additional costs and expenses from customer compensation and retention incentives, creator loss, regulatory inquiries, litigation and further remediation and upgrades to our security infrastructure. Although we have insurance coverage, our policy may not cover all financial expenses related to this matter.

In addition, our platform involves the storage and transmission of personal information of users of our platform in our facilities and on our equipment, networks and corporate or third-party systems. Security breaches could expose us to litigation, remediation costs, increased costs for security measures, loss of revenue, damage to our reputation and potential liability. User data and corporate systems and security measures may be breached due to the actions of outside parties, employee error or misconduct, malfeasance, a combination of these or otherwise, and, as a result, an unauthorized party may obtain access to our data or data of creators and attendees. Additionally, outside parties may attempt to fraudulently induce employees, creators or attendees to disclose sensitive information in order to gain access to creator or attendee data. We must continuously examine and modify our security controls and business policies to address the use of new devices and technologies, and the increasing focus by users and regulators on controlling and protecting user data. We may need to expend significant resources to protect against and remedy any potential security breaches and their consequences. Any security breach of our platform or systems, the systems or networks of our third-party service providers or partners, or any unauthorized access to information we or our providers and partners process or maintain, could harm our business, results of operations and financial condition.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently or may be designed to remain dormant until a predetermined or other future event and often are not recognized until launched against a target, we and our third-party service providers and partners may be unable to anticipate these techniques or implement adequate preventative measures. While we have implemented

 

20


Table of Contents

security measures intended to protect our information technology systems and infrastructure, there can be no assurance that such measures or our third-party service providers and partners’ information security measures will successfully prevent service interruptions or further security incidents. Although it is difficult to determine what harm may directly result from any specific interruption or breach, any actual or perceived failure to maintain performance, reliability, security and availability of our network infrastructure, or of any third-party networks or systems used or supplied by our third-party service providers or partners, to the satisfaction of creators and attendees may harm our reputation and our ability to retain existing creators and attendees and attract new creators and attendees.

Examples of situations which may lead to unauthorized access of data may include:

 

   

employees inadvertently sending financial information of one creator, attendee or employee to another creator, attendee or employee;

 

   

creators’ failure to properly password protect their leased ticket scanning and site operations devices leaving the data available to anyone using the device;

 

   

a device stolen from an event and data access, alteration or acquisition occurring prior to our remote wiping of the data;

 

   

an employee losing their computer or mobile device or otherwise, allowing for access to our email and/or administrative access, including access to guest lists to events;

 

   

external breaches leading to the circulation of “dark web” lists of user name and password combinations openly vulnerable to attack without immediate detection;

 

   

a hack of one of our databases;

 

   

account takeovers;

 

   

a hack of a third-party service provider or partner’s database; and

 

   

unauthorized access to our offices or other properties.

If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed, we could lose creators and attendees or we could face lawsuits, regulatory investigations or other legal or regulatory proceedings and we could suffer financial exposure due to such events or in connection with regulatory fines, remediation efforts, investigation costs, changes or augmentation of our security measures and the expense of taking additional system protection measures.

The processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing applications of privacy regulations.

We receive, transmit and store a large volume of personally identifiable information and other user data. Numerous federal, state and international laws address privacy, data protection and the collection, storing, sharing, use, disclosure and protection of personally identifiable information and other user data. Numerous states already have, and are looking to expand, data protection legislation requiring companies like ours to consider solutions to meet differing needs and expectations of creators and attendees. Outside the United States, personally identifiable information and other user data is increasingly subject to legislation and regulations in numerous jurisdictions around the world, the intent of which is to protect the privacy of information that is collected, processed and transmitted in or from the governing jurisdiction. Foreign data protection, privacy, information security, user protection and other laws and regulations are often more restrictive than those in the United States. In particular, the European Union and its member states traditionally have taken broader views as to types of data that are subject to privacy and data protection laws and regulations, and have imposed greater legal obligations on companies in this regard. For example, in April 2016, European legislative bodies adopted the General Data Protection Regulation (GDPR) which became effective May 25, 2018. The GDPR applies to

 

21


Table of Contents

any company established in the European Union as well as to those outside the European Union if they collect and use personal data in connection with the offering of goods or services to individuals in the European Union or the monitoring of their behavior. The GDPR enhances data protection obligations for processors and controllers of personal data, including, for example, expanded disclosures about how personal information is to be used, limitations on retention of information, mandatory data breach notification requirements and onerous new obligations on services providers. Non-compliance with the GDPR may result in monetary penalties of up to €20 million or 4% of annual worldwide revenue, whichever is higher. In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services. The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of personal data, such as healthcare data or other sensitive information, could greatly increase our cost of providing our products and services or even prevent us from offering certain services in jurisdictions in which we operate.

We rely on a variety of legal bases to transfer certain personal information outside of the European Economic Area, including the EU-U.S. Privacy Shield Framework, or Privacy Shield, and EU Standard Contractual Clauses (SCCs). Both the Privacy Shield and SCCs are the subject of legal challenges in European courts and may face additional challenges in the future, and the absence of successor legal bases for continued data transfer could require us to create duplicative, and potentially expensive, information technology infrastructure and business operations in Europe or limit our ability to collect and use personal information collected in Europe. In addition, the EU Commission is currently negotiating a new ePrivacy Regulation that would address various matters, including provisions specifically aimed at the use of cookies to identify an individual’s online behavior, and any such ePrivacy Regulation may provide for new compliance obligations and significant penalties. Any of these changes to EU data protection law or its interpretation could disrupt and harm our business.

Further, following a referendum in June 2016 in which voters in the United Kingdom approved an exit from the European Union, the United Kingdom government has initiated a process to leave the EU, which has created uncertainty with regard to the regulation of data protection in the United Kingdom. In particular, although a Data Protection Bill designed to be consistent with the GDPR is pending in the United Kingdom’s legislative process, it is unclear whether the United Kingdom will enact data protection laws or regulations designed to be consistent with the GDPR and how data transfers to and from the United Kingdom will be regulated.

The interpretation and application of many privacy and data protection laws are, and will likely remain, uncertain, and it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or product features. If so, in addition to the possibility of fines, lawsuits and other claims and penalties, we could be required to fundamentally change our business activities and practices or modify our products, which could harm our business. In addition to government regulation, privacy advocacy and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us. Any inability to adequately address privacy, data protection and data security concerns or comply with applicable privacy, data protection or data security laws, regulations, policies and other obligations could result in additional cost and liability to us, damage our reputation, inhibit sales and harm our business

Our acquisition strategy to date, and going forward, often results in the winding down of the acquired platforms over a period of 12 to 24 months while the existing creators migrate to our platform. The focus often shifts away from these legacy platforms to meeting the needs of migrated creators on our platform. The existence of these legacy platforms within a shifting landscape regarding privacy, data protection and data security may result in regulatory liability or exposure to fines. A significant data incident on a legacy platform may harm our reputation and our brand and may adversely affect the migration of existing creators to our platform. We may also become exposed to potential liabilities and our attention and resources may be diverted as a result of differing privacy regulations pertaining to our applications.

 

22


Table of Contents

Our failure, and/or the failure by the various third-party service providers and partners with which we do business, to comply with applicable privacy policies or federal, state or similar international laws and regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in the unauthorized release of personally identifiable information or other user data, or the perception that any such failure or compromise has occurred, could damage our reputation, result in a loss of creators or attendees, discourage potential creators and attendees from trying our platform and/or result in fines and/or proceedings by governmental agencies and/or users, any of which could have an adverse effect on our business, results of operations and financial condition. In addition, given the breadth and depth of changes in data protection obligations, ongoing compliance with evolving interpretation of the GDPR and other regulatory requirements requires time and resources and a review of the technology and systems currently in use against the requirements of GDPR and other regulations.

Our industry is highly fragmented. We compete against traditional solutions to event management and may face significant competition from both established and new companies. If we are not able to maintain or improve our competitive position, our business could suffer.

We operate in a market that is highly fragmented. We compete with a variety of competitors to secure new and retain existing creators, including traditional solutions to event management, such as offline, internal or ad hoc solutions, local or specialized market competitors, products offered by large technology companies that may enter the market, or other ticketing competitors such as Live Nation Entertainment subsidiaries Front Gate Tickets, TicketWeb and Universe. If we cannot successfully compete in the future with existing or potential competitors this will cause an adverse effect on our business, results of operations and financial condition.

Some of our current and potential competitors have significantly more financial, technical, marketing and other resources, are able to devote greater resources to the development, promotion, sale and support of their services, have more extensive customer bases and broader customer relationships, have longer operating histories and greater name recognition. We may also compete with potential entrants into the market that currently do not offer the same services but could potentially leverage their networks in the market in which we operate. For instance, large e-commerce companies such as eBay and Amazon have in the past, or currently, operate within the ticketing space. In addition, other large companies with large user-bases that have substantial event-related activity may be successful in adding a product in this space, such as Facebook, Google and Twitter. These competitors may be better able to undertake more extensive marketing campaigns and/or offer their solutions and services at a discount to ours. Furthermore, some of our competitors may customize their products to suit a specific event type, category or customer. We also compete with self-service products that provide creators with alternatives to ticket their events by integrating such self-service products with creators’ existing operations. If we are unable to compete with such alternatives, the demand for our solutions could decline.

If any of our competitors have existing relationships with potential creators or the venues or facilities used by those creators, those creators may be unwilling or unable to use our platform and this may limit our ability to successfully compete in certain markets where such pre-existing relationships are common. For example, some competitors purchase venues or rights to events and/or enter into exclusivity agreements with creators. If creators do not remain independent from our potential competitors, demand for our platform will diminish and our business and results of operations will be harmed.

Our business may be subject to sales tax and other indirect taxes in various jurisdictions. In addition, creators may also be subject to certain taxes.

The application of indirect taxes, such as sales and use tax, amusement tax, value-added tax, goods and services tax, business tax and gross receipt tax, to businesses like ours and to creators and attendees is a complex and evolving issue. Significant judgment is required to evaluate applicable tax obligations and as a result amounts recorded are estimates and are subject to adjustments. In many cases, the ultimate tax determination is uncertain because it is not clear how new and existing statutes might apply to our business or to creators’ businesses.

 

23


Table of Contents

One or more states, localities, the federal government or other countries may seek to impose additional reporting, record-keeping or indirect tax collection obligations on businesses like ours that facilitate online commerce. For example, taxing authorities in the United States and other countries have identified e-commerce platforms as a means to calculate, collect and remit indirect taxes for transactions taking place over the Internet, and are considering related legislation. Certain jurisdictions have enacted laws which became effective in 2018 or will become effective later requiring marketplaces to report user activity or collect and remit taxes on certain items sold on the marketplace. Imposition of an information reporting or tax collection requirement could decrease creator or attendee activity on our platform, which would harm our business. New legislation could require us or creators to incur substantial costs in order to comply, including costs associated with tax calculation, collection and remittance and audit requirements, which could make using our platform less attractive and could adversely affect our business and results of operations.

We face sales and use tax and value-added tax audits in certain states and international jurisdictions and it is possible that we could face additional sales and use tax and value-added tax audits in the future in additional jurisdictions and that our liability for these taxes could exceed our reserves as state or international tax authorities could assert that we are obligated to collect additional amounts as taxes from creators and remit those taxes to those authorities. We could also be subject to audits and assessments with respect to states and international jurisdictions for which we have not accrued tax liabilities. A successful assertion that we should be collecting additional sales or other taxes on our services in jurisdictions where we have not historically done so and do not accrue for sales or other taxes could result in substantial tax liabilities for past sales, discourage creators from using our platform or otherwise harm our business and results of operations. Although we have reserved for potential payments of possible past tax liabilities in our financial statements as disclosed in Note 9 of the Notes to Consolidated Financial Statements, if these liabilities exceed such reserves, our financial condition will be harmed.

The reputation and brand of our platform is important to our success, and if we are not able to maintain and enhance our brand, our results of operations and financial condition may be adversely affected.

We believe that maintaining and enhancing our reputation and brand as a differentiated and category-defining ticketing company serving creators and attendees is critical to our relationship with our existing creators and to our ability to attract new creators and attendees. The successful promotion of our brand attributes will depend on a number of factors that we control and some factors outside of our control.

The promotion of our brand requires us to make substantial expenditures and management investment, which will increase as our market becomes more competitive and as we seek to expand our platform. To the extent that these activities yield increased revenue, this revenue may not offset the increased expenses we incur. If we do not successfully maintain and enhance our brand and successfully differentiate our platform from competitive products and services, our business may not grow, we may not be able to compete effectively and we could lose creators or fail to attract potential creators, all of which would adversely affect our business, results of operations and financial condition. Additionally, we must continue to make substantial efforts and investments to be associated with events that are positively viewed by other creators and attendees.

However, there are also factors outside of our control, which could undermine our reputation and harm our brand. Negative perception of our platform may harm our business, including as a result of complaints or negative publicity about us or creators; events being fraudulent or unsuccessful, either as a result of lack of attendance or attendee experience not meeting expectations; responsiveness to issues or complaints and timing of refunds and/or chargebacks; actual or perceived disruptions or defects in our platform; security incidents; or lack of awareness of our policies or changes to our policies that creators, attendees or others perceive as overly restrictive, unclear or inconsistent with our values.

Furthermore, creators use our platform for events that represent a variety of views, activities and interests, some of which many other creators or attendees do not agree with or find offensive, or are illegal, or are

 

24


Table of Contents

perceived as such. For example, in the past, creators have tried to use our platform for events related to illegal activity and extreme activist groups. These events may cause negative publicity and harm our reputation and brand. Some creators may not have, or are perceived not to have, legal and ethical business practices. Although we maintain procedures and policies, both automated and by human review, to prevent the usage of our platform for such purposes and to prevent such practices, our procedures and policies may not effectively reduce or eliminate the use of our platform by such creators. In addition, certain creators or attendees may not agree with our decision to restrict certain creators or events from using our platform. If our platform is associated with illegal or offensive activity or creators and attendees disagree with our decision to restrict certain creators or events from using our platform, our reputation and brand may be harmed and our ability to attract and retain creators will be adversely impacted.

If we are unable to maintain a reputable platform that provides valuable solutions and desirable events, then our ability to attract and retain creators and attendees could be impaired and our reputation, brand and business could be harmed.

Our platform might be used for illegal or improper purposes, all of which could expose us to additional liability and harm our business.

Our platform remains susceptible to potentially illegal or improper uses by creators or attendees. Illegal or improper uses of our platform may include money laundering, terrorist financing, drug trafficking, illegal online gaming, other online scams, illegal sexually-oriented services, phishing and identity theft, prohibited sales of pharmaceuticals, fraudulent sale of goods or services, posting of unauthorized intellectual property, unauthorized uses of credit and debit cards or bank accounts and similar misconduct. Creators may also encourage, promote, facilitate or instruct others to engage in illegal activities. Despite measures we have taken to detect and lessen the risk of this kind of conduct, we cannot guarantee that these measures will stop all illegal or improper uses of our platform. Our business could be harmed if creators use our system for illegal or improper purposes, which may expose us to liability. At the same time, if the measures we have taken to guard against these activities are too restrictive and inadvertently screen proper transactions, or if we are unable to apply and communicate these measures fairly and transparently, or we are perceived to have failed to do so, this could diminish the experience of creators and attendees, which could harm our business.

Factors adversely affecting the live event market could impact our results of operations.

We help creators organize, promote and sell tickets and registrations to a broad range of events. Our business is directly affected by the success of such events and our revenue is impacted by the number of events, type of events and ticket prices of events produced by creators. Adverse trends in one or more event industries could adversely affect our business. A decline in attendance at or reduction in the number of events may have an adverse effect on our revenue and operating income.

During periods of economic slowdown and recession, consumers have historically reduced their discretionary spending. The impact of economic slowdowns on our business is difficult to predict, but they may result in reductions in ticket and registration sales and our ability to generate revenue. Our business depends on discretionary consumer and corporate spending. Many factors related to discretionary consumer and corporate spending, including employment, fuel prices, interest and tax rates and inflation can adversely impact our results of operations.

In addition, the occurrence and threat of extraordinary events, such as terrorist attacks, mass-casualty incidents, public health concerns, natural disasters or similar events, or loss or restriction of individuals’ rights to assemble may deter creators from producing large events and substantially decrease the attendance at live events. For example, in January 2017, five people were killed at a music festival in Mexico ticketed by us. Terrorism and security incidents in the past, military actions in foreign locations and periodic elevated terrorism alerts have increased public concerns regarding air travel, military actions and additional national or local catastrophic

 

25


Table of Contents

incidents and raised numerous challenging operating factors, including additional logistics for event safety and increased costs of security, which may detract from the creator and attendee experience and may harm our results of operations and those of creators.

Furthermore, adverse weather and climate conditions could impact the success of an event and disrupt our operations in any of our offices or the operations of creators, third-party providers, vendors or partners. If an event is cancelled due to weather, attendees expect a refund, which harms our results of operations and those of creators.

Accordingly, any adverse condition could lead to unsatisfied attendees that require refunds or chargebacks or increase the complexity and costs for creators and us, which will have a negative effect on our business, results of operations and financial condition.

Any significant system interruption or delays could damage our reputation, result in a potential loss of creators and adversely impact our business.

Our ability to attract and retain creators depends on the reliable performance of our technology, including our websites, applications and information and related systems. System interruptions, slow-downs and a lack of integration and redundancy in our information systems and infrastructure may adversely affect our ability to operate our technology, handle sales for high-demand events, process and fulfill transactions, respond to creator and attendee inquiries and generally maintain cost-efficient operations.

We also rely on affiliate and third-party computer systems, broadband and other communications systems and service providers in connection with the provision of services generally, as well as to facilitate, process and fulfill transactions. Any interruptions, outages or delays in our systems and infrastructures, our businesses, our affiliates and/or third-party systems we use, or deterioration in the performance of these systems and infrastructures, could impair our ability to provide services, fulfill orders and/or process transactions. We have experienced, and may in the future experience, occasional system interruptions caused by outages by our partners that made some or all systems or data unavailable or prevented us from efficiently providing services or fulfilling orders.

We outsource our cloud infrastructure to Amazon Web Services (AWS), which hosts our platform, and therefore we are vulnerable to service interruptions at AWS, which could impact the ability of creators and attendees to access our platform at any time, without interruption or degradation of performance. Our customer agreement with AWS will remain in effect until terminated by AWS or us. AWS may terminate the agreement by providing 30 days prior written notice and may, in some cases, terminate the agreement immediately for cause upon notice. In the event that our AWS service agreements are terminated, or there is a lapse of service, interruption of Internet service provider connectivity or damage to such facilities, we could experience interruptions in access to our platform as well as delays and additional expense in arranging new facilities and services. For example, we previously experienced interruptions in performance of our platform because of a hardware error that AWS experienced. We may also incur significant costs for using an alternative cloud infrastructure provider or taking other actions in preparation for, or in reaction to, events that damage the AWS services we use.

In addition, fire, flood, power loss, telecommunications failure, hurricanes, tornadoes, earthquakes, acts of war or terrorism, natural disasters and similar events or disruptions may damage or interrupt computer, broadband or other communications systems and infrastructures at any time. Any of these events could cause system interruptions, outages, delays and loss of critical data, and could prevent us from providing services, fulfilling orders and/or processing transactions. While we have backup systems for certain aspects of our operations, disaster recovery planning by its nature cannot be sufficient for all eventualities. In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption.

 

26


Table of Contents

In some instances, we may not be able to identify the cause or causes of these performance problems within a period of time acceptable to creators. It may become increasingly difficult to maintain and improve our platform performance, especially during peak usage times, as the features of our platform become more complex and the usage of our platform increases. Any of the above circumstances or events may harm our reputation, cause creators to stop using our platform, impair our ability to increase revenue, impair our ability to grow our business, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our business, results of operations and financial condition.

Our platform and solutions are accessed by a large number of creators and attendees often at the same time. As we continue to expand the number of creators and attendees and solutions available to creators and attendees, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service. Furthermore, capacity constraints could be due to a number of potential causes including technical failures, natural disasters, fraud or security attacks. In addition, the failure of AWS cloud infrastructure or other third-party Internet service providers to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to scale our operations. The occurrence of any of these events could have an adverse effect on our business, results of operations and financial condition.

Creators rely on third-party platforms, such as Facebook and Spotify, to connect with and attract attendees and we depend on our platform of partners and developers to create applications that will integrate with our platform.

Our platform interoperates with other third-party distributors, such as Facebook and Spotify. Attendees are able to access our platform and purchase tickets through these third-party services. Creators are able to publicize their events and sell tickets on these third-party sites. The interoperability of our platform with these other sites allows creators to reach more attendees and makes our platform more appealing to creators. These third-party partners may terminate their relationship with us, limit certain integration functionality, change their treatment of our services or restrict access to their platform by creators at any time. For example, in the past, Facebook removed a feature of its service that allowed creators to include multiple hosts on a single event seamlessly across platforms, which negatively impacted certain music creators’ use of the Facebook integration with our platform. If any such third-party services becomes incompatible with our platform or the use of our platform and solutions on such third-party platforms are restricted in the future, our business will be harmed.

In addition, to the extent that Google, Facebook or other leading large technology companies that have a significant presence in our key markets, disintermediate ticketing or event management providers, whether by offering their own comprehensive event-focused or shopping capabilities, or by referring leads to suppliers, other favored partners or themselves directly, there could be an adverse impact on our business, results of operations and financial condition.

We also depend on our platform of integrated product partners connecting through our API to create applications that will integrate with our platform, such as Salesforce, HubSpot and MailChimp, and to allow them to integrate with our solutions. This presents certain risks to our business, including:

 

   

our inability to provide any assurance that these third-party applications and products meet the same quality and security standards that we apply to our own development efforts, and to the extent that they contain bugs or defects, they may create disruptions in the use of our platform by creators or negatively affect our brand;

 

   

our lack of support for software applications developed by our partner platform, which could cause creators and attendees to be left without support and consequently could cease using our services if these developers do not provide adequate support for their applications;

 

   

our inability to assure that our partners will be able to successfully integrate with our products or that our partners will continue to do so;

 

27


Table of Contents
   

our inability to confirm if our partners comply with all applicable laws and regulations; and

 

   

the risk that these partners and developers may not possess the appropriate intellectual property rights to develop and share their applications.

Many of these risks are not within our control to prevent, and our brand may be damaged if these applications do not perform to the satisfaction of creators and attendees and that dissatisfaction is attributed to us.

Changes in Internet search engine algorithms and dynamics, or search engine disintermediation, or changes in marketplace rules could have a negative impact on traffic for our sites and ultimately, our business and results of operations.

We rely heavily on Internet search engines, such as Google, to generate traffic to our website, principally through free or organic search. Search engines frequently update and change the logic that determines the placement and display of results of a user’s search, such that the purchased or algorithmic placement of links to our websites can be negatively affected. In addition, a search engine could, for competitive or other purposes, alter its search algorithms or results causing our websites to place lower in organic search query results. If a major search engine changes its algorithms in a manner that negatively affects the search engine ranking of our websites or those of our partners, our business and financial performance would be adversely affected. Furthermore, our failure to successfully manage our search engine optimization could result in a substantial decrease in traffic to our websites, as well as increased costs if we were to replace free traffic with paid traffic.

We also rely on application marketplaces, such as Apple’s App Store and Google’s Play, to drive downloads of our applications. In the future, Apple, Google or other marketplace operators may make changes to their marketplaces that make access to our products more difficult. For example, our applications may receive unfavorable treatment compared to the promotion and placement of competing applications, such as the order in which they appear within marketplaces. Similarly, if problems arise in our relationships with providers of application marketplaces, traffic to our site and our user growth could be harmed.

Our business may be subject to chargebacks and other losses for various reasons, including due to fraud, unsuccessful or cancelled events. These chargebacks and other losses may harm our results of operations and business.

We have experienced, and may in the future experience, claims from attendees that creators have not performed their obligations or that events did not match their descriptions. These claims could arise from creator fraud or misuse, an unintentional failure of the event or from fraudulent claims by an attendee. We have experienced fraudulent activity on our platform in the past, including fake events in which a person sells tickets to an event but does not intend to hold an event or fulfill the ticket, email spam being sent through our platform, a third party taking over the account of a creator to receive payments owed to such creator or orders placed with fraudulent or stolen credit card data and other erroneous transmissions. Although we have measures in place to detect and reduce the occurrence of fraudulent activity on our platform, those measures may not always be effective. These measures must be continually improved and may not be effective against evolving methods of fraud or in connection with new platform offerings. If we cannot adequately control the risk of fraudulent activity on our platform, it could harm our business, results of operations and financial condition.

We also may experience chargebacks and losses as a result of advance payment of ticket fees to creators. Under our standard terms for creators using EPP, Eventbrite passes the creator’s share of ticket sales to the creator within five business days after the successful completion of the creator’s event. However, we face growing pressure from creators to advance some or most of their event funds prior to completion of their events because creators need these funds to pay for event related costs such as the venue, marketing, talent and vendors. For qualified creators who apply for such advance payments, we pass proceeds from ticket sales to the creators prior to the event as we receive the ticket proceeds, subject to certain limitations. We refer to these payments as

 

28


Table of Contents

advance payouts. In 2017, approximately 13% of creators received advance payouts. When we advance funds, we assume some risk that the event may be cancelled, fraudulent, materially not as described or removed from our platform due to its failure to comply with our terms of service or merchant agreement or the event has significant chargebacks, refund requests and/or disputes. The terms of our standard merchant agreement obligates creators to repay us for ticket sales advanced under such circumstances. However, we may not be able to recover our losses from these events and such unrecoverable amounts could equal up to the value of the transaction or transactions passed to the creator prior to the event that is disputed. This amount could be many multiples of the fees we collect from such transaction. In the case of failure of an entire event or series of events, the volume of transactions charged back or disputed could have an adverse impact on our financial position. We have established processes and risk mitigation measures around these advance payouts. However, these advance payments pose a challenging financial risk, and our standard fraud and risk controls may be ineffective in addressing this risk. Furthermore, we must also strike a balance between these protective measures and the needs of creators for access to ticket sales through a convenient and easy process, which many of our competitors provide. If these measures do not succeed, or if we fail to strike the right balance between protective measures and creator needs, our business and results of operations may be harmed.

The total write-off from all lost advance payouts and other chargebacks was $3.6 million for the year ended December 31, 2017 and $2.7 million for the six months ended June 30, 2018. Our failure to manage the risk of advance payouts to creators and to mitigate chargebacks and disputes due to fraud of a creator or otherwise or to recover the resulting losses from creators could have an adverse effect on our business, results of operations and financial condition.

We rely on the experience and expertise of our founders, senior management team, key technical employees and other highly skilled personnel and the failure to retain, motivate or integrate any of these individual could have an adverse effect on our business, results of operations and financial condition.

Our success depends upon the continued service of our founders and senior management team and key technical employees, as well as our ability to continue to attract and retain additional highly qualified personnel. Our future success depends on our continuing ability to identify, hire, develop, motivate, retain and integrate highly skilled personnel for all areas of our organization. Each of our founders, executive officers, key technical personnel and other employees could terminate his or her relationship with us at any time. The loss of any of our founders or any other member of our senior management team or key personnel might significantly delay or prevent the achievement of our business objectives and could harm our business and our relationships. Competition in our industry for qualified employees is intense. In addition, our compensation arrangements, such as our equity award programs, may not always be successful in attracting new employees and retaining and motivating our existing employees. Furthermore, several members of our management team were hired recently. If we are not able to integrate these new team members or if they do not perform adequately, our business may be harmed.

We face significant competition for personnel, particularly in the San Francisco Bay Area where our headquarters is located. To attract top talent, we have had to offer, and believe we will need to continue to offer, competitive compensation and benefits packages. We may also need to increase our employee compensation levels in response to competition. We may not be able to hire new employees quickly enough to meet our needs. If we fail to effectively manage our hiring needs or successfully integrate new hires, including our recently hired management team members, our efficiency, ability to meet forecasts and our employee morale, productivity and retention could suffer, which may harm our business.

Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork fostered by our culture, which could harm our business.

We believe that our corporate culture has been an important contributor to our success, which we believe fosters innovation, teamwork and passion for creators. Most of our employees have been with us for fewer than

 

29


Table of Contents

two years as a result of our rapid growth. As we continue to grow, we must effectively integrate, develop and motivate a growing number of new employees. As a result, we may find it difficult to maintain our corporate culture, which could limit our ability to innovate and operate effectively. Any failure to preserve our culture could also negatively affect our ability to retain and recruit personnel, maintain our performance or execute on our business strategy.

If we fail to manage our growth effectively, our business, financial condition and results of operations could be harmed.

We have experienced, and may continue to experience, rapid growth and organizational change, such as additional controls and procedures and new functional groups within our company, through organic growth or as the result of integrating acquired companies. For example, the number of Eventbrite employees has increased from 609 on June 30, 2017 to 1,016 on June 30, 2018 and we expect to add more employees in the future. This growth and these changes have placed, and may continue to place, significant demands on our management, operational and financial resources. Our organizational structure is becoming more complex as we build the proper level of operational, financial and management controls and develop our reporting systems and procedures. We will require significant expenditures and the allocation of valuable management resources to grow and change in these areas and integrate acquired companies. If we fail to manage our anticipated growth and changes and integrate acquired companies in a manner that preserves rapid innovation, attention to creator satisfaction and overall culture, the quality of our platform and our reputation may suffer, which could negatively affect our ability to retain and attract creators and impact our business, results of operations and financial condition.

Our rapid growth makes it difficult to evaluate our future prospects and may increase the risk that we will not continue to grow at or near historical rates.

We have grown rapidly over the last several years, and as a result, our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth. We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, our growth rates may slow and our business would suffer.

Our pricing package options were recently launched and may affect our ability to attract or retain creators.

In the past, we have adjusted our prices either for individual creators in connection with long-term agreements or for new markets. In September 2017, we launched new pricing package options for creators based on the features required, service level desired and budget. While we determined these prices and packages based on prior experience and feedback from creators, our assessments may not be accurate and we could be underpricing or overpricing our services, which may require us to continue to adjust our pricing packages. Furthermore, creators’ price sensitivity may vary by location, and as we expand into different countries, our pricing packages may not enable us to compete effectively in these countries. In addition, if our platform or services change, then we may need to, or choose to, revise our pricing. Such changes to our pricing model or our ability to efficiently price our packages and solution could harm our business, results of operations and financial condition and impact our ability to predict our future performance.

If we cannot attract and retain attendees, our business will be harmed.

In order to continue to support creators, we need to continue to provide a compelling platform for creators to attract and retain attendees. Several factors may impact an attendee’s experience with our platform, including:

 

   

our ability to provide an easy solution for attendees to buy tickets or register for an event;

 

30


Table of Contents
   

outages or delays in our platform and other services, including delays in getting into events;

 

   

compatibility with other third-party services, such as Facebook and Spotify, and our ability to connect with other applications through our API;

 

   

fraudulent or unsuccessful events that may result in a bad experience for attendees;

 

   

breaches and other security incidents that could compromise the data of attendees; and

 

   

quality of our customer service and our ability to respond to complaints and other issues in a timely and effective manner.

If attendees become dissatisfied with their experiences on our platform or at an event, they make request refunds, provide negative reviews of our platform or decide not to attend future events on our platform, all of which would harm our business and reputation.

A significant number of our employees are located in Argentina and any favorable or unfavorable developments in Argentina could have an impact on our results of operations.

A significant number of our employees, including engineering and sales and marketing employees, are located in Argentina, and therefore, a portion of our operating expenses are denominated in Argentine pesos. As of June 30, 2018, we had a total of 111 employees located in Argentina, of which 75 are engineers. If the peso strengthens against the U.S. dollar, it could have a negative impact on our results of operations as it would increase our operating expenses. Our business activities in Argentina also subject us to risks associated with changes in and interpretations of Argentine law, including laws related to employment, the protection and ownership of intellectual property and U.S. ownership of Argentine operations. Furthermore, if we had to scale down or close our Argentine operations, there would be significant time and cost required to relocate those operations elsewhere, which could have an adverse impact on our overall cost structure.

The Argentine government has historically exercised significant influence over the country’s economy. Additionally, the country’s legal and regulatory frameworks have at times suffered radical changes, due to significant political influence and uncertainties. In the past, government policies in Argentina included expropriation, nationalization, forced renegotiation or modification of existing contracts, suspension of the enforcement of creditors’ rights, new taxation policies, including royalty and tax increases and retroactive tax claims, and changes in laws and policies affecting foreign trade and investment. Such policies could destabilize the country and adversely affect our business and operating expenses.

In addition, Argentina has experienced labor unrest over wages and benefits paid to workers. In the past, the Argentine government has passed laws, regulations, and decrees requiring companies in the private sector to maintain minimum wage levels and provide specified benefits to employees and may do so again in the future. Employers have also experienced significant pressure from their employees and labor organizations to increase wages and to provide additional employee benefits. Any disruptions, labor unrest, or increased personnel-related expenses in Argentina could have an adverse effect on our business and operating expenses.

Our metrics and estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively affect our reputation and our business.

We regularly review metrics to evaluate growth trends, measure our performance, and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies. Furthermore, if we discover material inaccuracies in our metrics, we may not be able to accurately assess the health of our business and our reputation and our business may be harmed.

 

31


Table of Contents

The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

Market opportunity estimates and growth forecasts included in this prospectus, including those we have generated ourselves or commissioned others to estimate on our behalf, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. Even if the market in which we compete meets the size estimates and growth forecasted in this prospectus, our business could fail to grow for a variety of reasons, which would adversely affect our results of operations. For more information regarding the estimates of market opportunity and the forecasts of market growth included in this prospectus, see the section titled “Market and Industry Data.”

Creator and attendee growth and retention depend upon effective interoperation with operating systems, networks, devices, web browsers and standards that we do not control.

We make our platform available across a variety of operating systems and web browsers. We are dependent on the interoperability of our platform with popular devices, mobile operating systems and web browsers that we do not control, such as Android, iOS, Chrome and Firefox. Any changes, bugs or technical issues in such systems, devices or web browsers that degrade the functionality of our platform, make it difficult for creators or attendees to access or use our platform, impose fees related to our platform or give preferential treatment to competitive products or services could adversely affect usage of our platform. In the event that it is difficult for creators or attendees to access and use our platform, our business and results of operations could be harmed.

Our failure to successfully address the evolving market for transactions on mobile devices and to build mobile products could harm our business.

A significant and growing portion of creators and attendees access our platform through mobile devices. The number of people who access the Internet and purchase goods and services through mobile devices, including smartphones and handheld tablets or computers, has increased significantly in the past few years and is expected to continue to increase. If we are not able to provide creators and attendees with the experience and solutions they want on mobile devices, our business may be harmed.

While we have created mobile applications and versions of much of our web content, if these mobile applications and versions are not well received by creators and attendees, our business may suffer. In addition, we face different fraud risks and regulatory risks from transactions sent from mobile devices than we do from personal computers. If we are unable to effectively anticipate and manage these risks, our business and results of operations may be harmed.

Our software is highly complex and may contain undetected errors.

The software underlying our platform is highly complex and may contain undetected errors or vulnerabilities, some of which may only be discovered after the code has been used in a production environment to deliver products and services. Any real or perceived errors, failures, bugs or other vulnerabilities discovered in our code could result in negative publicity and damage to our reputation, loss of creators and attendees, loss of or delay in market acceptance of our platform, loss of competitive position, loss of revenue or liability for damages, overpayments and/or underpayments, any of which could harm the confidence of creators and attendees on our platform, our business, results of operations and financial condition. In such an event, we may be required or may choose to expend additional resources in order to help correct the problem. Since creators use our platform for processes that are critical to their businesses, errors, failures or bugs in our code could result in creators seeking significant compensation from us for any losses they suffer and/or ceasing conducting business with us altogether. There can be no assurance that provisions typically included in our agreements with creators that attempt to limit our exposure to claims would be enforceable or adequate or would otherwise protect us from

 

32


Table of Contents

liabilities or damages with respect to any particular claim. Even if unsuccessful, a claim brought against us by any creators would likely be time-consuming and costly to defend and could seriously damage our reputation and brand.

We rely on software and services licensed from other parties. Defects in or the loss of software or services from third parties could increase our costs and adversely affect the quality of our service.

Components of our platform include various types of software and services licensed from unaffiliated third parties. Our business would be disrupted if any of the software or services we license from others or functional equivalents thereof were either no longer available to us or no longer offered on commercially reasonable terms. In either case, we would be required to either redesign our platform to function with software or services available from other parties or develop these components ourselves, which would result in increased costs and could result in delays in the release of new solutions and services on our platform. Furthermore, we might be forced to limit the features available in our platform due to changes by our third-party software and service providers. In addition, if we fail to maintain or renegotiate any of these software or service licenses, we could face significant delays and diversion of resources in attempting to license and integrate functional equivalents.

If we fail to adequately protect our intellectual property rights, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue and incur costly litigation to protect our rights.

Our success is dependent, in part, upon protecting our intellectual property rights. We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws and contractual restrictions to establish and protect our intellectual property rights in our platform. However, the steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. While we take precautions, it may still be possible for unauthorized third parties to copy our technology and use our proprietary information to create solutions and services that compete with ours. Some license provisions protecting against unauthorized use, copying, transfer and disclosure of our technology may be unenforceable under the laws of certain jurisdictions and foreign countries. Further, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States. To the extent we expand our international activities, our exposure to unauthorized copying and use of our technology and proprietary information may increase.

We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective in controlling access to, and use and distribution of, our platform and proprietary information. Further, these agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our platform or solutions.

In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Litigation to protect and enforce our intellectual property rights could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our platform or solutions, impair the functionality of our platform or solutions, delay introductions of enhancements to our platform, result in our substituting inferior or more costly technologies into our platform or solutions, or injure our reputation. In addition, we may be required to license additional technology from third parties to develop and market new features in our platform or solutions, and we cannot assure you that we could license that technology on commercially reasonable terms or at all. Our inability to license such technology on commercially reasonable terms could adversely affect our ability to compete.

 

33


Table of Contents

We use open source software in our platform, which could subject us to litigation or other actions.

We use open source software in our platform and may use more open source software in the future. The terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our platform. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their solutions. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have an adverse effect on our business, results of operations or financial condition or require us to devote additional research and development resources to change our platform. In addition, if we were to combine our proprietary software with open source software in a certain manner, we could, under certain of the open source licenses, be required to release the source code of our proprietary software. If we inappropriately use open source software, we may be required to re-engineer our platform, discontinue the sale of our platform or take other remedial actions. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software.

Our business is subject to various import and export regulations. Our failure to comply with those laws and regulations could harm our business.

Economic and trade sanctions programs that are administered by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) prohibit or restrict transactions to or from, and dealings with specified countries, their governments, and in certain circumstances, with individuals and entities that are specially designated nationals of those countries, and other sanctioned persons, including narcotics traffickers and terrorists or terrorist organizations. As federal, state and foreign legislative regulatory scrutiny and enforcement actions in these areas increase, we expect our costs to comply with these requirements will increase, perhaps substantially. Failure to comply with any of these requirements could result in the limitation, suspension or termination of our platform, imposition of significant civil and criminal penalties, including fines, and/or the seizure and/or forfeiture of our assets. While we have policies and procedures for compliance with these economic sanctions regulations, given the technical limitations in developing measures that will prevent access to Internet-based services from particular geographies or by particular individuals, and additional factors, such as the ability of users to place on our platform false or deliberately misleading information, we believe that we may have provided services in connection with events that were located in a country subject to an embargo by the United States that may not have been in compliance with the economic sanctions regulations administered by OFAC. We have previously identified and expect we will continue to identify customer accounts for our platform and services that may originate from or are intended to benefit, persons in countries that are subject to U.S. embargoes including events in or relating to Cuba, Iran, North Korea, Syria and the Crimea region of Ukraine.

On June 11, 2018, we submitted to OFAC an initial voluntary self-disclosure, and on July 17, 2018, a final report regarding the discovery of potentially unauthorized uses of our services by persons and in countries subject to U.S. economic sanctions. We will continue to work to remediate gaps in our compliance policies and procedures, potentially in ways that may be time-consuming or result in the delay or loss of sales opportunities or impose other costs. Additionally, we cannot guarantee these measures will be fully effective in deterring unlawful activity on our platform. OFAC may conduct its own investigation of these events to determine whether to assess fines and penalties. We cannot predict when OFAC will complete its review and determine whether any violations occurred or levy penalties, including potential penalties against us for facilitating unlawful activity. Each instance in which we provide services through our platform may constitute a separate violation of these laws.

Further, our products incorporate encryption technology. These encryption products may be exported from the United States only with the required export authorizations, including by a license, a license exception or other

 

34


Table of Contents

appropriate government authorizations. Such products may also be subject to certain regulatory reporting requirements. Various countries also regulate the import of certain encryption technology, including through import permitting and licensing requirements, and have enacted laws that could limit our customers’ ability to import our services into those countries. Governmental regulation of encryption technology and of exports and imports of encryption products, or our failure to obtain required approval for our products and services, when applicable, could harm our international sales and adversely affect our revenue. Compliance with applicable regulatory requirements regarding the provision of our products and services, including with respect to new products and services, may delay the introduction of our products and services in various markets or, in some cases, prevent the provision of our products and services to some countries altogether.

Our business is subject to a wide range of laws and regulations. Our failure to comply with those laws and regulations could harm our business.

We are subject to a number of U.S. federal and state and foreign laws and regulations that involve matters central to our business. For example, our platform is subject to an increasingly strict set of legal and regulatory requirements intended to help detect and prevent money laundering, terrorist financing, fraud and other illicit activity. The interpretation of those requirements by judges, regulatory bodies and enforcement agencies is changing, often quickly and with little notice. Changes in laws and regulations could impose more stringent requirements on us to detect and prevent illegal and improper activity by creators, which can increase our operating costs and reduce our margins. For example, to date, platforms like ours are immune from liability resulting from the improper or illegal actions facilitated by the platform, but initiated by its users, under Section 230 of the Communications Decency Act (CDA). If the CDA is amended in a manner that reduces protections for our platform, we will need to increase our content moderation operations, which may harm our results of operations.

In addition, the ticketing business is subject to many laws and regulations, both foreign and domestic. These laws and regulations vary from jurisdiction to jurisdiction and may sometimes conflict. Outside of ticketing regulations, creators are often subject to regulations of their own, such as permitting and crowd control requirements. Regulatory agencies or courts may claim or hold that we are responsible for ensuring that creators comply with these laws and regulations, which could greatly increase our compliance costs, expose us to litigation, subject us to fines and penalties and otherwise harm our business.

Failure to comply with economic sanctions and anti-bribery, anti-corruption and similar laws associated with our activities outside of the United States could subject us to penalties and other adverse consequences.

We are subject to the United States Foreign Corrupt Practices Act of 1977, as amended (FCPA), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the United Kingdom Bribery Act 2010 (Bribery Act), and other anti-corruption and anti-bribery laws in various jurisdictions, both domestic and abroad, where we conduct activities or have users. Our sales team sells use of our platform abroad, and we face significant risks if we fail to comply with the FCPA and other anti-corruption laws that prohibit companies and their agents and third-party business parties and intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to foreign government officials, political parties and private-sector recipients for the purpose of obtaining or retaining business, directing business to any person, or securing any advantage. In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses engage in practices that are prohibited by the FCPA or other applicable laws and regulations. We may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, service providers and agents, even if we do not authorize such activities. While we have policies and procedures to address compliance with such laws, we cannot ensure that all of our employees, users and agents, as well as those contractors to which we outsource certain of our business operations, will not take actions in violation of our policies or agreements and applicable law, for which we may be ultimately held responsible.

 

35


Table of Contents

Further, as noted above, we believe it may have been used for events located in countries subject to an embargo by the United States in potential violation of the economic sanctions regulations and has filed an initial voluntary self-disclosure with OFAC. We are conducting an internal review and will then submit a final voluntary self-disclosure to OFAC. Any violation of the FCPA or other applicable anti-bribery, anti-corruption laws, and economic sanctions laws could result in various actions, including whistleblower complaints, adverse media coverage, investigations and actions by federal or state attorneys general or foreign regulators, loss of export privileges, severe criminal or civil fines and penalties or other sanctions, forfeiture of significant assets, or suspension or debarment from U.S. government contracts, all of which may have an adverse effect on our reputation, business, results of operations and prospects. Responding to any enforcement action may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees. Civil penalties for violations of the economic sanctions regulations may include monetary penalties of up to approximately $295,000 or twice the value of the transaction, whichever is greater, per violation as well as criminal penalties for knowing and willful violations. A filing of a voluntary self-disclosure mitigates any potential civil penalties. At this time, we cannot determine if OFAC would impose any penalties against us or individuals for the potential violations and if any such penalties would be material to us.

Failure to comply with applicable anti-money laundering laws and regulations could harm our business and result of operations.

Due to the risk of our platform being used for illegal or illicit activity, any perceived or actual breach of compliance by us with respect to anti-money laundering (AML) laws, rules, and regulations, including the Bank Secrecy Act, USA Patriot Act and Title 18 U.S.C. Sections 1956-57 and 1960, could have a significant impact on our reputation and could cause us to lose existing creators and attendees, prevent us from obtaining new creators, require us to expend significant funds to remedy civil and criminal problems caused by violations and to avert further violations and expose us to legal risk and potential liability that could have a material effect on our business. Several of these laws require certain companies to adopt an AML compliance program, including those companies that are characterized as a money services business or money transmitter. Moreover, many states have their own AML legal regulatory regimes and interpretations and applications of those legal principles are complex and varied. If the federal government or any state government took the position that we were a money services business or money transmitter, they could require us to register as such and obtain a money transmitter license.

While we maintain that we are not a money services business or money transmitter, we have voluntarily elected to adopt an AML compliance program to mitigate the risk of our platform being used for illegal or illicit activity and to help detect and prevent fraud. Our AML compliance program is designed to foster trust in our platform and services connecting event creators and event attendees and also may mitigate our legal exposure should any federal or state regulator challenge our determination that we are not a money services business or money transmitter. Should a federal or state regulator make a determination that we have operated as an unlicensed money services business or money transmitter, we could be subject to civil and criminal fines, penalties, costs, legal fees, reputational damage or other negative consequences, all of which may have an adverse effect on our business, finances, and operations.

Failure to comply with laws and regulations related to payments could harm our business and results of operations.

The laws and regulations related to payments are complex and vary across different jurisdictions in the United States and globally. Furthermore, changes in laws, rules and regulations have occurred and may occur in the future, which may impact our business practices. As a result, we are required to spend significant time and effort to comply with those laws and regulations and to ensure that creators and attendees are complying with those laws and regulations. Any failure or claim of our failure to comply or any failure by our third-party service providers and partners to comply with such laws and regulations or other requirements, including the Payment Card Industry Data Security Standard (PCI-DSS), could divert substantial resources, result in liabilities or force us to stop offering EPP, which will harm our business and results of operations.

 

36


Table of Contents

For example, if we are deemed to be a money transmitter as defined by applicable regulation, we could be subject to certain laws, rules and regulations enforced by multiple authorities and governing bodies in the United States and numerous state and local agencies who may define money transmitter differently. For example, certain states may have a more expansive view of money transmitter. Additionally, outside of the United States, we could be subject to additional laws, rules and regulations related to the provision of payments and financial services, and as we expand into new jurisdictions, the foreign regulations and regulators governing our business that we are subject to will expand as well. If we are found to be a money transmitter under any applicable regulation and we are not in compliance with such regulations, we may be subject to fines or other penalties in one or more jurisdictions levied by federal or state or local regulators, including state Attorneys General, as well as those levied by foreign regulators. In addition to fines, penalties for failing to comply with applicable rules and regulations could include criminal and civil proceedings, forfeiture of significant assets, or other enforcement actions. We could also be required to make changes to our business practices or compliance programs as a result of regulatory scrutiny.

Additionally, if we experience substantial losses related to payment card transactions or in the event of noncompliance with the PCI-DSS, we may choose to, or be required to, cease accepting certain payment cards for payment. If we were unable to accept payment cards through EPP, creators would be required to use third-party payment options, which would reduce the simplicity and ease-of-use of our platform.

Our reported results of operations may be adversely affected by changes in accounting principles generally accepted in the United States.

Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board (FASB), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported results of operations, and may even affect the reporting of transactions completed before the announcement or effectiveness of a change. For example, in May 2014, the FASB issued Accounting Standards Update (ASU), No. 2014-09, Revenue from Contracts with Customers (Topic 606), which superseded nearly all existing revenue recognition guidance.

We face potential liability, expenses for legal claims and harm to our business based on the nature of the events business.

We face potential liability and expenses for legal claims relating to the events business, including potential claims related to event injuries allegedly caused by us, creators, service providers, partners or unrelated third parties. For example, third parties could assert legal claims against us in connection with personal injuries related to occurrences at an event, including deaths. Even if our personnel are not involved in these occurrences, we may face legal claims and still incur substantial expenses to resolve such claims. Further, Eventbrite may provide guidance or onsite personnel for event safety. In such instances, if an injury occurs at an event, we may face legal claims or additional liability for providing such services.

Unfavorable outcomes in legal proceedings may harm our business and results of operations.

Our results of operations may be affected by the outcome of pending and future litigation, claims, investigations, legal and administrative cases and proceedings, whether civil or criminal, or lawsuits by governmental agencies or private parties. If the results of these legal proceedings are unfavorable to us or if we are unable to successfully defend against third-party lawsuits, we may be required to pay monetary damages or may be subject to fines, penalties, injunctions or other censure that could have an adverse effect on our business, results of operations and financial condition. Even if we adequately address the issues raised by an investigation or proceeding or successfully defend a third-party lawsuit or counterclaim, we may have to devote significant financial and management resources to address these issues, which could harm our business, results of operations and financial condition.

 

37


Table of Contents

Our results of operations may be adversely affected if we are subject to a protracted infringement claim or a claim that results in a significant damage award.

There is considerable patent and other intellectual property development activity in our industry. Our success depends on our not infringing upon the intellectual property rights of others. Our competitors, as well as a number of other entities, including non-practicing entities and individuals, may own or claim to own intellectual property rights relating to our industry and may challenge the validity or scope of our intellectual property rights. From time to time, third parties, including our competitors and non-practicing entities, have claimed and may in the future claim that our products or technologies may infringe their intellectual property rights and may assert patent, copyright, trade secret and other claims based on intellectual property rights against us and our customers, suppliers and channel partners. For example, in February 2013, a non-practicing entity named Eventbrite as a defendant in a multi-defendant patent infringement claim. A claim may also be made relating to technology or intellectual property rights that we acquire or license from third parties. If we were subject to a claim of infringement, regardless of the merit of the claim or our defenses, the claim could:

 

   

require costly litigation to resolve and the payment of substantial damages;

 

   

require significant management time;

 

   

cause us to enter into unfavorable royalty or license agreements;

 

   

require us to discontinue the sale of products and solutions through our platform;

 

   

require us to indemnify creators or third-party service providers or partners; and/or

 

   

require us to expend additional development resources to redesign our platform.

If currency exchange rates fluctuate substantially in the future, our results of operations, which are reported in U.S. dollars, could be adversely affected.

Our international operations expose us to the effects of fluctuations in currency exchange rates. We incur expenses for employee compensation and other operating expenses at our international locations in the local currency, and accept payment in currencies other than the U.S. dollar. Since we conduct business in currencies other than U.S. dollars but report our results of operations in U.S. dollars, we face exposure to fluctuations in currency exchange rates, which could have a negative impact on our results of operations.

Our international operations subject us to potential adverse tax consequences and additional taxes.

We generally conduct our international operations through wholly-owned subsidiaries and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Because of these international operations, we may be subject to adverse tax changes or interpretation, increased taxes due to increased international expansion, and tax charges due to complex intercompany agreements.

We may be subject to income taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have an adverse effect on our liquidity and results of operations. In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements apply to us or assert that benefits of tax treaties are not available to us, any of which could have a negative impact on us or our results of operations. As we earn an increasing portion of our revenue, and accumulate a greater portion of our cash flow, in foreign jurisdictions, we could face a higher effective tax rate and incremental cash tax payments.

Additionally, our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions. The relevant taxing authorities may disagree with our

 

38


Table of Contents

determinations as to the income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates and reduced cash flows and may harm our results of operations and financial condition. We believe that our financial statements reflect adequate reserves to cover such a contingency, but there can be no assurances in that regard.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

As of December 31, 2017, we had net operating loss carryforwards (NOLs) for federal and California income tax purposes of approximately $135.9 million and $46.0 million, respectively, which may be available to offset tax income in the future. In general, under Section 382 of the Internal Revenue Code of 1986, as amended (Code), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. We have undergone ownership changes in the past, which have resulted in minor limitations on our ability to utilize our NOLs, and if we undergo an ownership change in connection with or after this offering, our ability to utilize NOLs could be further limited by Section 382 of the Code. Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. The existing NOLs of some of our subsidiaries may be subject to limitations arising from ownership changes prior to, or in connection with, their acquisition by us. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities, including for state tax purposes. For these reasons, we may not be able to utilize some portion of our NOLs, none of which are currently reflected on our balance sheet, even if we attain profitability.

The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and significantly reforms the Code. The Tax Act, among other things, includes changes to U.S. federal tax rates and the rules governing net operating loss carryforwards. For NOLs arising in tax years beginning after December 31, 2017, the Tax Act limits a taxpayer’s ability to utilize NOL carryforwards to 80% of taxable income (as calculated before taking the NOL carryforwards into account). In addition, NOLs arising in tax years ending after December 31, 2017 can be carried forward indefinitely, but carryback is generally prohibited. NOLs generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation, and NOLs generated in tax years ending before January 1, 2018 will continue to have a two-year carryback and twenty-year carryforward period. As we maintain a full valuation allowance against our U.S. NOLs, these changes will not impact our balance sheet as of December 31, 2017. However, in future years, at the time a deferred tax asset is recognized related to our NOLs, the changes in the carryforward/carryback periods as well as the new limitation on use of NOLs may significantly impact our valuation allowance assessments for NOLs generated after December 31, 2017.

We have incurred indebtedness, which could adversely affect our ability to adjust our business to respond to competitive pressures and to obtain sufficient funds to satisfy our future research and development needs, to protect and enforce our intellectual property and to meet other needs.

We have entered into a $60.0 million credit facility in June 2017 and a $15.0 million credit facility in May 2018, both with Western Technology Investments (WTI). These facilities are collateralized by substantially all of our assets and intellectual property rights. As of June 30, 2018, we had $74.2 million of principal indebtedness outstanding under the WTI credit facilities. These facilities contain customary events of default. $29.7 million of borrowings under the first WTI credit facility will become due in February 2022 and the remaining $29.7 million will become due in September 2022. $14.8 million of borrowing under the second WTI facility will become due in November 2022. Any required repayment of our existing indebtedness as a result of an event of default would reduce our cash on hand such that we would not have those funds available for use in our business, which could have a material adverse effect on our business, operating results and financial condition.

 

39


Table of Contents

Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and adversely affect our results of operations.

We may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our security holders may experience significant dilution of their ownership interests, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our Class A common stock and Class B common stock. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions, or agree to other restrictive covenants. If we need additional capital and cannot raise it on acceptable terms, if at all, we may not be able to, among other things:

 

   

develop and enhance our platform and solutions;

 

   

continue to expand our technology development, sales and marketing organizations;

 

   

hire, train and retain employees;

 

   

respond to competitive pressures or unanticipated working capital requirements; or

 

   

pursue acquisition opportunities.

Our inability to do any of the foregoing could reduce our ability to compete successfully and could have an adverse effect on our business.

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act), the Sarbanes-Oxley Act and the listing standards of the New York Stock Exchange (NYSE). We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. We are also continuing to improve our internal control over financial reporting. We have expended, and anticipate that we will continue to expend, significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business, including increased complexity resulting from our international expansion. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of management reports and independent registered public accounting firm audits of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures, and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a

 

40


Table of Contents

negative effect on the market price of our Class A common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.

Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have an adverse effect on our business and results of operations and could cause a decline in the price of our Class A common stock.

Risks Related to Ownership of Our Class A Common Stock

We have a limited operating history in an evolving industry which makes it difficult to evaluate our current business future prospects and increases the risk of your investment.

We launched operations in 2006. This limited history in an evolving industry makes it difficult to effectively assess or forecast our future prospects. You should consider our business and prospects in light of the risks and difficulties we encounter or may encounter. These risks and difficulties include our ability to cost-effectively acquire new creators and engage and retain existing creators, maintain the quality of our technology infrastructure that can efficiently and reliably handle ticket sales and event management services globally and the deployment of new features and solutions and successfully compete with other companies that are currently in, or may enter, the ticketing and event solution space. Additional risks include our ability to effectively manage growth, responsibly use the data that creators and attendees share with us, process, store, protect and use personal data in compliance with governmental regulation, contractual obligations and other legal obligations related to privacy and security and avoid interruptions or disruptions in our service or slower than expected load times for our platform. Other risks posed by our limited operating history include the ability to hire, integrate and retain world class talent at all levels of the company, continue to expand our business in markets outside the United States, and defend ourselves against litigation, regulatory, intellectual property, privacy or other claims. If we fail to address the risks and difficulties that we face, including those associated with the challenges listed above, our business and our results of operations will be adversely affected.

The market price of our Class A common stock may be volatile and may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

Prior to this offering, there has been no public market for shares of our Class A common stock. The initial public offering price of our Class A common stock will be determined through negotiation among the underwriters and us and may vary from the market price of our Class A common stock following this offering. The market prices of the securities of other newly public companies have historically been highly volatile. The market price of our Class A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

 

   

overall performance of the equity markets and/or publicly-listed technology companies;

 

   

actual or anticipated fluctuations in our net revenue or other operating metrics;

 

   

changes in the financial projections we provide to the public or our failure to meet these projections;

 

   

failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet the estimates or the expectations of investors;

 

   

the economy as a whole and market conditions in our industry;

 

   

rumors and market speculation involving us or other companies in our industry;

 

41


Table of Contents
   

announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

 

   

new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

 

   

lawsuits threatened or filed against us;

 

   

recruitment or departure of key personnel;

 

   

other events or factors, including those resulting from war, incidents of terrorism or responses to these events; and

 

   

the expiration of contractual lock-up or market standoff agreements.

In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect many technology companies’ stock prices. Often, their stock prices have fluctuated in ways unrelated or disproportionate to the companies’ operating performance. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and harm our business.

Moreover, because of these fluctuations, comparing our results of operations on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our net revenue or results of operations fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our Class A common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated net revenue or earnings forecasts that we may provide.

The dual class structure of our common stock has the effect of concentrating voting control with our directors, executive officers and their affiliates and that may depress the trading price of our Class A common stock.

Our Class B common stock has ten votes per share, and our Class A common stock, which is the stock we are offering in this offering, has one vote per share. Following this offering, our directors, executive officers and their affiliates will hold in the aggregate         % of the voting power of our capital stock. Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively will continue to control a majority of the combined voting power of our common stock. This concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders.

Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes. The conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term.

In addition, in July 2017, Standard & Poor’s announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices. Affected indices include the S&P 500, S&P MidCap 400, and S&P SmallCap 600, which together make up the S&P Composite 1500. Under the announced policies, our dual class capital structure would make us ineligible for inclusion in any of

 

42


Table of Contents

these indices, and as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track these indices will not be investing in our stock. These policies are new and it is as of yet unclear what effect, if any, they will have on the valuations of publicly-traded companies excluded from the indices, but it is possible that they may depress these valuations compared to those of other similar companies that are included.

An active trading market for our Class A common stock may never develop or be sustained.

We intend to apply to list our Class A common stock on the NYSE, under the symbol “EB.” However, there has been no prior public trading market for our Class A common stock. We cannot assure you that an active trading market for our Class A common stock will develop on that exchange or elsewhere or, if developed, that any market will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our Class A common stock will develop or be maintained, the liquidity of any trading market, your ability to sell your shares of our Class A common stock when desired, or the prices that you may obtain for your shares.

We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our Class A common stock less attractive to investors.

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including:

 

   

not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes Oxley Act;

 

   

reduced disclosure obligations regarding executive compensation in our periodic reports and annual report on Form 10-K; and

 

   

exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We could be an emerging growth company for up to five years following the completion of this offering. Our status as an emerging growth company will end as soon as any of the following takes place:

 

   

the last day of the fiscal year in which we have more than $1.07 billion in annual revenue;

 

   

the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates;

 

   

the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; or

 

   

the last day of the fiscal year ending after the fifth anniversary of the completion of this offering.

We cannot predict if investors will find our Class A common stock less attractive if we choose to rely on the exemptions afforded emerging growth companies. If some investors find our Class A common stock less attractive because we reply on any of these exemptions, there may be a less active trading market for our Class A common stock and the market price of our Class A common stock may be more volatile.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result,

 

43


Table of Contents

our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our Class A common stock and trading volume could decline.

The trading market for our Class A common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, the trading price for our Class A common stock would be negatively affected. If one or more of the analysts who cover us downgrade our Class A common stock or publish inaccurate or unfavorable research about our business, our Class A common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us on a regular basis, demand for our Class A common stock could decrease, which might cause our Class A common stock price and trading volume to decline.

Sales of substantial amounts of our Class A common stock in the public markets, such as when our lock-up restrictions are released, or the perception that sales might occur, could cause the market price of our Class A common stock to decline.

Sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our directors, executive officers and principal stockholders, or the perception that these sales might occur, could cause the market price of our Class A common stock to decline. Based on the total number of outstanding shares of our common stock as of June 30, 2018, upon completion of this offering, we will have outstanding a total of            shares of Class A common stock and            shares of Class B common stock. This assumes no exercise of outstanding options and gives effect to the conversion of all of our outstanding shares of preferred stock into shares of Class B common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus) and the issuance of            shares of Class A common stock on the completion of this offering.

Substantially all of our securities outstanding prior to the completion of this offering are currently restricted from resale as a result of lock-up and market standoff agreements. See the section titled “Shares Eligible for Future Sale” for additional information. These securities will become available to be sold 180 days after the date of the final prospectus relating to the offering. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC may, in their discretion, permit our security holders to sell shares prior to the expiration of the restrictive provisions contained in the lock-up agreements. Sales of a substantial number of such shares upon expiration of the lock-up and market standoff agreements, the perception that such sales may occur or early release of these agreements could cause our market price to fall or make it more difficult for you to sell your Class A common stock at a time and price that you deem appropriate. Shares held by directors, executive officers and other affiliates will also be subject to volume limitations under Rule 144 under the Securities Act of 1933, as amended (Securities Act), and various vesting agreements.

In addition, as of June 30, 2018, we had 18,442,924 options outstanding that, if fully exercised, would result in the issuance of shares of Class B common stock. All of the shares of Class B common stock issuable upon the exercise of stock options and the shares reserved for future issuance under our equity incentive plans will be registered for public resale under the Securities Act. Accordingly, these shares will be able to be freely sold in the public market upon issuance, subject to existing lock-up or market standoff agreements, volume limitations under Rule 144 for our executive officers and directors and applicable vesting requirements.

Following this offering, the holders of              shares of our Class B common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set

 

44


Table of Contents

forth on the cover page of this prospectus) will have rights, subject to some conditions, to require us to file registration statements for the public resale of the Class A common stock issuable upon conversion of such shares or to include such shares in registration statements that we may file for us or other stockholders. Any registration statement we file to register additional shares, whether as a result of registration rights or otherwise, could cause the market price of our Class A common stock to decline or be volatile.

Purchasers in this offering will immediately experience substantial dilution in net tangible book value.

The initial public offering price of our Class A common stock is substantially higher than the pro forma net tangible book value per share of our common stock immediately following this offering based on the total value of our tangible assets less our total liabilities. Therefore, if you purchase shares of our Class A common stock in this offering, you will experience immediate dilution of $             per share, the difference between the price per share you pay for our Class A common stock and the pro forma net tangible book value per share as of June 30, 2018, after giving effect to the issuance of shares of our Class A common stock in this offering. See the section titled “Dilution” below.

Our management will have broad discretion in the use of proceeds from this offering and our use may not produce a positive rate of return.

The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our stock and thereby enable access to the public equity markets by our employees and stockholders, obtain additional capital and strengthen our position in the ticketing and event solution market. We cannot specify with certainty our plans for the use of the net proceeds we receive from this offering. However, we currently intend to use the net proceeds we receive from this offering (i) to repay a portion of our outstanding indebtedness under our term loan facilities, which, as of June 30, 2018, had an outstanding balance of $74.2 million and (ii) for working capital and other general corporate purposes. Our management will have broad discretion over the specific use of the net proceeds we receive in this offering and might not be able to obtain a significant return, if any, on investment of these net proceeds. Investors in this offering will need to rely upon the judgment of our management with respect to the use of proceeds. If we do not use the net proceeds that we receive in this offering effectively, our business, results of operations and financial condition could be harmed.

Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans or otherwise will dilute all other stockholders.

We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors and consultants under our stock incentive plans. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in complementary companies, products or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per share value of our Class A common stock to decline.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

As a public company, we will be subject to the reporting requirements of the Exchange Act, the listing standards of the NYSE and other applicable securities rules and regulations. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources. For example, the Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and results of operations. As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management’s attention may be diverted from other business concerns, which could harm our business, results of operations and financial condition. Although we have already hired additional employees to assist us in complying with these

 

45


Table of Contents

requirements, we may need to hire more employees in the future or engage outside consultants, which will increase our operating expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest substantial resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from business operations to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which may result in an increased risk of threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business, results of operations and financial condition.

The individuals who now constitute our senior management team have limited experience managing a publicly-traded company and limited experience complying with the increasingly complex laws pertaining to public companies. Our senior management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations.

We do not intend to pay dividends on our Class A common stock and, consequently, the ability of Class A common stockholders to achieve a return on investment will depend on appreciation in the price of our Class A common stock.

We have never declared or paid any dividends on our capital stock. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. As a result, Class A common stockholders may only receive a return on your investment in our Class A common stock if the market price of our Class A common stock increases.

Provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current board of directors and limit the market price of our Class A common stock.

Provisions that will be in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. Our amended and restated certificate of incorporation and amended and restated bylaws, which will become effective upon the completion of this offering, will include provisions that:

 

   

provide that our board of directors will be classified into three classes of directors with staggered three-year terms;

 

46


Table of Contents
   

permit the board of directors to establish the number of directors and fill any vacancies and newly-created directorships;

 

   

require super-majority voting to amend some provisions in our amended and restated certificate of incorporation and amended and restated bylaws;

 

   

authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;

 

   

provide that only the Chairperson of our board of directors, our Chief Executive Officer, or a majority of our board of directors will be authorized to call a special meeting of stockholders;

 

   

provide for a dual class common stock structure in which holders of our Class B common stock have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our Class A and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets;

 

   

prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

 

   

provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and

 

   

advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.

Moreover, Section 203 of the Delaware General Corporation Law may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock. See the section titled “Description of Capital Stock” for additional information.

Our amended and restated bylaws will designate a state or federal court located within the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Our amended and restated bylaws will provide that a state or federal court located within the State of Delaware will be the exclusive forum for:

 

   

any derivative action or proceeding brought on our behalf;

 

   

any action asserting a breach of fiduciary duty;

 

   

any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws; or

 

   

any action asserting a claim against us that is governed by the internal affairs doctrine.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers or other employees, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision which will be contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.

 

47


Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements within the meaning of the federal securities laws, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this prospectus include, but are not limited to, statements about:

 

   

our future financial performance, including our revenue, costs of revenue and operating expenses;

 

   

our ability to achieve and grow profitability;

 

   

the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs;

 

   

our ability to maintain the security and availability of our platform;

 

   

our predictions about industry and market trends;

 

   

our ability to attract and retain creators;

 

   

our ability to successfully expand internationally;

 

   

our ability to effectively manage our growth and future expenses;

 

   

our estimated total addressable market;

 

   

our ability to maintain, protect and enhance our intellectual property;

 

   

our ability to comply with modified or new laws and regulations applying to our business;

 

   

the attraction and retention of qualified employees and key personnel;

 

   

our ability to successfully defend litigation brought against us;

 

   

the increased expenses associated with being a public company; and

 

   

our use of the net proceeds from this offering.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this prospectus.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this prospectus primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this prospectus to reflect events or circumstances after the date of this prospectus or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions

 

48


Table of Contents

or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

 

49


Table of Contents

MARKET AND INDUSTRY DATA

This prospectus contains statistical data, estimates and forecasts that are based on various sources, including independent industry publications or other publicly available information, as well as other information based on our internal sources. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors,” that could cause results to differ materially from those expressed in these publications and reports. The content of the below sources, except to the extent specifically set forth in this prospectus, does not constitute a portion of this prospectus and is not incorporated herein.

Certain information in the text of this prospectus is contained in independent industry publications and publicly-available reports. The source of these independent industry publications is provided below:

 

   

U.S. Bureau of Economic Analysis database accessed on April 27, 2018.

 

   

Crowd DNA poll results, taken April 11-16, 2017.

 

   

eMarketer, “ B2B Event Marketing 2017: How the Event Stack Bridges Offline and Online ,” dated July 2017.

 

   

U.S. Census database accessed on June 12, 2018.

 

50


Table of Contents

USE OF PROCEEDS

We estimate that the net proceeds from the sale of shares of our Class A common stock that we are selling in this offering will be approximately $            million, based upon an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ option to purchase additional shares of our Class A common stock from us is exercised in full, we estimate that our net proceeds would be approximately $            million, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase or decrease in the assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the net proceeds that we receive from this offering by approximately $            million, assuming that the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions payable by us. Similarly, each increase or decrease of 1.0 million in the number of shares of our Class A common stock offered by us would increase or decrease the net proceeds that we receive from this offering by approximately $            million, assuming the assumed initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions payable by us.

The principal purposes of this offering are to increase our capitalization, increase our financial flexibility, create a public market for our Class A common stock and enable access to the public equity markets for our stockholders and us. We currently intend to use the net proceeds of this offering (i) to repay our outstanding indebtedness under our term loan facilities (which includes $30.0 million of indebtedness we incurred in September 2017 to finance our acquisition of Ticketfly, LLC), which are described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Term Loans,” which, had we completed this offering and repaid the term loans on June 30, 2018, the amount of such repayment would equal $83.1 million including prepayment penalties and (ii) for working capital and other general corporate purposes. We may use some of the net proceeds to satisfy tax withholding obligations related to the vesting and settlement of RSUs. We may also use a portion of the net proceeds to acquire or invest in complementary businesses, products, services, technologies or other assets. We have not entered into any agreements or commitments with respect to any material acquisitions or investments at this time.

We cannot specify with certainty the particular uses of the net proceeds that we will receive from this offering or the amounts we actually spend on the uses set forth above. Pending the use of proceeds from this offering as described above, we plan to invest the net proceeds that we receive in this offering in short-term and intermediate-term interest-bearing obligations, investment-grade investments, certificates of deposit or direct or guaranteed obligations of the U.S. government. Our management will have broad discretion in the application of the net proceeds from this offering and investors will be relying on the judgment of our management regarding the application of the proceeds.

We entered into a loan and security agreement with Western Technology Investments in June 2017, which provided for a secured credit facility of up to $60.0 million of term debt. To finance our acquisition of Ticketfly, LLC, in September 2017, we borrowed $30.0 million as a term loan under the facility.

 

51


Table of Contents

DIVIDEND POLICY

We have never declared or paid any cash dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. In addition, the terms of our credit facilities place certain limitations on the amount of cash dividends we can pay prior to a qualifying public offering of our securities, even if no amounts are currently outstanding.

 

52


Table of Contents

CAPITALIZATION

The following table sets forth cash, as well as our capitalization, as of June 30, 2018 as follows:

 

   

on an actual basis;

 

   

on a pro forma basis, giving effect to (i) the filing and effectiveness of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws, each of which will occur immediately prior to the completion of this offering, (ii) the automatic conversion of 41,628,207 shares of our redeemable convertible preferred stock into              shares of our common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), (iii) the automatic exercise of outstanding warrants to purchase 933,269 shares of our redeemable convertible preferred stock into the same number of shares of our common stock, (iv) the net issuance of                      shares of our common stock issuable pursuant to the vesting and settlement of 802,900 RSUs subject to performance conditions outstanding as of June 30, 2018, based upon an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, (v) the increase in other accrued liabilities and an equivalent decrease in additional paid-in capital of $            million in connection with tax withholding obligations related to such RSUs, based upon an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus and (vi) the reclassification of our outstanding common stock as Class B common stock, all of which will occur immediately prior to the completion of this offering; and

 

   

on a pro forma as adjusted basis, giving effect to (i) the pro forma adjustments set forth above, (ii) the sale and issuance by us of                  shares of our Class A common stock in this offering, based on an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us and (iii) the repayment of our outstanding indebtedness under our term loan facilities, which is described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Term Loans” which, had we completed this offering and repaid the term loans on June 30, 2018, the amount of such repayment would equal $83.1 million, including prepayment penalties.

If the initial public offering price is equal to the midpoint of the estimated offering price range set forth on the cover page of this prospectus, all 8,181,957 outstanding shares of our Series G redeemable convertible preferred stock would convert and be reclassified into                  shares of our Class B common stock. A $1.00 decrease in the initial public offering price would increase the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by                     , and a $1.00 increase in the initial public offering price would decrease the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by                    ; provided, however that in no event would the 8,181,957 outstanding shares of our Series G redeemable convertible preferred stock convert and reclassify into fewer than 8,181,957 shares of our Class B common stock.

 

53


Table of Contents

The pro forma as adjusted information set forth in the table below is illustrative only and will be adjusted based on the actual initial public offering price and other final terms of this offering. You should read this table together with our financial statements and related notes, and the sections titled “Selected Consolidated Financial Data and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” that are included elsewhere in this prospectus.

 

     As of June 30, 2018  
     Actual     Pro
Forma
    Pro Forma as
Adjusted (1)
 
     (in thousands, except share and per share data)  

Cash (2)

   $ 258,720     $ 258,720     $    
  

 

 

   

 

 

   

 

 

 

Total debt

   $ 66,360     $ 66,360     $                    

Redeemable convertible preferred stock warrant liability

     17,945       —      

Redeemable convertible preferred stock, $0.00001 par value; 42,561,476 shares authorized, 41,628,207 shares issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma or pro forma as adjusted

     334,018       —      

Stockholders’ equity (deficit):

      

Preferred stock, $0.00001 par value; no shares authorized or issued and outstanding, actual; 100,000,000 shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted

     —         —         —    

Common stock, $0.00001 par value; 97,167,059 shares authorized and 22,512,056 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

     —         —         —    

Class A common stock, $0.00001 par value; no shares authorized or issued and outstanding, actual; 1,000,000,000 shares authorized, no shares issued and outstanding, pro forma; 1,000,000,000 shares authorized,             shares issued and outstanding, pro forma as adjusted

     —         —      

Class B common stock, $0.00001 par value; no shares authorized or issued and outstanding, actual; 100,000,000 shares authorized,             shares issued and outstanding, pro forma and pro forma as adjusted

     —         1    

Treasury stock at cost, 188,480 shares

     (488     (488  

Additional paid-in capital

     103,502      

Accumulated deficit

     (254,197    
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     (151,183    
  

 

 

   

 

 

   

 

 

 

Total capitalization

   $ 267,140     $       $    
  

 

 

   

 

 

   

 

 

 

 

(1)

Each $1.00 increase or decrease in the assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the pro forma as adjusted cash; additional paid-in capital total stockholders’ equity and total capitalization by $             million, assuming that the number of shares of our Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions payable by us. An increase or decrease of 1.0 million shares of our Class A common stock offered by us would increase or decrease, as applicable, the cash; additional paid-in capital; and total stockholders’ equity and total capitalization by $             million, assuming an initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions payable by us.

(2)

To calculate our available liquidity at any date, we add funds receivable and creator advances, net, to our cash balance and reduce this by our accounts payable, creators. As of June 30, 2018, we had funds receivable of $37.1 million, creator advances, net, of $21.6 million, and accounts payable, creators, of $277.6 million. This provided us with $39.8 million of available liquidity as of June 30, 2018.

 

54


Table of Contents

If the underwriters’ option to purchase additional shares of our Class A common stock from us were exercised in full, pro forma as adjusted cash, additional paid-in capital, total stockholders’ equity (deficit), total capitalization and shares of Class A common stock issued and outstanding as of December 31, 2017 would be $             million, $             million, $             million, $             million and     shares, respectively.

The pro forma column in the table above is based on             shares of Class A and            shares of Class B common stock outstanding (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus) as of June 30, 2018, and excludes:

 

   

18,442,924 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock that were outstanding as of June 30, 2018 with a weighted-average exercise price of $6.17 per share;

 

   

4,878,897 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock that were granted after June 30, 2018 with an exercise price of $13.72 per share;

 

   

230,000 shares of our Class B common stock issuable under RSUs that were outstanding as of June 30, 2018 and are subject to service and performance conditions;

 

   

81,161 shares of our Class B common stock issued after June 30, 2018 in connection with a business acquisition; and

 

   

             shares of our Class A common stock reserved for future issuance under our stock-based compensation plans to be adopted in connection with this offering, consisting of:

 

   

     shares of our Class A common stock reserved for future issuance under the 2018 Plan; and

 

   

     shares of our Class A common stock reserved for future issuance under the ESPP.

Our 2018 Plan and ESPP each provides for annual automatic increases in the number of shares reserved thereunder.

 

55


Table of Contents

DILUTION

If you invest in our Class A common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our Class A common stock and the pro forma as adjusted net tangible book value per share of our Class A common stock immediately after this offering. Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of shares of Class A common stock in this offering and the pro forma as adjusted net tangible book value per share of Class A common stock immediately after completion of this offering. Net tangible book value per share is determined by dividing our total tangible assets less our total liabilities by the number of shares of common stock outstanding. Our historical net tangible book value (deficit) as of June 30, 2018 was $             million, or $             per share. Our pro forma net tangible book value (deficit) as of June 30, 2018 was $             million, or $             per share, based on the total number of shares of our common stock outstanding as of June 30, 2018, after giving effect to (i) the filing and effectiveness of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws, (ii) the automatic conversion of 41,628,207 shares of our redeemable convertible preferred stock into              shares of our common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), (iii) the automatic exercise of outstanding warrants to purchase 933,269 shares of our redeemable convertible preferred stock into the same number of shares of our common stock, (iv) the net issuance of              shares of our common stock issuable pursuant to the vesting and settlement of 802,900 RSUs subject to performance conditions outstanding as of June 30, 2018, based upon an assumed initial public offering price of $         per share, which is the midpoint of the estimate offering price range set forth on the cover page of this prospectus, (v) the increase in other accrued liabilities and an equivalent decrease in additional paid-in-capital of $             million in connection with tax withholding obligations related to such RSUs, based upon an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus and (vi) the reclassification of our outstanding common stock as Class B common stock, all of which will occur immediately prior to the completion of this offering.

After giving effect to the sale by us of              shares of our Class A common stock in this offering at the assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and the application of the proceeds from this offering as described under the section titled “Use of Proceeds” our pro forma as adjusted net tangible book value as of June 30, 2018 would have been $             million, or $             per share. This represents an immediate increase in pro forma net tangible book value of $             per share to our existing stockholders and immediate dilution of $             per share to investors purchasing shares of our Class A common stock in this offering at the assumed initial public offering price. The following table illustrates this dilution:

 

Assumed initial public offering price per share

      $  

Pro forma net tangible book value (deficit) per share as of June 30, 2018

   $             

Increase in pro forma net tangible book value (deficit) per share attributable to new investors in this offering

     
  

 

 

    

Pro forma as adjusted net tangible book value per share immediately after this offering

     
     

 

 

 

Dilution per share to new investors in this offering

      $            
     

 

 

 

Each $1.00 increase or decrease in the assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, our pro forma as adjusted net tangible book value per share to new investors by $            , and would increase or decrease, as applicable, dilution per share to new investors in this offering by $            , assuming that the number of shares of our Class A common stock offered by us, as set forth on the cover page of

 

56


Table of Contents

this prospectus, remains the same and after deducting estimated underwriting discounts and commissions payable by us. In addition, to the extent any outstanding options to purchase Class B common stock are exercised, new investors would experience further dilution. If the underwriters exercise their option to purchase additional shares of our Class A common stock from us in full, the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering would be $             per share, and the dilution in pro forma net tangible book value per share to new investors in this offering would be $             per share.

If the initial public offering price is equal to the midpoint of the estimated offering price range set forth on the cover page of this prospectus, all 8,181,957 outstanding shares of our Series G redeemable convertible preferred stock would convert and be reclassified into                  shares of our Class B common stock. A $1.00 decrease in the initial public offering price would increase the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by                 , and a $1.00 increase in the initial public offering price would decrease the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by                 ; provided, however that in no event would the 8,181,957 outstanding shares of our Series G redeemable convertible preferred stock convert and reclassify into fewer than 8,181,957 shares of our Class B common stock .

The following table presents, on a pro forma as adjusted basis as of June 30, 2018, after giving effect to the conversion and reclassification of all outstanding shares of redeemable convertible preferred stock into Class B common stock immediately prior to the completion of this offering, the differences between the existing stockholders and the new investors purchasing shares of our Class A common stock in this offering with respect to the number of shares purchased from us, the total consideration paid or to be paid to us, which includes net proceeds received from the issuance of common stock and redeemable convertible preferred stock, cash received from the exercise of stock options, and the average price per share paid or to be paid to us at an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

 

     Shares Purchased     Total Consideration     Average
Price per
Share
 
     Number      Percent     Amount      Percent  

Existing stockholders

          $                      $              

New investors

            
  

 

 

    

 

 

   

 

 

    

 

 

   

Totals

        100     $        100  
  

 

 

    

 

 

   

 

 

    

 

 

   

Each $1.00 increase or decrease in the assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the total consideration paid by new investors and total consideration paid by all stockholders by approximately $             million, assuming that the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions payable by us. In addition, to the extent any outstanding options to purchase Class B common stock are exercised, new investors will experience further dilution.

Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters’ option to purchase additional shares of Class A common stock. If the underwriters exercise their option to purchase additional shares of Class A common stock in full from us, our existing stockholders would own     % and our new investors would own     % of the total number of shares of our common stock outstanding upon the completion of this offering.

The number of shares of Class A and Class B common stock that will be outstanding after this offering is based on             shares of our Class A common stock and             shares of our Class B common stock outstanding as of June 30, 2018 (including additional shares issuable upon conversion of our Series G

 

57


Table of Contents

redeemable convertible preferred stock based on an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), and excludes:

 

   

18,442,924 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock that were outstanding as of June 30, 2018 with a weighted-average exercise price of $6.17 per share;

 

   

4,878,897 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock that were granted after June 30, 2018 with an exercise price of $13.72 per share;

 

   

230,000 shares of our Class B common stock issuable under RSUs that were outstanding as of June 30, 2018 and are subject to service and performance conditions;

 

   

81,161 shares of our Class B common stock issued after June 30, 2018 in connection with a business acquisition; and

 

   

     shares of our Class A common stock reserved for future issuance under our stock-based compensation plans to be adopted in connection with this offering, consisting of:

 

   

     shares of our Class A common stock reserved for future issuance under the 2018 Plan; and

 

   

     shares of our Class A common stock reserved for future issuance under the ESPP.

Our 2018 Plan and ESPP each provides for annual automatic increases in the number of shares reserved thereunder.

 

58


Table of Contents

SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER DATA

The following selected consolidated statements of operations data for the years ended December 31, 2016 and 2017 and the consolidated balance sheet data as of December 31, 2016 and 2017 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated statements of operations data for the six months ended June 30, 2017 and 2018 and the consolidated balance sheet data as of June 30, 2018 have been derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited interim consolidated financial statements on the same basis as the audited consolidated financial statements and have included all adjustments, consisting only of normal recurring adjustments that, in our opinion, are necessary to state fairly the financial information set forth in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future and the results for the six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year or any other period. You should read the following selected consolidated financial data and other data below in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

 

59


Table of Contents
     Year Ended
December 31,
    Six Months Ended
June 30,
 
     2016     2017     2017     2018  
     (in thousands, except percentages and
per share data)
 

Consolidated Statements of Operations

        

Net revenue

   $ 133,499     $ 201,597     $ 88,153     $ 142,068  

Cost of net revenue (1)

     55,689       81,667       35,302       57,947  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     77,810       119,930       52,851       84,121  

Operating expenses (1) :

        

Product development

     22,723       30,608       11,481       19,815  

Sales, marketing and support

     48,391       55,170       23,171       35,623  

General and administrative

     41,749       67,559       26,546       44,994  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     112,863       153,337       61,198       100,432  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (35,053     (33,407     (8,347     (16,311

Interest expense

     (3,513     (6,462     (1,958     (5,562

Change in fair value of redeemable convertible preferred stock warrant liability

     —         (2,200     —         (6,071

Gain on extinguishment of promissory note

     —         —         —         16,340  

Other income (expense), net

     (1,695     3,509       1,904       (3,176
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision for (benefit from) income taxes

     (40,261     (38,560     (8,401     (14,780

Income tax provision (benefit)

     131       (13     (55     800  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stockholders

   $ (40,392   $ (38,547   $ (8,346   $ (15,580
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to common stockholders, basic and diluted (2)

   $ (2.48 )   $ (1.98 )   $ (0.44   $ (0.73
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted (2)

     16,291     19,500     18,961       21,289  
  

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma net loss per share attributable to common stockholders, basic and diluted (2)

     $         $    
    

 

 

     

 

 

 

Pro forma weighted-average shares outstanding used to compute pro forma net loss per share attributable to common stockholders, basic and diluted (2)

        
    

 

 

     

 

 

 

Supplemental pro forma net loss per share attributable to common stockholders, basic and diluted (2)

     $       $    
    

 

 

     

 

 

 

Supplemental pro forma weighted-average shares outstanding used to compute supplemental pro forma net loss per share attributable to common stockholders, basic and
diluted (2)

        
    

 

 

     

 

 

 

 

     Year Ended
December 31,
    Six Months Ended
June 30,
 
     2016     2017     2017      2018  
     (in thousands, except percentages)  

Non-GAAP and Other Data

         

Paid tickets (3)

     44,572       71,046       30,274        46,697  

Retention rate (4)

     93     97     N/A        N/A  

Adjusted EBITDA (5)

   $ (17,591   $ 4,206     $ 3,700      $ 10,024  

Free cash flow (for the trailing twelve months) (6)

   $ (5,681   $ 21,143     $ 8,552      $ 13,162  

 

60


Table of Contents
(1)

Amounts include stock-based compensation expense as follows:

 

     Year Ended
December 31,
       Six Months Ended
June 30,
 
     2016        2017        2017        2018  
     (in thousands)  

Cost of net revenue

   $ 134        $ 200        $ 65        $ 124  

Product development

     2,020          2,411          836          1,348  

Sales, marketing and support

     1,767          2,364          774          1,578  

General and administrative

     4,610          5,883          2,086          5,058  
  

 

 

      

 

 

      

 

 

      

 

 

 

Total stock-based compensation

   $ 8,531        $ 10,858        $ 3,761        $ 8,108  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

(2)

Please refer to Note 14 to our consolidated financial statements for an explanation of the method used to compute the historical, pro forma and supplemental pro forma net loss per share attributable to common stockholders and the number of shares used in the computation of the per share amounts.

(3)

We define paid tickets as the number of tickets that generate ticket fees for us.

(4)

To obtain our retention rate, we calculate the gross ticket fees generated by all creators in the year prior to the year of measurement (Prior Year Gross Ticket Fees). We then calculate the gross ticket fees those creators generated in the applicable year of measurement (Measurement Year Gross Ticket Fees). Finally, to calculate our retention rate for a measurement year we divide the Measurement Year Gross Ticket Fees by the Prior Year Gross Ticket Fees. Fees associated with the sale of tickets on our platform are gross ticket fees, which are the total fees generated from paid ticket sales, before adjustments for refunds, credits and amortization of non-recoupable signing fees. We calculate retention rate on an annual basis only.

(5)

Adjusted EBITDA is a financial measure that is not calculated in accordance with U.S. GAAP. See the section titled “—Non-GAAP Financial Measures—Adjusted EBITDA” for information regarding Adjusted EBITDA, including the limitations of such measure, and a reconciliation of Adjusted EBITDA to net income (loss).

(6)

Free cash flow is a financial measure that is not calculated in accordance with U.S. GAAP. See the section titled “—Non-GAAP Financial Measures—Free Cash Flow” for information regarding free cash flow, including the limitations of such measure, and a reconciliation of free cash flow to net cash provided by operating activities.

 

     As of December 31,     As of June 30,  
     2016     2017     2018  
     (in thousands)  

Consolidated Balance Sheet Data

      

Cash (1)

   $ 139,538     $ 188,986     $ 258,720  

Working capital

     34,438       32,301       34,113  

Total assets

     245,337       571,924       637,645  

Total debt

     —         77,751       66,360  

Redeemable convertible preferred stock warrant liability

     —         7,271       17,945  

Redeemable convertible preferred stock

     200,082       334,018       334,018  

Total stockholders’ deficit

     (149,084     (155,814     (151,183

 

(1)

To calculate our available liquidity at any date, we add funds receivable and creator advances, net, to our cash balance and reduce this by our accounts payable, creators. As of December 31, 2016 and 2017 and June 30, 2018, we had funds receivable of $26.1 million, $51.6 million and $37.1 million, creator advances, net, of $7.6 million, $20.1 million and $21.6 million, and accounts payable, creators, of $137.1 million, $228.0 million and $277.6 million, respectively. This provided us with $36.1 million, $32.7 million and $39.8 million of available liquidity as of December 31, 2016 and 2017 and June 30, 2018, respectively.

See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Key Business Metrics” for further information on our key metrics.

Non-GAAP Financial Measures

We believe that the use of Adjusted EBITDA and free cash flow is helpful to our investors as they are metrics used by management in assessing the health of our business and our operating performance. These measures, which we refer to as our non-GAAP financial measures, are not prepared in accordance with GAAP and have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under GAAP. You are encouraged to evaluate the adjustments and the reasons we consider them appropriate.

 

61


Table of Contents

Adjusted EBITDA

Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes and in evaluating acquisition opportunities.

We calculate Adjusted EBITDA as net loss attributable to common stockholders adjusted to exclude depreciation and amortization, stock-based compensation expense, interest expense, the change in fair value of redeemable convertible preferred stock warrant liability, gains on extinguishment of promissory note, direct and indirect acquisition-related costs, income tax provision (benefit) and other income (expense), which consisted of interest income and foreign exchange rate gains and losses. Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP.

The following table presents a reconciliation of Adjusted EBITDA from net loss for each of 2016, 2017 and the six months ended June 30, 2017 and 2018:

 

     Year Ended
December 31,
    Six Months Ended
June 30,
 
     2016     2017     2017     2018  
    

(in thousands)

 

Net loss

   $ (40,392   $ (38,547   $ (8,346   $ (15,580

Add:

        

Depreciation and amortization

     7,639       19,418       5,961       16,782  

Stock-based compensation

     8,531       10,858       3,761       8,108  

Interest expense

     3,513       6,462       1,958       5,562  

Change in fair value of redeemable convertible preferred stock warrant liability

     —         2,200       —         6,071  

Gain on extinguishment of promissory note

     —         —         —         (16,340

Direct and indirect acquisition-related costs (1)

     1,292       7,337       2,325       1,445  

Income tax provision (benefit)

     131       (13     (55     800  

Other income (expense), net

     1,695       (3,509     (1,904     3,176  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (17,591   $ 4,206     $ 3,700     $ 10,024  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Direct and indirect acquisition-related costs consist primarily of transaction and transition related fees and expenses, including legal, accounting, tax and other professional fees as well as personnel-related costs such as severance and retention bonuses for completed, pending and attempted acquisitions.

Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital spending that occurs off of the income statement or account for future contractual commitments, (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures and (iii) Adjusted EBITDA does not reflect the interest and principal required to service our indebtedness. Our Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner as we calculate the measure, limiting its usefulness as a comparative measure. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider Adjusted EBITDA alongside other financial performance measures, including our net loss and other GAAP results.

 

62


Table of Contents

Free Cash Flow

Free cash flow is a key performance measure that our management uses to assess our overall performance. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making strategic acquisitions and strengthening our financial position.

We calculate free cash flow as net cash flow from operating activities less purchases of property and equipment and capitalized internal-use software development costs, over a trailing twelve-month period. Since quarters are not uniform in terms of cash usage, we believe a trailing twelve-month view provides the best understanding of the underlying trends of the business.

The following table presents a reconciliation of free cash flow, which is computed on a trailing twelve months basis, from net cash provided by operating activities for each of 2016, 2017 and for the twelve months ended June 30, 2017 and 2018:

 

     Year Ended
December 31,
    Twelve Months Ended
June 30,
 
     2016     2017     2017     2018  
    

(in thousands)

 

Net cash provided by operating activities

   $ 2,785     $ 29,821     $ 17,268     $ 24,554  

Less:

        

Purchases of property and equipment and capitalized internal-use software development costs

     (8,466     (8,678     (8,716     (11,392
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ (5,681   $ 21,143     $ 8,552     $ 13,162  
  

 

 

   

 

 

   

 

 

   

 

 

 

Although we believe free cash flow provides another important lens into the business, free cash flow is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. Free cash flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as cash provided by operating activities. Some of the limitations of free cash flow is that it may not properly reflect capital commitments to creators that need to be paid in the future or future contractual commitments that have not been realized in the current period. Our free cash flow may not be comparable to similarly titled measures of other companies because they may not calculate free cash flow in the same manner as we calculate the measure, limiting its usefulness as a comparative measure.

 

63


Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

You should read the following discussion and analysis in conjunction with the information set forth under “Selected Consolidated Financial Data and Other Data” and our consolidated financial statements and related notes included elsewhere in this prospectus. The following discussion contains forward-looking statements, including, without limitation, our expectation of our future performance, liquidity and capital resources; our plans, estimates, beliefs and expectations; and other non-historical statements in this discussion, are forward looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risk and uncertainties described under “Risk Factors” and elsewhere in this prospectus. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Our Business

We built a powerful, broad technology platform to enable creators to solve the challenges associated with creating live experiences. Our platform integrates components needed to seamlessly plan, promote and produce live events, thereby allowing creators to reduce friction and costs, increase reach and drive ticket sales. By reducing risk and complexity, we allow creators to focus their energy on producing compelling and successful events.

We charge creators on a per-ticket basis when an attendee purchases a paid ticket for an event. We grow with creators as their attendance grows and as they plan, promote and produce more events. In 2017, we helped more than 700,000 creators issue approximately 203 million tickets across three million events in over 170 countries.

We derive substantially all of our revenue from fees associated with the sale of tickets on our platform, inclusive of payment processing. Our fee structure typically consists of a fixed fee and a percentage of the price of each ticket sold by a creator. Fees associated with the sale of tickets on our platform are gross ticket fees, which we define as the total fees generated from paid ticket sales, before adjustments for refunds, credits and amortization of non-recoupable signing fees.

In 2017, our net revenue was $201.6 million, up from $133.5 million in 2016, representing year-over-year net revenue growth of 51.0%. Our net revenue for the six months ended June 30, 2018 was $142.1 million, up from $88.2 million for the six months ended June 30, 2017, representing period-over-period net revenue growth of 61.2%. The growth over these periods was primarily the result of paid ticket growth, fueled in part by recent acquisitions. Our net loss was $40.4 million and $38.5 million in 2016 and 2017, respectively, and $8.3 million and $15.6 million for the six months ended June 30, 2017 and 2018, respectively. Our Adjusted EBITDA was $(17.6) million and $4.2 million in 2016 and 2017, respectively, and $3.7 million and $10.0 million for the six months ended June 30, 2017 and 2018, respectively. In 2017, our net cash provided by operating activities was $29.8 million, and free cash flow was $21.1 million. Our net cash provided by operating activities was $48.8 million for the six months ended June 30, 2018. Our free cash flow, which is computed on a trailing twelve months basis, was $13.2 million for the twelve months ended June 30, 2018.

For more information about Adjusted EBITDA and free cash flow, including the limitations of such measures, and a reconciliation to the most directly comparable measures calculated in accordance with GAAP, see the section titled “Selected Consolidated Financial Data and Other Data—Non-GAAP and Other Data.”

Our Business Model

The key elements of our business model are:

Efficiently Acquire Creators

We are highly focused on creating a seamless experience that attracts creators to our platform organically. More than 95% of creators who used our platform in 2017 signed themselves up for Eventbrite. In 2017, we

 

64


Table of Contents

derived 54% of our net revenue from these creators. We attract creators to our platform through multiple means, including prior experience as attendees, word of mouth from other creators, our prominence in search engine results, the ability to try our platform for free events and our library of content. We augment these channels with a highly-targeted direct sales effort that focuses on acquiring creators with events in specific categories or countries. We leverage this efficient customer acquisition model to attract a wide range of creators to Eventbrite while keeping our sales and marketing costs low. Substantially all creators go on to create and manage events with little service or support.

Provide High-Quality Solutions at a Cost Advantage

We deliver our solutions on a cloud-based architecture that allows us to serve a wide variety of creators on a single global system, thereby reducing our operating and support costs. Our cloud-based platform does not require us to own or operate data centers or proprietary on-premises equipment. Additionally, our highly-automated platform requires limited service and support staff. All of this frees up capital and other resources to dedicate to enhancing our platform and growing our business. Our platform is extensible and modular, allowing us to efficiently improve and expand our services, as well as partner with third parties to deliver the best experience possible for creators.

Drive Powerful Retention

When creators enjoy success on Eventbrite, they continue to use our platform. This happens because we are able to meet their diverse and changing needs through a creator-focused approach. Our platform scales with creators, able to handle their smallest gatherings to their largest and most complex events. As creators’ needs evolve, our platform’s breadth and extensibility allow access to a full suite of solutions, enhanced by third-party integrated offerings. Further, we continually invest to deliver new and enhanced functionality. Our success in serving creators is reflected in our retention rate, which was 93% and 97% in 2016 and 2017, respectively.

Enhance Growth and Monetization

We believe that there are many opportunities within the fragmented event management market to expand both core ticketing and complementary solutions. We designed our business model and technology platform to take advantage of this opportunity by ensuring we can support the addition of new event categories and countries for ticketing, as well as new revenue-generating solutions beyond ticketing. For example, we evolved our platform to meet the needs of music creators, helping to grow music venues on our platform from less than 100 in 2012 to over 1,000 in 2017, inclusive of acquisitions. Similarly, after making enhancements across our platform, revenue from outside of the United States grew from 18% to 30% from 2012 to 2017. Finally, EPP uses multiple external vendors to provide a single, seamless payments option for creators and attendees, and has expanded to allow the use of multiple local payment methods like Boleto in Brazil and iDeal in the Netherlands. This offering has grown to support approximately 90% of paid tickets in 2017. We believe that our ability to extend into new event categories and countries and add new revenue streams differentiates us from our competitors.

 

65


Table of Contents

Our Attractive Cohort Economics

The revenue we have generated from new creators has increased over time. We evaluate this trend by tracking annual cohorts of new creators. Each creator cohort consists of creators that first paid us a fee in a specific year. The gross ticket fees we have generated for the first year of each creator cohort has more than doubled from 2013 to 2017. Gross ticket fees of each creator cohort in year one are set forth below:

 

 

LOGO

$50 $47 $40 $38 Millions) $31 ( $ $30 $26 Fees Ticket $20 $20 Gross $10 $0 2013 2014 2015 2016 2017

We have demonstrated a consistent track record of retaining gross ticket fees from creator cohorts over time. For example, we retained 78% of the gross ticket fees from our 2013 creator cohort in 2017. Our annual gross ticket fees by creator cohort is set forth below:

 

 

LOGO

$180 $160 $140 Millions) $120 ( $ $100 Fees $80 Ticket $60 Gross $40 $20 $0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Key Factors Affecting Our Performance

We believe that the growth of our business and our future success are dependent upon many factors. While each of these areas presents significant opportunities for us, they also pose important challenges that we must successfully address in order to sustain the growth of our business and improve our results of operations.

Attract New Creators and Retain Existing Creators

Attracting new creators to our platform and retaining existing creators drives our revenue growth. We expect to continue to invest in our brand and marketing to attract more new creators, while simultaneously

 

66


Table of Contents

developing our platform to delight and retain existing creators. Our ability to attract new creators and retain existing creators is impacted by how our features and functionality develop, our pricing, the creator and attendee experience on our platform, our brand awareness among the professional creator community, our search engine prominence, the quality and audience for our professional content, the continued transition of creators from using our platform for free events to paid events and solutions and the effectiveness of our direct sales efforts. We must continue to attract new creators and retain existing creators to maintain our current business as well as continue to drive growth in the future.

Enhance and Expand Our Technical Platform

We strive to provide a platform that provides creators with a seamless experience both to sign up for and publish live events. We initially started with a core ticketing platform and over time we have added meaningful capabilities to our platform, such as expansion into new categories or countries, packages that better target particular creator types, and new solutions like payment processing, custom-designed websites and proprietary technology for the day of the event. We intend to continue to invest in our platform to develop additional functionality and solutions. If we do not enhance our platform with the functionalities that are desired by creators and if we are not able to provide easy-to-use solutions required by creators in an efficient manner, our ability to attract and retain creators will be harmed.

Invest Capital to Drive Additional Growth Opportunities

We have and will continue to invest in our business, including solutions on our platform separate from generating fees from the sale and processing of tickets, such as web presence, promoted listing and on-site services and equipment. These efforts target both expanding how we serve creators as well as enhancing the benefits of our platform for attendees. We have invested $4.8 million and $10.6 million in 2016 and 2017, respectively, and $3.7 million and $9.0 million for the six months ended June 30, 2017 and 2018, respectively, in these complementary solutions on our platform and have generated less than five percent of our net revenue from such solutions during these periods. While our investments are based on a careful and deliberate planning process, there is no guarantee that we will choose the right investments, or that those investments pay off for us. If we are unable to effectively invest in developing new solutions, our business may be harmed.

Competitive Landscape

We operate in a space that is fragmented with many types of competitors, including traditional offline alternatives, internal systems, category-based competitors who operate in a single geography or region, and smaller platform providers. While we believe we have differentiated our business from these competitors by building a powerful and broad technology platform for creators, we must continue to respond to competitive pressures. Consequently, we will need to continue to invest in this platform to differentiate our business and remain competitive, as well as respond to shifts in industry pricing levels, revenue models or business practices. Further, our industry is evolving and our business may be impacted if we face additional competition from new entrants into the market, such as large advertising or e-commerce providers. If we are not able to compete effectively with these potential competitors, our business, results of operations and financial condition will be harmed.

International Expansion

Our paid tickets for events outside of the United States represented 30.3% and 36.0% of our total paid tickets in 2016 and 2017. Net revenue outside the United States during 2016 and 2017 was 27.0% and 30.0% of our total net revenue. Net revenue outside the United States was 29.9% and 26.5% of our total net revenue for the six months ended June 30, 2017 and 2018, respectively. As we deepen our global penetration, we believe international demand for our platform and solutions will continue to increase. Accordingly, we believe there is significant opportunity to grow our international business. We have invested, and plan to continue to invest, in the adoption of our platform and solutions internationally, including localization of our platform and the addition of critical capabilities to our platform required to serve those local markets. Further, our international business delivers higher gross margins, primarily because of lower payment processing expenses. If we are not able to

 

67


Table of Contents

effectively address the risk associated with international expansion, such as product-market fit in a given geography, currency fluctuation or unique factors in a specific market, our business and results of operations may be harmed.

In January 2017, we acquired 100% of the outstanding equity of TSTM Group Limited (ticketscript), a Dutch ticketing company with operations throughout Europe. We acquired ticketscript in order to enhance our ticketing solutions. The acquisition date fair value of the consideration transferred was $33.4 million, which consisted of $7.7 million in cash, $7.5 million in promissory notes and 2.7 million shares of our common stock and options to purchase 0.3 million shares of our common stock. These promissory notes were allowed to be prepaid at any time and we repaid the promissory notes in full, including accrued interest, in August 2017.

In September 2017, we acquired 100% of the outstanding equity of Ticketfly, LLC (Ticketfly), a subsidiary of Pandora Media, Inc. We acquired Ticketfly in order to expand our solutions for music-related events. The acquisition date fair value of the consideration transferred was $201.1 million, which consisted of $151.1 million in cash and $50.0 million in the form of convertible promissory notes which were paid and issued, respectively, at the closing of the transaction. We repaid these notes in March 2018.

In April 2018, we acquired Ticketea S.L. (Ticketea), a leading Spanish ticketing provider. We acquired Ticketea in order to enhance our ticketing solutions and expand in the Spanish market. The acquisition of Ticketea has been accounted for as a business combination . The acquisition date fair value of the consideration transferred was $11.2 million, which consisted of $3.6 million in cash and 0.7 million shares of our common stock. Of the 0.7 million shares, 0.1 million shares are being held in escrow for adjustments related to working capital requirements and breaches of representations, warranties and covenants. These escrowed shares will be released approximately 18 months from the acquisition date, net of any adjustments. Acquisition costs related to the Ticketea transaction were $0.5 million and are included in general and administrative expenses in the consolidated statement of operations for the six months ended June 30, 2018.

In August 2018, we acquired Picatic E-Ticket Inc., a Vancouver-based ticketing and event registration platform, for a purchase price of CAD $1.8 million in cash and 0.1 million shares of our common stock, less certain adjustments and holdbacks, including adjustments related to working capital requirements and breaches of representations, warranties and covenants.

For more information regarding our acquisitions of ticketscript, Ticketfly and Ticketea, see Note 3 to our consolidated financial statements, Ticketfly’s audited financial statements and our pro forma consolidated financial statements included elsewhere in this prospectus.

 

68


Table of Contents

Key Business Metrics

We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions.

Paid Tickets

 

LOGO

Tickets (Millions) 0 50 100 150 200 250 56 39 17 2013 2014 25 54 79 109 75 34 2015 2016 99 143 2017 71 132 203 44

Our success in serving creators is measured in large part by the number of tickets that generate ticket fees for us. We consider this an important indicator of the underlying health of the business. We refer to these tickets as paid tickets. The below table sets forth the number of paid tickets for the periods indicated:

 

     Year Ended
December 31,
     Six Months
Ended June 30,
 
     2016      2017      2017      2018  
    

(in thousands)

 

Paid Tickets

     44,572        71,046        30,274        46,697  

Retention Rate

When creators experience success on our platform, they continue to organize events with us. We monitor retention of our gross ticket fees to measure our ability to retain creators on our platform. To obtain our retention rate, we determine (i) the gross ticket fees generated by all creators in the year prior to the year of measurement (Prior Year Gross Ticket Fees) and (ii) the gross ticket fees those creators generated in the applicable year of measurement (Measurement Year Gross Ticket Fees). We calculate our retention rate for a measurement year by dividing the Measurement Year Gross Ticket Fees by the Prior Year Gross Ticket Fees. We calculate retention rate on an annual basis only. While we have seen a strong retention rate from creators, this measure may fluctuate from period to period based on the success of creators and the events that they produce.

 

    Year Ended
December 31,
 
            2016                     2017          

Retention Rate

    93     97

Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance

 

69


Table of Contents

on a more consistent basis, we use this measure for business planning purposes and in evaluating acquisition opportunities.

We calculate Adjusted EBITDA as net loss attributable to common stockholders adjusted to exclude depreciation and amortization, stock-based compensation expense, interest expense, the change in fair value of our redeemable convertible preferred stock warrant liability, gain on extinguishment of promissory note, direct and indirect acquisition-related costs, income tax provision (benefit) and other income (expense), which consisted of interest income and foreign exchange rate gains and losses. Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP.

The following table presents our Adjusted EBITDA for the periods indicated:

 

     Year Ended
December 31,
     Six Months
Ended June 30,
 
             2016                     2017                      2017                      2018          
    

(in thousands)

 

Adjusted EBITDA

   $ (17,591   $ 4,206      $ 3,700      $ 10,024  

For more information about Adjusted EBITDA, including the limitations of such measure, and a reconciliation to our net loss attributable to common stockholders, see the section titled “Selected Consolidated Financial Data and Other Data—Non-GAAP and Other Data.”

Free Cash Flow

Free cash flow is a key performance measure that our management uses to assess our overall performance. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making strategic acquisitions and strengthening our financial position.

We calculate free cash flow as cash flow from operating activities less purchases of property and equipment and capitalized internal-use software development costs, over a trailing twelve-month period. Because quarters are not uniform in terms of cash usage, we believe a trailing twelve-month view provides the best understanding of the underlying trends of the business.

The following table presents our free cash flow for the periods indicated:

 

     Year Ended
December 31,
     Twelve Months Ended
June 30,
 
     2016     2017      2017      2018  
    

(in thousands)

 

Free cash flow

   $ (5,681   $ 21,143      $ 8,552      $ 13,162  

For more information about free cash flow, including the limitations of such measure, and a reconciliation to operating cash flow see the section titled “Selected Consolidated Financial Data and Other Data—Non-GAAP and Other Data.”

Components of Results of Operations

Net Revenue

We generate substantially all of our net revenue through the sale of paid tickets on our platform. Our fee structure typically consists of a fixed fee and a percentage of the price of each ticket sold by a creator. Net revenue is recognized as tickets are sold. Net revenue excludes sales taxes and value added taxes (VAT) and is presented net of estimated customer refunds, chargebacks and amortization of creator signing fees.

 

70


Table of Contents

We also generate a small portion of our net revenue from complementary solutions, such as day-of-event on-site product and services, web presence development and branding, software solutions to manage event venue administration and marketing services, that we provide to creators. These complementary solutions represented less than five percent of our net revenue in the aggregate in each of 2016 and 2017 and for the six months ended June 30, 2017 and 2018.

Cost of Net Revenue

Cost of net revenue consists primarily of payment processing fees, expenses associated with the operation and maintenance of our platform, including website hosting fees and platform infrastructure costs, amortization of capitalized software development costs, onsite operations costs and allocated customer support costs. Cost of net revenue also includes the amortization expense related to our acquired developed technology assets. We expect to continue to incur amortization expense related to our acquired developed technology assets through the end of 2018 for prior acquisitions. We may incur such expense related to future acquisitions in future periods. We expect cost of revenue as a percentage of revenue to fluctuate in the near- to mid-term primarily as a result of our geographical revenue mix. Our payment processing costs for credit and debit card payments are generally lower outside of the United States due to a number of factors, including lower card network fees and lower cost alternative payment networks. Consequently, if we grow more rapidly internationally than in the United States, we expect that our payment processing costs will decline as a percentage of revenue. Thus, in the long-term, we expect cost of revenue to grow in absolute dollars but decrease as a percentage of revenue.

Operating Expenses

Operating expenses consist of product development, sales, marketing and support and general and administrative expenses. Direct and indirect personnel costs, including stock-based compensation expense, are the most significant component of operating expenses. We also include sublease income as a reduction of our operating expenses.

Product development. Product development expenses consist primarily of costs associated with our employees in product development and product engineering activities. We expect our product development expenses to continue to increase in absolute dollars over time. In the near-term, we anticipate our product development expenses will increase as a percentage of net revenue as we focus our product development efforts on enhancing, improving and expanding the capabilities of our platform. We expect that we will continue to invest in building employee and system infrastructure to enhance and support development of new technologies and to integrate acquired businesses and technologies. Over the long-term, we anticipate that it will decrease as a percentage of net revenue as our revenue grows and as we continue to grow our development staff in lower cost markets.

Sales, marketing and support. Sales, marketing and support expenses consist primarily of costs associated with our employees involved in selling and marketing our products, public relations and communication activities, marketing programs, travel and customer support costs associated with free events on our platform. For our sales teams, this also includes commissions. We also classify certain organizer related expenses, such as refunds of the ticket price paid by us on behalf of a creator as sales, marketing and support expense. Sales, marketing and support expenses are driven by investments to grow and retain creators and attendees on our platform. We expect sales, marketing and support expenses to increase in absolute dollars over time. In the near-term, we anticipate sales, marketing and support expenses will fluctuate as a percentage of net revenue, but over the long-term we anticipate that it will decrease as a percentage of net revenue as we expect to see continued growth in net revenue generated from creators that signed up with us through our efficient customer acquisition channels, such as word of mouth referrals, converting free creators to paid creators and converting attendees into creators. We spend a comparatively small portion of our sales, marketing and support costs on these customer acquisition channels. We believe that, in the long-term, our sales, marketing and support expenses will decrease as a percentage of net revenue as we continue to drive sales through these efficient customer acquisition channels.

 

71


Table of Contents

General and administrative. General and administrative expenses consist of personnel costs for finance, accounting, legal, risk, human resources and administrative personnel. It also includes professional fees for legal, accounting, finance, human resources and other corporate matters. Our general and administrative expenses currently include two large non-compensation items: (i) amortization of acquired customer relationship and trade names assets and (ii) reserves for sales tax and VAT accrued on behalf of creators. Our general and administrative expenses have increased on an actual dollar basis over time. We expect general and administrative expenses to increase in absolute dollars over time. In the near-term, we anticipate general and administrative expenses will fluctuate as a percentage of net revenue as we expect to incur additional general and administrative expenses to support our growth as we transition to be a publicly-traded company, which may be partially offset by reductions in sales tax and VAT accruals. Additionally, in connection with this offering, we will recognize $6.9 million of stock based compensation expense related to the vesting of certain RSUs subject to performance conditions. Over the long-term we anticipate that general and administrative expenses will decrease as a percentage of net revenue as our revenue grows and as we experience reductions in sales tax and VAT accruals. Although we expect paid ticket volume to continue to increase, we expect our accruals for sales tax and VAT to decrease steadily over time as a result of our increased certainty as to the amounts we may owe in sales tax and VAT in certain jurisdictions and our increased clarity into how certain tax regulators interpret tax legislation in the various jurisdictions in which we operate.

Interest Expense

Interest expense relates to our build-to-suit lease financing obligation and outstanding debt.

As a result of our build-to-suit lease accounting, a portion of our cash rent payments related to our San Francisco office are classified as interest expense for GAAP reporting purposes. We reported interest expense of $3.5 million for 2016 and 2017 and $1.7 million for each of the six months ended June 30, 2017 and 2018 related to build-to-suit accounting.

Other outstanding debt has been historically related to acquisitions, either as part of consideration or to finance cash consideration for an acquisition. In January 2017, we issued $7.5 million in promissory notes in connection with the ticketscript acquisition. These promissory notes plus accrued interest were fully repaid in August 2017. In September 2017, we issued $50.0 million subordinated convertible notes in connection with the Ticketfly acquisition. Also in September 2017, we drew on our first term loan facility with WTI in the amount of $30.0 million. The subordinated convertible notes were repaid in March 2018 at a discount to issuance, funded in part by an additional draw of $30.0 million against our first term loan facility with WTI. We drew an additional $15.0 million under the second WTI loan facility in May 2018. We had no outstanding debt prior to January 2017.

For more information, see the subsection titled “—Contractual Obligations and Commitments—Term Loans.”

Change in Fair Value of Redeemable Convertible Preferred Stock Warrant Liability

The redeemable convertible preferred stock warrant is classified as a liability on our consolidated balance sheet and remeasured to fair value at each balance sheet date with the corresponding charge recorded as a change in fair value of redeemable convertible preferred stock warrant liability on the consolidated statements of operations. Upon the earlier of exercise of the outstanding warrant or the completion of a liquidation event, including the completion of this offering, the redeemable convertible preferred stock warrant liability will be automatically exercised into common stock, at which time it will no longer be subject to fair value accounting.

Other Income (Expense), Net

Other income (expense), net consists of interest income and foreign exchange rate remeasurement gains and losses recorded from consolidating our subsidiaries each period-end.

 

72


Table of Contents

Income Tax Provision (Benefit)

The tax benefit for 2017 consists primarily of state income taxes in the United States and tax amortization on indefinite-lived intangibles, offset by a benefit related to certain foreign deferred tax assets. Tax expense for 2016 consisted primarily of foreign income taxes in the jurisdictions in which we conduct business. We have a full valuation allowance for our U.S. deferred tax assets primarily consisting of net operating loss carryforwards, accruals and reserves. We expect to maintain this full valuation allowance for the foreseeable future.

The tax provision for the six months ended June 30, 2018 consists primarily of state income taxes in the United States and tax amortization of indefinite-lived intangible assets, offset by a benefit related to certain foreign deferred tax assets. The tax benefit for the six months ended June 30, 2017 consists primarily of state income taxes in the United States offset by a benefit related to certain foreign deferred tax assets. The differences in the tax provision and benefit for the periods presented and the United States federal statutory rate is primarily due to foreign taxes in profitable jurisdictions and the recording of a full valuation allowance on our deferred tax assets and certain foreign losses which benefit from rates lower than the U.S, federal statutory rate.

Results of Operations

The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this prospectus. The following tables set forth our consolidated results of operations data and such data as a percentage of net revenue for the periods presented:

 

     Year Ended
December 31,
     Six Months Ended
June 30,
 
     2016      2017      2017      2018  
     (in thousands, except percentages)  

Consolidated Statements of Operations

           

Net revenue

   $ 133,499      $ 201,597      $ 88,153      $ 142,068  

Cost of net revenue

     55,689        81,667        35,302        57,947  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     77,810        119,930        52,851        84,121  

Operating expenses:

           

Product development

     22,723        30,608        11,481        19,815  

Sales, marketing and support

     48,391        55,170        23,171        35,623  

General and administrative

     41,749        67,559        26,546        44,994  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     112,863        153,337        61,198        100,432  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss from operations

     (35,053      (33,407      (8,347      (16,311

Interest expense

     (3,513      (6,462      (1,958      (5,562

Change in fair value of redeemable convertible preferred stock warrant liability

     —          (2,200      —          (6,071

Gain on extinguishment of promissory note

     —          —          —          16,340  

Other income (expense), net

     (1,695      3,509        1,904        (3,176
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss before provision for (benefit from) income taxes

     (40,261      (38,560      (8,401      (14,780

Income tax provision (benefit)

     131        (13      (55      800  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss attributable to common stockholders

   $ (40,392    $ (38,547    $ (8,346    $ (15,580
  

 

 

    

 

 

    

 

 

    

 

 

 

 

73


Table of Contents
     Year Ended
December 31,
    Six Months Ended
June 30,
 
     2016     2017     2017     2018  

Consolidated Statements of Operations, as a percentage of net revenue

        

Net revenue

           100.0           100.0           100.0           100.0

Cost of net revenue

     41.7       40.5       40.0       40.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     58.3       59.5       60.0       59.2  

Operating expenses:

        

Product development

     17.0       15.2       13.0       13.9  

Sales, marketing and support

     36.2       27.4       26.3       25.1  

General and administrative

     31.4       33.5       30.1       31.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     84.6       76.1       69.4       70.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (26.3     (16.6     (9.5     (11.5

Interest expense

     (2.6     (3.2     (2.2     (3.9

Change in fair value of redeemable convertible preferred stock warrant liability

     —         (1.1     —         (4.3

Gain on extinguishment of promissory note

     —         —         —         11.5  

Other income (expense), net

     (1.3     1.8       2.2       (2.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision for (benefit from) income taxes

     (30.2     (19.1     (9.5     (10.4

Income tax provision (benefit)

     0.1       0.0       (0.0     0.6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stockholders

     (30.3 )%      (19.1 )%      (9.5 )%      (11.0 )% 
  

 

 

   

 

 

   

 

 

   

 

 

 

Comparison of six months ended June 30, 2017 and 2018

Net revenue

 

     Six Months Ended
June 30,
     Change  
     2017      2018      $      %  
     (in thousands, except percentages)  

Net revenue

   $ 88,153      $ 142,068      $ 53,915        61.2

The increase in net revenue during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 was driven primarily by growth in paid ticket volume, which increased by 54.2% during the six months ended June 30, 2018 compared to the six months ended June 30, 2017, from 30.3 million to 46.7 million. Net revenue from organic paid ticket growth increased by $32.5 million, or 38.9%, in the six months ended June 30, 2018 compared to the six months ended June 30, 2017. The remainder of our paid ticket growth was due to additional paid ticket volume from the Ticketfly acquisition, which occurred in September 2017, and the Ticketea acquisition, which occurred in April 2018.

Our period-over-period revenue growth was partially offset by a contra revenue adjustment of $6.3 million in the six months ended June 30, 2018. In June 2018, we publicly announced that a criminal was able to penetrate the Ticketfly website and steal certain consumer data, including names, email addresses, shipping addresses, billing addresses and phone numbers. For a short time, we disabled the Ticketfly platform to contain the risk of the cyber incident, which disabled ticket sales through Ticketfly during that period. Shortly after stabilizing the platform, we approached impacted creators and offered a financial accommodation to address their inconvenience and to encourage them to continue doing business with Eventbrite. As a result, in the six months ended June 30, 2018, we recorded a $6.6 million liability of which $6.3 million was recorded as contra revenue and $0.3 million was recorded as an operating expense. This amount represents our best estimate of the total amount of creator accommodations to be made as a result of the incident. We believe that we suffered revenue

 

74


Table of Contents

loss during the six months ended June 30, 2018 due to the disablement of the Ticketfly platform. In the future, our financial performance may be impacted further if we face additional costs and expenses from customer compensation and retention incentives, creator loss, regulatory inquiries, litigation and further remediation and upgrades to our security infrastructure.

Net revenue per paid ticket increased during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 from $2.91 to $3.04. This was driven by our pricing package options which were launched in September 2017.

Cost of net revenue

 

     Six Months Ended
June 30,
    Change  
     2017     2018     $      %  
     (in thousands, except percentages)  

Cost of net revenue

   $ 35,302     $ 57,947     $ 22,645        64.1

Percentage of total net revenue

     40.0     40.8     

Gross margin

     60.0     59.2     

The increase in cost of net revenue during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 was primarily due to an increase in payment processing costs of $12.7 million driven by our organic paid ticket growth and paid ticket volume from the Ticketfly and Ticketea acquisitions. Additionally, there was an increase in amortization of acquired developed technology of $5.1 million, primarily resulting from the Ticketfly acquisition.

Operating expense

Product development

 

     Six Months Ended
June 30,
    Change  
     2017     2018     $      %  
     (in thousands, except percentages)  

Product development

   $ 11,481     $ 19,815     $ 8,334        72.6

Percentage of total net revenue

     13.0     13.9     

Product development expense during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 increased primarily due to increased personnel costs of $7.8 million, resulting from organic hiring efforts and an increase in headcount as a result of the Ticketfly and Ticketea acquisitions.

Sales, marketing and support

 

     Six Months Ended
June 30,
    Change  
     2017     2018     $      %  
     (in thousands, except percentages)  

Sales, marketing and support

   $ 23,171     $ 35,623     $ 12,452        53.7

Percentage of total net revenue

     26.3     25.1     

Sales, marketing and support expenses during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 increased primarily due to personnel related expenses of $10.1 million driven by higher headcount.

 

75


Table of Contents

General and administrative

 

     Six Months Ended
June 30,
    Change  
     2017     2018     $      %  
     (in thousands, except percentages)  

General and administrative

   $ 26,546     $ 44,994     $ 18,448        69.5

Percentage of total net revenue

     30.1     31.7     

The increase in general and administrative expenses during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 was a result of several factors. Personnel costs increased by $8.1 million, including $2.9 million of stock-based compensation, driven by increased headcount during the six months ended June 30, 2018 compared to the six months ended June 30, 2017. Amortization of acquired intangible assets increased $4.5 million primarily stemming from the Ticketfly acquisition. Third-party legal, finance, tax and business development costs increased $3.8 million, driven by costs incurred related to the Ticketfly incident, the Ticketea acquisition and our efforts to become a publicly-traded company. As a partial offset to these increases, we recorded $1.3 million related to insurance proceeds to be received from the Ticketfly incident as a reduction in general and administrative expense in the six months ended June 30, 2018. Such proceeds are a partial reimbursement for accommodations to creators which are recorded as contra revenue. We also reversed a portion of a reserve due to the settlement of a tax matter, resulting in a reduction of expense of $2.7 million.

Interest expense

 

     Six Months Ended
June 30,
    Change  
     2017     2018     $      %  
     (in thousands, except percentages)  

Interest expense

   $ (1,958   $ (5,562   $ 3,604        184.1

Percentage of total net revenue

     (2.2 )%      (3.9 )%      

The increase in interest expense during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 was driven by higher amounts of interest bearing debt that was outstanding during the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily related to the WTI loan facilities.

Change in fair value of redeemable convertible preferred stock warrant liability

 

     Six Months Ended
June 30,
    Change  
     2017     2018     $      %  
     (in thousands, except percentages)  

Change in fair value of redeemable convertible preferred stock warrant liability

   $ —       $ (6,071   $ 6,071        *  

Percentage of total net revenue

     —       (4.3 )%      

 

*

Not meaningful

The change in fair value of our redeemable convertible preferred stock warrant liability during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 was due to an increase in the underlying fair value of our redeemable convertible preferred stock. We first issued redeemable convertible preferred stock warrants on June 30, 2017 in connection with the close of our first WTI loan facility.

 

76


Table of Contents

Gain on extinguishment of promissory note

 

     Six Months Ended
June 30,
    Change  
     2017     2018     $      %  
     (in thousands, except percentages)  

Gain on extinguishment of promissory note

   $ —       $ 16,340     $ 16,340        *  

Percentage of total net revenue

     —       11.5     

 

*

Not meaningful

The gain on extinguishment of promissory note during the six months ended June 30, 2018 is due to the settlement of the outstanding convertible promissory notes that were issued in connection with the Ticketfly acquisition. In March 2018, we settled $50.0 million of principal for a one-time cash payment to the noteholder of $34.7 million, which included $1.7 million of accrued interest.

Other income (expense), net

 

     Six Months Ended
June 30,
    Change  
     2017     2018     $      %  
     (in thousands, except percentages)  

Other income (expense), net

   $ 1,904     $ (3,176   $ (5,080      *  

Percentage of total net revenue

     2.2     (2.2 )%      

 

*

Not meaningful

The decrease in other income (expense), net during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 was driven by foreign currency rate measurement fluctuations. We recognized foreign currency rate measurement gains during the six months ended June 30, 2017 as a result of the weakening of the U.S. dollar. We recognized foreign currency rate measurement losses during the six months ended June 30, 2018 as a result of the overall strengthening of the U.S. dollar compared to the currencies in which we operate and process transactions.

Comparison of years ended December 31, 2016 and 2017

Net Revenue

 

     Year Ended
December 31,
     Change  
     2016      2017      $      %  
     (in thousands, except percentages)  

Net revenue

   $ 133,499      $ 201,597      $ 68,098        51.0

The increase in net revenue during 2017 compared to 2016 was driven primarily by growth in paid ticket volume, which increased by 59.4% during 2017, from 44.6 million to 71.0 million in part due to ticket volume from acquired companies. Net revenue from organic paid ticket growth increased by $40.6 million, or 30.4%, in 2017. Net revenue increased an additional $27.5 million as a result of the Ticketfly and ticketscript acquisitions, both of which were completed in 2017. While net revenue and paid tickets increased year-over-year, net revenue per paid ticket decreased from $3.00 in 2016 to $2.84 in 2017. This decrease was driven by our pricing adjustments made in certain markets, which resulted in additional paid ticket volume, as well as an increase in the proportion of lower price tickets as our fees are partially based on the price of the tickets that creators sell to their events.

 

77


Table of Contents

Cost of Net Revenue

 

     Year Ended
December 31,
    Change  
     2016     2017     $      %  
     (in thousands, except percentages)  

Cost of net revenue

   $ 55,689     $ 81,667     $ 25,978        46.6

Percentage of net revenue

     41.7     40.5     

Gross margin

     58.3     59.5     

The increase in cost of net revenue during 2017 compared to 2016 was driven by an increase in payment processing costs of $17.0 million driven by our organic paid ticket growth and paid ticket volume from acquired businesses, and increased amortization of acquired developed technology of $4.6 million, resulting from the Ticketfly and ticketscript acquisitions.

Operating Expenses

Product development

 

     Year Ended
December 31,
    Change  
     2016     2017     $      %  
     (in thousands, except percentages)  

Product development

   $ 22,723     $ 30,608     $ 7,885        34.7

Percentage of net revenue

     17.0     15.2     

Product development expense increased during 2017 compared to 2016 primarily due to increased personnel costs of $8.0 million, resulting from organic hiring efforts and an increase in headcount as a result of the ticketscript and Ticketfly acquisitions.

Sales, marketing and support

 

     Year Ended
December 31,
    Change  
     2016     2017     $      %  
     (in thousands, except percentages)  

Sales, marketing and support

   $ 48,391     $ 55,170     $ 6,779        14.0

Percentage of total net revenue

     36.2     27.4     

Sales, marketing and support expenses increased during 2017 compared to 2016, driven by increased personnel related expenses of $7.4 million driven by higher headcount, offset by lower professional services costs, creator related expenses and advertising spend as we leveraged our low-cost customer acquisition channels, such as word of mouth referrals, converting free creators to paid creators and converting attendees into creators.

General and administrative

 

     Year Ended
December 31,
    Change  
     2016     2017     $      %  
     (in thousands, except percentages)  

General and administrative

   $ 41,749     $ 67,559     $ 25,810        61.8

Percentage of total net revenue

     31.4     33.5     

The increase in general and administrative expenses during 2017 compared to 2016 was a result of several factors. Third-party legal, finance, tax and business development costs increased $5.2 million, driven by

 

78


Table of Contents

acquisitions we completed in 2017 as well as costs incurred as we prepare to become a publicly-traded company. We also incurred direct and indirect acquisition-related expenses of $7.3 million related to the Ticketfly and ticketscript acquisitions. The increase was also attributable to higher depreciation and amortization of $5.7 million, of which $4.8 million related to acquired intangible assets. There was also an increase in accrued sales taxes and VAT of $4.8 million driven by higher paid ticket volume in 2017 compared to 2016.

Interest Expense

 

     Year Ended
December 31,
    Change  
     2016     2017     $      %  
     (in thousands, except percentages)  

Interest expense

   $ (3,513   $ (6,462   $ 2,949        83.9

Percentage of total net revenue

     (2.6 )%      (3.2 )%      

Interest expense increased during 2017 compared to 2016, entirely driven by interest bearing debt that was outstanding during 2017, related to promissory notes issued in connection with acquisitions and term-debt draw under our credit facilities. We did not have any outstanding debt prior to 2017. The interest expense recorded in 2016 is entirely related to our build-to-suit lease accounting for our office lease in San Francisco, California.

Change in Fair Value of Redeemable Convertible Preferred Stock Warrant Liability

 

     Year Ended
December 31,
    Change  
     2016     2017     $      %  
     (in thousands, except percentages)  

Change in fair value of redeemable convertible preferred stock warrant liability

   $ —       $ (2,200   $ 2,200        *  

Percentage of total net revenue

     —       (1.1 )%      

 

*

Not meaningful

The change in fair value of our redeemable convertible preferred stock warrant liability in 2017 was due to an increase in the underlying fair value of our redeemable convertible preferred stock. We did not have any redeemable convertible preferred stock warrants outstanding in 2016.

Other Income (Expense), net

 

     Year Ended
December 31,
    Change  
     2016     2017     $      %  
     (in thousands, except percentages)  

Other income (expense), net

   $ (1,695   $ 3,509     $ 5,204        *  

Percentage of total net revenue

     (1.3 )%      1.8     

 

*

Not meaningful

The increase in other income (expense), net during 2017 compared to 2016 was driven by foreign currency rate measurement fluctuations. We recognized foreign currency rate measurement losses during 2016 as a result of an overall strengthening U.S. dollar. We recognized foreign currency rate measurement gains during 2017 as a result of an overall weakening U.S. dollar compared to the currencies in which we operate and process transactions.

 

79


Table of Contents

Quarterly Results of Operations

The following tables set forth selected unaudited quarterly statements of operations data for each of the eight quarters in the period ended June 30, 2018. The information for each of these quarters has been prepared on the same basis as the audited annual consolidated financial statements included elsewhere in this prospectus and, in the opinion of management, includes all adjustments, which consist only of normal recurring adjustments, necessary for the fair statement of the results of operations for these periods. This data should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this prospectus. These quarterly operating results are not necessarily indicative of the results we may achieve in any future period.

 

    Three Months Ended  
    September 30,
2016
    December 31,
2016
    March 31,
2017
    June 30,
2017
    September 30,
2017
    December 31,
2017
    March 31,
2018
    June 30,
2018
 
    (in thousands)  

Consolidated Statements of Operations

               

Net revenue

  $ 32,176     $ 33,905     $ 43,351     $ 44,802     $ 50,749     $ 62,695     $ 74,526     $ 67,542  

Cost of net revenue (1)

    13,352       13,880       17,157       18,145       20,993       25,372       28,084       29,863  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    18,824       20,025       26,194       26,657       29,756       37,323       46,442       37,679  

Operating expenses (1) :

               

Product development

    5,767       6,187       5,458       6,023       9,351       9,776       8,834       10,981  

Sales, marketing and support

    12,153       11,655       11,039       12,132       14,351       17,648       17,538       18,085  

General and administrative

    9,987       13,356       13,112       13,434       16,479       24,534       23,161       21,833  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    27,907       31,198       29,609       31,589       40,181       51,958       49,533       50,899  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (9,083     (11,173     (3,415     (4,932     (10,425     (14,635     (3,091     (13,220

Interest expense

    (839     (876     (965     (993     (1,674     (2,830     (2,372     (3,190

Change in fair value of redeemable convertible preferred stock warrant liability

    —         —         —         —         (1,404     (796     (1,321     (4,750

Gain on extinguishment of promissory note

    —         —         —         —         —         —         16,340       —    

Other income (expense), net

    (718     (1,394     641       1,263       1,606       (1     (163     (3,013
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision for (benefit from) income taxes

    (10,640     (13,443     (3,739     (4,662     (11,897     (18,262     9,393       (24,173

Income tax provision (benefit)

    91       12       (18     (37     (40     82       370       430  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ (10,731   $ (13,455   $ (3,721   $ (4,625   $ (11,857   $ (18,344   $ 9,023     $ (24,603
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  

Amounts include stock-based compensation expense as follows:

 

    Three Months Ended  
    September 30,
2016
    December 31,
2016
    March 31,
2017
    June 30,
2017
    September 30,
2017
    December 31,
2017
    March 31,
2018
    June 30,
2018
 
    (in thousands)  

Cost of net revenue

  $ 36     $ 34     $ 32     $ 33     $ 35     $ 100     $ 53     $ 71  

Product development

    499       582       402       433       463       1,113       601       747  

Sales, marketing and support

    443       415       310       463       406       1,184       714       864  

General and administrative

    1,250       1,515       1,061       1,027       1,042       2,754       1,492       3,566  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stock-based compensation

  $ 2,228     $ 2,546     $ 1,805     $ 1,956     $ 1,946     $ 5,151     $ 2,860     $ 5,248  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

80


Table of Contents
    Three Months Ended  
    September 30,
2016
    December 31,
2016
    March 31,
2017
    June 30,
2017
    September 30,
2017
    December 31,
2017
    March 31,
2018
    June 30,
2018
 

Consolidated Statements of Operations, as a percentage of net revenue

               

Net revenue

    100.0     100.0     100.0     100.0     100.0     100.0     100.0     100.0

Cost of net revenue

    41.5       40.9       39.6       40.5       41.4       40.5       37.7       44.2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    58.5       59.1       60.4       59.5       58.6       59.5       62.3       55.8  

Operating expenses:

               

Product development

    17.9       18.2       12.6       13.4       18.4       15.6       11.9       16.3  

Sales, marketing and support

    37.8       34.4       25.5       27.1       28.3       28.1       23.5       26.8  

General and administrative

    31.0       39.4       30.2       30.0       32.5       39.1       31.1       32.3  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    86.7       92.0       68.3       70.5       79.2       82.8       66.5       75.4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (28.2     (32.9     (7.9     (11.0     (20.6     (23.3     (4.2     (19.6

Interest expense

    (2.7     (2.6     (2.2     (2.2     (3.3     (4.6     (3.2     (4.7

Change in fair value of redeemable convertible preferred stock warrant liability

    —         —         —         —         (2.8     (1.3     (1.7     (7.0

Gain on extinguishment of promissory note

    —         —         —         —         —         —         21.9       —    

Other income (expense), net

    (2.2     (4.2     1.5       2.8       3.2       (0.0     (0.2     (4.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision for (benefit from) income taxes

    (33.1     (39.7     (8.6     (10.4     (23.5     (29.2     12.6       (35.8

Income tax provision (benefit)

    0.3       0.0       (0.0     (0.1     (0.1     0.1       0.5       0.6  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

    (33.4 )%      (39.7 )%      (8.6 )%      (10.3 )%      (23.4 )%      (29.3 )%      12.1     (36.4 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The following table presents our paid ticket volume for each of the periods indicated:

 

    Three Months Ended  
    September 30,
2016
    December 31,
2016
    March 31,
2017
    June 30,
2017
    September 30,
2017
    December 31,
2017
    March 31,
2018
    June 30,
2018
 
         

(in thousands)

             

Paid Tickets

    11,095       12,110       14,669       15,605       18,074       22,698       23,598       23,099  

 

81


Table of Contents

The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for each of the periods indicated:

 

    Three Months Ended  
    September 30,
2016
    December 31,
2016
    March 31,
2017
    June 30,
2017
    September 30,
2017
    December 31,
2017
    March 31,
2018
    June 30,
2018
 
    (in thousands)  

Net income (loss)

  $ (10,731   $ (13,455   $ (3,721   $ (4,625   $ (11,857   $ (18,344   $ 9,023     $ (24,603

Add:

               

Depreciation and amortization

    1,892       2,047       2,775       3,186       5,090       8,367       8,202       8,580  

Stock-based compensation

    2,228       2,546       1,805       1,956       1,946       5,151       2,860       5,248  

Interest expense

    839       876       965       993       1,674       2,830       2,372       3,190  

Change in fair value of redeemable convertible preferred stock warrant liability

    —         —         —         —         1,404       796       1,321       4,750  

Gain on extinguishment of promissory note

    —         —         —         —         —         —         (16,340     —    

Direct and indirect acquisition related costs

    180       1,057       1,097       1,228       4,406       606       823       622  

Other income (expense), net

    718       1,394       (641     (1,263     (1,606     1       163       3,013  

Income tax provision (benefit)

    91       12       (18     (37     (40     82       370       430  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (1)

  $ (4,783   $ (5,523   $ 2,262     $ 1,438     $ 1,017     $ (511   $ 8,794     $ 1,230  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. See the section titled “—Non-GAAP Financial Measures—Adjusted EBITDA” for information regarding Adjusted EBITDA, including the limitations of such measure, and a reconciliation of Adjusted EBITDA to net income (loss).

The following table presents a reconciliation of free cash flow, which is computed on a trailing twelve months basis, from net cash provided by operating activities for each of the periods indicated:

 

    Twelve Months Ended  
    September 30,
2016
    December 31,
2016
    March 31,
2017
    June 30,
2017
    September 30,
2017
    December 31,
2017
    March 31,
2018
    June 30,
2018
 
    (in thousands)  

Net cash provided by operating activities

  $ 7,405     $ 2,785     $ 20,754     $ 17,268     $ 42,794     $ 29,821     $ 38,977     $ 24,554  

Less:

               

Purchases of property and equipment and capitalized internal-use software development costs

    (7,833     (8,466     (8,790     (8,716     (8,414     (8,678     (9,703     (11,392
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

  $ (428   $ (5,681   $ 11,964     $ 8,552     $ 34,380     $ 21,143     $ 29,274     $ 13,162  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

82


Table of Contents

Quarterly Trends

Net revenue

Our quarterly revenue increased for all periods presented, except the second quarter of 2018, primarily due to increases in paid ticket volume, both organically and through our acquisitions. Historically, we have experienced a higher increase in sequential organic net revenue growth in the first quarter of a year compared to the sequential organic net revenue growth in other quarters of that year. We acquired ticketscript in the first quarter of 2017 and Ticketfly in the third quarter of 2017, which had a positive impact on our net revenue growth in each of those quarters. The decrease in quarterly net revenue in the second quarter of 2018 was a result of the contra revenue amount of $6.3 million which we recognized related to the Ticketfly incident.

Cost of net revenue

Our quarterly cost of net revenue increased for all periods presented primarily due to increases in payment processing costs resulting from our paid ticket volume growth.

Operating expenses

Our operating expenses increased for all periods presented, except for the first quarters of 2017 and 2018, primarily due to increases in compensation and benefits driven by increases in headcount. In the fourth quarter of 2016, we recognized higher compensation expense related to sign-on bonuses paid to certain executives as well as higher impairment charges related to creator signing fees and creator advances. This was the primary driver of the decrease in operating expenses from the fourth quarter of 2016 to the first quarter of 2017. In the fourth quarter of 2017, we recognized higher stock-based compensation expense across all operating expense categories as a result of the immediate vesting of certain awards granted to employees hired as a result of the Ticketfly acquisition, which was the primary driver of the decrease in operating expenses from the fourth quarter of 2017 to the first quarter of 2018.

Liquidity and Capital Resources

As of June 30, 2018, we had cash of $258.7 million and funds receivable of $37.1 million. Our cash includes bank deposits held by financial institutions and is held for working capital purposes. Our funds receivable represents cash-in-transit from credit card processors that is received to our bank accounts within five days of the underlying ticket transaction. Collectively, our cash and funds receivable balances represent a mix of cash that belongs to us and cash that is due to the creator. The amounts due to creators is shown as accounts payable, creators on our consolidated balance sheets, which was $277.6 million as of June 30, 2018.

We also make payments to creators to provide the creator with short-term liquidity in advance of ticket sales. These are classified as creator advances, net, on our consolidated balance sheets. Creator advances are recovered by us as tickets are sold by the respective creator, and are expected to be recovered within 12 months of the payment date. We maintain an allowance for estimated creator advances that are not recoverable and nets this against the balance shown in assets. Creator advances, net was $7.6 million and $20.1 million as of December 31, 2016 and 2017, respectively, and $21.6 million as of June 30, 2018.

To calculate our available liquidity at any date, we add funds receivable and creator advances, net, to our cash balance and reduce this by our accounts payable, creators. As of December 31, 2016 and 2017 and June 30, 2018, we had cash of $139.5 million, $189.0 million and $258.7 million, funds receivable of $26.1 million, $51.6 million and $37.1 million, creator advances, net, of $7.6 million, $20.1 million and $21.6 million, and accounts payable, creators, of $137.1 million, $228.0 million and $277.6 million, respectively. This provided us with $36.1 million, $32.7 million and $39.8 million of available liquidity as of December 31, 2016 and 2017 and June 30, 2018, respectively.

 

83


Table of Contents

As of June 30, 2018, approximately 62.8% of our cash was held outside of the United States, which was held primarily on behalf of and to be remitted to creators and to fund our foreign operations. We do not expect to incur significant taxes related to these amounts.

We believe that our existing cash, together with cash generated from operations will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. We may seek to raise additional funds at any time through debt, equity and equity-linked arrangements.

Sources of Liquidity

Since our inception, we have financed our operations and capital expenditures primarily through non-registered sales of redeemable convertible preferred stock and common stock, cash flows generated by operations and issuances of debt. Through June 30, 2018, we have raised a total of $334.0 million from the sale of redeemable convertible preferred stock, net of costs associated with such financings.

Consolidated Statements of Cash Flows Data

 

     Year Ended
December 31,
    Six Months Ended
June 30,
 
     2016     2017     2017     2018  
     (in thousands)  

Net cash provided by (used in):

        

Operating activities

   $ 2,785     $ 29,821     $ 54,102     $ 48,835  

Investing activities

     (10,159     (140,652     (8,560     6,991  

Financing activities

     2,325       159,514       (146     13,222  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and restricted cash

   $ (5,049   $ 48,683     $ 45,396     $ 69,048  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash Flows from Operating Activities

The net cash provided by operating activities of $48.8 million for the six months ended June 30, 2018 was due primarily to net loss of $15.6 million with adjustments for depreciation and amortization of $16.8 million, stock-based compensation expense of $8.1 million, amortization of creator signing fees of $3.1 million, change in fair value of redeemable convertible preferred stock warrant liability of $6.1 million, an increase of accounts payable to creators of $29.9 million due to increases in paid tickets, an increase in other accrued liabilities of $8.7 million, decreases in funds receivable of $14.8 million, partially offset by a gain on extinguishment of promissory note of $16.3 million, an increase in creator signing fees, net of $4.4 million and an increase in creator advances, net of $4.2 million. The increases in creator signing fees, net, and creator advances, net, are due to increases in our sales contracting with creators.

The net cash provided by operating activities of $54.1 million for the six months ended June 30, 2017 was due primarily to net loss of $8.3 million with adjustments for depreciation and amortization of $6.0 million, stock-based compensation expense of $3.8 million, amortization of creator signing fees of $1.8 million, an increase of accounts payable to creators of $43.7 million due to increases in paid tickets, an increase in accrued taxes of $5.2 million, a decrease in funds receivable of $7.1 million, partially offset by increases in creator signing fees, net of $2.8 million and creator advances, net of $2.3 million. The increases in creator signing fees, net, and creator advances, net, are due to increases in our sales contracting with creators.

The net cash provided by operating activities of $29.8 million in 2017 was due primarily to net loss of $38.5 million with adjustments for depreciation and amortization of $19.4 million, stock-based compensation expense of $10.9 million, amortization of creator signing fees of $4.3 million, an increase of accounts payable to

 

84


Table of Contents

creators of $52.8 million due to increases in paid tickets, an increase in accrued taxes of $10.7 million, partially offset by increases in funds receivable of $18.1 million, increase in creator signing fees, net of $8.6 million and an increase in creator advances, net of $5.8 million. The increases in creator signing fees, net, and creator advances, net, are due to increases in our sales contracting with creators.

The net cash provided by operating activities of $2.8 million in 2016 was due primarily to net loss of $40.4 million with adjustments for depreciation and amortization of $7.6 million, stock-based compensation expense of $8.5 million, amortization of creator signing fees of $2.7 million, impairment charges of $1.8 million, an increase in accounts payable to creators of $37.1 million due to increases in paid tickets, an increase in other accrued liabilities of $3.9 million, an increase in accrued taxes of $3.7 million. These increases were partially offset by an increase in funds receivable of $9.9 million, increase in creator signing fees, net of $6.0 million and an increase in creator advances, net of $4.6 million. The increases in creator signing fees, net, and creator advances, net, are due to increases in our sales contracting with creators.

Cash Flows from Investing Activities

The net cash provided by investing activities of $7.0 million for the six months ended June 30, 2018 was due to $14.1 million net cash provided through our acquisition of Ticketea in April 2018, partially offset by capitalized software development costs of $4.3 million and purchases of property and equipment of $2.7 million.

The net cash used in investing activities of $8.6 million for the six months ended June 30, 2017 was due to capitalized software development costs of $3.3 million, $4.2 million paid for our acquisition of ticketscript, net of cash acquired in January 2017 and $1.1 million paid for purchases of property and equipment.

The net cash used in investing activities of $140.7 million in 2017 was due to cash paid for our acquisitions of Ticketfly and ticketscript, net of cash acquired of $132.0 million, capitalized software development costs of $6.1 million and purchases of property and equipment of $2.5 million.

The net cash used in investing activities of $10.2 million in 2016 was due to capitalized software development costs of $5.5 million, $3.0 million for purchases of property and equipment and $1.7 million cash used for our acquisitions of Queue Ticketing, LLC and Nvite Inc., net of cash acquired.

Cash Flows from Financing Activities

The net cash provided by financing activities of $13.2 million during the six months ended June 30, 2018 was due primarily to proceeds from our WTI term loans of $45.0 million and $4.2 million in proceeds from exercise of stock options, partially offset by $35.5 million in principal payments on our debt obligations, primarily repayment of the Ticketfly promissory note.

The net cash used in financing activities totaled $0.1 million during the six months ended June 30, 2017 and was driven by $0.7 million in stock option exercise proceeds offset by $0.6 million in principal payments on our debt obligations.

The net cash provided by financing activities of $159.5 million in 2017 was due to $133.9 million received related to the issuance of our Series G redeemable convertible preferred stock, net of issuance costs, $30.0 million in proceeds from drawing funds under our term loan, $2.3 million excess tax benefit from stock-based compensation awards, $1.8 million cash proceeds from stock option exercises, partially offset by principal payments on debt obligations of $7.8 million.

The net cash provided by financing activities of $2.3 million in 2016 was due primarily to cash proceeds received in connection with the exercise of stock options of $2.9 million offset by $0.4 million in cash payments for capital lease obligations and $0.2 million for principal payments related to our build-to-suit lease obligation.

 

85


Table of Contents

Concentrations of Credit Risk

As of December 31, 2016 and 2017 and June 30, 2018, there were no customers that represented 10% or more of our accounts receivable balance. There were no customers that individually exceeded 10% of our net revenue during 2016 and 2017, or for the six months ended June 30, 2017 and 2018.

Contractual obligations and commitments

Our principal commitments consist of debt, capital commitments to creators, rental payments under our build-to-suit lease, operating leases, purchase commitments and capital leases. The following table summarizes our commitments to settle contractual obligations as of December 31, 2017:

 

     Payments due by Period  
     Total     Less than
1 year
    Between
1-3 years
    Between
3-5 years
    More than
5 years
 
     (in thousands)  

Term loans, including interest

   $ 39,997     $ 3,450     $ 20,565     $ 15,982     $ —    

Promissory note, including interest

     66,582       3,320       6,650       56,612       —    

Future creator signing fees and creator advances

     33,020       18,254       11,616       3,150       —    

Build-to-suit lease obligation

     18,759       5,440       11,376       1,943       —    

Operating leases

     6,146       1,561       2,956       1,629       —    

Sublease income

     (13,604     (3,881     (8,308     (1,415     —    

Purchase commitments

     12,500       5,000       7,500       —         —    

Capital leases

     25       25       —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 163,425     $ 33,169     $ 52,355     $ 77,901     $       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Term Loans

We entered into a loan and security agreement with WTI in June 2017, which provided for a secured credit facility of up to $60.0 million of term debt. To finance our acquisition of Ticketfly, in September 2017, we borrowed $30.0 million as a term loan under the facility which bears interest at 11.5% annually and has a maturity date of February 2022. In March 2018, we borrowed the remaining $30.0 million under the facility which bears interest at 11.75% annually and has a maturity date of September 2022.

In May 2018, we entered into a second loan and security agreement with WTI, which provided for a secured credit facility of up to $15.0 million of term debt. At that time, we borrowed $15.0 million as a term loan under the facility which bears interest at 12.0% annually and has a maturity date of November 2022. Monthly payments of interest are due for the first 24 months and equal monthly installments of principal and interest are due for 30 months thereafter. By the end of the equal monthly installments of principal and interest, the principal under the loan will be fully repaid. The loan may be prepaid at any time for an amount equal to the outstanding balance plus accrued interest, plus an amount equal to all scheduled but unpaid payments of interest that would have accrued and been payable through the maturity date. If we consummate a qualified public offering within the first 24 months of the term loan and we prepay the term loan in conjunction with the qualified public offering, we are required to prepay the outstanding contractual balance plus accrued interest within fifteen days of the consummation of the qualified public offering plus an additional amount equal to 50% of all interest that would have been incurred through the end of first 24 months of the loan. If we consummate a qualified public offering within 30 months following the first 24 months of the loan and we prepay the term loan in conjunction with the qualified public offering, we are required to prepay the outstanding contractual balance plus accrued interest within fifteen days of the consummation of the qualified public offering plus an additional amount equal to 50% of all interest that would have been incurred through the end of the 30 months following the first 24 months of the loan.

In May 2018, we modified the terms of our first loan and security agreement so that the $30 million borrowed in March 2018 under our first loan and security agreement is subject to the same contingent prepayment feature in the event of a qualified public offering that is included in our second loan and security agreement with WTI.

 

86


Table of Contents

Our loan and security agreements with WTI contain customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to incur indebtedness, grant liens, make certain distributions to our equity holders prior to a qualifying public offering of our securities, make investments or engage in transactions with our affiliates. Our loan and security agreements with WTI do not contain financial maintenance covenants. We were in compliance with all covenants under the our loan and security agreements as of June 30, 2018.

Promissory Note

In September 2017, we acquired 100% of the outstanding equity of Ticketfly, LLC for $201.1 million, which consisted of $151.1 million in cash and a $50.0 million Convertible Promissory Note (Promissory Note). The Promissory Note is due five years from the issuance date and bears interest at a rate of 6.5% per annum, payable quarterly in cash or in-kind for the first year at the discretion of Eventbrite, and in cash thereafter. In March 2018, we reached an agreement with the seller of Ticketfly to retire the Promissory Note. The face value of $50 million was settled in full for $34.7 million which represented $33.0 million of principal and $1.7 million of accrued interest.

Lease Commitments

We have entered into various non-cancelable leases for certain offices with contractual lease periods expiring between 2018 and 2023.

In 2014, we undertook a series of structural improvements to the floors that we occupied in our corporate headquarters in San Francisco. As a result of the requirement to fund construction costs and due to certain structural improvements that were made by us, we were considered the deemed owner of the leased floors for accounting purposes. Due to the presence of a standby letter of credit as a security deposit, we were deemed to have continuing involvement after the construction period. As such, we accounted for this arrangement as owned real estate. Legally, we do not own the floors that we have leased in the building, the property owner owns the floors. However, accounting rules require that we record an imputed financing obligation for our obligation to the legal owners as well as an asset for the fair value of the leased floors. Under these accounting rules, our monthly rental payments are allocated to (1) interest expense, (2) ground rent expense and (3) a reduction of the principal of the imputed financing obligation. We recorded interest expense related to this financing obligation of $3.5 million during each of 2016 and 2017 and $1.7 million for each of the six months ended June 30, 2017 and 2018. The lease financing obligation was $30.3 million and $29.5 million as of December 31, 2016 and 2017, respectively, and the net book value of the asset as of those dates was $30.3 million and $29.2 million, respectively. As of June 30, 2018, the lease financing obligation was $29.0 million and the net book value of the asset was $28.7 million. See Note 9 to our consolidated financial statements for additional details.

In May 2018, we entered into a ten year lease for office space in Cork, Ireland. Monthly rent payments are due beginning in January 2019 and will total approximately $0.4 million per year. The lease expires in 2028.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements and did not have any such arrangements during 2016, 2017 or for the six months ended June 30, 2018.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. GAAP requires us to make certain estimates and judgements that affect the amounts reported in our consolidated financial statements related disclosures. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis and our actual results could differ from these estimates.

 

87


Table of Contents

Revenue Recognition

Our net revenue is derived from our service fees and payment processing fees and is recognized as tickets for an event are sold and processed since we believe that is when all the following conditions are met:

 

   

There is persuasive evidence of an arrangement;

 

   

The service has been provided to the customer;

 

   

The collection of the fees is reasonably assured; and

 

   

The amount of fees to be paid is fixed or determinable.

Net revenue is presented net of sales taxes, value added taxes and reserves for customer refunds and payment chargebacks. Estimates for customer refunds and credits are based on our historical experience for such transactions and are monitored by us on an ongoing basis. If an event is cancelled by a creator, then any obligations to provide refunds to event attendees are the responsibility of that creator. If a creator is unwilling or unable to fulfill their refund obligations, we may, at our discretion, provide attendee refunds and would reverse the net revenue recognized from our fees for this event (any refund would be recognized as a sales, marketing and support expense). Net revenue is also presented net of amortization of creator signing fees. The benefit we receive by securing exclusive ticketing and payment processing rights with certain creators from these signing fees is inseparable from the customer relationship with the creator, and accordingly these payments are recorded as a reduction of revenue.

Our customers are event creators who are selling tickets for events using our platform. The customer has the choice of whether to use EPP or to use a third-party payment processor, referred to as FPP. Under the EPP option, Eventbrite is the merchant of record and is responsible for processing the transaction and collecting the face value of the ticket and all associated fees at the time the ticket is sold. The fee structure for EPP consists of a service fee as well as payment processing fees. The service fee consists of a fixed dollar amount and a fixed percentage of the ticket price. The payment processing fee is an additional fixed percentage that is charged per transaction. This payment processing fee is only applicable for customers who use EPP. Approximately 90% of revenue generated on our platform is generated by customers who choose to use EPP for their payment processing. Eventbrite is also responsible for remitting these amounts collected, less the Eventbrite fees, to the event creators after the event has taken place. Under the FPP option, Eventbrite is not responsible for processing the transaction or collecting the face value of the ticket and associated fees. In this case, we charge only a service fee and we invoice the customer for all Eventbrite fees as tickets are sold. Under both EPP and FPP options, revenue is recognized related to our fees only and not for the face value of the ticket sold or for other amounts collected on behalf of the creator.

Effective January 1, 2019, we will be required to adopt Accounting Standard Codification Topic 606, Revenue from Contracts with Customers (ASC 606). We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

Business Combinations, Goodwill and Intangible Assets

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. Such valuations require us to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

 

88


Table of Contents

Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the assets acquired, net of liabilities assumed. Goodwill is not amortized but is evaluated for impairment annually on the first day of the fourth quarter, or more frequently if events or changes in circumstances indicate the goodwill may be impaired.

Events or changes in circumstances which could trigger an impairment review include significant changes in the manner of our use of the acquired assets or the strategy for the our overall business, significant negative industry or economic trends, significant underperformance relative to historical or projected future results of operations, a significant adverse change in the business climate, an adverse action or assessment by a regulator, unanticipated competition or a loss of key personnel.

We have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if an entity concludes otherwise, then it is required to perform the first of a two-step impairment test.

The first step involves comparing the estimated fair value of the reporting unit with its respective book value, including goodwill. If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary. If, however, the fair value of the reporting unit is less than book value, then a second step is required that compares the carrying amount of the goodwill with its implied fair value. The estimate of implied fair value of goodwill may require valuations of certain internally-generated and unrecognized intangible and tangible net assets. If the carrying amount of goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess.

Acquired intangible assets, net consists of identifiable intangible assets, consisting of developed technology, customer relationships and trade names resulting from our acquisitions. Acquired intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated economic lives following the pattern in which the economic benefits of the assets will be consumed, straight-line. Acquired intangible assets are presented net of accumulated amortization in the consolidated balance sheet.

Creator Signing Fees and Creator Advances

Creator signing fees represent contractual amounts paid to creators pursuant to event ticketing and payment processing agreements. Creator signing fees are additional incentives paid by us to secure exclusive ticketing and payment processing rights with certain creators. As of December 31, 2017, these payments are being amortized over a weighted-average remaining life of 3.1 years on a straight line basis. Amortization of creator signing fees is recorded as a reduction of revenue in the consolidated statements of operations. Creator signing fees are presented net of reserves and allowances for potentially unrecoverable amounts on the consolidated balance sheets.

Creator advances represent contractual amounts paid to creators pursuant to event ticketing and payment processing agreements. Creator advances provide the creator with funds in advance of the event and are subsequently recovered by withholding amounts due to us from the sale of tickets for the event until the creator payment has been fully recovered. Creator advances are presented net of reserves and allowances for potentially unrecoverable amounts on the consolidated balance sheets.

Income Taxes

We report income taxes in accordance with ASC 740, Income Taxes, which requires us to use the asset and liability method, requiring the recognition of deferred tax assets and liabilities for the expected future tax

 

89


Table of Contents

consequences of events that have been recognized in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount expected to be realized.

We recognize tax benefits from uncertain tax positions if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe we have adequately provided for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We adjust these allowances when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our consolidated financial statements.

On December 22, 2017, the Tax Act was passed into law. The Tax Act provides broad and significant changes to the U.S. tax code and how the U.S. imposes income tax on multinational corporations. The Tax Act requires complex computations that were not previously provided for under U.S. tax law. These computations require significant judgments to be made regarding the interpretation of the provisions within the Tax Act along with preparation and analysis of information not previously required. In conjunction with the Tax Act, the SEC issued Staff Accounting Bulletin (SAB) 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, that allows for us to record provisional amounts until a final assessment can be made within a period not to exceed one year from the date of enactment.

We are required to recognize the effect of the tax law changes in the period of enactment, such as re-measuring our U.S. deferred tax assets and liabilities as well as the corresponding valuation allowance against our net U.S. deferred tax assets. In accordance with SAB 118, we recorded a $21.9 million reduction to deferred tax assets and related valuation allowance in connection with the re-measurement of certain deferred tax assets and liabilities, resulting in no impact to our statement of operations. We estimate that no current tax expense should be recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings, a provisional estimate at December 31, 2017.

Stock-Based Compensation

Stock-based compensation expense to employees is measured based on the grant-date fair value of the awards and recognized in the consolidated statements of operations over the period during which the employee is required to perform services in exchange for the award (the vesting period of the award). We estimate the fair value of stock options granted using the Black-Scholes option valuation model. We measure the fair value of RSUs based on the fair value of the underlying shares on the date of grant. Compensation expense is recognized over the vesting period of the applicable award using the straight-line attribution method.

Compensation expense for non-employee stock options is recorded as the options vest. Options subject to vesting are required to be periodically revalued over their service period, which is the same as the vesting period.

The Black-Scholes option-pricing model requires the input of highly subjective assumptions, including the fair value of our underlying common stock, the expected term of stock options, the expected volatility of the price of our common stock, risk-free interest rates and the expected dividend yield of our common stock. The assumptions used in our option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.

These assumptions are estimated as follows:

 

   

Fair Value of Common Stock . Because our common stock is not publicly traded, we must estimate the fair value of common stock, as discussed in the section “Common Stock Valuation” below.

 

90


Table of Contents
   

Risk-Free Interest Rate . We base the risk-free interest rate used in the Black-Scholes valuation model on the implied yield available on U.S. Treasury zero-coupon bonds with an equivalent remaining term of the stock options for each stock option group.

 

   

Expected Term . We determine the expected term based on the average period the stock options are expected to remain outstanding generally calculated as the midpoint of the stock options vesting term and contractual expiration period, as we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.

 

   

Expected Volatility . We determine the price volatility factor based on the historical volatility of publicly-traded industry peers. To determine our peer group of companies, we consider public companies in the technology industry and select those that are similar to us in size, stage of life cycle and financial leverage. We do not rely on implied volatilities of traded options in our industry peers’ common stock because the volume of activity is relatively low. We intend to continue to consistently apply this methodology using the same or similar public companies until

 

   

Expected Dividend Yield . We have not paid and do not anticipate paying any cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero.

The following table summarizes the assumptions, other than fair value of our common stock, relating to our stock options granted during each of the periods indicated:

 

     Year Ended December 31,      Six Months Ended June 30,  
     2016      2017      2017      2018  

Expected dividend yield

     —          —          —          —    

Expected volatility

     57.6% - 62.8%        40.7% - 57.1%        56.3% - 57.0%        48.3% - 52.9%  

Risk-free interest rate

     1.14% - 1.93%        1.92% - 2.1%        2.02% - 2.10%        2.32% - 2.61%  

Expected term (in years)

     6.02 – 6.08        5.02 – 6.08        6.02 - 6.08        6.08  

In addition to the assumptions used in the Black-Scholes option-pricing model, we must also estimate a forfeiture rate to calculate the stock-based compensation expense for our awards. Our forfeiture rate is based on an analysis of our actual forfeitures. We will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and other factors. Changes in the estimated forfeiture rate can have a significant impact on our stock-based compensation expense as the cumulative effect of adjusting the rate is recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in our financial statements. If a revised forfeiture rate is lower than the previously estimated forfeiture rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in our financial statements.

We will continue to use judgment in evaluating the expected volatility, expected term and forfeiture rate utilized in our stock-based compensation expense calculations on a prospective basis. As we continue to accumulate additional data related to our common stock, we may refine our estimates of expected volatility, expected term and forfeiture rates, which could materially impact our future stock-based compensation expense.

Common Stock Valuation

The fair value of our common stock underlying stock options has historically been determined by our board of directors, with assistance from management and contemporaneous third-party valuations. Given the absence of a public trading market for our common stock and in accordance with the American Institute of Certified Public Accountants Practice Aid,  Valuation of Privately Held Company Equity Securities Issued as Compensation , or the Practice Aid, our board of directors has exercised reasonable judgment and considered numerous objective

 

91


Table of Contents

and subjective factors to determine the best estimate of the fair value of our common stock at each grant date. These factors include:

 

   

contemporaneous third-party valuations of our common stock;

 

   

the prices, rights, preference and privileges of our preferred stock relative to the common stock;

 

   

the prices of common or preferred stock sold to third-party investors by us and in secondary transactions or repurchased by us in arms-length transactions

 

   

our operating and financial performance;

 

   

current business conditions and projections;

 

   

the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of our company, given prevailing market conditions;

 

   

the lack of marketability of our common stock;

 

   

the market performance of comparable publicly-traded e-commerce and technology companies; and

 

   

the U.S. and global economic and capital market conditions and outlook.

Following the closing of our initial public offering, the fair value per share of our common stock for purposes of determining stock-based compensation will be the closing price of our common stock as reported on the applicable grant date.

Based on the initial public offering price of $             per share of Class A common stock, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, the intrinsic value of stock awards outstanding as of the date of this prospectus was             , of which              and              related to stock awards that were vested and unvested, respectively, at that date.

In determining the fair value of our common stock, we estimated the enterprise value of our business using the market approach and the income approach. Under the income approach, forecast cash flows are discounted to the present value at a risk-adjusted discount rate. The valuation analyses determine discrete free cash flows over several years based on forecast financial information provided by our management and a terminal value for the residual period beyond the discrete forecast, which are discounted at our estimated weighted-average cost of capital to estimate our enterprise value. Under the market approach, a group of guideline publicly-traded companies with similar financial and operating characteristics as us is selected, and valuation multiples based on the guideline public companies’ financial information and market data are calculated. Based on the observed valuation multiples, an appropriate multiple was selected to apply to our historical and forecasted revenue results. The estimated enterprise value is then allocated to the common stock using the Option Pricing Method (OPM), and the Probability Weighted Expected Return Method (PWERM), or the hybrid method. The hybrid method applied the PWERM utilizing the probability of an exit scenario, and the OPM was used in the remaining private scenario.

Prior to August 2017, the equity valuation was based on both the income and the market approach valuation methods and the OPM was selected as the principal equity allocation method. For options granted starting in August 2017, we have used a hybrid method to determine the fair value of our common stock. Under the hybrid method, multiple valuation approaches were used and then combined into a single probability weighted valuation using a PWERM. Our approach for options granted between August 1, 2017 and September 20, 2017 included the use of an initial public offering scenario, a scenario assuming continued operation as a private entity and a scenario assuming an acquisition of the company. Our approach for options granted starting in October 1, 2017 included the use of an initial public offering scenario and a scenario assuming continued operation as a private entity.

JOBS Act Accounting Election

We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the

 

92


Table of Contents

JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Recent Accounting Pronouncements

See Note 2 to our consolidated financial statements “Summary of Significant Accounting Policies” for more information.

Quantitative and Qualitative Disclosures about Market Risk

We have operations within the United States and internationally, and we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and foreign currency exchange rate fluctuations. Information relating to quantitative and qualitative disclosures about these market risks is described below.

Interest Rate Sensitivity

Interest expense related to our outstanding debt as of December 31, 2017 is related to fixed rate debt and interest expense related to the build-to-suit lease and is not sensitive to movements in interest rates. A 10% increase or decrease in interest rates would not have a material effect on our interest expense.

Foreign Currency Risk

Many of our event organizers live or operate outside the United States, and therefore we have significant ticket sales denominated in foreign currencies, most notably the British Pound, Euro, Canadian Dollar, Australian Dollar, Brazilian Real and Argentinian Peso. If currency exchange rates remain at current levels, currency translation could continue to negatively affect net revenue growth for events that are not listed in U.S. dollars and could also reduce the demand for U.S. dollar denominated events from attendees outside of the United States. Because the functional currency of our foreign subsidiaries is the U.S. dollar, fluctuations due to changes in currency exchange rates cause us to recognize transaction gains and losses in our statement of operations. 10% increase or decrease in current exchange rates would not have a material impact on our consolidated results of operations.

 

93


Table of Contents

Letter from the Eventbrite Founders

We believe it’s in all of us: the desire for human connection. Throughout history people have gathered together to celebrate and to share stories, talents and points-of-view as communities. Live experiences are fundamental to fulfilling that undeniable human desire to understand and find acceptance both from within ourselves and among others. From the first day we set out on this journey, that belief inspired our mission: to bring the world together through live experiences.

Yet when we founded Eventbrite in 2006, we were not certain if live events were going to survive the digital revolution that was quickly reshaping society. Was technology fundamentally changing a centuries old human truth? Instead of gathering as communities in flesh and blood, would we instead accept less meaningful, if not more convenient, virtual meetups as a replacement?

It turns out, the effect of social, mobile, data ubiquity and other trends in the last ten years has accelerated the ability to fulfill the basic desire to connect. First by making it easier for those with a passion to bring their community together, and second by making it easier for everyone to find their communities. This has forged an experience economy for event creators to build businesses around their passions. We believe this will continue, and Eventbrite will continue to power the success of event creators.

Our belief in creators to grow the experience economy has never been stronger, as more people dare to pursue their passion as their life’s work. Yet it is not without complex tasks and unanticipated obstacles that they take on this challenge. Event creators embrace the staggering work of bringing people together through vision, perseverance and execution. Despite so many barriers, they remain committed and an inspiration to us every day.

We focus on enabling the greatest number of creators to develop the greatest number of experiences by lowering two main barriers: friction and cost. We fundamentally believe that we should only succeed as a business if the creators succeed. Every day, Britelings around the world wake up with one question on their minds: how can I help creators bring people together through live experiences?

To help event creators more easily and successfully engage attendees, we’ve created a platform for attendees to discover and connect with creators, finding the right experience for the right moment. Our technology not only helps event creators reach their audience but also helps improve the daily lives of attendees all over the world.

At just over a decade into our journey, we find ourselves as passionately dedicated to achieving our mission as we were on the first day in our office on Utah Street in San Francisco—to uphold that basic human desire of understanding and acceptance by empowering event creators and leading the way in building this experience economy.

We are here to bring the world together through live experiences.

Sincerely,

 

LOGO   LOGO   LOGO

Julia Hartz, Kevin Hartz and Renaud Visage

 

94


Table of Contents

LOGO

CREATOR STORIES


Table of Contents

LOGO

 

 

BRICK FEST “As we scaled the number of events from one to many, we also had to pay more attention to the data. On a daily basis, we are tacking our spending and we’re able to do that efficiently because of the reporting that’s available on our Eventbrite dashboard.” chad collins—founder


Table of Contents

LOGO

 

 

Started using Eventbrite JUN 2013 Scaled to 252k TICKETS Current lineup in 2018 31 EVENTS Across 15 CITIES Growing events at a 61% CAGR Based in Philadelphia, Open World Events produces large family events including Minefaire, Brick Fest Live and Young Innovators Fair.


Table of Contents

LOGO

THE CORNER GROUP “The marketing reach via Eventbrite’s partners is hugely beneficial to our events, helping us to spread the word quickly and get people through the door.” SALLY MATHER — MUSIC & MARKETING MANAGER


Table of Contents

LOGO

Started using Eventbrite JUL 2016 Scaled to 263K TICKETS Current lineup in 2018 327 EVENTS In VICTORIA, AUS Growing events at a 93% CAGR The Corner Group’s live music venues in Victoria, Australia have seen big-name international artists and local rising stars grace its stages since the 1940s.


Table of Contents

LOGO

LA AUTO SHOW “What really compelled me to choose Eventbrite was the mobile-optimized purchase experience. Now customers can see an ad for the LA Auto Show and buy a ticket in under 60 seconds. The number of steps to purchase went from eight to just three.” MIKE ASNER — SENIOR DIRECTOR OF MARKETING & TICKETING


Table of Contents

LOGO

Started using Eventbrite JUN 2017 In 2017 online tickets grew 37% YOY 1 EVENT In LOS ANGELES With the event offering 40 TICKET TYPES Founded in 1907, the Los Angeles Auto Show is an annual auto show held at the Los Angeles Convention Center and spans more than 860,000 square feet.


Table of Contents

LOGO

SEA CREATURES “With a very friendly user interface and customer journey, we know that customers find it very easy to navigate and purchase through Eventbrite.” NAZ KABIR — MANAGING DIRECTOR & LEAD PRODUCER


Table of Contents

LOGO

Started using Eventbrite MAR 2018 Scaled to 4K TICKETS Current lineup in 2018 78 EVENTS Across 3 CITIES Integrated with 8 SPECTRUM APPS Sea Creatures is an interactive and immersive exhibition in the United Kingdom that takes you on a deep dive into the anatomy of some of the ocean’s most iconic marine species.


Table of Contents

LOGO

VAMBORA “Eventbrite allowed me to understand my audience and reach new audiences from different parts of Rio. It empowers my street teams to sell more tickets.” GABRIELA SANTANA — FOUNDER


Table of Contents

LOGO

Started using Eventbrite AUG 2017 Scaled to 69K TICKETS In 2018 21 EVENTS In RIO DE JANEIRO Growing events at a 31% YOY Vambora hosts a series of music events in Rio de Janeiro partnering with different promoters depending on the theme of the party.


Table of Contents

LOGO

PIANOFIGHT “We love how tech-forward and innovative Eventbrite is. The product is constantly evolving and improving with new and better features.” DUNCAN WOLD — DIRECTOR OF OPERATIONS


Table of Contents

LOGO

Started using Eventbrite DEC 2014 Scaled to 130K TICKETS In 2018 650 EVENTS In SAN FRANCISCO Growing events at a 149% CAGR PianoFight is a community-driven indie arts venue that partners with local artists to produce shows and serve food and cocktails, adding up to a uniquely San Francisco experience.


Table of Contents

LOGO


Table of Contents

BUSINESS

Overview

We founded Eventbrite to bring the world together through live experiences. We believe live experiences are fundamental to fulfilling a human desire to connect. Our company serves event creators—the people who bring others together to share their passions, artistry and causes through live experiences—and we empower their success.

We built a powerful, broad technology platform to enable creators to solve the challenges associated with creating live experiences. Our platform integrates components needed to seamlessly plan, promote and produce live events, thereby allowing creators to reduce friction and costs, increase reach and drive ticket sales. By reducing risk and complexity, we allow creators to focus their energy on producing compelling and successful events.

We succeed when creators succeed. Our business model is simple: we charge creators on a per-ticket basis when an attendee purchases a paid ticket for an event. We grow with the creators as they plan, promote and produce more events and grow attendance. In 2017, we helped more than 700,000 creators issue approximately 203 million tickets across approximately three million events in over 170 countries.

Creators face numerous challenges in planning, promoting and producing events. These challenges stem from complex and interdependent workflows required before, during and after events. Creators have historically relied on a fragmented set of online and offline tools that inhibit, rather than enhance, these workflows. While some of the largest professional event creators have access to costly technology systems for event management, many creators lack the budget and staff necessary to benefit from these legacy technologies. Our comprehensive platform is designed to be easy to use and intuitive while providing sophisticated capabilities to the widest range of event creators.

We designed our platform for all creators, regardless of category, country, size or type of event. We enable events ranging from fundraisers, seminars, wellness activities and music festivals to classes and cultural celebrations all over the world. Anyone can create or discover events on Eventbrite. This allows more creators to produce original and compelling experiences, attracting more attendees to these experiences. As a consequence, we believe we are expanding the global market for live experiences.

Our platform meets the complex needs of creators through a modular and extensible design. It can be accessed from Eventbrite.com, our mobile apps and through other websites. This modularity facilitates rapid product development and allows third-party developers to integrate features and functionality from Eventbrite into their environment. Our platform also allows developers to seamlessly integrate services from third-party partners such as Salesforce, Facebook and Hubspot. Importantly, we have designed our platform to produce consistent and reliable performance, handling both surges in traffic and transaction volume associated with high-demand on-sales and the load associated with supporting millions of events each year. This approach gives creators a platform that can scale to their needs, offering everything from basic registration and ticketing to a fully-featured event management platform.

This platform approach has allowed us to pioneer a powerful business model that drives our go-to-market strategy and allows us to efficiently serve a large number and variety of creators. We believe our business model will enable us to achieve and grow profitability as we increase our scale. We attract creators to our platform through multiple means, including prior experience as attendees, word of mouth from other creators, our prominence in search engine results, the ability to try our platform for free events and our library of content. More than 95% of creators who used our platform in 2017 signed themselves up for Eventbrite. In 2017, we derived 54% of our net revenue from these creators. We augment this model with a highly-targeted sales team that focuses on acquiring creators with events in specific categories or countries. Substantially all of our creators create and manage events without the need for service or support.

We believe our financial performance reflects the success of creators on our platform. Over the past several years, we have seen significant growth in creators, events and paid tickets in our business. In 2017, our net revenue

 

109


Table of Contents

was $201.6 million, up from $133.5 million in 2016, representing year-over-year net revenue growth of 51.0%. Our net revenue for the six months ended June 30, 2018 was $142.1 million, up from $88.2 million for the six months ended June 30, 2017, representing period-over-period net revenue growth of 61.2%. The growth in these periods was primarily the result of paid ticket growth, fueled in part by recent acquisitions. Our net loss was $40.4 million and $38.5 million in 2016 and 2017, respectively, and $8.3 million and $15.6 million for the six months ended June 30, 2017 and 2018, respectively. Our Adjusted EBITDA was $(17.6) million and $4.2 million in 2016 and 2017, respectively, and $3.7 million and $10.0 million for the six months ended June 30, 2017 and 2018, respectively. In 2017, our net cash provided by operating activities was $29.8 million, and free cash flow was $21.1 million. Our net cash provided by operating activities was $48.8 million for the six months ended June 30, 2018. Our free cash flow, which is computed on a trailing twelve months basis, was $13.2 million for the twelve months ended June 30, 2018. For more information about Adjusted EBITDA and free cash flow, including the limitations of such measures, and a reconciliation to the most directly comparable measures calculated in accordance with GAAP, see the section titled “Selected Consolidated Financial Data and Other Data—Non-GAAP and Other Data.”

Our Market

The global market for live experiences is large and rapidly increasing in size and diversity. We believe that a significant portion of our market opportunity is represented by categories that were previously not well served by event management technology. The landscape of services to manage the complexities of planning, promoting and producing events is highly fragmented. Creators use a variety of approaches and solutions to achieve these goals. We believe that the breadth of functionality on our platform, combined with its ease of use, has enabled creators to build businesses and introduce new types of live experiences.

Based on market data prepared in conjunction with a third party, we believe that in 2018, our platform will address a current market opportunity in our top 12 markets that is estimated to be 1.1 billion paid tickets generating $3.2 billion in gross ticket fees, along with an additional 1.9 billion free tickets. This market opportunity can be broken down into four broad areas that reflect our current target market: registration (for a variety of events), festivals, music and endurance events. We believe that our target market is continuing to expand across new categories and geographies, and into larger events as the live experience market continues to grow. Further, we believe our platform can address certain additional potential market opportunities, including: tours and attractions, movie theatres, performing arts and spectator sports. The market data, and our expectations about the future growth of our market opportunity, are supported by data from the U.S. Bureau of Labor Statistics published in February 2012, which projects that employment for meeting, convention and event planners in the United States will grow by 44% from 2010 to 2020.

 

110


Table of Contents

LOGO

GEOGRAPHY POTENTIAL MARKET 3.5 BN PAID TICKETS Tours & Attractions 2.5BN Movie Theaters 779MM Performing Arts 113MM Spectator Sports 84MM CATEGORY SERVED MARKET 1.1 BN PAID TICKETS Festivals 437MM Music 358MM Registration 283MM Endurance 69MM SIZE

This reflects our target market: the millions of events that happen all over the world that lie between the two ends of the spectrum of live events. Specifically, we address the broad range of events between those where the venue dictates the ticketing relationship, like professional sports and blockbuster concerts, and those where there are often no formal venue or event management needs, like small, personal gatherings. We believe that there are millions of creators globally who are in this target market, operating in a variety of categories and serving a nearly unlimited range of events. No two creators are the same. These creators can be sole proprietors, employees of larger organizations or entrepreneurs that have their own businesses with many employees. They require a platform that supports everything from a ten-person cooking class to a 100,000-person music festival.

 

 

LOGO

STADIUM SCALE EVENTS PROFESSIONAL SPORTS BLOCKBUSTER CONCERTS BUSINESS MUSIC ENDURANCE CAUSES FOOD & DRINK CLASSES FILM ARTS CULTURE BABY SHOWERS SMALL PERSONAL GATHERINGS BIRTHDAY PARTIES

 

111


Table of Contents

The landscape of solutions and systems to manage the complexities of planning, promoting and producing events is highly fragmented. Creators use a variety of approaches and solutions to achieve these goals. Some event creators use offline methods with proven effectiveness. Others integrate a number of commercially available point solutions, like PayPal and Google Forms, to meet their needs. Others build internal solutions, committing to continued technology investments. Finally, some creators select sales-driven software providers that require significant investment in training, professional services and customization. A significant number of creators have historically lacked the choice of an end-to-end technology solution built on modern, open architectures that can fully meet their needs.

Trends in Our Favor

We believe live experiences are fundamental to fulfilling a human desire to connect. This interest in human connection drives the creation of more diverse events today than ever before, ranging from consumer-focused experiences such as music concerts and beer festivals, to cause-related events like marches, fundraisers and political rallies. According to an Eventbrite survey conducted by Crowd DNA, four out of five adults surveyed in our top four geographic markets in April 2017 attended a live event in the past year, indicating broad interest in events.

A combination of trends in consumer behavior and technology is increasing the role and importance of live experiences and provides a tailwind for our market opportunity. We call this the “experience economy.”

 

   

Consumer Preferences Shifting to Experiences. We are in the middle of a societal transition to a world that prioritizes experiences over goods. According to the U.S. Bureau of Economic Analysis, growth in consumer spending on experiences in the United States has consistently outpaced overall growth in consumer spending from 2001 to 2016, even during periods of economic recession. In a proprietary report that we commissioned, over 70% of adults surveyed in our top four geographies in April 2017 reported they would rather spend money on experiences as compared to material goods.

 

   

Rising Importance of Experiential Marketing. Live experiences have become increasingly critical in connecting companies, products and brands to their target audiences. According to a 2017 eMarketer survey, events were rated as one of the most effective marketing channels used by business-to-business marketers to engage with potential customers and nearly 70% of marketing decision makers in the United States planned to increase spending on events in the coming year.

 

   

Content Owners Extending Monetization. Thanks to the rise of digital distribution of content, today, traditional media companies and content owners enjoy a closer relationship with some of their end users. As a result, these media companies and content owners increasingly leverage data with direct marketing capabilities to target these end users with live experiences. Live music sales have grown steadily over the past 15 years, and are the primary source of revenue for artists in the U.S. music industry.

 

   

Technology Acting as an Enabler. Recent advances in mobile, social media, cloud software and other digital technologies act as a catalyst for live experiences. Internet ubiquity and smartphone adoption propel the use of online and mobile ticketing, reducing the discovery and transactional friction associated with acquiring tickets. Social media enables attendees to become evangelists of events and serves as a low-cost promotion tool and distribution channel, improving the efficiency of attendee acquisition for event organizers. The shift to cloud has led to the emergence of a low-cost infrastructure upon which we can build powerful, self-service software.

Our Value Proposition

Our platform supports a wide range of creators through a simple interface with capabilities that are powerful and reliable and scale with their needs, delivering the following benefits:

 

   

Streamlined Creator Experience . Our platform is designed to be powerful, yet easy to use, and to seamlessly support the entire lifecycle of an event. Creators are able to use our platform without training,

 

112


Table of Contents
 

support or professional services. As a result, our platform reduces the time and effort necessary to produce live experiences. Creators can launch an event on the platform in a matter of minutes. Our platform scales with creators. Many creators begin to use our platform for free gatherings and evolve to paid events of various sizes.

 

   

Reduced Cost to Manage Events . Our platform is available for anyone to use for free, and we offer a range of attractively-priced packages to serve a variety of creator needs. Not only is our product affordable, but creators often find they can do more on their own, reducing the need for staff and other third-party vendors.

 

   

Real-Time Insights . Platform analytics bring insight to creators about multiple dimensions of an event, allowing them to make real-time decisions that directly impact attendance, revenues, profitability and the attendee experience.

 

   

Trusted Attendee Experience . Event registration and payments are the first touch points of the attendee with the creator brand and are critical to create an overall positive experience. Attendees are able to register, purchase and access their tickets in a few taps of a smartphone or clicks on their computer. The speed of the registration process maximizes conversion during the purchase flow and, therefore, enhances the creators’ return on marketing efforts. Furthermore, our digital tickets remove friction associated with traditional box offices and enable streamlined entry through a variety of technological improvements in access control and queueing.

 

   

Extended Creator Reach . We have a number of capabilities to help connect attendees’ individual interests with creators’ events. Search and browse functionality allows attendees who are in the market for a particular event to easily find it on Eventbrite or through our search engine prominence. Additionally, our platform supports social sharing and has deep integrations with distribution partners where we extend the reach of creators’ events to new and relevant audiences. Finally, we offer creators access to a number of paid marketing channels to drive additional sales.

Our Strengths

 

   

Our Comprehensive Platform Serves Any Creator. Our platform combines deep functionality designed to serve sophisticated creators yet is intuitive and easy to use for creators of all types. This platform is modular and extensible, allowing us to build new capabilities quickly and to integrate with best-in-class third-party services. In 2017, our platform supported nearly three million events in more than 170 countries on a cloud-based infrastructure.

 

   

Our Business Model Has Cost Advantages in Creator Acquisition and Operations. Creators become aware of Eventbrite through word of mouth, exposure from purchasing tickets as attendees and our search engine prominence, a free offering that drives paid adoption and our relevant professional content. More than 95% of creators who used our platform in 2017 signed themselves up for Eventbrite. Our single global system combined with self-service functionality allows us to reduce cost of operations and optimize service delivery.

 

   

Our Commitment to Creators Shapes Our Culture . Our creator-centric culture drives innovation, high performance and global sensibility. Creators inspire product evolution and help us to attract a mission-driven talent base with similar passion and commitment. This unique environment and focus on people and culture feeds the productivity and engagement of our team, driving long-term success for creators and our business.

Our Growth Strategy

 

   

Attract New Creators to Our Platform. We will continue to broaden the reach of our platform by efficiently attracting new creators. We will continue to leverage a number of creator acquisition triggers, such as prior experience as attendees, word of mouth from other creators, our prominence in search engine results, the ability to try the product for free events and our library of content. By serving these new creators, we aim to

 

113


Table of Contents
 

benefit from the variety of high quality events they bring to our platform and enhance our reputation, driving further creator acquisition through word of mouth and referrals.

 

   

Add Capabilities to Better Serve Specific Categories. The breadth of our platform has enabled us to build a strong historical track record of expanding our business by developing capabilities to better address specific event categories. For example, in 2016, we decided to focus on independent music venues by building out category-specific capabilities on our platform. We will continue to strategically add category-specific capabilities, expanding the breadth and depth of our platform.

 

   

Add Capabilities to Better Serve Specific Countries. Eventbrite is globally available. In 2017, our platform supported events in more than 170 countries. However, every country is unique and requires a thoughtful process to support creators. As we serve more creators in specific countries, we intend to localize our platform by adding new capabilities, often around local payment methods or supporting local tax systems, in order to further scale in these markets.

 

   

Develop New Revenue Streams Based on Complementary Offerings. As we grow and evolve with creators, we plan to develop new capabilities and solutions to enhance our core offering. These capabilities and services allow us to better serve creators, unlocking additional revenue streams and developing opportunities with attendees directly. For example, we currently offer web and mobile development on our proprietary platform to help creators express their brands through their event listing page, profile page, email and other event-related digital assets. We intend to continue to invest in these types of solutions by monitoring changing creator and attendee needs and developing offerings where we see the greatest opportunity for growth.

 

   

Selectively Acquire Businesses Focused on Serving Creators. We have been successful leveraging our platform to make selective acquisitions that have contributed to creator and revenue growth. We accelerated our momentum through the acquisitions of ticketscript and Ticketfly. By finding like-minded teams who share a common ethos around serving creators, we can continue to expand and offer new capabilities to existing creators. The modularity and extensibility of our platform enables us to quickly integrate and migrate creators to the Eventbrite platform, allowing us to quickly deprecate the acquired technology and associated costs.

Our Technology Platform

To enable creators to more easily plan, promote and produce successful events independent of size, category or geographic location, we have designed a powerful and comprehensive platform. Our platform’s cloud-based architecture supports a modular and extensible design that facilitates rapid product development and innovation by our internal development teams, our external partners and a broad developer ecosystem.

The five core tenets guiding our platform design are:

 

   

Accessibility . We build intuitive mobile and Web applications that connect to a single platform. Creators can choose how they interface with our platform. Their access is not limited by the channels they prefer.

 

   

Modularity . Our core capabilities are built as independent components and solutions so that they can be efficiently modified without redeploying the entire codebase. Similarly, new capabilities can be easily added without disturbing the functionality of the existing platform. This approach fuels rapid product development.

 

   

Extensibility . We can extend our platform to integrate third parties, enabling creators seamless access to best-in-class partners. We also extend their reach by building Eventbrite into social and media properties with large audiences.

 

   

Flexibility . Our proprietary and third-party components exist on our common platform, allowing creators to seamlessly customize their experience by choosing different functionalities for each event.

 

114


Table of Contents
   

Reliability . We can centrally manage the performance of our platform, providing oversight and monitoring of that performance to support high-demand on-sales while continually monitoring for fraudulent or malicious activity.

Our platform is visually depicted below.

 

LOGO

ACCESS LAYER EVENTBRITE.COM ORGANIZER APP EVENTBRITE APP THIRD-PARTY SOCIAL & MEDIA PROPERTIES CREATOR WEBSITES PERFORMANCE LAYER FAULT TOLEARANCE SPECIALIZED CACHING TRANSACTIONAL QUEUING EVENTABRITE CORE COMPONENT LAYER EMAIL MARKETING EVENT CREATION AND MANAGEMENT EVENT DISCOVERY CHECKOUT REPORTING CHSITE TOOLS ORM’S ANALYSIS ADVERTISING & PROMO ACCOUNT SETTINGS NOTICATIONS ORGANIZATIONS PAYMENT OPTIONS PAYOUT MANAGEMENT PROMO TOOLS & EMAIL REFUNDS REPEATING EVENTS INVITES RESERVED SEATING SOCIAL NOTIFICATIONS CUSTOM APPS & OPERATIONS SERVICE LAYER ORDERS EVENTS PAYMENTS RISK DECISIONS PERMISSIONS ASSORTMENTS

Currently, our platform is hosted in the cloud by Amazon Web Services (AWS). AWS supports our platform’s multiple layers, variances in load and global demand by allowing us to reserve server capacity in varying amounts and sizes distributed across multiple regions of the world. In February 2012, we entered into an agreement with Amazon Web Services, Inc. for the use of cloud services from AWS. Such agreement will continue indefinitely until terminated by either party. In a December 2017 addendum to such agreement, we committed to spend an aggregate of at least $12.5 million between January 2018 and December 2020 on AWS services ($5.0 million in 2018, $3.5 million in 2019 and $4.0 million in 2020). If we fail to meet the minimum purchase commitment during any year, we may be required to pay the difference. We pay AWS monthly, and we may pay more than the minimum purchase commitment to AWS based on usage.

 

115


Table of Contents

Our Access Layer

 

LOGO

7:16 eventbrite.com Eventbrite Billy & Dolly by Elbo Room date and time Thu. Jun 14.2018. 9:00PM – Fri. Jun 15. 2018. 12:30 AM PTD LOCATION $8 - $50 TICKETS 7:16 Billy & Dolly THU, JUN 14, 2018, 9.00 PM GROSS SALES $15,575 SALES SUMMARY HOUR DAY WEEK MONTH ON DEVICE 299 SOLD $13,285 $50,000 $25,000 7 AM 8 AM 9 AM 10 AM 11 AM 12 PM 26% Tickets Sold 362/1400 SELL CHECK IN ORDERS MORE Organizer App Ticket 1 to 3 Name Michael Smith Event Billy & seat General admission Date Location Thu. June 14. 9:00 Elbo Room PM – 12:30 AM 647 Valencia St. Eventbrite App

 

   

Eventbrite.com . Creators, attendees and consumers who use our platform to search for events access Eventbrite’s broad functionality through our responsively designed website.

 

   

Organizer App . Creators access Eventbrite through our proprietary creator app available on both Android and iOS. This app is customized specifically to help creators quickly create, manage and handle onsite needs.

 

   

Eventbrite App . Consumers access Eventbrite through our proprietary consumer app available on both Android and iOS. This app is customized specifically to help consumers quickly discover, purchase and gain access to events.

 

   

Third-Party Social and Media Properties . Our integrations with distribution partners provide consumers access to our transactional capabilities. All events are automatically distributed to these partners and most partners have invested in integrations that allow sales to happen natively on the partner site. We have more than 50 partners today, including Google, Facebook, Spotify, Instagram and Bandsintown.

 

   

Creator Websites . Eventbrite powers many creator sites, allowing both creators and their audiences to directly interact with the Eventbrite platform through a variety of integrations. This includes our embedded checkout widget to power native transactions directly within the creator’s website, increasing conversion and maintaining engagement in the creator’s brand post-transaction.

Our Performance Layer

We strive to maintain consistent performance in spite of significant variations in the load placed upon our platform at different points in time. Our platform regularly supports events which sell tens of thousands of tickets in just minutes, often with significantly more page views or inventory requests than the total capacity of the event. The timing of high demand episodes is unpredictable, and we accommodate them while managing our typical volumes.

There are three critical mechanisms to ensure this high level of steady-state performance:

 

   

Fault Tolerance . Although Eventbrite is entirely in the cloud, all of our solutions are designed to handle failures either in critical support infrastructure like site operations or payments. For these kinds of solutions, we either run in multiple “zones” to avoid issues with a failure in any one zone or run multiple partners with the ability to fail-over to different partners depending on availability.

 

   

Specialized Caching . We have developed specialized caching schemes that render common portions of our components in a highly efficient manner. Instead of requiring the whole page to render with every request straight from our data stores, we can cache elements to ensure consumers have quick load times and so the overall performance of the site is not degraded.

 

116


Table of Contents
   

Transactional Queuing . We have a proprietary transaction queueing system that tracks the order of arrival of potential ticket buyers across all Eventbrite channels, ensuring that all consumers have fair access to inventory, every time, no matter what channel they use.

Success in delivering a high level of steady-state performance depends on handling episodes of high demand amid a consistently large volume of events. Our efforts here have allowed us to maintain 99.99% system uptime on the Eventbrite platform over the last six years.

Our Core Component Layer

Components are modular elements purpose-built to be shared across points of access. Eventbrite components can be extended to third-party platforms. Additionally, we can integrate third-party components into our platform, giving third parties access to these components while using our platform.

Some of the most important components include:

 

   

Event Creation and Management . Creators can set up professional ticketing and registration pages within minutes, on any device. They can customize this flow to include multiple ticket types and specifications, design checkout forms, integrate fundraising, implement waitlists and more. Once an event is published, it is immediately available to be managed both online and in our creator apps.

 

   

Event Discovery . We take into account consumers’ interests and purchase behavior to drive discovery of relevant events and deliver incremental audience and ticket sales to creators. Consumers can search for live experiences by location, date or type of event, save those they are interested in and follow creators to receive a more personalized experience.

 

   

Checkout . Our platform supports transactions across multiple modes of access. No matter how a consumer comes to Eventbrite, they encounter the same high-performance purchase flow. While ensuring a high-conversion experience, this component also ensures that we track inventory and test for fraud or other malicious activity. Our apps also allow attendees to store and access tickets conveniently on their mobile devices.

 

   

Reporting . Creators can also track performance through various charts and reports, review data from past events, install tracking pixels and promote their events on social media.

 

   

Onsite Tools . On the day of the event, we help creators with ticket scanning, streamlined entry and maintaining accurate counts and we also provide point-of-sale solutions.

Importantly, we are not limited to components that we have created. With Eventbrite Spectrum, we have a platform of more than 100 extensions and API integrations that bring essential software tools and adjacent workflows directly into Eventbrite. Example of areas where we use extensions to enhance creator functionality include:

 

   

Email Marketing . More than ten email marketing software (EMS) providers plug into the Eventbrite APIs to deliver a unified experience of event management and email marketing. Creators are able to leverage integrations with MailChimp, AWeber, Emma and many other leading EMS providers.

 

   

Advertising  & Promotion . Through partner extensions, we give creators access to a range of promotional and advertising solutions that allow them to reach a wider audience and sell more tickets. These include solutions that enable the automation of social media advertising, software for running word of mouth marketing campaigns and deep integrations with media properties that offer incremental reach and awareness.

 

   

CRM  & Analytics . Creators are able to connect Eventbrite to a range of industry-leading customer relationship management and analytics tools through partner-built integrations. These include tools such as Salesforce, HubSpot and Zoho.

 

117


Table of Contents
   

Mobile Apps and Event Operations . Creators can take advantage of a number of best-in-class event technology providers, ranging from event mobile apps, badge and ticket printing, session scheduling and live streaming.

Our Service Layer

The base layer of our platform is a set of services accessible through programmer interfaces that allow all developers access to the platform’s data and capabilities in a powerful, secure and intuitive way.

Key services include:

 

   

Orders . Our order service enables transactions on Eventbrite.com, our organizer and consumer apps, API-driven transactions from our distribution partners and embedded checkout from within creators’ websites.

 

   

Events . Our event service captures all data around an event in the creation flow regardless of how the service is accessed and renders this data in the appropriate format depending on how the event is accessed.

 

   

Payments . We deliver an integrated payment solution for creators as a Level 1 PCI-DSS Compliant Merchant and Service Provider. Despite having multiple vendors, our integrated approach allows us to offer a simple onboarding process, a seamless checkout experience, quick refunds for attendees, simple payout schedules and a unified chargeback process. In September 2017, we announced a partnership with Square where Square would become our primary online payment processing partner for EPP in the United States, Canada, Australia, the United Kingdom as well as any new territories Square enters into over time. Square will also become our exclusive payment processing partner for all of our point-of-sale solutions in those same territories. We estimate that the first online transaction will be processed through EPP using Square in 2019, but we are moving forward with the point-of-sale partnership as expediently as possible.

 

   

Risk Decisions . We have built a risk and fraud system that uses machine-learning models and business rules to evaluate every transaction processed for fraud and malicious use in milliseconds. This system uses hundreds of features and data points to inform fast and accurate decisions with low false positive rates. The systems and operations that we have created to fight fraud have become a key strategic advantage.

 

   

Permissions . Our comprehensive permissions handling service controls access to all of our platform capabilities. This system enables creators with more complex needs to handle multi-user access, multiple roles and collaboration on events and accounts.

 

   

Assortments . We offer creators multiple packages at different price points to allow them to select the perfect package for their needs. Our creators have access to specific features, APIs and services based on their selected package.

Our Go-To-Market Strategy

Our go-to-market strategy allows us to efficiently serve a large number and variety of creators. We attract creators to our platform through multiple means. Our category leadership and diversity of event types brings creators to us through word of mouth or their experiences as attendees at events produced by other Eventbrite creators. In addition, we are a leading publisher and distributor of content, which elevates our brand and drives prominence in search engine results. Finally, we make our platform available for free events, which allows us to attract many creators who then use our solution for paid events. More than 95% of creators who used our platform in 2017 signed themselves up for Eventbrite. In 2017, we derived 54% of our net revenue from these creators. We augment these efforts with a highly-targeted sales team that focuses on acquiring creators with events in specific categories or countries.

Key components of our go-to-market strategy are described below:

 

   

Awareness . A significant number of creators become aware of us through either word of mouth or interacting with our platform as attendees. In a 2016 internal survey of more than 3,000 global creators, 36%

 

118


Table of Contents
 

of creators reported first learning about Eventbrite through word of mouth and 34% of creators reported first learning of Eventbrite by attending events produced by other Eventbrite creators. Both of these factors have helped us grow organically with low creator acquisition costs. This awareness is amplified by our public relations efforts, which drove more than 1,000 pieces of earned media in 2017.

 

   

Professional Content . By creating valuable content focused on creator needs, we make creators aware of us as a place for high quality, professional articles housed in a constantly evolving knowledge hub, leading creators to discover our platform as an event management solution. We published over 1,000 pieces of content in 2017, translating this content into five languages and localized for nine countries. Based on Internet traffic, we believe we are the largest online publisher of professional content targeted at creators.

 

   

Search Engine Prominence . We enjoy an advantage in search engine prominence, driving material organic traffic to our website at no cost. Eventbrite.com is among the top 100 most linked-to sites on the Internet, granting it one of the highest domain authority scores. We enhance this advantage through search engine prominence, resulting in a steady stream of professional creators who come to Eventbrite directly as part of their search for an event management solution.

 

   

Free-to-Paid Conversion . Our “free for free events” approach attracted more than 400,000 free creators to our platform in 2017. Since 2015, approximately 17% of creators who have produced a free event have gone on to host a paid event within twelve months of their first free event.

In addition, our comprehensive platform supports a global go-to-market strategy and allows us to enter new markets or new categories with minimal additional cost.

Packages

We recently enhanced our go-to-market approach by adding pricing packages to our services in September 2017, in order to be able to meet the varying needs of creators who come to our platform.

We offer three different pricing packages with corresponding levels of features to provide flexibility for each creator: Essentials, Professional and Premium.

 

   

Essentials. The Essentials package offers the capabilities required for a simple event at an attractive price. Creators can build a mobile-optimized event page, accept secure payments, use our free promotional solutions, track sales and benefit from time-saving integrations and give attendees a simple, secure checkout experience.

 

   

Professional . With the Professional package, creators get everything in Essentials plus unlimited ticket types, ticket sales on their own sites, detailed sales analytics, customizable registration forms, payouts before events, reserved seating and comprehensive support.

 

   

Premium . The Premium package takes everything in the Professional offering and adds account management and access to a number of complementary solutions that enable these creators to scale. Premium features include branded community pages, installment payments, product training, team access and permissions, onsite staffing and support, access control technology, 24/7 phone support and more.

Our packages allow us to address specific types of creators with a targeted offering that balances price and functionality, covering a greater spectrum of creator willingness-to-pay. We believe this approach will allow us to optimize revenue in new creator cohorts in the future.

Our People, Culture and Values

Our mission is to bring the world together through live experiences, and we like to think about working at Eventbrite as the ultimate live experience, which we refer to as the “Briteling Experience.” This experience is built on the foundation of our five core values:

 

   

Be a creator . Since day one, making it happen has been part of our DNA. It is essential to our success and integral to our culture. We are innovators and doers. We are creators.

 

119


Table of Contents
   

Go all in . Great ideas come to life when pursued with conviction. With the confidence to take smart risks and learn from failures, we dream big and go all in. It’s how success is made.

 

   

Simplify it . Creating events is a complex and ambitious effort, so we strive to tackle that complexity at every turn and make it easy for creators to succeed.

 

   

Let ’em in . Authenticity invites the conversations and connections that can inspire incredible growth. We encourage being yourself and welcoming diverse perspectives.

 

   

Choose brilliance . We never opt for anything less than our best. We choose brilliance because our mission requires it—and it’s what our creators deserve.

We support a global workforce, with 14 offices in 11 countries, serving creators across the world. We maintain operations in the United States, Argentina, Australia, Belgium, Brazil, Canada, Germany, Ireland, the Netherlands, Spain and the United Kingdom.

As of June 30, 2018, we had a total of 1,016 employees, of which 997 were full-time employees. 39% of our total employees were located at our headquarters in San Francisco, California.

Competition

The market for event management solutions is highly fragmented and is impacted by shifting creator and attendee needs and changing technology and consumer trends. We also compete with internally-developed systems. This competitive landscape provides creators and attendees with many channels to promote or engage with live experiences.

We believe that competition varies by market, category, country and creator type, and that the most critical dimensions of competition are the following:

 

   

breadth and depth of functionality;

 

   

quality and reliability of the technology;

 

   

ability to assist creators in getting access to more potential attendees;

 

   

ability to address the needs of specific categories;

 

   

ability to adapt to specific geographies;

 

   

pricing level and pricing model;

 

   

reputation and brand as a seamless, transparent and secure platform for creating and attending live experiences;

 

   

flexibility and integration of technology with complementary products and services;

 

   

capabilities that create a comprehensive set of event management functionality that help power creator success;

 

   

ability to provide mobile event management and ticketing; and

 

   

willingness to offer creators access to capital ahead of the event.

We believe that our focus on providing a seamless experience for creators and attendees and a powerful but easy-to-use platform differentiate us from our competitors and that we compete favorably with respect to the factors above.

We do not typically compete with event management providers who sell sports, music and concert tickets in the world’s largest stadiums, arenas and amphitheaters. This market is characterized by multi-year financial

 

120


Table of Contents

commitments including operating leases and outright ownership of venues with commensurately higher fee structures to support the higher real estate-based cost. We also believe these systems are impractical for the majority of event creators, as they often require significant costs, substantial amounts of on-premises equipment and software customization. Finally, this segment of the market is challenged by distinct factors such as widespread and unauthorized and often highly-regulated secondary ticketing. Further, we also do not compete for every type of ticket. For instance, we do not currently participate in the movie or airline markets. Therefore, we do not consider all “ticketing” companies to be competitors.

In assessing our competitive landscape, although we believe that no single competitor focuses on all of the same markets, geographies, categories and creator types as we do at the same scale, we believe that our competitors fall into two broad groups:

 

   

Event management software vendors. These providers are dedicated to a particular category of events, and typically in a limited number of countries. They often focus on providing solutions for larger scale, professional affairs, relying on a sales-driven go-to-market strategy that can be high cost and often involves the use of capital in the form of signing fees and advances to secure contracts. Lastly, their offerings tend to be proprietary on-premises software. This group also includes many internal systems, which typically lag in adoption of more modern architectures.

 

   

Smaller long tail providers. These providers are typically smaller in scale and have limited technology and feature functionality. While they typically use modern development methods and use a cloud infrastructure, they may lack the scale to take advantage of the efficiencies of a platform approach.

Our Product Development Approach

We invest substantial resources in product development to enhance our platform and develop new products and features.

Our product development organization consists of world-class engineering, product and design teams. As of June 30, 2018, we had more than 324 professionals across these teams, representing approximately 32% of our employees. Our engineering, product and design teams work together to drive continual innovation.

In 2016, 2017 and the six months ended June 30, 2018, product development expenses were 17.0%, 15.2% and 13.9% of net revenue, respectively.

Intellectual Property

We protect our intellectual property through a combination of trademarks, domain names, copyrights, trade secrets and patents, as well as contractual provisions and restrictions governing access to our proprietary technology.

We registered “Eventbrite” as a trademark in the United States, Australia, Argentina, Brazil, Canada, China, European Union, Germany, Ireland, the Netherlands, Mexico, Spain, the United Kingdom and certain other jurisdictions. We also have filed other trademark applications in the United States, Argentina, Australia, Brazil, Canada, Germany, Ireland, the Netherlands, Spain, the United Kingdom and certain other jurisdictions, and will pursue additional trademark registrations to the extent we believe it would be beneficial and cost effective.

As of June 30, 2018, we had 13 issued patents, which expire between 2031 and 2032, and one patent application pending in the United States. These patents and patent applications seek to protect proprietary inventions relevant to our business. We intend to pursue additional patent protection to the extent we believe it would be beneficial and cost effective.

We are the registered holder of a variety of domain names that include “Eventbrite” and similar variations.

 

121


Table of Contents

In addition to the protection provided by our registered intellectual property rights, we also enter into confidentiality agreements with our employees, consultants, contractors and business partners. Our employees, consultants and contractors are also subject to invention assignment agreements, pursuant to which we obtain rights to technology that they develop for us. We further protect our rights in our proprietary technology and intellectual property through restrictive license and service use provisions in both the general and product-specific terms of use on our website and in other business contracts.

Facilities

We lease approximately 48,812 square feet of space in San Francisco, California for our headquarters under a lease agreement that expires in November 2020. We also lease facilities in Nashville, Tennessee, Argentina, Australia, Belgium, Brazil, Canada, Germany, Ireland, the Netherlands, Spain and the United Kingdom to support our global team.

We anticipate leasing additional office space in future periods to support our growth. We intend to further expand our facilities or add new facilities as we add employees and enter new geographic markets, and we believe that suitable additional or alternative space will be available as needed to accommodate any such growth. However, we expect to incur additional expenses in connection with such new or expanded facilities.

Legal Matters

We are not a party to any material legal proceedings. From time to time we may be subject to legal proceedings and claims arising in the ordinary course of business.

Government Regulation

We are subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet, many of which are still evolving and could be interpreted in ways that could harm our business. These laws and regulations are often complex, sometimes contradict other laws, and are frequently still evolving. Laws and regulations may be interpreted and enforced in different ways in various locations around the world, posing a significant challenge to our global business. For example, U.S. federal and state laws, EU directives and regulations, and other national laws and regulations govern the processing of payments, consumer protection and the privacy of consumer information; other laws define and regulate unfair and deceptive trade practices. Still other laws dictate when and how sales, amusement or other taxes must be collected. The growing regulation of eCommerce worldwide could impose additional compliance burdens and costs on us or on creators and attendees, and could subject us to significant liability for any failure to comply. Additionally, because we operate internationally, we need to comply with various laws associated with doing business outside of the United States, including anti-money laundering, anti-corruption and export control laws. Concern about the use of platforms for illegal conduct, such as money laundering or to support terrorist activities, may in the future result in legislation or other governmental action that could require changes to our platform.

See the section titled “Risk Factors”, including the subsections titled “Risk Factors—Data loss or security breaches could harm our business, reputation, brand and results of operations,” “Risk Factors—The processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing applications of privacy regulations,” “Risk Factors—Our platform might be used for illegal or improper purposes, all of which could expose us to additional liability and harm our business,” “Risk Factors—Our business is subject to various import and export regulations. Our failure to comply with those laws and regulations could harm our business” and “Risk Factors—Our business is subject to a wide range of laws and regulations. Our failure to comply with those laws and regulations could harm our business,” for additional information about the laws and regulations we are subject to and the risks to our business associated with such laws and regulations.

 

122


Table of Contents

MANAGEMENT

Executive Officers and Directors

The following table provides information regarding our executive officers and directors as of July 31, 2018:

 

Name

   Age   

Position

Executive Officers:

     

Julia Hartz

   38    Co-Founder, Chief Executive Officer and Director

Randy Befumo

   47    Chief Financial Officer

Omer Cohen

   50    Chief People Officer

Samantha Harnett

   42    Senior Vice President and General Counsel

Brian Irving

   43    Chief Brand Officer

Patrick Poels

   50    Senior Vice President of Platform

Non-Executive Officer Directors:

     

Katherine August-deWilde (2)(3)

   70    Director

Roelof Botha (1)(2)(4)

   44    Director

Andrew Dreskin

   49    President of Music and Director

Kevin Hartz

   48    Co-Founder, Chairman of the Board and Director

Sean P. Moriarty (2)

   48    Director

Lorrie M. Norrington (1)(3)

   58    Director

Helen Riley (1)

   42    Director

Steffan C. Tomlinson (1)

   46    Director

 

(1)  

Member of the audit committee.

(2)  

Member of the compensation committee.

(3)  

Member of the nominating and corporate governance committee.

(4)  

Lead independent director.

Each executive officer serves at the discretion of our board of directors and holds office until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. Ms. Hartz and Mr. Hartz are wife and husband.

Executive Officers

Julia Hartz . Ms. Hartz co-founded our company and has served as our Chief Executive Officer and a member of our board of directors since April 2016. From 2006 to April 2016, Ms. Hartz served as our President. From 2003 to 2005, Ms. Hartz served as a manager of various television network series at Fox Networks Group, a media company, and from 2001 to 2003, Ms. Hartz developed and managed a network television series at MTV Networks, a part of Viacom, a media company. Ms. Hartz holds a Bachelor of Arts in Telecommunications from Pepperdine University.

We believe that Ms. Hartz is qualified to serve as a member of our board of directors based on the perspective and experience she brings as our co-founder and Chief Executive Officer.

Randy Befumo . Mr. Befumo has served as our Chief Financial Officer since November 2016. From July 2016 to November 2016, Mr. Befumo served as our Interim Chief Financial Officer. From May 2013 to October 2016, he served in various other leadership roles with us, primarily as the VP of Strategy. From 2006 to 2013, Mr. Befumo served as director of research at Legg Mason Capital Management, an investment company. Mr. Befumo holds a Bachelor of Arts in Interdisciplinary Studies, Religion and Philosophy from The College of William and Mary.

 

123


Table of Contents

Omer Cohen . Mr. Cohen has served as our Chief People Officer since September 2017. From 2012 to 2017, Mr. Cohen held various roles at Lytro, a light field imaging and virtual reality content company, including Chief Operating Officer from 2015 to 2017 and Chief People Officer from 2012 to 2015. Prior to that, Mr. Cohen founded TrustAdvantage, a boutique organizational effectiveness consulting practice and also formerly served as Chief Operating Officer and then President of the Great Place to Work Institute, Inc. Mr. Cohen holds a Master of Business Administration from the University of Michigan, Stephen M. Ross School of Business, and a Bachelor of Arts in Economics from Brown University.

Samantha Harnett . Ms. Harnett has served as our Senior Vice President and General Counsel since May 2018, and previously as our Vice President, General Counsel from November 2015 through May 2018. From March 2005 to November 2015, Ms. Harnett served in various positions at ZipRealty, a real estate technology and online brokerage company, including most recently as the general counsel and senior vice president of business development from October 2009 to November 2015. Prior to that, Ms. Harnett was an associate at Wilson Sonsini Goodrich and Rosati, P.C. Ms. Harnett holds a Juris Doctor from Santa Clara University School of Law and a Bachelor of Arts in Psychology from California State University.

Brian Irving. Mr. Irving has served as our Chief Brand Officer since January 2018. From September 2016 to September 2017, Mr. Irving served as the chief marketing and revenue officer for Just, Inc. (formerly Hampton Creek), a food manufacturing company. From May 2015 to July 2016, Mr. Irving served as global marketing director at Airbnb, an online hospitality marketplace. From July 2013 to May 2015, Mr. Irving served as the senior director of marketing for Google Play, a division of Alphabet. Mr. Irving holds a Bachelor of Arts in International Relations from Michigan State University.

Patrick Poels. Mr. Poels has served as our Senior Vice President of Platform since January 2018 and, prior to that, he served as our Vice President of Engineering from March 2012 to January 2018, and as our Director of Data Engineering from November 2011 to March 2012. From 2010 to 2011, Mr. Poels served as the chief technical officer at Pathways Platform, a healthcare staffing company. Previously, Mr. Poels was an executive at Ticketmaster.

Non-Executive Officer Directors

Katherine August-deWilde . Ms. August-deWilde has served on our board of directors since February 2016. Ms. August-deWilde is currently the Vice Chair of First Republic Bank, a position she has held since the beginning of 2016. Ms. August-deWilde has served as an executive at First Republic Bank since 1985 and has previously served as chief operating officer from 1993 to 2014 and president from 2007 to 2015. Ms. August-deWilde has served on the board of directors of First Republic Bank since 1988, Sunrun, a publicly-traded solar panel and energy company, since 2016, and TriNet Group, a publicly-traded human resources software solution company, since 2013. She also currently serves on the board of directors of a number of privately-held companies. Ms. August-deWilde is currently a member of the Advisory Council of the Stanford Center on Longevity and a member of the Stanford University Graduate School of Business Advisory Council. Ms. August-deWilde holds a Master of Business Administration from the Stanford Graduate School of Business and a Bachelor of Arts in History from Goucher College.

We believe that Ms. August-deWilde is qualified to serve as a member of our board of directors due to her leadership experience and experience serving on the boards of directors of public companies.

Roelof Botha . Mr. Botha  has served as a member of our board of directors since October 2009. Since January 2003, Mr. Botha has served in various positions at Sequoia Capital, a venture capital firm, including as a Managing Member since 2007. From 2000 to 2003, Mr. Botha served in various positions at PayPal, a payment processing and financial services company, including as chief financial officer. Mr. Botha has served on the board of directors of MongoDB, a publicly-traded general purpose database platform, since 2013, Square, Inc., a publicly-traded company that provides payments, financial and marketing services, since 2011, and Natera, a

 

124


Table of Contents

publicly-traded genetic testing company, since 2007. He also currently serves on the board of directors of a number of privately-held companies. Mr. Botha previously served on the board of directors of Xoom Corporation from May 2005 until its acquisition by PayPal in 2015. Mr. Botha holds a Master of Business Administration from the Stanford University Graduate School of Business and a Bachelor of Science in Actuarial Science, Economics and Statistics from the University of Cape Town.

We believe that Mr. Botha is qualified to serve as a member of our board of directors due to his knowledge of the technology industry and experience serving on the boards of directors of public companies.

Andrew Dreskin . Mr. Dreskin has served as our President of Music and a member of our board of directors since December 2017. From January 2008 to September 2017, Mr. Dreskin served as the chief executive officer and was a co-founder of Ticketfly, a music ticketing and marketing company we acquired in September 2017. Earlier in his career, Mr. Dreskin served as the chief executive officer and was a co-founder of TicketWeb. TicketWeb was acquired by Ticketmaster in 2000. Over the course of his career, Mr. Dreskin has held various roles in the record, concert and festival industries. He currently serves on a variety of not-for-profit boards including Headcount, an organization that works with musicians to promote participation in democracy. Mr. Dreskin holds a Bachelor of Arts in History from Tulane University.

Mr. Dreskin is qualified to serve as a member of our board of directors because of his experience working in the live events and ticketing industries.

Kevin Hartz . Mr. Hartz co-founded our company and has served as the Chairman of the Board of our board of directors since August 2018 and has served on our board of directors since October 2005. From September 2016 until June 2018, Mr. Hartz served as a partner and entrepreneur in residence at Founders Fund, a venture capital investment fund. From October 2005 to September 2016, Mr. Hartz served as our Chief Executive Officer. From 2001 to 2015, Mr. Hartz co-founded and held various roles at Xoom Corporation, a publicly-traded payments processing company that was sold to PayPal in 2015, including serving as its chief executive officer from 2001 to 2005 and director from 2001 to 2015. Mr. Hartz holds a Masters of Studies degree in History from Oxford University and a Bachelor of Arts and Science in History and Applied Earth Science from Stanford University.

We believe that Mr. Hartz is qualified to serve as a member of our board of directors based on the perspective and experience he brings as our co-founder and former chief executive officer and his experience serving on a public company board.

Sean P. Moriarty . Mr. Moriarty has served on our board of directors since January 2010. Since August 2014, Mr. Moriarty has served as the chief executive officer and as a member of the board of directors of Leaf Group, a publicly-traded diversified media platform company. Mr. Moriarty previously served as the chief executive officer of Saatchi Online, which operated Saatchi Art, an online art gallery, from August 2013 to August 2014, prior to its acquisition by Leaf Group. From 2009 to 2012, Mr. Moriarty was an entrepreneur in residence at Mayfield Fund, a venture capital firm. From 2007 to 2009, Mr. Moriarty was president and chief executive officer of Ticketmaster, a live entertainment ticketing and marketing company, and he held various other positions at Ticketmaster from 2000 to 2006, including executive vice president, technology and chief operating officer. Mr. Moriarty served on the Ticketmaster board of directors from 2008 to 2009, and he currently serves on the board of directors of several privately-held companies. Mr. Moriarty attended graduate school at Boston University and the University of South Carolina and holds a Bachelor of Arts in English from the University of South Carolina.

We believe that Mr. Moriarty is qualified to serve as a member of our board of directors due to his executive experience at Ticketmaster and his breadth of leadership experience.

Lorrie M. Norrington . Ms. Norrington has served as a director on our board of directors since April 2015. Ms. Norrington is currently an operating partner for Lead Edge Capital, a growth equity investment firm. Prior to

 

125


Table of Contents

Lead Edge Capital, Ms. Norrington served in several senior management roles at eBay from 2005 through 2010, including as president of eBay Marketplaces. Prior to joining eBay, she was the chief executive officer of Shopping.com and held senior positions at Intuit. Ms. Norrington also led a variety of businesses at General Electric Company over a twenty-year period in a broad range of industries. She has served on the board of directors of Colgate-Palmolive Company, a publicly-traded consumer products company, since 2015, HubSpot, a publicly-traded company that provides an inbound marketing and sales platform, since 2013 and currently serves as lead director, and Autodesk, a publicly-traded design and engineering software company, since 2011. Ms. Norrington also currently serves on the board of directors of several privately-held companies. Ms. Norrington holds a Master of Business Administration from the Harvard Business School and a Bachelor of Science in Business Administration from the University of Maryland.

We believe that Ms. Norrington is qualified to serve as a member of our board of directors due to her leadership experience in technology, software and Internet businesses and experience serving on the boards of directors of public companies.

Helen Riley . Ms. Riley has served as a member of our board of directors since July 2018. Since 2014, Ms. Riley has served as the chief financial officer at X, a research and development company and subsidiary of Alphabet Inc., a publicly-traded multinational conglomerate. From 2011 to 2013, Ms. Riley was the senior finance director of global marketing and global general and administration at Google, an Alphabet Inc. subsidiary. From 2013 to 2015, Ms. Riley was a finance director at Google, and she held various other positions in finance at Google from 2003 to 2012. Ms. Riley currently serves on the board of directors of WildAid, a wildlife conservation non-profit. Ms. Riley holds a Master of Business Administration from the Harvard Business School and a Bachelor of Arts and Master of Arts in Philosophy, Politics and Economics from the University of Oxford.

We believe that Ms. Riley is qualified to serve as a member of our board of directors due to her knowledge of global finance and experience advising technology companies.

Steffan C. Tomlinson . Mr. Tomlinson has served as a member of our board of directors since February 2016. From February 2012 to March 2018, Mr. Tomlinson served as chief financial officer of Palo Alto Networks, a publicly-traded cyber security company. From September 2011 to January 2012, Mr. Tomlinson served as chief financial officer at Arista Networks, a provider of cloud networking solutions. From April 2011 to September 2011, Mr. Tomlinson was a partner and chief administrative officer at Silver Lake Kraftwerk, a private investment firm. From 2005 to 2011, Mr. Tomlinson served as chief financial officer at Aruba Networks, a provider of intelligent wireless LAN switching systems. Since May 2017, Mr. Tomlinson has served on the board of directors of Cornerstone OnDemand, a publicly-traded company providing cloud-based learning and talent management solutions. He also previously served on the boards of directors of Qlik Technologies, a publicly-traded data analytics platform, from 2013 to 2016, and Riverbed Technology, a publicly-traded network performance company, from 2014 to 2015. Mr. Tomlinson holds a Master of Business Administration from Santa Clara University and a Bachelor of Arts in Sociology from Trinity College.

We believe that Mr. Tomlinson is qualified to serve as a member of our board of directors and chair of our audit committee due to his background as a member of the board and audit committee of other public companies and his financial and accounting expertise from his experience as chief financial officer of publicly-traded companies.

Code of Conduct

Our board of directors has adopted, effective upon the effectiveness of the registration statement to which this prospectus relates, a code of conduct that will apply to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. Upon the completion of this offering, the full text of our code of conduct will be posted on our website. We intend to disclose any amendments to our code of conduct, or waivers of its requirements, on our website or in filings under the Exchange Act.

 

126


Table of Contents

Board of Directors

Our business and affairs are managed under the direction of our board of directors. The number of directors will be fixed by our board of directors, subject to the terms of our amended and restated certificate of incorporation and amended and restated bylaws that will become effective immediately prior to the completion of this offering. Our board of directors consists of nine directors, six of whom will qualify as “independent” under NYSE listing standards.

In accordance with our amended and restated certificate of incorporation and our amended and restated bylaws, immediately after the completion of this offering our board of directors will be divided into three classes with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Our directors will be divided among the three classes as follows:

 

   

the Class I directors will be Roelof Botha, Andrew Dreskin and Steffan Tomlinson, and their terms will expire at the annual meeting of stockholders to be held in 2019;

 

   

the Class II directors will be Katherine August-deWilde, Julia Hartz and Helen Riley, and their terms will expire at the annual meeting of stockholders to be held in 2020; and

 

   

the Class III directors will be Kevin Hartz, Sean Moriarty and Lorrie Norrington, and their terms will expire at the annual meeting of stockholders to be held in 2021.

Each director’s term will continue until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

This classification of our board of directors may have the effect of delaying or preventing changes in control of our company.

Director Independence

Our board of directors has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our board of directors has determined that Mses. August-deWilde, Norrington and Riley and Messrs. Botha, Moriarty and Tomlinson do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing standards of the NYSE. In making these determinations, our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in the section titled “Certain Relationships and Related Party Transactions.”

Lead Independent Director

Our board of directors has adopted, effective upon the effectiveness of the registration statement to which this prospectus relates, corporate governance guidelines that provide that one of our independent directors will serve as our lead independent director. Our board of directors has appointed Roelof Botha to serve as our lead independent director. As lead independent director, Mr. Botha will preside over periodic meetings of our independent directors, serve as a liaison between the Chairperson of our board of directors and the independent directors and perform such additional duties as our board of directors may otherwise determine and delegate.

 

127


Table of Contents

Committees of the Board of Directors

Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and responsibilities of each of the committees of our board of directors is described below. Members will serve on these committees until their resignation or until as otherwise determined by our board of directors.

Audit Committee

Our audit committee consists of Messrs. Botha and Tomlinson and Mses. Norrington and Riley, with Mr. Tomlinson serving as Chairperson. The composition of our audit committee meets the requirements for independence under current NYSE listing standards and SEC rules and regulations. Each member of our audit committee meets the financial literacy requirements of the NYSE listing standards. In addition, our board of directors has determined that Mr. Tomlinson is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act. Our audit committee will, among other things:

 

   

select a qualified firm to serve as the independent registered public accounting firm to audit our financial statements;

 

   

help to ensure the independence and performance of the independent registered public accounting firm;

 

   

discuss the scope and results of the audit with the independent registered public accounting firm, and review, with management and the independent registered public accounting firm, our interim and year-end results of operations;

 

   

develop procedures for employees to submit concerns anonymously about questionable accounting or audit matters;

 

   

review our policies on risk assessment and risk management;

 

   

review related party transactions;

 

   

obtain and review a report by the independent registered public accounting firm at least annually, that describes our internal control procedures, any material issues with such procedures, and any steps taken to deal with such issues; and

 

   

approve (or, as permitted, pre-approve) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm.

Our audit committee will operate under a written charter, to be effective upon the effectiveness of the registration statement to which this prospectus relates, that satisfies the applicable rules of the SEC and the listing standards of the NYSE.

Compensation Committee

Our compensation committee consists of Messrs. Botha and Moriarty and Ms. August-deWilde, with Mr. Moriarty serving as Chairperson. The composition of our compensation committee meets the requirements for independence under NYSE listing standards and SEC rules and regulations. Each member of the compensation committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act. The purpose of our compensation committee is to discharge the responsibilities of our board of directors relating to compensation of our executive officers. Our compensation committee will, among other things:

 

   

review, approve and determine, or make recommendations to our board of directors regarding, the compensation of our executive officers;

 

128


Table of Contents
   

administer our stock and equity incentive plans;

 

   

review and approve, or makes recommendations to our board of directors regarding, incentive compensation and equity plans; and

 

   

establish and review general policies relating to compensation and benefits of our employees.

Our compensation committee will operate under a written charter, to be effective upon the effectiveness of the registration statement to which this prospectus relates, that satisfies the applicable rules of the SEC and the listing standards of the NYSE.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee consists of Mses. August-deWilde and Norrington, with Ms. August-deWilde serving as Chairperson. The composition of our nominating and corporate governance committee meets the requirements for independence under NYSE listing standards and SEC rules and regulations. Our nominating and corporate governance committee will, among other things:

 

   

identify, evaluate and make recommendations to our board of directors regarding, nominees for election to our board of directors and its committees;

 

   

evaluate the performance of our board of directors and of individual directors;

 

   

consider and make recommendations to our board of directors regarding the composition of our board of directors and its committees;

 

   

review developments in corporate governance practices;

 

   

evaluate the adequacy of our corporate governance practices and reporting; and

 

   

develop and make recommendations to our board of directors regarding corporate governance guidelines and matters.

The nominating and corporate governance committee will operate under a written charter, to be effective upon the effectiveness of the registration statement to which this prospectus relates, that satisfies the applicable listing requirements and rules of the NYSE.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee is or has been an officer or employee of our company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. See the section titled “Certain Relationships and Related Party Transactions” for information about related party transaction involving members of our compensation committee or their affiliates.

Non-Employee Director Compensation

We did not pay any compensation or make any equity awards or non-equity awards to any of our non-employee directors during the year ended December 31, 2017. Directors may be reimbursed for travel and other expenses directly related to their activities as directors. Directors who also serve as employees receive no additional compensation for their service as directors. During the fiscal year ended December 31, 2017, Ms. Hartz, our Chief Executive Officer, and Mr. Dreskin, our President, Music, were each a member of our board of directors, as well as an employee, and thus received no additional compensation for her or his services as a director. See the section titled “Executive Compensation” for more information about Ms. Hartz’ compensation for the year ended December 31, 2017, and see the following table for the total compensation that was earned by or paid to Mr. Dreskin for his service as an employee for the year ended December 31, 2017. Mr. Dreskin was

 

129


Table of Contents

hired by us in connection with the Ticketfly acquisition in 2017 and the compensation reported below is the result of negotiations between us and Mr. Dreskin in order to incentivize him to join us as an employee. Additionally, in connection with the Ticketfly acquisition, Mr. Dreskin was also appointed to our board, though he does not receive any compensation for his service as a director.

 

Name                         

   Option
awards
($) (1)
     All Other
Compensation ($)
    Total
($)
 

Andrew Dreskin

     2,455,648        520,492 (2)        2,976,140  

 

(1)

The amount reported represents the aggregate grant date fair value of the stock option awarded to Mr. Dreskin in the year ended December 31, 2017, calculated in accordance with FASB ASC Topic 718. Such grant date fair value does not take into account any estimated forfeitures related to service-vesting conditions. The assumptions used in calculating the grant date fair value of the stock option reported in this column are set forth in the Notes to our Consolidated Financial Statements included elsewhere in this prospectus. The amount reported in this column reflects the accounting cost for the stock option and does not correspond to the actual economic value that may be received by the director upon exercise of the stock option. 25% of the shares subject to the option vested on September 5, 2017, and 1/24th of the shares subject to the option will vest each month thereafter; provided that Mr. Dreskin remains continuously employed with us through each applicable vesting date. The shares subject to the option are not early exercisable. In the event of a change in control, if Mr. Dreskin is terminated by us without cause or he resigns for good reason, in each case within three months prior to or 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested and exercisable. In the event Mr. Dreskin is terminated by us without cause or he resigns for good reason not in connection with a change in control, then 50% of the then-unvested portion of the option and underlying shares of common stock will become vested and exercisable.

(2)

The amounts reported represent $211,742 in salary for services as our employee, a sign-on bonus in the amount of $183,750 in connection with Mr. Dreskin’s commencement of employment with us, and a discretionary bonus in the amount of $125,000 related to Mr. Dreskin’s performance for fiscal year 2017. Mr. Dreskin did not receive any compensation for his services as a director.

As of December 31, 2017, Ms. August-deWilde held 103,129 shares of restricted stock, Mr. Dreskin held an option to purchase 878,052 shares of our common stock, Mr. Hartz held an option to purchase 1,250,000 shares of our common stock as well as an RSU award for 802,900 shares, Mr. Moriarty held an option to purchase 50,000 shares of our common stock, Ms. Norrington held an option to purchase 184,963 shares of our common stock, and Mr. Tomlinson held an option to purchase 190,392 shares of our common stock. David Morin, who resigned from the board of directors in 2018, held an option to purchase 115,934 shares of our common stock. None of the other non-employee directors held equity awards as of December 31, 2017. Prior to this offering, we did not have a formal policy to compensate our non-employee directors. Immediately prior to the completion of this offering, we intend to implement a formal policy pursuant to which our non-employee directors will be eligible to receive the following cash retainers and equity awards:

 

Annual Retainer for Board Membership

  

Annual service on the board of directors

   $ 35,000  

Annual service as lead director

   $ 15,000  

Additional Annual Retainer for Committee Membership

  

Annual service as chair of the audit committee

   $ 10,000  

Annual service as member of the audit committee (other than chair)

   $ 20,000  

Annual service as chair of the compensation committee

   $ 6,000  

Annual service as member of the compensation committee (other than chair)

   $ 12,000  

Annual service as chair of the nominating and corporate governance committee

   $ 3,750  

Annual service as member of the nominating and corporate governance committee (other than chair)

   $ 7,500  

 

130


Table of Contents

Non-employee directors will be given the opportunity to elect to receive all or a portion of their retainer and committee fees in the form of an equity award of unrestricted stock having a grant-date fair value equal to the amount (or portion of the amount) of such retainer and committee fees.

Our policy will provide that each non-employee director as of the effective time of the registration statement for our initial firm commitment underwritten public offering of equity securities will be granted an equity award having a fair market value of $165,000 (pro-rated based on the time between the date of grant and our next annual meeting of stockholders), of which 50% will be restricted stock units and 50% will be stock options (IPO Grant). In addition, our policy will provide that, upon initial election to our board of directors, each non-employee director will be granted an equity award having a fair market value of $165,000 (Initial Grant) of which 50% will be restricted stock units and 50% will be stock options. Furthermore, on the date of each of our annual meeting of stockholders following the completion of this offering, each non-employee director who will continue as a non-employee director following such meeting will be granted an annual equity award having a fair market value of $165,000 (Annual Grant) of which 50% will be restricted stock units and 50% will be stock options. If a new non-employee director joins our board of directors on a date other than the date of our annual meeting of stockholders, such non-employee director will be granted a pro-rata portion of the Initial Grant, based on the time between his or her appointment and our next annual meeting of stockholders. The Initial Grant, IPO Grant and the Annual Grant will vest in full on the earlier of (i) the first anniversary of the grant date or (ii) our next annual meeting of stockholders, subject to continued service as a director through the applicable vesting date. Such awards are subject to full accelerated vesting upon the sale of the Company.

Non-employee directors will be given the opportunity to defer all or a portion of their equity grant retainers into deferred stock units pursuant to the terms and conditions of our policy, the 2018 Plan and the Non-Employee Directors’ Deferred Compensation Program.

Employee directors will receive no additional compensation for their service as a director.

We will reimburse all reasonable out-of-pocket expenses incurred by directors for their attendance at meetings of our board of directors or any committee thereof.

 

131


Table of Contents

EXECUTIVE COMPENSATION

Overview

The following discussion contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. The actual amount and form of compensation and the compensation policies and practices that we adopt in the future may differ materially from currently planned programs as summarized in this discussion.

As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act. This section provides an overview of the compensation awarded to, earned by, or paid to each individual who served as our principal executive officer during fiscal year 2017, and our next two most highly compensated executive officers in respect of their service to our company for the year ended December 31, 2017. We refer to these individuals as our named executive officers. Our named executive officers for fiscal year 2017 are:

 

   

Julia Hartz, our Chief Executive Officer;

 

   

Omer Cohen, our Chief People Officer; and

 

   

Matthew Rosenberg, our former Chief Revenue Officer.

Our executive compensation program is based on a pay for performance philosophy. Compensation for our executive officers is composed primarily of the following main components: base salary, bonus and equity incentives in the form of stock options. Our executive officers, like all full-time employees, are eligible to participate in our health and welfare benefit plans. As we transition from a private company to a publicly-traded company, we intend to evaluate our compensation philosophy and compensation plans and arrangements as circumstances require.

2017 Summary Compensation Table

The following table provides information regarding the total compensation, for services rendered in all capacities, that was earned by our named executive officers during the fiscal year ended December 31, 2017.

 

Name and principal position

   Year      Salary
($)
     Option
awards
($) (1)
     Non-Equity
Incentive Plan
Compensation
($)
    Total
($)
 

Julia Hartz

     2017        335,000        —          —         335,000  

Chief Executive Officer

             

Omer Cohen

             

Chief People Officer (2)

     2017        105,871        1,816,240        —         1,922,111  

Matthew Rosenberg

             

Chief Revenue Officer (3)

     2017        357,500        385,869        200,845 (4)        944,214  

 

(1)

The amounts reported represent the aggregate grant date fair value of the stock options awarded to the named executive officer in the fiscal year ended December 31, 2017, calculated in accordance with FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock options reported in this column are set forth in the Notes to our Consolidated Financial Statements included elsewhere in this prospectus. The amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the named executive officers upon exercise of the stock options.

(2)  

Mr. Cohen joined us in 2017.

(3)  

As of March 2018, Mr. Rosenberg was no longer employed by us.

(4)  

This amount reflects monthly commissions earned by Mr. Rosenberg under the 2017 Chief Revenue Officer Incentive Plan.

 

132


Table of Contents

Narrative to Summary Compensation Table

Base Salaries

We use base salaries to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers. Base salaries are reviewed annually, typically in connection with our annual performance review process, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience. For the year ended December 31, 2017, the annual base salaries for each of Ms. Hartz and Messrs. Cohen and Rosenberg were $335,000, $325,000, and $357,500.

Bonuses and Commissions

In 2017, Mr. Rosenberg participated in the 2017 Chief Revenue Officer Incentive Plan, which provided a monthly commission payment based upon our attainment of certain revenue targets, paid within one month after such amounts are deemed earned by us. None of our other named executive officers received any bonuses or non-equity incentive compensation for 2017.

Equity Compensation

Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers, we believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our executive officers to remain in our employment during the vesting period. Accordingly, our board of directors periodically reviews the equity incentive compensation of our named executive officers and from time to time may grant equity incentive awards to them. During the year ended December 31, 2017, we granted options to purchase shares of our common stock to Mr. Cohen in connection with him commencing employment with us, as described in more detail in the “Outstanding Equity Awards at 2017 Year-End” table.

Executive Employment Arrangements

Executive Employment Arrangements

We initially entered into offer letters with each of the named executive officers in connection with his or her employment with us, which set forth the terms and conditions of employment of each individual, including base salary, target annual bonus opportunity and standard employee benefit plan participation.

Offer Letters in Place During the Year Ended December 31, 2017 for Named Executive Officers

Julia Hartz

On November 30, 2005, we entered into an offer letter with Ms. Hartz, which was subsequently amended on April 21, 2016 in connection with her promotion to Chief Executive Officer. The offer letter, as amended, provided for Ms. Hartz’s at-will employment and set forth her annual base salary and an option grant (including an option grant in connection with her promotion), as well as her eligibility to participate in our benefit plans generally. Ms. Hartz’s initial option grant covered 60,000 shares of our common stock and her promotional option grant covered 1,552,468 shares of our common stock. Ms. Hartz is subject to our standard employment, confidential information, invention assignment and arbitration agreement. Subsequent to December 31, 2017, Ms. Hartz received an additional grant to purchase up to 2,877,468 shares of our common stock, which will vest monthly over 4 years, at an exercise price of $13.72 per share.

 

133


Table of Contents

Omer Cohen

On July 17, 2017, we entered into an offer letter with Mr. Cohen, who currently serves as our Chief People Officer. The offer letter provided for Mr. Cohen’s at-will employment and set forth his initial annual base salary and an initial option grant, as well as his eligibility to participate in our benefit plans generally. Mr. Cohen’s initial option grant covered 494,000 shares of our common stock. Mr. Cohen is subject to our standard employment, confidential information, invention assignment and arbitration agreement.

Matthew Rosenberg

On August 20, 2012, we entered into an offer letter with Mr. Rosenberg, who served as our Chief Revenue Officer until March 2, 2018. The offer letter provided for Mr. Rosenberg’s at-will employment and set forth his initial annual base salary, target bonus and an initial option grant, as well as his eligibility to participate in our benefit plans generally. Mr. Rosenberg’s initial option grant covered 550,000 shares of our common stock. The offer letter also provided that, in the event of a change in control, if Mr. Rosenberg is terminated by us without cause within 12 months following such change in control, then 100% of the then-unvested portion of his outstanding options will become vested and exercisable. Additionally, in the event he is terminated by us or resigns for good reason, subject to execution of a release of claims in favor of us, Mr. Rosenberg would be eligible to receive 6 months of salary continuation and an amount equal to his last quarterly bonus. Mr. Rosenberg was subject to our standard employment, confidential information, invention assignment and arbitration agreement.

Executive Severance and Change in Control Agreements

In 2017, we entered into Executive Severance and Change in Control Agreements with certain of our executive officers, including Ms. Hartz and Mr. Cohen, which provides that upon a termination by us for any reason other than for “cause,” as defined in such agreement, death or disability, outside of the change in control period (i.e., the period beginning 3 months prior to and ending 12 months after, a “change in control,” as defined in such agreement), Ms. Hartz and Mr. Cohen will be entitled to receive, subject to the execution and delivery of an effective release of claims in our favor, (i) a lump sum cash payment equal to six months of base salary and (ii) a monthly cash payment equal to the contribution that we would have made to provide health insurance to the executive officer if the executive officer had remained employed by us for up to six months.

The Executive Severance and Change in Control Agreement also provides that upon a (i) termination by us other than for cause, death or disability or (ii) resignation for “good reason,” as defined in such agreement, in each case within the change in control period, Ms. Hartz and Mr. Cohen will be entitled to receive, in lieu of the payments and benefits above and subject to the execution and delivery of an effective release of claims in our favor, (i) a lump sum cash payment equal to 12 months of base salary, (ii) a monthly cash payment equal to the contribution that we would have made to provide health insurance to the executive officer if the executive officer had remained employed by us for up to 12 months and (iii) full accelerated vesting of all outstanding and unvested equity awards held by such executive.

The payments and benefits provided under the Executive Severance and Change in Control Agreements in connection with a change in control may not be eligible for a federal income tax deduction by us pursuant to Section 280G of the Code. These payments and benefits may also subject such executive to an excise tax under Section 4999 of the Code. If the payments or benefits payable to Ms. Hartz or Mr. Cohen in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to her or him.

 

134


Table of Contents

Outstanding Equity Awards at 2017 Year-End

The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2017:

 

    

 

     Option Awards (1)  

Name

   Vesting
commencement
date
     Number of
securities
underlying
unexercised
options
(#)
exercisable
    Number of
securities
underlying
unexercised
options
(#)
unexercisable
    Equity incentive
plan award:
Number of
securities
underlying
unexercised
unearned
options
(#)
     Option
exercise
price
($)
     Option
expiration
date
 

Julia Hartz

     2/13/2013        250,000 (2)        —         —          2.41        2/27/2023  

Chief Executive Officer

     5/1/2015        75,000 (2)        —         —          6.65        5/24/2025  
     5/19/2016        1,552,468 (2)        —         —          7.40        5/18/2026  

Omer Cohen

     9/5/2017        —         494,000 (3)        —          7.31        11/30/2027  

Chief People Officer

               

Matthew Rosenberg

     9/17/2012        550,000 (4)        —         —          2.27        9/17/2022  

Chief Revenue Officer

     5/1/2015        32,291 (5)        17,709       —          6.65        5/6/2025  
     1/12/2016        52,708 (5)        57,292       —          7.24        1/11/2016  
     1/1/2017        25,208 (5)        84,792       —          6.37        3/13/2027  

 

(1)  

Each stock option was granted pursuant to our 2010 Plan and is immediately exercisable except as otherwise noted below. To the extent a named executive officer exercises his or her option prior to vesting, the shares of our common stock that he or she will receive will be unvested and subject to the Company’s right of repurchase. No named executive officer has early exercised his or her options.

(2)  

The shares subject to the option vest in equal monthly installments over 48 months following the vesting commencement date; provided that in each case Ms. Hartz remains continuously employed with us through each applicable vesting date. In the event of a change in control, if Ms. Hartz is terminated by us for any reason other than for cause, death or disability, or she resigns for good reason, in each case within 3 months prior to or 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested.

(3)  

25% of the shares subject to the option will vest on the first anniversary of the vesting commencement date and 1/48th of the shares subject to the option will vest each month thereafter; provided that Mr. Cohen remains continuously employed with us through each applicable vesting date. The shares subject to the option are not early exercisable. In the event of a change in control, if Mr. Cohen is terminated by us for any reason other than for cause, death or disability, or he resigns for good reason, in each case within 3 months prior to or 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested and exercisable.

(4)  

25% of the shares subject to the option will vest on the first anniversary of the vesting commencement date and 1/48th of the shares subject to the option will vest each month thereafter; provided that Mr. Rosenberg remains continuously employed with us through each applicable vesting date. The shares subject to the option are not early exercisable and the vested portion of the option may be exercised until the earlier of (x) 24 months from his termination or (y) the option’s expiration date. In the event of a change in control, if Mr. Rosenberg is terminated by us without cause within 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested and exercisable.

(5)  

The shares subject to the option vest in equal monthly installments over 48 months following the vesting commencement date; provided that in each case Mr. Rosenberg remains continuously employed with us through each applicable vesting date and the vested portion of the option may be exercised until the earlier of (x) 24 months from his termination or (y) the option’s expiration date. In the event of a change in control, if Mr. Rosenberg is terminated by us without cause within 12 months following such change in control, then 100% of the then-unvested portion of the option and underlying shares of common stock will become vested and exercisable.

 

135


Table of Contents

Employee Benefits and Stock Plans

2018 Stock Option and Incentive Plan

Our 2018 Plan was adopted by our board of directors and approved by our stockholders in August 2018 and shall become effective upon the day immediately prior to the time that the registration statement of which this prospectus is part is declared effective by the SEC. The 2018 Plan will replace the 2010 Plan, as our board of directors has determined not to make additional awards under the 2010 Plan following the completion of our initial public offering. However, the 2010 Plan will continue to govern outstanding equity awards granted thereunder. The 2018 Plan will allow the compensation committee to make equity-based incentive awards to our officers, employees, directors and other key persons, including consultants.

Authorized Shares. We will initially reserve                    shares of our Class A common stock for the issuance of awards under the 2018 Plan. The 2018 Plan will provide that the number of shares reserved and available for issuance under the 2018 Plan will automatically increase each January 1, beginning on January 1, 2019, by 5% of the outstanding number of shares of our Class A and Class B common stock on the immediately preceding December 31 or such lesser number of shares as determined by our compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization. The shares we issue under the 2018 Plan will be authorized but unissued shares or shares that we reacquire. The shares of Class A common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated, other than by exercise, under the 2018 Plan will be added back to the shares of Class A common stock available for issuance under the 2018 Plan. The maximum number of shares of Class A common stock that may be issued as incentive stock options in any one calendar year period may not exceed                      cumulatively increased on January 1, 2019 and on each January 1 thereafter by the lesser of 5% of the number of outstanding shares of Class A and Class B common stock as of the immediately preceding December 31, or                      shares. The value of all awards issued under the 2018 Plan and all other cash compensation paid by us to any non-employee director in any calendar year cannot exceed $750,000; provided, however, that such amount shall be $1,000,000 for the calendar year in which the applicable non-employee director is initially elected or appointed to the board.

Administration. The 2018 Plan will be administered by our compensation committee. Our compensation committee will have full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of the 2018 Plan.

Eligibility. Persons eligible to participate in the 2018 Plan will be those employees, non-employee directors and consultants, as selected from time to time by our compensation committee in its discretion; except awards may not be granted to employees, directors and consultants who are providing services only to our “parent,” as such term is defined in Rule 405 of the Securities Act unless the stock underlying the award is treated as “service recipient stock” under Section 409A of the Code or is otherwise exempt from or compliant with Section 409A of the Code.

Options. The 2018 Plan will permit the granting of both options to purchase Class A common stock intended to qualify as incentive stock options under Section 422 of the Code and options that do not so qualify. The option exercise price of each option will be determined by our compensation committee but may not be less than 100% of the fair market value of our Class A common stock on the date of grant unless the option is granted (i) pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code or (ii) to individuals who are not subject to U.S. income tax. The term of each option will be fixed by our compensation committee and may not exceed 10 years from the date of grant. Our compensation committee will determine at what time or times each option may be exercised.

Stock Appreciation Rights. Our compensation committee will be able to award stock appreciation rights subject to such conditions and restrictions as it may determine. Stock appreciation rights entitle the recipient to

 

136


Table of Contents

shares of Class A common stock, or cash, equal to the value of the appreciation in our stock price over the exercise price. The exercise price may not be less than 100% of the fair market value of our Class A common stock on the date of grant. The term of each stock appreciation right will be fixed by our compensation committee and may not exceed 10 years from the date of grant. Our compensation committee will determine at what time or times each stock appreciation right may be exercised.

Restricted Stock and RSUs. Our compensation committee will be able to award restricted shares of Class A common stock and RSUs to participants subject to such conditions and restrictions as it may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with us through a specified vesting period.

Unrestricted Stock Awards. Our compensation committee will also be able to grant shares of Class A common stock that are free from any restrictions under the 2018 Plan. Unrestricted stock may be granted to participants in recognition of past services or for other valid consideration and may be issued in lieu of cash compensation due to such participant.

Dividend Equivalent Rights. Our compensation committee will be able to grant dividend equivalent rights to participants that entitle the recipient to receive credits for dividends that would be paid if the recipient had held a specified number of shares of Class A common stock.

Cash -Based Awards. Our compensation committee will be able to grant cash bonuses under the 2018 Plan to participants, subject to the achievement of certain performance goals.

Sale Event. The 2018 Plan will provide that upon the effectiveness of a “sale event,” as defined in the 2018 Plan, an acquirer or successor entity may assume, continue or substitute for the outstanding awards under the 2018 Plan. To the extent that awards granted under the 2018 Plan are not assumed or continued or substituted by the successor entity, all unvested awards granted under the 2018 Plan shall terminate. In such case, except as may be otherwise provided in the relevant award agreement, all options and stock appreciation rights with time-based vesting, conditions or restrictions that are not exercisable immediately prior to the sale event will become fully exercisable as of the sale event, all other awards with time-based vesting, conditions or restrictions will become fully vested and nonforfeitable as of the sale event, and all awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with the sale event in the plan administrator’s discretion or to the extent specified in the relevant award agreement. In the event of such termination, individuals holding options and stock appreciation rights will be permitted to exercise such options and stock appreciation rights (to the extent exercisable) prior to the sale event. In addition, in connection with the termination of the 2018 Plan upon a sale event, we may make or provide for a cash payment to participants holding vested and exercisable options and stock appreciation rights equal to the difference between the per share cash consideration payable to stockholders in the sale event and the exercise price of the options or stock appreciation rights.

Amendment. Our board of directors will be able to amend or discontinue the 2018 Plan and our compensation committee will be able to amend or cancel outstanding awards for purposes of satisfying changes in law or any other lawful purpose, but no such action may adversely affect rights under an award without the holder’s consent. The compensation committee is specifically authorized to exercise its discretion to reduce the exercise price of outstanding stock options or stock appreciation rights or effect the repricing of such awards through cancellation and re-grants. Certain amendments to the 2018 Plan will require the approval of our stockholders.

No awards may be granted under the 2018 Plan after the date that is 10 years from the date of stockholder approval of the 2018 Plan. No awards under the 2018 Plan have been made prior to the date hereof.

 

137


Table of Contents

2010 Stock Option Plan, as amended and restated

Our board of directors adopted, and our stockholders approved, our 2010 Plan in January 2010. Our 2010 Plan was most recently amended and restated in July 2018. Our 2010 Stock Plan allows for the grant of incentive stock options to our employees and any of our parent and subsidiary corporations’ employees, and for the grant of nonqualified stock options and RSU awards and the direct award or sale of shares to employees, officers, directors and consultants of ours and our parent and subsidiary corporations.

Authorized Shares. No shares will be available for future issuance under the 2010 Plan following the closing of this offering. However, our 2010 Plan will continue to govern outstanding awards granted thereunder.

Administration. Our board of directors currently administers our 2010 Plan. Subject to the provisions of our 2010 Plan, the administrator has fully authority and discretion to take any actions it deems necessary or advisable for the administration of our 2010 Plan.

Options. Stock options may be granted under our 2010 Plan. The exercise price per share of all options must equal at least 100% of the fair market value per share of our Class B common stock on the date of grant. The term of an incentive stock option may not exceed 10 years. An incentive stock option granted to a participant who owns more than 10% of the total combined voting power of all classes of our outstanding stock, or any parent or subsidiary corporations’, on the date of grant may not be exercisable after the expiration of 5 years from the date of grant and must have an exercise price of at least 110% of the fair market value per share of our Class B common stock on the date of grant. The administrator will determine the methods of payment of the exercise price of an option, which may include cash or cash equivalents, surrender of stock or certain other forms of payment acceptable to the administrator and permitted by the Delaware General Corporation Law. After a participant’s termination of service, the participant generally may exercise his or her options, to the extent vested as of such date of termination, for 3 months after termination or such earlier or longer period of time as the administrator may determine. If termination is due to disability, the option generally will remain exercisable, to the extent vested as of such date of termination, until the six-month anniversary of such termination. If termination is due to death, the option generally will remain exercisable, to the extent vested as of such date of termination, until the twelve-month anniversary of such termination. However, in no event may an option be exercised later than the expiration of its term.

Unrestricted Stock Awards. Our 2010 Plan also allows for the grant shares of Class B common stock that are free from any restrictions. Any right to purchase shares under our 2010 Plan automatically expires if not exercised by the purchaser within 30 days after we communicate the grant of such right to the purchaser. Such right is not transferable and may be exercisable only by the purchaser to whom such right was granted. Unrestricted stock may be granted to participants in recognition of services rendered to us, or our parent or subsidiary, or for other valid consideration.

RSUs. RSUs may be granted under our 2010 Plan. An RSU is an award that covers a number of shares of our Class B common stock that may be settled upon vesting in cash or shares of our Class B common stock. The administrator determines the terms and conditions of RSUs, including the number of units granted, the vesting criteria (which may include achievement of pre-established performance goals or continued service to us). The RSUs are settled on or promptly following the vesting date or dates applicable to any RSUs, but in no event later than March 15 of the year following the year in which such vesting occurs. Unless otherwise provided in the applicable RSU agreement, RSUs shall have a purchase price of zero (or par value if required by applicable law).

Transferability or Assignability of Awards. Our awards are subject to transfer restrictions as the administrator may determine. In addition, options are transferable only by a beneficiary designation, a will or the laws of descent and distribution. Nonstatutory options may also be transferable by gift or domestic relations order to an immediate family member. In addition, incentive stock options may be exercised during the lifetime of the optionee only by the optionee or by the optionee’s guardian or legal representative.

 

138


Table of Contents

Certain Adjustments. In the event of certain changes in our capitalization, the number of shares available for future grants, the number of shares covered by each outstanding option and RSU and the exercise price under each outstanding option will be proportionately adjusted.

Right to Cancel . We have the right at any time to cancel an option that was not granted in compliance with Rule 701 under the Securities Act subject to not less than 30 days prior written notice to the optionee. The optionee shall have the right to receive consideration for such cancellation equal to the aggregate excess value of the fair market value of the shares subject to such option at the time of cancellation over the exercise price of such option.

Mergers and Consolidations; Dissolution or Liquidation. The 2010 Plan provides that in the event that we are a party to a merger or consolidation, all shares acquired under our 2010 Plan and all outstanding awards shall be subject to the agreement of merger or consolidation, which need not treat all outstanding awards in an identical manner. Such agreement, without the optionees’ consent, may dispose of options that are not exercisable as of the effective date of such merger or consolidation in any manner permitted by applicable law, including (without limitation) the cancellation of such options without the payment of any consideration. Additionally, such agreement, without the optionees’, grantees’ or purchasers’ consent, shall provide for one or more of the following with respect to each award that is outstanding as of the effective date of such merger or consolidation: (i) the continuation of the option, RSU or award by the Company (if the Company is the surviving corporation), (ii) the assumption or substitution of the option by the surviving corporation or its parent in a manner that complies with Section 424(a) of the Code, (iii) the cancellation of options and a payment to the optionees equal to the excess of (A) the fair market value of the shares subject to such options as of the effective date of such merger or consolidation over (B) their exercise price, (iv) the cancellation of such options, (v) the assumption of RSUs, or substitution of a new RSU, by the surviving corporation or its parent with an equitable or proportionate adjustment to the amount and kind of shares subject thereto, or (vi) the cancellation of RSUs and a payment to the grantee with respect to each share subject to the portion of the RSUs that are vested as of the effective date of such merger or consolidation (including those RSUs that become vested as a result of such transaction) equal to the fair market value of such shares.

Our board of directors has determined not to grant any further awards under the 2010 Plan after the completion of the offering. Following the consummation of our initial public offering, we expect to make future awards under the 2018 Plan.

2004 Stock Plan, as amended

Our board of directors adopted, and our stockholders approved, our 2004 Stock Plan, or our 2004 Plan, in July 2004. Our 2004 Plan was most recently amended in September 2012. Our 2004 Stock Plan allowed for the grant of incentive stock options to our employees and any of our parent and subsidiary corporations’ employees, and for the grant of nonqualified stock options and stock purchase rights to employees, officers, directors and consultants of ours and our parent and subsidiary corporations.

Authorized Shares. The 2004 Plan terminated in January 2010. No shares are available for future issuance under the 2004 Plan following the offering. However, our 2004 Plan will continue to govern outstanding awards granted thereunder.

Administration. Our board of directors currently administers our 2004 Plan. Subject to the provisions of our 2004 Plan, the administrator has full authority and discretion to take any actions it deems necessary or advisable for the administration of our 2004 Plan.

Options. Stock options may be granted under our 2004 Plan. The exercise price per share of all incentive stock options must equal at least 100% of the fair market value per share of our Class B common stock on the date of grant. The term of an incentive stock option may not exceed ten years. An incentive stock option granted

 

139


Table of Contents

to a participant who owns more than 10% of the total combined voting power of all classes of our outstanding stock, or any parent or subsidiary corporations’, on the date of grant may not be exercisable after the expiration of 5 years from the date of grant and must have an exercise price of at least 110% of the fair market value per share of our Class B common stock on the date of grant. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, check, promissory note, surrender of stock, a cashless exercise program or any combination of the foregoing. After a participant’s termination of service, the participant generally may exercise his or her options, to the extent vested as of such date of termination, for three months after termination, or such other period of time as the administrator may determine and set forth in the applicable option agreement. If termination is due to death or disability, the option generally will remain exercisable, to the extent vested as of such date of termination, until the twelve-month anniversary of such termination, or such other period of time as the administrator may determine and set forth in the applicable option agreement. However, in no event may an option be exercised later than the expiration of its term.

Stock Purchase Rights. Our 2004 Plan also allows for the purchase of shares of Class B common stock, subject to a repurchase right in the case of any termination of employment prior to vesting. Such right is not transferable and may be exercisable only by the purchaser to whom such right was granted.

Transferability or Assignability of Awards. Our awards are subject to transfer restrictions as the administrator may determine. In addition, options are transferable only by a beneficiary designation, a will or the laws of descent and distribution. Nonstatutory options may also be transferable by gift or domestic relations order to an immediate family member. In addition, incentive stock options may be exercised during the lifetime of the optionee only by the optionee or by the optionee’s guardian or legal representative.

Certain Adjustments. In the event of certain changes in our capitalization, the number of shares available for future grants, the number of shares covered by each outstanding option and the exercise price under each outstanding option will be proportionately adjusted.

Right to Cancel . We have the right at any time to cancel an option that was not granted in compliance with Rule 701 under the Securities Act subject to not less than 30 days prior written notice to the optionee. The optionee shall have the right to receive consideration for such cancellation equal to the aggregate excess value of the fair market value of the shares subject to such option at the time of cancellation over the exercise price of such option.

Mergers and Consolidations; Dissolution or Liquidation. The 2004 Plan provides that in the event that we are a party to a merger or consolidation, each outstanding award under the 2004 Plan shall be assumed or substituted by the successor or a parent or subsidiary of the successor. If the successor refuses to assume or substitute outstanding awards, all such awards shall accelerate and become fully vested. In such event, all holders of options will be notified that all such options shall be exercisable for a period of 15 days from such notice, after which they shall terminate prior to the consummation of the merger or consolidation that such and shall terminate at the end of such period if not exercised.

2018 Employee Stock Purchase Plan

Our ESPP was adopted by our board of directors and approved by our stockholders in August 2018 and shall become effective upon the day immediately prior to the time that the registration statement of which this prospectus is part is declared effective by the SEC. The ESPP will initially reserve and authorize the issuance of up to a total of                     shares of Class A common stock to participating employees. The ESPP will provide that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2019, by the lesser of                     shares of our Class A common stock, 1% of the outstanding number of shares of our Class A and Class B common stock on the immediately preceding December 31, or such lesser number of shares as determined by our compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization.

 

140


Table of Contents

All employees whose customary employment is for more than 20 hours per week and have completed 30 days of employment will be eligible to participate in the ESPP. Any employee who owns 5% or more of the total combined voting power or value of all classes of stock will not be eligible to purchase shares under the ESPP.

We will make one or more offerings each year to our employees to purchase shares under the ESPP. The first offering will begin on the effective date of the registration statement of which this prospectus is part and, unless otherwise determined by the administrator of the ESPP, will end on the date that is approximately six (6) months following such date. Each eligible employee as of the effective date of the registration statement for the offering will be deemed to be a participant in the ESPP at that time and must authorize payroll deductions or other contributions by submitting an enrollment form by the deadline specified by the plan administrator. Subsequent offerings will usually begin every six months and will continue for six-month periods, referred to as offering periods. Each eligible employee may elect to participate in any subsequent offering by submitting an enrollment form at least 15 days before the relevant offering date.

Each employee who is a participant in the ESPP may purchase shares by authorizing contributions of up to 10% of his or her compensation during an offering period. Unless the participating employee has previously withdrawn from the offering, his or her accumulated contributions will be used to purchase shares on the last business day of the purchase period at a price equal to 85% of the fair market value of the shares on the first business day of the offering period or the last business day of the purchase period, whichever is lower, provided that no more than                    shares of Class A common stock (or a lesser number as established by the plan administrator in advance of the purchase period) may be purchased by any one employee during each purchase period. Under applicable tax rules, an employee may purchase no more than $25,000 worth of shares of Class A common stock, valued at the start of the offering period, under the ESPP for each calendar year in which a purchase right is outstanding.

The accumulated contributions of any employee who is not a participant on the last day of a purchase period will be refunded. An employee’s rights under the ESPP terminate upon voluntary withdrawal from the plan or when the employee ceases employment with us for any reason.

The ESPP may be terminated or amended by our board of directors at any time but shall automatically terminate on the 10 year anniversary of this offering. An amendment that increases the number of shares of Class A common stock that are authorized under the ESPP and certain other amendments will require the approval of our stockholders. The plan administrator may adopt subplans under the ESPP for employees of our non-U.S. subsidiaries who may participate in the ESPP and may permit such employees to participate in the ESPP on different terms, to the extent permitted by applicable law.

Senior Executive Cash Incentive Bonus Plan

In August 2018, our board of directors adopted the Senior Executive Cash Incentive Bonus Plan (Bonus Plan). The Bonus Plan provides for cash bonus payments based upon the attainment of performance targets established by our compensation committee. The payment targets will be related to financial and operational measures or objectives with respect to our company, or corporate performance goals, as well as individual performance objectives.

Our compensation committee may select corporate performance goals from among the following: achievement of cash flow (including, but not limited to, operating cash flow and free cash flow); earnings before interest, taxes, depreciation and amortization; net income (loss) (either before or after interest, taxes, depreciation and/or amortization); changes in the market price of our common stock; economic value-added; acquisitions or strategic transactions, including licenses, collaborations, joint ventures or promotion arrangements; operating income (loss); return on capital, assets, equity, or investment; total stockholder returns; coverage decisions; productivity; expense efficiency; margins; operating efficiency; working capital; earnings (loss) per share of our

 

141


Table of Contents

common stock; sales or market shares; number of prescriptions or prescribing physicians; revenue; corporate revenue; operating income and/or net annual recurring revenue, any of which may be (i) measured in absolute terms or compared to any incremental increase, (ii) measured in terms of growth, (iii) compared to another company or companies or to results of a peer group, (iv) measured against the market as a whole and/or as compared to applicable market indices and/or (v) measured on a pre-tax or post-tax basis (if applicable).

Each executive officer who is selected to participate in the Bonus Plan will have a target bonus opportunity set for each performance period. The bonus formulas will be adopted in each performance period by the compensation committee and communicated to each executive. The corporate performance goals will be measured at the end of each performance period after our financial reports have been published or such other appropriate time as the compensation committee determines. If the corporate performance goals and individual performance objectives are met, payments will be made as soon as practicable following the end of each performance period. Subject to the rights contained in any agreement between the executive officer and us, an executive officer must be employed by us on the bonus payment date to be eligible to receive a bonus payment. The Bonus Plan also permits the compensation committee to approve additional bonuses to executive officers in its sole discretion and provides the compensation committee with discretion to adjust the size of the award as it deems appropriate to account for unforeseen factors beyond management’s control that affected corporate performance.

401(k) Plan

We maintain a tax-qualified retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax-advantaged basis. Plan participants are able to defer eligible compensation subject to applicable annual Code limits. We have the ability to make discretionary contributions to the 401(k) plan and have started to make such contributions commencing in 2018. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.

 

142


Table of Contents

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In addition to the compensation arrangements, including employment, termination of employment and change in control arrangements and indemnification arrangements, discussed, when required, in the sections titled “Management” and “Executive Compensation,” the following is a description of each transaction since January 1, 2015 and each currently proposed transaction in which:

 

   

we have been or are to be a participant;

 

   

the amount involved exceeded or exceeds $120,000; and

 

   

any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these persons, had or will have a direct or indirect material interest.

Hartz Family Trusts

Ms. Hartz is a member of our board of directors and the Chief Executive Officer and a co-founder of our company. Mr. Hartz is the Executive Chairman of our board of directors and a co-founder of our company. Ms. Hartz and Mr. Hartz are wife and husband. Ms. and Mr. Hartz beneficially own shares held by The Hartz 2008 Irrevocable Trust, dated September 15, 2008 and the Kevin Earnest Hartz & Julia D. Hartz TTEES the Hartz Family Revocable Trust Dtd 12/4/08, which together hold 10.5% of our outstanding common stock as of June 30, 2018 and prior to this offering, are affiliates of Ms. and Mr. Hartz, and Ms. and Mr. Hartz are the beneficial owners of the shares of our stock owned by those trusts. After this offering, the Kevin Earnest Hartz & Julia D. Hartz TTEES and the Hartz Family Revocable Trust Dtd 12/4/08 will beneficially own             % of the outstanding shares of Class B common stock and will control             % of the voting power of our common stock.

Equity Financings

Series G Redeemable Convertible Preferred Stock Financing

On August 30, 2017, we sold an aggregate of 8,181,957 shares of our Series G redeemable convertible preferred stock at a purchase price of $16.3836 per share, for an aggregate purchase price of $134.0 million, pursuant to our Series G redeemable convertible preferred stock financing. The following table summarizes purchases of our Series G redeemable convertible preferred stock by related persons:

 

Stockholder

   Shares of
Series G
Convertible
Preferred Stock
     Total
Purchase
Price
 

Entities affiliated with Sequoia Capital (1)(2)

     610,365      $ 9,999,976  

Entities affiliated with Tiger Global (3)

     305,182        4,999,980  

Funds and accounts advised by T. Rowe Price Associates, Inc. (4)

     1,220,733        20,000,001  

Entities affiliated with Julia Hartz and Kevin Hartz

     30,518        499,995  

Entity affiliated with Katherine August-deWilde

     30,518        499,995  

Entity affiliated with Randy Befumo

     48,829        799,995  

 

(1)

Affiliates of Sequoia Capital holding our securities, whose shares are aggregated for purposes of reporting the above share ownership information, are Sequoia Capital U.S. Venture 2010 Fund, LP, Sequoia Capital U.S. Venture 2010 Partners Fund (Q), LP and Sequoia Capital U.S. Venture 2010 Partners Fund, LP. Affiliates of Sequoia Capital beneficially own more than 5% of our outstanding capital stock as of June 30, 2018.

(2)

Roelof Botha, a member of our board of directors, is a managing member at Sequoia Capital.

(3)

Affiliates of Tiger Global holding our securities, whose shares are aggregated for purposes of reporting the above share ownership information, are Tiger Global Private Investment Partners VI, L.P., Tiger Global Private Investment Partners VII, L.P., LFX Trust LLC and Griffin Shroeder. Affiliates of Tiger Global beneficially own more than 5% of our outstanding capital stock as of June 30, 2018. Lee Fixel, a former member of our board of directors, is affiliated with Tiger Global.

 

143


Table of Contents
(4)

Funds and accounts advised by T. Rowe Price Associates, Inc. (T. Rowe Price) holding our securities, whose shares are aggregated for purposes of reporting the above share ownership information, are T. Rowe Price New Horizons Fund, Inc. (Nominee: BRIDGE & CO.), T. Rowe Price New Horizons Trust (Nominee: AMIDSPEED & CO.) and T. Rowe Price U.S. Equities Trust (Nominee: ICECOLD & CO.). Affiliates of T. Rowe beneficially own more than 5% of our outstanding capital stock as of June 30, 2018.

Secondary Stock Sales

In May 2018, entities affiliated with Sequoia Capital, one of our 5% stockholders, purchased a total of 1,312,372 shares of our common stock at a purchase price of $13.12 per share, for an aggregate purchase price of $17,218,321, from five stockholders, none of whom were directors or executive officers.

Investors’ Rights Agreement

We are party to an amended and restated investors’ rights agreement, dated as of August 30, 2017 (IRA), which provides, among other things, that certain holders of our capital stock, including entities affiliated with Sequoia Capital and Tiger Global and funds and accounts advised by T. Rowe Price, which each beneficially own more than 5% of our outstanding capital stock, Ms. Hartz and Mr. Hartz and their affiliated entities, an entity affiliated with Mr. Befumo and Ms. August-deWilde, have the right to demand that we file a registration statement or request that their shares of our capital stock be included on a registration statement that we are otherwise filing. See the section titled “Description of Capital Stock—Registration Rights” for more information regarding these registration rights.

Right of First Refusal

Pursuant to our equity compensation plans and certain agreements with our stockholders, including an amended and restated right of first refusal and co-sale agreement with certain holders of our capital stock, including entities affiliated with Sequoia Capital and Tiger Global and funds and accounts advised by T. Rowe Price, which each beneficially own more than 5% of our outstanding capital stock, Ms. Hartz and Mr. Hartz and their affiliated entities, an entity affiliated with Mr. Befumo and Ms. August-deWilde, we or our assignees have a right to purchase shares of our capital stock which certain stockholders propose to sell to other parties. This right will terminate upon the completion of this offering. Since January 1, 2015, we have waived our right of first refusal in connection with the sale of certain shares of our capital stock, including sales by certain of our executive officers, resulting in the purchase of such shares by certain of our stockholders at prices in excess of the estimated fair value of such shares at the time of the transactions. See the section titled “Principal Stockholders” for additional information regarding beneficial ownership of our capital stock.

Voting Agreement

We are party to an amended and restated voting agreement under which certain holders of our capital stock, including entities affiliated with Sequoia Capital and Tiger Global and funds and accounts advised by T. Rowe Price, which each beneficially own more than 5% of our outstanding capital stock, Ms. Hartz and Mr. Hartz and their affiliated entities, an entity affiliated with Mr. Befumo and Ms. August-deWilde, have agreed as to the manner in which they will vote their shares of our capital stock on certain matters, including with respect to the election of directors. Upon completion of this offering, the amended and restated voting agreement will terminate and none of our stockholders will have any special rights regarding the election or designation of members of our board of directors.

Other Transactions

We have granted equity awards to our executive officers and certain of our directors. See the sections titled “Executive Compensation” and “Management—Non-Employee Director Compensation” for a description of these equity awards.

We have entered into change in control arrangements with certain of our executive officers that, among other things, provide for certain severance and change in control benefits. See the section titled “Executive Compensation Executive Severance and Change in Control Agreements” for more information regarding these agreements.

 

144


Table of Contents

Other than as described above under this section titled “Certain Relationships and Related Person Transactions,” since January 1, 2015, we have not entered into any transactions, nor are there any currently proposed transactions, between us and a related party where the amount involved exceeds, or would exceed, $120,000, and in which any related person had or will have a direct or indirect material interest. We believe the terms of the transactions described above were comparable to terms we could have obtained in arm’s-length dealings with unrelated third parties.

Limitation of Liability and Indemnification of Officers and Directors

Prior to the completion of this offering, we expect to adopt an amended and restated certificate of incorporation, which will become effective immediately prior to the completion of this offering, and which will contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:

 

   

any breach of their duty of loyalty to our company or our stockholders;

 

   

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

 

   

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

 

   

any transaction from which they derived an improper personal benefit.

Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.

In addition, prior to the completion of this offering, we expect to adopt amended and restated bylaws which will provide that we will indemnify, to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. Our amended and restated bylaws are expected to provide that we may indemnify to the fullest extent permitted by law any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our employees or agents or is or was serving at our request as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Our amended and restated bylaws will also provide that we must advance expenses incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to limited exceptions.

Further, prior to the completion of this offering, we expect to enter into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification agreements will require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements will also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.

The limitation of liability and indemnification provisions that are expected to be included in our amended and restated certificate of incorporation, amended and restated bylaws and in indemnification agreements that we will enter into with our directors and executive officers may discourage stockholders from bringing a lawsuit

 

145


Table of Contents

against our directors and executive officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be harmed to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law.

Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our board of directors.

The underwriting agreement will provide for indemnification by the underwriters of us and our officers, directors and employees for certain liabilities arising under the Securities Act, or otherwise.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Policies and Procedures for Related Party Transactions

Following the effectiveness of the registration statement to which this prospectus relates, our audit committee charter will provide that the audit committee will have the primary responsibility for reviewing and approving or disapproving “related party transactions,” which are transactions between us and related persons in which the aggregate amount involved exceeds $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person will be defined as a director, executive officer, nominee for director or greater than 5% beneficial owner of our common stock and their immediate family members. As of the date of this prospectus, we have not adopted any formal standards, policies or procedures governing the review and approval of related party transactions, but we expect that our audit committee will do so in the future.

All of the transactions described above were entered into prior to the adoption of this policy. Accordingly, each was approved by disinterested members of our board of directors after making a determination that the transaction was executed on terms no less favorable than those that could have been obtained from an unrelated third party.

 

146


Table of Contents

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of July 31, 2018, as adjusted to reflect the sale of Class A common stock offered by us in this offering assuming no exercise of the underwriters’ option to purchase additional shares, for:

 

   

each of our named executive officers;

 

   

each of our directors;

 

   

all of our directors and executive officers as a group; and

 

   

each person known by us to be the beneficial owner of more than five percent of any class of our voting securities.

We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable. The information does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Sections 13(d) and 13(g) of the Securities Act. We have deemed shares of our common stock subject to options and 802,900 RSUs that are exercisable or would vest based on service-based vesting conditions, assuming the performance condition had been achieved, within 60 days of July 31, 2018 to be beneficially owned by the person holding the option or RSUs for the purpose of computing the percentage ownership of that person but have not treated them as outstanding for the purpose of computing the percentage ownership of any other person.

We have based percentage ownership of our common stock before this offering on 65,955,234 shares of our Class B common stock outstanding as of July 31, 2018, which includes (i) 41,628,207 shares of Class B common stock resulting from the automatic conversion and reclassification of all of our outstanding shares of our redeemable convertible preferred stock immediately prior to the completion of this offering, as if this conversion and reclassification had occurred as of July 31, 2018, (ii) the automatic exercise of outstanding warrants to purchase 933,269 shares of our redeemable convertible preferred stock into the same number of shares of our common stock and (iii) the vesting and settlement of 802,900 outstanding RSUs for which the service-based vesting would be satisfied within 60 days of July 31, 2018 subject to performance conditions, before giving effect to shares withheld to satisfy the associated withholding tax obligations. Percentage ownership of our common stock after this offering assumes our sale of             shares of our Class A common stock in this offering and             shares of our Class B common stock outstanding immediately after the completion of this offering (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), assuming that the underwriters will not exercise their option to purchase additional shares. For more information about the conversion of the shares of our Series G redeemable convertible preferred stock, see the section titled “Capitalization.”

 

147


Table of Contents

Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Eventbrite, Inc., 155 5 th Street, 7 th Floor, San Francisco, California 94103.

 

     Shares Beneficially
Owned Before the
Offering
     Shares Beneficially Owned After the
Offering (2)
     % of Total
Voting
Power After
the Offering
 
     Class B (1)      Class A      Class B (1)  
5% Stockholders:    Shares      %      Shares      %      Shares      %  

Entities affiliated with Tiger Global (3)

     14,043,369        21.3              14,043,369        

Entities affiliated with Sequoia Capital (4)

     13,410,612        20.3              13,410,612        

Funds and accounts advised by T. Rowe Price (5)

     4,464,007        6.8              4,464,007        

Named Executive Officers and Directors:

                    

Julia Hartz (6)

     12,068,934        17.4              12,068,934        

Omer Cohen (7)

     123,500        *              123,500        

Matthew Rosenberg (8)

     574,790        *              574,790        

Katherine August-deWilde (9)

     220,910        *              220,910        

Roelof Botha

     —          —                —          

Andrew Dreskin (10)

     548,782        *              548,782        

Kevin Hartz (6)

     12,068,934        17.4              12,068,934        

Sean P. Moriarty (11)

     357,538        *              357,538        

Lorrie M. Norrington (12)

     234,963                 234,963        

Helen Riley (13)

     264,319        *              264,319        

Steffan C. Tomlinson (14)

     190,392        *              190,392        

All directors and executive officers as a group (15 persons) (15)

     15,948,205        22.0              15,948,205        

 

*

Represents beneficial ownership or voting power of less than one percent (1%) of the outstanding shares of our common stock.

(1)

The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis.

(2)

Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. Each holder of Class B common stock shall be entitled to ten votes per share of Class B common stock and each holder of Class A common stock shall be entitled to one vote per share of Class A common stock on all matters submitted to our stockholders for a vote. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may otherwise be required by law.

(3)

Consists of shares of Class B common stock held by Tiger Global Private Investment Partners VI, L.P., Tiger Global Private Investment Partners VII, L.P. and other affiliates of Tiger Global Management, LLC. Tiger Global Management, LLC is controlled by Chase Coleman, Lee Fixel and Scott Shleifer. The business address for each of these entities and individuals is c/o Tiger Global Management, LLC, 9 West 57 th Street, 35 th Floor, New York, New York 10019.

(4)

Consists (i) 10,686,620 shares of Class B common stock held by Sequoia Capital U.S. Venture 2010 Fund, L.P. (SC USV 2010); (ii) 1,174,494 shares of Class B common stock held by Sequoia Capital U.S. Venture 2010 Partners Fund (Q), L.P. (SC USV 2010 PFQ); (iii) 237,126 shares of Class B common stock held by Sequoia Capital U.S. Venture 2010 Partners Fund, L.P (SC USV 2010 PF); (iv) 1,232,186 shares of Class B common stock held by Sequoia Capital U.S. Growth Fund VII, L.P. (SC USGF VII) and (v) 80,186 shares of Class B common stock held by Sequoia Capital U.S. Growth VII Principals Fund, L.P (SC USGF VII PF). SC US (TTGP), Ltd. is the general partner of SC U.S. Venture 2010 Management, L.P., which is the general partner of each of SC USV 2010, SC USV 2010 PF and SC USV 2010 PFQ (collectively, the SC USV 2010 Funds). As a result, SC US (TTGP), Ltd. and SC U.S. Venture 2010 Management, L.P. may be deemed to share voting and dispositive power with respect to the shares held by the SC USV 2010 Funds. SC US (TTGP), Ltd. is the general partner of SC U.S. Growth VII Management, L.P., which is the general partner of each of SC USGF VII and SC USGF VII PF (collectively, the SC USGF VII Funds). As a result, SC US (TTGP), Ltd. and SC U.S. Growth VII Management, L.P. may be deemed to share voting and dispositive power with respect to the shares held by the SC USGF VII Funds. The directors and stockholders of SC US (TTGP), Ltd. that exercise voting and investment discretion with respect to the SC 2010 Funds’ and SC USGF VII Funds’ investments include Roelof F.

 

148


Table of Contents
  Botha, one of our directors. Each of the directors and stockholders of SC US (TTGP), Ltd. who exercises voting and investment discretion with respect to the SC USV 2010 Funds’ and the SC USGF VII Funds’ investments, including Mr. Botha, disclaims beneficial ownership of the shares held by the SC USV 2010 Funds and the SC USGF VII Funds. The address of each of these entities is 2800 Sand Hill Road, Suite 101, Menlo Park, California 94025.
(5)

Consists of (i) 367,159 shares of common stock held by Amidspeed & Co., as nominee for T. Rowe Price New Horizons Trust; (ii) 4,085,568 shares of common stock held by Bridge & Co., as nominee for T. Rowe Price New Horizons Fund, Inc. and (iii) 11,280 shares of common stock held by Icecold & Co, as nominee for T. Rowe Price U.S. Equities Trust. The foregoing accounts are advised by T. Rowe Price, a registered investment adviser. T. Rowe Price serves as investment adviser with power to direct investments and/or sole power to vote the securities owned by the accounts. For purposes of reporting requirements of the Exchange Act, T. Rowe Price may be deemed to be the beneficial owner of all the shares listed above; however, T. Rowe Price expressly disclaims that it is, in fact, the beneficial owner of such securities. T. Rowe Price Investment Services, Inc. (TRPIS), a registered broker-dealer (and FINRA member), is a subsidiary of T. Rowe Price Associates, Inc., the investment adviser to the accounts listed above. TRPIS is the principal underwriter and distributor of shares of the funds in the T. Rowe Price mutual fund family. TRPIS does not engage in underwriting or market-making activities involving individual securities. T. Rowe Price Associates, Inc. is the wholly-owned subsidiary of T. Rowe Price Group, Inc., which is a publicly-traded financial services holding company. The principal address for T. Rowe Price is 100 East Pratt Street, Baltimore, Maryland 21202.

(6)

Consists (i) 4,271,511 shares of Class B common stock held by The Hartz Family Revocable Trust Dtd 12/4/08; (ii) 2,627,266 shares of Class B common stock held by The Hartz 2008 Irrevocable Trust, dated September 15, 2008; and, as to each of which Ms. Hartz and Mr. Hartz are co-trustees, and share voting and dispositive power; (iii) 1,000,000 shares of Class B common stock held of record by Ms. Hartz; (iv) 2,117,257 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018 held by Ms. Hartz; (v) 1,250,000 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018 held by Mr. Hartz and (vi) RSUs for 802,900 shares of Class B common stock, for which the service-based vesting condition would be satisfied within 60 days of July 31, 2018 subject to performance conditions.

(7)

Consists of 123,500 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018.

(8)

Consists of 574,790 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018. As of March 2018, Mr. Rosenberg was no longer employed by us.

(9)

Consists of 220,910 shares of Class B common stock held by deWilde Family Trust u/ald 6/21/90, of which Ms. August-deWilde is a trustee.

(10)

Consists of 548,782 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018.

(11)

Consists of (i) 307,538 shares of Class B common stock and (ii) 50,000 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018.

(12)

Consists of 234,956 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018.

(13)

Consists of 264,319 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018.

(14)

Consists of 190,392 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018.

(15)

Consists of (i) 9,278,954 shares of Class B common stock beneficially owned by our named executive officers, current directors and other executive officers and (ii) 6,669,251 shares of Class B common stock subject to outstanding options that are exercisable within 60 days of July 31, 2018.

 

149


Table of Contents

DESCRIPTION OF CAPITAL STOCK

General

The following description summarizes the most important terms of our capital stock, as they are expected to be in effect upon the completion of this offering. We will adopt an amended and restated certificate of incorporation and amended and restated bylaws, effective upon the completion of this offering, and this description summarizes the provisions that are expected to be included in such documents. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description of the matters set forth in this section titled “Description of Capital Stock,” you should refer to our amended and restated certificate of incorporation and amended and restated bylaws and our amended and restated investor rights’ agreement, which are or will be included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Delaware law. Immediately following the completion of this offering, our authorized capital stock will consist of 1,000,000,000 shares of Class A common stock, $0.00001 par value per share, 100,000,000 shares of Class B common stock, $0.00001 par value per share, and 100,000,000 shares of undesignated preferred stock, $0.00001 par value per share.

Assuming the conversion of all outstanding shares of our redeemable convertible preferred stock into              shares of our Class B common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), which will occur immediately prior to the completion of this offering, as of June 30, 2018, there were no outstanding shares of Class A common stock and              shares of our Class B common stock outstanding, held by 476 stockholders of record, and no shares of our redeemable convertible preferred stock outstanding. Our board of directors is authorized, without stockholder approval except as required by the listing standards of the NYSE, to issue additional shares of our capital stock.

Class A Common Stock and Class B Common Stock

Upon the completion of this offering, we will have authorized a class of Class A common stock and a class of Class B common stock. All outstanding shares of our existing common stock and redeemable convertible preferred stock will be reclassified into shares of our new Class B common stock. In addition, any options to purchase shares of our capital stock outstanding prior to the completion of this offering will become eligible to be settled in or exercisable for shares of our new Class B common stock.

Dividend Rights

Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine.

Voting Rights

Holders of our Class A common stock will be entitled to one vote for each share, and holders of our Class B common stock are entitled to ten votes per share, on all matters submitted to a vote of stockholders. The holders of our Class A common stock and Class B common stock will generally vote together as a single class on all matters submitted to a vote of our stockholders, unless otherwise required by Delaware law or our amended and restated certificate of incorporation. Delaware law could require either holders of our Class A common stock or Class B common stock to vote separately as a single class in the following circumstances:

 

   

if we were to seek to amend our amended and restated certificate of incorporation to increase or decrease the par value of a class of our capital stock, then that class would be required to vote separately to approve the proposed amendment; and

 

   

if we were to seek to amend our amended and restated certificate of incorporation in a manner that alters or changes the powers, preferences or special rights of a class of our capital stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment.

 

150


Table of Contents

We do not expect to provide for cumulative voting for the election of directors in our amended and restated certificate of incorporation. Our amended and restated certificate of incorporation and amended and restated bylaws will establish a classified board of directors that is divided into three classes with staggered three-year terms. Only the directors in one class will be subject to election by a plurality of the votes cast at each annual meeting of our stockholders, with the directors in the other classes continuing for the remainder of their respective three-year terms.

No Preemptive or Similar Rights

Our common stock is not entitled to preemptive rights, redemption or sinking fund provisions. Our Class A common stock is not subject to conversion provisions.

Conversion

Each outstanding share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain permitted transfers described in our amended and restated certificate of incorporation, including transfers for tax or estate planning purposes or to other Class B stockholders upon the death or incapacity of a Class B stockholder. Once converted or transferred and converted into Class A common stock, the Class B common stock will not be reissued.

All the outstanding shares of Class A and Class B common stock will convert automatically into shares of a single class of common stock on the earlier of the date that is 10 years from the date of the filing of our amended and restated certificate of incorporation filed in connection with the closing of our initial public offering or the date the holders of 66-2/3% of our outstanding Class B common stock elect to convert the Class B common stock to Class A common stock. Following such conversion, each share of common stock will have one vote per share and the rights of the holders of all outstanding common stock will be identical.

Right to Receive Liquidation Distributions

If we become subject to a liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

Fully Paid and Non-Assessable

All of the outstanding shares of our Class B common stock are, and the shares of our Class A common stock to be issued pursuant to this offering will be, fully paid and non-assessable.

Preferred Stock

Upon the completion of this offering, no shares of our preferred stock will be outstanding. The number of shares of our Class B common stock to be issued in connection with the conversion and reclassification of our Series G redeemable convertible preferred stock depends on the initial public offering price of our Class A common stock. We expect the initial public offering price of our Class A common stock to be between $             and $             per share, as set forth on the cover page of this prospectus. However, the actual initial public offering price may be lower or higher, which would increase or decrease, respectively, the number of shares of our Class B common stock to be issued in connection with this special initial public offering adjustment of our Series G redeemable convertible preferred stock, as described in more detail below. We will not know the initial public offering price and, as a result, the total number of shares of our Class B common stock to be issued in

 

151


Table of Contents

connection with such adjustment, until the determination of the actual price per share following the effectiveness of the registration statement of which this prospectus forms a part. Based on an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, our 8,181,957 outstanding shares of Series G redeemable convertible preferred stock will convert and reclassify into             shares of our Class B common stock. A $1.00 decrease in the initial public offering price would increase the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by                     , and a $1.00 increase in the initial public offering price would decrease the number of shares of our Class B common stock issuable upon conversion and reclassification of our Series G redeemable convertible preferred stock by                     ; provided, however that in no event would the 8,181,957 outstanding shares of our Series G redeemable convertible preferred stock convert and reclassify into fewer than 8,181,957 shares of our Class B common stock.

Following this offering, our board of directors will be authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series and to fix the designation, powers, preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions, in each case without further vote or action by our stockholders. The holders of a majority of the voting power of all of the outstanding shares of our capital stock can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without a separate class vote of the holders of our preferred stock, or any separate series votes of any series thereof, unless a vote of any such holders is required pursuant to the terms of any rights designated to the preferred stock. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of our company and might adversely affect the market price of our Class A common stock and the voting and other rights of the holders of our Class A common stock and Class B common stock. We have no current plan to issue any shares of preferred stock.

Options and Restricted Stock Units

As of June 30, 2018, we had outstanding options to purchase an aggregate of 18,442,924 shares of our Class B common stock, with a weighted-average exercise price of $6.17 per share, pursuant to our existing equity incentive plans.

Subsequent to June 30, 2018, we granted options to purchase an aggregate of 4,878,897 shares of our Class B common stock, with an exercise price of $13.72 per share pursuant to our existing equity incentive plans.

As of June 30, 2018, 230,000 shares of our Class B common stock were issuable upon vesting of RSUs outstanding pursuant to our 2010 plan.

As of June 30, 2018, 802,900 shares of our Class B common stock were subject to RSUs granted outside of a stock option plan.

Warrants

As of June 30, 2018, warrants to purchase an aggregate of 933,269 shares of our redeemable convertible preferred stock at an exercise price of $16.3836 per share were outstanding. The warrants will be automatically exercised in connection with this offering for no consideration.

Registration Rights

After the completion of this offering, certain holders of our Class B common stock will be entitled to rights with respect to the registration of their shares under the Securities Act. These registration rights are contained in our IRA. We, along with certain holders of our redeemable convertible preferred stock are parties to the IRA.

 

152


Table of Contents

The registration rights set forth in the IRA will expire five years following the completion of this offering, or, with respect to any particular stockholder, when such stockholder is able to sell all of its shares pursuant to Rule 144 of the Securities Act during any 90-day period. We will pay the registration expenses (other than underwriting discounts and commissions) of the holders of the shares registered pursuant to the registrations described below, including the reasonable fees, not to exceed $50,000, of one counsel for the selling holders. In an underwritten offering, the underwriters have the right, subject to specified conditions, to limit the number of shares such holders may include. In connection with this offering, each stockholder that has registration rights will agree not to sell or otherwise dispose of any securities without the prior written consent of the underwriters for a period of 180 days after the date of this prospectus, subject to certain terms and conditions. See the section titled “Underwriting” for more information regarding such restrictions.

Demand Registration Rights

After the completion of this offering, the holders of approximately             shares of our Class B common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $        per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus) will be entitled to certain demand registration rights. We are obligated to effect only two such registrations. If we determine that it would be seriously detrimental to our stockholders to effect such a demand registration, we have the right to defer such registration, not more than once in any 12-month period, for a period of up to 120 days. Additionally, we will not be required to effect a demand registration during the period beginning 60 days prior to our good faith estimate of the date of the filing of, and ending up to 180 days following the effectiveness of, a registration statement relating to the public offering of our common stock.

Piggyback Registration Rights

After the completion of this offering, if we propose to register the offer and sale of our common stock under the Securities Act, in connection with the public offering of such common stock the holders of up to approximately             shares of our Class B common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus) will be entitled to certain “piggyback” registration rights allowing the holders to include their shares in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration statement under the Securities Act, other than with respect to (1) a registration related to a company stock plan, (2) a registration related to an SEC Rule 145 transaction, (3) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the public offering of our common stock or (4) a registration in which the only common stock being registered is common stock issuable upon the conversion of debt securities that are also being registered, the holders of these shares are entitled to notice of the registration and have the right, subject to certain limitations, to include their shares in the registration.

S-3 Registration Rights

After the completion of this offering, the holders of up to approximately             shares of our Class B common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $            per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus) may make a written request that we register the offer and sale of their shares on a registration statement on Form S-3 if we are eligible to file a registration statement on Form S-3 so long as the request covers at least that number of shares with an anticipated offering price, net of underwriting discounts and commissions, of at least $3.0 million. These stockholders may make an unlimited number of requests for registration on Form S-3; however, we will not be required to effect a registration on Form S-3 if we have effected two such registrations within the 12 month period preceding the date of the request. Additionally, if we determine that it would be seriously detrimental to our stockholders to effect such a registration during the period that is 30 days before our good faith estimate of the date of filing of our registration, and for 90 days after the effective date of our registration, we have the right to defer such registration.

 

153


Table of Contents

Anti-Takeover Provisions

The provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws, which are summarized below, may have the effect of delaying, deferring or discouraging another person from acquiring control of our company. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.

Delaware Law

We are governed by the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes mergers, asset sales or other transactions resulting in a financial benefit to the stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation’s outstanding voting stock. These provisions may have the effect of delaying, deferring or preventing a change in our control.

Amended and Restated Certificate of Incorporation and Amended and Restated Bylaw Provisions

Our amended and restated certificate of incorporation and our amended and restated bylaws will include a number of provisions that could deter hostile takeovers or delay or prevent changes in control of our board of directors or management team, including the following:

 

   

Dual Class   Stock . As described above in the subsection titled “—Class A Common Stock and Class B Common Stock—Voting Rights,” our amended and restated certificate of incorporation will provide for a dual class common stock structure, which will provide our founders, current investors, executives and employees with significant influence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets.

 

   

Board of Directors Vacancies . Our amended and restated certificate of incorporation and amended and restated bylaws will authorize only our board of directors to fill vacant directorships, including newly created seats. In addition, the number of directors constituting our board of directors will be permitted to be set only by a resolution adopted by a majority vote of our entire board of directors. These provisions would prevent a stockholder from increasing the size of our board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This will make it more difficult to change the composition of our board of directors and promote continuity of management.

 

   

Classified Board . Our amended and restated certificate of incorporation and amended and restated bylaws will provide that our board of directors is classified into three classes of directors. A third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is more difficult and time consuming for stockholders to replace a majority of the directors on a classified board of directors. See the section titled “Management—Board of Directors.”

 

   

Stockholder Action; Special Meeting of Stockholders . Our amended and restated certificate of incorporation will provide that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. As a result, a holder controlling a majority of our capital stock would not be able to amend our amended and restated bylaws or remove directors without holding a meeting of our stockholders called in accordance with our amended and restated bylaws. Our amended and restated bylaws will further provide that special meetings of our stockholders may be called only by a majority of our board of directors, the Chairperson of our board

 

154


Table of Contents
 

of directors or our Chief Executive Officer, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders controlling a majority of our capital stock to take any action, including the removal of directors.

 

   

Advance Notice Requirements for Stockholder Proposals and Director Nominations . Our amended and restated bylaws will provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our amended and restated bylaws will also specify certain requirements regarding the form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

 

   

No Cumulative Voting . The Delaware General Corporation Law provides that stockholders are not entitled to cumulate votes in the election of directors unless a corporation’s certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation will not provide for cumulative voting.

 

   

Directors Removed Only for Cause . Our amended and restated certificate of incorporation will provide that stockholders may remove directors only for cause.

 

   

Amendment of Charter Provisions . Any amendment of the above provisions in our amended and restated certificate of incorporation would require approval by holders of at least 66-2/3% of the voting power of the outstanding shares of our capital stock.

 

   

Issuance of Undesignated Preferred Stock . Our board of directors has the authority, without further action by the stockholders, to issue up to 100,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock would enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or other means.

 

   

Choice of Forum . Our amended and restated bylaws to be effective on the completion of this offering will provide that a state or federal court located within the State of Delaware be the exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of fiduciary duty; (iii) any action asserting a claim against us arising under the Delaware General Corporation Law; (iv) any action regarding our amended and restated certificate of incorporation or our amended and restated bylaws or (v) any action asserting a claim against us that is governed by the internal affairs doctrine.

Transfer Agent and Registrar

Upon the completion of this offering, the transfer agent and registrar for our Class A common stock and Class B common stock will be American Stock Transfer & Trust Company. The transfer agent’s address is 6201 15 th Avenue, Brooklyn, NY 11219.

Listing

We intend to apply to list our Class A common stock on the NYSE under the symbol “EB.”

 

155


Table of Contents

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock, and we cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Future sales of our Class A common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of our Class A common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price at such time and our ability to raise equity capital in the future.

Following the completion of this offering, based on the number of shares of our capital stock outstanding as of June 30, 2018, we will have a total of                      shares of our Class A common stock and                  shares of our Class B common stock outstanding, assuming (i) the automatic conversion and reclassification of 41,628,207 shares of our redeemable convertible preferred stock into              shares of our common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $         per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus), (ii) the automatic conversion and reclassification of outstanding warrants to purchase 933,269 shares of our redeemable convertible preferred stock into 933,269 shares of our common stock, (iii) the net issuance of                  shares of our common stock issuable pursuant to the vesting and settlement of 802,900 RSUs subject to performance conditions, outstanding as of June 30, 2018, based on an assumed initial public offering price of $         per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus and (iv) the reclassification of our outstanding common stock as Class B common stock. Of these outstanding shares, all of the                      shares of Class A common stock sold in this offering will be freely tradable, except that any shares purchased in this offering by our affiliates, as that term is defined in Rule 144 under the Securities Act, would only be able to be sold in compliance with the Rule 144 limitations described below.

The remaining outstanding shares of our Class B common stock will be deemed “restricted securities” as defined in Rule 144. Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which rules are summarized below. As a result of the lock-up and market standoff agreements described below and the provisions of our amended and restated investor rights’ agreement described above under the section titled “Description of Capital Stock—Registration Rights,” subject to the provisions of Rule 144 or Rule 701, based on an assumed offering date of                     , shares will be available for sale in the public market as follows:

 

   

beginning on the date of this prospectus, the                    shares of Class A common stock sold in this offering will be immediately available for sale in the public market; and

 

   

beginning 181 days after the date of this prospectus, subject to extension as described in the section titled “Underwriting” below,                    additional shares will become eligible for sale in the public market, of which                    shares will be held by affiliates and subject to the volume and other restrictions of Rule 144, as described below.

Lock-Up and Market Standoff Agreements

We, our executive officers, directors and holders of substantially all of our Class B common stock and securities convertible into or exchangeable for our Class B common stock, have agreed or will agree that, subject to certain exceptions, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, dispose of or hedge any shares or any securities convertible into or exchangeable for shares of our capital stock. Goldman Sachs & Co.

 

156


Table of Contents

LLC and J.P. Morgan Securities LLC, in their discretion, may release any of the securities subject to these lock-up agreements at any time. We have agreed that, without the prior written consent of Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, we will not release any of the securities subject to these lock-up agreements. In addition, our executive officers, directors and holders of all of our common stock and securities convertible into or exchangeable for shares of our common stock have entered into market standoff agreements with us under which they have agreed that, subject to certain exceptions, without our consent, they will not dispose of or hedge any shares or any securities convertible into or exchangeable for shares of our common stock for a period of 180 days after the date of this prospectus.

Rule 144

In general, under Rule 144 as currently in effect, once we have been subject to the public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to sell those shares without complying with any of the requirements of Rule 144.

In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described above, within any three-month period, a number of shares that does not exceed the greater of:

 

   

1% of the number of shares of our Class A common stock then outstanding, which will equal approximately                    shares immediately after this offering; or

 

   

the average weekly trading volume of our Class A common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of ours during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits our affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required by that rule to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701.

Registration Rights

Pursuant to our amended and restated investors’ rights agreement, the holders of up to             shares of our Class B common stock (including additional shares issuable upon conversion of our Series G redeemable convertible preferred stock based on an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus) will be entitled to certain rights with respect to the registration of the offer and sale of those shares under the Securities Act. See the section titled “Description of Capital Stock—Registration Rights” for a description of these registration rights. If the offer and sale of these shares is registered, the shares will be freely tradable without restriction under the Securities Act, and a large number of shares may be sold into the public market.

 

157


Table of Contents

Registration Statement on Form S-8

We intend to file a registration statement on Form S-8 under the Securities Act to register all of the shares of our Class A common stock and Class B common stock issued or reserved for issuance under our 2004 Plan, 2010 Plan, 2018 Plan and ESPP. We expect to file this registration statement as promptly as possible after the completion of this offering. Shares covered by this registration statement will be eligible for sale in the public market, subject to the Rule 144 limitations applicable to affiliates, vesting restrictions and any applicable lock-up agreements and market standoff agreements.

 

158


Table of Contents

CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a general discussion of certain material U.S. federal income tax considerations relating to ownership and disposition of our common stock by a non-U.S. holder. For purposes of this discussion, the term “non-U.S. holder” means a beneficial owner of our common stock that is not, for U.S. federal income tax purposes:

 

   

an individual citizen or resident of the United States;

 

   

a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

 

   

an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

 

   

a trust, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined in the Code) have authority to control all substantial decisions of the trust or if the trust has a valid election in effect to be treated as a U.S. person under applicable U.S. Treasury Regulations.

This discussion is based on current provisions of the Code, existing and proposed U.S. Treasury Regulations promulgated thereunder, current administrative rulings and judicial decisions, all as in effect as of the date of this prospectus and all of which are subject to change or to differing interpretation, possibly with retroactive effect. Any change could alter the tax consequences to non-U.S. holders described in this prospectus. In addition, the Internal Revenue Service (IRS) could challenge one or more of the tax consequences described in this prospectus.

We assume in this discussion that each non-U.S. holder holds shares of our common stock as a capital asset (generally, property held for investment) within the meaning of Section 1221 of the Code. This discussion does not address all aspects of U.S. federal income taxation that may be relevant to a particular non-U.S. holder in light of that non-U.S. holder’s individual circumstances nor does it address any aspects of state, local or non-U.S. taxes, alternative minimum tax, any tax considerations resulting from a non-U.S. holder having a functional currency other than the U.S. dollar, the Medicare tax on net investment income, or (except for the limited discussion of U.S. federal estate taxes specifically noted below) U.S. federal taxes other than income taxes. This discussion also does not consider any specific facts or circumstances that may apply to a non-U.S. holder and does not address any special tax rules that may apply to particular non-U.S. holders, such as:

 

   

insurance companies;

 

   

tax-exempt organizations;

 

   

financial institutions;

 

   

brokers or dealers in securities;

 

   

pension plans;

 

   

controlled foreign corporations;

 

   

passive foreign investment companies;

 

   

owners that hold our common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated investment;

 

   

certain U.S. expatriates;

 

   

persons who have elected to mark securities to market;

 

   

persons subject to the unearned income Medicare contribution tax; or

 

   

persons that acquire our common stock as compensation for services.

 

159


Table of Contents

In addition, this discussion does not address the tax treatment of partnerships (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) or other entities that are transparent for U.S. federal income tax purposes or persons who hold their common stock through such entities. In the case of a holder that is classified as a partnership for U.S. federal income tax purposes, the tax treatment of a person treated as a partner in such partnership for U.S. federal income tax purposes generally will depend on the status of the partner and the activities of the partner and the partnership. A person treated as a partner in a partnership or who holds their stock through another transparent entity should consult his, her or its own tax advisor regarding the tax consequences of the ownership and disposition of our common stock through a partnership or other transparent entity, as applicable.

Prospective investors should consult their own tax advisors regarding the U.S. federal, state, local and non-U.S. income and other tax considerations of acquiring, holding and disposing of our common stock.

Distributions on our Common Stock

We do not currently expect to pay dividends. See the section titled “Dividend Policy” above in this prospectus. However, in the event that we do pay distributions of cash or property on our common stock, those distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a tax-free return of the non-U.S. holder’s investment, up to such holder’s tax basis in our common stock. Any remaining excess will be treated as capital gain, subject to the tax treatment described below under the heading “Gain on Sale, Exchange or Other Taxable Disposition of Common Stock.”

Subject also to the discussions below under the headings “Information Reporting and Backup Withholding Tax” and “Foreign Account Tax Compliance Act,” dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder’s country of residence. If we are unable to determine, at a time reasonably close to the date of payment of a distribution on our common stock, what portion, if any, of the distribution will constitute a dividend, then we may withhold U.S. federal income tax on the basis of assuming that the full amount of the distribution will be a dividend. If we or another withholding agent apply over-withholding, a non-U.S. holder may be entitled to a refund or credit of any excess tax withheld by timely filing an appropriate claim with the IRS.

Dividends that are treated as effectively connected with a trade or business conducted by a non-U.S. holder within the United States, and, if an applicable income tax treaty so provides, that are attributable to a permanent establishment or a fixed base maintained by the non-U.S. holder within the United States, are generally exempt from the 30% withholding tax if the non-U.S. holder satisfies applicable certification and disclosure requirements. To obtain this exemption, a non-U.S. holder must generally provide us with a properly executed original IRS Form W-8ECI properly certifying such exemption. However, such U.S. effectively connected income, net of specified deductions and credits, will be taxed at the same graduated U.S. federal income tax rates applicable to U.S. persons. Any U.S. effectively connected income received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder’s country of residence.

A non-U.S. holder of our common stock who claims the benefit of an applicable income tax treaty between the United States and such holder’s country of residence generally will be required to provide a properly executed IRS Form W-8BEN or W-8BEN-E (or applicable successor form) and satisfy applicable certification and other requirements. Non-U.S. holders are urged to consult their own tax advisors regarding their entitlement to benefits under a relevant income tax treaty.

 

160


Table of Contents

A non-U.S. holder that is eligible for a reduced rate of U.S. withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim with the IRS.

Any documentation provided to an applicable withholding agent may need to be updated in certain circumstances. The certification requirements described above also may require a non-U.S. holder to provide its U.S. taxpayer identification number.

Gain on Sale, Exchange or Other Taxable Disposition of Common Stock

Subject to the discussions below under the headings “Information Reporting and Backup Withholding Tax” and “Foreign Account Tax Compliance Act,” a non-U.S. holder generally will not be subject to U.S. federal income tax or withholding tax on gain recognized on a sale, exchange or other taxable disposition of our common stock unless:

 

   

the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States, and, if an applicable income tax treaty so provides, the gain is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States; in these cases, the non-U.S. holder will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons, and, if the non-U.S. holder is a foreign corporation, an additional branch profits tax at a rate of 30%, or a lower rate as may be specified by an applicable income tax treaty, may also apply;

 

   

the non-U.S. holder is an individual present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met, in which case the non-U.S. holder will be subject to a 30% tax (or such lower rate as may be specified by an applicable income tax treaty) on the amount by which the non-U.S. holder’s capital gains allocable to U.S. sources exceed capital losses allocable to U.S. sources during the taxable year of the disposition (without taking into account any capital loss carryovers); or

 

   

we are or were a “U.S. real property holding corporation” during a certain look-back period, unless our common stock is regularly traded on an established securities market and the non-U.S. holder held no more than five percent of our outstanding common stock, directly or indirectly, during the shorter of the five-year period ending on the date of the disposition or the period that the non-U.S. holder held our common stock. If we are determined to be a U.S. real property holding corporation and the foregoing exception does not apply, then a purchaser may generally withhold 15% of the proceeds payable to a non-U.S. holder from a sale of our common stock and the non-U.S. holder generally will be taxed on its net gain derived from the disposition at the regular graduated rates applicable to U.S. persons. Generally, a corporation is a “U.S. real property holding corporation” if the fair market value of its “U.S. real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. Although there can be no assurance, we believe that we have not been and are not currently, and we do not anticipate becoming, a “U.S. real property holding corporation” for U.S. federal income tax purposes.

Information Reporting and Backup Withholding Tax

We (or the applicable paying agent) must report annually to the IRS and to each non-U.S. holder the gross amount of the distributions on our common stock paid to such holder and the tax withheld, if any, with respect to such distributions. Non-U.S. holders may have to comply with specific certification procedures to establish that the holder is not a U.S. person in order to avoid backup withholding at the applicable rate with respect to dividends on our common stock. Generally, a holder will comply with such procedures if it provides a properly executed IRS Form W-8BEN or W-8BEN-E or otherwise meets documentary evidence requirements for establishing that it is a non-U.S. holder, or otherwise establishes an exemption.

 

161


Table of Contents

Information reporting and backup withholding generally will apply to the proceeds of a disposition of our common stock by a non-U.S. holder effected by or through the U.S. office of any broker, U.S. or foreign, unless the holder certifies its status as a non-U.S. holder and satisfies certain other requirements, or otherwise establishes an exemption. Generally, information reporting and backup withholding will not apply to a payment of disposition proceeds to a non-U.S. holder where the transaction is effected outside the United States through a foreign broker. However, for information reporting purposes, dispositions effected through a non-U.S. office of a broker with substantial U.S. ownership or operations generally will be treated in a manner similar to dispositions effected through a U.S. office of a broker. Non-U.S. holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

Copies of information returns may be made available to the tax authorities of the country in which the non-U.S. holder resides or is incorporated under the provisions of a specific treaty or agreement. Any documentation provided to an applicable withholding agent may need to be updated in certain circumstances.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder may be refunded or credited against the non-U.S. holder’s U.S. federal income tax liability, if any, provided that an appropriate claim is timely filed with the IRS.

Foreign Account Tax Compliance Act

Legislation commonly referred to as the Foreign Account Tax Compliance Act and associated guidance (collectively, FATCA) will generally impose a 30% withholding tax on any “withholdable payment” (as defined below) to a “foreign financial institution,” unless such institution enters into an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which would include certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or another applicable exception applies or such institution is compliant with applicable foreign law enacted in connection with an applicable intergovernmental agreement between the United States and a foreign jurisdiction. FATCA will also generally impose a 30% withholding tax on any “withholdable payment” to a foreign entity that is not a financial institution, unless such entity provides the withholding agent with a certification identifying the substantial U.S. owners of the entity (which generally includes any U.S. person who directly or indirectly owns more than 10% of the entity), if any, or another applicable exception applies or such entity is compliant with applicable foreign law enacted in connection with an applicable intergovernmental agreement between the United States and a foreign jurisdiction. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes.

“Withholdable payments” generally include dividends on our common stock, and beginning on January 1, 2019, will also include the gross proceeds of a disposition of our common stock. The FATCA withholding tax will apply regardless of whether a payment would otherwise be exempt from or not subject to U.S. nonresident withholding tax (e.g., as capital gain).

Federal Estate Tax

Common stock owned or treated as owned by an individual who is a non-U.S. holder (as specially defined for U.S. federal estate tax purposes) at the time of death will be included in the individual’s gross estate for U.S. federal estate tax purposes and, therefore, may be subject to U.S. federal estate tax, unless an applicable estate tax or other treaty provides otherwise.

The preceding discussion of material U.S. federal income tax considerations is for general information only. It is not tax advice. Prospective investors should consult their own tax advisors regarding the particular U.S. federal, state, local and non-U.S. tax consequences of purchasing, holding and disposing of our common stock, including the consequences of any proposed changes in applicable laws.

 

162


Table of Contents

UNDERWRITING

We and the underwriters named below will enter into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter will severally agree to purchase the number of shares indicated in the following table. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Allen & Company LLC are the representatives of the underwriters.

 

Underwriters

   Number of
Shares
 

Goldman Sachs & Co. LLC

  

J.P. Morgan Securities LLC

  

Allen & Company LLC

  

RBC Capital Markets, LLC

  

SunTrust Robinson Humphrey, Inc.

  

Stifel, Nicolaus & Company, Incorporated

  
  

 

 

 

Total

  
  

 

 

 

The underwriters will be committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

The underwriters will have an option to buy up to an additional            shares from us to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by us. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase                additional shares.

 

     No Exercise      Full Exercise  

Per Share

   $                      $                  

Total

   $        $    

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $            per share from the initial public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

We and our officers, directors and holders of substantially all of our common stock have agreed or will agree with the underwriters, subject to certain exceptions, not to dispose of or hedge any common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC. In addition, our executive officers, directors and holders of all of our common stock and securities convertible into or exchangeable for shares of our common stock have entered into market standoff agreements with us under which they have agreed that, subject to certain exceptions, without our consent, they will not dispose of or hedge any shares or any securities convertible into or exchangeable for shares of our common stock for a period of 180 days after the date of this prospectus. See the section titled “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.

 

163


Table of Contents

Prior to the offering, there has been no public market for the shares. The initial public offering price will be negotiated among the representatives and us. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

We intend to apply to list our Class A common stock on the NYSE under the symbol “EB.”

In connection with the offering, the underwriters may purchase and sell shares of Class A common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional shares for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our Class A common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of Class A common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our Class A common stock. As a result, the price of our Class A common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the NYSE, in the over-the-counter market or otherwise.

The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered. We will agree to reimburse the underwriters for certain FINRA-related expenses incurred by them in connection with the offering in an amount not to exceed $            as set forth in the underwriting agreement.

We estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $            . The underwriters will agree to reimburse us for certain expenses incurred by us in connection with this offering upon closing of this offering.

We will agree to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial

 

164


Table of Contents

and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities with relationships with us, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively traded securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of ours (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with us. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), an offer to the public of our common shares may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of our common shares may be made at any time under the following exemptions under the Prospectus Directive:

 

   

To any legal entity which is a qualified investor as defined in the Prospectus Directive;

 

   

To fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the representatives for any such offer; or

   

In any other circumstances falling within Article 3(2) of the Prospectus Directive;

provided that no such offer or shares of our common stock shall result in a requirement for the publication by us or any placement agent of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer to public” in relation to our common shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and our common shares to be offered so as to enable an investor to decide to purchase our common shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (as amended), including by Directive 2010/73/EU and includes any relevant implementing measure in the Relevant Member State.

This European Economic Area selling restriction is in addition to any other selling restrictions set out below.

United Kingdom

In the United Kingdom, this prospectus is only addressed to and directed as qualified investors who are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (Order); or (ii) high net worth entities and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Any investment or investment activity to which this prospectus relates is available only to relevant persons and will only be engaged with relevant persons. Any person who is not a relevant person should not act or relay on this prospectus or any of its contents.

 

165


Table of Contents

Hong Kong

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

Japan

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Canada

The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption form, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

 

166


Table of Contents

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Switzerland

The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the offering, us, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (CISA). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Dubai

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (DFSA). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

Australia

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (ASIC) in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (Corporations Act) and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons, or the Exempt Investors, who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.

 

167


Table of Contents

The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take into account the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate for their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

Chile

The shares are not registered in the Securities Registry (Registro de Valores) or subject to the control of the Chilean Securities and Exchange Commission (Superintendencia de Valores y Seguros de Chile). This prospectus supplement and other offering materials relating to the offer of the shares do not constitute a public offer of, or an invitation to subscribe for or purchase, the shares in the Republic of Chile, other than to individually identified purchasers pursuant to a private offering within the meaning of Article 4 of the Chilean Securities Market Act (Ley de Mercado de Valores) (an offer that is not “addressed to the public at large or to a certain sector or specific group of the public”).

United Arab Emirates

The shares have not been, and are not being, publicly offered, sold, promoted or advertised in the United Arab Emirates (including the Dubai International Financial Centre) other than in compliance with the laws of the United Arab Emirates (and the Dubai International Financial Centre) governing the issue, offering and sale of securities. Further, this prospectus does not constitute a public offer of securities in the United Arab Emirates (including the Dubai International Financial Centre) and is not intended to be a public offer. This prospectus has not been approved by or filed with the Central Bank of the United Arab Emirates, the Securities and Commodities Authority or the Dubai Financial Services Authority.

Bermuda

Shares may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act of 2003 of Bermuda which regulates the sale of securities in Bermuda. Additionally, non-Bermudian persons (including companies) may not carry on or engage in any trade or business in Bermuda unless such persons are permitted to do so under applicable Bermuda legislation.

Saudi Arabia

This prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations as issued by the board of the Saudi Arabian Capital Market Authority (CMA) pursuant to resolution number 2-11-2004 dated 4 October 2004 as amended by resolution number 1-28-2008, as amended (CMA Regulations). The CMA does not make any representation as to the accuracy or completeness of this prospectus and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this prospectus. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this prospectus, you should consult an authorized financial adviser.

 

168


Table of Contents

BVIs

The shares are not being, and may not be offered to the public or to any person in the British Virgin Islands for purchase or subscription by or on behalf of us. The shares may be offered to companies incorporated under the BVI Business Companies Act, 2004 (British Virgin Islands) (BVI Companies), but only where the offer will be made to, and received by, the relevant BVI Company entirely outside of the British Virgin Islands.

This prospectus has not been, and will not be, registered with the Financial Services Commission of the British Virgin Islands. No registered prospectus has been or will be prepared in respect of the shares for the purposes of the Securities and Investment Business Act, 2010 (SIBA) or the Public Issuers Code of the British Virgin Islands.

China

This prospectus does not constitute a public offer of shares, whether by sale or subscription, in the People’s Republic of China (PRC). The shares are not being offered or sold directly or indirectly in the PRC to or for the benefit of, legal or natural persons of the PRC.

Further, no legal or natural persons of the PRC may directly or indirectly purchase any of the shares or any beneficial interest therein without obtaining all prior PRC’s governmental approvals that are required, whether statutorily or otherwise. Persons who come into possession of this prospectus are required by the issuer and its representatives to observe these restrictions.

Korea

The shares have not been and will not be registered under the Financial Investments Services and Capital Markets Act of Korea and the decrees and regulations thereunder (FSCMA), and the shares have been and will be offered in Korea as a private placement under the FSCMA. None of the shares may be offered, sold or delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the FSCMA and the Foreign Exchange Transaction Law of Korea and the decrees and regulations thereunder (FETL). Furthermore, the purchaser of the shares shall comply with all applicable regulatory requirements (including but not limited to requirements under the FETL) in connection with the purchase of the shares. By the purchase of the shares, the relevant holder thereof will be deemed to represent and warrant that if it is in Korea or is a resident of Korea, it purchased the shares pursuant to the applicable laws and regulations of Korea.

Malaysia

No prospectus or other offering material or document in connection with the offer and sale of the shares has been or will be registered with the Securities Commission of Malaysia (Commission) for the Commission’s approval pursuant to the Capital Markets and Services Act 2007. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Malaysia other than (i) a closed end fund approved by the Commission; (ii) a holder of a Capital Markets Services Licence; (iii) a person who acquires the shares, as principal, if the offer is on terms that the shares may only be acquired at a consideration of not less than RM250,000 (or its equivalent in foreign currencies) for each transaction; (iv) an individual whose total net personal assets or total net joint assets with his or her spouse exceeds RM3 million (or its equivalent in foreign currencies), excluding the value of the primary residence of the individual; (v) an individual who has a gross annual income exceeding RM300,000 (or its equivalent in foreign currencies) per annum in the preceding 12 months; (vi) an individual who, jointly with his or her spouse, has a gross annual income of RM400,000 (or its equivalent in foreign currencies), per annum in the preceding 12 months; (vii) a corporation with total net assets exceeding RM10 million (or its equivalent in a foreign currencies) based on the last audited accounts; (viii) a partnership with total net assets exceeding RM10 million (or its equivalent in foreign currencies); (ix) a bank

 

169


Table of Contents

licensee or insurance licensee as defined in the Labuan Financial Services and Securities Act 2010; (x) an Islamic bank licensee or takaful licensee as defined in the Labuan Financial Services and Securities Act 2010; and (xi) any other person as may be specified by the Commission; provided that, in the each of the preceding categories (i) to (xi), the distribution of the shares is made by a holder of a Capital Markets Services Licence who carries on the business of dealing in securities. The distribution in Malaysia of this prospectus is subject to Malaysian laws. This prospectus does not constitute and may not be used for the purpose of public offering or an issue, offer for subscription or purchase, invitation to subscribe for or purchase any securities requiring the registration of a prospectus with the Commission under the Capital Markets and Services Act 2007.

Taiwan

The shares have not been and will not be registered with the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be sold, issued or offered within Taiwan through a public offering or in circumstances which constitutes an offer within the meaning of the Securities and Exchange Act of Taiwan that requires a registration or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer, sell, give advice regarding or otherwise intermediate the offering and sale of the shares in Taiwan.

South Africa

Due to restrictions under the securities laws of South Africa, the shares are not offered, and the offer shall not be transferred, sold, renounced or delivered, in South Africa or to a person with an address in South Africa, unless one or other of the following exemptions applies:

 

  i.

the offer, transfer, sale, renunciation or delivery is to:

 

  (a)

persons whose ordinary business is to deal in securities, as principal or agent;

 

  (b)

the South African Public Investment Corporation;

 

  (c)

persons or entities regulated by the Reserve Bank of South Africa;

 

  (d)

authorized financial service providers under South African law;

 

  (e)

financial institutions recognized as such under South African law;

 

  (f)

a wholly-owned subsidiary of any person or entity contemplated in (c), (d) or (e), acting as agent in the capacity of an authorized portfolio manager for a pension fund or collective investment scheme (in each case duly registered as such under South African law); or

 

  (g)

any combination of the person in (a) to (f); or

 

  ii.

the total contemplated acquisition cost of the securities, for any single addressee acting as principal is equal to or greater than ZAR1,000,000.

No “offer to the public” (as such term is defined in the South African Companies Act, No. 71 of 2008 (as amended or re-enacted) (South African Companies Act)) in South Africa is being made in connection with the issue of the shares. Accordingly, this prospectus does not, nor is it intended to, constitute a “registered prospectus” (as that term is defined in the South African Companies Act) prepared and registered under the South African Companies Act and has not been approved by, and/or filed with, the South African Companies and Intellectual Property Commission or any other regulatory authority in South Africa. Any issue or offering of the shares in South Africa constitutes an offer of the shares in South Africa for subscription or sale in South Africa only to persons who fall within the exemption from “offers to the public” set out in section 96(1)(a) of the South African Companies Act. Accordingly, this prospectus must not be acted on or relied on by persons in South Africa who do not fall within section 96(1)(a) of the South African Companies Act (such persons being referred to as “SA Relevant Persons”). Any investment or investment activity to which this prospectus relates is available in South Africa only to SA Relevant Persons and will be engaged in South Africa only with SA Relevant Persons.

 

170


Table of Contents

LEGAL MATTERS

Goodwin Procter LLP, Redwood City, California, which has acted as our counsel in connection with this offering, will pass upon the validity of the shares of Class A common stock being offered by this prospectus. The underwriters have been represented by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California.

EXPERTS

The financial statements of Eventbrite, Inc. as of December 31, 2016 and 2017 and for each of the two years in the period ended December 31, 2017 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The financial statements of Ticketfly, LLC as of December 31, 2016 and August 31, 2017 and for the year ended December 31, 2016 and the eight months ended August 31, 2017 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

We have submitted with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Class A common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our Class A common stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. You may obtain copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

As a result of this offering, we will become subject to the information and reporting requirements of the Exchange Act and, in accordance with this law, will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC’s public reference facilities and the website of the SEC referred to above. We also maintain a website at www.eventbrite.com. Upon completion of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.

 

171


Table of Contents

EVENTBRITE, INC.

Index to the Consolidated Financial Statements

 

Eventbrite, Inc. and Subsidiaries

  

Report of Independent Registered Public Accounting Firm

     F-2  

Eventbrite, Inc. Consolidated Balance Sheets

     F-3  

Eventbrite, Inc. Consolidated Statements of Operations

     F-5  

Eventbrite, Inc. Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit

     F-6  

Eventbrite, Inc. Consolidated Statements of Cash Flows

     F-8  

Eventbrite, Inc. Notes to Consolidated Financial Statements

     F-10  

Ticketfly, LLC and Subsidiary

  

Report of Independent Auditors

     F-51  

Ticketfly, LLC Consolidated Balance Sheets

     F-52  

Ticketfly, LLC Consolidated Statements of Operations and Comprehensive Loss

     F-53  

Ticketfly, LLC Consolidated Statements of Member’s Equity

     F-54  

Ticketfly, LLC Consolidated Statements of Cash Flows

     F-55  

Ticketfly, LLC Notes to Consolidated Financial Statements

     F-56  

Unaudited Pro Forma Condensed Combined Financial Information

  

Eventbrite, Inc. Unaudited Pro Forma Condensed Combined Statement of Operations

     F-71  

Eventbrite, Inc. Notes to Unaudited Pro Forma Condensed Combined Statement of Operations

     F-73  

Financial Statement Schedules

  

Eventbrite, Inc. Schedule II — Valuation and Qualifying Accounts for the Years Ended December 31, 2016 and 2017

     F-I  

 

F-1


Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Eventbrite, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Eventbrite, Inc. and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of operations, of redeemable convertible preferred stock and stockholders’ deficit, and of cash flows for the years then ended, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

San Jose, California

June 15, 2018

We have served as the Company’s auditor since 2014.

 

F-2


Table of Contents

EVENTBRITE, INC.

Consolidated Balance Sheets

( in  thousands, except share and per share data )

 

     December 31,      June 30,
2018
     Pro Forma
June 30,
2018
 
     2016      2017  
                  

(unaudited)

    

(unaudited)

(Note 2)

 

Assets

           

Current assets

           

Cash

   $ 139,538      $ 188,986      $ 258,720     

Funds receivable

     26,069        51,639        37,109     

Accounts receivable, net

     1,982        2,885        3,911     

Creator signing fees, net

     2,676        4,235        5,567     

Creator advances, net

     7,583        20,076        21,601     

Prepaid expenses and other current assets

     5,856        11,749        15,514     
  

 

 

    

 

 

    

 

 

    

Total current assets

     183,704        279,570        342,422     

Property, plant and equipment, net

     40,723        42,492        44,462     

Goodwill

     9,725        158,766        167,570     

Acquired intangible assets, net

     1,684        79,541        71,264     

Restricted cash

     4,000        3,235        2,549     

Creator signing fees, noncurrent

     4,230        6,186        7,711     

Other assets

     1,271        2,134        1,667     
  

 

 

    

 

 

    

 

 

    

Total assets

   $ 245,337      $ 571,924      $ 637,645     
  

 

 

    

 

 

    

 

 

    

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit

           

Current liabilities

           

Accounts payable, creators

   $ 137,124      $ 228,007      $ 277,624     

Accounts payable, trade

     632        1,481        1,988     

Accrued compensation and benefits

     1,696        3,535        3,199     

Accrued taxes

     410        3,702        5,147     

Other accrued liabilities

     9,404        10,544        20,351     
  

 

 

    

 

 

    

 

 

    

Total current liabilities

     149,266        247,269        308,309     

Build-to-suit lease financing obligation

     30,274        29,494        29,032     

Accrued taxes

     12,688        30,047        31,304     

Redeemable convertible preferred stock warrant liability

     —          7,271        17,945        —    

Promissory note

     —          51,082        —       

Term loans

     —          26,669        66,360     

Other liabilities

     2,111        1,888        1,860     
  

 

 

    

 

 

    

 

 

    

Total liabilities

     194,339        393,720        454,810     
  

 

 

    

 

 

    

 

 

    

Commitments and contingencies (Note 9)

           

Redeemable convertible preferred stock, $0.00001 par value; 33,446,250, 42,452,188, and 42,561,476 shares authorized as of December 31, 2016 and 2017 and June 30, 2018 (unaudited), aggregate liquidation preference of $200,317 as of December 31, 2016 and $401,372 as of December 31, 2017 and June 30, 2018 (unaudited); 33,446,250 shares issued and outstanding as of December 31, 2016 and 41,628,207 shares issued and outstanding as of December 31, 2017 and June 30, 2018 (unaudited); no shares issued and outstanding pro forma (unaudited)

     200,082        334,018        334,018        —    

 

F-3


Table of Contents

EVENTBRITE, INC.

Consolidated Balance Sheets

(continued)

( in  thousands, except share and per share data )

 

     December 31,     June 30,
2018
    Pro Forma
June 30,
2018
 
     2016     2017  
                 (unaudited)    

(unaudited)

(Note 2)

 

Stockholders’ equity (deficit)

        

Common stock, $0.00001 par value; 70,000,000, 92,057,771 and 97,167,059 shares authorized as of December 31, 2016 and 2017 and June 30, 2018 (unaudited); 16,693,380, 20,748,441 and 22,512,056 shares issued and outstanding as of December 31, 2016 and 2017 and June 30, 2018 (unaudited) (including 150,729, 103,133 and 79,335 shares, subject to repurchase, legally issued and outstanding as of December 31, 2016 and 2017 and June 30, 2018 (unaudited));              shares issued and outstanding, pro forma (unaudited)

   $ —       $ —         —       $ 1  

Treasury stock at cost, 188,480 shares as of December 31, 2016 and 2017 and June 30, 2018 (unaudited)

     (488     (488     (488     (488

Additional paid-in capital

     51,474       83,291       103,502    

Accumulated deficit

     (200,070     (238,617     (254,197  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     (149,084     (155,814     (151,183   $                
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities, redeemable convertible preferred stock and stockholders’ deficit

   $ 245,337     $ 571,924     $ 637,645    
  

 

 

   

 

 

   

 

 

   

The accompanying notes are an integral part of these consolidated financial statements.

 

F-4


Table of Contents

EVENTBRITE, INC.

Consolidated Statements of Operations

( in  thousands, except per share data )

 

     Year Ended December 31,      Six Months Ended June 30,  
     2016      2017      2017      2018  
                   (unaudited)  

Net revenue

   $ 133,499      $ 201,597      $ 88,153      $ 142,068  

Cost of net revenue

     55,689        81,667        35,302        57,947  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     77,810        119,930        52,851        84,121  

Operating expenses:

           

Product development

     22,723        30,608        11,481        19,815  

Sales, marketing and support

     48,391        55,170        23,171        35,623  

General and administrative

     41,749        67,559        26,546        44,994  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     112,863        153,337        61,198        100,432  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss from operations

     (35,053      (33,407      (8,347      (16,311

Interest expense

     (3,513      (6,462      (1,958      (5,562

Change in fair value of redeemable convertible preferred stock warrant liability

     —          (2,200      —          (6,071

Gain on extinguishment of promissory note

     —          —          —          16,340  

Other income (expense), net

     (1,695      3,509        1,904        (3,176
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss before provision for (benefit from) income taxes

     (40,261      (38,560      (8,401      (14,780

Income tax provision (benefit)

     131        (13      (55      800  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss attributable to common stockholders

   $ (40,392    $ (38,547    $ (8,346    $ (15,580
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss per share attributable to common stockholders,
basic and diluted

   $ (2.48    $ (1.98    $ (0.44    $ (0.73
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted

     16,291        19,500        18,961        21,289  
  

 

 

    

 

 

    

 

 

    

 

 

 

Pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)

      $           $    
     

 

 

       

 

 

 

Pro forma weighted-average shares outstanding used to compute pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)

           
     

 

 

       

 

 

 

Supplemental pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)

      $           $    
     

 

 

       

 

 

 

Supplemental pro forma weighted-average shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted (unaudited)

           
     

 

 

       

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-5


Table of Contents

EVENTBRITE, INC.

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit

( in  thousands, except share and per share data )

 

    Redeemable
Convertible
Preferred Stock
    Common Stock     Treasury Stock     Additional
Paid-In
Capital
    Accumulated
Deficit
    Total
Stockholders’

Deficit
 
    Shares     Amount     Shares     Amount     Shares     Amount  

Balance at January 1, 2016

    33,446,250     $ 200,082       16,022,200     $ —         (188,480   $ (488   $ 40,153     $ (159,678   $ (120,013

Issuance of common stock upon exercise of stock options

    —         —         599,180       —         —         —         1,439       —         1,439  

Issuance of common stock, acquisitions

    —         —         72,000       —         —         —         478       —         478  

Vesting of early exercised options

    —         —         —         —         —         —         305       —         305  

Stock-based compensation

    —         —         —         —         —         —         9,099       —         9,099  

Net loss

    —         —         —         —         —         —         —         (40,392     (40,392
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2016

    33,446,250     $ 200,082       16,693,380     $ —         (188,480   $ (488   $ 51,474     $ (200,070   $ (149,084

Issuance of Series G redeemable convertible preferred stock at $16.3836 per share, net of issuance costs of $0.1 million

    8,181,957       133,936       —         —         —         —         —         —         —    

Issuance of common stock upon exercise of stock options

    —         —         1,376,872       —         —         —         1,767       —         1,767  

Issuance of common stock, acquisitions

    —         —         2,678,189       —         —         —         18,243       —         18,243  

Vesting of early exercised options

    —         —         —         —         —         —         366       —         366  

Stock-based compensation

    —         —         —         —         —         —         11,441       —         11,441  

Net loss

    —         —         —         —         —         —         —         (38,547     (38,547
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2017

    41,628,207     $ 334,018       20,748,441     $ —         (188,480   $ (488   $ 83,291     $ (238,617   $ (155,814
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-6


Table of Contents
    Redeemable
Convertible
Preferred Stock
    Common Stock     Treasury Stock     Additional
Paid-In
Capital
    Accumulated
Deficit
    Total
Stockholders’

Deficit
 
    Shares     Amount     Shares     Amount     Shares     Amount  

Issuance of common stock upon exercise of stock options (unaudited)

    —         —         1,087,555       —         —         —         4,208       —         4,208  

Issuance of common stock, acquisitions (unaudited)

    —         —         676,060       —         —         —         7,439       —         7,439  

Vesting of early exercised stock options (unaudited)

    —         —         —         —         —         —         183       —         183  

Stock-based compensation (unaudited)

    —         —         —         —         —         —         8,381       —         8,381  

Net loss (unaudited)

    —         —         —         —         —         —         —         (15,580     (15,580
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at June 30, 2018 (unaudited)

    41,628,207     $ 334,018       22,512,056     $ —         (188,480   $ (488     103,502     $ (254,197     (151,183
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-7


Table of Contents

EVENTBRITE, INC.

Consolidated Statements of Cash Flows

( in  thousands )

 

     Year Ended December 31,     Six Months Ended June 30,  
     2016      2017     2017      2018  
                  (unaudited)  

Cash flows from operating activities

          

Net loss

   $ (40,392    $ (38,547   $ (8,346    $ (15,580

Adjustments to reconcile net loss to net cash provided by operating activities:

          

Depreciation and amortization

     7,639        19,418       5,961        16,782  

Amortization of creator signing fees

     2,737        4,314       1,766        3,077  

Accretion of term loan

     —          752       —          1,412  

Gain on extinguishment of promissory note

          —          (16,340

Change in fair value of redeemable convertible preferred stock warrant liability

     —          2,200       —          6,071  

Stock-based compensation

     8,531        10,858       3,761        8,108  

Impairment of long-lived assets

     1,795        2,715       1,344        1,682  

Provision for bad debt

     910        921       459        789  

Loss on disposal of equipment

     20        1,271       —          1  

Deferred income taxes

     (58      (400     (179      617  

Excess tax benefit from stock-based compensation awards

     —          (2,258     —          —    

Changes in operating assets and liabilities, net of impact of acquisitions:

          

Accounts receivable

     (1,364      (775     (419      (1,005

Funds receivable

     (9,862      (18,148     7,070        14,778  

Creator signing fees, net

     (5,980      (8,600     (2,785      (4,409

Creator advances, net

     (4,636      (5,782     (2,250      (4,200

Prepaid expenses and other current assets

     (1,890      (4,347     (1,613      (2,340

Other assets

     (307      668       621        (910

Accounts payable, creators

     37,109        52,836       43,681        29,947  

Accounts payable, trade

     245        386       376        453  

Accrued compensation and benefits

     1        (333     (446      (596

Accrued taxes

     (1,253      3,640       1,779        539  

Other accrued liabilities

     3,939        693       (400      8,736  

Accrued taxes, non-current

     4,957        7,027       3,457        1,257  

Other liabilities

     644        1,312       265        (34
  

 

 

    

 

 

   

 

 

    

 

 

 

Net cash provided by operating activities

     2,785        29,821       54,102        48,835  
  

 

 

    

 

 

   

 

 

    

 

 

 

Cash flows from investing activities

          

Purchases of property and equipment

     (2,983      (2,536     (1,058      (2,732

Capitalized internal-use software development costs

     (5,483      (6,142     (3,289      (4,329

Acquisitions, net of cash acquired

     (1,693      (131,974     (4,213      14,052  
  

 

 

    

 

 

   

 

 

    

 

 

 

Net cash provided by (used in) investing activities

     (10,159      (140,652     (8,560      6,991  
  

 

 

    

 

 

   

 

 

    

 

 

 

 

F-8


Table of Contents

EVENTBRITE, INC.

Consolidated Statements of Cash Flows

(continued)

( in  thousands )

 

     Year Ended December 31,     Six Months Ended June 30,  
     2016      2017     2017      2018  
                  (unaudited)  

Cash flows from financing activities

          

Proceeds from exercise of stock options

     2,903        1,767       733        4,208  

Excess tax benefit from stock-based compensation awards

     —          2,258       —          —    

Proceeds from issuance of redeemable convertible preferred stock, net

     —          133,936       —          —    

Proceeds from term loans

     —          30,000       —          45,000  

Principal payments on debt obligations

     —          (7,788     (571      (35,455

Payments on capital lease obligations

     (358      (249     (135      (21

Payments on lease financing obligations

     (220      (410     (173      (279

Payments of deferred offering costs

     —          —         —          (231
  

 

 

    

 

 

   

 

 

    

 

 

 

Net cash provided by (used in) financing activities

     2,325        159,514       (146      13,222  
  

 

 

    

 

 

   

 

 

    

 

 

 

Net increase (decrease) in cash and restricted cash

     (5,049      48,683       45,396        69,048  

Cash and restricted cash

          

Beginning of period

   $ 148,587      $ 143,538     $ 143,538      $ 192,221  
  

 

 

    

 

 

   

 

 

    

 

 

 

End of period

   $ 143,538      $ 192,221     $ 188,934      $ 261,269  
  

 

 

    

 

 

   

 

 

    

 

 

 

Supplemental cash flow data

          

Cash paid for interest

   $ —        $ 868     $ —        $ 3,622  

Noncash investing and financing activities

          

Vesting of early exercised stock options

   $ 305      $ 366     $ 183      $ 183  

Issued shares of common stock for acquisitions

   $ 478      $ 18,243     $ 18,243      $ 7,439  

Promissory notes issued in connection with acquisitions

   $ —        $ 57,500     $ 7,500      $ —    

Issuance of redeemable convertible preferred stock warrants in connection with the loan facilities and term loan

   $ —        $ 5,071     $ 3,032      $ 4,603  

Deferred offering costs included in accounts payable, trade and other accrued liabilities

   $ —        $ —       $ —        $ 1,067  

The accompanying notes are an integral part of these consolidated financial statements.

 

F-9


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

1. Organization

Description of business

Eventbrite, Inc. (Eventbrite or the Company) has built a powerful, broad technology platform to enable creators to solve many challenges associated with creating live experiences. The Company’s platform integrates components needed to seamlessly plan, promote and produce live events, thereby allowing creators to reduce friction and costs, increase reach and drive ticket sales.

Mollyguard Corporation was incorporated in 2003. Eventbrite launched operations as part of Mollyguard Corporation in 2006, and in 2009, the Company changed its name to Eventbrite, Inc. In October 2009, Eventbrite reincorporated as a Delaware corporation.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since inception, the Company has incurred net losses. During the year ended December 31, 2017 and six months ended June 30, 2018 (unaudited), the Company incurred a net loss of $38.5 million and $15.6 million, respectively. At December 31, 2017 and June 30, 2018 (unaudited), the Company had an accumulated deficit of $238.6 million and $254.2 million, respectively. The Company has historically financed its operations primarily through the issuance and sale of redeemable convertible preferred stock, through cash flows generated from operations and through the issuance of debt. The Company has evaluated and concluded there are no conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year following the date that these financial statements are issued.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Unaudited Pro Forma Information

Unaudited pro forma information assumes the following: (i) the automatic conversion of all outstanding shares of the Company’s redeemable convertible preferred stock, except Series G convertible redeemable preferred stock, into an aggregate of 33,446,250 shares of its common stock, (ii) the automatic exercise of outstanding warrants to purchase 933,269 shares of its redeemable convertible preferred stock into 933,269 shares of common stock for no consideration and the resulting reclassification of the redeemable convertible preferred stock warrant liability to additional paid-in capital, (iii) the automatic conversion and reclassification of all 8,181,957 outstanding shares of the Company’s Series G redeemable convertible preferred stock into an aggregate of                  shares of its common stock, based on an assumed IPO price of $         per share, the mid-point of the price range set forth on the cover of the Company’s initial public offering prospectus, and (iv) the net issuance of                  shares of our common stock issuable pursuant to the vesting and net settlement of 802,900 restricted stock units (RSUs) subject to performance conditions, all of which will occur upon the completion of the Company’s planned initial public offering (IPO). The unaudited pro forma information also reflects a tax withholding obligation related to such RSUs of approximately $             million in the aggregate, assuming that the price of its common stock at the time of settlement were equal to $             per share, which is the midpoint of the price range set forth on the cover page of the Company’s initial public offering prospectus. The shares expected to be sold and related proceeds to be received from the IPO are

 

F-10


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

excluded from such unaudited pro forma information. The unaudited pro forma net loss per share for the year ended December 31, 2017 and six months ended June 30, 2018 was computed using the weighted-average number of shares of common stock outstanding, including the pro forma effects as if such issuances and reclassifications had occurred at the beginning of the period, or their issuance dates if later. The stock-based compensation expense of $6.9 million to be recognized upon vesting of the RSUs is also excluded from unaudited pro forma net loss per share.

Supplemental Unaudited Pro Forma Net Loss per Share

Supplemental pro forma basic and diluted net loss per share attributable to common stockholders have been computed to give effect to the pro forma adjustments discussed above and to the number of additional shares that would have been required to be issued to repay the outstanding loan facilities if the IPO has been completed and the loans repaid as of December 31, 2017 and June 30, 2018. The numerator in the supplemental pro forma basic and diluted net loss per share calculation has been adjusted to include the pro forma adjustments discussed above and to reverse the interest expense on the loan facilities which is assumed to be repaid using a portion of the net proceeds of the Company’s initial public offering of its common stock. The supplemental pro forma net loss per share does not include the proceeds to be received from the assumed initial public offering, or shares expected to be sold in the initial public offering, except for those shares necessary to be issued to repay the loan facilities.

Unaudited Interim Financial Information

The accompanying interim consolidated balance sheet as of June 30, 2018, the interim consolidated statements of operations and statements of cash flows for the six months ended June 30, 2017 and 2018, the interim consolidated statements of redeemable convertible preferred stock and stockholders’ deficit for the six months ended June 30, 2018 and the related footnote disclosures are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position as of June 30, 2018 and results of operations and cash flows for the six months ended June 30, 2017 and 2018. The results for the six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other periods.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. These estimates include, but are not limited to, the recoverability of creator signing fees and creator advances, the capitalization and estimated useful life of internal-use software, certain assumptions used in the valuation of equity awards, assumptions used in determining the fair value of the redeemable convertible preferred stock warrant liability and term loan derivative liability, assumptions used in determining the fair value of business combinations, the allowance for doubtful accounts, indirect tax reserves and contra revenue amounts related to fraudulent events, customer disputed transactions and refunds. The Company evaluates these estimates on an ongoing basis. Actual results could differ from those estimates and such differences could be material to the Company’s consolidated financial statements.

Comprehensive Loss

For all periods presented, comprehensive loss equaled net loss. Therefore, the consolidated statements of comprehensive loss have been omitted from the consolidated financial statements.

 

F-11


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Segment Information

The Company’s Chief Executive Officer (CEO) is the chief operating decision maker. The Company’s CEO reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating the Company’s financial performance. Additionally, there are no segment managers or other individuals that are held accountable for results below the consolidated level. Accordingly, the Company has determined that it operates as a single reportable and operating segment.

Revenue Recognition

Revenue primarily consists of service fees and payment-processing fees (Eventbrite fees) recognized at the time a ticket for an event is sold and processed. The Company’s customers are event creators who are selling tickets for events using the Company’s platform.

The creator has the choice of whether to use Eventbrite Payment Processing (EPP) or to use a third-party payment processor, referred to as Facilitated Payment Processing (FPP). Under the EPP option, the Company is the merchant of record and is responsible for processing the transaction and collecting the face value of the ticket and all associated fees at the time the ticket is sold. The Company is also responsible for remitting these amounts collected, less the Company’s fees, to the creators. Under the FPP option, Eventbrite is not responsible for processing the transaction or collecting the face value of the ticket and associated fees. In this case, the Company invoices the creator for all of the Company’s fees.

The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company has the substantial risks and rewards of ownership under the terms of an arrangement. The Company determined the creator is the primary obligor in a ticketing transaction as the creator is responsible for providing the event for which a ticket is sold and is the party responsible for providing a refund if the event is canceled. The Company’s service provides a platform for the creator and event attendee to transact and to facilitate payment processing of that transaction. The amount that the Company earns for this service is fixed. For the payment processing service, the Company determined it is the principal in providing the service. The Company is the primary obligor in the arrangement, has latitude in setting the price of the service, has discretion in determining the supplier and bears credit risk. Based on management’s assessment, the Company records revenue on a net basis related to its ticketing service and on a gross basis related to its payment processing service.

The Company’s revenue is derived from its service fees and payment processing fees and is recognized as tickets for an event are sold and processed since the Company believes that is when all the following conditions are met:

 

   

There is persuasive evidence of an arrangement;

 

   

The service has been provided to the creator;

 

   

The collection of the fees is reasonably assured; and

 

   

The amount of fees to be paid is fixed or determinable.

Revenue is presented net of indirect taxes, value added taxes, creator royalties and reserves for customer refunds, payment chargebacks and estimated uncollectible amounts. If an event is cancelled by a creator, then any obligations to provide refunds to event attendees are the responsibility of that creator. If a creator is unwilling or unable to fulfill their refund obligations, the Company may, at its discretion, provide attendee refunds. Revenue is also presented net of the amortization of creator signing fees. The benefit the Company receives by securing exclusive ticketing and payment processing rights with certain creators from these fees is inseparable from the customer relationship with the creator and accordingly these fees are recorded as a reduction of revenue.

 

F-12


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Cost of Revenue

Cost of revenue consists primarily of payment processing fees, platform and website hosting fees and operational costs, amortization of acquired developed technology, amortization of capitalized internal-use software development costs, field operations costs and allocated customer support costs.

Cash and Restricted Cash

Cash includes bank deposits held by financial institutions. Cash balances include the face value of tickets sold on behalf of creators and their share of service charges, which amounts are to be remitted to the creators. Such balances were $112.6 million and $179.5 million as of December 31, 2016 and 2017, respectively, and $223.8 million as of June 30, 2018 (unaudited). Although creator cash is legally unrestricted, the Company does not utilize creator cash for its own financing or investing activities as the amounts are payable to creators on a regular basis. These amounts due to creators are included in accounts payable, creators on the consolidated balance sheet.

The Company has issued a letter of credit under a lease agreement which has been collateralized with cash. This cash is classified as noncurrent restricted cash on the consolidated balance sheet based on the term of the underlying lease. The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows (in thousands):

 

     December 31,      June 30,
2018
 
     2016      2017  
                   (unaudited)  

Cash

   $ 139,538      $ 188,986      $ 258,720  

Restricted cash

     4,000        3,235        2,549  
  

 

 

    

 

 

    

 

 

 

Total cash and restricted cash

   $ 143,538      $ 192,221      $ 261,269  
  

 

 

    

 

 

    

 

 

 

Funds Receivable

Funds receivable represents cash-in-transit from third-party payment processors that is received by the Company within approximately five business days from the date of the underlying ticketing transaction. The funds receivable balances include the face value of tickets sold on behalf of creators and their share of service charges, which amounts are to be remitted to the creators. Such amounts were $24.5 million and $48.5 million as of December 31, 2016 and 2017, respectively, and $34.9 million as of June 30, 2018 (unaudited).

Accounts Receivable, Net

Accounts receivable, net is comprised of invoiced amounts to creators who use a third-party facilitated payment processor (FPP). For customer accounts receivable balances related to FPP, the Company records accounts receivable at the invoiced amount, net of a reserve to provide for potentially uncollectible amounts.

In evaluating the Company’s ability to collect outstanding receivable balances, the Company considers various factors including the age of the balance, the creditworthiness of the customer and the customer’s current financial condition. Accounts receivable deemed uncollectible are charged against the allowance for doubtful accounts when identified.

 

F-13


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Property, Plant and Equipment, Net

Property, plant and equipment, including assets acquired through capital leases, are stated at cost less accumulated depreciation.

Depreciation is calculated using the straight-line method over the estimated useful lives of assets. Maintenance and repair costs are charged to expense as incurred. The estimated useful lives of the Company’s property, plant and equipment are as follows:

 

     Estimated Useful Life

Building and improvements

   30 years

Furniture and fixtures

   3-5 years

Computers and computer equipment

   1-2 years

Computer software

   2-3 years

Capitalized internal-use software development costs

   2 years

Leasehold improvements

   Shorter of estimated useful life
or remaining lease term

Fair Value Measurements

The Company measures its financial assets and liabilities at fair value at each reporting date using a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Other inputs that are directly or indirectly observable in the marketplace.

Level 3 – Unobservable inputs that are supported by little or no market activity.

The Company’s funds receivable, accounts receivable, accounts payable, other current liabilities and debt approximate their fair value. All of these financial assets and liabilities are Level 1, except for debt, which is Level 2. There are no other Level 1 or Level 2 assets or liabilities recorded at December 31, 2016 and 2017, or June 30, 2018 (unaudited).

The Company measures the redeemable convertible preferred stock warrant liability and term loan derivative liability (as discussed in Note 10) at fair value on a recurring basis and determined these are Level 3 financial liabilities in the fair value hierarchy.

The fair value of the redeemable convertible preferred stock warrants was estimated using a hybrid between a probability-weighted expected return method (PWERM) and option pricing model (OPM), estimating the probability weighted value across multiple scenarios, while using an OPM to estimate the allocation of value within one or more of these scenarios. Under a PWERM, the value of the Company’s various equity securities was estimated based upon an analysis of future values for the Company assuming various future outcomes, including two IPO scenarios and two scenarios contemplating the continued operation of the Company as a privately held enterprise. Guideline public company multiples were used to value the Company under the IPO scenarios. The discounted cash flow method was used to value the Company under the staying private scenarios. Share value for each class of security was based upon the probability-weighted present value of expected future investment returns, considering each of these possible future outcomes, as well as the rights of each share class.

 

F-14


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

The significant unobservable inputs into the valuation model used to estimate the fair value of the redeemable convertible preferred stock warrants include the timing of potential events (IPO) and their probability of occurring, the selection of guideline public company multiples, a discount for the lack of marketability of the preferred and common stock, the projected future cash flows, and the discount rate used to calculate the present-value of the estimated equity value allocated to each share class.

The significant unobservable inputs into the valuation model used to estimate the fair value of the term loan derivative liability include the timing of potential events (IPO), probability of exercise, and the discount rate used to calculate the present-value of discounted cash flows.

Generally, changes in the fair value of the underlying redeemable convertible preferred stock would result in a directionally similar impact to the fair value of the redeemable convertible preferred stock warrant liability.

There were no transfers of financial assets or liabilities into or out of Level 1, Level 2 or Level 3 for the years ended December 31, 2016 and 2017 or for the six months ended June 30, 2018 (unaudited).

Leases

The Company leases office space and certain computer equipment under noncancelable lease agreements which are accounted for as operating leases. Rent expense is recorded on a straight-line basis over the lease term. If a lease provides for fixed escalations of the minimum rental payments, the difference between the straight-line rent charged to expense and the amount payable under the lease is recognized as deferred rent.

The Company considers the nature of renovations and the Company’s involvement during the construction period for leased office space to determine if it should be considered the owner of the construction project during the construction period. If the Company determines that it is the owner of the construction project, it is required to capitalize the fair value of the building as well as the construction costs incurred on its consolidated balance sheet along with a corresponding liability (build-to-suit accounting). Upon occupancy for build-to-suit leases, the Company assesses whether the circumstances qualify for sales recognition under the sale leaseback accounting guidance. If the lease meets the sale-leaseback criteria, the Company will remove the asset and related financial obligation from the consolidated balance sheet and treat the building lease as an operating lease. If upon completion of construction, the project does not meet the sale-leaseback criteria, the leased property will continue to be treated as a build-to-suit lease asset and financing obligation for financial reporting purposes.

Internal-Use Software Development Costs

The Company capitalizes certain costs associated with website and application development and software developed or obtained for internal use. Costs incurred in the preliminary stages of development are expensed as incurred. Once software has reached the end of the preliminary project stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use, including stock-based compensation and other employee benefit costs. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized costs are included in property and equipment, net in the consolidated balance sheet.

Capitalized internal-use software and website development costs are amortized on a straight-line basis over their estimated useful life. The estimated useful life of capitalized costs is evaluated for each specific project and is two years. Amortization expense is recorded in cost of revenue within the consolidated statement of operations. Maintenance and training costs are charged to expense as incurred and included in operating expenses.

 

F-15


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Business Combinations

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill and Acquired Intangible Assets, Net

Goodwill

Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the assets acquired, net of liabilities assumed. Goodwill is not amortized but the Company evaluates goodwill impairment of its single reporting unit annually on the first day of the fourth quarter, or more frequently if events or changes in circumstances indicate the goodwill may be impaired.

Events or changes in circumstances which could trigger an impairment review include significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business, significant negative industry or economic trends, significant underperformance relative to historical or projected future results of operations, a significant adverse change in the business climate, an adverse action or assessment by a regulator, unanticipated competition or a loss of key personnel. The Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if an entity concludes otherwise, then it is required to perform the first of a two-step impairment test.

The first step involves comparing the estimated fair value of the reporting unit with its respective book value, including goodwill. If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary. If, however, the fair value of the reporting unit is less than book value, then a second step is required that compares the carrying amount of the goodwill with its implied fair value. The estimate of implied fair value of goodwill may require valuations of certain internally-generated and unrecognized intangible and tangible net assets. If the carrying amount of goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess.

During the years ended December 31, 2016 and 2017, the Company assessed qualitative factors and determined additional impairment testing was not required, therefore no goodwill impairment charges have been recorded during the years ended December 31, 2016 and 2017. No impairment charges were recorded during the six months ended June 30, 2018 (unaudited).

Acquired Intangible Assets, Net

Acquired intangible assets, net consists of identifiable intangible assets such as developed technology, customer relationships, and trade names resulting from the Company’s acquisitions. Acquired intangible assets

 

F-16


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

are recorded at fair value on the date of acquisition and amortized over their estimated economic lives following the pattern in which the economic benefits of the assets will be consumed, determined to be straight-line. Acquired intangible assets are presented net of accumulated amortization in the consolidated balance sheet.

The Company evaluates the recoverability of its intangible assets for potential impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to the fair value.

Creator Signing Fees, Net

Creator signing fees, net represent contractual amounts paid to creators pursuant to event ticketing and payment processing agreements. Creator signing fees are additional incentives paid by the Company to secure exclusive ticketing and payment processing rights with certain creators. These payments are amortized over the life of the contract to which they relate on a straight-line basis. Creator signing fees are presented net of reserves and allowances for potentially unrecoverable amounts on the consolidated balance sheets. Amortization of creator signing fees is recorded as a reduction of revenue in the consolidated statements of operations.

Creator Advances, Net

Creator advances, net represent contractual amounts paid to creators pursuant to event ticketing and payment processing agreements. Creator advances provide the creator with funds in advance of the event and are subsequently recovered by withholding amounts due to the Company from the sale of tickets for the event until the creator payment has been fully recovered. Creator advances are presented net of reserves and allowances for potentially unrecoverable amounts on the consolidated balance sheets.

Impairment of Long-Lived Assets

The carrying amounts of long-lived assets, including property and equipment, capitalized internal-use software, creator signing fees, creator advances and acquisition-related intangible assets, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to future undiscounted net cash flows the asset is expected to generate over its remaining life.

If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the revised shorter useful life.

Accounts Payable, Creators

Accounts payable, creators consists of unremitted ticket sale proceeds, net of Eventbrite service fees and applicable taxes. Amounts are remitted to creators within five business days subsequent to the completion of the related event. In certain situations, at the request of the creator, the Company may remit ticket sale proceeds in advance of the related event.

 

F-17


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Advertising

Advertising costs are charged to expense as incurred. The costs of developing advertising creative and trade show expenses are initially deferred and charged to expense in the period in which the advertising is displayed or the period the trade show occurs.

Advertising expenses were $2.1 million and $1.9 million during the years ended December 31, 2016 and 2017, respectively, and $0.9 million and $0.4 million for the six months ended June 30, 2017 and 2018 (unaudited), respectively.

Stock-Based Compensation Expense

Stock-based compensation expense to employees is measured based on the grant-date fair value of the awards and recognized in the consolidated statements of operations over the period during which the employee is required to perform services in exchange for the award (the vesting period of the award).

The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model. The Company measures the fair value of RSUs based on the fair value of the underlying shares on the date of grant. Compensation expense is recognized over the vesting period of the applicable award using the straight-line method. The Company estimates forfeitures in order to calculate the stock-based compensation expense.

Compensation expense for nonemployee stock options is calculated using the Black-Scholes option pricing model and is recorded as the options vest. Options subject to vesting are revalued periodically over the service period, which is the same as the vesting period. Compensation expense for nonemployee stock options was immaterial for all periods presented.

Deferred Offering Costs

Deferred offering costs, which consist of direct incremental legal, consulting, banking and accounting fees relating to anticipated equity offerings, are capitalized and will be offset against proceeds upon the consummation of the offerings within stockholders’ equity. In the event an anticipated offering is terminated, deferred offering costs will be expensed. As of December 31, 2016 and 2017, there were no capitalized deferred offering costs in the consolidated balance sheets. As of June 30, 2018 (unaudited), there are $1.3 million of deferred offering costs in the consolidated balance sheets.

Income Taxes

The Company records income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company recognizes tax benefits from uncertain tax positions if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Although the Company believes it has adequately provided for its uncertain tax positions, the Company can provide no assurance that the final tax outcome of these matters will not be materially different. The Company

 

F-18


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

adjusts these allowances when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s consolidated financial statements.

Foreign Currency Remeasurement

The functional currency of the Company’s international subsidiaries is the U.S. dollar. Accordingly, monetary balance sheet accounts are remeasured using exchange rates in effect at the balance sheet dates and non-monetary items are remeasured at historical exchange rates. Revenue and expenses are remeasured at the average exchange rates for the period. Foreign currency remeasurement and transaction gains and losses are included in other income (expense), net in the consolidated statements of operations. The Company recorded foreign currency rate remeasurement losses of $2.0 million and foreign currency rate remeasurement gains of $3.1 million during the years ended December 31, 2016 and 2017, respectively. The Company recorded foreign currency rate remeasurement gains of $2.0 million and losses of $3.6 million during the six months ended June 30, 2017 and 2018, respectively (unaudited).

Concentrations of Risk

Financial instruments potentially exposing the Company to concentrations of credit risk consist primarily of cash, funds receivable, accounts receivable, payments to creators and creator advance payouts. The Company holds its cash with high-credit-quality financial institutions; however, the Company maintains balances in excess of the FDIC insurance limits. The Company does not require their customers to provide collateral to support accounts receivable and maintains an allowance for accounts receivable balances that are doubtful of collection.

As of December 31, 2016 and 2017 and June 30, 2018 (unaudited), there were no customers that represented 10% or more of the Company’s accounts receivable balance and there were no customers that individually exceeded 10% of the Company’s net revenue for years ended December 31, 2016 and 2017 or for the six months ended June 30, 2017 and 2018 (unaudited).

Redeemable Convertible Preferred Stock Warrants

Freestanding warrants to purchase shares of redeemable convertible preferred stock are classified as liabilities on the consolidated balance sheets at their estimated fair value because the underlying shares of redeemable convertible preferred stock are contingently redeemable and, therefore, may obligate the Company to transfer assets at some point in the future. Warrants to purchase shares of redeemable convertible preferred stock are recorded at fair value upon issuance and remeasured to fair value at each reporting period through the consolidated statements of operations. The Company adjusts the redeemable convertible preferred stock warrant liability for changes in estimated fair value until the earlier of the exercise or expiration or the completion of a sale of the Company or an IPO. Upon an IPO, the warrants to purchase shares of redeemable convertible preferred stock automatically exercise into shares of the Company’s common stock.

Net Loss Per Share Attributable to Common Stockholders

The Company follows the two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method determines net income (loss) per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based

 

F-19


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s redeemable convertible preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in the Company’s losses. For periods in which he Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Recently Adopted Accounting Pronouncements

In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . This standard clarifies that transfers between cash and restricted cash are not part of the entity’s operating, investing, and financing activities, and details of those transfers are not reported as cash flow activities in the statements of cash flows. The Company early adopted this standard during the year ended December 31, 2017 and has retroactively adjusted the consolidated statements of cash flows for all periods presented.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting , which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in the ASU. The Company early adopted this standard during the year ended December 31, 2017. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) : Simplifying the Test for Goodwill Impairment , which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. For public business entities that are SEC filers, this standard is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. For public business entities that are not SEC filers, this standard is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. For all other entities, this standard is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. This standard will apply to the Company’s reporting requirements in performing goodwill impairment testing; however, the Company does not anticipate the adoption of this standard will have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business , which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. This standard is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those periods. For all other entities, this standard is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The impact to the Company’s consolidated financial statements will depend on the facts and circumstances of any specific future transactions.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718 ), which simplifies several aspects of the accounting for share-based payment transactions. This standard requires companies to record excess tax benefits and tax deficiencies as income tax benefit or expense in the statement of operations when the awards vest, or are settled, and eliminates the requirement to reclassify cash flows related to

 

F-20


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

excess tax benefits from operating activities to financing activities on the statement of cash flows. This standard also allows an entity to make an accounting policy election to either estimate expected forfeitures or to account for them as they occur. For public business entities, this standard is effective for annual and interim reporting periods beginning after December 15, 2016. For all other entities, this standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities in any interim or annual period for which financial statements have not been issued or made available for issuance. The Company intends to adopt this ASU beginning January 1, 2018 and is currently assessing how the adoption of this standard will impact the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) which requires lessees to put most leases on their balance sheets but recognize expenses on their income statement and eliminates the real estate-specific provisions for all entities. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating implementation methods and the effect that implementation of this standard will have on its consolidated financial statements upon adoption.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40) , which will supersede nearly all existing revenue recognition guidance. The core principle behind this standard is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering those goods and services. To achieve this core principle, the ASU provides a model, which involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction prices to the performance obligations in the contract, and recognizing revenue when (or as) the entity satisfies the performance obligations. The standard also provides guidance on the recognition of costs related to obtaining customer contracts.

This standard permits adoption either by using a full retrospective approach, in which all comparative periods are presented in accordance with the new standard, or a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. For public business entities, this standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early application is permitted for annual periods beginning after December 15, 2016. The Company has elected to adopt this standard as of January 1, 2019 using the full retrospective approach and does not expect the adoption of this standard to have a material impact on the consolidated financial statements.

Recently Adopted Accounting Pronouncements (unaudited)

The Company adopted ASU No. 2016-09,  Compensation—Stock Compensation (Topic 718 ) beginning January 1, 2018. The Company has elected to continue to estimate expected forfeitures as awards are granted. Additionally, the Company will prospectively present excess tax benefits as an operating activity on the consolidated statement of cash flows. The Company recognized the previously unrecognized excess tax benefits using the modified retrospective transition method, which did not result in a cumulative-effect adjustment to the opening balance of accumulated deficit in 2018 given the Company’s valuation allowance position. Without the valuation allowance, the Company’s deferred tax assets would have increased by $3.5 million.

 

F-21


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

3. Acquisitions

2018 Acquisitions (unaudited)

In April 2018, the Company acquired Ticketea S.L. (Ticketea), a leading Spanish ticketing provider. The Company acquired Ticketea in order to enhance its ticketing solutions and expand in the Spanish market. The acquisition of Ticketea has been accounted for as a business combination . The acquisition date fair value of the consideration transferred was $11.2 million, which consisted of $3.6 million in cash and 0.7 million shares of the Company’s common stock. Of the 0.7 million shares, 0.1 million shares are being held in escrow for adjustments related to working capital requirements and breaches of representations, warranties and covenants. These escrowed shares will be released approximately 18 months from the acquisition date, net of any adjustments. Acquisition costs related to the Ticketea transaction were $0.5 million and are included in general and administrative expenses in the consolidated statement of operations for the six months ended June 30, 2018 (unaudited).

The total purchase prices of Ticketea acquisition was allocated to the assets acquired and liabilities assumed based on their fair value as of the acquisition date. The excess of the purchase price over the net assets acquired was recorded as goodwill. The goodwill recorded in connection with the Ticketea acquisition is not deductible for tax purposes. Goodwill is attributable to the assembled workforce and synergies from the future growth and strategic advantages in the ticketing industry.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):

 

Cash

   $ 17,852  

Funds and accounts receivable

     1,058  

Creator advances

     532  

Prepaid expenses and other current assets

     127  

Property and equipment

     42  

Other noncurrent assets

     28  

Accounts payable, creators

     (19,671

Other current liabilities

     (628

Intangible assets

     3,094  

Goodwill

     8,804  
  

 

 

 

Total purchase price

   $ 11,238  
  

 

 

 

 

F-22


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

The following table sets forth the components of identifiable intangible assets acquired (in thousands) and their estimated useful lives as of the date of acquisition (in years):

 

     Amount      Estimated
useful life
 

Customer relationships

   $ 2,475        5  

Developed technology

     619        1  
  

 

 

    

Total acquired intangible assets

   $ 3,094     
  

 

 

    

The amount of net revenue from the Ticketea acquisition included in the consolidated statements of operations for the six months ended June 30, 2018 (unaudited) was not material.

2017 Acquisitions

In January 2017, the Company acquired 100% of the outstanding equity of TSTM Group Limited (ticketscript), a privately-held Dutch ticketing company with operations throughout Europe. The Company acquired ticketscript in order to enhance its ticketing solutions. The acquisition of ticketscript has been accounted for as a business combination . The acquisition date fair value of the consideration transferred was $33.4 million, which consisted of $7.7 million in cash, $7.5 million in promissory notes, 2.7 million shares of the Company’s common stock and options to purchase 0.3 million shares of Eventbrite common stock. These promissory notes were allowed to be prepaid at any time and the Company repaid these promissory notes in full, including accrued interest, in August 2017. Acquisition costs related to the ticketscript transaction were $1.2 million and are included in general and administrative expenses in the consolidated statement of operations. The Company retained certain former ticketscript employees under Eventbrite employment contracts and issued options to purchase an aggregate of 0.3 million shares of common stock in connection with those employment contracts. These options vest over time and compensation expense will be recorded over the associated service period.

In September 2017, the Company acquired 100% of the outstanding equity of Ticketfly, LLC (Ticketfly), a San Francisco based subsidiary of a publicly-held company. The Company acquired Ticketfly in order to expand the Company’s solutions for music-related events. The acquisition of Ticketfly has been accounted for as a business combination . The acquisition date fair value of the consideration transferred was $201.1 million, which consisted of $151.1 million in cash and $50.0 million in Convertible Promissory Notes (Promissory Note), which were paid and issued, respectively, at the closing of the transaction. Acquisition costs related to the Ticketfly transaction were $0.5 million and are included in general and administrative expenses in the consolidated statement of operations for the year ended December 31, 2017.

The Promissory Note is due five years from the issuance date and bears interest at a rate of 6.5% per annum, payable quarterly in cash or in-kind for the first year at the discretion of Eventbrite, and in cash thereafter. Prior to the maturity date, the Promissory Note is convertible at the Company’s option into shares of Eventbrite’s common stock at a price of $16.38 per share. The Promissory Note is subordinated to the Company’s term loan described in Note 10 and can be prepaid at any time.

In March 2018, the Company reached an agreement with the seller of Ticketfly to repay the Promissory Note. The face value of $50.0 million was settled in full for $34.7 million which represented $33.0 million of principal and $1.7 million of accrued interest. The Company recognized a gain of $16.3 million resulting from the extinguishment of the Promissory Note in the consolidated statement of operations for the six months ended June 30, 2018 (unaudited).

The total purchase prices of these acquisitions were allocated to the assets acquired and liabilities assumed based on their fair value as of the acquisition date. The excess of the purchase price over the net assets acquired

 

F-23


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

was recorded as goodwill. The goodwill recorded in connection with the Ticketfly acquisition is deductible for tax purposes, while the goodwill recorded in connection with ticketscript is not. Goodwill is attributable to the assembled workforce and synergies from the future growth and strategic advantages in the ticketing industry.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the respective acquisition dates (in thousands):

 

     Ticketfly      ticketscript      Total  

Cash and restricted cash

   $ 23,339      $ 3,492      $ 26,831  

Funds and accounts receivable

     4,263        4,208        8,471  

Creator advances

     8,567        —          8,567  

Prepaid expenses and other current assets

     1,213        242        1,455  

Property and equipment

     2,619        425        3,044  

Other noncurrent assets

     15        238        253  

Accounts payable, creators

     (29,909      (7,950      (37,859

Other current liabilities

     (2,138      (836      (2,974

Accrued taxes

     (6,179      (1,799      (7,978

Deferred tax liabilities

     —          (2,401      (2,401

Intangible assets

     76,300        11,800        88,100  

Goodwill

     123,011        26,030        149,041  
  

 

 

    

 

 

    

 

 

 

Total purchase price

   $ 201,101      $ 33,449      $ 234,550  
  

 

 

    

 

 

    

 

 

 

The following table sets forth the components of identifiable intangible assets acquired (in thousands) and their estimated useful lives as of the date of acquisition (years):

 

     Ticketfly      ticketscript      Useful
Lives
 

Customer relationships

   $ 60,500      $ 10,600        8.0  

Developed technology

     14,500        1,100        1.3  

Trademark

     1,300        100        1.3  
  

 

 

    

 

 

    

Total acquired intangible assets

   $ 76,300      $ 11,800     
  

 

 

    

 

 

    

The amount of net revenue from the 2017 acquisitions included in the consolidated statements of operations for the year ended December 31, 2017 was $27.5 million.

The following unaudited pro forma information presents the combined results of operations as if the Ticketfly acquisition had been completed on January 1, 2016, the beginning of the comparable prior annual reporting period. Unaudited pro forma information for the ticketscript acquisition is not presented because it is not material.

 

F-24


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

The unaudited pro forma results include the adjustments for amortization associated with the acquired intangible assets, interest expense on new debt, stock based compensation and the inclusion of $0.5 million of non-recurring acquisition costs. The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the companies. Accordingly, these unaudited pro forma results are presented for informational purpose only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisitions had occurred at the beginning of the period presented, nor are they indicative of future results of operations (in thousands):

 

     Year Ended

December 31,
 
     2016      2017  

Net revenue

   $ 174,094      $ 235,096  

Net loss

     (87,132      (199,222

2016 Acquisitions

In February 2016, the Company acquired 100% of the net assets of Queue Ticketing, LLC (Queue), a privately-held ticketing and event management company. The acquisition of Queue has been accounted for as a business combination . The acquisition date fair value of the consideration transferred was $1.4 million, consisting of $1.3 million in cash and 22 thousand shares of the Company’s common stock. In connection with the Queue acquisition and as part of the Company’s employee retention program, the Company issued an aggregate of 56,600 options to key employees to purchase the Company’s common stock. These options vest over four years and will be recorded as compensation expense over the associated service period.

In November 2016, the Company acquired 100% of the net assets of NVite Inc. (NVite), a privately-held ticketing and web development company. The acquisition of NVite has been accounted for as a business combination . The acquisition date fair value of the consideration transferred was $0.7 million, consisting of $0.4 million in cash and 50 thousand shares of the Company’s common stock. In connection with the Nvite acquisition and as part of the Company’s employee retention program, the Company issued an aggregate of 56,200 options to key employees to purchase the Company’s common stock. These options vest over four years and will be recorded as compensation expense over the associated service period.

The total purchase prices of the two acquisitions were allocated to the assets acquired and liabilities assumed based on their fair value as of the acquisition date. The excess of the purchase price over the net assets acquired was recorded as goodwill, which is deductible for tax purposes. Goodwill is attributable to the assembled workforce and synergies acquired. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the respective acquisition dates (in thousands):

 

     Queue      NVite      Total  

Net tangible assets assumed

   $ 94      $ —        $ 94  

Intangible assets

     640        512        1,152  

Goodwill

     688        237        925  
  

 

 

    

 

 

    

 

 

 

Total purchase price

   $ 1,422      $ 749      $ 2,171  
  

 

 

    

 

 

    

 

 

 

 

F-25


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

4. Goodwill and Acquired Intangible Assets, Net

The changes in the carrying amounts of goodwill was as follows (in thousands):

 

At January 1, 2016

   $ 8,800  

Additions from acquisitions

     925  
  

 

 

 

At December 31, 2016

     9,725  

Additions from acquisitions

     149,041  
  

 

 

 

At December 31, 2017

     158,766  

Additions from acquisitions (unaudited)

     8,804  
  

 

 

 

At June 30, 2018 (unaudited)

   $ 167,570  
  

 

 

 

Acquired intangible assets consisted of the following as of the dates indicated (in thousands):

 

     December 31, 2016         
     Cost      Accumulated
Amortization
     Net
Book
Value
     Weighted-
average
remaining
useful life
(years)
 

Developed technology

   $ 2,877      $ 1,422      $ 1,455        2.5  

Customer relationships

     402        173        229        2.1  

Tradenames

     200        200        —          —    
  

 

 

    

 

 

    

 

 

    

Acquired intangible assets, net

   $ 3,479      $ 1,795      $ 1,684     
  

 

 

    

 

 

    

 

 

    

 

     December 31, 2017         
     Cost      Accumulated
Amortization
     Net Book
Value
     Weighted-
average
remaining
useful life
(years)
 

Developed technology

   $ 18,477      $ 6,679      $ 11,798        1.0  

Customer relationships

     71,502        4,743        66,759        7.2  

Tradenames

     1,600        616        984        1.0  
  

 

 

    

 

 

    

 

 

    

Acquired intangible assets, net

   $ 91,579      $ 12,038      $ 79,541     
  

 

 

    

 

 

    

 

 

    

 

     June 30, 2018         
    

(unaudited)

     Weighted-
average
remaining
useful life
(years)
 
     Cost      Accumulated
Amortization
     Net Book
Value
 

Developed technology

   $ 19,096      $ 12,587      $ 6,509        0.6  

Customer relationships

     73,977        9,715        64,262        6.7  

Tradenames

     1,600        1,107        493        0.5  
  

 

 

    

 

 

    

 

 

    

Acquired intangible assets, net

   $ 94,673      $ 23,409      $ 71,264     
  

 

 

    

 

 

    

 

 

    

 

F-26


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

The Company recorded amortization expense related to acquired intangible assets as follows (in thousands):

 

     Year Ended
December 31,
     Six Months Ended
June 30,
 
     2016      2017      2017      2018  
                   (unaudited)  

Cost of net revenue

   $ 470      $ 5,083      $ 693      $ 5,821  

General and administrative

     157        5,160        1,089        5,550  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total amortization of acquired intangible assets

   $ 627      $ 10,243      $ 1,782      $ 11,371  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2017, the total expected future amortization expense for acquired intangible assets is as follows (in thousands by fiscal year):

 

2018

   $ 22,303  

2019

     9,944  

2020

     9,743  

2021

     9,683  

2022 and beyond

     27,868  
  

 

 

 

Acquired intangible assets, net

   $ 79,541  
  

 

 

 

5. Accounts Receivable, Net

Accounts receivable, net is comprised of invoiced amounts to customers who use FPP for payment processing as well as other invoiced amounts. The following table summarizes the Company’s accounts receivable balance (in thousands):

 

     December 31,      June 30,  
     2016      2017      2018  
                   (unaudited)  

Accounts receivable, customers

   $ 3,081      $ 4,682      $ 6,176  

Allowance for doubtful accounts

     (1,099      (1,797      (2,265
  

 

 

    

 

 

    

 

 

 

Accounts receivable, net

   $ 1,982      $ 2,885      $ 3,911  
  

 

 

    

 

 

    

 

 

 

6. Creator Signing Fees, Net

Creator signing fees are additional incentives paid by the Company to secure exclusive ticketing and payment processing rights with certain creators. As of December 31, 2017, these payments are being amortized over a weighted-average remaining contract life of 3.1 years on a straight-line basis. Amortization of creator signing fees is recorded as a reduction of revenue in the consolidated statements of operations.

 

F-27


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

The following table summarizes the activity in creator signing fees (in thousands):

 

     December 31,      June 30,  
     2016      2017      2018  
                   (unaudited)  

Balance, beginning of period

   $ 4,742      $ 6,906      $ 10,421  

Creator signing fees paid

     5,673        8,552        6,279  

Amortization of creator signing fees

     (2,737      (4,314      (3,077

Write-offs and other adjustments

     (772      (723      (345
  

 

 

    

 

 

    

 

 

 

Balance, end of period

   $ 6,906      $ 10,421      $ 13,278  
  

 

 

    

 

 

    

 

 

 

Creator signing fees, net

   $ 2,676      $ 4,235      $ 5,567  
  

 

 

    

 

 

    

 

 

 

Creator signing fees, noncurrent

   $ 4,230      $ 6,186      $ 7,711  
  

 

 

    

 

 

    

 

 

 

7. Creator Advances, Net

Creator advances provide the creator with funds in advance of the event and are subsequently recovered by withholding amounts due to the Company from the sale of tickets for the event until the creator payment has been fully recovered. The following table summarizes the activity in creator advances (in thousands):

 

     December 31,      June 30,  
     2016      2017      2018  
                   (unaudited)  

Balance, beginning of period

   $ 3,172      $ 7,583      $ 20,076  

Acquired with Ticketfly transaction

     —          8,567        —    

Acquired with Ticketea transaction

     —          —          532  

Creator advances paid

     11,080        14,701        10,248  

Creator advances recouped

     (5,954      (8,681      (7,917

Write-offs and other adjustments

     (715      (2,094      (1,338
  

 

 

    

 

 

    

 

 

 

Balance, end of period

   $ 7,583      $ 20,076      $ 21,601  
  

 

 

    

 

 

    

 

 

 

8. Property, Plant and Equipment, Net

Property, plant and equipment, net consisted of the following as of the dates indicated (in thousands):

 

     December 31,      June 30,  
     2016      2017      2018  
                   (unaudited)  

Building and improvements

   $ 33,277      $ 33,277      $ 33,277  

Capitalized internal-use software development costs

     21,003        27,392        32,000  

Furniture and fixtures

     2,550        3,206        3,578  

Computers and computer equipment

     7,099        9,716        10,896  

Leasehold improvements

     2,135        2,950        3,796  
  

 

 

    

 

 

    

 

 

 
     66,064        76,541        83,547  

Less: Accumulated depreciation and amortization

     (25,341      (34,049      (39,085
  

 

 

    

 

 

    

 

 

 

Property, plant and equipment, net

   $ 40,723      $ 42,492      $ 44,462  
  

 

 

    

 

 

    

 

 

 

 

F-28


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Depreciation expense totaled $2.6 million and $4.1 million for the year ended December 31, 2016 and 2017, respectively, and $1.6 million and $2.3 million for the six months ended June 30, 2017 and 2018, respectively (unaudited). The Company recorded the following amounts related to capitalized internal-use software development costs during the periods indicated (in thousands):

 

     Year Ended
December 31,
     Six Months Ended
June 30,
 
     2016      2017      2017      2018  
                   (unaudited)  

Internal-use software development costs capitalized during the period

   $ 5,483      $ 6,724      $ 3,598      $ 4,562  

Amortization of capitalized internal-use software

     4,458        5,102        2,521        3,046  

Impairments of capitalized internal-use software

     490        88        —          —    

Stock-based compensation costs included in capitalized internal-use software and website development costs capitalized were $0.6 million for each of the years ended December 31, 2016 and 2017, and $0.3 million for each of the six months ended June 30, 2017 and 2018 (unaudited).

9. Commitments and Contingencies

Operating Leases

The Company leases office space under various noncancelable operating leases that expire at various dates through 2023. Rent expense from operating leases totaled $1.5 million and $2.1 million for the year ended December 31, 2016 and 2017, respectively, and $0.9 million and $1.1 million for the six months ended June 30, 2017 and 2018 (unaudited), respectively. The Company also recognized sublease income of $3.2 million and $3.1 million during the years ended December 31, 2016 and 2017, respectively, and $1.6 million and $1.5 million for the six months ended June 30, 2017 and 2018, respectively (unaudited).

Build-to-suit Lease

In December 2013, the Company executed a lease for 97,624 square feet of office space in San Francisco, California. The initial lease term is seven years with an option to renew for an additional three years, and the leased space represents two floors in a seven-floor building. The lease provided for a $6.4 million tenant improvement reimbursement allowance, which the Company utilized in 2014. In order for the facility to meet the Company’s operating specifications, both the landlord and the Company made structural changes as part of the improvement of the building, and as a result, the Company has concluded that it is the deemed partial owner of the building (for accounting purposes only) during the construction period. Accordingly, at lease inception, the Company recorded an asset of $22.3 million, representing its estimate of the fair market value of the leased space, and a corresponding lease financing obligation on the consolidated balance sheets.

Upon completion of construction, the Company evaluated the derecognition of the asset and liability as a sale-leaseback transaction. The Company concluded it did not meet the provisions needed for sale-leaseback accounting, and thus the lease is being accounted for as a financing obligation. Lease payments are allocated to (1) a reduction of the principal financing obligation; (2) imputed interest expense; and (3) land lease expense (which is considered an operating lease) representing an imputed cost to lease the underlying land of the facility. In addition, the underlying building asset is being depreciated over the building’s estimated useful life of 30 years. At the conclusion of the lease term, the Company will derecognize both the net book values of the asset and financing obligation.

 

F-29


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Land lease expense was $0.9 million for each of the years ended December 31, 2016 and 2017, respectively, and $0.5 million for each of the six months ended June 30, 2017 and 2018 (unaudited). Interest expense related to the Company’s build-to-suit lease was $3.5 million for each of the years ended December 31, 2016 and 2017, and $1.7 million for each of the six months ended June 30, 2017 and 2018 (unaudited).

As of December 31, 2017, the future minimum lease payments and sublease rental payments under noncancelable leases are as follows (in thousands):

 

     Capital
Leases
     Build-to-Suit
Lease
    Operating
Leases
     Sublease
Income
    Total  

2018

   $ 25      $ 5,440     $ 1,561      $ (3,881   $ 3,145  

2019

     —          5,604       1,477        (4,093     2,988  

2020

     —          5,772       1,479        (4,215     3,036  

2021

     —          1,943       919        (1,415     1,447  

2022 and thereafter

     —          —         710        —         710  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total minimum lease payments

     25        18,759       6,146        (13,604     11,326  

Less: Amount representing interest and taxes

     —          (10,979     —          —         (10,979
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total present value of minimum lease payments

   $ 25      $ 7,780     $ 6,146      $ (13,604   $ 347  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

In May 2018, the Company entered into a 10 year operating lease for its office space in Cork, Ireland. Monthly rent payments are due beginning in January 2019 and will total approximately $0.4 million per year. The lease expires in 2028. As a result, operating lease obligations increased by approximately $0.4 million in each of 2019, 2020, 2021 and $2.6 million in 2022 and thereafter, which are not reflected in the table above.

Letters of Credit

As of December 31, 2016 and 2017, the Company had outstanding letters of credit for $4.0 million and $3.2 million, respectively. The amounts recorded as of December 31, 2016 relate to the Company’s leased office space in San Francisco, California. The letter of credit is collateralized by the Company’s restricted cash balance and other bank balances and was reduced by $2.0 million during the year ended December 31, 2017. Further, the letter can be reduced by an additional $1.0 million in 2018, so long as the Company remains in good standing as defined in the terms of the underlying agreement. In connection with the Ticketfly acquisition, the Company acquired a lease for which there was a collateralizing letter of credit for $0.8 million.

Creator Signing fees and Creator Advances

Creator signing fees and creator advances represent contractual amounts paid in advance to customers pursuant to event ticketing and payment processing agreements. Certain of the Company’s contracts include terms where future payments to creators are committed to as part of the overall ticketing arrangement. The following table presents, by year, the future creator payments committed to under contract but not yet paid as of December 31, 2017 (in thousands):

 

2018

   $ 18,254  

2019

     7,285  

2022

     4,331  

2021

     3,150  

2022 and thereafter

     —    
  

 

 

 
   $ 33,020  
  

 

 

 

 

F-30


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Litigation and Loss Contingencies

The Company accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. From time to time, the Company may become a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims, and threatened claims, breach of contract claims, tax and other matters. The Company currently has no material pending litigation.

The Company is currently under audit in certain domestic jurisdictions with regard to indirect tax matters. The Company establishes reserves for indirect tax matters when it determines that the likelihood of a loss is probable, and the loss is reasonably estimable. Accordingly, the Company has established a reserve for the potential settlement of issues related to sales and other indirect taxes in the amount of $12.7 million and $28.9 million as of December 31, 2016 and 2017, respectively, and $30.1 million as of June 30, 2018 (unaudited). This amount, which represents management’s best estimate of its potential liability, includes potential interest and penalties of $1.7 million and $3.5 million as of December 31, 2016 and 2017, respectively, and $4.1 million as of June 30, 2018 (unaudited).

In June 2018, the Company publicly announced that a criminal was able to penetrate the Ticketfly website and steal certain consumer data, including names, email addresses, shipping addresses, billing addresses and phone numbers. For a short time, the Company disabled the Ticketfly platform to contain the risk of the cyber incident, which disabled ticket sales through Ticketfly during that period. Because of this incident, the Company has incurred costs related to responding to and remediating this incident and has suffered a loss of revenue for the period during which the Ticketfly platform was disabled. In the six months ended June 30, 2018 (unaudited), the Company recorded a liability of $6.6 million for potential costs associated with this incident, of which $6.3 million was recorded as contra revenue and $0.3 million was recorded as an operating expense. This amount represents the Company’s best estimate of the total amount of creator accommodations to be made as a result of the incident. The Company also recorded $1.3 million related to insurance proceeds to be received from the Ticketfly incident as a reduction in general and administrative expenses in the six months ended June 30, 2018 (unaudited). Such proceeds are a partial reimbursement for accommodations to creators which are recorded as contra revenue.

As of the date these annual financial statements and unaudited interim financial statements were available to be issued, the Company does not believe that any ultimate liability resulting from any of these matters will have a material adverse effect on its business, consolidated financial position, results of operations or liquidity. However, the outcome of these matters is inherently uncertain. Therefore, if one or more of these matters were resolved against the Company for amounts in excess of management’s expectations, the Company’s financial statements, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected.

Indemnifications

In the ordinary course of business, the Company enters into contractual arrangements under which the Company agrees to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from the Company’s online ticketing platform or the Company’s acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, the Company’s obligations under these agreements may be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the

 

F-31


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Company has indemnification agreements with its directors and executive officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary.

10. Term Loans and Redeemable Convertible Preferred Stock Warrants

Term loans consisted of the following at the dates indicated (in thousands):

 

     December 31,
2017
     June 30,
2018
 
            (unaudited)  

Outstanding principal balance

   $ 29,704      $ 74,232  

Less: Unamortized discount and debt issuance costs

     (3,035      (7,872
  

 

 

    

 

 

 

Total term loan, net

   $ 26,669      $ 66,360  
  

 

 

    

 

 

 

The Company entered into a loan and security agreement (Loan Facility) with, and issued warrants to purchase shares of redeemable convertible preferred stock to Western Technology Investments (WTI) in June 2017, which provided for a secured credit facility of up to $60.0 million of term debt, which is collateralized by substantially all of the Company’s assets and intellectual property rights. The Loan Facility contains customary events of default. In September 2017, the Company borrowed $30.0 million as a term loan under the facility with a maturity date of February 2022 which bears interest at 11.5% annually (effective interest rate of 15.9%). Monthly payments of interest are due for the first 24 months and equal monthly installments of principal and interest are due for 30 months thereafter. By the end of the equal monthly installments of principal and interest, the principal under the loan will be fully repaid. The loan may be prepaid at any time for an amount equal to the outstanding balance plus accrued interest, plus an amount equal to all scheduled but unpaid payments of interest that would have accrued and been payable through the maturity date.

In March 2018, the Company borrowed an additional $30.0 million under the Loan Facility with a maturity date of September 2022, which bears interest at 11.75% annually. Monthly payments of interest are due for the first 24 months and equal monthly installments of principal and interest are due for 30 months thereafter. By the end of the equal monthly installments of principal and interest, the principal under the loan will be fully repaid.

In May 2018, the Company entered into a second loan and security agreement (Second Loan Facility) with WTI and issued additional warrants to purchase shares of Series G redeemable convertible preferred stock. The secured credit facility provides up to $15.0 million of term debt, which the Company borrowed in full as a term loan under the facility in May 2018. This debt bears interest at 12.0% annually and has a maturity date of November 2022. Monthly payments of interest are due for the first 24 months and equal monthly installments of principal and interest are due for 30 months thereafter. By the end of the equal monthly installments of principal and interest, the principal under the loan will be fully repaid. The redeemable convertible preferred stock warrants are exercisable into 109,288 shares of Series G redeemable convertible preferred stock.

The Second Loan Facility includes a contingent prepayment feature under which if the Company consummates a qualified public offering within the first 24 months of the term loan and the Company prepays the term loan in conjunction with the qualified public offering, the Company is required to prepay the outstanding contractual balance plus accrued interest within fifteen days of the consummation of a qualified public offering plus an additional amount equal to 50% of all interest that would have been incurred through the end of first 24 months of the loan. If the Company consummates a qualified public offering within 30 months following the first

 

F-32


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

24 months of the loan and the Company prepays the term loan in conjunction with the qualified public offering, the Company may prepay the outstanding contractual balance plus accrued interest within fifteen days of the consummation of a qualified public offering plus an additional amount equal to 50% of all interest that would have been incurred through the end of the 30 months following the first 24 months of the loan.

In May 2018, the Company modified the terms of the Loan Facility so that the $30.0 million borrowed in March 2018 under the Loan Facility is subject to the same contingent prepayment feature in the event of a qualified public offering that is included in the Second Loan Facility.

The Company has determined that these contingent prepayment features under the term loans are embedded derivatives requiring bifurcation and separate accounting. The fair value of these term loan derivatives was $ 2.2 million as of June 30, 2018 (unaudited) which is included in term loans on the consolidated balance sheet. The change in fair value of the term loan derivatives was not material to the consolidated statement of operations.

The Company’s loan and security agreements with WTI contain customary conditions to borrowing, events of default and covenants, including covenants that restrict the Company’s ability to incur indebtedness, grant liens, make certain distributions to its equity holders prior to a qualifying public offering of its securities, make investments or engage in transactions with its affiliates. The Company’s loan and security agreements with WTI do not contain financial maintenance covenants. The Company was in compliance with all covenants under its loan and security agreements as of December 31, 2017 and June 30, 2018.

As of December 31, 2017, the contractual principal payments for the next five years are as follows (in thousands):

 

2018

   $ 36  

2019

     3,506  

2020

     11,272  

2021

     12,639  

2022

     2,251  
  

 

 

 

Total

   $ 29,704  
  

 

 

 

As of June 30, 2018, the contractual principal payments for the next five years are as follows (in thousands, unaudited):

 

2018 (remaining 6 months)

   $ 47  

2019

     3,566  

2020

     22,361  

2021

     30,244  

2022

     18,014  
  

 

 

 

Total

   $ 74,232  
  

 

 

 

The preferred stock warrants became exercisable into 411,991 shares of Series G redeemable convertible preferred stock when the Loan Facility was executed in June 2017. In September 2017, the redeemable convertible preferred stock warrants became exercisable into an additional 205,995 shares of Series G redeemable convertible preferred stock when the Company borrowed $30.0 million under the Loan Facility in

 

F-33


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

September 2017. In March 2018, as a result of the Company borrowing the remaining $30.0 million under the Loan Facility, the Series G redeemable convertible preferred stock warrants became exercisable into an additional 205,995 shares of Series G redeemable convertible preferred stock. In May 2018, the Company issued additional warrants which are exercisable into 109,288 shares of Series G redeemable convertible preferred stock. The exercise price of all of the Series G redeemable convertible preferred stock warrants is $16.38 per share and the redeemable convertible preferred stock warrants expire in September 2027. Upon completion of an IPO, the Series G redeemable convertible preferred stock warrants are automatically exercised into shares of the Company’s common stock for no cash consideration.

The fair value of the redeemable convertible preferred stock warrants exercisable into shares of Series G redeemable convertible preferred stock was recorded as a deferred financing cost and is being amortized ratably over the term of the Loan Facility. As amounts are borrowed under the Loan Facility, the carrying amount of these deferred financing costs is recorded as a debt discount in proportion to the amount borrowed to the total secured credit facility. The Company allocated the proceeds from the issuance of the respective term loans to the redeemable convertible preferred stock warrants exercisable into shares of Series G redeemable convertible preferred stock and the term loan derivatives, with respect to the term loan issued in connection with the Second Loan Facility, based on the fair values of the redeemable convertible preferred stock warrants and the term loan derivatives, with the residual proceeds allocated to the debt obligation resulting in a debt discount. The fair value of the term loan derivatives issued in connection with the modification to the Loan Facility was accounted for as an additional discount to the carrying amount of the term loan at the modification date. The Company amortized the debt discounts, which includes fees paid to the lender and debt issuance costs, to interest expense using the effective interest method. For the year ended December 31, 2017 and six months ended June 30, 2018 (unaudited), the Company recognized $0.2 million and $1.0 million, respectively, of amortization of debt discount and deferred financing costs as interest expense on the consolidated statements of operations.

Refer to Note 2 for discussion of the significant inputs used to determine the fair value of the redeemable convertible preferred stock warrants. The following represent the changes in the liability relating to the redeemable convertible preferred stock warrants for the year ended December 31, 2017 and six months ended June 30, 2018 (in thousands):

 

Issuance

   $ 5,071  

Change in fair value

     2,200  
  

 

 

 

Balance as of December 31, 2017

     7,271  

Issuances (unaudited)

     4,603  

Change in fair value (unaudited)

     6,071  
  

 

 

 

Balance as of June 30, 2018 (unaudited)

   $ 17,945  
  

 

 

 

11. Redeemable Convertible Preferred Stock

In August 2017, the Company’s stockholders authorized the issuance of 9,005,938 shares of Series G redeemable convertible preferred stock. The Company received gross proceeds of $134.0 million through the issuance of 8,181,957 million shares of Series G redeemable convertible preferred stock at $16.38 per share. In connection with the sale, the total authorized shares of capital stock were increased to 134,509,959 consisting of 92,057,771 shares of common stock and 42,452,188 shares of redeemable convertible preferred stock.

 

F-34


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

The authorized, issued and outstanding shares, carrying amount and aggregate liquidation preference of such redeemable convertible preferred stock as of the dates indicated were as follows (in thousands, except share and per share amounts):

 

     December 31, 2016  
     Shares
Authorized
     Shares
Issued and
Outstanding
     Carrying
Amount
     Original
Issue Price
per Share
     Aggregate
Liquidation
Preference
 

Series A

     1,905,052        1,905,052      $ 248      $ 0.13      $ 248  

Series B

     2,795,811        2,795,811        1,290        0.39        1,300  

Series C

     10,964,532        10,964,532        8,667        0.80        8,718  

Series D

     3,900,971        3,900,971        19,984        5.14        20,051  

Series E

     5,358,313        5,358,313        49,924        9.33        50,000  

Series F

     4,859,373        4,859,373        59,973        12.35        60,000  

Series F-1

     3,662,198        3,662,198        59,996        16.38        60,000  
  

 

 

    

 

 

    

 

 

       

 

 

 
     33,446,250        33,446,250      $ 200,082         $ 200,317  
  

 

 

    

 

 

    

 

 

       

 

 

 

 

     December 31, 2017  
     Shares
Authorized
     Shares
Issued and
Outstanding
     Carrying
Amount
     Original
Issue Price
per Share
     Aggregate
Liquidation
Preference
 

Series A

     1,905,052        1,905,052      $ 248      $ 0.13      $ 248  

Series B

     2,795,811        2,795,811        1,290        0.39        1,300  

Series C

     10,964,532        10,964,532        8,667        0.80        8,718  

Series D

     3,900,971        3,900,971        19,984        5.14        20,051  

Series E

     5,358,313        5,358,313        49,924        9.33        50,000  

Series F

     4,859,373        4,859,373        59,973        12.35        60,000  

Series F-1

     3,662,198        3,662,198        59,996        16.38        60,000  

Series G

     9,005,938        8,181,957        133,936        16.38        201,055  
  

 

 

    

 

 

    

 

 

       

 

 

 
     42,452,188        41,628,207      $ 334,018         $ 401,372  
  

 

 

    

 

 

    

 

 

       

 

 

 

 

     June 30, 2018  
     (unaudited)  
     Shares
Authorized
     Shares
Issued and
Outstanding
     Carrying
Amount
     Original
Issue Price
per Share
     Aggregate
Liquidation
Preference
 

Series A

     1,905,052        1,905,052      $ 248      $ 0.13      $ 248  

Series B

     2,795,811        2,795,811        1,290        0.39        1,300  

Series C

     10,964,532        10,964,532        8,667        0.80        8,718  

Series D

     3,900,971        3,900,971        19,984        5.14        20,051  

Series E

     5,358,313        5,358,313        49,924        9.33        50,000  

Series F

     4,859,373        4,859,373        59,973        12.35        60,000  

Series F-1

     3,662,198        3,662,198        59,996        16.38        60,000  

Series G

     9,115,226        8,181,957        133,936        16.38        201,055  
  

 

 

    

 

 

    

 

 

       

 

 

 
     42,561,476        41,628,207      $ 334,018         $ 401,372  
  

 

 

    

 

 

    

 

 

       

 

 

 

 

F-35


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Other rights, preferences and privileges of the Company’s redeemable convertible preferred stock are as follows:

Redemption Rights

The holders of the Company’s redeemable convertible preferred stock have no voluntary rights to redeem shares. A liquidation or winding up of the Company, a change in control, or a sale of substantially all of the Company’s assets would constitute a redemption event which may be outside of the Company’s control. Accordingly, these shares are considered contingently redeemable and are classified as temporary equity on the consolidated balance sheet.

Conversion Rights

Each share of redeemable convertible preferred stock is convertible, at the option of its holder, at any time, into the number of fully paid and nonassessable shares of common stock which results from dividing the applicable original issue price per share by the applicable conversion price per share on the date that the share certificate is surrendered for conversion.

Each share of redeemable convertible preferred stock shall automatically be converted into fully paid, nonassessable shares of common stock at the effective conversion price (i) immediately prior to the closing of a firm commitment underwritten initial public offering filed under the Securities Act of 1933, as amended, covering the offer and sale of the Company’s common stock, provided that the offering price per share is not less than $14.00 as it relates to Series A, B, C, D, E, F and F-1 of redeemable convertible preferred stock and $16.38 as it relates to Series G of redeemable convertible preferred stock (both as adjusted for recapitalizations) and the aggregate gross proceeds to the Company are not less than $30 million; or (ii) upon the receipt by the Company of a written request for such conversion from the holders of at least a majority of the redeemable convertible preferred stock then outstanding (voting together as a single class on an as-converted to common stock basis).

As of December 31, 2017 and June 30, 2018 (unaudited), the conversion prices per share for all series of redeemable convertible preferred stock were equal to the original issue prices, and the rate at which each share would convert into common stock was one-for-one.

In the event that a conversion event is in connection with, or contemplation of, a firm commitment underwritten initial public offering filed under the Securities Act covering the offer and sale of the Company’s common stock in which the offering price (IPO Price) is less than $24.5754 (Target Price) (subject to adjustments for recapitalizations), then the then-existing conversion price of the Series G redeemable convertible preferred stock shall be automatically adjusted so that, upon such automatic conversion event, each share of Series G redeemable convertible preferred stock shall convert into the applicable number shares of common stock issuable on conversion plus an additional number of shares of common stock equal to the difference between the Target Price and the IPO Price, divided by the IPO Price.

Dividend Rights

The holders of the outstanding shares of redeemable convertible preferred stock shall be entitled to receive dividends when and if declared by the Board of Directors, out of any assets at the time legally available, at the annual rate of 8% of the original issue price for each Series of redeemable convertible preferred stock, payable in preference and priority to any declaration or payment of any distribution on common stock of the Company. No distributions shall be made with respect to the common stock until all declared dividends on the redeemable

 

F-36


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

convertible preferred stock have been paid or set aside for payment to the redeemable convertible preferred stockholders. The right to receive dividends on shares of redeemable convertible preferred stock is noncumulative.

In addition to the dividend rights of the Company’s Series A through Series F-1 redeemable convertible preferred stock, beginning on January 1, 2019, dividends accrue on each share of Series G redeemable convertible preferred stock at a rate of 8% per annum of the sum of the original issue price of the share plus the amount of previously accrued dividends. The Series G accruing dividends accrue from day to day, are cumulative and compound annually. The Series G accruing dividends are automatically payable in additional shares of Series G redeemable convertible preferred stock immediately prior to a liquidation event or any conversion of Series G redeemable convertible preferred stock into common stock. The number of additional shares of Series G redeemable convertible preferred stock issued to settle the accrued dividends is determined by dividing the accrued dividends by the original issuance price of the Series G redeemable convertible preferred stock.

As of December 31, 2017 and June 30, 2018 (unaudited), no dividends had been declared or paid on the Company’s redeemable convertible preferred stock to date.

Liquidation Rights

In the event of certain liquidation events, as defined in the Company’s Amended and Restated Certificate of Incorporation, the holders of the Series G, F-1, F, E, D and C redeemable convertible preferred stock shall be entitled to receive, on a pari passu basis and in preference to any distribution of any of the assets of the Company to the holders of common stock, Series A redeemable convertible preferred stock and Series B redeemable convertible preferred stock, an amount equal to the sum of (i) the liquidation preference specified for such shares of redeemable convertible preferred stock and (ii) any declared but unpaid dividends. After distribution of the above amounts to holders of Series G, F-1, F, E, D and C redeemable convertible preferred stock, any remaining assets of the Company shall be distributed to the holders of Series B redeemable convertible preferred stock, in preference to the holders of Series A redeemable convertible preferred stock and holders of common stock, for an amount equal to the original issue price for such shares, plus all declared and unpaid dividends. After distribution of the above amounts to the holders of Series B redeemable convertible preferred stock, the holders of Series A redeemable convertible preferred stock shall be entitled to receive, in preference to any distributions to holders of common stock, an amount equal to the original issue price for such shares, plus all declared and unpaid dividends. If the assets and funds are insufficient to permit full payment of the above amounts, the Company shall distribute the assets and funds first ratably among the holders of Series G, F-1, F, E, D and C redeemable convertible preferred stock in proportion to the full amounts to which they would otherwise be entitled, until such holders have received the full preference described above, then ratably among holders of Series B redeemable convertible preferred stock in proportion to the full amounts to which they would otherwise be entitled, until such holders have received the full preference described above, and then ratably among holder of Series A redeemable convertible preferred stock, in proportion to the full amounts to which they would otherwise be entitled. After payments to the holders of redeemable convertible preferred stock, all remaining assets will be distributed to the holders of common stock.

Voting Rights

Each holder of redeemable convertible preferred stock shall be entitled to the number of votes equal to the number shares of common stock into which the shares of redeemable convertible preferred stock held by such holder could be converted. The holders of shares of the redeemable convertible preferred stock shall be entitled to vote on all matters on which the holders of common stock shall be entitled to vote. The holders of redeemable

 

F-37


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

convertible preferred stock have voting rights as a single class and no series voting is permitted as described in the Company’s Amended and Restated Certificate of Incorporation.

12. Common Stock

The Company’s board of directors has authorized one class of common stock. The Company’s common stock has no preferences or privileges and is not redeemable. Holders of the Company’s common stock are entitled to one vote for each share of common stock held. Holders of common stock are entitled to dividends, if and when declared, by the Company’s board of directors. As of the dates indicated, the Company had the following shares of common stock reserved for issuance:

 

     December 31,
2017
     June 30,
2018
 
            (unaudited)  

Redeemable convertible preferred stock

     41,628,207        41,628,207  

Options issued and outstanding

     18,741,267        18,442,924  

Options available for future grants

     4,576,508        3,556,271  

Convertible promissory notes

     3,051,832        —    

Warrants to purchase redeemable convertible preferred stock

     823,981        933,269  
  

 

 

    

 

 

 

Total

     68,821,795        64,560,671  
  

 

 

    

 

 

 

At December 31, 2016 and 2017 and June 30, 2018 (unaudited), outstanding common stock included 150,729, 103,133 and 79,335 shares, respectively, subject to repurchase related to stock options early exercised and unvested.

13. Stock-Based Compensation Plans

2004 Stock Option Plan

In 2004, the board of directors and shareholders of the Company authorized and ratified the 2004 Stock Option Plan (2004 Plan), as amended. The 2004 Plan allows for the issuance of incentive stock options (ISOs), non-statutory stock options (NSOs) and stock purchase rights. The 2004 Plan states the maximum aggregate number of shares that may be subject to options or stock purchase rights and sold under the plan is 6,000,000 shares.

2010 Stock Option Plan

In 2010, the board of directors and shareholders of the Company authorized and ratified the 2010 Stock Plan (2010 Plan), as amended. The 2010 Plan allows for the issuance of ISOs, NSOs and stock purchase rights. The 2010 Plan states the maximum aggregate number of shares that may be subject to options or stock purchase rights and sold under the plan is 29,963,761 shares.

 

F-38


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Stock options granted to date vest over a four-year period from the date of grant. Options awarded under the Amended 2004 Plan and Amended 2010 Plan may be granted at an exercise price per share not less than the fair value at the date of grant and are exercisable up to ten years. Common stock received under either the Amended 2004 Plan or the Amended 2010 Plan is subject to certain restrictions, including a right of first refusal by the Company with respect to the sale or transfer of these shares to third parties, other than with respect to certain estate planning activities. Stock option activity is as follows:

 

     Outstanding
options
     Weighted-
average exercise
price
     Weighted-
average
remaining
contractual
term (years)
     Aggregate
intrinsic
value
 
                          (thousands)  

Balance as of January 1, 2016

     12,361,791      $ 3.98        

Granted

     3,672,830      $ 7.33        

Exercised

     (599,180    $ 4.85         $ 1,440  

Cancelled

     (1,766,260    $ 5.89        
  

 

 

          

Balance as of December 31, 2016

     13,669,181      $ 4.60        5.9      $ 26,710  

Granted

     7,332,168      $ 7.06        

Exercised

     (1,376,872    $ 1.24         $ 7,600  

Cancelled

     (923,210    $ 6.14        
  

 

 

          

Balance as of December 31, 2017

     18,701,267      $ 5.73        7.3      $ 29,728  
  

 

 

          

Granted (unaudited)

     1,902,728      $ 9.76        

Exercised (unaudited)

     (1,087,555    $ 3.87         $ 8,560  

Cancelled (unaudited)

     (1,073,516    $ 7.03        
  

 

 

          

Balance as of June 30, 2018 (unaudited)

     18,442,924      $ 6.17        7.0      $ 75,355  
  

 

 

          

Vested and exercisable as of December 31, 2017

     10,731,138      $ 4.72        5.5      $ 28,112  
  

 

 

          

Vested and expected to vest
as of December 31, 2017

     17,781,271      $ 5.65        6.8      $ 29,978  
  

 

 

          

Vested and exercisable as of June 30, 2018 (unaudited)

     10,983,610      $ 5.10        5.7      $ 56,663  
  

 

 

          

Vested and expected to vest as of June 30, 2018 (unaudited)

     17,513,350      $ 6.07        6.9      $ 73,323  
  

 

 

          

The weighted-average fair value of stock options granted was $4.06 and $3.25 for the years ended December 31, 2016 and 2017, respectively, and was $3.58 and $5.88 for the six months ended June 30, 2017 and 2018, respectively (unaudited).

As of December 31, 2017 and June 30, 2018 (unaudited), the total unrecognized stock-based compensation related to unvested options outstanding was $23.7 million and $24.0 million, respectively, to be recognized over a weighted-average period of 2.68 years and 2.61 years, respectively.

 

F-39


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Common Stock Subject to Repurchase

The Amended 2010 Plan and the Company’s Stock Option Agreement allow for the early exercise of stock options for certain individuals, as determined by the board of directors. Common stock purchased pursuant to an early exercise of stock options is not deemed to be outstanding for accounting purposes until those shares vest. The consideration received for an exercise of an option is considered to be a deposit of the exercise price and the related dollar amount is recorded as a liability. Upon termination of service, the Company may, at their discretion, repurchase unvested shares acquired through early exercise of stock options at a price equal to the price per share paid upon the exercise of such options. The Company includes unvested shares subject to repurchase in the number of shares of common stock outstanding on the statement of redeemable convertible preferred stock and stockholders’ deficit.

The Company had a liability of $1.2 million, $0.8 million and $0.6 million as of December 31, 2016 and 2017 and June 30, 2018 (unaudited), respectively, related to early exercises of stock options. The liability is reclassified into stockholders’ deficit as the awards vest.

Stock-Based Compensation

All stock-based awards to employees and members of the Company’s board of directors are measured based on the grant date fair value of the awards and recognized in the consolidated statements of operations over the period during which the employee is required to perform services in exchange for the award (the vesting period of the award). The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model and records stock-based compensation expense for service-based equity awards using the straight-line attribution method. The assumptions for the Black-Scholes option pricing model are outlined below.

Fair Value of Common Stock

Given the absence of a public trading market the Company’s board of directors considered numerous objective and subjective factors to determine the fair value of its common stock at each meeting at which awards were granted and approved. The factors included, but were not limited to: (i) contemporaneous third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences and privileges of the Company’s redeemable convertible preferred stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) the Company’s actual operating and financial results; (v) current business conditions and projections; and (vi) the likelihood and timing of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions.

Expected Term

The Company determines the expected term based on the average period the stock options are expected to remain outstanding, calculated as the midpoint of the stock options vesting term and contractual expiration period, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.

Volatility

The Company determines the price volatility factor based on the historical volatility of publicly traded industry peers. To determine the Company’s peer group of companies, the Company considers public companies in its industry and select those that are similar in size, stage of life cycle, and financial leverage. The Company does not rely on implied volatilities of traded options in its industry peers’ common stock because the volume of

 

F-40


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

activity is relatively low. The Company intends to continue to consistently apply this methodology using the same or similar public companies until a sufficient amount of historical information regarding the volatility of its own common stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

Dividends

The Company has not paid and does not expect to pay dividends.

The estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts will be recorded as a cumulative adjustment in the period the estimates are revised. The Company considers several factors when estimating expected forfeitures, including the types of awards and employee class. Actual results, and future changes in estimates may differ substantially from the Company’s current estimates.

The following range of assumptions were used to estimate the fair value of stock options granted to employees:

 

     Year ended
December 31,
     Six Months Ended
June 30,
 
     2016     2017      2017     2018  
                  (unaudited)  

Expected dividend yield

     —         —          —         —    

Expected volatility

     57.6 - 62.8     40.7 - 57.1      56.3 - 57.0 %     48.3 - 52.9

Risk-free interest rate

     1.14 - 1.93     1.92 - 2.1      2.02 - 2.10     2.32 - 2.61

Expected term (years)

     6.02 - 6.08       5.02 – 6.08        6.02 - 6.08       6.08  

The Company recorded stock-based compensation expense in the consolidated statement of operations as follows for the dates indicated (in thousands):

 

     Year ended
December 31,
     Six Months Ended
June 30,
 
     2016      2017      2017      2018  
                   (unaudited)  

Cost of net revenue

   $ 134      $ 200      $ 65      $ 124  

Product development

     2,020        2,411        836        1,348  

Sales, marketing and support

     1,767        2,364        774        1,578  

General and administrative

     4,610        5,883        2,086        5,058  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 8,531      $ 10,858      $ 3,761      $ 8,108  
  

 

 

    

 

 

    

 

 

    

 

 

 

Restricted Stock Units

In 2011, the Company granted 802,900 shares of RSUs to one of its executive officers. The RSUs will fully vest upon the occurrence of a qualifying event, defined as a change of control or initial public offering of the Company under the Securities Act of 1933, as amended, within six years of the grant date. There is no time or

 

F-41


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

service condition. On November 3, 2017, the Restricted Stock Unit Agreement was amended to modify the expiration date of November 9, 2017 to December 31, 2017. As of December 31, 2017, the Company has not recognized any stock-based compensation expense related to these RSUs as the performance conditions have not yet been met and the RSUs expired on December 31, 2017. However, had the IPO been completed on December 31, 2017, the Company would have recognized $5.9 million of stock-based compensation expense, based on the fair value of the award when it was modified. On January 1, 2018, the Company granted RSUs with identical terms and conditions to the same executive officer with an expiration date of December 31, 2024. As of June 30, 2018 (unaudited), the Company has not recognized any stock-based compensation related to these RSUs as the performance conditions have not yet been met. However, had the IPO been completed on June 30, 2018 (unaudited), the Company would have recognized $6.9 million of stock-based compensation expense, based on the fair value of the award when it was granted.

In May 2018, the Company granted a total of 230,000 shares of RSUs to certain individuals. These RSUs have both a service and performance condition. The service condition is satisfied by continued employment with the Company and these shares will lapse over a period of four years. The performance condition is the occurrence of a qualifying event, defined as a change of control or initial public offering of the Company under the Securities Act of 1933, as amended, within 10 years of the grant date. As the performance condition has not been satisfied as of June 30, 2018 (unaudited), no stock-based compensation expense has been recognized related to these RSUs. Had the IPO been completed on June 30, 2018 (unaudited), the Company would have recognized an immaterial amount of stock-based compensation expense, based on the fair value of the award when it was granted and the satisfaction of the portion of the service condition that had lapsed as of June 30, 2018 (unaudited).

Treasury Stock

The Company has recorded repurchases of common stock as treasury shares at cost in the stockholders’ deficit section of the consolidated balance sheet.

Sales of the Company’s Stock

In May 2018, employees and former employees of the Company sold an aggregate of 1,312,372 shares of the Company’s common stock to entities affiliated with an existing investor at a purchase price of $13.12 per share, for an aggregate purchase price of $17.2 million. The purchase price was in excess of the fair value of such shares. As a result, during the six months ended June 30, 2018, the Company recorded the excess of the purchase price above fair value of $2.2 million as compensation expense (unaudited).

 

F-42


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

14. Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. The diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period. The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data):

 

    Year Ended
December 31,
    Six Months Ended
June 30,
 
    2016     2017     2017     2018  
                (unaudited)  

Net loss

  $ (40,392   $ (38,547   $ (8,346   $ (15,580

Weighted-average shares used in computing net loss per share, basic and diluted

    16,291       19,500       18,961       21,289  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share, basic and diluted

  $ (2.48   $ (1.98   $ (0.44   $ (0.73
 

 

 

   

 

 

   

 

 

   

 

 

 

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect (in thousands):

 

    Year Ended
December 31,
    Six Months Ended
June 30,
 
    2016     2017     2017     2018  
                (unaudited)  

Redeemable convertible preferred stock
(on an if-converted basis)

    33,446       41,628       33,446       41,628  

Stock-options to purchase common stock

    13,709       18,741       15,598       18,443  

Redeemable convertible preferred stock warrants

    —         618       437       933  

Restricted stock units

    803       803       803       1,033  

Early exercised options

    151       103       127       79  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

    48,109       61,893       50,411       62,116  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

F-43


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Unaudited Pro Forma Net Loss Per Share

The following table sets forth the computation of the Company’s unaudited pro forma basic and diluted net loss per share attributable to common stockholders for the year ended December 31, 2017 and six months ended June 30, 2018 has been computed to give effect to the automatic conversion of the redeemable convertible preferred stock, the remeasurement and assumed automatic exercise of the redeemable convertible preferred stock warrants into common stock and the vesting and net settlement of RSUs subject to performance conditions upon consummation of a qualified IPO as if it occurred as of January 1, 2017 (in thousands, except per share data):

 

     Year Ended
December 31, 2017
     Six Months Ended
June 30, 2018
 

Numerator

     

Net loss attributable to common stockholders

   $ (38,547    $ (15,580

Add: change in fair value of redeemable convertible preferred stock warrant liabilities

     2,200        6,071  
  

 

 

    

 

 

 

Net loss used in calculating pro forma earnings per share attributable to common stockholders, basic and diluted

   $ (36,347    $ (9,509
  

 

 

    

 

 

 

Denominator

     

Weighted-average shares used in computing net loss per common share, basic and diluted

     19,500        21,289  

Pro forma adjustment to reflect assumed conversion of redeemable convertible preferred stock

     

Pro forma adjustment to reflect assumed vesting of RSUs outstanding, net of shares withheld for tax withholding obligations

     

Pro forma adjustment to reflect assumed exercise of redeemable convertible preferred stock warrants

     276        843  
  

 

 

    

 

 

 

Weighted-average shares of common stock used in computing pro forma net loss per share attributable to common stockholders, basic and diluted

     
  

 

 

    

 

 

 

Pro forma net loss per share attributable to common stockholders, basic and diluted

   $        $    
  

 

 

    

 

 

 

 

F-44


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

Supplemental Unaudited Pro Forma Net Loss Per Share

Supplemental unaudited pro forma basic and diluted net loss per share were computed to give effect to the automatic conversion of the redeemable convertible preferred stock, the remeasurement and assumed automatic exercise of the preferred stock warrants into common stock and the vesting of RSUs subject to a performance condition upon consummation all of which will occur upon completion of this offering as well as the number of additional shares that would have been required to be issued to repay the outstanding loan facilities, including prepayment penalties, and of $         million and          million at December 31, 2017 and June 30, 2018, respectively, assuming the issuance of such shares at the initial public offering price of $        , the midpoint of the price range set forth on the cover page of the Company’s initial public offering prospectus. The numerator in the supplemental pro forma basic and diluted net income per share calculation has been adjusted to include the pro forma adjustments discussed above and to reverse interest expense on the loan facilities, which is assumed to be repaid using a portion of the net proceeds of the Company’s initial public offering of its common stock.

The following table presents the calculations of unaudited supplemental pro forma basic and diluted net loss per share (in thousands, except share and per share data):

 

     Year Ended
December 31, 2017
    Six Months
Ended
June 30, 2018
 

Numerator

    

Net loss used in calculating pro forma earnings per share attributable to common stockholders, basic and diluted

   $ (36,347   $ (9,509

Less: pro forma adjustment to reverse interest expense related to repayment of term loan facilities

    
  

 

 

   

 

 

 

Net loss used in calculating supplemental pro forma net loss per share attributable to common stockholders, basic and diluted

   $                   $                
  

 

 

   

 

 

 

Denominator

    

Weighted-average shares of common stock used in computing pro forma net loss per share attributable to common stockholders, basic and diluted

    

Pro forma adjustment to include additional shares required to be issued to generate proceeds to repay term loan facilities

    
  

 

 

   

 

 

 

Weighted-average shares of common stock used in computing supplemental pro forma net loss per share attributable to common stockholders, basic and diluted

    
  

 

 

   

 

 

 

Supplemental pro forma net loss per share attributable to common shareholders, basic and diluted

   $                   $                
  

 

 

   

 

 

 

 

F-45


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

15. Income Taxes

Loss before provision for (benefit from) income taxes consisted of the following for the periods indicated (in thousands):

 

     Year Ended December 31,  
     2016      2017  

Domestic

   $ (37,901    $ (31,681

International

     (2,360      (6,879
  

 

 

    

 

 

 

Total

   $ (40,261    $ (38,560
  

 

 

    

 

 

 

The components of the Company’s income tax provision (benefit) were as follows for the periods indicated (in thousands):

 

     Year Ended December 31,  
       2016          2017    

Current tax expense

     

Federal

   $ —        $ —    

State

     19        109  

Foreign

     170        278  
  

 

 

    

 

 

 

Total current tax expense

   $ 189        387  
  

 

 

    

 

 

 

Deferred tax expense

     

Federal

   $ 15      $ 99  

State

     1        55  

Foreign

     (74      (554
  

 

 

    

 

 

 

Total deferred tax expense

     (58      (400
  

 

 

    

 

 

 

Total income tax provision (benefit)

   $ 131      $ (13
  

 

 

    

 

 

 

The reconciliation of the Federal statutory income tax provision to the Company’s effective income tax provision is as follows for the periods indicated (in thousands):

 

     Year Ended December 31,  
     2016      2017  

Federal tax benefit at statutory rate

   $ (13,733    $ (13,147

State tax

     20        2,009  

Foreign rate differential

     1,125        2,513  

Non-deductible permanent items

     693        1,142  

Stock-based compensation

     2,184        1,950  

Tax credits

     —          (1,702

Change in valuation allowance

     9,842        (14,653

Tax Act – revaluation of deferred taxes

     —          21,875  
  

 

 

    

 

 

 

Total income tax provision (benefit)

   $ 131      $ (13
  

 

 

    

 

 

 

On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the Tax Act) was passed into law. The Tax Act provides broad and significant changes to the U.S. tax code and how the United States imposes income tax on

 

F-46


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

multinational corporations. The Tax Act requires complex computations that were not previously provided for under U.S. tax law. These computations require significant judgments to be made regarding the interpretation of the provisions within the Tax Act along with preparation and analysis of information not previously required. In conjunction with the Tax Act, the SEC issued Staff Accounting Bulletin (SAB) 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The Company has calculated an estimate of the impact of the Tax Act in its year-end income tax provision in accordance with its understanding of the Tax Act and guidance available as of the date of this filing. In accordance with SAB 118, the Company recorded a $21.9 million reduction to deferred tax assets and related valuation allowance in connection with the re-measurement of certain deferred tax assets and liabilities, resulting in no impact to the consolidated statement of operations. The effect of the change in federal corporate tax rate from 35% to 21% is subject to change based on resolution of estimates used in determining the amounts of deferred tax assets and liabilities that were remeasured. The Company will reflect any adjustments to the provisional amounts in the period the accounting is completed and expects to complete this analysis within the one-year measurement period provided by SAB 118. The Company’s provisional analysis of the one-time transition tax liability for its foreign subsidiaries pursuant to the Tax Act did not result in additional taxes being owed. As of December 31, 2017, the Company had an immaterial amount of unremitted earnings related to certain foreign subsidiaries. The Company intends to continue to reinvest its foreign earnings indefinitely and does not expect to incur any significant taxes related to such amounts. As of June 30, 2018 (unaudited), the Company has not made additional measurement period adjustments related to provisional amounts recorded as of December 31, 2017.

The Company’s deferred tax assets and liabilities as of the dates indicated were as follows (in thousands):

 

     December 31,  
     2016      2017  

Deferred tax assets

     

Net operating loss

   $ 48,226      $ 39,970  

Accrual and reserves

     5,140        7,845  

Tax credit carry-forward

     1,413        6,683  

Stock-based compensation

     3,490        3,642  

Depreciation and amortization

     1,801        2,593  
  

 

 

    

 

 

 

Total deferred tax assets

     60,070        60,733  

Valuation allowance

     (59,806      (58,748
  

 

 

    

 

 

 

Net deferred tax assets

     264        1,985  

Deferred tax liabilities

     

Depreciation and amortization

     (210      (3,925
  

 

 

    

 

 

 

Net deferred taxes

   $ 54      $ (1,940
  

 

 

    

 

 

 

The Company regularly assesses the realizability of its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to the Company’s history of net operating losses, the Company believes it is more likely than not that the vast majority of its federal, state and foreign deferred tax assets will not be realized as of December 31, 2016 and 2017. The total valuation allowance recorded as of December 31, 2016 and 2017 was $59.8 million and $58.7 million, respectively.

 

F-47


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

As of December 31, 2016 and 2017, the Company has net operating loss carryforwards for federal income tax purposes of $131.2 million and $135.9 million respectively available to reduce future taxable income. The federal net operating loss carryforwards will begin to expire, if not utilized, in 2025. In addition, the Company has $42.9 million and $46.0 million of net operating loss carryforwards available to reduce future taxable income for California state income tax purposes for the year ended December 31, 2016 and 2017, respectively. The state net operating loss carryforwards will begin to expire, if not utilized, in 2023.

Excess tax benefits associated with stock option exercises and other equity awards are credited to stockholders’ equity in the period cash taxes payable is reduced. As of December 31, 2017, the portion of net operating loss carryforwards related to stock awards for federal and California was $14.0 million and $3.1 million, respectively, the benefit of which will be credited to additional paid-in capital when realized. The federal and state net operating loss carryforwards are subject to various annual limitations under Section 382 of the Internal Revenue Code and similar state provisions.

As of December 31, 2017, the Company had Federal and California Research and Development credits of $6.0 million and $5.0 million, respectively. The Federal Research and Development Credits will begin to expire, if not utilized, in 2031. The California Research and Development credits do not expire as it has an indefinite life. As of December 31, 2016 and 2017, the Company had California EZ Hiring Tax Credits of $2.1 million and $2.2 million, respectively. The California Hiring Tax Credits will begin to expire, if not utilized, in 2019.

As of December 31, 2016 and 2017, the Company had unrecognized tax benefits of zero and $5.5 million, respectively, which would not affect the effective tax rate because of the Company’s valuation allowance position. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows (in thousands):

 

Balance as of December 31, 2016

   $ —    

Gross amount of increase in unrecognized tax benefits for tax positions taken in current year

     1,526  

Gross amounts of increases in unrecognized tax benefits for tax positions taken in prior year

     3,970  
  

 

 

 

Balance as of December 31, 2017

   $ 5,496  
  

 

 

 

The Company classifies uncertain tax positions as non-current income tax liabilities unless expected to be paid within one year or otherwise directly related to an existing deferred tax asset, in which case the uncertain tax position is recorded net of the asset on the consolidated balance sheet. As of December 31, 2017, $5.5 million of the Company’s gross unrecognized tax benefits were recorded as a reduction of the related deferred tax assets.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of its provision for income taxes. The amount of interest and penalties accrued as of December 31, 2016 and 2017 was $0.

The Company does not anticipate its total unrecognized tax benefits will significantly change due to settlement of examination or the expiration of statute of limitations during the next 12 months.

The Company files income tax returns in the U.S. federal jurisdiction as well as many U.S. states and certain foreign jurisdictions. Material jurisdictions where the Company is subject to potential examination include the United States, United Kingdom and Netherlands. The Company is subject to examination in these jurisdictions for all years since 2006. Fiscal years outside the normal statute of limitations remain open to audit due to tax attributes generated in the early years which have been carried forward and may be audited in subsequent years when utilized. The Company is not currently under examination for income taxes in any jurisdiction.

 

F-48


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

16. Revenue by Geography

The following table presents the Company’s total net revenue by geography based on the currency of the underlying transaction (in thousands):

 

     Year Ended
December 31,
     Six Months Ended
June 30,
 
     2016      2017      2017      2018  
                   (unaudited)  

United States

   $ 97,454      $ 141,118      $ 61,804      $ 104,491  

International

     36,045        60,479        26,349        37,577  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net revenue

   $ 133,499      $ 201,597      $ 88,153      $ 142,068  
  

 

 

    

 

 

    

 

 

    

 

 

 

No individual country included in the International line above represents more than 10% of the total consolidated net revenue for 2016, 2017 or the six months ended June 30, 2017 and 2018 (unaudited). Substantially all of the Company’s long-lived assets are located in the United States.

17. Retirement Plans

The Company has a 401(k) retirement and savings plan made available to all United States employees. The 401(k) plan allows each participant to contribute up to an amount not to exceed an annual statutory maximum. The Company may, at its discretion, make matching contributions to the 401(k) plan. The Company is responsible for the administrative costs of the 401(k) plan and has not made any contributions to the 401(k) plan since inception.

18. Subsequent Events

The Company evaluated events subsequent to December 31, 2017 through June 15, 2018, the date at which the consolidated financial statements were available to be issued.

In March 2018, the Company reached an agreement with the seller of Ticketfly to repay the Promissory Note. The face value of $50.0 million was settled in full for $34.7 million which represented $33.0 million of principal and $1.7 million of accrued interest. The Company is currently evaluating the accounting for this transaction. See Note 3 for a description of the final accounting for this transaction during the six months ended June 30, 2018 (unaudited).

In March 2018, the Company borrowed an additional $30.0 million under the Loan Facility which bears interest at 11.75% annually and has a maturity date of September 2022. In connection with this borrowing and as discussed in Note 10, the Company issued warrants to purchase 205,995 shares of redeemable convertible preferred stock.

In April 2018, the Company acquired Ticketea for approximately €12.0 million consisting of cash and shares of the Company’s common stock. The Company is currently evaluating the accounting for the Ticketea transaction, including the purchase price allocation. See Note 3 for a description of the final accounting for this transaction during the six months ended June 30, 2018 (unaudited).

In May 2018, the Company entered into a second loan and security agreement with WTI and issued additional warrants to purchase shares of redeemable convertible preferred stock with an exercise price of $16.38. The secured credit facility provides up to $15.0 million of term debt, and the Company borrowed $15.0 million as a term loan under the facility in May 2018. This debt bears interest at 12.0% annually and has a maturity date of November 2022. The redeemable convertible preferred stock warrants are exercisable into 109,288 shares of Series G redeemable convertible preferred stock.

 

F-49


Table of Contents

EVENTBRITE, INC.

Notes to Consolidated Financial Statements

(continued)

 

In May 2018, employees and former employees of the Company sold an aggregate of 1,312,372 shares of the Company’s common stock to entities affiliated with existing investor at a purchase price of $13.12 per share, for an aggregate purchase price of $17.2 million. The Company is currently evaluating the accounting for this transaction. See Note 13 for a description of the final accounting for this transaction during the six months ended June 30, 2018 (unaudited).

In May 2018, the Company entered into a 10 year lease for office space in Cork, Ireland. Monthly rent payments are due beginning in January 2019 and will total approximately $0.4 million per year. The lease expires in 2028.

19. Subsequent Events (unaudited)

The Company has evaluated subsequent events through August 10, 2018, which is the date the unaudited interim consolidated financial statements were issued.

In July 2018, the Company granted 4,878,897 stock options to purchase common stock with an exercise price of $13.72 per share. These stock options have an aggregate grant date fair value of $45.6 million that is expected to be recognized over a weighted-average period of 4.0 years.

In August 2018, the Company acquired Picatic E-Ticket Inc., a Vancouver-based ticketing and event registration platform, for a purchase price of CAD $1.8 million in cash and 0.1 million shares of the Company’s common stock, less certain adjustments and holdbacks related to working capital requirements and breaches of representations, warranties and covenants. The Company is in the process of evaluating the accounting for this transaction.

 

F-50


Table of Contents

Report of Independent Auditors

To the Board of Directors and Members of Ticketfly, LLC

We have audited the accompanying consolidated financial statements of Ticketfly, LLC and its subsidiary, which comprise the consolidated balance sheets as of August 31, 2017 and December 31, 2016, and the related consolidated statements of operations and comprehensive loss, of statements of member’s equity, and of cash flows for the periods then ended.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ticketfly, LLC and its subsidiary as of August 31, 2017 and December 31, 2016, and the results of their operations and their cash flows for the periods then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ PricewaterhouseCoopers LLP

San Jose, California

June 15, 2018

 

F-51


Table of Contents

TICKETFLY, LLC

Consolidated Balance Sheets

(in thousands)

 

     December 31,
2016
     August 31,
2017
 

Assets

     

Current assets

     

Cash

   $ 16,874      $ 22,094  

Funds receivable

     4,425        3,235  

Accounts receivable, net

     1,567        1,024  

Creator advances, net

     5,876        8,564  

Prepaid expenses and other current assets

     2,080        1,788  
  

 

 

    

 

 

 

Total current assets

     30,822        36,705  

Property and equipment, net

     5,016        4,448  

Goodwill

     233,106        101,436  

Acquired intangible assets, net

     62,782        54,697  

Restricted cash

     1,876        1,235  

Creator signing fees

     15,357        18,723  

Other assets

     16        15  
  

 

 

    

 

 

 

Total assets

   $ 348,975      $ 217,259  
  

 

 

    

 

 

 

Liabilities and Member’s Equity

     

Current liabilities

     

Accounts payable, creators

   $ 21,538      $ 29,909  

Accounts payable, trade

     268        226  

Accrued compensation and benefits

     2,033        1,759  

Other accrued liabilities

     5,116        7,016  
  

 

 

    

 

 

 

Total current liabilities

     28,955        38,910  

Other liabilities

     189        240  
  

 

 

    

 

 

 

Total liabilities

     29,144        39,150  
  

 

 

    

 

 

 

Commitments and contingencies (Note 6)

     

Member’s equity

     

Member’s capital

     319,484        177,687  

Accumulated other comprehensive income

     347        422  
  

 

 

    

 

 

 

Total member’s equity

     319,831        178,109  
  

 

 

    

 

 

 

Total liabilities and member’s equity

   $ 348,975      $ 217,259  
  

 

 

    

 

 

 

See accompanying notes to the consolidated financial statements.

 

F-52


Table of Contents

TICKETFLY, LLC

Consolidated Statements of Operations and Comprehensive Loss

(in thousands)

 

     Year Ended
December 31,
2016
    Eight
Months Ended
August 31, 2017
 

Net revenue

   $ 40,595     $ 33,499  

Cost of net revenue

     24,154       18,807  
  

 

 

   

 

 

 

Gross profit

     16,441       14,692  
  

 

 

   

 

 

 

Operating expenses

    

Product development

     16,192       14,024  

Sales, marketing and support

     17,560       14,441  

General and administrative

     18,612       20,866  

Goodwill impairment

     —         131,700  
  

 

 

   

 

 

 

Total operating expenses

     52,364       181,031  
  

 

 

   

 

 

 

Loss from operations

     (35,923     (166,339

Interest income (expense), net

     (6     8  
  

 

 

   

 

 

 

Net loss

   $ (35,929   $ (166,331
  

 

 

   

 

 

 

Other comprehensive income

    

Foreign currency translation adjustment

     (378     (75
  

 

 

   

 

 

 

Total comprehensive loss

   $ (35,551   $ (166,256
  

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

F-53


Table of Contents

TICKETFLY, LLC

Consolidated Statements of Member’s Equity

(in thousands)

 

     Member’s
Capital
    Accumulated
Other
Comprehensive
Income (Loss)
    Total Member’s
Equity
 

Balance, January 1, 2016

   $ 324,342     $ (31   $ 324,311  

Contributions from member

     31,071       —         31,071  

Net loss

     (35,929     —         (35,929

Foreign currency translation adjustment

     —         378       378  
  

 

 

   

 

 

   

 

 

 

Balance, December 31, 2016

     319,484       347       319,831  

Contributions from member

     24,534       —         24,534  

Net loss

     (166,331     —         (166,331

Foreign currency translation adjustment

     —         75       75  
  

 

 

   

 

 

   

 

 

 

Balance, August 31, 2017

   $ 177,687     $ 422     $ 178,109  
  

 

 

   

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

F-54


Table of Contents

TICKETFLY, LLC

Consolidated Statements of Cash Flows

( in  thousands )

 

     Year Ended
December 31,

2016
    Eight Months
Ended
August 31, 2017
 

Cash flows from operating activities

    

Net loss

   $ (35,929   $ (166,331

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     14,264       9,814  

Goodwill impairment

     —         131,700  

Amortization of creator signing fees

     5,720       5,576  

Provision for bad debt

     280       5,859  

Stock-based compensation

     9,083       6,941  

Changes in operating assets and liabilities:

    

Accounts receivable

     (804     55  

Funds receivable

     (1,810     1,190  

Creator signing fees, noncurrent

     (5,533     (3,366

Creator advances, net

     (7,779     (8,649

Prepaid expenses and other current assets

     (117     (4,694

Other assets

     6       1  

Accounts payable, creators

     8,632       8,371  

Accounts payable, trade

     (516     (30

Accrued compensation and benefits

     466       (274

Other accrued liabilities

     (4,911     1,952  
  

 

 

   

 

 

 

Net cash used in operating activities

     (18,948     (11,885
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchase of property and equipment

     (2,626     (1,169

Cash used for acquisitions

     (688     —    
  

 

 

   

 

 

 

Net cash used in investing activities

     (3,314     (1,169
  

 

 

   

 

 

 

Cash flows from financing activities

    

Contributions from Member

     21,988       17,593  

Payments on capital lease obligations

     (104     —    
  

 

 

   

 

 

 

Net cash provided by financing activities

     21,884       17,593  
  

 

 

   

 

 

 

Effect of foreign currency translation on cash and restricted cash

     375       40  
  

 

 

   

 

 

 

Net increase (decrease) in cash and restricted cash

     (3     4,579  

Cash and restricted cash

    

Beginning of year

   $ 18,753     $ 18,750  
  

 

 

   

 

 

 

End of period

   $ 18,750     $ 23,329  
  

 

 

   

 

 

 

Supplemental cash flow data

    

Non-cash contribution from member

   $ 9,083     $ 6,941  

See accompanying notes to the consolidated financial statements.

 

F-55


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

1. Organization

Ticketfly, LLC and its subsidiary (Ticketfly or the Company) is headquartered in San Francisco, California and is a progressive ticketing company that makes it easy to discover events, buy tickets, and share events with friends. The Company works with various venues and promoters throughout the United States and Canada. During the periods presented, Ticketfly was a wholly-owned subsidiary of Pandora Media, Inc. (Pandora).

Ticketfly services are available through multiple distribution channels, including the Ticketfly website, the websites of its venue and promoter clients, venue box offices and the Ticketfly website optimized for mobile devices. Tickets for events are delivered to customers through a variety of delivery methods, including mail, will call, print at home and mobile tickets, which are delivered electronically and presented by customers on their mobile devices upon arrival to the venues.

2. Summary of significant accounting policies

Basis of Presentation

The consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP). The consolidated financial statements include the accounts of the Company and its wholly-owned Canadian subsidiary. All intercompany balances and transactions have been eliminated in consolidation. Assets and liabilities that are specifically identifiable or otherwise attributable to the Company, such as intangible assets, are included in the consolidated balance sheets. Debt, and related interest expense, held by Pandora, has not been allocated to Ticketfly for any of the periods presented as these borrowings were not directly attributable to the Company’s operations.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. These estimates include, but are not limited to, expense allocations, the recoverability of deferred costs, assumptions used in determining the fair value of assets and liabilities, the allowance for doubtful accounts, indirect tax reserves and contra revenue amounts related to fraudulent events, customer disputed transactions and refunds. The Company evaluates these estimates on an ongoing basis. Actual results could differ from those estimates and such differences could be material to the Company’s consolidated financial statements.

Expense Allocations

Ticketfly was operated (independently and distinctly) during its ownership by Pandora. However, the consolidated financial statements include general corporate expenses of Pandora that were not historically charged to the Company for certain support functions that were provided on a centralized basis including, but not limited to, executive oversight, insurance, and audit and tax services. These general corporate expenses were included in the accompanying statements of consolidated operations within general and administrative and sales, marketing and support. The costs of such services have been allocated based on the most relevant allocation method to the service provided, primarily based on relative percentage of revenue. The Company believes the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by Ticketfly during the periods presented.

 

F-56


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

Nevertheless, the consolidated financial statements of the Company may not include all of the actual expenses that would have been incurred and may not reflect the Company’s consolidated results of operations, financial position, and cash flows had it been a standalone company during the periods presented. Actual costs that would have been incurred if the Company had been a standalone company would depend on multiple factors, including organizational structure, capital structure, and strategic decisions made in various areas.

Revenue recognition

Revenue is generated primarily from service and merchant processing fees generated on ticket sales through the Ticketfly platform. The Company sells tickets to fans for events on behalf of clients and charges a fee per ticket, which generally increases as the face value of the ticket increases, or a percentage of the total convenience charge and order processing fee, for its services at the time the ticket for an event is sold. Ticketing service revenue is recorded net of the face value of the ticket at the time of the sale, as the Company generally acts as an agent with respect to the ticket price in these transactions.

The Company’s revenue is derived from its service fees and payment processing fees and is recognized as tickets for an event are sold since the Company believes that is when all the following conditions are met:

 

   

There is persuasive evidence of an arrangement;

 

   

The service has been provided to the customer;

 

   

The collection of the fees is reasonably assured; and

 

   

The amount of fees to be paid is fixed or determinable.

Revenue is presented net of sales taxes, value added taxes and reserves for customer refunds and payment chargebacks. If an event is cancelled by an organizer (creator), then any obligations to provide refunds to event attendees are the responsibility of that creator. If a creator is unwilling or unable to fulfill their refund obligations, the Company may, at its discretion, provide attendee refunds and would reverse the revenue recognized.

Revenue is also presented net of the amortization of creator signing fees. The benefit the Company receives by securing exclusive ticketing and payment processing rights with certain creators from these payments is inseparable from the customer relationship with the creator and accordingly these payments are recorded as a reduction of revenue.

Cost of Net Revenue

Cost of revenue consists primarily of transaction processing fees, amortization of intangibles, platform and website hosting costs, allocated customer support costs and field operations costs.

Cash and Restricted Cash

Cash includes bank deposits held by financial institutions. Included in the December 31, 2016 and August 31, 2017 cash balances of $16.2 million and $21.3 million, respectively, is the cash received for the face value of tickets sold on behalf of creators and their share of service charges, which amounts are to be remitted to the creators. The Company does not utilize creator cash for its own financing or investing activities as the amounts are payable to creators on a regular basis. These amounts due to creators are included in accounts payable, creators on the consolidated balance sheet.

 

F-57


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

The Company’s restricted cash relates to an unconditional, irrevocable letter of credit held for security deposit for its payment processor and its landlord and collateralized money market accounts with its commercial bank.

The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows (in thousands):

 

     December 31,
2016
     August 31,
2017
 

Cash

   $ 16,874      $ 22,094  

Restricted cash

     1,876        1,235  
  

 

 

    

 

 

 

Total cash and restricted cash

   $ 18,750      $ 23,329  
  

 

 

    

 

 

 

Funds Receivable

Funds receivable represents cash-in-transit from third-party payment processors from the date of the underlying ticketing transaction.

Accounts Receivable, Net

Accounts receivable, net is comprised of invoiced amounts to customers who use a third-party facilitated payment processor. Accounts receivables, net also includes subscription fees, amounts due from clients for refunds and chargebacks remitted to the ticket buyer, equipment rental fees and website fees. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivable amounts. In evaluating the reserve, the Company considers various factors including historical experience, the aging of balances and known factors about customers’ current financial conditions. Losses are written off when it is probable that the balance will not be collected.

Property and Equipment, Net

Property and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of assets, which ranges from two to five years. Maintenance and repair costs are charged to expense as incurred.

Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term of estimated useful life of the assets.

Costs of maintenance and repairs that do not improve or extend the life of the respective asset are expensed as incurred. Upon retirement or sale, the costs and related accumulated depreciation are removed from the consolidated balance sheet and the resulting gain or loss is reflected in operating expenses.

Business Combinations

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

 

F-58


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

In January 2016, the Company acquired TicketBreak, Ltd. (TicketBreak), a Canadian independent music company. This acquisition broadened the Company’s presence in the North American festival space as well as expanded its Canadian client base. The acquisition of TicketBreak has been accounted for as a business combination. The acquisition date fair value of the consideration transferred was $0.7 million, which was paid entirely in cash.

The total purchase price of this acquisition was allocated to the assets acquired and liabilities assumed based on their fair value as of the acquisition date. The excess of the purchase price over the net assets acquired was recorded as goodwill, which is deductible for tax purposes. Goodwill is attributable to the assembled workforce and synergies from the future growth and strategic advantages in the festival space.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):

 

Intangible assets

   $ 223  

Goodwill

     465  
  

 

 

 

Total purchase price

   $ 688  
  

 

 

 

The following table sets forth the components of identifiable intangible assets acquired (in thousands) and their estimated useful lives as of the date of acquisition:

 

     Amount      Useful lives  

Customer relationships

   $ 97        2 years  

Developed technology

     111        2 years  

Trademark

     15        2 years  
  

 

 

    

Total intangible assets

   $ 223     
  

 

 

    

Goodwill

Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the assets acquired, net of liabilities assumed. Goodwill is not amortized, but is evaluated for impairment annually on the first day of the fourth quarter, or more frequently if events or changes in circumstances indicate the goodwill may be impaired.

Events or changes in circumstances which could trigger an impairment review include significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business,

 

F-59


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

significant negative industry or economic trends, significant underperformance relative to historical or projected future results of operations, a significant adverse change in the business climate, an adverse action or assessment by a regulator, unanticipated competition or a loss of key personnel.

The Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if an entity concludes otherwise, then it is required to perform the first of a two-step impairment test.

The first step involves comparing the estimated fair value of the reporting unit with its respective book value, including goodwill. If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary. If, however, the fair value of the reporting unit is less than book value, then a second step is required that compares the carrying amount of the goodwill with its implied fair value. The estimate of implied fair value of goodwill may require valuations of certain internally-generated and unrecognized intangible and tangible net assets. If the carrying amount of goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess.

Acquired Intangible Assets, Net

Acquired intangible assets, net consists of identifiable intangible assets, consisting of developed technology, customer relationships and trade names resulting from the Company’s acquisitions. Acquired intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated economic lives following the pattern in which the economic benefits of the assets will be consumed, determined to be straight-line. Acquired intangible assets are presented net of accumulated amortization in the consolidated balance sheet.

Impairment of Long-Lived Assets

The carrying amounts of long-lived assets, including property and equipment, capitalized internal-use software, creator signing fees, creator advances and acquisition-related intangible assets, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to future undiscounted net cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the revised shorter useful life. No impairment charges were recorded during the periods presented.

Stock-Based Compensation Expense

The Company’s employees were eligible to participate in Pandora’s equity incentive plans. Pandora issued RSUs and stock options to the Company’s employees, both of which vest over four years. Stock-based compensation expense associated with RSUs is based on the fair value of Pandora’s common stock on the date of grant. Stock-based compensation expense associated with stock options is based on the estimated grant date fair value method using the Black-Scholes option valuation model. The Company recognizes compensation expense on a straight-line basis over the respective vesting period for awards with forfeitures recognized as they occur.

 

F-60


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

Fair Value Measurements

The Company measures its financial assets and liabilities at fair value at each reporting date using a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

 

Level 1    Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2    Other inputs that are directly or indirectly observable in the marketplace.
Level 3    Unobservable inputs that are supported by little or no market activity.

The Company’s funds receivable, accounts receivable, accounts payable and other current liabilities approximate their fair value due to the relatively short maturity of these accounts.

Leases

The Company leases office space under noncancelable lease agreements which are accounted for as operating leases. Rental expense is recorded on a straight-line basis over the lease term. If a lease provides for fixed escalations of the minimum rental payments, the difference between the straight-line rent charged to expense and the amount payable under the lease is recognized as deferred rent.

Creator Signing Fees, Net

Creator signing fees, net represent contractual amounts paid to creators pursuant to event ticketing and payment processing agreements. Creator signing fees are additional incentives paid by the Company to secure exclusive ticketing and payment processing rights with certain creators. These payments are amortized over the life of the contract to which they relate on a straight-line basis. Amortization of creator signing fees is recorded as a reduction of revenue in the consolidated statements of operations. Creator signing fees are presented net of reserves and allowances for potentially unrecoverable amounts on the consolidated balance sheets.

Creator Advances, Net

Creator advances, net represent contractual amounts paid to creators pursuant to event ticketing and payment processing agreements. Creator advances provide the creator with funds in advance of the event and are subsequently recovered by withholding amounts due to the Company from the sale of tickets for the event until the creator payment has been fully recovered. Creator advances are presented net of reserves and allowances for potentially unrecoverable amounts on the consolidated balance sheets.

Accounts Payable, Creators

Accounts payable, creators consist of unremitted ticket sale proceeds, net of Ticketfly service fees. Amounts are remitted to creators within seven business days subsequent to the completion of the related event. In certain situations, at the request of the customer, the Company may remit ticket sale proceeds in advance of the related event.

 

F-61


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

Advertising

Advertising costs are charged to expense as incurred. The costs of developing advertising creative and trade show expenses are initially deferred and charged to expense in the period in which the advertising is displayed or the period the trade show occurs. Advertising expenses were $0.2 million and $0.1 million for the year ended December 31, 2016 and eight months ended August 31, 2017, respectively.

Income Taxes

The Company is a limited liability company treated as a disregarded entity for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the members. As such, no recognition of federal or state income taxes for the Company have been provided for in the accompanying consolidated financial statements. Any uncertain tax position taken by the member is not an uncertain position of the Company.

Foreign Currency Translation

The functional currency of the Company’s subsidiary is the Canadian dollar. The Company translates the financial statements of the subsidiary to U.S. dollars using the period-end exchange rates for assets and liabilities and average rates for the period derived from month-end exchange rates for revenue, costs and expenses. The Company records translation gains and losses in accumulated other comprehensive income or loss as a component of member’s equity.

Concentrations of Risk

Financial instruments potentially exposing the Company to concentrations of credit risk consist primarily of cash, funds receivable, accounts receivable, payments to creators and creator advance payouts. The Company holds its cash with high-credit-quality financial institutions; however, the Company maintains balances in excess of the FDIC insurance limits. The Company does not require their customers to provide collateral to support accounts receivable and maintains an allowance for accounts receivable balances that are doubtful of collection.

At December 31, 2016 and August 31, 2017, there were no customers that represented 10% or more of the Company’s accounts receivable balance. There were no customers that individually exceeded 10% of the Company’s net revenue for all periods presented.

Recently Issued Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. For public business entities that are SEC filers, this standard is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. For public business entities that are not SEC filers, this standard is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. For all other entities, this standard is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. The Company has elected to early adopt this guidance beginning in the second quarter of 2017 using the retrospective method.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share

 

F-62


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

based payment award require an entity to apply modification accounting in the ASU. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. This standard is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those periods. For all other entities, this standard is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The impact to the Company’s consolidated financial statements will depend on the facts and circumstances of any specific future transactions.

In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This standard clarifies that transfers between cash and restricted cash are not part of the entity’s operating, investing, and financing activities, and details of those transfers are not reported as cash flow activities in the statements of cash flows. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718), which simplifies several aspects of the accounting for share-based payment transactions. This standard requires companies to record excess tax benefits and tax deficiencies as income tax benefit or expense in the statement of operations when the awards vest, or are settled, and eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the statement of cash flows. This standard also allows an entity to make an accounting policy election to either estimate expected forfeitures or to account for them as they occur. For public business entities, this standard is effective for annual and interim reporting periods beginning after December 15, 2016. For all other entities, this standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities in any interim or annual period for which financial statements have not been issued or made available for issuance. The Company adopted this ASU beginning January 1, 2017. The adoption of this standard did not have a material impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) which requires lessees to put most leases on their balance sheets but recognize expenses on their income statement and eliminates the real estate specific provisions for all entities. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating implementation methods and the effect that implementation of this standard will have on its consolidated financial statements upon adoption.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40), which will supersede nearly all existing revenue recognition guidance. The core principle behind this standard is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering those goods and services. To achieve this core principle, the ASU provides a model, which involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining

 

F-63


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

the transaction price, allocating the transaction prices to the performance obligations in the contract, and recognizing revenue when (or as) the entity satisfies the performance obligations. The standard also provides guidance on the recognition of costs related to obtaining customer contracts.

This standard permits adoption either by using a full retrospective approach, in which all comparative periods are presented in accordance with the new standard, or a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. For public business entities, this standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early application is permitted for annual periods beginning after December 15, 2016. The Company has elected to adopt this standard as of January 1, 2019 using the full retrospective approach and does not expect the adoption of this standard to have a material impact on the consolidated financial statements.

3. Accounts receivable, net

The following table summarizes the Company’s accounts receivable balances (in thousands):

 

     December 31,
2016
     August 31, 2017  

Accounts receivable, customers

   $ 1,567      $ 1,512  

Allowance for doubtful debts

     —          (488
  

 

 

    

 

 

 

Accounts receivable, net

   $ 1,567      $ 1,024  
  

 

 

    

 

 

 

4. Goodwill and acquired intangible assets, net

During the eight-months ended August 31, 2017, the Company recognized a goodwill impairment charge of $131.7 million as a result of the decline in fair value of the Company as evidenced by its estimated selling price to a potential acquirer. The goodwill impairment charge was based on the fair value of the Company’s net assets and implied estimated selling price as of June 30, 2017. The change in the carrying amounts of goodwill for the year ended December 31, 2016 and the eight-months ended August 31, 2017 were as follows (in thousands):

 

At January 1, 2016

   $ 233,018  

Acquisition of TicketBreak

     88  
  

 

 

 

At December 31, 2016

     233,106  

Goodwill impairment

     (131,700

Currency translation adjustments

     30  
  

 

 

 

At August 31, 2017

   $ 101,436  
  

 

 

 

 

F-64


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

Acquired intangible assets consisted of the following as of the dates indicated (in thousands):

 

     December 31, 2016      Weighted-
average
remaining
useful life
 
     Cost      Accumulated
Amortization
     Net Book
Value
 

Developed technology

   $ 28,211      $ 6,628      $ 21,583        3.8  

Customer relationships

     38,397        6,086        32,311        6.7  

Tradenames

     10,415        1,527        8,888        6.8  
  

 

 

    

 

 

    

 

 

    

Acquired intangible assets, net

   $ 77,023      $ 14,241      $ 62,782     
  

 

 

    

 

 

    

 

 

    

 

     August 31, 2017      Weighted-
average
remaining
useful life
 
     Cost      Accumulated
Amortization
     Net Book
Value
 

Developed technology

   $ 28,211      $ 10,391      $ 17,820        3.2  

Customer relationships

     38,397        9,540        28,857        6.0  

Tradenames

     10,415        2,395        8,020        6.2  
  

 

 

    

 

 

    

 

 

    

Acquired intangible assets, net

   $ 77,023      $ 22,326      $ 54,697     
  

 

 

    

 

 

    

 

 

    

The Company recorded amortization expense related to acquired intangible assets as follows (in thousands):

 

     Year ended
December 31,
2016
     Eight
Months
Ended
August 31,
2017
 

Cost of net revenue

   $ 5,667      $ 3,763  

General and administrative

     6,512        4,322  
  

 

 

    

 

 

 

Total amortization of intangible assets

   $ 12,179      $ 8,085  
  

 

 

    

 

 

 

As of August 31, 2017, the total expected future amortization expense for acquired intangible assets is as follows (in thousands by fiscal year):

 

Remaining 4 months of fiscal 2017

  $ 3,968  

2018

    11,625  

2019

    11,601  

2020

    10,645  

2021

    5,963  

2022 and beyond

    10,895  
 

 

 

 

Acquired intangible assets, net

  $ 54,697  
 

 

 

 

 

F-65


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

5. Property and equipment, net

Property and equipment, net consisted of the following (in thousands):

 

     December 31,
2016
     August 31, 2017  

Computers and computer equipment

   $ 4,447      $ 5,571  

Leasehold improvements

     1,883        1,895  

Furniture and fixtures

     732        760  

Other

     341        343  
  

 

 

    

 

 

 
     7,403        8,569  

Less: Accumulated depreciation

     (2,387      (4,121
  

 

 

    

 

 

 

Property and equipment, net

   $ 5,016      $ 4,448  
  

 

 

    

 

 

 

Depreciation expense totaled $2.0 million and $1.7 million for the year ended December 31, 2016 and eight months ended August 31, 2017, respectively.

6. Commitments and contingencies

Operating leases

The Company leases office space under a noncancelable operating lease that expires in May 2022. Rent expense from the operating lease totaled $2.3 million and $1.4 million for the year ended December 31, 2016 and eight months ended August 31, 2017, respectively.

As of August 31, 2017, the future minimum lease payments under noncancelable leases are as follows (in thousands):

 

Remaining four months of 2017

   $ 506  

2018

     1,543  

2019

     1,589  

2020

     1,637  

2021

     1,686  

2022

     711  
  

 

 

 

Total future minimum lease payments

   $ 7,672  
  

 

 

 

Letters of Credit

As of August 31, 2017, the Company had a letter of credit for $0.8 million outstanding related to the lease of its office space. The letter of credit is collateralized by the Company’s restricted cash balance and other bank balances.

Creator Signing fees and creator advances

Creator signing fees and creator advances represent contractual amounts paid in advance to customers pursuant to event ticketing and payment processing agreements. Certain of the Company’s contracts include terms where future payments to creators are committed to as part of the overall ticketing arrangement. As of August 31, 2017, the total amount of future creator payments committed to under contract but not yet paid was $9.2 million.

 

F-66


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

Litigation and Loss Contingencies

The Company accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. From time to time, the Company may become a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims and threatened claims, breach of contract claims, tax and other matters. The Company currently has no material pending litigation.

As of the date these financial statements were available to be issued, the Company does not believe that any ultimate liability resulting from any of these matters will have a material adverse effect on its business, consolidated financial position, results of operations or cash flows. However, the outcome of these matters is inherently uncertain. Therefore, if one or more of these matters were resolved against the Company for amounts in excess of management’s expectations, the Company’s financial statements, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected.

Indemnifications

In the ordinary course of business, the Company enters into contractual arrangements under which the Company agrees to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties and other liabilities relating to or arising from the Company’s online ticketing platform or the Company’s acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, the Company’s obligations under these agreements may be limited in terms of time and/or amount and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has indemnification agreements with its directors and executive officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary.

 

F-67


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

7. Stock-based Compensation

The following table summarizes the stock option activity related to the Company’s employees that participate in Pandora’s equity incentive plan for the year ended December 31, 2016 and the eight months ended August 31, 2017:

 

     Outstanding
Options
     Weighted-
Average
Exercise
Price
     Weighted-
Average
Remaining
Contractual
Term
(years)
     Aggregate
Intrinsic
Value
 
                          (thousands)  

Balance as of January 1, 2016

     2,394,435      $ 3.64        8.57     

Granted

     —             

Exercised

     (526,484      3.42        

Cancelled

     (198,441      3.77        
  

 

 

          

Balance as of December 31, 2016

     1,669,510        3.69        7.66      $ 15,602  

Granted

     495           

Exercised

     (629,315      3.65        

Cancelled

     (34,448      3.62        
  

 

 

          

Balance as of August 31, 2017

     1,006,242      $ 3.72        7.02        4,755  
  

 

 

          

Vested and expected to vest as of August 31, 2017

     1,006,242      $ 3.72        7.02        4,755  

Vested and exercisable as of August 31, 2017

     511,421      $ 3.50        6.74        2,534  

During the year ended December 31, 2016 and eight months ended August 31, 2017, the aggregate intrinsic value of options exercised was $ 5.1 million and $3.0 million, respectively, determined as of the date of option exercise. As of August 31, 2017, 1.0 million options were in-the-money.

During the year ended December 31, 2016 and the eight months ended August 31, 2017, the Company recorded stock-based compensation expense related to stock options of approximately $5.1 million and $2.6 million, respectively.

 

F-68


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

Restricted stock units

The following table summarizes the RSU activity related to the Company’s employees that participate in Pandora’s equity incentive plan for the year ended December 31, 2016 and the eight months ended August 31, 2017:

 

     Number of
RSU
     Weighted-
Average
Grant
Date Fair
Value
 

Unvested as of January 1, 2016

     737,499        12.6  

Granted

     1,529,775        10.85  

Vested

     (185,517      10.74  

Cancelled

     (364,901      11.11  
  

 

 

    

Unvested as of December 31, 2016

     1,716,856        11.39  

Granted

     722,919        11.26  

Vested

     (467,375      10.99  

Cancelled

     (342,760      11.89  
  

 

 

    

Unvested as of August 31, 2017

     1,629,640     
  

 

 

    

Expected to vest as of August 31, 2017

     2,202        —    

During the year ended December 31, 2016 and eight months ended August 31, 2017, the total fair value of RSUs that vested was $2.0 million and $5.1 million, respectively.

During the year ended December 31, 2016 and the eight months ended August 31, 2017, the Company recorded stock-based compensation expense related to RSUs of $4.0 million and $4.3 million, respectively.

Stock-based compensation expense

The Company’s portion of allocated stock-based compensation expense associated with all Pandora’s equity incentive plans in which Ticketfly employees participated is included in the consolidated statements of operations as follows (in thousands):

 

     Year Ended
December 31,
2016
     Eight Months
Ended August 31,
2017
 

Cost of net revenues

   $ 188      $ 86  

Product development

     3,225        2,679  

Sales, marketing and support

     2,364        1,621  

General and administrative

     3,306        2,555  
  

 

 

    

 

 

 

Total stock-based compensation expense

   $ 9,083      $ 6,941  
  

 

 

    

 

 

 

 

F-69


Table of Contents

TICKETFLY, LLC

Notes to Consolidated Financial Statements

(continued)

 

8. Subsequent Events

The Company evaluated events subsequent to August 31, 2017 through June 15, 2018, the date at which these consolidated financial statements were available to be issued.

In September 2017, Eventbrite, Inc. completed its acquisition of the Company for a purchase price of $201.1 million.

In October 2017, the Company and its landlord agreed to terminate a lease of office space that originally expired in May 2022.

 

F-70


Table of Contents

EVENTBRITE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

Introduction to Unaudited Pro Forma Condensed Combined Statement of Operations

The following unaudited pro forma condensed combined statement of operations for the year ended December 31, 2017 is presented to give effect to the acquisition of Ticketfly, LLC (Ticketfly) on September 1, 2017 for $201.1 million, which consisted of $151.1 million in cash and a $50.0 million Convertible Promissory Note (the Note) which were paid and issued, respectively, at the closing of the transaction (the Acquisition).

The pro forma information was prepared based on the historical consolidated statement of operations of Eventbrite, Inc. (Eventbrite or the Company) and Ticketfly after giving effect to the Acquisition using the acquisition method of accounting, and after applying the assumptions, reclassifications and adjustments described in the accompanying notes. The pro forma information is presented as if the Acquisition had occurred on January 1, 2017. The acquisition of Ticketfly has already been reflected in the Company’s historical audited consolidated balance sheet as of December 31, 2017. Therefore, no unaudited pro forma condensed combined balance sheet as of December 31, 2017 has been presented herein.

The Eventbrite condensed statement of operations information included herein was derived from the Eventbrite audited statement of operations for the year ended December 31, 2017 included in this prospectus. The Ticketfly historical statement of operations included herein was derived from the Ticketfly audited statement of operations from January 1, 2017 through the acquisition date which is also included in this prospectus. Certain balances were reclassified within the Ticketfly January 1, 2017 through August 31, 2017 (as adjusted) column in the unaudited pro forma condensed combined statement of operations so that the presentation would be consistent with Eventbrite.

The pro forma information has been prepared for illustrative purposes only and is not intended to represent or be indicative of the consolidated results of operations in future periods or the results that actually would have been achieved had Eventbrite and Ticketfly been a combined company during the period presented. The pro forma information does not reflect any operating efficiencies, post-acquisition synergies or cost savings that Eventbrite may achieve with respect to the combined companies.

The pro forma information should be read together with (1) the accompanying notes to the unaudited pro forma condensed combined statement of operations, (2) the audited historical financial statements and related notes of Eventbrite included elsewhere in this prospectus, and (3) the audited historical financial statements and related notes of Ticketfly included elsewhere in this prospectus.

 

F-71


Table of Contents

Unaudited Pro Forma Condensed Combined Statement of Operations

For the year ended December 31, 2017

( in thousands, except per share data )

 

    Historical
Eventbrite
    Ticketfly
January 1,
2017
through
August 31,
2017

(as adjusted)
    Pro Forma
Adjustments

(see Note 3)
    Notes     Pro Forma
Combined
 

Net revenue

  $     201,597     $     33,499     $ —         $     235,096  

Cost of net revenue

    81,667       18,807       3,438       (a), (d), (e)       103,912  
 

 

 

   

 

 

   

 

 

     

 

 

 

Gross profit

    119,930       14,692       (3,438       131,184  

Operating expenses

         

Product development

    30,608       14,024       (2,360     (d), (e)       42,272  

Sales, marketing and support

    55,170       14,441       (1,288     (d), (e)       68,323  

General and administrative

    67,559       20,866       (766     (a), (d), (e), (f)       87,659  

Goodwill impairment

    —         131,700       —           131,700  
 

 

 

   

 

 

   

 

 

     

 

 

 

Total operating expenses

    153,337       181,031       (4,414       329,954  
 

 

 

   

 

 

   

 

 

     

 

 

 

Loss from operations

    (33,407     (166,339     976         (198,770

Interest expense

    (6,462     —         (4,938     (b), (c)       (11,400

Change in fair value of redeemable convertible preferred stock warrant

    (2,200     —         —           (2,200

Other income (expense), net

    3,509       8       —           3,517  
 

 

 

   

 

 

   

 

 

     

 

 

 

Loss before provision for (benefit from) income taxes

  $ (38,560   $ (166,331   $ (3,962     $ (208,853

Income tax provision (benefit)

    (13     —         314       (g)       301  
 

 

 

   

 

 

   

 

 

     

 

 

 

Net loss attributable to common stockholders

  $ (38,547   $ (166,331   $ (4,276     $ (209,154
 

 

 

   

 

 

   

 

 

     

 

 

 

Net loss per share attributable to common stockholders, basic and diluted

  $ (1.98         $ (10.73
 

 

 

         

 

 

 

Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted

    19,500             19,500  
 

 

 

         

 

 

 

See accompanying notes to the unaudited pro forma condensed combined statement of operations.

 

F-72


Table of Contents

Notes to Unaudited Pro Forma Condensed Combined Statement of Operations

1. Basis of Presentation

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2017 is presented to give effect to the acquisition of Ticketfly by Eventbrite on September 1, 2017 for $201.1 million, which consisted of $151.1 million in cash and $50.0 million in the Note which were paid and issued, respectively, at the closing of the transaction. The Note is due five years from its issuance date and bears interest at a rate of 6.5% per annum. The Note is convertible at the Company’s option into shares of Eventbrite’s common stock at a price of $16.38 per share. The unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X.

The unaudited pro forma condensed combined statement of operations reflects certain adjustments that are necessary to present fairly the Company’s unaudited pro forma condensed combined statement of operations. The pro forma adjustments give effect to events that are (1) directly attributable to the acquisition, (2) factually supportable and (3) expected to have a continuing impact on the Company and are based on assumptions that management believes are reasonable given the best information currently available.

Under the acquisition method of accounting, acquisition-related transaction costs (e.g., advisory, legal, valuation and other professional fees) are not included as consideration transferred but are accounted for as expenses in the periods in which the costs are incurred. These costs are not presented in the unaudited pro forma condensed combined statement of operations because they will not have a continuing impact on the combined results.

In accordance with the acquisition method of accounting for business combinations under the provisions of ASC 805, the assets acquired and the liabilities assumed are recorded at their respective fair values and added to those of the Company. The excess purchase consideration over the fair values of assets acquired and liabilities assumed was recorded as goodwill.

2. Purchase Price Allocation

The total purchase price of the Acquisition was allocated to the assets acquired and liabilities assumed based on their fair value as of the acquisition date. The excess of the purchase price over the net assets acquired was recorded as goodwill. The goodwill recorded in connection with the Acquisition is deductible for tax purposes. Goodwill is attributable to the assembled workforce and synergies from the future growth and strategic advantages in the ticketing industry.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition dates (in thousands):

 

Current assets

   $ 36,147  

Noncurrent assets

     3,868  

Current liabilities

     (32,425

Noncurrent liabilities

     (5,800

Intangible assets

     76,300  

Goodwill

     123,011  
  

 

 

 

Total purchase price

   $     201,101  
  

 

 

 

 

F-73


Table of Contents

Notes to Unaudited Pro Forma Condensed Combined Statement of Operations (continued)

 

 

3. Pro Forma Adjustments

The accompanying unaudited pro forma condensed combined statement of operations has been prepared as if the Acquisition was completed on January 1, 2017 and reflects the following pro forma adjustments:

 

  (a)

To record estimated amortization expense for the eight months ended August 31, 2017 associated with the fair value of acquired developed technology, customer relationships and trade name, net of historical amortization expense related to the acquired intangible assets recorded by Ticketfly.

The adjustment for the amortization of gross intangible assets acquired was calculated using the acquisition-date fair value of the intangible assets acquired amortized on a straight-line basis over the estimated useful life, assuming the acquisition occurred on January 1, 2017.

 

     Estimated
amortization
expense
     Historical
amortization
expense
     Pro forma
adjustment
 

Cost of net revenue

   $ 7,265      $ (3,763    $ 3,502  

General and administrative expense

     5,641        (4,322      1,319  
  

 

 

    

 

 

    

 

 

 
   $ 12,906      $ (8,085    $ 4,819  
  

 

 

    

 

 

    

 

 

 

 

  (b)

To record $2.2 million of estimated interest expense related to the Note issued by Eventbrite to the seller of Ticketfly assuming the Note was outstanding for the entire year ended December 31, 2017. The interest rate used for the calculation of estimated interest expense for the Note was 6.5%, determined using the effective interest rate method, which considers the contractual payment of principal and interest under the Note and debt issuance costs. The Company calculated the pro forma adjustment for interest expense by multiplying the principal balance of the Note, net of the debt discount and debt issuance costs, by the effective interest rate, prorated for the period from January 1, 2017 to August 31, 2017. In March 2018, the Company reached an agreement with the seller of Ticketfly to retire the Note. The Company paid the seller $34.7 million which represented $33.0 million of principal and $1.7 million of accrued interest to extinguish the debt. No adjustment has been made to reflect the extinguishment of the Note as the Company does not believe that such extinguishment is directly attributable to its acquisition of Ticketfly.

 

  (c)

The cash paid for the acquisition of Ticketfly was partially financed through a secured credit facility under which the Company borrowed $30.0 million in September 2017. This adjustment is to record $2.8 million of estimated incremental interest expense assuming this borrowing was outstanding for the entire year ended December 31, 2017. The interest rate used for the calculation of estimated interest expense for the borrowing was 15.9%, determined using the effective interest rate method, which considers the contractual payment of principal and interest under the borrowing, allocated proceeds to the warrants issued in connection with the secured credit facility, and debt issuance costs. The Company calculated the pro forma adjustment for interest expense by multiplying the principal balance of the borrowing, net of the debt discount and debt issuance costs, by the effective interest rate, prorated for the period from January 1, 2017 to August 31, 2017.

 

  (d)

To eliminate $6.9 million of stock-based compensation expense recorded by Ticketfly during the eight months ended August 31, 2017, as follows (in thousands):

 

Cost of net revenue

   $ 86  

Product development

         2,679  

Sales, marketing and support

     1,621  

General and administrative

     2,555  

 

F-74


Table of Contents

Notes to Unaudited Pro Forma Condensed Combined Statement of Operations (continued)

 

 

  (e)

To record $1.6 million of stock-based compensation for the eight months ended August 31, 2017, related to stock options issued by the Company to Ticketfly employees as follows (in thousands):

 

Cost of net revenue

   $ 22  

Product development

     319  

Sales, marketing and support

     333  

General and administrative

     944  

 

  (f)

To eliminate $0.5 million in transaction costs incurred by the Company as a result of the acquisition, primarily consisting of legal and advisory fees. Transaction costs incurred by Ticketfly were not material.

 

  (g)

To record estimated tax expense related to tax deductible goodwill for the period from January 1, 2017 through August 31, 2017. Due to the Company’s history of net operating losses in the jurisdictions in which it operates, the pro forma tax expense adjustment is comprised solely of deferred tax expense related to tax deductible goodwill. Aside from the deferred tax impact of tax deductible goodwill, the Company’s blended rate is zero.

 

F-75


Table of Contents

Appendix F-I

Eventbrite, Inc.

Schedule II—Valuation and Qualifying Accounts

 

Column A

  

Column B

    

Column C

    

Column D

   

Column E

 
            Additions               

Description

  

Balance at Beginning

of Period

    

Charged to Costs &

Expenses

    

Charged to Other

Accounts

    

Deductions

   

Balance at End

of Period

 

Year ended December 31, 2017

             

Allowance for doubtful accounts

   $ 1,099        921           (223   $ 1,797  

Deferred tax asset valuation allowance

   $ 59,806              (1,058   $ 58,748  

Year ended December 31, 2016

             

Allowance for doubtful accounts

   $ 1,119        910           (930   $ 1,099  

Deferred tax asset valuation allowance

   $ 48,390        11,416           $ 59,806  

 

F-I


Table of Contents

 

 

 

 

LOGO

 

 

 

 


Table of Contents

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses to be paid by us, other than underwriting discounts and commissions, in connection with this offering. All amounts shown are estimates except for the SEC registration fee, the FINRA filing fee and the listing fee.

 

SEC registration fee

     24,900  

FINRA filing fee

     30,500  

NYSE listing fee

     *  

Printing and engraving

     *  

Legal fees and expenses

     *  

Accounting fees and expenses

     *  

Custodian, transfer agent and registrar fees

     *  

Miscellaneous

     *  
  

 

 

 

Total

   $             *  
  

 

 

 

 

*

To be provided by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law authorizes a corporation’s board of directors to grant, and authorizes a court to award, indemnity to officers, directors and other corporate agents.

Prior to the completion of this offering, we expect to adopt an amended and restated certificate of incorporation, which will become effective immediately prior to the completion of this offering, and which will contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:

 

   

any breach of their duty of loyalty to our company or our stockholders;

 

   

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

 

   

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

 

   

any transaction from which they derived an improper personal benefit.

Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.

In addition, prior to the completion of this offering, we expect to adopt amended and restated bylaws which will provide that we will indemnify, to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. Our amended and restated bylaws are expected to provide that we may indemnify to the fullest extent permitted by law any person who is or was a party or is threatened to be

 

II-1


Table of Contents

made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our employees or agents or is or was serving at our request as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Our amended and restated bylaws will also provide that we must advance expenses incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to very limited exceptions.

Further, prior to the completion of this offering, we expect to enter into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification agreements will require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements will also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.

The limitation of liability and indemnification provisions that are expected to be included in our amended and restated certificate of incorporation, amended and restated bylaws and in indemnification agreements that we enter into with our directors and executive officers may discourage stockholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be harmed to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against losses arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law.

The underwriting agreement to be filed as Exhibit 1.1 to this registration statement provides for indemnification by the underwriters of the Registrant and its officers and directors for certain liabilities arising under the Securities Act of 1933, as amended (the Securities Act), and otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since January 1, 2015, we made sales of the following unregistered securities:

Preferred Stock Issuances

In August 2017, we sold an aggregate of 8,181,957 shares of our Series G redeemable convertible preferred stock to 23 accredited investors at a purchase price of $16.3836 per share, for an aggregate purchase price of $134,049,910.80.

Option and Common Stock Issuances

Since January 1, 2015, we granted to our employees, consultants and other service providers options to purchase an aggregate of 20,733,297 shares of common stock under our 2010 Stock Option Plan (the 2010 Plan) at exercise prices ranging from $2.73 to $13.72 per share.

 

II-2


Table of Contents

Since January 1, 2015, we granted to our employees, consultants and other service providers restricted stock units for an aggregate of 230,000 shares of common stock under our 2010 Plan.

Since January 1, 2015, we issued and sold to our employees, consultants and other service providers an aggregate of 3,725,960 shares of common stock upon the exercise of options under our 2010 Plan at exercise prices ranging from $0.02 to $10.26 per share, for a weighted-average exercise price of $3.43.

Since January 1, 2015, we issued 3,435,410 shares of our common stock in business acquisition transactions.

Since January 1, 2015, we granted to a service provider restricted stock units for an aggregate of 802,900 shares of common stock outside of an equity incentive plan.

Warrant Issuances

Since January 1, 2015, we granted to two accredited investors warrants to purchase 933,269 shares of our redeemable convertible preferred stock at an exercise price of $16.3836 per share.

We believe these transactions were exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about Eventbrite.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits .

See the Exhibit Index on the page preceding the signature page for a list of exhibits filed as part of this registration statement on Form S-1, which Exhibit Index is incorporated herein by reference.

(b) Financial Statement Schedule .

Schedule II – Valuation & Qualifying Accounts is included in the financial statements and incorporated herein by reference.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification by the Registrant for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the

 

II-3


Table of Contents

securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

 

  (1)

For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

 

  (2)

For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

II-4


Table of Contents

EXHIBIT INDEX

 

Exhibit

Number

 

Description

1.1*   Form of Underwriting Agreement.
2.1**   Membership Interest Purchase Agreement, dated June 9, 2017 by and among Eventbrite, Inc., Pandora Media, Inc. and Ticketfly, LLC.
2.2**   Amendment No. 1 to Membership Interest Purchase Agreement, dated June  9, 2017 by and among Eventbrite, Inc., Pandora Media, Inc. and Ticketfly, LLC, dated September 1, 2017.
2.3**   Amendment No. 2 to Membership Interest Purchase Agreement, dated June  9, 2017 by and among Evenbrite, Inc., Pandora Media, Inc., and Ticketfly, LLC, dated March 30, 2018.
3.1**   Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect.
3.2   Form of Amended and Restated Certificate of Incorporation of the Registrant to be in effect immediately prior to the completion of this offering.
3.3**   Bylaws of the Registrant, as currently in effect.
3.4   Form of Amended and Restated Bylaws of the Registrant to be adopted immediately prior to the completion of this offering.
4.1*   Form of Class A common stock certificate of the Registrant.
4.2**   Amended and Restated Investors’ Rights Agreement, dated August  30, 2017, by and among the Registrant and certain of its stockholders.
5.1*   Opinion of Goodwin Procter LLP.
10.1**   Lease for 155 5th Street, San Francisco, CA, dated December  6, 2013, by and between the Registrant and University of the Pacific, as amended.
10.2**   Loan and Security Agreement, dated June 30, 2017, by and among the Registrant, Venture Lending  & Leasing VII, Inc. and Venture Lending & Leasing VIII, Inc., as supplemented.
10.3**   Loan and Security Agreement, dated May 29, 2018, between the Registrant and Venture Lending  & Leasing VIII, Inc., as supplemented.
10.4** #   Senior Executive Cash Incentive Bonus Plan.
10.5** #   Non-Employee Director Compensation Policy.
10.6 #   Andrew Dreskin’s 2018 Executive Bonus Plan.
10.7** #   Eventbrite, Inc. (f/k/a Mollyguard Corporation) 2004 Stock Plan, as amended, and forms of agreements thereunder.
10.8 #   Eventbrite, Inc. 2010 Stock Plan, as amended, and forms of agreements thereunder.
10.9** #   Eventbrite, Inc. 2018 Stock Option and Incentive Plan and forms of agreements thereunder.
10.10** #   Eventbrite, Inc. 2018 Employee Stock Purchase Plan.
10.11** #   Form of Indemnification Agreement, between the Registrant and each of its directors.
10.12** #   Employment Offer Letter, dated September 15, 2017, between the Registrant and Andrew Dreskin.
10.13** #   Promotion Letter, dated April 21, 2016, between the Registrant and Julia Hartz.
10.14** #   Offer Letter, dated November 30, 2005, between Mollyguard Corporation and Julia (Steen) Hartz.
10.15** #   Offer Letter, dated April 15, 2013, between the Registrant and Randy Befumo.
10.16** #   Promotion Letter, dated January 13, 2016, between the Registrant and Matthew Rosenberg.
10.17** #   Offer Letter, dated August 20, 2012, between the Registrant and Matthew Rosenberg.
10.18 #  

Form of Executive Severance and Change in Control Agreement between the Registrant and each of its executives.

10.19**   Warrant to Purchase Shares of Preferred Stock of the Registrant issued to Venture Lending & Leasing VII, LLC, dated June  30, 2017.

 

II-5


Table of Contents

Exhibit

Number

 

Description

10.20**   Warrant to Purchase Shares of Preferred Stock of the Registrant issued to Venture Lending  & Leasing VIII, LLC, dated June 30, 2017.
10.21**   Warrant to Purchase Shares of Preferred Stock of the Registrant issued to Venture Lending & Leasing VIII, LLC, dated May  29, 2018.
10.22**   Restricted Stock Unit Agreement, dated January 1, 2018, between the Registrant and Kevin Hartz.
10.23* #  

Non-Employee Directors’ Deferred Compensation Program.

10.24*#   Offer letter, dated July 17, 2017, between the Registrant and Omer Cohen.
21.1**   Subsidiaries of the Registrant.
23.1   Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm as to Eventbrite, Inc.
23.2   Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm as to Ticketfly, LLC.
23.3*   Consent of Goodwin Procter LLP (included in Exhibit 5.1).
24.1**   Power of Attorney (see page II-7 of the original filing of this Registration Statement on Form S-1).

 

*

To be filed by amendment.

**

Previously filed.

#  

Indicates management contract or compensatory plan, contract or agreement.

 

II-6


Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Amendment No. 2 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in San Francisco, California on August 27, 2018.

 

EVENTBRITE, INC.
By:  

/s/ Julia Hartz

 

Julia Hartz

Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 2 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ Julia Hartz

Julia Hartz

  

Chief Executive Officer and Director

(Principal Executive Officer)

  August 27, 2018

/s/ Randy Befumo

Randy Befumo

  

Chief Financial Officer

(Principal Financial and Accounting Officer)

  August 27, 2018

*

Katherine August-deWilde

   Director   August 27, 2018

*

Roelof Botha

   Lead Independent Director   August 27, 2018

*

Andrew Dreskin

   President of Music and Director   August 27, 2018

*

Kevin Hartz

   Executive Chairman and Director   August 27, 2018

*

Sean P. Moriarty

   Director   August 27, 2018

*

Lorrie M. Norrington

   Director   August 27, 2018

*

Helen Riley

   Director   August 27, 2018

*

Steffan C. Tomlinson

   Director   August 27, 2018

*By: /s/ Samantha Harnett

Samantha Harnett

Attorney-in-Fact

    

 

II-7

Exhibit 3.2

EVENTBRITE, INC.

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

Eventbrite, Inc. (the “ Corporation ”), a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

A. The Corporation was originally incorporated under the name of Eventbrite, Inc., and the original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on October 20, 2009.

B. This Amended and Restated Certificate of Incorporation was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “ DGCL ”), and has been duly approved by the written consent of the stockholders of the Corporation in accordance with Section 228 of the DGCL.

C. The Amended Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:

ARTICLE I

The name of the Corporation is Eventbrite, Inc.

ARTICLE II

The address of the Corporation’s registered office in the State of Delaware is 3500 South DuPont Highway, City of Dover, County of Kent 19901. The name of its registered agent at such address is Incorporating Services, Ltd.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

ARTICLE IV

A. Classes of Stock . The total number of shares of capital stock that the Corporation shall have authority to issue is 1,200,000,000, consisting of the following: 1,000,000,000 shares of Class  A Common Stock, par value $0.00001 per share (“ Class  A Common Stock ”), 100,000,000 shares of Class  B Common Stock, par value $0.00001 per share (“ Class  B Common Stock ”), and 100,000,000 shares of undesignated Preferred Stock, par value $0.00001 per share (“ Preferred Stock ”).

Immediately upon the acceptance of this Amended and Restated Certificate of Incorporation for filing by the Secretary of State of the State of Delaware (the “ Effective Time ”), each share of the Corporation’s capital stock issued and outstanding or held as treasury stock immediately prior to the Effective Time, shall, automatically and without further action by any stockholder, be reclassified as, and shall become, one share of Class B Common Stock.

B. Rights of Preferred Stock . The Board of Directors of the Corporation (the “Board of Directors”) is authorized, subject to any limitations prescribed by law but to the fullest extent permitted by law, to provide by resolution for the designation and issuance of shares of Preferred Stock in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, (which may include, without limitation, full, limited or no voting powers), preferences, and relative, participating, optional or other rights of the shares of each such series and any qualifications, limitations or restrictions thereof, and to file a certificate pursuant to the applicable law of the State of Delaware (such certificate being hereinafter referred to as a “ Preferred Stock Designation ”), setting forth such resolution or resolutions.


C. Vote to Increase or Decrease Authorized Shares of Preferred Stock . The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the outstanding shares of capital stock of the Corporation entitled to vote thereon, without a separate class vote of the holders of Preferred Stock, or any separate series votes of any series thereof, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock Designation.

D. Rights of Class A Common Stock and Class B Common Stock . The relative powers, rights, qualifications, limitations and restrictions granted to or imposed on the shares of Class A Common Stock and Class B Common Stock are as follows:

1. Voting Rights.

(a) General Right to Vote Together; Exception . Except as otherwise expressly provided herein or required by applicable law, the holders of Class A Common Stock and Class B Common Stock shall vote together as one class on all matters submitted to a vote of the stockholders; provided, however , subject to the terms of any Preferred Stock Designation, the number of authorized shares of Class A Common Stock or Class B Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the capital stock of the Corporation entitled to vote.

(b) Votes Per Share . Except as otherwise expressly provided herein or required by applicable law, on any matter that is submitted to a vote of the stockholders, each holder of Class A Common Stock shall be entitled to one (1)  vote for each such share, and each holder of Class  B Common Stock shall be entitled to ten (10)  votes for each such share.

2. Identical Rights . Except as otherwise expressly provided herein or required by applicable law, shares of Class A Common Stock and Class  B Common Stock shall have the same rights and privileges and rank equally, share ratably and be identical in all respects as to all matters, including, without limitation:

(a) Dividends and Distributions . Shares of Class A Common Stock and Class  B Common Stock shall be treated equally, identically and ratably, on a per share basis, with respect to any Distribution paid or distributed by the Corporation, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class  A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class  B Common Stock, each voting separately as a class; provided, however , that in the event a Distribution is paid in the form of Class  A Common Stock or Class  B Common Stock (or Rights to acquire such stock), then holders of Class  A Common Stock shall receive Class  A Common Stock (or Rights to acquire such stock, as the case may be) and holders of Class  B Common Stock shall receive Class  B Common Stock (or Rights to acquire such stock, as the case may be).

(b) Subdivision or Combination . If the Corporation in any manner subdivides or combines the outstanding shares of Class A Common Stock or Class  B Common Stock, the outstanding shares of the other such class will be subdivided or combined in the same proportion and manner, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class  A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class  B Common Stock, each voting separately as a class.

(c) Equal Treatment in a Change of Control or any Merger Transaction . In connection with any Change of Control Transaction, shares of Class A Common Stock and Class  B Common Stock shall be treated equally, identically and ratably, on a per share basis, with respect to any consideration into which such shares are converted or any consideration paid or otherwise distributed to stockholders of the Corporation, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a

 

-2-


majority of the outstanding shares of Class A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class  B Common Stock, each voting separately as a class. Any merger or consolidation of the Corporation with or into any other entity, which is not a Change of Control Transaction, shall require approval by the affirmative vote of the holders of a majority of the outstanding shares of Class  A Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class  B Common Stock, each voting separately as a class, unless (i)  the shares of Class  A Common Stock and Class  B Common Stock remain outstanding and no other consideration is received in respect thereof or (ii)  such shares are converted on a pro rata basis into shares of the surviving or parent entity in such transaction having identical rights to the shares of Class  A Common Stock and Class  B Common Stock, respectively.

3. Conversion of Class B Common Stock .

(a) Voluntary Conversion . Each one (1) share of Class  B Common Stock shall be convertible into one (1)  share of Class  A Common Stock at the option of the holder thereof at any time upon written notice to the transfer agent of the Corporation.

(b) Automatic Conversion . Shares of Class B Common Stock shall automatically, without any further action, convert into an equal number of shares of Class  A Common Stock upon the earlier of:

(i) a Transfer of such share; provided that no such automatic conversion shall occur in the case of a Transfer by a Class  B Stockholder, for tax or estate planning purposes, to any of the persons or entities listed in clauses (A)  through (F) below (each, a “ Permitted Transferee ”) and from any such Permitted Transferee back to such Class  B Stockholder and/or any other Permitted Transferee established by or for such Class  B Stockholder:

(A) a family member of such Class B Stockholder, which shall include with respect to any natural person who is a Class  B Stockholder, the spouse, domestic partner, parents, grandparents, lineal descendants, siblings and lineal descendants of siblings of such Class  B Stockholder; and provided, further , that lineal descendants shall include adopted persons, but only so long as they are adopted during minority;

(B) a trust for the benefit of such Class B Stockholder or persons other than the Class  B Stockholder so long as the Class  B Stockholder and/or family members of such Class B Stockholder have sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust; provided such Transfer does not involve any payment of cash, securities, property or other consideration to the Class  B Stockholder (other than as a settlor or beneficiary of such trust) and, provided, further , that in the event such Class  B Stockholder and/or family members of such Class  B Stockholder no longer have sole dispositive power and exclusive Voting Control with respect to the shares of Class  B Common Stock held by such trust, each share of Class  B Common Stock then held by such trust shall automatically convert into one (1)  fully paid and nonassessable share of Class  A Common Stock;

(C) a trust under the terms of which such Class  B Stockholder has retained a “qualified interest” within the meaning of §2702(b)(1) of the Internal Revenue Code (or successor provision) and/or a reversionary interest so long as the Class  B Stockholder and/or family members of such Class  B Stockholder have sole dispositive power and exclusive Voting Control with respect to the shares of Class  B Common Stock held by such trust; provided, however , that in the event such Class  B Stockholder and/or family members of such Class  B Stockholder no longer have sole dispositive power and exclusive Voting Control with respect to the shares of Class  B Common Stock held by such trust, each share of Class  B Common Stock then held by such trust shall automatically convert into one (1)  fully paid and nonassessable share of Class  A Common Stock;

 

-3-


(D) an Individual Retirement Account, as defined in Section 408(a) of the Internal Revenue Code (or successor provision), or a pension, profit sharing, stock bonus or other type of plan or trust of which such Class  B Stockholder is a participant or beneficiary and which satisfies the requirements for qualification under Section  401 of the Internal Revenue Code; provided that in each case such Class  B Stockholder has sole dispositive power and exclusive Voting Control with respect to the shares of Class  B Common Stock held in such account, plan or trust, and provided, further , that in the event the Class  B Stockholder no longer has sole dispositive power and exclusive Voting Control with respect to the shares of Class  B Common Stock held by such account, plan or trust, each share of Class  B Common Stock then held by such trust shall automatically convert into one (1)  fully paid and nonassessable share of Class  A Common Stock;

(E) a corporation, partnership or limited liability company in which such Class B Stockholder and/or family members of such Class  B Stockholder directly, or indirectly through one or more Permitted Transferees, own shares, partnership interests or membership interests, as applicable, with sufficient Voting Control in the corporation, partnership or limited liability company, as applicable, or otherwise have legally enforceable rights, such that the Class  B Stockholder and/or family members of such Class  B Stockholder retain sole dispositive power and exclusive Voting Control with respect to the shares of Class  B Common Stock held by such corporation, partnership or limited liability company; provided, however , that in the event the Class  B Stockholder and/or family members of such Class  B Stockholder no longer own sufficient shares, partnership interests or membership interests, as applicable, or no longer has sufficient legally enforceable rights to ensure the Class  B Stockholder and/or family members of such Class  B Stockholder retain sole dispositive power and exclusive Voting Control with respect to the shares of Class  B Common Stock held by such corporation, partnership or limited liability company, as applicable, each share of Class  B Common Stock then held by such corporation, partnership or limited liability company, as applicable, shall automatically convert into one (1) fully paid and nonassessable share of Class  A Common Stock;

(F) another Class B Stockholder or a Class  B Stockholder’s Permitted Transferee upon the death or Incapacity of a Class  B Stockholder; and

(ii) the date specified by a written notice and certification request of the Corporation to the holder of such share of Class B Common Stock requesting a certification, in a form satisfactory to the Corporation, verifying such holder’s ownership of Class  B Common Stock and confirming that a conversion to Class  A Common Stock has not occurred, which date shall not be less than sixty (60)  calendar days after the date of such notice and certification request; provided that no such automatic conversion pursuant to this subsection (ii)  shall occur in the case of a Class B Stockholder or its Permitted Transferees that furnishes a certification satisfactory to the Corporation prior to the specified date.

(c) Conversion Upon Death or Incapacity of a Class B Stockholder .

(i) Except as otherwise provided in this Section  3, each share of Class  B Common Stock held of record by a Class  B Stockholder who is a natural person, or by such Class  B Stockholder’s Permitted Transferees, shall automatically, without any further action, convert into one (1)  fully paid and nonassessable share of Class  A Common Stock upon the death or Incapacity of such Class  B Stockholder.

(d) Automatic Conversion of all Outstanding Class B Common Stock . Each one (1)  share of Class  B Common Stock shall automatically, without any further action, convert into one (1)  share of Class  A Common Stock upon the date specified by affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of Class  B Common Stock, voting as a single class.

(e) Final Conversion of Class B Common Stock . On the Final Conversion Date, each one (1)  outstanding share of Class  B Common Stock shall automatically, without any further action, convert into one (1)  share of Class  A Common Stock. Following such conversion, the reissuance of all shares of Class  B Common Stock shall be prohibited, and such shares shall be retired and cancelled in accordance with Section  243 of the DGCL and the filing by the Secretary of State of the State of Delaware required thereby, and upon such retirement and cancellation, all references to Class  B Common Stock in this Amended and Restated Certificate of Incorporation shall be eliminated.

 

-4-


(f) Procedures . The Corporation may, from time to time, establish such policies and procedures relating to the conversion of Class B Common Stock to Class  A Common Stock and the general administration of this dual class stock structure, including the issuance of stock certificates (or the establishment of book-entry positions) with respect thereto, as it may deem reasonably necessary or advisable, and may from time to time request that holders of shares of Class  B Common Stock furnish certifications, affidavits or other proof to the Corporation as it deems necessary to verify the ownership of Class  B Common Stock and to confirm that a conversion to Class  A Common Stock has not occurred. A determination by the Secretary of the Corporation that a Transfer results in a conversion to Class  A Common Stock shall be conclusive and binding.

(g) Immediate Effect . In the event of a conversion of shares of Class B Common Stock to shares of Class  A Common Stock pursuant to this Section D.3 or upon the Final Conversion Date, such conversion(s) shall be deemed to have been made at the time that the Transfer of shares occurred or immediately upon the Final Conversion Date, as applicable. Upon any conversion of Class  B Common Stock to Class  A Common Stock, all rights of the holder of shares of Class  B Common Stock shall cease and the person or persons in whose names or names the certificate or certificates (or book-entry position(s)) representing the shares of Class  A Common Stock are to be issued shall be treated for all purposes as having become the record holder or holders of such shares of Class  A Common Stock. Shares of Class  B Common Stock that are converted into shares of Class  A Common Stock as provided in this Section D.3 shall be retired and may not be reissued.

(h) Reservation of Stock . The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class  B Common Stock, such number of its shares of Class  A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class  B Common Stock into shares of Class  A Common Stock.

E. No Further Issuances . Except for the issuance of Class B Common Stock issuable upon exercise of Rights outstanding at the Effective Time or a dividend payable in accordance with Article IV , Section  D.2(a), the Corporation shall not at any time after the Effective Time issue any additional shares of Class  B Common Stock, unless such issuance is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class  B Common Stock. After the Final Conversion Date, the Corporation shall not issue any additional shares of Class  B Common Stock.

ARTICLE V

The following terms, where capitalized in this Amended and Restated Certificate of Incorporation, shall have the meanings ascribed to them in this Article V :

Change of Control Share Issuance ” means the issuance by the Corporation, in a transaction or series of related transactions, of voting securities representing more than two percent (2%) of the total voting power (assuming Class A Common Stock and Class B Common Stock each have one (1) vote per share) of the Corporation before such issuance to any person or persons acting as a group as contemplated in Rule 13d-5(b) under the Exchange Act (or any successor provision) that immediately prior to such transaction or series of related transactions held fifty percent (50%) or less of the total voting power of the Corporation (assuming Class A Common Stock and Class B Common Stock each have one (1) vote per share), such that, immediately following such transaction or series of related transactions, such person or group of persons would hold more than fifty percent (50%) of the total voting power of the Corporation (assuming Class A Common Stock and Class B Common Stock each have one (1) vote per share).

Change of Control Transaction ” means (i) the sale, lease, exclusive license, exchange, or other disposition (other than liens and encumbrances created in the ordinary course of business, including liens or encumbrances to secure indebtedness for borrowed money that are approved by the Corporation’s Board of Directors, so long as no foreclosure occurs in respect of any such lien or encumbrance) of all or substantially all of

 

-5-


the Corporation’s property and assets (which shall for such purpose include the property and assets of any direct or indirect subsidiary of the Corporation), provided that any sale, lease, exclusive license, exchange or other disposition of property or assets exclusively between or among the Corporation and any direct or indirect subsidiary or subsidiaries of the Corporation shall not be deemed a “ Change of Control Transaction ”; (ii) the merger, consolidation, business combination, or other similar transaction of the Corporation with any other entity, other than a merger, consolidation, business combination, or other similar transaction that would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Corporation and more than fifty percent (50%) of the total number of outstanding shares of the Corporation’s capital stock, in each case as outstanding immediately after such merger, consolidation, business combination, or other similar transaction, and the stockholders of the Corporation immediately prior to the merger, consolidation, business combination, or other similar transaction own voting securities of the Corporation, the surviving entity or its parent immediately following the merger, consolidation, business combination, or other similar transaction in substantially the same proportions (vis a vis each other) as such stockholders owned the voting securities of the Corporation immediately prior to the transaction; (iii) a recapitalization, liquidation, dissolution, or other similar transaction involving the Corporation, other than a recapitalization, liquidation, dissolution, or other similar transaction that would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Corporation and more than fifty percent (50%) of the total number of outstanding shares of the Corporation’s capital stock, in each case as outstanding immediately after such recapitalization, liquidation, dissolution or other similar transaction, and the stockholders of the Corporation immediately prior to the recapitalization, liquidation, dissolution or other similar transaction own voting securities of the Corporation, the surviving entity or its parent immediately following the recapitalization, liquidation, dissolution or other similar transaction in substantially the same proportions (vis a vis each other) as such stockholders owned the voting securities of the Corporation immediately prior to the transaction; and (iv) any Change of Control Share Issuance.

Class  B Stockholder ” means (i) the registered holder of a share of Class B Common Stock at the Effective Time and (ii) the registered holder of any shares of Class B Common Stock that are originally issued by the Corporation after the Effective Time.

Distribution ” means (i) any dividend or distribution of cash, property or shares of the Corporation’s capital stock; and (ii) any distribution following or in connection with any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary .

Exchange Act ” means the United States Securities Exchange Act of 1934, as amended.

Final Conversion Date ” means 5:00 p.m. in New York City, New York on the first Trading Day falling on or after the tenth (10th) year anniversary of the Effective Time.

Incapacity ” shall mean that such holder is incapable of managing his or her financial affairs under the criteria set forth in the applicable probate code that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months as determined by a licensed medical practitioner. In the event of a dispute regarding whether a Class B Stockholder has suffered an Incapacity, no Incapacity of such holder will be deemed to have occurred unless and until an affirmative ruling regarding such Incapacity has been made by a court of competent jurisdiction.

Rights ” means any option, warrant, restricted stock unit, conversion right or contractual right of any kind to acquire shares of the Corporation’s authorized but unissued capital stock.

Securities Act ” means the United States Securities Act of 1933, as amended.

Securities Exchange ” means, at any time, the registered national securities exchange on which the Corporation’s equity securities are then principally listed or traded, which shall be the New York Stock Exchange or NASDAQ Global Market (or similar national quotation system of the NASDAQ Stock Market) (“ NASDAQ ”) or any successor exchange of either the New York Stock Exchange or NASDAQ.

 

-6-


Trading Day ” means any day on which the Securities Exchange is open for trading.

Transfer ” of a share of Class B Common Stock shall mean any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of such share or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law. A “ Transfer ” shall also include, without limitation, (i) a transfer of a share of Class B Common Stock to a broker or other nominee (regardless of whether or not there is a corresponding change in beneficial ownership) or (ii) the transfer of, or entering into a binding agreement with respect to, Voting Control over a share of Class B Common Stock by proxy or otherwise; provided, however , that the following shall not be considered a “ Transfer ”: (a) the grant of a proxy to officers or directors of the Corporation at the request of the Board of Directors of the Corporation in connection with actions to be taken at an annual or special meeting of stockholders; (b) the pledge of shares of Class B Common Stock by a Class B Stockholder that creates a mere security interest in such shares pursuant to a bona fide loan or indebtedness transaction so long as the Class B Stockholder continues to exercise Voting Control over such pledged shares; provided, however , that a foreclosure on such shares of Class B Common Stock or other similar action by the pledge shall constitute a “ Transfer ”; or (c) the fact that, as of the Effective Time or at any time after the Effective Time, the spouse of any Class B Stockholder possesses or obtains an interest in such holder’s shares of Class B Common Stock arising solely by reason of the application of the community property laws of any jurisdiction, so long as no other event or circumstance shall exist or have occurred that constitutes a “ Transfer ” of such shares of Class B Common Stock.

Voting Control ” with respect to a share of Class B Common Stock means the exclusive power (whether directly or indirectly) to vote or direct the voting of such share of Class B Common Stock by proxy, voting agreement, or otherwise.

ARTICLE VI

A. General Powers . The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

B. Number of Directors; Election . Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, the number of directors that constitutes the entire Board of Directors of the Corporation shall be fixed solely by resolution of the Board of Directors. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, each director of the Corporation shall hold office until the expiration of the term for which he or she is elected and until his or her successor has been duly elected and qualified or until his or her earlier resignation, death or removal.

C. Classified Board Structure . From and after the Effective Time, and subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, the directors of the Corporation shall be divided into three (3)  classes as nearly equal in size as is practicable, hereby designated Class I, Class II and Class III. The Board of Directors may assign members of the Board of Directors already in office to such classes at the time such classification becomes effective. The term of office of the initial Class I directors shall expire at the first regularly-scheduled annual meeting of stockholders following the Effective Time, the term of office of the initial Class II directors shall expire at the second annual meeting of stockholders following the Effective Time and the term of office of the initial Class III directors shall expire at the third annual meeting of stockholders following the Effective Time. At each annual meeting of stockholders, commencing with the first regularly-scheduled annual meeting of stockholders following the Effective Time, each of the successors elected to replace the directors of a Class whose term shall have expired at such annual meeting shall be elected to hold office until the third annual meeting next succeeding his or her election and until his or her respective successor shall have been duly elected and qualified.

Notwithstanding the foregoing provisions of this Article VI, each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation, or removal. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, if the number of directors is

 

-7-


hereafter changed, any newly created directorships or decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

D. Removal; Vacancies . Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, for so long as the board of directors is divided into classes pursuant to Article VI Section C, any director may be removed from office by the stockholders of the Corporation only for cause. Vacancies occurring on the Board of Directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, or by a sole remaining director, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall be duly elected and qualified.

ARTICLE VII

A. Written Ballot . Elections of directors need not be by written ballot unless the Bylaws of the Corporation (the “ Bylaws ”) shall so provide.

B. Amendment of Bylaws . In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation.

C. Special Meetings . Special meetings of the stockholders may be called only by (i) the Board of Directors pursuant to a resolution adopted by a majority of the Board of Directors; (ii) the chairman of the Board of Directors; or (iii) the chief executive officer of the Corporation.

D. No Stockholder Action by Written Consent . Subject to the rights of the holders of any series of Preferred Stock, no action shall be taken by the stockholders of the Corporation except at an annual or special meeting of the stockholders called in accordance with the Bylaws, and no action shall be taken by the stockholders by written consent.

E. No Cumulative Voting . No stockholder will be permitted to cumulate votes at any election of directors.

ARTICLE VIII

To the fullest extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of any fiduciary duties as a director. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

Neither any amendment nor repeal of this Article VIII , nor the adoption of any provision of the Corporation’s Amended Certificate of Incorporation inconsistent with this Article VIII , shall eliminate or reduce the effect of this Article VIII in respect of any matter occurring, or any cause of action, suit or proceeding accruing or arising or that, but for this Article VIII , would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

ARTICLE IX

Subject to any provisions in the Bylaws of the Corporation related to indemnification of directors or officers of the Corporation, the Corporation shall indemnify, to the fullest extent permitted by applicable law, any director or officer of the Corporation who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”) by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation

 

-8-


or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding.

The Corporation shall have the power to indemnify, to the extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, any employee or agent of the Corporation who was or is a party or is threatened to be made a party to any Proceeding by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding.

A right to indemnification or to advancement of expenses arising under a provision of this Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation shall not be eliminated or impaired by an amendment to this Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.

ARTICLE X

If any provision of this Amended and Restated Certificate of Incorporation becomes or is declared on any ground by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Amended and Restated Certificate of Incorporation, and the court will replace such illegal, void or unenforceable provision of this Amended and Restated Certificate of Incorporation with a valid and enforceable provision that most accurately reflects the Corporation’s intent, in order to achieve, to the maximum extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance of this Amended and Restated Certificate of Incorporation shall be enforceable in accordance with its terms.

Except as provided in ARTICLE VIII and ARTICLE IX above, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation; provided, however, that, notwithstanding any other provision of this Amended and Restated Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of this Corporation required by law or by this Amended and Restated Certificate of Incorporation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of the outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal, or adopt any provision of this Amended and Restated Certificate of Incorporation inconsistent with, ARTICLE VI , ARTICLE VII , ARTICLE VIII , ARTICLE IX or this ARTICLE X .

*     *    *

 

-9-


IN WITNESS WHEREOF , this Amended and Restated Certificate of Incorporation has been signed on behalf of the Corporation by its duly authorized officer effective this         day of                      2018.

 

EVENTBRITE, INC.
By:  

 

  Samantha Harnett
  General Counsel

 

-10-

Exhibit 3.4

AMENDED AND RESTATED BYLAWS

OF

EVENTBRITE, INC.

(effective as of the closing of the corporation’s initial public offering)


TABLE OF CONTENTS

 

         Page  

ARTICLE I CORPORATE OFFICES

     1  

1.1

  Registered Office      1  

1.2

  Other Offices      1  

ARTICLE II MEETINGS OF STOCKHOLDERS

     1  

2.1

  Place of Meetings      1  

2.2

  Annual Meeting      1  

2.3

  Special Meeting      1  

2.4

  Advance Notice Procedures      2  

2.5

  Notice of Stockholders’ Meetings      6  

2.6

  Quorum      6  

2.7

  Adjourned Meeting; Notice      7  

2.8

  Conduct of Business      7  

2.9

  Voting      7  

2.10

  Stockholder Action By Written Consent Without A Meeting      8  

2.11

  Record Dates      8  

2.12

  Proxies      8  

2.13

  List of Stockholders Entitled to Vote      9  

2.14

  Inspectors of Election      9  

ARTICLE III DIRECTORS

     10  

3.1

  Powers      10  

3.2

  Number of Directors      10  

3.3

  Election, Qualification and Term of Office Of Directors      10  

3.4

  Resignation and Vacancies      10  

3.5

  Place of Meetings; Meetings By Telephone      11  

3.6

  Regular Meetings      11  

3.7

  Special Meetings; Notice      12  

3.8

  Quorum; Voting      12  

3.9

  Board Action By Written Consent Without A Meeting      12  

3.10

  Fees and Compensation of Directors      13  

3.11

  Removal of Directors      13  

ARTICLE IV COMMITTEES

     13  

4.1

  Committees of Directors      13  

4.2

  Committee Minutes      13  

4.3

  Meetings and Action of Committees      13  

4.4

  Subcommittees      14  

ARTICLE V OFFICERS

     14  

5.1

  Officers      14  

5.2

  Appointment of Officers      15  

5.3

  Subordinate Officers      15  

 

i


5.4

  Removal and Resignation of Officers      15  

5.5

  Vacancies In Offices      15  

5.6

  Representation of Shares of Other Corporations      15  

5.7

  Authority and Duties of Officers      15  

ARTICLE VI STOCK

     16  

6.1

  Stock Certificates; Partly Paid Shares      16  

6.2

  Special Designation On Certificates      17  

6.3

  Lost Certificates      17  

6.4

  Dividends      17  

6.5

  Transfer of Stock      17  

6.6

  Stock Transfer Agreements      17  

6.7

  Registered Stockholders      17  

ARTICLE VII MANNER OF GIVING NOTICE AND WAIVER

     17  

7.1

  Notice of Stockholders’ Meetings      17  

7.2

  Notice By Electronic Transmission      18  

7.3

  Notice To Stockholders Sharing An Address      19  

7.4

  Notice To Person With Whom Communication Is Unlawful      19  

7.5

  Waiver of Notice      19  

ARTICLE VIII FORUM FOR CERTAIN ACTIONS

     19  

ARTICLE IX INDEMNIFICATION

     20  

9.1

  Indemnification of Directors and Officers In Third Party Proceedings      20  

9.2

  Indemnification of Directors and Officers in Actions by or in the Right of the Corporation      20  

9.3

  Successful Defense      21  

9.4

  Indemnification of Others      21  

9.5

  Advance Payment of Expenses      21  

9.6

  Limitation On Indemnification      21  

9.7

  Determination; Claim      22  

9.8

  Non-Exclusivity of Rights      22  

9.9

  Insurance      22  

9.10

  Survival      23  

9.11

  Effect of Repeal or Modification      23  

9.12

  Certain Definitions      23  

ARTICLE X GENERAL MATTERS

     23  

10.1

  Execution of Corporate Contracts and Instruments      23  

10.2

  Fiscal Year      23  

10.3

  Seal      24  

10.4

  Construction; Definitions      24  

ARTICLE XI AMENDMENTS

     24  

 

ii


BYLAWS OF EVENTBRITE, INC.

ARTICLE I

CORPORATE OFFICES

1.1 Registered Office . The registered office of Eventbrite, Inc. shall be fixed in the corporation’s certificate of incorporation, as the same may be amended from time to time.

1.2 Other Offices . The corporation’s board of directors may at any time establish other offices at any place or places where the corporation is qualified to do business.

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1 Place of Meetings . Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. The board of directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section  211(a)(2) of the Delaware General Corporation Law (the “ DGCL ”). In the absence of any such designation or determination, stockholders meetings shall be held at the corporation’s principal executive office.

2.2 Annual Meeting . The annual meeting of stockholders shall be held on such date, at such time, and at such place (if any) within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the corporation s notice of the meeting. At the annual meeting, directors shall be elected and any other proper business, brought in accordance with Section  2.4 of these bylaws, may be transacted. The board of directors may cancel, postpone or reschedule any previously scheduled annual meeting at any time, before or after the notice for such meeting has been sent to the stockholders.

2.3 Special Meeting .

(i) A special meeting of the stockholders, other than those required by statute, may be called at any time by (A) the board of directors, (B)  the chairperson of the board of directors or (C)  the chief executive officer, but a special meeting may not be called by any other person or persons. The board of directors may cancel, postpone or reschedule any previously scheduled special meeting at any time, before or after the notice for such meeting has been sent to the stockholders.

(ii) The notice of a special meeting shall include the purpose for which the meeting is called. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the board of directors, chairperson of the board of directors or chief executive officer. Nothing contained in this Section  2.3(ii) shall be construed as limiting, fixing or affecting the time when a meeting of stockholders called by action of the board of directors may be held.


2.4 Advance Notice Procedures .

(i) Advance Notice of Stockholder Business . At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be brought: (A) pursuant to the corporation’s proxy materials with respect to such meeting, (B)  by or at the direction of the board of directors, or (C)  by a stockholder of the corporation who (1)  is a stockholder of record at the time of the giving of the notice required by this Section  2.4(i) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2)  has timely complied in proper written form with the notice procedures set forth in this Section  2.4(i). In addition, for business to be properly brought before an annual meeting by a stockholder, such business must be a proper matter for stockholder action pursuant to these bylaws and applicable law. For the avoidance of doubt, except for proposals properly made in accordance with Rule  14a-8 under the Securities and Exchange Act of 1934, as amended, or any successor thereto (the “ 1934  Act ”), and the regulations thereunder (or any successor rule and in any case as so amended), clause  (C) above shall be the exclusive means for a stockholder to bring business before an annual meeting of stockholders.

(a) To comply with clause (C) of Section  2.4(i) above, a stockholder’s notice must set forth all information required under this Section  2.4(i) and must be timely received by the secretary of the corporation. To be timely, a stockholder’s notice must be received by the secretary at the principal executive offices of the corporation not later than the 45th day nor earlier than the 75th  day before the one-year anniversary of the date on which the corporation first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the preceding year’s annual meeting; provided, however , that in the event that no annual meeting was held in the previous year or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year anniversary of the date of the previous year’s annual meeting, then, for notice by the stockholder to be timely, it must be so received by the secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th  day prior to such annual meeting, or (ii)  the tenth day following the day on which Public Announcement (as defined below) of the date of such annual meeting is first made. In no event shall any adjournment, rescheduling or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described in this Section  2.4(i)(a). “ Public Announcement ” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service, in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section  13, 14 or 15(d) of the 1934 Act, or made via a Tweet from a verified account operated by the corporation (e.g.,  @eventbrite).

(b) To be in proper written form, a stockholder’s notice to the secretary must set forth as to each matter of business the stockholder intends to bring before the annual meeting: (1) a brief description of the business intended to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (2)  the name and address, as they appear on the corporation’s books, of the stockholder proposing such business and any Stockholder Associated Person (as defined below), (3)  the class and number of shares of the corporation that are held of record or are beneficially owned by the stockholder or any

 

2


Stockholder Associated Person and any derivative positions held or beneficially held by the stockholder or any Stockholder Associated Person, (4) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, (5)  any material interest of the stockholder or a Stockholder Associated Person in such business, and (6)  a statement whether either such stockholder or any Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the voting power of the corporation’s voting shares required under applicable law to carry the proposal (such information provided and statements made as required by clauses  (1) through (6), a “ Business Solicitation Statement ”). In addition, to be in proper written form, a stockholder’s notice to the secretary must be supplemented not later than ten days following the record date for the determination of stockholders entitled to notice of the meeting to disclose the information contained in clauses  (3) and (4)  above as of the record date. For purposes of this Section  2.4, a “ Stockholder Associated Person ” of any stockholder shall mean (i)  any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii)  any beneficial owner of shares of stock of the corporation owned of record or beneficially by such stockholder and on whose behalf the proposal or nomination, as the case may be, is being made, or (iii)  any person controlling, controlled by or under common control with such person referred to in the preceding clauses  (i) and (ii).

(c) Without exception, no business shall be conducted at any annual meeting except in accordance with the provisions set forth in this Section 2.4(i) and, if applicable, Section  2.4(ii). In addition, business proposed to be brought by a stockholder may not be brought before the annual meeting if such stockholder or a Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Business Solicitation Statement applicable to such business or if the Business Solicitation Statement applicable to such business contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that business was not properly brought before the annual meeting and in accordance with the provisions of this Section  2.4(i), and, if the chairperson should so determine, he or she shall so declare at the annual meeting that any such business not properly brought before the annual meeting shall not be conducted.

(ii) Advance Notice of Director Nominations at Annual Meetings . Notwithstanding anything in these bylaws to the contrary, only persons who are nominated in accordance with the procedures set forth in this Section 2.4(ii) shall be eligible for election or re-election as directors at an annual meeting of stockholders. Nominations of persons for election to the board of directors of the corporation shall be made at an annual meeting of stockholders only (A)  by or at the direction of the board of directors or (B)  by a stockholder of the corporation who (1)  was a stockholder of record at the time of the giving of the notice required by this Section  2.4(ii) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2)  has complied with the notice procedures set forth in this Section 2.4(ii). In addition to any other applicable requirements, for a nomination to be made by a stockholder, the stockholder must have given timely notice thereof in proper written form to the secretary of the corporation.

 

3


(a) To comply with clause (B) of Section  2.4(ii) above, a nomination to be made by a stockholder must set forth all information required under this Section  2.4(ii) and must be received by the secretary of the corporation at the principal executive offices of the corporation at the time set forth in, and in accordance with, the final three sentences of Section  2.4(i)(a) above; provided additionally, however , that in the event that the number of directors to be elected to the board of directors is increased and there is no Public Announcement naming all of the nominees for director or specifying the size of the increased board made by the corporation at least ten days before the last day a stockholder may deliver a notice of nomination pursuant to the foregoing provisions, a stockholder’s notice required by this Section  2.4(ii) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be received by the secretary of the corporation at the principal executive offices of the corporation not later than the close of business on the tenth day following the day on which such Public Announcement is first made by the corporation.

(b) To be in proper written form, such stockholder’s notice to the secretary must set forth:

(1) as to each person (a “ nominee ”) whom the stockholder proposes to nominate for election or re-election as a director: (A)  the name, age, business address and residence address of the nominee, (B)  the principal occupation or employment of the nominee, (C)  the class and number of shares of the corporation that are held of record or are beneficially owned by the nominee and any derivative positions held or beneficially held by the nominee, (D)  whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of the nominee with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit of share price changes for, or to increase or decrease the voting power of the nominee, (E)  a description of all arrangements or understandings between or among any of the stockholder, each nominee and/or any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder or relating to the nominee’s potential service on the board of directors, (F)  a written statement executed by the nominee acknowledging that as a director of the corporation, the nominee will owe a fiduciary duty under Delaware law with respect to the corporation and its stockholders, and (G)  any other information relating to the nominee that would be required to be disclosed about such nominee if proxies were being solicited for the election of the nominee as a director, or that is otherwise required, in each case pursuant to Regulation  14A under the 1934  Act (including without limitation the nominee’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and

(2) as to such stockholder giving notice, (A) the information required to be provided pursuant to clauses  (2) through (5)  of Section  2.4(i)(b) above, and the supplement referenced in the second sentence of Section  2.4(i)(b) above (except that the references to “business” in such clauses shall instead refer to nominations of directors for

 

4


purposes of this paragraph), and (B) a statement whether either such stockholder or Stockholder Associated Person will deliver a proxy statement and form of proxy to holders at least the percentage of the corporation’s voting shares reasonably believed by such stockholder or Stockholder Associated Person to be necessary to elect such nominee(s) (such information provided and statements made as required by clauses  (A) and (B)  above, a “ Nominee Solicitation Statement ”).

(c) At the request of the board of directors, any person nominated by a stockholder for election as a director must furnish to the secretary of the corporation (1) that information required to be set forth in the stockholder’s notice of nomination of such person as a director as of a date subsequent to the date on which the notice of such person’s nomination was given and (2)  such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent director of the corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee; in the absence of the furnishing of such information if requested, such stockholder’s nomination shall not be considered in proper form pursuant to this Section  2.4(ii).

(d) Without exception, no person shall be eligible for election or re-election as a director of the corporation at an annual meeting of stockholders unless nominated in accordance with the provisions set forth in this Section 2.4(ii). In addition, a nominee shall not be eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that a nomination was not made in accordance with the provisions prescribed by these bylaws, and if the chairperson should so determine, he or she shall so declare at the annual meeting, and the defective nomination shall be disregarded.

(iii) Advance Notice of Director Nominations for Special Meetings .

(a) For a special meeting of stockholders at which directors are to be elected pursuant to Section 2.3, nominations of persons for election to the board of directors shall be made only (1)  by or at the direction of the board of directors or (2)  by any stockholder of the corporation who (A)  is a stockholder of record at the time of the giving of the notice required by this Section  2.4(iii) and on the record date for the determination of stockholders entitled to vote at the special meeting and (B)  delivers a timely written notice of the nomination to the secretary of the corporation that includes the information set forth in Sections  2.4(ii)(b) and (ii)(c) above. To be timely, such notice must be received by the secretary at the principal executive offices of the corporation not later than the close of business on the later of the 90th  day prior to such special meeting or the tenth day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting. In no event shall any adjournment, rescheduling or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice. A person shall not be eligible for election or re-election as a director at a

 

5


special meeting unless the person is nominated (i) by or at the direction of the board of directors or (ii)  by a stockholder in accordance with the notice procedures set forth in this Section  2.4(iii). In addition, a nominee shall not be eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading.

(b) The chairperson of the special meeting shall, if the facts warrant, determine and declare at the meeting that a nomination or business was not made in accordance with the procedures prescribed by these bylaws, and if the chairperson should so determine, he or she shall so declare at the meeting, and the defective nomination or business shall be disregarded.

(iv) Other Requirements and Rights . In addition to the foregoing provisions of this Section 2.4, a stockholder must also comply with all applicable requirements of state law and of the 1934 Act and the rules and regulations thereunder with respect to the matters set forth in this Section  2.4, including, with respect to business such stockholder intends to bring before the annual meeting that involves a proposal that such stockholder requests to be included in the corporation’s proxy statement, the requirements of Rule  14a-8 (or any successor provision) under the 1934 Act. Nothing in this Section  2.4 shall be deemed to affect any right of the corporation to omit a proposal from the corporation’s proxy statement pursuant to Rule  14a-8 (or any successor provision) under the 1934 Act.

2.5 Notice of Stockholders Meetings . Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided in the DGCL, the certificate of incorporation or these bylaws, the written notice of any meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.

2.6 Quorum . The holders of a majority of the voting power of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders, unless otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange. Where a separate vote by a class or series or classes or series is required, a majority of the voting power of the issued and outstanding shares of such class or series or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter, except as otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange.

 

6


Whether or not a quorum is present at a meeting of stockholders, the chairperson of the meeting shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting.

2.7 Adjourned Meeting; Notice . When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the board of directors shall fix a new record date for notice of such adjourned meeting in accordance with Section 213(a) of the DGCL and Section  2.11 of these bylaws, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.

2.8 Conduct of Business . The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business. The chairperson of any meeting of stockholders shall be designated by the board of directors; in the absence of such designation, the chairperson of the board, if any, the chief executive officer (in the absence of the chairperson) or the lead independent director (in the absence of the chairperson of the board and the chief executive officer), or in their absence any other executive officer of the corporation, shall serve as chairperson of the stockholder meeting.

2.9 Voting . The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section  2.11 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section  218 (relating to voting trusts and other voting agreements) of the DGCL.

Except as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.

Except as otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange, in all matters other than the election of directors, the affirmative vote of a majority of the voting power of the shares, present in person or represented by proxy, at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Except as otherwise required by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange, directors shall be elected by a plurality of the voting power of the shares, present in person or represented by proxy, at the meeting and entitled to vote on the election of directors. Where a separate vote by a class or series or classes or series is required, in all matters other than the election of directors, the affirmative vote of the majority of the voting power of shares of such class or series or classes or series, present in person or represented by proxy, at the meeting shall be the act of such class or series or classes or series, except as otherwise provided by law, the certificate of incorporation, these bylaws or the rules of any applicable stock exchange.

 

7


2.10 No Stockholder Action By Written Consent Without A Meeting . Subject to the rights of the holders of the shares of any series of preferred stock or any other class of stock or series thereof that have been expressly granted the right to take action by written consent, any action required or permitted to be taken by the stockholders of the corporation must be effected at a duly called annual or special meeting of stockholders of the corporation and may not be effected by any consent in writing by such stockholders.

2.11 Record Dates . In order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the board of directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the board of directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination.

If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the provisions of Section 213 of the DGCL and this Section 2.11 at the adjourned meeting.

In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.

2.12 Proxies . Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy

 

8


that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A written proxy may be in the form of a telegram, cablegram, or other means of electronic transmission which sets forth or is submitted with information from which it can be determined that the telegram, cablegram, or other means of electronic transmission was authorized by the stockholder.

2.13 List of Stockholders Entitled to Vote . The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however , if the record date for determining the stockholders entitled to vote is less than 10  days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i)  on a reasonably accessible electronic network; provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii)  during ordinary business hours, at the corporation’s principal place of business. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then such list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

2.14 Inspectors of Election . Before any meeting of stockholders, the board of directors shall appoint an inspector or inspectors of election to act at the meeting or its adjournment. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy; provided further that, in any case, if no inspector or alternate is able to act at a meeting of stockholders, the chairperson of the meeting shall appoint at least one (1)  inspector to act at the meeting.

Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. Such inspectors shall:

(i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

 

9


(ii) receive votes, ballots or consents;

(iii) hear and determine all challenges and questions in any way arising in connection with the right to vote;

(iv) count and tabulate all votes or consents;

(v) determine when the polls shall close;

(vi) determine the result; and

(vii) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.

The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

ARTICLE III

DIRECTORS

3.1 Powers . The business and affairs of the corporation shall be managed by or under the direction of the board of directors, except as may be otherwise provided in the DGCL or the certificate of incorporation.

3.2 Number of Directors . The board of directors shall consist of one or more members, each of whom shall be a natural person. Unless the certificate of incorporation fixes the number of directors, the number of directors shall be determined from time to time by resolution of the board of directors. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3 Election, Qualification and Term of Office Of Directors . Except as provided in Section 3.4 of these bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until such director s successor is elected and qualified or until such director’s earlier death, resignation or removal. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors.

In accordance with the provisions of the certificate of incorporation, the directors of the corporation shall be divided into three classes.

3.4 Resignation and Vacancies . Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation. A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. A resignation which is conditioned

 

10


upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable. Unless otherwise provided in the certificate of incorporation or these bylaws, when one or more directors resign from the board of directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.

Unless otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. If the directors are divided into classes, a person so elected by the directors then in office to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified.

If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Delaware Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board of directors (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the voting power of the voting stock at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.

3.5 Place of Meetings; Meetings By Telephone . The board of directors may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

3.6 Regular Meetings . Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board of directors.

 

11


3.7 Special Meetings; Notice . Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairperson of the board of directors, the chief executive officer, the secretary or a majority of the authorized number of directors, at such times and places as he or she or they shall designate.

Notice of the time and place of special meetings shall be:

(i) delivered personally by hand, by courier or by telephone;

(ii) sent by United States first-class mail, postage prepaid;

(iii) sent by facsimile; or

(iv) sent by electronic mail,

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the corporation’s records.

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the corporation’s principal executive office) nor the purpose of the meeting.

3.8 Quorum; Voting . At all meetings of the board of directors, a majority of the total authorized number of directors shall constitute a quorum for the transaction of business. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws.

If the certificate of incorporation provides that one or more directors shall have more or less than one vote per director on any matter, every reference in these bylaws to a majority or other proportion of the directors shall refer to a majority or other proportion of the votes of the directors.

3.9 Board Action By Written Consent Without A Meeting . Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board of directors or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic

 

12


transmission or transmissions are filed with the minutes of proceedings of the board of directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Any person (whether or not then a director) may provide, whether through instruction to an agent or otherwise, that a consent to action will be effective at a future time (including a time determined upon the happening of an event), no later than 60 days after such instruction is given or such provision is made and such consent shall be deemed to have been given for purposes of this Section 3.9 at such effective time so long as such person is then a director and did not revoke the consent prior to such time. Any such consent shall be revocable prior to its becoming effective.

3.10 Fees and Compensation of Directors . Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors.

3.11 Removal of Directors . A director may be removed from office by the stockholders of the corporation only as provided in the certificate of incorporation.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

ARTICLE IV

COMMITTEES

4.1 Committees of Directors . The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in these bylaws, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii)  adopt, amend or repeal any bylaw of the corporation.

4.2 Committee Minutes . Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

4.3 Meetings and Action of Committees . Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

(i) Section 3.5 (place of meetings and meetings by telephone);

 

13


(ii) Section  3.6 (regular meetings);

(iii) Section 3.7 (special meetings and notice);

(iv) Section 3.8 (quorum; voting);

(v) Section  7.5 (waiver of notice); and

(vi) Section 3.9 (action without a meeting)

with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members. However:

(i) the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee;

(ii) special meetings of committees may also be called by resolution of the board of directors; and

(iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors or a committee may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

Any provision in the certificate of incorporation providing that one or more directors shall have more or less than one vote per director on any matter shall apply to voting in any committee or subcommittee, unless otherwise provided in the certificate of incorporation or these bylaws.

4.4 Subcommittees . Unless otherwise provided in the certificate of incorporation, these bylaws or the resolutions of the board of directors designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.

ARTICLE V

OFFICERS

5.1 Officers . The officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the board of directors, a chairperson of the board of directors, a vice chairperson of the board of directors, a chief executive officer, a chief financial officer or treasurer, one or more vice presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

 

14


5.2 Appointment of Officers . The board of directors shall appoint the officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.

5.3 Subordinate Officers . The board of directors may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.

5.4 Removal and Resignation of Officers . Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board of directors or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.

Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

5.5 Vacancies In Offices . Any vacancy occurring in any office of the corporation shall be filled by the board of directors or as provided in Section 5.3.

5.6 Representation of Shares of Other Corporations . The chairperson of the board of directors, the president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares or other equity interests of any other corporation or corporations or entity or entities standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

5.7 Authority and Duties of Officers . All officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors or the stockholders and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the board of directors.

 

15


ARTICLE VI

STOCK

6.1 Stock Certificates; Partly Paid Shares . The shares of the corporation shall be represented by certificates; provided that the board of directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the corporation by the chairperson of the board of directors or vice-chairperson of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The corporation shall not have power to issue a certificate in bearer form.

The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly-paid shares, or upon the books and records of the corporation in the case of uncertificated partly-paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully-paid shares, the corporation shall declare a dividend upon partly-paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

6.2 Special Designation On Certificates . If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however , that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this Section  6.2 or Sections 151, 156, 202(a) or 218(a) of the DGCL or with respect to this Section 6.2 a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

 

16


6.3 Lost Certificates . Except as provided in this Section  6.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

6.4 Dividends . The board of directors, subject to any restrictions contained in the certificate of incorporation or applicable law, may declare and pay dividends upon the shares of the corporation’s capital stock.

The board of directors may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.

6.5 Transfer of Stock . Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by an attorney duly authorized, and, subject to Section 6.3 of these bylaws, if such stock is certificated, upon the surrender of a certificate or certificates for a like number of shares, properly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer.

6.6 Stock Transfer Agreements . The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

6.7 Registered Stockholders . The corporation:

(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;

(ii) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and

(iii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VII

MANNER OF GIVING NOTICE AND WAIVER

7.1 Notice of Stockholders’ Meetings . Notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the corporation’s records. An affidavit of the secretary or an assistant secretary of the corporation or of the transfer agent or other agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

17


7.2 Notice By Electronic Transmission . Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any such consent shall be deemed revoked if:

(i) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent; and

(ii) such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

Any notice given pursuant to the preceding paragraph shall be deemed given:

(i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

(ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

(iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

(iv) if by any other form of electronic transmission, when directed to the stockholder.

An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

An “ electronic transmission ” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

Notice by a form of electronic transmission shall not apply with respect to Sections 164, 296, 311, 312 or 324 of the DGCL.

 

18


7.3 Notice To Stockholders Sharing An Address . Except as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the corporation under the provisions of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any stockholder who fails to object in writing to the corporation, within 60 days of having been given written notice by the corporation of its intention to send the single notice, shall be deemed to have consented to receiving such single written notice.

7.4 Notice To Person With Whom Communication Is Unlawful . Whenever notice is required to be given, under the DGCL, the certificate of incorporation or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

7.5 Waiver of Notice . Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

ARTICLE VIII

FORUM FOR CERTAIN ACTIONS

Unless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the corporation to the corporation or the corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the state of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this bylaw.

 

19


ARTICLE IX

INDEMNIFICATION

9.1 Indemnification of Directors and Officers In Third Party Proceedings . Subject to the other provisions of this Article IX, the corporation shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”) (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

9.2 Indemnification of Directors and Officers in Actions by or in the Right of the Corporation . Subject to the other provisions of this Article IX, the corporation shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

 

20


9.3 Successful Defense . To the extent that a present or former director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described in Section 9.1 or Section  9.2, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

9.4 Indemnification of Others . Subject to the other provisions of this Article IX, the corporation shall have power to indemnify its employees and agents to the extent not prohibited by the DGCL or other applicable law. The board of directors shall have the power to delegate to such person or persons as the board shall in its discretion determine the determination of whether employees or agents shall be indemnified.

9.5 Advance Payment of Expenses . Expenses (including attorneys’ fees) actually and reasonably incurred by an officer or director of the corporation in defending any Proceeding shall be paid by the corporation in advance of the final disposition of such Proceeding upon receipt of a written request therefor (together with documentation reasonably evidencing such expenses) and an undertaking by or on behalf of the person to repay such amounts if it shall ultimately be determined that the person is not entitled to be indemnified under this Article IX or the DGCL. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents of the corporation or by persons serving at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. The right to advancement of expenses shall not apply to any claim for which indemnity is excluded pursuant to these bylaws, but shall apply to any Proceeding referenced in Section  9.6(ii) or 9.6(iii) prior to a determination that the person is not entitled to be indemnified by the corporation.

9.6 Limitation On Indemnification . Subject to the requirements in Section 9.3 and the DGCL, the corporation shall not be obligated to indemnify any person pursuant to this Article  IX in connection with any Proceeding (or any part of any Proceeding):

(i) for which payment has actually been made to or on behalf of such person under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid;

(ii) for an accounting or disgorgement of profits pursuant to Section  16(b) of the 1934 Act, or similar provisions of federal, state or local statutory law or common law, if such person is held liable therefor (including pursuant to any settlement arrangements);

(iii) for any reimbursement of the corporation by such person of any bonus or other incentive-based or equity-based compensation or of any profits realized by such person from the sale of securities of the corporation, as required in each case under the 1934 Act (including any such reimbursements that arise from an accounting restatement of the corporation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes -Oxley Act ”), or the payment to the corporation of profits arising from the purchase and sale by such person of securities in violation of Section  306 of the Sarbanes-Oxley Act), if such person is held liable therefor (including pursuant to any settlement arrangements);

 

21


(iv) initiated by such person, including any Proceeding (or any part of any Proceeding) initiated by such person against the corporation or its directors, officers, employees, agents or other indemnitees, unless (a) the board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (b)  the corporation provides the indemnification, in its sole discretion, pursuant to the powers vested in the corporation under applicable law, (c)  otherwise required to be made under Section  9.7 or (d)  otherwise required by applicable law; or

(v) if prohibited by applicable law; provided, however , that if any provision or provisions of this Article  IX shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1)  the validity, legality and enforceability of the remaining provisions of this Article  IX (including, without limitation, each portion of any paragraph or clause containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2)  to the fullest extent possible, the provisions of this Article  IX (including, without limitation, each such portion of any paragraph or clause containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

9.7 Determination; Claim . If a claim for indemnification or advancement of expenses under this Article IX is not paid in full within 60 days after receipt by the corporation of the written request therefor, the claimant shall be entitled to an adjudication by a court of competent jurisdiction of his or her entitlement to such indemnification or advancement of expenses. The corporation shall indemnify such person against any and all expenses that are incurred by such person in connection with any action for indemnification or advancement of expenses from the corporation under this Article  IX, to the extent such person is successful in such action, and to the extent not prohibited by law. In any such suit, the corporation shall, to the fullest extent not prohibited by law, have the burden of proving that the claimant is not entitled to the requested indemnification or advancement of expenses.

9.8 Non-Exclusivity of Rights . The indemnification and advancement of expenses provided by, or granted pursuant to, this Article IX shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the certificate of incorporation or any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advancement of expenses, to the fullest extent not prohibited by the DGCL or other applicable law.

9.9 Insurance . The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of the DGCL.

 

22


9.10 Survival . The rights to indemnification and advancement of expenses conferred by this Article IX shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

9.11 Effect of Repeal or Modification . A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to the certificate of incorporation or these bylaws after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.

9.12 Certain Definitions . For purposes of this Article IX, references to the “ corporation ” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article  IX with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article  IX, references to “ other enterprises ” shall include employee benefit plans; references to “ fines ” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “ serving at the request of the corporation ” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “ not opposed to the best interests of the corporation ” as referred to in this Article  IX.

ARTICLE X

GENERAL MATTERS

10.1 Execution of Corporate Contracts and Instruments . Except as otherwise provided by law, the certificate of incorporation or these bylaws, the board of directors may authorize any officer or officers, or agent or agents, to enter into any contract or execute any document or instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

10.2 Fiscal Year . The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.

 

23


10.3 Seal . The corporation may adopt a corporate seal, which may be altered by the board of directors. The corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

10.4 Construction; Definitions . Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “ person ” includes both a corporation and a natural person.

ARTICLE XI

AMENDMENTS

These bylaws may be adopted, amended or repealed by the stockholders entitled to vote; provided, however , that the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the total voting power of outstanding voting securities, voting together as a single class, shall be required for the stockholders of the corporation to alter, amend or repeal, or adopt any provision of these bylaws. The board of directors shall also have the power to adopt, amend or repeal bylaws.

A bylaw amendment adopted by stockholders which specifies the votes that shall be necessary for the election of directors shall not be further amended or repealed by the board of directors.

 

24


EVENTBRITE, INC.

CERTIFICATE OF AMENDMENT OF BYLAWS

The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of Eventbrite, Inc., a Delaware corporation and that the foregoing bylaws were amended and restated on                    , 2018 by the corporation’s board of directors.

IN WITNESS WHEREOF , the undersigned has hereunto set his hand this          day of                     , 2018.

 

                                                                                       ,
Samantha Harnett, Secretary

Exhibit 10.6

Andrew Dreskin’s Executive Bonus Plan

1. Plan.

Andrew Dreskin’s Executive Bonus Plan (hereinafter referred to as the “Bonus Plan”) governs Eventbrite’s (or “Company”) bonus payments to Andrew Dreskin (“Participant”). The “Plan Period” is set forth in Exhibit A, but will generally run from January 1 through December 31 of the applicable calendar year. Bonus payments will be made within 30 days of the end of the Plan Period.

2. Eligibility.

To be eligible to participate in the Bonus Plan, Participant must sign the participation notice, attached as Exhibit A.

3. Plan Administration.

The Bonus Plan will be administered by the Company’s Chief People Officer and Chief Executive Officer, in consultation with the Compensation Committee of the Company’s Board of Directors (“Administrators”). The Administrators shall have sole authority and discretion to interpret the Bonus Plan and to make or eliminate any rules and procedures for administration. Any determination by the Administrators will be final and binding on Participant. The Administrators may, in their sole discretion, add to, amend, or discontinue the Bonus Plan, at any time, with notice. In addition, Administrators reserve the unilateral right to terminate Participant’s participation in the Bonus Plan at any time, or reduce bonus payments based on Participant’s individual performance.

4. Termination of Employment.

Bonus payments earned in the Plan Period will be prorated upon Participant’s termination of employment. Nothing in this Bonus Plan shall change the “at will” nature of the Participant’s service to the Company.

5. Leaves of Absence.

Participant may continue to be eligible to participate in the Bonus Plan during an approved leave of absence at the Administrator’s sole discretion, provided that the bonus payments may be prorated accordingly.

6. Advance Payments.

The Company will make advance payments in the amount set forth in Exhibit A (the “Advance Payment”) and true-up Participant within 30 days of the end of the Plan Period. If Participant is paid any amount in excess of bonuses earned under this Bonus Plan, including but not limited to as a result of Advance Payments (the “Overpayment”), Participant is obligated to repay the amount of such Overpayment in full to the Company within 30 days following notice by the Company of such Overpayment and authorizes the Company to deduct any Overpayment against any and all amounts otherwise owed by the Company to Participant. Termination of employment and/or expiration of the Plan Period shall not in any way limit or terminate Participant’s liability to repay Overpayments.

7. Taxes.

All payments under the Bonus Plan will be recognized as compensation of Participant in the year paid for taxable income purposes. All payments under the Bonus Plan will be subject to withholding for required income and other applicable taxes or deductions.

8. Rights and Limitations.

Except to the extent provided herein, this Bonus Plan supersedes any and all prior compensation policies, plans or understandings regarding bonus payments to Participant. Nothing in the Bonus Plan may be construed to give Participant any right to be paid any amount other than under the terms of the Bonus Plan. Any rights accruing to Participant under the Bonus Plan shall be solely those of Participant and may not be assigned or transferred. Nothing contained in the Bonus Plan, and no action taken pursuant to the provisions hereof, will create or be construed to create a trust of any kind, a pledge, or a fiduciary relationship between the Company and Participant or any other person. Nothing herein will be construed


to require the Company to maintain any fund or to segregate any amount for Participant’s benefit. The Bonus Plan is provided at the discretion of the Company and is not a contractual entitlement. To the extent Participant holds any rights by virtue of an award under the Bonus Plan, such right shall be no greater than the right of an unsecured general creditor of the Company or any of its subsidiaries. Any compensation provided under the Bonus Plan is not an acquired right or entitlement. Participation in the Bonus Plan one year does not imply future participation in this or any other Bonus Plan. Nothing in this Bonus Plan shall be construed to limit the rights of Participant under the Company’s benefit plans, programs or policies.

9. Proprietary Information; Dispute Resolution.

Participant is expected to comply with all applicable proprietary information and confidentiality obligations according to the terms of local policies and his employment agreement. Furthermore, to the extent the Participant has entered into a Dispute Resolution Agreement with the Company, the Participant agrees by signing below that any and all controversies, claims, or disputes arising out of or relating to the Plan shall be covered by and subject to final and binding arbitration under such Dispute Resolution Agreement and the Participant is expected to and agrees by signing below to comply with the terms of such agreement. To the extent the Participant has not entered into a Dispute Resolution Agreement, the Bonus Plan shall be construed in accordance with and governed by the laws of the State of California, without regard to principles of conflict of laws of such state, and the parties hereby consent to the jurisdiction of the Superior Court of San Francisco and the United States District Court for the Northern District of California.

10. Section  409A.

The provisions regarding all payments to be made hereunder shall be interpreted in such a manner that all such payments either comply with Section 409A of the Internal Revenue Code (hereinafter “Code”) or are exempt from the requirements of Section 409A of the Code as “short-term deferrals.” The Company makes no representation or warranty and shall have no liability to Participant or any other person if any payments under any provisions of this Bonus Plan are determined to constitute deferred compensation under Section 409A of the Code that are subject to the 20 percent tax under Section 409A of the Code.

11. Enforceability.

If any portion or provision of this Bonus Plan shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Bonus Plan, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Bonus Plan shall be valid and enforceable to the fullest extent permitted by law.

12. Waiver.

No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Bonus Plan, or the waiver by any party of any breach of this Bonus Plan, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

13. Notices.

Any notices, requests, demands, and other communications provided for by this Bonus Plan shall be sufficient if in writing and delivered in person, electronically or by certified mail.

 

2


Exhibit A

Participation Notice

Dear Mr. Dreskin,

Eventbrite (the “Company”) is pleased to invite you to participate in the Company’s Executive Bonus Plan (the “Bonus Plan”) in accordance with the terms of this letter and the Bonus Plan with respect to the plan period running from January 1 through December 31, 2018 (the “Plan Period”).

Your Bonus Payout shall be as set forth in Addendum A. The terms of the Bonus Plan are detailed in the copy of the Bonus Plan that has been provided to you, and those terms are incorporated in and made a part this letter. This letter (and addendums) and the Bonus Plan constitute the entire agreement between you and the Company with respect to the subject matter hereof and supersede in all respects any and all prior agreements (oral or written) between you and the Company concerning such subject matter. In the event of a conflict between the terms of this letter and the terms of the Bonus Plan, the terms of the Bonus Plan shall govern your bonus.

I acknowledge that I have received and read a copy of the Bonus Plan, Exhibit A and its addendums in their entirety and agree to the terms and conditions of the Bonus Plan. I understand that the Company may amend, supplement, supersede, or terminate the Bonus Plan at any time in its sole discretion. In addition, I understand that my agreeing to the terms of the Bonus Plan is a condition of my earning bonuses under the Bonus Plan.

 

EMPLOYEE SIGNATURE    DATE
/s/ Andrew Dreskin    2018-08-23
Chief People Officer    DATE
/s/ Omar Cohen    2018-08-23


Addendum A

For Participant to earn a payout pursuant to this Bonus Plan, the Company must achieve at least 70% retention of 2017 Ticketfly customers during the Plan Period. Participant’s bonus will increase with the percentage of retained Gross Ticket Fees (“GTF”) based on a linear calculation, as set forth in Addendum B.

The Bonus Payout shall be calculated by the Administrators in their sole discretion as follows: Target Bonus x (Retained GTF ÷ Target Retained GTF), where:

 

   

Target Bonus: $500,000, achieved upon 90% retention of 2017 Ticketfly customers. Participant’s Bonus Payout is capped at Target.

 

   

Retained GTF: 2018 GTF derived from customers that sold tickets on the Ticketfly platform in 2017.

 

   

Target Retained GTF: $50,000,000, calculated as 90% of Ticketfly’s 2017 eligible GTF. Ticketfly’s 2017 eligible GTF less customers purchased by a third party, those filing for Chapter 11 bankruptcy, and those the Company elects not to renew for economic reasons, and GTF for the following customers: Black Rock City, Toronto Festival of Beer, JFL Northwest.

Pursuant to the terms and conditions set forth in the Bonus Plan, the Company will make Advance Payments in the amount of $100,000 per quarter.


Addendum B

Bonus Payout vs. % Migrated GTF

 

 

LOGO

Exhibit 10.8

E VENTBRITE , I NC .

2010 S TOCK P LAN

A DOPTED ON J ANUARY  20, 2010

L AST A MENDED ON J ULY  31, 2018


TABLE OF CONTENTS

 

         Page  

SECTION 1.

  ESTABLISHMENT AND PURPOSE      1  

SECTION 2.

  ADMINISTRATION      1  

(a)

  Committees of the Board of Directors      1  

(b)

  Authority of the Board of Directors      1  

SECTION 3.

  ELIGIBILITY      1  

(a)

  General Rule      1  

(b)

  Ten-Percent Stockholders      1  

SECTION 4.

  STOCK SUBJECT TO PLAN      2  

(a)

  Basic Limitation      2  

(b)

  Additional Shares      2  

SECTION 5.

  TERMS AND CONDITIONS OF AWARDS OR SALES      2  

(a)

  Stock Grant or Purchase Agreement      2  

(b)

  Duration of Offers and Nontransferability of Rights      2  

(c)

  Purchase Price      2  

(d)

  Withholding Taxes      2  

(e)

  Transfer Restrictions and Forfeiture Conditions      2  

Section 5A.

  Restricted Stock Units      3  

(a)

  Restricted Stock Unit Agreement      3  

(b)

  Purchase Price      3  

(c)

  Rights as a Stockholder      3  

(d)

  Termination      3  

(e)

  Withholding Taxes      3  

(f)

  Transfer Restrictions and Forfeiture Conditions      3  

SECTION 6.

  TERMS AND CONDITIONS OF OPTIONS      3  

(a)

  Stock Option Agreement      3  

(b)

  Number of Shares      4  

(c)

  Exercise Price      4  

(d)

  Exercisability      4  

(e)

  Basic Term      4  

(f)

  Termination of Service (Except by Death)      4  

(g)

  Leaves of Absence      5  

(h)

  Death of Optionee      5  

(i)

  Post-Exercise Restrictions on Transfer of Shares      5  

(j)

  Pre-Exercise Restrictions on Transfer of Options or Shares      5  

(k)

  Withholding Taxes      6  

(l)

  No Rights as a Stockholder      6  

(m)

  Modification, Extension and Assumption of Options      6  

(n)

  Company’s Right to Cancel Certain Options      6  

 

i


SECTION 7.

  PAYMENT FOR SHARES      7  

(a)

  General Rule      7  

(b)

  Services Rendered      7  

(c)

  Promissory Note      7  

(d)

  Surrender of Stock      7  

(e)

  Exercise/Sale      7  

(f)

  Other Forms of Payment      7  

SECTION 8.

  ADJUSTMENT OF SHARES      7  

(a)

  General      7  

(b)

  Mergers and Consolidations      8  

(c)

  Reservation of Rights      9  

SECTION 9.

  PRE-EXERCISE INFORMATION REQUIREMENT      9  

(a)

  Application of Requirement      9  

(b)

  Scope of Requirement      9  

SECTION 10.

  MISCELLANEOUS PROVISIONS      9  

(a)

  Securities Law Requirements      9  

(b)

  No Retention Rights      9  

(c)

  Treatment as Compensation      9  

(d)

  Governing Law      10  

SECTION 11.

  DURATION AND AMENDMENTS      10  

(a)

  Term of the Plan      10  

(b)

  Right to Amend or Terminate the Plan      10  

(c)

  Effect of Amendment or Termination      10  

SECTION 12.

  DEFINITIONS      10  

 

ii


E VENTBRITE , I NC . 2010 S TOCK P LAN

SECTION 1. ESTABLISHMENT AND PURPOSE.

The purpose of the Plan is to offer selected persons an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, by acquiring Shares of the Company’s Stock. The Plan provides for the direct award or sale of Shares, the grant of RSUs, and for the grant of Options to purchase Shares. Options granted under the Plan may include Nonstatutory Options as well as ISOs intended to qualify under Section 422 of the Code.

Capitalized terms are defined in Section 12.

SECTION 2. ADMINISTRATION.

(a) Committees of the Board of Directors . The Plan may be administered by one or more Committees. Each Committee shall consist of one or more members of the Board of Directors who have been appointed by the Board of Directors. Each Committee shall have such authority and be responsible for such functions as the Board of Directors has assigned to it. If no Committee has been appointed, the entire Board of Directors shall administer the Plan. Any reference to the Board of Directors in the Plan shall be construed as a reference to the Committee (if any) to whom the Board of Directors has assigned a particular function.

(b) Authority of the Board of Directors . Subject to the provisions of the Plan, the Board of Directors shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan. All decisions, interpretations and other actions of the Board of Directors shall be final and binding on all Purchasers, all Grantees, all Optionees and all persons deriving their rights from a Purchaser, Grantee or Optionee.

SECTION 3. ELIGIBILITY.

(a) General Rule . Only Employees, Outside Directors and Consultants shall be eligible for the grant of Nonstatutory Options or the direct award or sale of Shares or the grant of RSUs. Only Employees shall be eligible for the grant of ISOs.

(b) Ten -Percent Stockholders . A person who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries shall not be eligible for the grant of an ISO unless (i)  the Exercise Price is at least 110% of the Fair Market Value of a Share on the Date of Grant and (ii)  such ISO by its terms is not exercisable after the expiration of five years from the Date of Grant. For purposes of this Subsection  (b), in determining stock ownership, the attribution rules of Section  424(d) of the Code shall be applied.

 

1


SECTION 4. STOCK SUBJECT TO PLAN.

(a) Basic Limitation . Not more than 30,663,761 Shares may be issued under the Plan, subject to Subsection  (b) below and Section  8(a). All of these Shares may be issued upon the exercise of ISOs. The number of Shares that are subject to Options or other rights outstanding at any time under the Plan shall not exceed the number of Shares that then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. Shares offered under the Plan may be authorized but unissued Shares or treasury Shares.

(b) Additional Shares . In the event that Shares previously issued under the Plan are reacquired by the Company, such Shares shall be added to the number of Shares then available for issuance under the Plan. In the event that Shares that otherwise would have been issuable under the Plan are withheld by the Company in payment of the Purchase Price, Exercise Price or withholding taxes, such Shares shall remain available for issuance under the Plan. In the event that an outstanding Option or other right for any reason expires or is canceled, the Shares allocable to the unexercised portion of such Option or other right shall be added to the number of Shares then available for issuance under the Plan.

SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.

(a) Stock Grant or Purchase Agreement . Each award of Shares under the Plan shall be evidenced by a Stock Grant Agreement between the Grantee and the Company. Each sale of Shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Grant Agreement or Stock Purchase Agreement. The provisions of the various Stock Grant Agreements and Stock Purchase Agreements entered into under the Plan need not be identical.

(b) Duration of Offers and Nontransferability of Rights . Any right to purchase Shares under the Plan (other than an Option) shall automatically expire if not exercised by the Purchaser within 30 days after the grant of such right was communicated to the Purchaser by the Company. Such right shall not be transferable and shall be exercisable only by the Purchaser to whom such right was granted.

(c) Purchase Price . The Board of Directors shall determine the Purchase Price of Shares to be offered under the Plan at its sole discretion. The Purchase Price shall be payable in a form described in Section  7.

(d) Withholding Taxes . As a condition to the award, purchase, vesting or transfer of Shares, the Grantee or Purchaser shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such event.

(e) Transfer Restrictions and Forfeiture Conditions . Any Shares awarded or sold under the Plan shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may determine. Such restrictions shall be set forth in the applicable Stock Grant Agreement or Stock Purchase Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

 

2


SECTION 5A. Restricted Stock Units.

(a) Restricted Stock Unit Agreement . Upon the grant of RSUs, the Grantee and the Company shall enter into a Restricted Stock Unit Agreement. The terms and conditions of each such Restricted Stock Unit Agreement shall be determined by the Board of Directors and may differ among individual awards and Grantees. The Board of Directors shall determine the restrictions and conditions applicable to each RSU at the time of grant. Vesting conditions may be based on continuing Service and/or achievement of pre-established performance goals and objectives and/or other such criteria as the Board of Directors may determine. On or promptly following the vesting date or dates applicable to any RSU, but in no event later than March  15 of the year following the year in which such vesting occurs, such RSUs shall be settled in the form of cash or shares of Stock, as specified in the Restricted Stock Unit Agreement. RSUs may not be sold, assigned, transferred, pledged, or otherwise encumbered or disposed of.

(b) Purchase Price . Unless otherwise provided for in the Restricted Stock Unit Agreement, RSUs shall have a purchase price of zero (or par value if required by applicable law).

(c) Rights as a Stockholder . A Grantee shall have the rights of a stockholder only as to Shares, if any, acquired upon settlement of RSUs. A Grantee shall not be deemed to have acquired any such Shares unless and until the RSUs shall have been settled in Shares pursuant to the terms of the Plan and the Restricted Stock Unit Agreement, the Company shall have issued and delivered a certificate representing the Shares to the Grantee (or transferred on the records of the Company with respect to uncertificated stock), and the Grantee’s name has been entered in the books of the Company as a stockholder.

(d) Termination . Except as may otherwise be provided by the Board of Directors either in the Restricted Stock Unit Agreement or in writing after the Restricted Stock Unit Agreement is issued, a Grantee s right in all RSUs that have not vested shall automatically terminate upon the Grantee’s cessation of Service.

(e) Withholding Taxes . As a condition to the award, vesting or settlement of RSUs, the Grantee shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such event.

(f) Transfer Restrictions and Forfeiture Conditions . Any RSUs (and any Shares issued upon settlement of the RSUs) awarded under the Plan shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may determine. Such restrictions shall be set forth in the applicable Restricted Stock Unit Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

(a) Stock Option Agreement . Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. The Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

 

3


(b) Number of Shares . Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section  8. The Stock Option Agreement shall also specify whether the Option is an ISO or a Nonstatutory Option.

(c) Exercise Price . Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an Option shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant, and in the case of an ISO a higher percentage may be required by Section  3(b). Subject to the preceding sentence, the Exercise Price shall be determined by the Board of Directors at its sole discretion. The Exercise Price shall be payable in a form described in Section  7. This Subsection (c) shall not apply to an Option granted pursuant to an assumption of, or substitution for, another option in a manner that complies with Section  424(a) of the Code (whether or not the Option is an ISO).

(d) Exercisability . Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. No Option shall be exercisable unless the Optionee (i)  has delivered an executed copy of the Stock Option Agreement to the Company or (ii)  otherwise agrees to be bound by the terms of the Stock Option Agreement. The Board of Directors shall determine the exercisability provisions of the Stock Option Agreement at its sole discretion. All of an Optionee’s Options shall become exercisable in full if Section 8(b)(iv) applies.

(e) Basic Term . The Stock Option Agreement shall specify the term of the Option. The term shall not exceed 10 years from the Date of Grant, and in the case of an ISO a shorter term may be required by Section  3(b). Subject to the preceding sentence, the Board of Directors at its sole discretion shall determine when an Option is to expire.

(f) Termination of Service (Except by Death) . If an Optionee’s Service terminates for any reason other than the Optionee’s death, then the Optionee’s Options shall expire on the earliest of the following dates:

(i) The expiration date determined pursuant to Subsection (e) above;

(ii) The date three months after the termination of the Optionee’s Service for any reason other than Disability, or such earlier or later date as the Board of Directors may determine (but in no event earlier than 30 days after the termination of the Optionee’s Service); or

(iii) The date six months after the termination of the Optionee’s Service by reason of Disability, or such later date as the Board of Directors may determine.

 

4


The Optionee may exercise all or part of the Optionee’s Options at any time before the expiration of such Options under the preceding sentence, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination). The balance of such Options shall lapse when the Optionee’s Service terminates. In the event that the Optionee dies after the termination of the Optionee’s Service but before the expiration of the Optionee’s Options, all or part of such Options may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination).

(g) Leaves of Absence . For purposes of Subsection  (f) above, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in writing and if continued crediting of Service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).

(h) Death of Optionee . If an Optionee dies while the Optionee is in Service, then the Optionee’s Options shall expire on the earlier of the following dates:

(i) The expiration date determined pursuant to Subsection (e) above; or

(ii) The date 12 months after the Optionee’s death, or such earlier or later date as the Board of Directors may determine (but in no event earlier than six months after the Optionee’s death).

All or part of the Optionee’s Options may be exercised at any time before the expiration of such Options under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s death (or became exercisable as a result of the death) and the underlying Shares had vested before the Optionee’s death (or vested as a result of the Optionee’s death). The balance of such Options shall lapse when the Optionee dies.

(i) Post-Exercise Restrictions on Transfer of Shares . Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

(j) Pre-Exercise Restrictions on Transfer of Options or Shares . An Option shall be transferable by the Optionee only by (i) a beneficiary designation, (ii)  a will or (iii)  the laws of descent and distribution, except as provided in the next sentence. If the applicable Stock Option Agreement so provides, a Nonstatutory Option shall also be transferable by gift or domestic relations order to a Family Member of the Optionee. An ISO may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian

 

5


or legal representative. In addition, an Option shall comply with all conditions of Rule 12h-1(f)(1) under the Exchange Act until the Company becomes subject to the reporting requirements of Section  13 or  15(d) of the Exchange Act. Such conditions include, without limitation, the transferability restrictions set forth in Rule  12h-1(f)(1)(iv) and  (v) under the Exchange Act, which shall apply to an Option and, prior to exercise, to the Shares to be issued upon exercise of such Option during the period commencing on the Date of Grant and ending on the earlier of (i)  the date when the Company becomes subject to the reporting requirements of Section  13 or  15(d) of the Exchange Act or (ii)  the date when the Company makes a determination that it will cease to rely on the exemption afforded by Rule  12h-1(f)(1) under the Exchange Act. During such period, an Option and, prior to exercise, the Shares to be issued upon exercise of such Option shall be restricted as to any pledge, hypothecation or other transfer by the Optionee, including any short position, any “put equivalent position” (as defined in Rule  16a-1(h) under the Exchange Act) or any “call equivalent position” (as defined in Rule  16a-1(b) under the Exchange Act).

(k) Withholding Taxes . As a condition to the grant or exercise of an Option, the Optionee shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such grant or exercise. The Optionee shall also make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the vesting or transfer of Shares acquired by exercising an Option or any similar event.

(l) No Rights as a Stockholder . An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by the Optionee’s Option until such person becomes entitled to receive such Shares by filing a notice of exercise and paying the Exercise Price pursuant to the terms of such Option.

(m) Modification, Extension and Assumption of Options . Within the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s obligations under such Option.

(n) Company s Right to Cancel Certain Options . Any other provision of the Plan or a Stock Option Agreement notwithstanding, the Company shall have the right at any time to cancel an Option that was not granted in compliance with Rule  701 under the Securities Act. Prior to canceling such Option, the Company shall give the Optionee not less than 30 days’ notice in writing. If the Company elects to cancel such Option, it shall deliver to the Optionee consideration with an aggregate Fair Market Value equal to the excess of (i) the Fair Market Value of the Shares subject to such Option as of the time of the cancellation over (ii) the Exercise Price of such Option. The consideration may be delivered in the form of cash or cash equivalents, in the form of Shares, or a combination of both. If the consideration would be a negative amount, such Option may be cancelled without the delivery of any consideration.

 

6


SECTION 7. PAYMENT FOR SHARES.

(a) General Rule . The entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable in cash or cash equivalents at the time when such Shares are purchased, except as otherwise provided in this Section  7.

(b) Services Rendered . At the discretion of the Board of Directors, Shares may be awarded under the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to the award.

(c) Promissory Note . At the discretion of the Board of Directors, all or a portion of the Purchase Price or Exercise Price (as the case may be) of Shares issued under the Plan may be paid with a full-recourse promissory note. The Shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon. The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Board of Directors (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note.

(d) Surrender of Stock . At the discretion of the Board of Directors, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when the Option is exercised.

(e) Exercise/Sale . To the extent that a Stock Option Agreement so provides, and if Stock is publicly traded, all or part of the Exercise Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company.

(f) Other Forms of Payment . To the extent that a Stock Purchase Agreement or Stock Option Agreement so provides, the Purchase Price or Exercise Price of Shares issued under the Plan may be paid in any other form permitted by the Delaware General Corporation Law, as amended.

SECTION 8. ADJUSTMENT OF SHARES.

(a) General . In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a combination or consolidation of the outstanding Stock into a lesser number of Shares, a reclassification, or any other increase or decrease in the number of issued shares of Stock effected without receipt of consideration by the Company, proportionate adjustments shall automatically be made in each of (i)  the number of Shares available for future grants under Section  4, (ii)  the number of Shares covered by each outstanding Option and RSU, and (iii)  the Exercise Price under each outstanding Option. In the event of a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of the Stock, a recapitalization, a spin-off, or a similar occurrence, the Board of Directors at its sole discretion may make

 

7


appropriate adjustments in one or more of (i) the number of Shares available for future grants under Section  4, (ii)  the number of Shares covered by each outstanding Option and RSU or (iii)  the Exercise Price under each outstanding Option; provided, however, that the Board of Directors shall in any event make such adjustments as may be required by Section  25102(o) of the California Corporations Code.

(b) Mergers and Consolidations . In the event that the Company is a party to a merger or consolidation, all Shares acquired under the Plan and all outstanding awards shall be subject to the agreement of merger or consolidation, which need not treat all outstanding awards in an identical manner. Such agreement, without the Optionees’ consent, may dispose of Options that are not exercisable as of the effective date of such merger or consolidation in any manner permitted by applicable law, including (without limitation) the cancellation of such Options without the payment of any consideration. Such agreement, without the Optionees’, Purchasers’, or Grantees’ consent, shall provide for one or more of the following with respect to each award that is outstanding as of the effective date of such merger or consolidation:

(i) The continuation of the Option, RSU or award by the Company (if the Company is the surviving corporation).

(ii) The assumption of the Option by the surviving corporation or its parent in a manner that complies with Section 424(a) of the Code (whether or not the Option is an ISO).

(iii) The substitution by the surviving corporation or its parent of a new option for the Option in a manner that complies with Section 424(a) of the Code (whether or not the Option is an ISO).

(iv) The cancellation of such Options and a payment to the Optionees equal to the excess of (A) the Fair Market Value of the Shares subject to such Options as of the effective date of such merger or consolidation over (B)  their Exercise Price. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount.

(v) The cancellation of such Options. Any exercise of such Options prior to the closing date of such merger or consolidation may be contingent on the closing of such merger or consolidation.

(vi) Assumption of the RSU, or substitution of a new RSU, by the surviving corporation or its parent with an equitable or proportionate adjustment to the amount and kind of shares subject thereto.

(vii) Cancellation of RSUs and a payment to the Grantee with respect to each Share subject to the portion of the RSUs that are vested as of the effective date of such merger or consolidation (including those RSUs that become vested as a result of such transaction) equal to the Fair Market Value of such Shares. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. For the avoidance of doubt, unvested RSUs may be cancelled for no consideration.

 

8


(c) Reservation of Rights . Except as provided in this Section  8, a Grantee, Purchaser or Optionee shall have no rights by reason of (i)  any subdivision or consolidation of shares of stock of any class, (ii)  the payment of any dividend or (iii)  any other increase or decrease in the number of shares of stock of any class. Any issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Option or RSU. The grant of an Option or RSU pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

SECTION 9. PRE-EXERCISE INFORMATION REQUIREMENT.

(a) Application of Requirement . This Section  9 shall apply only during a period that (i)  commences when the Company begins to rely on the exemption described in Rule 12h-1(f)(1) under the Exchange Act, as determined by the Company in its sole discretion, and (ii)  ends on the earlier of (A)  the date when the Company ceases to rely on such exemption, as determined by the Company in its sole discretion, or (B)  the date when the Company becomes subject to the reporting requirements of Section  13 or  15(d) of the Exchange Act. In addition, this Section  9 shall in no event apply to an Optionee after he or she has fully exercised all of his or her Options.

(b) Scope of Requirement . The Company shall provide to each Optionee the information described in Rule 701(e)(3), (4) and  (5) under the Securities Act. Such information shall be provided at six-month intervals, and the financial statements included in such information shall not be more than 180 days old. The foregoing notwithstanding, the Company shall not be required to provide such information unless the Optionee has agreed in writing, on a form prescribed by the Company, to keep such information confidential.

SECTION 10. MISCELLANEOUS PROVISIONS.

(a) Securities Law Requirements . Shares shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded. The Company shall not be liable for a failure to issue Shares that is attributable to such requirements.

(b) No Retention Rights . Nothing in the Plan or in any right or Option granted under the Plan shall confer upon the Grantee, Purchaser or Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Grantee, Purchaser or Optionee) or of the Grantee, Purchaser or Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

 

9


(c) Treatment as Compensation . Any compensation that an individual earns or is deemed to earn under this Plan shall not be considered a part of his or her compensation for purposes of calculating contributions, accruals or benefits under any other plan or program that is maintained or funded by the Company, a Parent or a Subsidiary.

(d) Governing Law . The Plan and all awards, sales and grants under the Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

SECTION 11. DURATION AND AMENDMENTS.

(a) Term of the Plan . The Plan, as set forth herein, shall become effective on the date of its adoption by the Board of Directors, subject to the approval of the Company’s stockholders. If the stockholders fail to approve the Plan within 12 months after its adoption by the Board of Directors, then any grants, exercises or sales that have already occurred under the Plan shall be rescinded and no additional grants, exercises or sales shall thereafter be made under the Plan. The Plan shall terminate automatically 10 years after the later of (i)  the date when the Board of Directors adopted the Plan or (ii)  the date when the Board of Directors approved the most recent increase in the number of Shares reserved under Section  4 that was also approved by the Company’s stockholders. The Plan may be terminated on any earlier date pursuant to Subsection  (b) below.

(b) Right to Amend or Terminate the Plan . The Board of Directors may amend, suspend or terminate the Plan at any time and for any reason; provided, however, that any amendment of the Plan shall be subject to the approval of the Company’s stockholders if it (i)  increases the number of Shares available for issuance under the Plan (except as provided in Section  8) or (ii)  materially changes the class of persons who are eligible for the grant of ISOs. Stockholder approval shall not be required for any other amendment of the Plan. If the stockholders fail to approve an increase in the number of Shares reserved under Section  4 within 12 months after its adoption by the Board of Directors, then any grants, exercises or sales that have already occurred in reliance on such increase shall be rescinded and no additional grants, exercises or sales shall thereafter be made in reliance on such increase.

(c) Effect of Amendment or Termination . No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option (or any other right to purchase Shares) granted under the Plan prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option previously granted under the Plan.

SECTION 12. DEFINITIONS.

(a) “ Board of Directors ” shall mean the Board of Directors of the Company, as constituted from time to time.

(b) “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

 

10


(c) “ Committee ” shall mean a committee of the Board of Directors, as described in Section 2(a).

(d) “ Company ” shall mean Eventbrite, Inc., a Delaware corporation.

(e) “ Consultant ” shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

(f) “ Date of Grant ” shall mean the date of grant specified in the applicable Stock Option Agreement, which date shall be the later of (i) the date on which the Board of Directors resolved to grant the Option or (ii) the first day of the Optionee’s Service.

(g) “ Disability ” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

(h) “ Employee ” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

(i) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

(j) “ Exercise Price ” shall mean the amount for which one Share may be purchased upon exercise of an Option, as specified by the Board of Directors in the applicable Stock Option Agreement.

(k) “ Fair Market Value ” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

(l) “ Family Member ” shall mean (i) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, (ii) any person sharing the Optionee’s household (other than a tenant or employee), (iii) a trust in which persons described in Clause (i) or (ii) have more than 50% of the beneficial interest, (iv) a foundation in which persons described in Clause (i) or (ii) or the Optionee control the management of assets and (v) any other entity in which persons described in Clause (i) or (ii) or the Optionee own more than 50% of the voting interests.

(m) “ Grantee ” shall mean a person to whom the Board of Directors has awarded Shares or granted an RSU under the Plan.

(n) “ ISO ” shall mean an employee incentive stock option described in Section 422(b) of the Code.

(o) “ Nonstatutory Option ” shall mean a stock option not described in Sections 422(b) or 423(b) of the Code.

 

11


(p) “ Option ” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

(q) “ Optionee ” shall mean a person who holds an Option.

(r) “ Outside Director ” shall mean a member of the Board of Directors who is not an Employee.

(s) “ Parent ” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

(t) “ Plan ” shall mean this Eventbrite, Inc. 2010 Stock Plan, as amended, which includes the UK Appendix.

(u) “ Purchase Price ” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Board of Directors.

(v) “ Purchaser ” shall mean a person to whom the Board of Directors has offered the right to purchase Shares under the Plan (other than upon exercise of an Option).

(w) “ Restricted Stock Unit Agreement ” shall mean the agreement between the Company and the Grantee that contains the terms, conditions and restrictions pertaining to the Grantee’s RSUs.

(x) “ RSU ” shall mean a restricted stock unit representing the Grantee’s right to receive a Share of Stock upon the satisfaction of certain conditions.

(y) “ Securities Act ” shall mean the Securities Act of 1933, as amended.

(z) “ Service ” shall mean service as an Employee, Outside Director or Consultant.

(aa) “ Share ” shall mean one share of Stock, as adjusted in accordance with Section 8 (if applicable).

(bb) “ Stock ” shall mean the Common Stock of the Company.

(cc) “ Stock Grant Agreement ” shall mean the agreement between the Company and a Grantee who is awarded Shares under the Plan that contains the terms, conditions and restrictions pertaining to the award of such Shares.

 

12


(dd) “ Stock Option Agreement ” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to the Optionee’s Option.

(ee) “ Stock Purchase Agreement ” shall mean the agreement between the Company and a Purchaser who purchases Shares under the Plan that contains the terms, conditions and restrictions pertaining to the purchase of such Shares.

(ff) “ Subsidiary ” shall mean any corporation (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 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

(gg) “ UK Appendix ” means the UK Appendix to this Plan which governs the award or sale of Shares or the grant of Options to United Kingdom Employees.

 

13


THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

E VENTBRITE , I NC . 2010 S TOCK P LAN :

G LOBAL S TOCK O PTION A GREEMENT

SECTION 1. GRANT OF OPTION.

(a) Option . On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Optionee on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair Market Value if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies). This option is intended to be an ISO or an NSO, as provided in the Notice of Stock Option Grant.

(b) $100,000 Limitation . Even if this option is designated as an ISO in the Notice of Stock Option Grant, it shall be deemed to be an NSO to the extent (and only to the extent) required by the $100,000 annual limitation under Section 422(d) of the Code.

(c) Stock Plan and Defined Terms . This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received. The provisions of the Plan are incorporated into this Agreement by this reference. Capitalized terms are defined in Section 14 of this Agreement.

SECTION 2. RIGHT TO EXERCISE.

(a) Exercisability . Subject to Subsection (b) below and the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant.

(b) Stockholder Approval . Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time prior to the approval of the Plan by the Company’s stockholders.


SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.

The Optionee shall not Transfer this option other than by will or by the laws of descent and distribution, except as provided in the following sentence. The Optionee may Transfer this option to the extent it is an NSO to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family or to a partnership in which such Immediate Family members and the Optionee are the only partners, in each case without consideration and for bona fide estate planning purposes, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee Transfers this option, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

SECTION 4. EXERCISE PROCEDURES.

(a) Notice of Exercise . The Optionee or the Optionee’s representative may exercise this option by giving written notice to the Company pursuant to Section 12(c). The notice shall specify the election to exercise this option, the number of Shares for which it is being exercised and the form of payment. The person exercising this option shall sign the notice. In the event that this option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative’s right to exercise this option. The Optionee or the Optionee’s representative shall deliver to the Company, at the time of giving the notice, payment in a form permissible under Section 5 for the full amount of the Purchase Price.

(b) Issuance of Shares . After receiving a proper notice of exercise, the Company shall cause the Shares for which the option is exercised to be registered in book entry (i.e., uncertificated) form on the books and records of the Company. Such Shares shall be registered (i) in the name of the person exercising this option, (ii) in the names of such person and his or her spouse as community property or as joint tenants with the right of survivorship or (iii) with the Company’s consent, in the name of a revocable trust. The Company shall cause certificates representing the Shares to be delivered to or upon the order of the person exercising this option only upon such person’s prior written request.

(c) Withholding Taxes .

(i) The Optionee acknowledges that, regardless of any action taken by the Company or, if different, any Parent or Subsidiary employing or retaining the Optionee (the “ Employer ”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Optionee’s participation in the Plan and legally applicable to the Optionee ( Tax-Related Items ), is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the option, including, but not limited to, the grant, vesting or exercise of the option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Optionee is subject to Tax-Related Items in more than one jurisdiction, the Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

2


(ii) Prior to the relevant taxable or tax withholding event, as applicable, the Optionee agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company and/or the Employer; (ii) withholding from proceeds of the sale of Shares acquired upon exercise of the option either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization); and/or (iii) withholding in Shares to be issued upon exercise of the option.

(iii) Depending on the withholding method, the Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case the Optionee will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent amount in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Optionee is deemed to have been issued the full number of Shares subject to the exercised portion of the option, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

(iv) The Optionee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

SECTION 5. PAYMENT FOR STOCK.

(a) Cash . All or part of the Purchase Price may be paid in cash or cash equivalents.

(b) Surrender of Stock . At the discretion of the Board of Directors, all or any part of the Purchase Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when this option is exercised.

 

3


(c) Exercise/Sale . All or part of the Purchase Price and any Tax-Related Items may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company. However, payment pursuant to this Subsection (c) shall be permitted only if (i) Stock is then publicly traded on an established securities market and (ii) such payment does not violate applicable law.

SECTION 6. TERM AND EXPIRATION.

(a) Basic Term . This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies).

(b) Termination of Service (Except by Death) . If the Optionee’s Service terminates for any reason other than death, then this option shall expire on the earliest of the following occasions:

(i) The expiration date determined pursuant to Subsection (a) above;

(ii) The date three months after the termination of the Optionee’s Service for any reason other than Disability; or

(iii) The date six months after the termination of the Optionee’s Service by reason of Disability.

The Optionee may exercise all or part of this option at any time before its expiration under the preceding sentence, but only to the extent that this option had become exercisable before the Optionee’s Service terminated. When the Optionee’s Service terminates, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable. In the event that the Optionee dies after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by bequest or inheritance, but only to the extent that this option had become exercisable before the Optionee’s Service terminated.

(c) Death of the Optionee . If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

(i) The expiration date determined pursuant to Subsection (a) above; or

(ii) The date 12 months after the Optionee’s death.

All or part of this option may be exercised at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by bequest or inheritance, but only to the extent that this option had become exercisable before the Optionee’s death. When the Optionee dies, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable.

 

4


(d) Part-Time Employment and Leaves of Absence . If the Optionee commences working on a part-time basis, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant. If the Optionee goes on a leave of absence, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant in accordance with the Company’s leave of absence policy or the terms of such leave. Except as provided in the preceding sentence, Service shall be deemed to continue for any purpose under this Agreement while the Optionee is on a bona fide leave of absence, if (i) such leave was approved by the Company in writing and (ii) continued crediting of Service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company). Service shall be deemed to terminate when such leave ends, unless the Optionee immediately returns to active work.

(e) Notice Concerning ISO Treatment . Even if this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax treatment as an ISO to the extent that it is exercised:

(i) More than three months after the date when the Optionee ceases to be in continuous Service for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code);

(ii) More than 12 months after the date when the Optionee ceases to be in continuous Service by reason of permanent and total disability (as defined in Section 22(e)(3) of the Code); or

(iii) More than three months after the date when the Optionee has been on a leave of absence for 90 days, unless the Optionee’s reemployment rights following such leave were guaranteed by statute or by contract.

SECTION 7. APPROVAL RIGHT AND RIGHT OF FIRST REFUSAL.

(a) Approval Right. The Optionee shall not Transfer any Shares without first obtaining the express written approval of the Board of Directors. In the event that the Optionee proposes to Transfer any Shares, the Optionee shall first give a written Transfer Notice to the Company along with a request to the Board of Directors to approve such Transfer. The Transfer Notice shall fully describe the proposed Transfer, including the number of Shares proposed to be Transferred, the proposed Transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed Transfer will not violate any applicable federal, State or foreign securities laws. Such Transfer Notice must be signed by the Optionee. Within a reasonable period of time after receiving the Transfer Notice, the Board of Directors shall either grant or deny the approval of such Transfer in its sole and absolute discretion. If the Board of Directors does not approve of such Transfer, the Optionee shall not be permitted to Transfer such Shares.

 

5


(b) Right of First Refusal . If the Board of Directors has approved the Optionee’s proposed Transfer of Shares pursuant to Subsection 7(a) above, the Optionee must then present to the Company the Transfer Notice signed both by the Optionee and by the proposed Transferee and such Transfer Notice must constitute a binding commitment of both parties to the Transfer of the Shares (the “ Second Transfer Notice ”). The Company shall have the Right of First Refusal with respect to all or any portion of such Shares. The Company shall have the right to purchase all or any portion of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (c) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date on which the Second Transfer Notice was received by the Company.

(c) Transfer of Shares . If the Company fails to fully exercise its Right of First Refusal within 30 days after the date on which it received the Second Transfer Notice, the Optionee may, not later than 90 days following receipt of such Second Transfer Notice by the Company, conclude a Transfer of the Shares subject to the Second Transfer Notice (and not otherwise elected to be purchased by the Company) on the terms and conditions described in the Second Transfer Notice, provided that any such Transfer is made in compliance with applicable federal, State and foreign securities laws and Company policies in effect at the time of Transfer (including the payment of any applicable Transfer charges imposed by the Company) and not in violation of any other contractual restrictions to which the Optionee is bound. Any proposed Transfer on terms and conditions different from those described in the Second Transfer Notice, as well as any subsequent proposed Transfer by the Optionee, shall again be subject to the Approval Right and the Right of First Refusal and shall require compliance with the procedures described in Subsections (a) and (b) above. If the Company exercises its Right of First Refusal, the parties shall consummate the Transfer of the Shares that the Company elected to purchase on the terms set forth in the Second Transfer Notice within 60 days after the date on which the Company received the Second Transfer Notice; provided, however, that in the event the Second Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of Transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Second Transfer Notice.

(d) Additional or Exchanged Securities and Property . In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 7 shall immediately be subject to the Approval Right and the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 7.

(e) Termination of Approval Right and Right of First Refusal . Any other provision of this Section 7 notwithstanding, in the event that the Stock is publicly traded on an established securities market when the Optionee desires to Transfer Shares, the Company shall have no Approval Right or Right of First Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by Subsections (a), (b) and (c) above.

 

6


(f) Permitted Transfers . This Section 7 shall not apply to (i) a Transfer to the Company, (ii) a Transfer by will or intestate succession or (iii) a Transfer to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, in each case for bona fide estate planning purposes, provided in any case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee Transfers any Shares acquired under this Agreement, either under this Subsection (f) or after the Company has failed to fully exercise the Right of First Refusal following the approval of such Transfer, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

(g) Termination of Rights as Stockholder . If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 7, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.

(h) Assignment of Right of First Refusal . The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part. Any person who accepts an assignment of the Right of First Refusal from the Company shall assume all of the Company’s rights and obligations under this Section 7.

SECTION 8. LEGALITY OF INITIAL ISSUANCE.

No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:

(i) It and the Optionee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof;

(ii) Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

(iii) Any other applicable provision of federal, State or foreign law has been satisfied.

SECTION 9. NO REGISTRATION RIGHTS.

The Company may, but shall not be obligated to, register or qualify the Transfer of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the Transfer of Shares under this Agreement to comply with any law.

 

7


SECTION 10. Restrictions On Transfer of shares.

(a) Securities Law Restrictions . Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any State or foreign jurisdiction, the Company at its discretion may impose restrictions upon the Transfer of such Shares (including the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any State or foreign jurisdiction or any other law.

(b) Market Stand-Off . In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its managing underwriter. Such restriction (the “ Market Stand-Off ”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriter. In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports or (ii) analyst recommendations and opinions, including (without limitation) the restrictions set forth in Rule 2711(f)(4) of the National Association of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange, as amended, or any similar successor rules. The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (b). This Subsection (b) shall not apply to Shares registered in the public offering under the Securities Act.

(c) Investment Intent at Grant . The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.

 

8


(d) Investment Intent at Exercise . In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available that requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

(e) Legends . All certificates evidencing Shares purchased under this Agreement shall bear the following legend:

“THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN APPROVAL RIGHTS AND RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

All certificates evidencing Shares purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

(f) Removal of Legends . If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

(g) Administration . Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 10 shall be conclusive and binding on the Optionee and all other persons.

SECTION 11. ADJUSTMENT OF SHARES.

In the event of any transaction described in Section 8(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares subject to this option and the Exercise Price) shall be adjusted as set forth in Section 8(a) of the Plan. In the event that the Company is a party to a merger or consolidation, this option shall be subject to the agreement of merger or consolidation, as provided in Section 8(b) of the Plan.

 

9


SECTION 12. MISCELLANEOUS PROVISIONS.

(a) Rights as a Stockholder. Neither the Optionee nor the Optionee’s representative shall have any rights as a stockholder with respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 4 and 5.

(b) No Retention Rights . Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company, the Employer or of the Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

(c) Notice. Subject to Section 13(b) with respect to notices from the Company, any notice required by the terms of this Agreement shall be given in writing. It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service or local country equivalent, by registered or certified mail, with postage and fees prepaid or (iii) deposit with Federal Express Corporation, with shipping charges prepaid. Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance with this Subsection (c).

(d) Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Optionee and by an authorized officer of the Company (other than the Optionee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(e) Entire Agreement. The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.

(f) Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

(g) Venue. Unless the Optionee and the Company and/or the Employer have agreed otherwise in a separate written alternative dispute resolution agreement, for purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the option or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of San Francisco County, California, or the federal courts for the United States for the Northern District of California, where this grant is made and/or to be performed, and no other courts.

 

10


(h) Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

(i) Appendix . Notwithstanding any provisions in this Agreement, if the Optionee resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, the option shall be subject to the additional terms and conditions set forth in Appendix A to this Agreement and to the special terms and provisions as set forth in Appendix B for the Optionee’s country, if any. Moreover, if the Optionee relocates to one of the countries included in Appendix B during the life of the option, the special terms and conditions for such country shall apply to the Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendix A and B constitute part of this Agreement.

(j) Imposition of Other Requirements . The Company reserves the right to impose other requirements on the option and the Shares acquired upon exercise of the option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Optionee to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.

SECTION 13. ACKNOWLEDGEMENTS OF THE OPTIONEE.

(a) Tax Consequences . The Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Optionee’s tax liabilities. The Optionee shall not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from this option or the Optionee’s other compensation. In particular, the Optionee acknowledges that this option is exempt from Section 409A of the Code only if the Exercise Price is at least equal to the Fair Market Value per Share on the Date of Grant. Since Shares are not traded on an established securities market, the determination of their Fair Market Value is made by the Board of Directors or by an independent valuation firm retained by the Company. The Optionee acknowledges that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and the Optionee shall not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low. Finally, the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan or the Optionee’s acquisition or sale of Shares. The Optionee is hereby advised to consult with his or her personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

(b) Electronic Delivery and Acceptance of Documents . The Optionee agrees to accept by email all documents relating to the Company, the Plan or this option and all other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by the U.S. Securities and Exchange Commission). The Optionee also agrees that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. The Optionee hereby consents to receive such documents by electronic delivery and

 

11


agrees to participate in the Plan through the electronic acceptance procedure established and maintained by the Company or a third party designated by the Company. If the Company posts these documents on a website, it shall notify the Optionee by email of their availability. The Optionee acknowledges that he or she may incur costs in connection with electronic delivery, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere with his or her ability to access the documents. This consent shall remain in effect until this option expires or until the Optionee gives the Company written notice that it should deliver paper documents.

(c) No Notice of Expiration Date . The Optionee agrees that the Company and its officers, employees, attorneys and agents do not have any obligation to notify him or her prior to the expiration of this option pursuant to Section 6, regardless of whether this option will expire at the end of its full term or on an earlier date related to the termination of the Optionee’s Service. The Optionee further agrees that he or she has the sole responsibility for monitoring the expiration of this option and for exercising this option, if at all, before it expires. This Subsection (c) shall supersede any contrary representation that may have been made, orally or in writing, by the Company or by an officer, employee, attorney or agent of the Company.

SECTION 14. DEFINITIONS.

(a) “ Agreement ” shall mean this Global Stock Option Agreement including Appendices A and B.

(b) “ Approval Right ” shall mean the requirement that the Optionee obtain the prior approval of the Board of Directors to any Transfer.

(c) “ Board of Directors ” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

(d) “ Code ” shall mean the U.S. Internal Revenue Code of 1986, as amended.

(e) “ Committee ” shall mean a committee of the Board of Directors, as described in Section 2 of the Plan.

(f) “ Company ” shall mean Eventbrite, Inc., a Delaware corporation.

(g) “ Consultant ” shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

(h) “ Date of Grant ” shall mean the date of grant specified in the Notice of Stock Option Grant, which date shall be the later of (i) the date on which the Board of Directors resolved to grant this option or (ii) the first day of the Optionee’s Service.

(i) “ Disability ” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

 

12


(j) “ Employee ” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

(k) “ Employer ” shall have the meaning set forth in Section 4(c).

(l) “ Exercise Price ” shall mean the amount for which one Share may be purchased upon exercise of this option, as specified in the Notice of Stock Option Grant.

(m) “ Fair Market Value ” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

(n) “ Immediate Family ” shall have the same meaning as “family member” as defined in Rule 701 of the Securities Act.

(o) “ ISO ” shall mean an employee incentive stock option described in Section 422(b) of the Code.

(p) “ Market Stand-Off ” shall have the meaning set forth in Section 10(b).

(q) “ Notice of Stock Option Grant ” shall mean the document so entitled to which this Agreement is attached.

(r) “ NSO ” shall mean a stock option not described in Section 422(b) or 423(b) of the Code.

(s) “ Optionee ” shall mean the person named in the Notice of Stock Option Grant.

(t) “ Outside Director ” shall mean a member of the Board of Directors who is not an Employee.

(u) “ Parent ” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(v) “ Plan ” shall mean the Eventbrite, Inc. 2010 Stock Plan, as in effect on the Date of Grant.

(w) “ Purchase Price ” shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

(x) “ Right of First Refusal ” shall mean the Company’s right of first refusal described in Section 7.

(y) “ Second Transfer Notice ” shall have the meaning set forth in Section 7(b).

 

13


(z) “ Securities Act ” shall mean the U.S. Securities Act of 1933, as amended.

(aa) “ Service ” shall mean service as an Employee, Outside Director or Consultant.

(bb) “ Share ” shall mean one share of Stock, as adjusted in accordance with Section 8 of the Plan (if applicable).

(cc) “ Stock ” shall mean the Common Stock of the Company.

(dd) “ Subsidiary ” shall mean any corporation (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 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(ee) “ Tax-Related Items ” shall have the meaning set forth in Section 4(c).

(ff) “ Transfer, ” “ Transferred ,” and words of similar import shall mean any assignment, sale, offer to sell, pledge, mortgage, hypothecation, encumbrance, attachment, disposition or sale under execution of or any other like transfer or encumbering of any Shares or any interest therein (by operation of law or otherwise).

(gg) “ Transferee ” shall mean any person to whom the Optionee has directly or indirectly Transferred any Share acquired under this Agreement.

(hh) “ Transfer Notice ” shall mean the notice of a proposed Transfer of Shares described in Section 7(a).

 

14


APPENDIX A

TO THE GLOBAL STOCK OPTION AGREEMENT FOR NON-U.S. OPTIONEES

The following terms and conditions apply to Optionees who reside outside the United States or who are otherwise subject to the laws of a country other than the United States. In general, the terms and conditions in this Appendix A supplement the provisions of the Agreement, unless otherwise indicated herein. Capitalized terms used but not defined herein have the meanings given to them in the Agreement and/or the Plan.

SECTION 1. NATURE OF GRANT.

In accepting the option, the Optionee acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b) the grant of the option is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;

(c) all decisions with respect to future options or other grants, if any, will be at the sole discretion of the Company;

(d) the Optionee is voluntarily participating in the Plan;

(e) the option and any Shares acquired under the Plan, and the income and value of the same, are not intended to replace any pension rights or compensation;

(f) the option and any Shares acquired under the Plan, and the income and value of same, are not part of normal or expected compensation for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments;

(g) the future value of the Shares underlying the option is unknown, indeterminable, and cannot be predicted with certainty;

(h) if the underlying Shares do not increase in value, the option will have no value;

(i) if the Optionee exercises the option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price;

(j) no claim or entitlement to compensation or damages shall arise from forfeiture of the option resulting from the termination of the Optionee’s employment or other Service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), and in consideration of the grant of the option, the Optionee agrees not to institute any such claim against the Company, the Employer or any Parent or Subsidiary;

 

15


(k) for purposes of the option, the Optionee’s employment or Service relationship will be considered terminated as of the date the Optionee is no longer actively providing Services to the Company, the Employer or any Parent or Subsidiary (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, (i) the Optionee’s right to vest in the option under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., the Optionee’s period of Service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any); and (ii) the period (if any) during which the Optionee may exercise the option after such termination of the Optionee’s employment or Service relationship will commence on the date the Optionee ceases to actively provide Services and will not be extended by any notice period mandated under employment laws in the jurisdiction where the Optionee is employed or terms of the Optionee’s employment agreement, if any; the Board of Directors shall have the exclusive discretion to determine when the Optionee is no longer actively providing Services for purposes of his or her option grant (including whether the Optionee may still be considered to be providing services while on a leave of absence);

(l) unless otherwise provided in the Plan or by the Company in its discretion, the option and the benefits evidenced by this Agreement do not create any entitlement to have the option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Company;

(m) unless otherwise agreed with the Company in writing, the option and any Shares acquired under the Plan, and the income and value of the same, are not granted as consideration for, or in connection with, the Service the Optionee may provide as a director of any Parent or Subsidiary; and

(n) neither the Company, the Employer nor any Parent or Subsidiary shall be liable for any foreign exchange rate fluctuation between the Optionee’s local currency and the United States Dollar that may affect the value of the option or of any amounts due to the Optionee pursuant to the exercise of the option or the subsequent sale of any Shares acquired upon exercise.

SECTION 2. DATA PRIVACY .

The Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Optionee’s personal data as described in this Agreement and any other option grant materials (“Data”) by and among, as applicable, the Employer, the Company and any Parent or Subsidiaries for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.

 

16


The Optionee understands that the Company and the Employer may hold certain personal information about the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purpose of implementing, administering and managing the Plan.

The Optionee understands that Data will be transferred to such stock plan service providers as may be currently engaged by the Company or selected by the Company in the future to assist the Company and/or the Employer with the implementation, administration and management of the Plan, including, without limitation, brokers, benefit managers, equity software providers and outside legal and accounting advisors. The Optionee understands that these Data recipients may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than the Optionee’s country. The Optionee understands that he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative. The Optionee authorizes the Company and these Data recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Optionee’s participation in the Plan. The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan and as required by applicable laws. The Optionee understands that he or she may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Optionee understands that he or she is providing the consents herein on a purely voluntary basis. If the Optionee does not consent, or if the Optionee later seeks to revoke his or her consent, his or her employment status or Service with the Employer will not be affected; the only consequence of refusing or withdrawing the Optionee’s consent is that the Company would not be able to grant options or other equity awards to the Optionee or administer or maintain such awards. Therefore, the Optionee understands that refusing or withdrawing his or her consent may affect the Optionee’s ability to participate in the Plan. For more information on the consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact his or her local human resources representative.

SECTION 3. LANGUAGE.

If the Optionee has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

SECTION 4. INSIDER TRADING RESTRICTIONS / MARKET ABUSE LAWS.

By accepting the option, the Optionee acknowledges that he or she is bound by all the terms and conditions of the Company’s insider trading policy as may be in effect from time to time. The Optionee further acknowledges that, depending on the Optionee’s country, he or she

 

17


may be subject to insider trading restrictions and/or market abuse laws, which may affect the Optionee’s ability to acquire or sell Shares or rights to Shares ( e.g. , options) under the Plan during such times as the Optionee is considered to have “inside information” regarding the Company (as defined by the laws in the Optionee’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under the Company’s insider trading policy as may be in effect from time to time. The Optionee acknowledges that it is the Optionee’s responsibility to comply with any applicable restrictions, and the Optionee should speak to his or her personal advisor on this matter.

SECTION 5. FOREIGN ASSET / ACCOUNT, EXCHANGE CONTROL AND TAX REPORTING.

The Optionee may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash (including dividends and the proceeds arising from the sale of Shares) derived from his or her participation in the Plan, to and/or from a brokerage/bank account or legal entity located outside the Optionee’s country. The applicable laws of the Optionee’s country may require that he or she report such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in such country. The Optionee acknowledges that he or she is responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements and should consult his or her personal legal advisor on this matter.

 

18


APPENDIX B

TO THE GLOBAL STOCK OPTION AGREEMENT FOR NON-U.S. OPTIONEES

Terms and Conditions

This Appendix B includes special terms and conditions applicable to Optionees in the countries below. These terms and conditions are in addition to, or, if so indicated, in place of, the terms and conditions set forth in the Agreement, including Appendix A. Capitalized terms used but not defined herein have the meanings given to them in the Agreement and/or the Plan.

Notifications

This Appendix B may also include information regarding exchange controls and certain other issues of which the Optionee should be aware with respect to his or her participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of April 2016. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Optionee not rely on the information noted herein as the only source of information relating to the consequences of the Optionee’s participation in the Plan because the information may be out of date at the time the Optionee exercises the option and acquires Shares or when the Optionee subsequently sells Shares acquired under the Plan.

In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation, and the Company is not in a position to assure the Optionee of any particular result. Accordingly, the Optionee should seek appropriate professional advice as to how the relevant laws in his or her country may apply to the Optionee’s situation.

Finally, if the Optionee is a citizen or resident of a country other than the one in which he or she is working as of the Date of Grant, transfers employment and/or residency to another country after the Date of Grant, or is considered a resident of another country for local law purposes, the information contained herein may not be applicable to the Optionee. In addition, the Company shall, in its sole discretion, determine to what extent the terms and conditions included herein will apply to such an Optionee.

ALL COUNTRIES OUTSIDE THE UNITED STATES

Terms and Conditions

RIGHT TO EXERCISE.

Section 2 of the Agreement is hereby deleted in its entirety and replaced with the following:

(a) Prior to an Exit . Unless the Board of Directors, in their absolute discretion, determine otherwise, no part of the option shall become exercisable until an Exit.

 

19


(b) In Connection With an Exit . In the event of an Exit, the option, to the extent it has not already expired or been exercised, shall become exercisable as follows:

(i) unless the Board of Directors determine in their absolute discretion that the Option shall become exercisable to a greater extent, the option shall become exercisable to the extent Vested as at the date of Exit, provided that the Optionee’s Service continues at the date of Exit; or

(ii) if the Optionee is a Good Leaver prior to the date of Exit, to the extent Vested in accordance with Section 6(b)(i) below,

and, to the extent that it is exercisable pursuant to this Section 2(b), the option may be exercised in accordance with Sections 2(c) and Section 4 of this Agreement.

(c) Determination of Exercise Period . If the option becomes exercisable in connection with Section 2(b)(i) of this Agreement, then, subject to the other conditions set forth in this Agreement and Section 8 of the Plan, this option may be exercised from time to time after the date of Exit and prior to its expiration as and when and to the extent it is then Vested and unexercised. If the Option becomes exercisable in connection with an Exit pursuant to Section 2(b)(ii) of this Agreement, the Board of Directors will determine:

(i) the period within which it may be exercised at the end of which it will cease to be exercisable and will not be capable of becoming exercisable again as a result of any provision of the Plan or this Agreement; and

(ii) the time or date on which it will expire.

EXERCISE PROCEDURES.

The following exercise procedure is added as a new Section 5(d) of the Agreement:

SECTION 15. (d) Net exercise . The Board may at any time in its absolute discretion determine in relation to this option that all or a part of the Purchase Price may be paid by a “net exercise” arrangement pursuant to which the COMPANY will reduce the number of Shares issued upon exercise of the option by the largest number of whole Shares with a Fair Market Value (as of the exercise date) that does not exceed the Purchase Price. The Optionee shall pay any remaining balance of the Purchase Price in one of the other forms specified in this Section 5. Any exercise of the option in accordance with this Section 5(d) shall be subject to the operation of Section 4(c) above.

TERM AND EXPIRATION.

Section 6(b) of the Agreement is deleted in its entirety and replaced with the following:

 

20


(b) Expiration Upon Termination of Service .

(i) Unless the Board of Directors, in its absolute discretion determines that the option shall Vest to a greater extent, in the event that the Optionee becomes a Good Leaver, the option shall cease to Vest at the date of cessation of Service as a Good Leaver. Any part of the Option which has become Vested as of such date of cessation may only be exercised:

(1) in connection with a subsequent Exit in accordance with S ection 2 of this Agreement; or

(2) if an Exit has already occurred and the option has not expired in accordance with Section 2(c)(ii) of this Agreement, the option may be exercised:

(a) within 12 months of the date of cessation if cessation is due to death;

(b) within 6 months of the date of cessation if cessation is due to Disability; or

(c) within 3 months of the date of cessation if the Optionee becomes a Good Leaver in any circumstances other than death or Disability,

after which, to the extent unexercised the option shall expire.

For the avoidance of doubt, any part of the option that does not Vest in accordance with this Section 6(b)(i) shall expire on the date of cessation of Service as a Good Leaver.

(ii) In the event that the Optionee becomes a Bad Leaver, all options held by the Optionee, including, for the avoidance of doubt, those that have Vested (in full or in part) and those that have become exercisable (in full or in part), shall expire on the date of cessation of Service as a Bad Leaver.

A new Section 6(d) is added to the Agreement as follows:

(d) Expiration . The option (or, where relevant, any part of the option) will expire on the earliest of:

(i) the expiration date specified in the Notice of Stock Option Grant;

(ii) in respect of any part of the Option which does not Vest in accordance with Section 6(b)(i), the date on which the Optionee becomes a Good Leaver;

(iii) the expiry of the relevant periods pursuant to Section 6(b)(i)(2);

 

21


(iv) the date on which the Optionee becomes a Bad Leaver;

(v) the date on which a resolution is passed, or an order is made by the Court, for the compulsory winding up of the Company;

(vi) the date on which the Optionee becomes bankrupt or does or omits to do anything as a result of which he is deprived of the legal or beneficial ownership of the option;

(vii) the date or time determined in accordance with Section 2(c)(ii) of this Agreement; and

(viii) any other date determined in accordance with this Agreement.

DEFINITIONS.

The following definitions are added to Section 14 of the Agreement:

Bad Leaver ” shall mean any Optionee whose continuous Service is terminated for one of the following reasons (as determined by the Board of Directors in their absolute discretion):

(i) failure (other than due to Disability) to materially comply with written Company policies generally applicable to similar service providers to the Company or any directive of the Optionee’s superior that is reasonably achievable, that is not inconsistent with the Optionee’s position or the fulfillment of fiduciary duties and that is not otherwise prohibited by law or established public policy, subject to notice and 30 day cure period to the extent curable;

(ii) engagement in willful misconduct against the Company or its Parent or a Subsidiary that is materially injurious to the Company or its Parent or a Subsidiary;

(iii) engagement in any activity that is a conflict of interest or competitive with the Company or its Parent or a Subsidiary;

(iv) engaging in any act of fraud or dishonesty against the Company or its Parent or a Subsidiary or any material breach of federal or state securities or other laws or regulations;

(v) engaging in an act of assault or other acts of violence in the workplace;

(vi) harassment of any individual in the workplace based on age, gender or other protected status or class or violation of any policy of the Company, its Parent or a Subsidiary regarding harassment; or

 

22


(vii) conviction, guilty plea or plea of nolo contendre for any felony charge.

Exit ” shall mean an occurrence of any one or more of the following as determined by the Board of Directors in its absolute discretion:

(i) a merger or consolidation in which:

(a) the Company is a constituent party; or

(b) a Subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation,

except, in each case, any such merger or consolidation involving the Company or a Subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (A) the surviving or resulting company or (B) if the surviving or resulting company is a wholly owned subsidiary of another company immediately following such merger or consolidation, the parent company of such surviving or resulting company (provided that, for the purpose of this definition, all shares of Stock issuable upon exercise of options outstanding immediately prior to such merger or consolidation or upon conversion of convertible securities outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Stock are converted or exchanged);

(ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any Subsidiary of the Company of all or substantially all the assets of the Company and its Subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more Subsidiaries of the Company if substantially all of the assets of the Company and its Subsidiaries taken as a whole are held by such Subsidiary or Subsidiaries, expect where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Subsidiary of the Company; or

(iii) the closing of a firm offer in respect of an underwritten initial public offering filed under the Securities Act, as amended, in respect of all or any of the Stock of the Company.

Good Leaver ” shall mean any Optionee other than a Bad Leaver who ceases to be in continuous Service.

Vested ” shall mean, in relation to all or any part of the option, as appropriate, when any relevant condition (including, for the avoidance of doubt, the affluxion of time) has been satisfied, as confirmed by the Board of Directors (or, where relevant, waived) and “ Vesting ” and “ Vest ” shall be construed accordingly. For the avoidance of doubt, unless stated otherwise, any part of the option which Vests does not automatically become exercisable.

 

23


ARGENTINA

Terms and Conditions

Nature of Grant .

The following provision supplements Section 1 of the Appendix A:

Any benefits awarded under the Plan accrue no more frequently than on an annual basis. In addition, the Optionee acknowledges, understands and agrees that the grant is made by the Company on behalf of the Employer.

Exercise Procedures / Payment for Stock .

Under current regulations adopted by the Argentine Central Bank (the “BCRA”), the Optionee may purchase and remit foreign currency with a value up to a certain maximum limit per month for the purpose of acquiring foreign securities (including Shares) without prior approval from the BCRA. The Optionee, however, must register the purchase with the BCRA and execute and submit an affidavit to the entity selling the foreign currency confirming that the Optionee has not purchased and remitted funds in excess of the maximum limit during the relevant month.

The Optionee understands and acknowledges that the Company has no liability if the Optionee is unable to exercise the option due to exchange control restrictions and that the Company reserves the right not to honor the exercise and/or to impose further terms and conditions on the exercise of the option and the issuance of Shares pursuant to the option if it determines that any regulatory requirements have not been met. In particular, but without limitation to the foregoing, the Company reserves the right to (i) require that the Optionee make payment of the Purchase Price by a method that does not involve that the Optionee advance any funds ( e.g. , by a “net exercise” arrangement or by an exercise/sale procedure as described in Sections 5(d) and 5(c) of the Agreement, respectively), and/or (ii) cancel the option in exchange for such cash consideration that the Board of Directors, in its sole discretion, may consider appropriate.

Notifications

Securities Law Information .

The option and any Shares to be issued pursuant to exercise of the option are offered as a private transaction. This offering is not subject to supervision by any Argentine governmental authority.

Exchange Control Information .

Please note that exchange control regulations in Argentina are subject to frequent change. The Optionee is solely responsible for complying with any and all Argentine currency exchange restrictions, approvals and reporting requirements that may apply in connection with the Optionee’s participation in the Plan. Prior to exercising the option, transferring sale proceeds into Argentina or taking any other action related to the Plan, the Optionee should consult his or her local bank and legal advisor to confirm the exchange control rules and required documentation.

 

24


Foreign Asset / Account Reporting Information .

Argentine residents must report any Shares they may hold on December 31st of each year on their annual tax return for that year. Argentine residents should consult with their personal tax advisor to ensure compliance with all applicable reporting requirements.

AUSTRALIA

Terms and Conditions

Nature of Plan .

The Plan and this Agreement is a plan to which Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) (the “Act”) applies (subject to the conditions in the Act).

Notifications

Securities Law Information .

If the Optionee acquires Shares under the Plan and offers such Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. The Optionee should obtain legal advice on disclosure obligations prior to making any such offer.

Exchange Control Information .

Exchange control reporting is required for cash transactions exceeding A$10,000 and international funds transfers ( e.g. , the remittance of sale proceeds related to Shares). The Australian bank assisting with the transaction may file the report for the Optionee. If there is no Australian bank involved in the transfer, the Optionee will be required to file the report him/herself. The Optionee should consult with his or her personal advisor to ensure proper compliance with applicable reporting requirements in Australia.

BRAZIL

Terms and Conditions

Compliance with Law .

By accepting the option, the Optionee acknowledges and agrees to comply with applicable Brazilian laws and to pay any and all applicable taxes associated with the exercise of the option, receipt of any dividends, and sale of Shares acquired under the Plan.

 

25


Labor Law Acknowledgement .

By accepting or exercising the option, the Optionee agrees that (i) he or she is making an investment decision, (ii) he or she may exercise the option only if the vesting conditions are met, and (iii) the value of the underlying Shares is not fixed and may increase or decrease in value without compensation.

Notifications

Foreign Asset / Account Reporting Information .

Brazilian residents are required to submit an annual or quarterly declaration of assets and rights (including Shares acquired under the Plan) held outside Brazil if the aggregate value of such rights and assets exceeds certain thresholds. Participant should consult with his or her personal legal advisor to determine whether he or she will be subject to this reporting requirement.

Tax on Financial Transaction (IOF) .

Payments to foreign countries (including payment of the Purchase Price) and repatriation of funds into Brazil and the conversion between Brazilian Reals and the United States Dollar associated with such fund transfers may be subject to the IOF ( i.e. , tax on financial transactions). The Optionee is solely responsible for complying with any applicable IOF arising from the Optionee’s participation in the Plan. The Optionee should consult with his or her personal tax advisor for additional details.

CANADA

Terms and Conditions

Payment for Stock .

The following provision supplements Section 5 of the Agreement:

Notwithstanding Section 7 of the Plan or any provision of the Agreement to the contrary, the Optionee will not be permitted to use the exercise methods set forth in Sections 5(b) and 5(d) of this Agreement to pay the Purchase Price in connection with this option. The Company reserves the right to permit these methods of payment depending upon the development of local law.

Nature of Grant .

The following provision replaces Section 1(k) of the Appendix A:

for purposes of the option, the Optionee’s employment or Service relationship will be considered terminated (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), as of the date that is the earlier of: (i) the date the Optionee receives notice of termination of employment, or (ii) the date the

 

26


Optionee is no longer actively employed or actively providing Services to the Company, any Parent or Subsidiary, regardless of any notice period or period of pay in lieu of such notice required under local law (including, but not limited to statutory law, regulatory law and/or common law). Unless otherwise expressly provided in this Agreement or determined by the Company, this date shall be the date on which vesting of this option ceases and on which the period remaining to exercise the option (if any) starts to run. The Board of Directors shall have the exclusive discretion to determine when the Optionee is no longer actively providing Services for purposes of his or her option grant (including whether the Optionee may still be considered to be providing services while on a leave of absence);

The following provisions apply if the Optionee is a resident of Quebec:

Language Consent .

The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Consentement relatif à la langue utilisée.

Les parties reconnaissent avoir exigé la rédaction en anglais de cette Convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy .

The following provision supplements Section 2 of the Appendix A:

The Optionee hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. The Optionee further authorizes the Company and the Employer to disclose and discuss the Plan with their advisors. The Optionee further authorizes the Company and the Employer the Optionee to record such information and to keep such information in his or her employee file.

Notifications

Securities Law Information .

The Optionee is permitted to sell Shares acquired under the Plan through the designated broker appointed under the Plan, if any, provided the sale of the Shares acquired under the Plan takes place outside of Canada through the facilities of a stock exchange on which the Shares will be listed.

 

27


Foreign Asset/Account Reporting Information .

Canadian residents are required to report any foreign property (including Shares acquired under the Plan and other rights to receive Shares, e.g. , the option) on form T1135 (Foreign Income Verification Statement) if the total cost of the such foreign property exceeds C$100,000 at any time in the year. The form must be filed by April 30 of the following year. The option must be reported—generally at a nil cost—if the C$100,000 cost threshold is exceeded because of other foreign property the Optionee holds. If Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB would normally equal the Fair Market Value of the Shares at the time of acquisition, but if the Optionee owns other shares, this ACB may need to be averaged with the ACB of the other shares. The Optionee should consult with his or her personal tax advisor to ensure compliance will applicable reporting obligations.

GERMANY

Notifications

Exchange Control Information .

Cross-border payments in excess of €12,500 (including transactions made in connection with the sale of Shares) must be reported monthly to the German Federal Bank ( Bundesbank ). German residents who make or receive payments in excess of this amount must report the payments to Bundesbank electronically using the “General Statistics Reporting Portal” (“ Allgemeines Meldeportal Statistik ”) available via Bundesbank’s website (www.bundesbank.de). The Optionee is responsible for complying with applicable reporting requirements.

IRELAND

Notifications

Director Notification Information .

If the Optionee is a director, shadow director 1 or secretary of an Irish Subsidiary, pursuant to the Company Act 2014, the Optionee must notify the Irish Subsidiary in writing if the Optionee receives or disposes of an interest exceeding 1% of the Company ( e.g ., options, Shares), if the Optionee becomes aware of the event giving rise to the notification requirement, or if the Optionee becomes a director or secretary if such an interest exceeding 1% of the Company exists at that time. In some cases, this notification should be made to the Company within eight days of the event giving rise to the duty to make the notification. This notification requirement also applies with respect to the interests of a spouse or minor child (whose interests will be attributed to the director, shadow director or secretary, as the case may be). The Optionee should consult with his or her personal legal advisor to ensure compliance with the applicable requirements.

 

 

1   A shadow director is an individual who is not on the board of directors of the Irish Subsidiary, but who has sufficient control so that the board of directors of the Irish Subsidiary acts in accordance with the directions or instructions of the individual.

 

28


UNITED KINGDOM

Terms and Conditions

Withholding Taxes .

This provision supplements Section 4(c) of the Agreement and applies if the Shares are considered readily convertible assets under U.K. law at the time of exercise:

If payment or withholding of the income tax due is not made within 90 days of the end of the U.K. tax year giving rise to the liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax will constitute a loan owed by the Optionee to the Employer, effective on the Due Date. The Optionee agrees that the loan will bear interest at the then-current Her Majesty’s Revenue and Customs (“HMRC”) Official Rate, it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 4(c) of the Agreement. Notwithstanding the foregoing, if the Optionee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities Exchange Act of 1934, as amended), the Optionee will not be eligible for such a loan to cover the tax liability. In the event that the Optionee is a director or executive officer and the income tax due is not collected from or paid by the Optionee by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Optionee on which additional income tax and employee National Insurance contributions (“NICs”) may be payable. The Optionee will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any employee NICs due on this additional benefit, which the Company or the Employer may recover from the Optionee at any time thereafter by any of the means referred to in Section 4(c) of the Agreement.

Section 431 Election .

As a condition of participation in the Plan and the exercise of the option, the Optionee agrees, jointly with the Employer, that he or she shall enter into the joint election within Section 431 of the U.K. Income Tax (Earnings and Pensions) Act 2003 (“ITEPA 2003”) in respect of computing any tax charge on the acquisition of “Restricted Securities” (as defined in Sections 423 and 424 of ITEPA 2003), and that the Optionee will not revoke such election at any time. This election will be to treat the Shares acquired pursuant to the exercise of the option as if such Shares were not Restricted Securities (for U.K. tax purposes only).

Joint Election for Transfer of Liability for Employer National Insurance Contributions .

As a condition of participation in the Plan and the exercise of the option at a time when the Shares are considered readily convertible assets under U.K. law, the Optionee agrees to accept any liability for secondary Class 1 NICs that may be payable by the Company, the Employer, any Parent or Subsidiary in connection with the option and any event giving rise to Tax-Related Items (“Employer NICs”). Without prejudice to the foregoing, the Optionee agrees to execute a

 

29


joint election with the Company or the Employer, the form of such joint election (the “Joint Election”) having been approved formally by HMRC, if required, and any other required consent or election prior to exercise of the option. The Optionee further agrees to execute such other joint elections as may be required between the Optionee and any successor to the Company, the Employer, any Parent or Subsidiary. The Optionee further agrees that the Company, the Employer, any Parent or Subsidiary may collect the Employer NICs from the Optionee by any of the means set forth in Section 4(c) of the Agreement.

If the Optionee does not enter into a Joint Election prior to the exercise of the option, he or she will not be entitled to exercise the option unless and until he or she enters into a Joint Election, and no Shares will be issued to the Optionee under the Plan, without any liability to the Company, the Employer, any Parent or Subsidiary.

 

30


E VENTBRITE , I NC . 2010 S TOCK P LAN

N OTICE OF S TOCK O PTION G RANT

The Optionee has been granted the following option to purchase shares of the Stock of Eventbrite, Inc.:

 

Name of Optionee:

  

 

  

Total Number of Shares:

  

 

  

Type of Option:

  

Incentive Stock Option (ISO)

  

Nonstatutory Stock Option (NSO)

Exercise Price per Share:

   $                                                                                   

Date of Grant:

  

 

  

Date Exercisable:    This option will Vest with respect to the first 25% of the Shares subject to this option when the Optionee completes 12 months of continuous Service beginning with the Vesting Commencement Date set forth below. This option will Vest with respect to an additional 1/48 th of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.

 

Vesting Commencement Date:

  

 

  

Expiration Date:

                                                                     . This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Global Stock Option Agreement.

[Remainder of page intentionally left blank]


By accepting this option, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, the 2010 Stock Plan and the Global Stock Option Agreement. Both of these documents are attached to, and made a part of, this Notice of Stock Option Grant. Section  13 of the Global Stock Option Agreement and Section  1 of Appendix A to the Global Stock Option Agreement include important acknowledgements of the Optionee .

IN ADDITION, BY ACCEPTING THIS OPTION, THE OPTIONEE ALSO AGREES THAT IN CONSIDERATION OF THE GRANT OF THIS OPTION, THE TRANSFER RESTRICTIONS SET FORTH IN SECTION  7 OF THE ATTACHED GLOBAL STOCK OPTION AGREEMENT SHALL ALSO APPLY (I)  TO ALL SHARES CURRENTLY HELD BY THE OPTIONEE REGARDLESS OF HOW THEY WERE ACQUIRED AND (II)  TO ALL SHARES SUBJECT TO ANY STOCK OPTIONS PREVIOUSLY GRANTED TO THE OPTIONEE BY THE COMPANY (WHETHER PURSUANT TO THE 2010 STOCK PLAN OR OTHERWISE).

 

O PTIONEE :      E VENTBRITE , I NC .

 

     By:   

                 

  
Name:      Title: Chief Financial Officer   

 

2


E VENTBRITE , I NC . 2010 S TOCK P LAN

N OTICE OF S TOCK O PTION G RANT

The Optionee has been granted the following option to purchase shares of the Stock of Eventbrite, Inc.:

 

  Name of Optionee:                                                 
  Total Number of Shares:                                                 
  Type of Option:   

Incentive Stock Option (ISO)

    

Nonstatutory Stock Option (NSO)

  Exercise Price per Share:            $                             
  Date of Grant:                                                 

Date Exercisable:    This option will Vest with respect to the first 1/48 th of the Shares subject to this option when the Optionee completes 1 month(s) of continuous Service beginning with the Vesting Commencement Date set forth below. This option will Vest with respect to an additional 1/48 th of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.

 

  Vesting Commencement Date:                                                     
  Expiration Date:                                                      . This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Global Stock Option Agreement.

[Remainder of page intentionally left blank]


By accepting this option, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, the 2010 Stock Plan and the Global Stock Option Agreement. Both of these documents are attached to, and made a part of, this Notice of Stock Option Grant. Section  13 of the Global Stock Option Agreement and Section  1 of Appendix A to the Global Stock Option Agreement include important acknowledgements of the Optionee .

IN ADDITION, BY ACCEPTING THIS OPTION, THE OPTIONEE ALSO AGREES THAT IN CONSIDERATION OF THE GRANT OF THIS OPTION, THE TRANSFER RESTRICTIONS SET FORTH IN SECTION 7 OF THE ATTACHED GLOBAL STOCK OPTION AGREEMENT SHALL ALSO APPLY (I) TO ALL SHARES CURRENTLY HELD BY THE OPTIONEE REGARDLESS OF HOW THEY WERE ACQUIRED AND (II) TO ALL SHARES SUBJECT TO ANY STOCK OPTIONS PREVIOUSLY GRANTED TO THE OPTIONEE BY THE COMPANY (WHETHER PURSUANT TO THE 2010 STOCK PLAN OR OTHERWISE).

 

O PTIONEE :       E VENTBRITE , I NC .

 

      By:  

                          

Name:       Title: Chief Financial Officer

 

2


E VENTBRITE , I NC . 2010 S TOCK P LAN

N OTICE OF S TOCK O PTION G RANT

The Optionee has been granted the following option to purchase shares of the Stock of Eventbrite, Inc.:

 

   Name of Optionee:                                             
   Total Number of Shares:                                             
   Type of Option:   

Incentive Stock Option (ISO)

     

Nonstatutory Stock Option (NSO)

   Exercise Price per Share:    $                             
   Date of Grant:                                             
   Date Exercisable:    This option may be exercised with respect to the first 25% of the Shares subject to this option when the Optionee completes 12 months of continuous Service beginning with the Vesting Commencement Date set forth below. This option may be exercised with respect to an additional 1/48 th of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.
   Vesting Commencement Date:                                                     
   Expiration Date:                                              . This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Global Stock Option Agreement.

[Remainder of page intentionally left blank]


By accepting this option, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, the 2010 Stock Plan and the Global Stock Option Agreement. Both of these documents are attached to, and made a part of, this Notice of Stock Option Grant. Section  13 of the Global Stock Option Agreement and Section  1 of Appendix A to the Global Stock Option Agreement include important acknowledgements of the Optionee .

IN ADDITION, BY ACCEPTING THIS OPTION, THE OPTIONEE ALSO AGREES THAT IN CONSIDERATION OF THE GRANT OF THIS OPTION, THE TRANSFER RESTRICTIONS SET FORTH IN SECTION 7 OF THE ATTACHED GLOBAL STOCK OPTION AGREEMENT SHALL ALSO APPLY (I) TO ALL SHARES CURRENTLY HELD BY THE OPTIONEE REGARDLESS OF HOW THEY WERE ACQUIRED AND (II) TO ALL SHARES SUBJECT TO ANY STOCK OPTIONS PREVIOUSLY GRANTED TO THE OPTIONEE BY THE COMPANY (WHETHER PURSUANT TO THE 2010 STOCK PLAN OR OTHERWISE).

 

O PTIONEE :      

E VENTBRITE , I NC .

 

      By:  

                     

Name:       Title: Chief Financial Officer

 

2


E VENTBRITE , I NC . 2010 S TOCK P LAN

N OTICE OF S TOCK O PTION G RANT (E ARLY E XERCISE )

The Optionee has been granted the following option to purchase shares of the Stock of Eventbrite, Inc.:

 

  Name of Optionee:                                             
  Total Number of Shares:                                             
  Type of Option:   

Incentive Stock Option (ISO)

    

Nonstatutory Stock Option (NSO)

  Exercise Price per Share:    $                         
  Date of Grant:                                             
  Date Exercisable:    This option may be exercised at any time after the Date of Grant for all or any part of the Shares subject to this option.
  Vesting Schedule:    The Right of Repurchase shall lapse with respect to the first 25% of the Shares subject to this option when the Optionee completes 12 months of continuous Service beginning with the Vesting Commencement Date set forth above. The Right of Repurchase shall lapse with respect to an additional 1/48 th of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.
  Vesting Commencement Date:                                                     
  Expiration Date:                                              . This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Global Stock Option Agreement.

[Remainder of page intentionally left blank]


By accepting this option, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, the 2010 Stock Plan and the Global Stock Option Agreement. Both of these documents are attached to, and made a part of, this Notice of Stock Option Grant. Section  13 of the Global Stock Option Agreement and Section  1 of Appendix A to the Global Stock Option Agreement include important acknowledgements of the Optionee .

IN ADDITION, BY ACCEPTING THIS OPTION, THE OPTIONEE ALSO AGREES THAT IN CONSIDERATION OF THE GRANT OF THIS OPTION, THE TRANSFER RESTRICTIONS SET FORTH IN SECTION  7 OF THE ATTACHED GLOBAL STOCK OPTION AGREEMENT SHALL ALSO APPLY (I)  TO ALL SHARES CURRENTLY HELD BY THE OPTIONEE REGARDLESS OF HOW THEY WERE ACQUIRED AND (II)  TO ALL SHARES SUBJECT TO ANY STOCK OPTIONS PREVIOUSLY GRANTED TO THE OPTIONEE BY THE COMPANY (WHETHER PURSUANT TO THE 2010 STOCK PLAN OR OTHERWISE).

 

O PTIONEE :       E VENTBRITE , I NC .

 

      By:   

             

Name:       Title:    Chief Financial Officer

 

2


E VENTBRITE , I NC . 2010 S TOCK P LAN

N OTICE OF S TOCK O PTION G RANT

The Optionee has been granted the following option to purchase shares of the Stock of Eventbrite, Inc.:

 

   Name of Optionee:                                                 
   Total Number of Shares:                                                 
   Type of Option:   

Incentive Stock Option (ISO)

     

Nonstatutory Stock Option (NSO)

   Exercise Price per Share:    $                         
   Date of Grant:                                        
   Date Exercisable:    This option may be exercised with respect to the first 1/48 th of the Shares subject to this option when the Optionee completes 1 month(s) of continuous Service beginning with the Vesting Commencement Date set forth below. This option may be exercised with respect to an additional 1/48 th of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.
   Vesting Commencement Date:                                                         
   Expiration Date:                                                  . This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Global Stock Option Agreement.

[Remainder of page intentionally left blank]


By accepting this option, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, the 2010 Stock Plan and the Global Stock Option Agreement. Both of these documents are attached to, and made a part of, this Notice of Stock Option Grant. Section  13 of the Global Stock Option Agreement and Section  1 of Appendix A to the Global Stock Option Agreement include important acknowledgements of the Optionee .

IN ADDITION, BY ACCEPTING THIS OPTION, THE OPTIONEE ALSO AGREES THAT IN CONSIDERATION OF THE GRANT OF THIS OPTION, THE TRANSFER RESTRICTIONS SET FORTH IN SECTION  7 OF THE ATTACHED GLOBAL STOCK OPTION AGREEMENT SHALL ALSO APPLY (I)  TO ALL SHARES CURRENTLY HELD BY THE OPTIONEE REGARDLESS OF HOW THEY WERE ACQUIRED AND (II)  TO ALL SHARES SUBJECT TO ANY STOCK OPTIONS PREVIOUSLY GRANTED TO THE OPTIONEE BY THE COMPANY (WHETHER PURSUANT TO THE 2010 STOCK PLAN OR OTHERWISE).

 

O PTIONEE :       E VENTBRITE , I NC .

 

      By:   

             

Name:       Title: Chief Financial Officer

 

2


E VENTBRITE , I NC . 2010 S TOCK P LAN

N OTICE OF S TOCK O PTION G RANT (E ARLY E XERCISE )

The Optionee has been granted the following option to purchase shares of the Stock of Eventbrite, Inc.:

 

Name of Optionee:                                                                                 
Total Number of Shares:                                                                                 
Type of Option:    Incentive Stock Option (ISO)
   Nonstatutory Stock Option (NSO)
Exercise Price per Share:    $__________
Date of Grant:                                                                                 
Date Exercisable:    This option may be exercised at any time after the Date of Grant for all or any part of the Shares subject to this option.
Vesting Schedule:    The Right of Repurchase shall lapse with respect to the first 25% of the Shares subject to this option when the Optionee completes 12 months of continuous Service beginning with the Vesting Commencement Date set forth above. The Right of Repurchase shall lapse with respect to an additional 1/48 th of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.
Vesting Commencement Date:                                                             
Expiration Date:    _____________________. This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Global Stock Option Agreement.

[Remainder of page intentionally left blank]


By signing below, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, the 2010 Stock Plan and the Global Stock Option Agreement. Both of these documents are attached to, and made a part of, this Notice of Stock Option Grant. Section  14 of the Global Stock Option Agreement and Section  1 of Appendix A to the Global Stock Option Agreement include important acknowledgements of the Optionee .

IN ADDITION, BY SIGNING BELOW, THE OPTIONEE ALSO AGREES THAT IN CONSIDERATION OF THE GRANT OF THIS OPTION, THE TRANSFER RESTRICTIONS SET FORTH IN SECTION  8 OF THE ATTACHED GLOBAL STOCK OPTION AGREEMENT SHALL ALSO APPLY (I)  TO ALL SHARES CURRENTLY HELD BY THE OPTIONEE REGARDLESS OF HOW THEY WERE ACQUIRED AND (II)  TO ALL SHARES SUBJECT TO ANY STOCK OPTIONS PREVIOUSLY GRANTED TO THE OPTIONEE BY THE COMPANY (WHETHER PURSUANT TO THE 2010 STOCK PLAN OR OTHERWISE).

 

O PTIONEE :    E VENTBRITE , I NC .   
                                                                 By:   

             

  
Name:    Title: Chief Financial Officer   

 

2


THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

E VENTBRITE , I NC . 2010 S TOCK P LAN :

G LOBAL S TOCK O PTION A GREEMENT

SECTION 1. GRANT OF OPTION.

(a) O ption . On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Optionee on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair Market Value if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies). This option is intended to be an ISO or an NSO, as provided in the Notice of Stock Option Grant.

(b) $100,000 Limitation . Even if this option is designated as an ISO in the Notice of Stock Option Grant, it shall be deemed to be an NSO to the extent (and only to the extent) required by the $100,000 annual limitation under Section 422(d) of the Code.

(c) Stock Plan and Defined Terms . This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received. The provisions of the Plan are incorporated into this Agreement by this reference. Capitalized terms are defined in Section 15 of this Agreement.

SECTION 2. RIGHT TO EXERCISE.

(a) Exercisability . Subject to Subsection (b) below and the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant. Shares purchased by exercising this option may be subject to the Right of Repurchase under Section 7.

(b) Stockholder Approval . Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time prior to the approval of the Plan by the Company’s stockholders.

 

3


SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.

The Optionee shall not Transfer this option other than by will or by the laws of descent and distribution, except as provided in the following sentence. The Optionee may Transfer this option to the extent it is an NSO to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family or to a partnership in which such Immediate Family members and the Optionee are the only partners, in each case without consideration and for bona fide estate planning purposes, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee Transfers this option, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

SECTION 4. EXERCISE PROCEDURES.

(a) Notice of Exercise . The Optionee or the Optionee’s representative may exercise this option by giving written notice to the Company pursuant to Section 13(c). The notice shall specify the election to exercise this option, the number of Shares for which it is being exercised and the form of payment. The person exercising this option shall sign the notice. In the event that this option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative’s right to exercise this option. The Optionee or the Optionee’s representative shall deliver to the Company, at the time of giving the notice, payment in a form permissible under Section 5 for the full amount of the Purchase Price. In the event of a partial exercise of this option, Shares shall be deemed to have been purchased in the order in which they vest in accordance with the Notice of Stock Option Grant.

(b) Issuance of Shares . After receiving a proper notice of exercise, the Company shall cause the Shares for which the option is exercised to be registered in book entry (i.e., uncertificated) form on the books and records of the Company. Such Shares shall be registered (i) in the name of the person exercising this option, (ii) in the names of such person and his or her spouse as community property or as joint tenants with the right of survivorship or (iii) with the Company’s consent, in the name of a revocable trust. In the case of Restricted Shares, the Company shall cause certificates to be deposited in escrow under Section 7(c) upon request for such certificates to be issued. In the case of other Shares, the Company shall cause such certificates to be delivered to or upon the order of the person exercising this option only upon request for such certificates to be issued.

(c) Withholding Taxes .

(i) The Optionee acknowledges that, regardless of any action taken by the Company or, if different, any Parent or Subsidiary employing or retaining the Optionee (the “ Employer ”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Optionee’s participation in the Plan and legally applicable to the Optionee (“ Tax-Related Items ”), is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company or

 

4


the Employer. The Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the option, including, but not limited to, the grant, vesting or exercise of the option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Optionee is subject to Tax-Related Items in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, the Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(ii) Prior to the relevant taxable or tax withholding event, as applicable, the Optionee agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company and/or the Employer; (ii) withholding from proceeds of the sale of Shares acquired upon exercise of the option either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization); and/or (iii) withholding in Shares to be issued upon exercise of the option.

(iii) Depending on the withholding method, the Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case the Optionee will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent amount in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Optionee is deemed to have been issued the full number of Shares subject to the exercised portion of the option, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

(iv) The Optionee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

 

5


SECTION 5. PAYMENT FOR STOCK.

(a) Cash . All or part of the Purchase Price may be paid in cash or cash equivalents.

(b) Surrender of Stock . At the discretion of the Board of Directors, all or any part of the Purchase Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when this option is exercised.

(c) Exercise/Sale . All or part of the Purchase Price and any Tax-Related Items may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company. However, payment pursuant to this Subsection (c) shall be permitted only if (i) Stock is then publicly traded on an established securities market and (ii) such payment does not violate applicable law.

SECTION 6. TERM AND EXPIRATION.

(a) Basic Term . This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies).

(b) Termination of Service (Except by Death) . If the Optionee’s Service terminates for any reason other than death, then this option shall expire on the earliest of the following occasions:

(i) The expiration date determined pursuant to Subsection (a) above;

(ii) The date three months after the termination of the Optionee’s Service for any reason other than Disability; or

(iii) The date six months after the termination of the Optionee’s Service by reason of Disability.

The Optionee may exercise all or part of this option at any time before its expiration under the preceding sentence, but only to the extent that this option is exercisable for vested Shares on or before the date when the Optionee’s Service terminates. When the Optionee’s Service terminates, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable and with respect to any Restricted Shares. In the event that the Optionee dies after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by bequest or inheritance, but only to the extent that this option was exercisable for vested Shares on or before the date when the Optionee’s Service terminated.

 

6


(c) Death of the Optionee . If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

(i) The expiration date determined pursuant to Subsection (a) above; or

(ii) The date 12 months after the Optionee’s death.

All or part of this option may be exercised at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by bequest or inheritance, but only to the extent that this option is exercisable for vested Shares on or before the date of the Optionee’s death. When the Optionee dies, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable and with respect to any Restricted Shares.

(d) Part-Time Employment and Leaves of Absence . If the Optionee commences working on a part-time basis, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant. If the Optionee goes on a leave of absence, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant in accordance with the Company’s leave of absence policy or the terms of such leave. Except as provided in the preceding sentence, Service shall be deemed to continue for any purpose under this Agreement while the Optionee is on a bona fide leave of absence, if (i) such leave was approved by the Company in writing and (ii) continued crediting of Service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company). Service shall be deemed to terminate when such leave ends, unless the Optionee immediately returns to active work.

(e) Notice Concerning ISO Treatment . Even if this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax treatment as an ISO to the extent that it is exercised:

(i) More than three months after the date when the Optionee ceases to be in continuous Service for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code);

(ii) More than 12 months after the date when the Optionee ceases to be in continuous Service by reason of permanent and total disability (as defined in Section 22(e)(3) of the Code); or

(iii) More than three months after the date when the Optionee has been on a leave of absence for 90 days, unless the Optionee’s reemployment rights following such leave were guaranteed by statute or by contract.

 

7


SECTION 7. RIGHT OF REPURCHASE.

(a) Scope of Repurchase Right . Until they vest in accordance with the Notice of Stock Option Grant and Subsection (b) below, the Shares acquired under this Agreement shall be Restricted Shares and shall be subject to the Company’s Right of Repurchase. The Company, however, may decline to exercise its Right of Repurchase or may exercise its Right of Repurchase only with respect to a portion of the Restricted Shares. The Company may exercise its Right of Repurchase only during the Repurchase Period following the termination of the Optionee’s Service, but the Right of Repurchase may be exercised automatically under Subsection (d) below. If the Right of Repurchase is exercised, the Company shall pay the Optionee an amount equal to the lower of (i) the Exercise Price of each Restricted Share being repurchased or (ii) the Fair Market Value of such Restricted Share at the time the Right of Repurchase is exercised.

(b) Lapse of Repurchase Right . The Right of Repurchase shall lapse with respect to the Restricted Shares in accordance with the vesting schedule set forth in the Notice of Stock Option Grant.

(c) Uncertificated Restricted Shares; Escrow . The Restricted Shares shall be issued in book entry (i.e., uncertificated form) on the books of the Company with a notation of these restrictions. If any Restricted Shares are ever issued in certificated form, such shares shall be deposited in escrow with the Company to be held in accordance with the provisions of this Agreement. Any additional or exchanged securities or other property described in Subsection (f) below shall immediately be delivered to the Company to be held in accordance with this Subsection (c). All ordinary cash dividends on Restricted Shares shall be paid directly to the Purchaser. Restricted Shares, together with any other assets held by the Company under this Agreement, shall be (i) surrendered to the Company for repurchase upon exercise of the Right of Repurchase or (ii) released to the Purchaser upon his or her request to the extent that the Shares have ceased to be Restricted Shares (but not more frequently than once every six months).

(d) Exercise of Repurchase Right . The Company shall be deemed to have exercised its Right of Repurchase automatically for all Restricted Shares as of the commencement of the Repurchase Period, unless the Company during the Repurchase Period notifies the holder of the Restricted Shares pursuant to Section 13(c) that it will not exercise its Right of Repurchase for some or all of the Restricted Shares. The Company shall pay to the holder of the Restricted Shares the purchase price determined under Subsection (a) above for the Restricted Shares being repurchased. Payment shall be made in cash or cash equivalents and/or by canceling indebtedness to the Company incurred by the Optionee in the purchase of the Restricted Shares. The certificate(s) representing the Restricted Shares being repurchased, if any, shall be delivered to the Company.

(e) Termination of Rights as Stockholder . If the Right of Repurchase is exercised in accordance with this Section 7 and the Company makes available the consideration for the Restricted Shares being repurchased, then the person from whom the Restricted Shares are repurchased shall no longer have any rights as a holder of the Restricted Shares (other than the right to receive payment of such consideration). Such Restricted Shares shall be deemed to have been repurchased pursuant to this Section 7, whether or not the certificate(s) for such Restricted Shares have been delivered to the Company or the consideration for such Restricted Shares has been accepted.

 

8


(f) Additional or Exchanged Securities and Property . In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Restricted Shares shall immediately be subject to the Right of Repurchase. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Restricted Shares. Appropriate adjustments shall also be made to the price per share to be paid upon the exercise of the Right of Repurchase, provided that the aggregate purchase price payable for the Restricted Shares shall remain the same. In the event of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, the Right of Repurchase may be exercised by the Company’s successor.

(g) Transfer of Restricted Shares . The Optionee shall not Transfer any Restricted Shares without the Company’s written consent, except as provided in the following sentence. The Optionee may Transfer Restricted Shares to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, in each case for bona fide estate planning purposes, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee Transfers any Restricted Shares, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

(h) Assignment of Repurchase Right . The Board of Directors may freely assign the Company’s Right of Repurchase, in whole or in part. Any person who accepts an assignment of the Right of Repurchase from the Company shall assume all of the Company’s rights and obligations under this Section 7.

SECTION 8. APPROVAL RIGHT AND RIGHT OF FIRST REFUSAL.

(a) Approval Right. The Optionee shall not Transfer any Shares without first obtaining the express written approval of the Board of Directors. In the event that the Optionee proposes to Transfer any Shares, the Optionee shall first give a written Transfer Notice to the Company along with a request to the Board of Directors to approve such Transfer. The Transfer Notice shall fully describe the proposed Transfer, including the number of Shares proposed to be Transferred, the proposed Transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed Transfer will not violate any applicable federal, State or foreign securities laws.    Such Transfer Notice must be signed by the Optionee. Within a reasonable period of time after receiving the Transfer Notice, the Board of Directors shall either grant or deny the approval of such Transfer in its sole and absolute discretion. If the Board of Directors does not approve of such Transfer, the Optionee shall not be permitted to Transfer such Shares.

 

9


(b) Right of First Refusal . If the Board of Directors has approved the Optionee’s proposed Transfer of Shares pursuant to Subsection 8(a) above, the Optionee must then present to the Company the Transfer Notice signed both by the Optionee and by the proposed Transferee and such Transfer Notice must constitute a binding commitment of both parties to the Transfer of the Shares (the “ Second Transfer Notice ”). The Company shall have the Right of First Refusal with respect to all or any portion of such Shares. The Company shall have the right to purchase all or any portion of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (c) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date on which the Second Transfer Notice was received by the Company.

(c) Transfer of Shares . If the Company fails to fully exercise its Right of First Refusal within 30 days after the date on which it received the Second Transfer Notice, the Optionee may, not later than 90 days following receipt of such Second Transfer Notice by the Company, conclude a Transfer of the Shares subject to the Second Transfer Notice (and not otherwise elected to be purchased by the Company) on the terms and conditions described in the Second Transfer Notice, provided that any such Transfer is made in compliance with applicable federal, State and foreign securities laws and Company policies in effect at the time of Transfer (including the payment of any applicable Transfer charges imposed by the Company) and not in violation of any other contractual restrictions to which the Optionee is bound. Any proposed Transfer on terms and conditions different from those described in the Second Transfer Notice, as well as any subsequent proposed Transfer by the Optionee, shall again be subject to the Approval Right and the Right of First Refusal and shall require compliance with the procedures described in Subsections (a) and (b) above. If the Company exercises its Right of First Refusal, the parties shall consummate the Transfer of the Shares that the Company elected to purchase on the terms set forth in the Second Transfer Notice within 60 days after the date on which the Company received the Second Transfer Notice; provided, however, that in the event the Second Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of Transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Second Transfer Notice.

(d) Additional or Exchanged Securities and Property . In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 8 shall immediately be subject to the Approval Right and the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 8.

(e) Termination of Approval Right and Right of First Refusal . Any other provision of this Section 8 notwithstanding, in the event that the Stock is publicly traded on an established securities market when the Optionee desires to Transfer Shares, the Company shall have no Approval Right or Right of First Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by Subsections (a), (b) and (c) above.

 

10


(f) Permitted Transfers . This Section 8 shall not apply to (i) a Transfer to the Company, (ii) a Transfer by will or intestate succession or (iii) a Transfer to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, in each case for bona fide estate planning purposes, provided in any case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee Transfers any Shares acquired under this Agreement, either under this Subsection (f) or after the Company has failed to fully exercise the Right of First Refusal following the approval of such Transfer, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

(g) Termination of Rights as Stockholder . If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 8, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.

(h) Assignment of Right of First Refusal . The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part. Any person who accepts an assignment of the Right of First Refusal from the Company shall assume all of the Company’s rights and obligations under this Section 8.

SECTION 9. LEGALITY OF INITIAL ISSUANCE.

No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:

(i) It and the Optionee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof;

(ii) Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

(iii) Any other applicable provision of federal, State or foreign law has been satisfied.

SECTION 10. NO REGISTRATION RIGHTS.

(i) The Company may, but shall not be obligated to, register or qualify the Transfer of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the Transfer of Shares under this Agreement to comply with any law.

 

11


SECTION 11. RESTRICTIONS ON TRANSFER OF SHARES.

(a) Securities Law Restrictions . Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any State or foreign jurisdiction, the Company at its discretion may impose restrictions upon the Transfer of such Shares (including the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any State or foreign jurisdiction or any other law.

(b) Market Stand-Off . In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its managing underwriter. Such restriction (the “ Market Stand-Off ”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriter. In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports or (ii) analyst recommendations and opinions, including (without limitation) the restrictions set forth in Rule 2711(f)(4) of the National Association of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange, as amended, or any similar successor rules. The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (b). This Subsection (b) shall not apply to Shares registered in the public offering under the Securities Act.

(c) Investment Intent at Grant . The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.

(d) Investment Intent at Exercise . In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available that requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

 

12


(e) Legends . All certificates evidencing Shares purchased under this Agreement shall bear the following legend:

“THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN APPROVAL RIGHTS AND RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF SERVICE WITH THE COMPANY. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

All certificates evidencing Shares purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

(f) Removal of Legends . If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

(g) Administration . Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 11 shall be conclusive and binding on the Optionee and all other persons.

SECTION 12. ADJUSTMENT OF SHARES.

In the event of any transaction described in Section 8(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares subject to this option and the Exercise Price) shall be adjusted as set forth in Section 8(a) of the Plan. In the event that the Company is a party to a merger or consolidation, this option shall be subject to the agreement of merger or consolidation, as provided in Section 8(b) of the Plan.

 

13


SECTION 13. MISCELLANEOUS PROVISIONS.

(a) Rights as a Stockholder . Neither the Optionee nor the Optionee’s representative shall have any rights as a stockholder with respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 4 and 5.

(b) No Retention Rights . Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company, the Employer or of the Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

(c) Notice . Subject to Section 14(b) with respect to notices from the Company, any notice required by the terms of this Agreement shall be given in writing. It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service or local country equivalent, by registered or certified mail, with postage and fees prepaid or (iii) deposit with Federal Express Corporation, with shipping charges prepaid. Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance with this Subsection (c).

(d) Modifications and Waivers . No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Optionee and by an authorized officer of the Company (other than the Optionee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(e) Entire Agreement . The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.

(f) Choice of Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

(g) Venue . Unless the Optionee and the Company and/or the Employer have agreed otherwise in a separate written alternative dispute resolution agreement, for purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the option or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of San Francisco County, California, or the federal courts for the United States for the Northern District of California, where this grant is made and/or to be performed, and no other courts.

 

14


(h) Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

(i) Appendix . Notwithstanding any provisions in this Agreement, if the Optionee resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, the option shall be subject to the additional terms and conditions set forth in Appendix A to this Agreement and to the special terms and provisions as set forth in Appendix B for the Optionee’s country, if any. Moreover, if the Optionee relocates to one of the countries included in Appendix B during the life of the option, the special terms and conditions for such country shall apply to the Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendix A and B constitute part of this Agreement.

(j) Imposition of Other Requirements . The Company reserves the right to impose other requirements on the option and the Shares acquired upon exercise of the option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Optionee to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.

SECTION 14. ACKNOWLEDGEMENTS OF THE OPTIONEE.

(a) Tax Consequences . The Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Optionee’s tax liabilities. The Optionee shall not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from this option or the Optionee’s other compensation. In particular, the Optionee acknowledges that this option is exempt from Section 409A of the Code only if the Exercise Price is at least equal to the Fair Market Value per Share on the Date of Grant. Since Shares are not traded on an established securities market, the determination of their Fair Market Value is made by the Board of Directors or by an independent valuation firm retained by the Company. The Optionee acknowledges that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and the Optionee shall not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low. Finally, the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan or the Optionee’s acquisition or sale of Shares. The Optionee is hereby advised to consult with his or her personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

(b) Electronic Delivery and Acceptance of Documents . The Optionee agrees to accept by email all documents relating to the Company, the Plan or this option and all other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by the Securities and Exchange Commission). The Optionee also agrees that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. The Optionee hereby consents to receive such documents by electronic delivery and

 

15


agrees to participate in the Plan through the electronic acceptance procedure established and maintained by the Company or a third party designated by the Company. If the Company posts these documents on a website, it shall notify the Optionee by email of their availability. The Optionee acknowledges that he or she may incur costs in connection with electronic delivery, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere with his or her ability to access the documents. This consent shall remain in effect until this option expires or until the Optionee gives the Company written notice that it should deliver paper documents.

(c) No Notice of Expiration Date . The Optionee agrees that the Company and its officers, employees, attorneys and agents do not have any obligation to notify him or her prior to the expiration of this option pursuant to Section 6, regardless of whether this option will expire at the end of its full term or on an earlier date related to the termination of the Optionee’s Service. The Optionee further agrees that he or she has the sole responsibility for monitoring the expiration of this option and for exercising this option, if at all, before it expires. This Subsection (c) shall supersede any contrary representation that may have been made, orally or in writing, by the Company or by an officer, employee, attorney or agent of the Company.

SECTION 15. DEFINITIONS.

(a) “ Agreement ” shall mean this Global Stock Option Agreement including Appendices A and B.

(b) “ Approval Right ” shall mean the requirement that the Optionee obtain the prior approval of the Board of Directors to any Transfer.

(c) “ Board of Directors ” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

(d) “ Code ” shall mean the U.S. Internal Revenue Code of 1986, as amended.

(e) “ Committee ” shall mean a committee of the Board of Directors, as described in Section 2 of the Plan.

(f) “ Company ” shall mean Eventbrite, Inc., a Delaware corporation.

(g) “ Consultant ” shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

(h) “ Date of Grant ” shall mean the date of grant specified in the Notice of Stock Option Grant, which date shall be the later of (i) the date on which the Board of Directors resolved to grant this option or (ii) the first day of the Optionee’s Service.

(i) “ Disability ” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

 

16


(j) “ Employee ” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

(k) “ Employer ” shall have the meaning set forth in Section 4(c).

(l) “ Exercise Price ” shall mean the amount for which one Share may be purchased upon exercise of this option, as specified in the Notice of Stock Option Grant.

(m) “ Fair Market Value ” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

(n) “ Immediate Family ” shall have the same meaning as “family member” as defined in Rule 701 of the Securities Act.

(o) “ ISO ” shall mean an employee incentive stock option described in Section 422(b) of the Code.

(p) “ Market Stand-Off ” shall have the meaning set forth in Section 11(b).

(q) “ Notice of Stock Option Grant ” shall mean the document so entitled to which this Agreement is attached.

(r) “ NSO ” shall mean a stock option not described in Section 422(b) or 423(b) of the Code.

(s) “ Optionee ” shall mean the person named in the Notice of Stock Option Grant.

(t) “ Outside Director ” shall mean a member of the Board of Directors who is not an Employee.

(u) “ Parent ” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(v) “ Plan ” shall mean the Eventbrite, Inc. 2010 Stock Plan, as in effect on the Date of Grant.

(w) “ Purchase Price ” shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

(x) “ Repurchase Period ” shall mean a period of 90 consecutive days commencing on the date when the Optionee’s Service terminates for any reason, including (without limitation) death or disability.

 

17


(y) “ Restricted Share ” shall mean a Share that is subject to the Right of Repurchase.

(z) “ Right of First Refusal ” shall mean the Company’s right of first refusal described in Section 8.

(aa) “ Right of Repurchase ” shall mean the Company’s right of repurchase described in Section 7.

(bb) “ Second Transfer Notice ” shall have the meaning set forth in Section 8(b).

(cc) “ Securities Act ” shall mean the Securities Act of 1933, as amended.

(dd) “ Service ” shall mean service as an Employee, Outside Director or Consultant.

(ee) “ Share ” shall mean one share of Stock, as adjusted in accordance with Section 8 of the Plan (if applicable).

(ff) “ Stock ” shall mean the Common Stock of the Company.

(gg) “ Subsidiary ” shall mean any corporation (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 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(hh) “ Tax-Related Items ” shall have the meaning set forth in Section 4(c).

(ii) “ Transfer, ” “ Transferred ,” and words of similar import shall mean any assignment, sale, offer to sell, pledge, mortgage, hypothecation, encumbrance, attachment, disposition or sale under execution of or any other like transfer or encumbering of any Shares or any interest therein (by operation of law or otherwise).

(jj) “ Transferee ” shall mean any person to whom the Optionee has directly or indirectly Transferred any Share acquired under this Agreement.

(kk) “ Transfer Notice ” shall mean the notice of a proposed Transfer of Shares described in Section 8(a).

 

18


APPENDIX A

TO THE GLOBAL STOCK OPTION AGREEMENT FOR NON-U.S. OPTIONEES

The following terms and conditions apply to Optionees who reside outside the United States or who are otherwise subject to the laws of a country other than the United States. In general, the terms and conditions in this Appendix A supplement the provisions of the Agreement, unless otherwise indicated herein. Capitalized terms used but not defined herein have the meanings given to them in the Agreement and/or the Plan.

SECTION 1. NATURE OF GRANT.

In accepting the option, the Optionee acknowledges, understands and agrees that:

the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

the grant of the option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;

all decisions with respect to future options or other grants, if any, will be at the sole discretion of the Company;

the Optionee is voluntarily participating in the Plan;

the option and any Shares acquired under the Plan are not intended to replace any pension rights or compensation;

the option and any Shares acquired under the Plan and the income and value of same, are not part of normal or expected compensation for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

the future value of the Shares underlying the option is unknown, indeterminable, and cannot be predicted with certainty;

if the underlying Shares do not increase in value, the option will have no value;

if the Optionee exercises the option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price;

no claim or entitlement to compensation or damages shall arise from forfeiture of the option resulting from the termination of the Optionee’s employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), and in consideration of the grant of the option to which the

 

19


Optionee is otherwise not entitled, the Optionee irrevocably agrees never to institute any claim against the Company, any Parent or Subsidiary or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company, any Parent or Subsidiary and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Optionee shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

for purposes of the option, the Optionee’s employment or service relationship will be considered terminated as of the date the Optionee is no longer actively providing services to the Company or any Parent or Subsidiary (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, (i) the Optionee’s right to vest in the option under the Plan, if any, will terminate as of such date and will not be extended by any notice period ( e.g ., the Optionee’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any); and (ii) the period (if any) during which the Optionee may exercise the option after such termination of the Optionee’s employment or service relationship will commence on the date the Optionee ceases to actively provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where the Optionee is employed or terms of the Optionee’s employment agreement, if any; the Board of Directors shall have the exclusive discretion to determine when the Optionee is no longer actively providing services for purposes of his or her option grant (including whether the Optionee may still be considered to be providing services while on a leave of absence);

unless otherwise provided in the Plan or by the Company in its discretion, the option and the benefits evidenced by this Agreement do not create any entitlement to have the option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Company; and

neither the Company, the Employer nor any Parent or Subsidiary shall be liable for any foreign exchange rate fluctuation between the Optionee’s local currency and the United States Dollar that may affect the value of the option or of any amounts due to the Optionee pursuant to the exercise of the option or the subsequent sale of any Shares acquired upon exercise.

SECTION 2. DATA PRIVACY .

The Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Optionee’s personal data as described in this Agreement and any other option grant materials (“Data”) by and among, as applicable, the Employer, the Company and any Parent and Subsidiaries for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.

 

20


The Optionee understands that the Company and the Employer may hold certain personal information about the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purpose of implementing, administering and managing the Plan.

The Optionee understands that Data will be transferred to such stock plan service providers as may be currently engaged by the Company or selected by the Company in the future to assist the Company and/or the Employer with the implementation, administration and management of the Plan, including, without limitation, brokers, benefit managers, equity software providers and outside legal and accounting advisors. The Optionee understands that these Data recipients may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than the Optionee’s country. The Optionee understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Optionee authorizes the Company and these Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Optionee’s participation in the Plan. The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan and as required by applicable laws. The Optionee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Optionee understands that he or she is providing the consents herein on a purely voluntary basis. If the Optionee does not consent, or if the Optionee later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing the Optionee’s consent is that the Company would not be able to grant the Optionee options or other equity awards or administer or maintain such awards. Therefore, the Optionee understands that refusing or withdrawing his or her consent may affect the Optionee’s ability to participate in the Plan. For more information on the consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact his or her local human resources representative.

SECTION 3. LANGUAGE.

If the Optionee has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

21


APPENDIX B

TO THE GLOBAL STOCK OPTION AGREEMENT FOR NON-U.S. OPTIONEES

Terms and Conditions

This Appendix B includes special terms and conditions applicable to Optionees in the countries below. These terms and conditions are in addition to, or, if so indicated, in place of, the terms and conditions set forth in the Agreement, including Appendix A. Capitalized terms used but not defined herein have the meanings given to them in the Agreement and/or the Plan.

Notifications

This Appendix B may also include information regarding exchange controls and certain other issues of which the Optionee should be aware with respect to his or her participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of July 2013. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Optionee not rely on the information noted herein as the only source of information relating to the consequences of the Optionee’s participation in the Plan because the information may be out of date at the time the Optionee exercises the option and acquires Shares or when the Optionee subsequently sells Shares acquired under the Plan.

In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation, and the Company is not in a position to assure the Optionee of any particular result. Accordingly, the Optionee is advised to seek appropriate professional advice as to how the relevant laws in his or her country may apply to the Optionee’s situation.

Finally, if the Optionee is a citizen or resident of a country other than the one in which he or she is working as of the Date of Grant, transfers employment to another country after the Date of Grant, or is considered a resident of another country for local law purposes, the information contained herein may not be applicable to the Optionee. In addition, the Company shall, in its sole discretion, determine to what extent the terms and conditions included herein will apply to such an Optionee.

ALL COUNTRIES OUTSIDE THE UNITED STATES

Terms and Conditions

RIGHT TO EXERCISE.

Section 2 of the Agreement is hereby deleted in its entirety and replaced with the following:

(a) Prior to an Exit . Unless the Board of Directors, in their absolute discretion, determine otherwise, no part of the option shall become exercisable until an Exit.

 

22


(b) In Connection With an Exit . In the event of an Exit, the option, to the extent it has not already expired or been exercised, shall become exercisable as follows:

(i) unless the Board of Directors determine in their absolute discretion that the Option shall become exercisable to a greater extent, the option shall become exercisable to the extent Vested as at the date of Exit, provided that the Optionee’s Service continues at the date of Exit; or

(ii) if the Optionee is a Good Leaver prior to the date of Exit, to the extent Vested in accordance with Section 6(b)(i) below,

and, to the extent that it is exercisable pursuant to this Section 2(b), the option may be exercised in accordance with Sections 2(c) and Section 4 of this Agreement.

(c) Determination of Exercise Period . If the option becomes exercisable in connection with Section 2(b)(i) of this Agreement, then, subject to the other conditions set forth in this Agreement and Section 8 of the Plan, this option may be exercised from time to time after the date of Exit and prior to its expiration as and when and to the extent it is then Vested and unexercised. If the Option becomes exercisable in connection with an Exit pursuant to Section 2(b)(ii) of this Agreement, the Board of Directors will determine:

(i) the period within which it may be exercised at the end of which it will cease to be exercisable and will not be capable of becoming exercisable again as a result of any provision of the Plan or this Agreement; and

(ii) the time or date on which it will expire.

EXERCISE PROCEDURES.

The following exercise procedure is added as a new Section 5(d) of the Agreement:

(d) Net exercise . The Board may at any time in its absolute discretion determine in relation to this option that all or a part of the Purchase Price may be paid by a “net exercise” arrangement pursuant to which the Company will reduce the number of Shares issued upon exercise of the option by the largest number of whole Shares with a Fair Market Value (as of the exercise date) that does not exceed the Purchase Price. The Optionee shall pay any remaining balance of the Purchase Price in one of the other forms specified in this Section 5. Any exercise of the option in accordance with this Section 5(d) shall be subject to the operation of Section 4(c) above.

TERM AND EXPIRATION.

Section 6(b) of the Agreement is deleted in its entirety and replaced with the following:

(b) Expiration Upon Termination of Service .

 

23


(i) Unless the Board of Directors, in its absolute discretion determines that the option shall Vest to a greater extent, in the event that the Optionee becomes a Good Leaver, the option shall cease to Vest as at the date of cessation of Service as a Good Leaver. Any part of the Option which has become Vested as of such date of cessation may only be exercised:

(1) in connection with a subsequent Exit in accordance with S ection 2 of this Agreement; or

(2) if an Exit has already occurred and the option has not expired in accordance with Section 2(c)(ii) of this Agreement, the option may be exercised:

(a) within 12 months of the date of cessation if cessation is due to death;

(b) within 6 months of the date of cessation if cessation is due to Disability; or

(c) within 3 months of the date of cessation if the Optionee becomes a Good Leaver in any circumstances other than death or Disability,

after which, to the extent unexercised the option shall expire.

For the avoidance of doubt, any part of the option that does not Vest in accordance with this Section 6(b)(i) shall expire on the date of cessation of Service as a Good Leaver.

(ii) In the event that the Optionee becomes a Bad Leaver, all options held by the Optionee, including, for the avoidance of doubt, those that have Vested (in full or in part) and those that have become exercisable (in full or in part), shall expire on the date of cessation of Service as a Bad Leaver.

A new Section 6(d) is added to the Agreement as follows:

(d) Expiration . The option (or, where relevant, any part of the option) will expire on the earliest of:

(i) the expiration date specified in the Notice of Stock Option Grant;

(ii) in respect of any part of the Option which does not Vest in accordance with Section 6(b)(i), the date on which the Optionee becomes a Good Leaver;

(iii) the expiry of the relevant periods pursuant to Section 6(b)(i)(2);

 

24


(iv) the date on which the Optionee becomes a Bad Leaver;

(v) the date on which a resolution is passed, or an order is made by the Court, for the compulsory winding up of the Company;

(vi) the date on which the Optionee becomes bankrupt or does or omits to do anything as a result of which he is deprived of the legal or beneficial ownership of the option;

(vii) the date or time determined in accordance with Section 2(c)(ii) of this Agreement; and

(viii) any other date determined in accordance with this Agreement.

DEFINITIONS.

The following definitions are added to Section 14 of the Agreement:

Bad Leaver ” shall mean any Optionee whose continuous Service is terminated for one of the following reasons (as determined by the Board of Directors in their absolute discretion):

(i) failure (other than due to Disability) to materially comply with written Company policies generally applicable to similar service providers to the Company or any directive of the Optionee’s superior that is reasonably achievable, that is not inconsistent with the Optionee’s position or the fulfillment of fiduciary duties and that is not otherwise prohibited by law or established public policy, subject to notice and 30 day cure period to the extent curable;

(ii) engagement in willful misconduct against the Company or its Parent or a Subsidiary that is materially injurious to the Company or its Parent or a Subsidiary;

(iii) engagement in any activity that is a conflict of interest or competitive with the Company or its Parent or a Subsidiary;

(iv) engaging in any act of fraud or dishonesty against the Company or its Parent or a Subsidiary or any material breach of federal or state securities or other laws or regulations;

(v) engaging in an act of assault or other acts of violence in the workplace;

(vi) harassment of any individual in the workplace based on age, gender or other protected status or class or violation of any policy of the Company, its Parent or a Subsidiary regarding harassment; or

 

25


(vii) conviction, guilty plea or plea of nolo contendre for any felony charge.

Exit ” shall mean an occurrence of any one or more of the following as determined by the Board of Directors in its absolute discretion:

(i) a merger or consolidation in which:

(a) the Company is a constituent party; or

(b) a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation,

except, in each case, any such merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (A) the surviving or resulting company or (B) if the surviving or resulting company is a wholly owned subsidiary of another company immediately following such merger or consolidation, the parent company of such surviving or resulting company (provided that, for the purpose of this definition, all shares of Stock issuable upon exercise of options outstanding immediately prior to such merger or consolidation or upon conversion of convertible securities outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Stock are converted or exchanged);

(ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, expect where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company; or

(iii) the closing of a firm offer in respect of an underwritten initial public offering filed under the Securities Act of 1933, as amended, in respect of all or any of the Stock of the Company.

Good Leaver ” shall mean any Optionee other than a Bad Leaver who ceases to be in continuous Service.

Vested ” shall mean, in relation to all or any part of the option, as appropriate, when any relevant condition (including, for the avoidance of doubt, the affluxion of time) has been satisfied, as confirmed by the Board of Directors (or, where relevant, waived) and “ Vesting ” and “ Vest ” shall be construed accordingly. For the avoidance of doubt, unless stated otherwise, any part of the option which Vests does not automatically become exercisable.

 

26


ARGENTINA

Terms and Conditions

Nature of Grant .

The following provision supplements Section 1 of the Appendix A:

Any benefits awarded under the Plan accrue no more frequently than on an annual basis. In addition, the Optionee acknowledges, understands and agrees that the grant is made by the Company on behalf of the Employer.

Exercise Procedures / Payment for Stock . Under current exchange control laws in Argentina, the Optionee is not permitted to purchase and remit foreign currency out of Argentina for the purpose of acquiring foreign securities (including Shares).

The Optionee understands and acknowledges that the Company has no liability if the Optionee is unable to exercise the option due to exchange control restrictions and that the Company reserves the right not to honor the exercise and/or to impose further terms and conditions on the exercise of the option and the issuance of Shares pursuant to the option if it determines that any regulatory requirements have not been met. In particular, but without limitation to the foregoing, the Company reserves the right to (i) require that the Optionee make payment of the Purchase Price by a method that does not involve that the Optionee advance any funds (e.g., by a “net exercise” arrangement or by an exercise/sale procedure as described in Sections 4(d) and 5(c) of the Agreement, respectively), and/or (ii) cancel the option in exchange for such cash consideration that the Board of Directors, in its sole discretion, may consider appropriate.

 

27


Notifications

Securities Law Information .

The option and any Shares to be issued pursuant to exercise of the option are offered as a private transaction. This offering is not subject to supervision by any Argentine governmental authority.

Exchange Control Information .

If the Optionee transfers proceeds from the sale of Shares into Argentina within 10 days of sale ( i.e. , if the proceeds have not been held in a U.S. bank or brokerage account for at least 10 days prior to transfer), the Optionee must deposit 30% of the sale proceeds into a non-interest bearing account in Argentina for 365 days. If the Optionee has satisfied the 10 day holding obligation, the Argentine bank handling the transaction may request certain documentation in connection with the Optionee’s request to transfer sale proceeds into Argentina, including evidence of the sale and proof of the source of funds used to purchase the Shares. If the bank determines that the 10-day rule or any other rule or regulation promulgated by the Argentine Central Bank has not been satisfied, it will require that 30% of the transfer amount be placed in a non-interest bearing dollar denominated mandatory deposit account for a holding period of 365 days.

The Optionee is solely responsible for complying with the exchange control rules that may apply in connection with the Optionee’s participation in the Plan. Prior to exercising the option, transferring sale proceeds into Argentina or taking any other action related to the Plan, the Optionee should consult his or her local bank and legal advisor to confirm the exchange control rules and required documentation.

UNITED KINGDOM

Terms and Conditions

Withholding Taxes .

This provision supplements Section 4(c) of the Agreement and applies if the Shares are considered readily convertible assets under U.K. law at the time of exercise:

If payment or withholding of the income tax due is not made within 90 days of the event giving rise to the liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax will constitute a loan owed by the Optionee to the Employer, effective on the Due Date. The Optionee agrees that the loan will bear interest at the then-current Her Majesty’s Revenue and Customs (“HMRC”) Official Rate, it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 4(c) of the Agreement. Notwithstanding the foregoing, if the Optionee is a director or executive officer of the Company (within the meaning of Section 13(k) of the Securities Exchange Act of 1934, as amended), the Optionee will not be eligible for such a loan to cover the tax liability. In the event that the Optionee is a director or executive officer and the income tax due is not collected from or paid by the Optionee by the Due Date, the amount of any uncollected income

 

28


tax may constitute a benefit to the Optionee on which additional income tax and employee National Insurance contributions (“NICs”) will be payable. The Optionee will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any employee NICs due on this additional benefit, which the Company or the Employer may recover from the Optionee at any time thereafter by any of the means referred to in Section 4(c) of the Agreement.

Section  431 Election .

As a condition of participation in the Plan and the exercise of the option, the Optionee agrees, jointly with the Employer, that he or she shall enter into the joint election within Section 431 of the U.K. Income Tax (Earnings and Pensions) Act 2003 (“ITEPA 2003”) in respect of computing any tax charge on the acquisition of “Restricted Securities” (as defined in Sections 423 and 424 of ITEPA 2003), and that the Optionee will not revoke such election at any time. This election will be to treat the Shares acquired pursuant to the exercise of the option as if such Shares were not Restricted Securities (for U.K. tax purposes only).

Joint Election for Transfer of Liability for Employer National Insurance Contributions .

As a condition of participation in the Plan and the exercise of the option at a time when the Shares are considered readily convertible assets under U.K. law, the Optionee agrees to accept any liability for secondary Class 1 NICs that may be payable by the Company, the Employer, any Parent or Subsidiary in connection with the option and any event giving rise to Tax-Related Items (“Employer NICs”). Without prejudice to the foregoing, the Optionee agrees to execute a joint election with the Company or the Employer, the form of such joint election (the “Joint Election”) having been approved formally by HMRC, and any other required consent or election prior to exercise of the option. The Optionee further agrees to execute such other joint elections as may be required between the Optionee and any successor to the Company, the Employer, any Parent or Subsidiary. The Optionee further agrees that the Company, the Employer, any Parent or Subsidiary may collect the Employer NICs from the Optionee by any of the means set forth in Section 4(c) of the Agreement.

If the Optionee does not enter into a Joint Election prior to the exercise of the option, he or she will not be entitled to exercise the option unless and until he or she enters into a Joint Election, and no Shares will be issued to the Optionee under the Plan, without any liability to the Company, the Employer, any Parent or Subsidiary.

 

29


THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

E VENTBRITE , I NC . 2010 S TOCK P LAN :

G LOBAL S TOCK O PTION A GREEMENT

SECTION 1. GRANT OF OPTION.

(a) Option . On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Optionee on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair Market Value if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies). This option is intended to be an ISO or an NSO, as provided in the Notice of Stock Option Grant.

(b) $100,000 Limitation . Even if this option is designated as an ISO in the Notice of Stock Option Grant, it shall be deemed to be an NSO to the extent (and only to the extent) required by the $100,000 annual limitation under Section 422(d) of the Code.

(c) Stock Plan and Defined Terms . This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received. The provisions of the Plan are incorporated into this Agreement by this reference. Capitalized terms are defined in Section 15 of this Agreement.

SECTION 2. RIGHT TO EXERCISE.

(a) Exercisability . Subject to Subsection (b) below and the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant. Shares purchased by exercising this option may be subject to the Right of Repurchase under Section 7.

(b) Stockholder Approval . Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time prior to the approval of the Plan by the Company’s stockholders.


SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.

The Optionee shall not Transfer this option other than by will or by the laws of descent and distribution, except as provided in the following sentence. The Optionee may Transfer this option to the extent it is an NSO to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family or to a partnership in which such Immediate Family members and the Optionee are the only partners, in each case without consideration and for bona fide estate planning purposes, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee Transfers this option, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

SECTION 4. EXERCISE PROCEDURES.

(a) Notice of Exercise . The Optionee or the Optionee’s representative may exercise this option by giving written notice to the Company pursuant to Section 13(c). The notice shall specify the election to exercise this option, the number of Shares for which it is being exercised and the form of payment. The person exercising this option shall sign the notice. In the event that this option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative’s right to exercise this option. The Optionee or the Optionee’s representative shall deliver to the Company, at the time of giving the notice, payment in a form permissible under Section 5 for the full amount of the Purchase Price. In the event of a partial exercise of this option, Shares shall be deemed to have been purchased in the order in which they vest in accordance with the Notice of Stock Option Grant.

(b) Issuance of Shares . After receiving a proper notice of exercise, the Company shall cause the Shares for which the option is exercised to be registered in book entry (i.e., uncertificated) form on the books and records of the Company. Such Shares shall be registered (i) in the name of the person exercising this option, (ii) in the names of such person and his or her spouse as community property or as joint tenants with the right of survivorship or (iii) with the Company’s consent, in the name of a revocable trust. In the case of Restricted Shares, the Company shall cause certificates to be deposited in escrow under Section 7(c) upon request for such certificates to be issued. In the case of other Shares, the Company shall cause such certificates to be delivered to or upon the order of the person exercising this option only upon request for such certificates to be issued.

(c) Withholding Taxes .

(i) The Optionee acknowledges that, regardless of any action taken by the Company or, if different, any Parent or Subsidiary employing or retaining the Optionee (the “ Employer ”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Optionee’s participation in the Plan and legally applicable to the Optionee (“ Tax-Related Items ”), is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company or

 

2


the Employer. The Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the option, including, but not limited to, the grant, vesting or exercise of the option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Optionee is subject to Tax-Related Items in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, the Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(ii) Prior to the relevant taxable or tax withholding event, as applicable, the Optionee agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company and/or the Employer; (ii) withholding from proceeds of the sale of Shares acquired upon exercise of the option either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization); and/or (iii) withholding in Shares to be issued upon exercise of the option.

(iii) Depending on the withholding method, the Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case the Optionee will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent amount in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Optionee is deemed to have been issued the full number of Shares subject to the exercised portion of the option, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

(iv) The Optionee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

 

3


SECTION 5. PAYMENT FOR STOCK.

(a) Cash . All or part of the Purchase Price may be paid in cash or cash equivalents.

(b) Surrender of Stock . At the discretion of the Board of Directors, all or any part of the Purchase Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when this option is exercised.

(c) Exercise/Sale . All or part of the Purchase Price and any Tax-Related Items may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company. However, payment pursuant to this Subsection (c) shall be permitted only if (i) Stock is then publicly traded on an established securities market and (ii) such payment does not violate applicable law.

SECTION 6. TERM AND EXPIRATION.

(a) Basic Term . This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies).

(b) Termination of Service (Except by Death) . If the Optionee’s Service terminates for any reason other than death, then this option shall expire on the earliest of the following occasions:

(i) The expiration date determined pursuant to Subsection (a) above;

(ii) The date three months after the termination of the Optionee’s Service for any reason other than Disability; or

(iii) The date six months after the termination of the Optionee’s Service by reason of Disability.

The Optionee may exercise all or part of this option at any time before its expiration under the preceding sentence, but only to the extent that this option is exercisable for vested Shares on or before the date when the Optionee’s Service terminates. When the Optionee’s Service terminates, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable and with respect to any Restricted Shares. In the event that the Optionee dies after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by bequest or inheritance, but only to the extent that this option was exercisable for vested Shares on or before the date when the Optionee’s Service terminated.

 

4


(c) Death of the Optionee . If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

(i) The expiration date determined pursuant to Subsection (a) above; or

(ii) The date 12 months after the Optionee’s death.

All or part of this option may be exercised at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by bequest or inheritance, but only to the extent that this option is exercisable for vested Shares on or before the date of the Optionee’s death. When the Optionee dies, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable and with respect to any Restricted Shares.

(d) Part-Time Employment and Leaves of Absence . If the Optionee commences working on a part-time basis, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant. If the Optionee goes on a leave of absence, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant in accordance with the Company’s leave of absence policy or the terms of such leave. Except as provided in the preceding sentence, Service shall be deemed to continue for any purpose under this Agreement while the Optionee is on a bona fide leave of absence, if (i) such leave was approved by the Company in writing and (ii) continued crediting of Service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company). Service shall be deemed to terminate when such leave ends, unless the Optionee immediately returns to active work.

(e) Notice Concerning ISO Treatment . Even if this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax treatment as an ISO to the extent that it is exercised:

(i) More than three months after the date when the Optionee ceases to be in continuous Service for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code);

(ii) More than 12 months after the date when the Optionee ceases to be in continuous Service by reason of permanent and total disability (as defined in Section 22(e)(3) of the Code); or

(iii) More than three months after the date when the Optionee has been on a leave of absence for 90 days, unless the Optionee’s reemployment rights following such leave were guaranteed by statute or by contract.

 

5


SECTION 7. RIGHT OF REPURCHASE.

(a) Scope of Repurchase Right . Until they vest in accordance with the Notice of Stock Option Grant and Subsection (b) below, the Shares acquired under this Agreement shall be Restricted Shares and shall be subject to the Company’s Right of Repurchase. The Company, however, may decline to exercise its Right of Repurchase or may exercise its Right of Repurchase only with respect to a portion of the Restricted Shares. The Company may exercise its Right of Repurchase only during the Repurchase Period following the termination of the Optionee’s Service, but the Right of Repurchase may be exercised automatically under Subsection (d) below. If the Right of Repurchase is exercised, the Company shall pay the Optionee an amount equal to the lower of (i) the Exercise Price of each Restricted Share being repurchased or (ii) the Fair Market Value of such Restricted Share at the time the Right of Repurchase is exercised.

(b) Lapse of Repurchase Right . The Right of Repurchase shall lapse with respect to the Restricted Shares in accordance with the vesting schedule set forth in the Notice of Stock Option Grant. However, in the event of a Change in Control prior to the Optionee’s termination of Service, the Right of Repurchase shall lapse in full with respect to all the Restricted Shares immediately prior to the consummation of the Change in Control.

(c) Uncertificated Restricted Shares ; Escrow. The Restricted Shares shall be issued in book entry (i.e., uncertificated form) on the books of the Company with a notation of these restrictions. If any Restricted Shares are ever issued in certificated form, such shares shall be deposited in escrow with the Company to be held in accordance with the provisions of this Agreement. Any additional or exchanged securities or other property described in Subsection (f) below shall immediately be delivered to the Company to be held in accordance with this Subsection (c). All ordinary cash dividends on Restricted Shares shall be paid directly to the Purchaser. Restricted Shares, together with any other assets held by the Company under this Agreement, shall be (i) surrendered to the Company for repurchase upon exercise of the Right of Repurchase or (ii) released to the Purchaser upon his or her request to the extent that the Shares have ceased to be Restricted Shares (but not more frequently than once every six months).

(d) Exercise of Repurchase Right . The Company shall be deemed to have exercised its Right of Repurchase automatically for all Restricted Shares as of the commencement of the Repurchase Period, unless the Company during the Repurchase Period notifies the holder of the Restricted Shares pursuant to Section 13(c) that it will not exercise its Right of Repurchase for some or all of the Restricted Shares. The Company shall pay to the holder of the Restricted Shares the purchase price determined under Subsection (a) above for the Restricted Shares being repurchased. Payment shall be made in cash or cash equivalents and/or by canceling indebtedness to the Company incurred by the Optionee in the purchase of the Restricted Shares. The certificate(s) representing the Restricted Shares being repurchased, if any, shall be delivered to the Company.

(e) Termination of Rights as Stockholder . If the Right of Repurchase is exercised in accordance with this Section 7 and the Company makes available the consideration for the Restricted Shares being repurchased, then the person from whom the Restricted Shares are repurchased shall no longer have any rights as a holder of the Restricted Shares (other than the right to receive payment of such consideration). Such Restricted Shares shall be deemed to have been repurchased pursuant to this Section 7, whether or not the certificate(s) for such Restricted Shares have been delivered to the Company or the consideration for such Restricted Shares has been accepted.

 

6


(f) Additional or Exchanged Securities and Property . In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Restricted Shares shall immediately be subject to the Right of Repurchase. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Restricted Shares. Appropriate adjustments shall also be made to the price per share to be paid upon the exercise of the Right of Repurchase, provided that the aggregate purchase price payable for the Restricted Shares shall remain the same. In the event of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, the Right of Repurchase may be exercised by the Company’s successor.

(g) Transfer of Restricted Shares . The Optionee shall not Transfer any Restricted Shares without the Company’s written consent, except as provided in the following sentence. The Optionee may Transfer Restricted Shares to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, in each case for bona fide estate planning purposes, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee Transfers any Restricted Shares, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

(h) Assignment of Repurchase Right . The Board of Directors may freely assign the Company’s Right of Repurchase, in whole or in part. Any person who accepts an assignment of the Right of Repurchase from the Company shall assume all of the Company’s rights and obligations under this Section 7.

SECTION 8. APPROVAL RIGHT AND RIGHT OF FIRST REFUSAL.

(a) Approval Right . The Optionee shall not Transfer any Shares without first obtaining the express written approval of the Board of Directors. In the event that the Optionee proposes to Transfer any Shares, the Optionee shall first give a written Transfer Notice to the Company along with a request to the Board of Directors to approve such Transfer. The Transfer Notice shall fully describe the proposed Transfer, including the number of Shares proposed to be Transferred, the proposed Transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed Transfer will not violate any applicable federal, State or foreign securities laws. Such Transfer Notice must be signed by the Optionee. Within a reasonable period of time after receiving the Transfer Notice, the Board of Directors shall either grant or deny the approval of such Transfer in its sole and absolute discretion. If the Board of Directors does not approve of such Transfer, the Optionee shall not be permitted to Transfer such Shares.

 

7


(b) Right of First Refusal . If the Board of Directors has approved the Optionee’s proposed Transfer of Shares pursuant to Subsection 8(a) above, the Optionee must then present to the Company the Transfer Notice signed both by the Optionee and by the proposed Transferee and such Transfer Notice must constitute a binding commitment of both parties to the Transfer of the Shares (the “Second Transfer Notice”). The Company shall have the Right of First Refusal with respect to all or any portion of such Shares. The Company shall have the right to purchase all or any portion of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (c) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date on which the Second Transfer Notice was received by the Company.

(c) Transfer of Shares . If the Company fails to fully exercise its Right of First Refusal within 30 days after the date on which it received the Second Transfer Notice, the Optionee may, not later than 90 days following receipt of such Second Transfer Notice by the Company, conclude a Transfer of the Shares subject to the Second Transfer Notice (and not otherwise elected to be purchased by the Company) on the terms and conditions described in the Second Transfer Notice, provided that any such Transfer is made in compliance with applicable federal, State and foreign securities laws and Company policies in effect at the time of Transfer (including the payment of any applicable Transfer charges imposed by the Company) and not in violation of any other contractual restrictions to which the Optionee is bound. Any proposed Transfer on terms and conditions different from those described in the Second Transfer Notice, as well as any subsequent proposed Transfer by the Optionee, shall again be subject to the Approval Right and the Right of First Refusal and shall require compliance with the procedures described in Subsections (a) and (b) above. If the Company exercises its Right of First Refusal, the parties shall consummate the Transfer of the Shares that the Company elected to purchase on the terms set forth in the Second Transfer Notice within 60 days after the date on which the Company received the Second Transfer Notice; provided, however, that in the event the Second Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of Transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Second Transfer Notice.

(d) Additional or Exchanged Securities and Property . In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 8 shall immediately be subject to the Approval Right and the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 8.

(e) Termination of Approval Right and Right of First Refusal . Any other provision of this Section 8 notwithstanding, in the event that the Stock is publicly traded on an established securities market when the Optionee desires to Transfer Shares, the Company shall have no Approval Right or Right of First Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by Subsections (a), (b) and (c) above.

 

8


(f) Permitted Transfers . This Section 8 shall not apply to (i) a Transfer to the Company, (ii) a Transfer by will or intestate succession or (iii) a Transfer to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, in each case for bona fide estate planning purposes, provided in any case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee Transfers any Shares acquired under this Agreement, either under this Subsection (f) or after the Company has failed to fully exercise the Right of First Refusal following the approval of such Transfer, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

(g) Termination of Rights as Stockholder . If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 8, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.

(h) Assignment of Right of First Refusal . The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part. Any person who accepts an assignment of the Right of First Refusal from the Company shall assume all of the Company’s rights and obligations under this Section 8.

SECTION 9. LEGALITY OF INITIAL ISSUANCE.

No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:

(i) It and the Optionee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof;

(ii) Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

(iii) Any other applicable provision of federal, State or foreign law has been satisfied.

 

9


SECTION 10. NO REGISTRATION RIGHTS.

The Company may, but shall not be obligated to, register or qualify the Transfer of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the Transfer of Shares under this Agreement to comply with any law.

SECTION 11. RESTRICTIONS ON TRANSFER OF SHARES.

(a) Securities Law Restrictions . Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any State or foreign jurisdiction, the Company at its discretion may impose restrictions upon the Transfer of such Shares (including the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any State or foreign jurisdiction or any other law.

(b) Market Stand-Off . In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its managing underwriter. Such restriction (the “ Market Stand-Off ”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriter. In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports or (ii) analyst recommendations and opinions, including (without limitation) the restrictions set forth in Rule 2711(f)(4) of the National Association of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange, as amended, or any similar successor rules. The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (b). This Subsection (b) shall not apply to Shares registered in the public offering under the Securities Act.

(c) Investment Intent at Grant . The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.

 

10


(d) Investment Intent at Exercise . In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available that requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

(e) Legends . All certificates evidencing Shares purchased under this Agreement shall bear the following legend:

“THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN APPROVAL RIGHTS AND RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF SERVICE WITH THE COMPANY. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

All certificates evidencing Shares purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

(f) Removal of Legends . If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

(g) Administration . Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 11 shall be conclusive and binding on the Optionee and all other persons.

SECTION 12. ADJUSTMENT OF SHARES.

In the event of any transaction described in Section 8(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares subject to this option and the Exercise Price) shall be adjusted as set forth in Section 8(a) of the Plan. In the event that the Company is a party to a merger or consolidation, this option shall be subject to the agreement of merger or consolidation, as provided in Section 8(b) of the Plan.

 

11


SECTION 13. MISCELLANEOUS PROVISIONS.

(a) Rights as a Stockholder . Neither the Optionee nor the Optionee’s representative shall have any rights as a stockholder with respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 4 and 5.

(b) No Retention Rights . Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company, the Employer or of the Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

(c) Notice . Subject to Section 14(b) with respect to notices from the Company, any notice required by the terms of this Agreement shall be given in writing. It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service or local country equivalent, by registered or certified mail, with postage and fees prepaid or (iii) deposit with Federal Express Corporation, with shipping charges prepaid. Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance with this Subsection (c).

(d) Modifications and Waivers . No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Optionee and by an authorized officer of the Company (other than the Optionee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(e) Entire Agreement . The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.

(f) Choice of Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

(g) Venue . Unless the Optionee and the Company and/or the Employer have agreed otherwise in a separate written alternative dispute resolution agreement, for purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the option or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of San Francisco County, California, or the federal courts for the United States for the Northern District of California, where this grant is made and/or to be performed, and no other courts.

 

12


(h) Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

(i) Appendix . Notwithstanding any provisions in this Agreement, if the Optionee resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, the option shall be subject to the additional terms and conditions set forth in Appendix A to this Agreement and to the special terms and provisions as set forth in Appendix B for the Optionee’s country, if any. Moreover, if the Optionee relocates to one of the countries included in Appendix B during the life of the option, the special terms and conditions for such country shall apply to the Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendix A and B constitute part of this Agreement.

(j) Imposition of Other Requirements . The Company reserves the right to impose other requirements on the option and the Shares acquired upon exercise of the option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Optionee to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.

SECTION 14. ACKNOWLEDGEMENTS OF THE OPTIONEE.

(a) Tax Consequences . The Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Optionee’s tax liabilities. The Optionee shall not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from this option or the Optionee’s other compensation. In particular, the Optionee acknowledges that this option is exempt from Section 409A of the Code only if the Exercise Price is at least equal to the Fair Market Value per Share on the Date of Grant. Since Shares are not traded on an established securities market, the determination of their Fair Market Value is made by the Board of Directors or by an independent valuation firm retained by the Company. The Optionee acknowledges that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and the Optionee shall not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low. Finally, the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan or the Optionee’s acquisition or sale of Shares. The Optionee is hereby advised to consult with his or her personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

(b) Electronic Delivery and Acceptance of Documents . The Optionee agrees to accept by email all documents relating to the Company, the Plan or this option and all other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by the Securities and Exchange Commission). The Optionee also agrees that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. The Optionee hereby consents to receive such documents by electronic delivery and

 

13


agrees to participate in the Plan through the electronic acceptance procedure established and maintained by the Company or a third party designated by the Company. If the Company posts these documents on a website, it shall notify the Optionee by email of their availability. The Optionee acknowledges that he or she may incur costs in connection with electronic delivery, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere with his or her ability to access the documents. This consent shall remain in effect until this option expires or until the Optionee gives the Company written notice that it should deliver paper documents.

(c) No Notice of Expiration Date . The Optionee agrees that the Company and its officers, employees, attorneys and agents do not have any obligation to notify him or her prior to the expiration of this option pursuant to Section 6, regardless of whether this option will expire at the end of its full term or on an earlier date related to the termination of the Optionee’s Service. The Optionee further agrees that he or she has the sole responsibility for monitoring the expiration of this option and for exercising this option, if at all, before it expires. This Subsection (c) shall supersede any contrary representation that may have been made, orally or in writing, by the Company or by an officer, employee, attorney or agent of the Company.

SECTION 15. DEFINITIONS.

(a) “ Agreement ” shall mean this Global Stock Option Agreement including Appendices A and B.

(b) “ Approval Right ” shall mean the requirement that the Optionee obtain the prior approval of the Board of Directors to any Transfer.

(c) “ Board of Directors ” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

(d) “ Change in Control ” shall mean (i) the consummation of a merger or consolidation of the Company with or into another entity or (ii) the dissolution, liquidation or winding up of the Company. The foregoing notwithstanding, a merger or consolidation of the Company does not constitute a “Change in Control” if immediately after the merger or consolidation a majority of the voting power of the capital stock of the continuing or surviving entity, or any direct or indirect parent corporation of the continuing or surviving entity, will be owned by the persons who were the Company’s stockholders immediately prior to the merger or consolidation in substantially the same proportions as their ownership of the voting power of the Company’s capital stock immediately prior to the merger or consolidation.

(e) “ Code ” shall mean the U.S. Internal Revenue Code of 1986, as amended.

(f) “ Committee ” shall mean a committee of the Board of Directors, as described in Section 2 of the Plan.

(g) “ Company ” shall mean Eventbrite, Inc., a Delaware corporation.

 

14


(h) Consultant ” shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

(i) Date of Grant ” shall mean the date of grant specified in the Notice of Stock Option Grant, which date shall be the later of (i) the date on which the Board of Directors resolved to grant this option or (ii) the first day of the Optionee’s Service.

(j) “ Disability ” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

(k) “ Employee ” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

(l) “ Employer ” shall have the meaning set forth in Section 4(c).

(m) “ Exercise Price ” shall mean the amount for which one Share may be purchased upon exercise of this option, as specified in the Notice of Stock Option Grant.

(n) “ Fair Market Value ” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

(o) “ Immediate Family ” shall have the same meaning as “family member” as defined in Rule 701 of the Securities Act.

(p) “ ISO ” shall mean an employee incentive stock option described in Section 422(b) of the Code.

(q) “ Market Stand-Off ” shall have the meaning set forth in Section 11(b).

(r) “ Notice of Stock Option Grant ” shall mean the document so entitled to which this Agreement is attached.

(s) “ NSO ” shall mean a stock option not described in Section 422(b) or 423(b) of the Code.

(t) “ Optionee ” shall mean the person named in the Notice of Stock Option Grant.

(u) “ Outside Director ” shall mean a member of the Board of Directors who is not an Employee.

(v) “ Parent ” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

15


(w) Plan ” shall mean the Eventbrite, Inc. 2010 Stock Plan, as in effect on the Date of Grant.

(x) Purchase Price shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

(y) “ Repurchase Period ” shall mean a period of 90 consecutive days commencing on the date when the Optionee’s Service terminates for any reason, including (without limitation) death or disability.

(z) “ Restricted Share ” shall mean a Share that is subject to the Right of Repurchase.

(aa) “ Right of First Refusal ” shall mean the Company’s right of first refusal described in Section 8.

(bb) “ Right of Repurchase ” shall mean the Company’s right of repurchase described in Section 7.

(cc) “ Second Transfer Notice ” shall have the meaning set forth in Section 8(b).

(dd) “ Securities Act ” shall mean the Securities Act of 1933, as amended.

(ee) “ Service ” shall mean service as an Employee, Outside Director or Consultant.

(ff) Share ” shall mean one share of Stock, as adjusted in accordance with Section 8 of the Plan (if applicable).

(gg) “Stock shall mean the Common Stock of the Company.

(hh) “Subsidiary shall mean any corporation (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 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(ii) “Tax-Related Items shall have the meaning set forth in Section 4(c).

(jj) “Transfer, “Transferred,” and words of similar import shall mean any assignment, sale, offer to sell, pledge, mortgage, hypothecation, encumbrance, attachment, disposition or sale under execution of or any other like transfer or encumbering of any Shares or any interest therein (by operation of law or otherwise).

(kk) Transferee ” shall mean any person to whom the Optionee has directly or indirectly Transferred any Share acquired under this Agreement.

 

16


(ll) Transfer Notice ” shall mean the notice of a proposed Transfer of Shares described in Section 8(a).

 

17


APPENDIX A

TO THE GLOBAL STOCK OPTION AGREEMENT FOR NON-U.S. OPTIONEES

The following terms and conditions apply to Optionees who reside outside the United States or who are otherwise subject to the laws of a country other than the United States. In general, the terms and conditions in this Appendix A supplement the provisions of the Agreement, unless otherwise indicated herein. Capitalized terms used but not defined herein have the meanings given to them in the Agreement and/or the Plan.

SECTION 1. NATURE OF GRANT.

In accepting the option, the Optionee acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b) the grant of the option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;

(c) all decisions with respect to future options or other grants, if any, will be at the sole discretion of the Company;

(d) the Optionee is voluntarily participating in the Plan;

(e) the option and any Shares acquired under the Plan are not intended to replace any pension rights or compensation;

(f) the option and any Shares acquired under the Plan and the income and value of same, are not part of normal or expected compensation for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(g) the future value of the Shares underlying the option is unknown, indeterminable, and cannot be predicted with certainty;

(h) if the underlying Shares do not increase in value, the option will have no value;

(i) if the Optionee exercises the option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price;

(j) no claim or entitlement to compensation or damages shall arise from forfeiture of the option resulting from the termination of the Optionee’s employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), and in consideration of the grant of the option to

 

18


which the Optionee is otherwise not entitled, the Optionee irrevocably agrees never to institute any claim against the Company, any Parent or Subsidiary or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company, any Parent or Subsidiary and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Optionee shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(k) for purposes of the option, the Optionee’s employment or service relationship will be considered terminated as of the date the Optionee is no longer actively providing services to the Company or any Parent or Subsidiary (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, (i) the Optionee’s right to vest in the option under the Plan, if any, will terminate as of such date and will not be extended by any notice period ( e.g ., the Optionee’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any); and (ii) the period (if any) during which the Optionee may exercise the option after such termination of the Optionee’s employment or service relationship will commence on the date the Optionee ceases to actively provide services and will not be extended by any notice period mandated under employment laws in the jurisdiction where the Optionee is employed or terms of the Optionee’s employment agreement, if any; the Board of Directors shall have the exclusive discretion to determine when the Optionee is no longer actively providing services for purposes of his or her option grant (including whether the Optionee may still be considered to be providing services while on a leave of absence);

(l) unless otherwise provided in the Plan or by the Company in its discretion, the option and the benefits evidenced by this Agreement do not create any entitlement to have the option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Company; and

(m) neither the Company, the Employer nor any Parent or Subsidiary shall be liable for any foreign exchange rate fluctuation between the Optionee’s local currency and the United States Dollar that may affect the value of the option or of any amounts due to the Optionee pursuant to the exercise of the option or the subsequent sale of any Shares acquired upon exercise.

SECTION 2. DATA PRIVACY .

The Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Optionee’s personal data as described in this Agreement and any other option grant materials (“Data”) by and among, as applicable, the Employer, the Company and any Parent and Subsidiaries for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.

 

19


The Optionee understands that the Company and the Employer may hold certain personal information about the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purpose of implementing, administering and managing the Plan.

The Optionee understands that Data will be transferred to such stock plan service providers as may be currently engaged by the Company or selected by the Company in the future to assist the Company and/or the Employer with the implementation, administration and management of the Plan, including, without limitation, brokers, benefit managers, equity software providers and outside legal and accounting advisors. The Optionee understands that these Data recipients may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than the Optionee’s country. The Optionee understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Optionee authorizes the Company and these Data recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Optionee’s participation in the Plan. The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan and as required by applicable laws. The Optionee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Optionee understands that he or she is providing the consents herein on a purely voluntary basis. If the Optionee does not consent, or if the Optionee later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing the Optionee’s consent is that the Company would not be able to grant the Optionee options or other equity awards or administer or maintain such awards. Therefore, the Optionee understands that refusing or withdrawing his or her consent may affect the Optionee’s ability to participate in the Plan. For more information on the consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact his or her local human resources representative.

SECTION 3. LANGUAGE.

If the Optionee has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

20


APPENDIX B

TO THE GLOBAL STOCK OPTION AGREEMENT FOR NON-U.S. OPTIONEES

Terms and Conditions

This Appendix B includes special terms and conditions applicable to Optionees in the countries below. These terms and conditions are in addition to, or, if so indicated, in place of, the terms and conditions set forth in the Agreement, including Appendix A. Capitalized terms used but not defined herein have the meanings given to them in the Agreement and/or the Plan.

Notifications

This Appendix B may also include information regarding exchange controls and certain other issues of which the Optionee should be aware with respect to his or her participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of July 2013. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Optionee not rely on the information noted herein as the only source of information relating to the consequences of the Optionee’s participation in the Plan because the information may be out of date at the time the Optionee exercises the option and acquires Shares or when the Optionee subsequently sells Shares acquired under the Plan.

In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation, and the Company is not in a position to assure the Optionee of any particular result. Accordingly, the Optionee is advised to seek appropriate professional advice as to how the relevant laws in his or her country may apply to the Optionee’s situation.

Finally, if the Optionee is a citizen or resident of a country other than the one in which he or she is working as of the Date of Grant, transfers employment to another country after the Date of Grant, or is considered a resident of another country for local law purposes, the information contained herein may not be applicable to the Optionee. In addition, the Company shall, in its sole discretion, determine to what extent the terms and conditions included herein will apply to such an Optionee.

ALL COUNTRIES OUTSIDE THE UNITED STATES

Terms and Conditions

RIGHT TO EXERCISE.

Section 2 of the Agreement is hereby deleted in its entirety and replaced with the following:

(a) Prior to an Exit . Unless the Board of Directors, in their absolute discretion, determine otherwise, no part of the option shall become exercisable until an Exit.

 

21


(b) In Connection With an Exit . In the event of an Exit , the option, to the extent it has not already expired or been exercised, shall become exercisable as follows:

(i) unless the Board of Directors determine in their absolute discretion that the Option shall become exercisable to a greater extent, the option shall become exercisable to the extent Vested as at the date of Exit, provided that the Optionee’s Service continues at the date of Exit; or

(ii) if the Optionee is a Good Leaver prior to the date of Exit, to the extent Vested in accordance with Section 6(b)(i) below,

and, to the extent that it is exercisable pursuant to this Section 2(b), the option may be exercised in accordance with Sections 2(c) and Section 4 of this Agreement.

(c) Determination of Exercise Period . If the option becomes exercisable in connection with Section 2(b)(i) of this Agreement, then, subject to the other conditions set forth in this Agreement and Section 8 of the Plan, this option may be exercised from time to time after the date of Exit and prior to its expiration as and when and to the extent it is then Vested and unexercised. If the Option becomes exercisable in connection with an Exit pursuant to Section 2(b)(ii) of this Agreement, the Board of Directors will determine:

(i) the period within which it may be exercised at the end of which it will cease to be exercisable and will not be capable of becoming exercisable again as a result of any provision of the Plan or this Agreement; and

(ii) the time or date on which it will expire.

EXERCISE PROCEDURES.

The following exercise procedure is added as a new Section 5(d) of the Agreement:

(d) Net exercise . The Board may at any time in its absolute discretion determine in relation to this option that all or a part of the Purchase Price may be paid by a “net exercise” arrangement pursuant to which the Company will reduce the number of Shares issued upon exercise of the option by the largest number of whole Shares with a Fair Market Value (as of the exercise date) that does not exceed the Purchase Price. The Optionee shall pay any remaining balance of the Purchase Price in one of the other forms specified in this Section 5. Any exercise of the option in accordance with this Section 5(d) shall be subject to the operation of Section 4(c) above.

TERM AND EXPIRATION.

Section 6(b) of the Agreement is deleted in its entirety and replaced with the following:

(b) Expiration Upon Termination of Service .

 

22


(i) Unless the Board of Directors, in its absolute discretion determines that the option shall Vest to a greater extent, in the event that the Optionee becomes a Good Leaver, the option shall cease to Vest as at the date of cessation of Service as a Good Leaver. Any part of the Option which has become Vested as of such date of cessation may only be exercised:

(1) in connection with a subsequent Exit in accordance with S ection 2 of this Agreement; or

(2) if an Exit has already occurred and the option has not expired in accordance with Section 2(c)(ii) of this Agreement, the option may be exercised:

(a) within 12 months of the date of cessation if cessation is due to death;

(b) within 6 months of the date of cessation if cessation is due to Disability; or

(c) within 3 months of the date of cessation if the Optionee becomes a Good Leaver in any circumstances other than death or Disability,

after which, to the extent unexercised the option shall expire.

For the avoidance of doubt, any part of the option that does not Vest in accordance with this Section 6(b)(i) shall expire on the date of cessation of Service as a Good Leaver.

(ii) In the event that the Optionee becomes a Bad Leaver, all options held by the Optionee, including, for the avoidance of doubt, those that have Vested (in full or in part) and those that have become exercisable (in full or in part), shall expire on the date of cessation of Service as a Bad Leaver.

A new Section 6(d) is added to the Agreement as follows:

(d) Expiration . The option (or, where relevant, any part of the option) will expire on the earliest of:

(i) the expiration date specified in the Notice of Stock Option Grant;

(ii) in respect of any part of the Option which does not Vest in accordance with Section 6(b)(i), the date on which the Optionee becomes a Good Leaver;

(iii) the expiry of the relevant periods pursuant to Section 6(b)(i)(2);

 

23


(iv) the date on which the Optionee becomes a Bad Leaver;

(v) the date on which a resolution is passed, or an order is made by the Court, for the compulsory winding up of the Company;

(vi) the date on which the Optionee becomes bankrupt or does or omits to do anything as a result of which he is deprived of the legal or beneficial ownership of the option;

(vii) the date or time determined in accordance with Section 2(c)(ii) of this Agreement; and

(viii) any other date determined in accordance with this Agreement.

DEFINITIONS.

The following definitions are added to Section 14 of the Agreement:

Bad Leaver ” shall mean any Optionee whose continuous Service is terminated for one of the following reasons (as determined by the Board of Directors in their absolute discretion):

(i) failure (other than due to Disability) to materially comply with written Company policies generally applicable to similar service providers to the Company or any directive of the Optionee’s superior that is reasonably achievable, that is not inconsistent with the Optionee’s position or the fulfillment of fiduciary duties and that is not otherwise prohibited by law or established public policy, subject to notice and 30 day cure period to the extent curable;

(ii) engagement in willful misconduct against the Company or its Parent or a Subsidiary that is materially injurious to the Company or its Parent or a Subsidiary;

(iii) engagement in any activity that is a conflict of interest or competitive with the Company or its Parent or a Subsidiary;

(iv) engaging in any act of fraud or dishonesty against the Company or its Parent or a Subsidiary or any material breach of federal or state securities or other laws or regulations;

(v) engaging in an act of assault or other acts of violence in the workplace;

(vi) harassment of any individual in the workplace based on age, gender or other protected status or class or violation of any policy of the Company, its Parent or a Subsidiary regarding harassment; or

 

24


(vii) conviction, guilty plea or plea of nolo contendre for any felony charge.

Exit ” shall mean an occurrence of any one or more of the following as determined by the Board of Directors in its absolute discretion:

(i) a merger or consolidation in which:

(a) the Company is a constituent party; or

(b) a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation,

except, in each case, any such merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (A) the surviving or resulting company or (B) if the surviving or resulting company is a wholly owned subsidiary of another company immediately following such merger or consolidation, the parent company of such surviving or resulting company (provided that, for the purpose of this definition, all shares of Stock issuable upon exercise of options outstanding immediately prior to such merger or consolidation or upon conversion of convertible securities outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Stock are converted or exchanged);

(ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, expect where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company; or

(iii) the closing of a firm offer in respect of an underwritten initial public offering filed under the Securities Act of 1933, as amended, in respect of all or any of the Stock of the Company.

Good Leaver ” shall mean any Optionee other than a Bad Leaver who ceases to be in continuous Service.

Vested ” shall mean, in relation to all or any part of the option, as appropriate, when any relevant condition (including, for the avoidance of doubt, the affluxion of time) has been satisfied, as confirmed by the Board of Directors (or, where relevant, waived) and “ Vesting ” and “ Vest ” shall be construed accordingly. For the avoidance of doubt, unless stated otherwise, any part of the option which Vests does not automatically become exercisable.

 

25


ARGENTINA

Terms and Conditions

Nature of Grant .

The following provision supplements Section 1 of the Appendix A:

Any benefits awarded under the Plan accrue no more frequently than on an annual basis. In addition, the Optionee acknowledges, understands and agrees that the grant is made by the Company on behalf of the Employer.

Exercise Procedures / Payment for Stock . Under current exchange control laws in Argentina, the Optionee is not permitted to purchase and remit foreign currency out of Argentina for the purpose of acquiring foreign securities (including Shares).

The Optionee understands and acknowledges that the Company has no liability if the Optionee is unable to exercise the option due to exchange control restrictions and that the Company reserves the right not to honor the exercise and/or to impose further terms and conditions on the exercise of the option and the issuance of Shares pursuant to the option if it determines that any regulatory requirements have not been met. In particular, but without limitation to the foregoing, the Company reserves the right to (i) require that the Optionee make payment of the Purchase Price by a method that does not involve that the Optionee advance any funds (e.g., by a “net exercise” arrangement or by an exercise/sale procedure as described in Sections 4(d) and 5(c) of the Agreement, respectively), and/or (ii) cancel the option in exchange for such cash consideration that the Board of Directors, in its sole discretion, may consider appropriate.

Notifications

Securities Law Information .

The option and any Shares to be issued pursuant to exercise of the option are offered as a private transaction. This offering is not subject to supervision by any Argentine governmental authority.

Exchange Control Information .

If the Optionee transfers proceeds from the sale of Shares into Argentina within 10 days of sale ( i.e. , if the proceeds have not been held in a U.S. bank or brokerage account for at least 10 days prior to transfer), the Optionee must deposit 30% of the sale proceeds into a non-interest bearing account in Argentina for 365 days. If the Optionee has satisfied the 10 day holding obligation, the Argentine bank handling the transaction may request certain documentation in connection with the Optionee’s request to transfer sale proceeds into Argentina, including evidence of the sale and proof of the source of funds used to purchase the Shares. If the bank determines that the 10-day rule or any other rule or regulation promulgated by the Argentine Central Bank has not been satisfied, it will require that 30% of the transfer amount be placed in a non-interest bearing dollar denominated mandatory deposit account for a holding period of 365 days.

 

26


The Optionee is solely responsible for complying with the exchange control rules that may apply in connection with the Optionee’s participation in the Plan. Prior to exercising the option, transferring sale proceeds into Argentina or taking any other action related to the Plan, the Optionee should consult his or her local bank and legal advisor to confirm the exchange control rules and required documentation.

CANADA

Terms and Conditions

Payment for Stock .

The following provision supplements Section 5 of the Agreement:

Notwithstanding Section 7 of the Plan or any provision of the Agreement to the contrary, the Optionee will not be permitted to use the exercise methods set forth in Sections 5(b) and 5(d) of this Agreement to pay the Purchase Price in connection with this option. The Company reserves the right to permit these methods of payment depending upon the development of local law.

Nature of Grant .

The following provision replaces Section 1(k) of the Appendix A:

for purposes of the option, the Optionee’s employment or service relationship will be considered terminated (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), as of the date that is the earlier of: (i) the date the Optionee receives notice of termination of employment, or (ii) the date the Optionee is no longer actively employed or actively providing services to the Company, any Parent or Subsidiary, regardless of any notice period or period of pay in lieu of such notice required under local law (including, but not limited to statutory law, regulatory law and/or common law). Unless otherwise expressly provided in this Agreement or determined by the Company, this date shall be the date on which vesting of this option ceases and on which the period remaining to exercise the option (if any) starts to run. The Board of Directors shall have the exclusive discretion to determine when the Optionee is no longer actively providing services for purposes of his or her option grant (including whether the Optionee may still be considered to be providing services while on a leave of absence);

The following provisions apply if the Optionee is a resident of Quebec:

Language Consent .

The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

 

27


Consentement relatif à la langue utilisée

Les parties reconnaissent avoir exigé la rédaction en anglais de cette Convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy .

The following provision supplements Section 2 of the Appendix A:

The Optionee hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. The Optionee further authorizes the Company and the Parent or Subsidiary employing the Optionee to disclose and discuss the Plan with their advisors. The Optionee further authorizes the Company and the Parent or Subsidiary employing the Optionee to record such information and to keep such information in his or her employee file.

Notifications

Securities Law Information .

The Optionee is permitted to sell Shares acquired under the Plan through the designated broker appointed under the Plan, if any, provided the sale of the Shares acquired under the Plan takes place outside of Canada through the facilities of a stock exchange on which the Shares will be listed.

Foreign Asset/Account Reporting Information .

The Optionee is required to report any foreign property (including Shares acquired under the Plan) on form T1135 (Foreign Income Verification Statement) if the total cost of the Optionee’s foreign property exceeds C$100,000 at any time in the year. The form must be filed by April 30 of the following year. The Optionee’s cost of Shares would generally be their Fair Market Value at the time they were issued to the Optionee.

GERMANY

Notifications

Exchange Control Information .

Cross-border payments in excess of €12,500 must be reported monthly to the State Central Bank. The Optionee is responsible for obtaining the appropriate form from a German bank and complying with applicable reporting requirements.

 

28


IRELAND

Notifications

Director Notification Information .

If the Optionee is a director, shadow director 1 or secretary of an Irish Subsidiary, the Optionee must notify the Irish Subsidiary in writing within five business days of (i) receiving or disposing of an interest in the Company (e.g., options, Shares, etc.), (ii) becoming aware of the event giving rise to the notification requirement, or (iii) becoming a director or secretary if such an interest exists at the time. This notification requirement also applies with respect to the interests of a spouse or minor child (whose interests will be attributed to the director, shadow director or secretary, as the case may be).

UNITED KINGDOM

Terms and Conditions

Withholding Taxes .

This provision supplements Section 4(c) of the Agreement and applies if the Shares are considered readily convertible assets under U.K. law at the time of exercise:

If payment or withholding of the income tax due is not made within 90 days of the event giving rise to the liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax will constitute a loan owed by the Optionee to the Employer, effective on the Due Date. The Optionee agrees that the loan will bear interest at the then-current Her Majesty’s Revenue and Customs (“HMRC”) Official Rate, it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 4(c) of the Agreement. Notwithstanding the foregoing, if the Optionee is a director or executive officer of the Company (within the meaning of Section 13(k) of the Securities Exchange Act of 1934, as amended), the Optionee will not be eligible for such a loan to cover the tax liability. In the event that the Optionee is a director or executive officer and the income tax due is not collected from or paid by the Optionee by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Optionee on which additional income tax and employee National Insurance contributions (“NICs”) will be payable. The Optionee will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any employee NICs due on this additional benefit, which the Company or the Employer may recover from the Optionee at any time thereafter by any of the means referred to in Section 4(c) of the Agreement.

 

1   A shadow director is an individual who is not on the board of directors of the Irish Subsidiary, but who has sufficient control so that the board of directors of the Irish Subsidiary acts in accordance with the directions or instructions of the individual.

 

29


Section 431 Election .

As a condition of participation in the Plan and the exercise of the option, the Optionee agrees, jointly with the Employer, that he or she shall enter into the joint election within Section 431 of the U.K. Income Tax (Earnings and Pensions) Act 2003 (“ITEPA 2003”) in respect of computing any tax charge on the acquisition of “Restricted Securities” (as defined in Sections 423 and 424 of ITEPA 2003), and that the Optionee will not revoke such election at any time. This election will be to treat the Shares acquired pursuant to the exercise of the option as if such Shares were not Restricted Securities (for U.K. tax purposes only).

Joint Election for Transfer of Liability for Employer National Insurance Contributions .

As a condition of participation in the Plan and the exercise of the option at a time when the Shares are considered readily convertible assets under U.K. law, the Optionee agrees to accept any liability for secondary Class 1 NICs that may be payable by the Company, the Employer, any Parent or Subsidiary in connection with the option and any event giving rise to Tax-Related Items (“Employer NICs”). Without prejudice to the foregoing, the Optionee agrees to execute a joint election with the Company or the Employer, the form of such joint election (the “Joint Election”) having been approved formally by HMRC, and any other required consent or election prior to exercise of the option. The Optionee further agrees to execute such other joint elections as may be required between the Optionee and any successor to the Company, the Employer, any Parent or Subsidiary. The Optionee further agrees that the Company, the Employer, any Parent or Subsidiary may collect the Employer NICs from the Optionee by any of the means set forth in Section 4(c) of the Agreement.

If the Optionee does not enter into a Joint Election prior to the exercise of the option, he or she will not be entitled to exercise the option unless and until he or she enters into a Joint Election, and no Shares will be issued to the Optionee under the Plan, without any liability to the Company, the Employer, any Parent or Subsidiary.

 

30


E VENTBRITE , I NC . 2010 S TOCK P LAN

N OTICE OF S TOCK O PTION E XERCISE (E ARLY E XERCISE )

You must sign this Notice on Page 4 before submitting it to the Company.

O PTIONEE I NFORMATION :

 

Name:   

 

       
Address:   

 

     Employee Number:   

 

  

 

       

O PTION I NFORMATION :

 

Date of Grant:                           , 20             Type of Stock Option:
Exercise Price per Share: $                 ☐ Nonstatutory (NSO)
Total number of shares of Common Stock of Eventbrite, Inc. (the “Company”) covered by the option:                         ☐ Incentive (ISO)

E XERCISE I NFORMATION :

 

Number of shares of Common Stock of the Company for which the option is being exercised now:                      . (These shares are referred to below as the “Purchased Shares.”)
Total Exercise Price for the Purchased Shares: $                     
Form of payment enclosed [check all that apply] :

☐   Check for $                      , payable to “Eventbrite, Inc.”

☐   Certificate(s) for                      shares of Common Stock of the Company. These shares will be valued as of the date this notice is received by the Company. [Requires Company consent.]

☐   Attestation Form covering                      shares of Common Stock of the Company. These shares will be valued as of the date this notice is received by the Company. [Requires Company consent.]

 

☐   Net Exercise for the Purchased Shares by the withholding by Company of                      whole Purchased Shares to pay the Total Exercise Price. [Non US Only. Requires Company consent.] [Number of Whole Shares withheld may not exceed Total Exercise Price and remainder must be satisfied by another method above.]


Name(s) in which the Purchased Shares should be registered [please review the attached explanation of the available forms of ownership, and then check one box] :

☐   In my name only

        

☐   In the names of my spouse and myself as community property [US Community Property States Only]

      My spouse’s name (if applicable):

☐   In the names of my spouse and myself as community property with the right of survivorship [US Community Property States Only]

     

 

☐   In the names of my spouse and myself as joint tenants with the right of survivorship

     

☐   Other:                                         

 

☐   In the name of an eligible revocable trust [requires Company Consent and Stock Transfer Agreement]

     

Full legal name of revocable trust:

 

 

 

 

The certificate for the Purchased Shares should be sent to the following address:      

 

 

 

R EPRESENTATIONS AND A CKNOWLEDGMENTS OF THE O PTIONEE :

 

1. I represent and warrant to the Company that I am acquiring and will hold the Purchased Shares for investment for my account only, and not with a view to, or for resale in connection with, any “distribution” of the Purchased Shares within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

 

2. I understand that the Purchased Shares have not been registered under the Securities Act by reason of a specific exemption therefrom and that the Purchased Shares must be held indefinitely, unless they are subsequently registered under the Securities Act or I obtain an opinion of counsel (in form and substance satisfactory to the Company and its counsel) that registration is not required.

 

3. I acknowledge that the Company is under no obligation to register the Purchased Shares.

 

4. I am aware of the adoption by the Securities and Exchange Commission of Rule 144 under the Securities Act, which permits limited public resales of securities acquired in a non-public offering, subject to the satisfaction of certain conditions. These conditions may include (without limitation) that certain current public information about the issuer be available, that the resale occur only after a holding period required by Rule 144 has been satisfied, that the sale occur through an unsolicited “broker’s transaction” and that the amount of securities being sold during any three-month period not exceed specified limitations. I understand that the conditions for resale set forth in Rule 144 have not been satisfied and that the Company is not required to take action to satisfy any conditions applicable to it.

 

5. I will not sell, transfer or otherwise dispose of the Purchased Shares in violation of the Securities Act, the Securities Exchange Act of 1934, or the rules promulgated thereunder, including Rule 144 under the Securities Act.

 

2


6. I acknowledge that I have received and had access to such information as I consider necessary or appropriate for deciding whether to invest in the Purchased Shares and that I had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of the Purchased Shares.

 

7. I am aware that my investment in the Company is a speculative investment that has limited liquidity and is subject to the risk of complete loss. I am able, without impairing my financial condition, to hold the Purchased Shares for an indefinite period and to suffer a complete loss of my investment in the Purchased Shares.

 

8. I acknowledge that the Purchased Shares remain subject to the Company’s right of first refusal and the market stand-off (sometimes referred to as the “lock-up”), and may remain subject to the Company’s right of repurchase at the lower of exercise price and fair market value to the extent unvested, all in accordance with the applicable Notice of Stock Option Grant and Stock Option Agreement.

 

9. I acknowledge that any sale, transfer or other disposition of the Purchased Shares remains subject to the prior approval of the Company’s Board of Directors in accordance with the applicable Notice of Stock Option Grant and Stock Option Agreement.

 

10. I acknowledge that I am acquiring the Purchased Shares subject to all other terms of the Notice of Stock Option Grant and Stock Option Agreement.

 

11. I acknowledge that I have been granted access to and have had a chance to review (i) a summary of the material terms of the Plan, the Notice of Stock Option Grant and Stock Option Agreement, (ii) a summary disclosure of risk factors associated with investing in the securities of the Company, and (iii) financial statements of the Company dated not more than 180 days prior to the date hereof, all of which have been made available to me a reasonable time prior to the date hereof.

 

12. I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership that is appropriate for me. In the event that I choose to transfer my Purchased Shares to a trust, I agree to sign a Stock Transfer Agreement. In the event that I choose to transfer my Purchased Shares to a trust that does not satisfy the requirements described in the attached explanation (i.e., a trust that is not an eligible revocable trust), I also acknowledge that the transfer will be treated as a “disposition” for tax purposes. As a result, the favorable ISO tax treatment will be unavailable and other unfavorable tax consequences may occur.

 

13. I acknowledge that I have received a copy of the Company’s explanation of the US federal income tax consequences of an option exercise and the tax election under section 83(b) of the Internal Revenue Code. In the event that I choose to make a section 83(b) election, I acknowledge that it is my responsibility—and not the Company’s responsibility—to file the election in a timely manner, even if I ask the Company or its agents to make the filing on my behalf. I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring the Purchased Shares at this time.

 

14. I agree that the Company does not have a duty to design or administer the 2010 Stock Plan or its other compensation programs in a manner that minimizes my tax liabilities. I will not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from my options or my other compensation. In particular, I acknowledge that my options are exempt from section 409A of the US Internal Revenue Code only if the exercise price per share is at least equal to the fair market value per share of the Company’s Common Stock at the time the option was granted by the Company’s Board of Directors. Since shares of the Company’s Common Stock are not traded on an established securities market, the determination of their fair market value was made by the Company’s Board of Directors or by an independent valuation firm retained by the Company. I acknowledge that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and I will not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low.

 

3


15. I agree to seek the consent of my spouse to the extent required by the Company to enforce the foregoing.

S IGNATURE :                                          D ATE :

 

                                                                                               

 

4


E VENTBRITE , I NC . 2010 S TOCK P LAN

N OTICE OF S TOCK O PTION E XERCISE

You must sign this Notice on Page 4 before submitting it to the Company.

O PTIONEE I NFORMATION :

 

Name:  

 

       
Address:  

 

     Employee Number:   

 

 

 

       

O PTION I NFORMATION :

 

Date of Grant:                           , 20             Type of Stock Option:
Exercise Price per Share: $                 ☐ Nonstatutory (NSO)
Total number of shares of Common Stock of Eventbrite, Inc. (the “Company”)
covered by the option:                                     
   ☐ Incentive (ISO)

E XERCISE I NFORMATION :

 

Number of shares of Common Stock of the Company for which the option is being exercised now:                              . (These shares are referred to below as the “Purchased Shares.”)
Total Exercise Price for the Purchased Shares: $                     
Form of payment enclosed [check all that apply] :

☐   Check for $                  , payable to “Eventbrite, Inc.”

☐   Certificate(s) for                  shares of Common Stock of the Company. These shares will be valued as of the date this notice is received by the Company. [Requires Company consent.]

    Attestation Form covering                      shares of Common Stock of the Company. These shares will be valued as of the date this notice is received by the Company. [Requires Company consent.]

 

   Net Exercise for the Purchased Shares by the withholding by Company of                      whole Purchased Shares to pay the Total Exercise Price. [Non US Only. Requires Company consent.] [Number of Whole Shares withheld may not exceed Total Exercise Price and remainder must be satisfied by another method above.]


Name(s) in which the Purchased Shares should be registered [please review the attached explanation of the available forms of ownership, and then check one box]:

☐   In my name only

     

☐   In the names of my spouse and myself as community property [US Community Property States Only]

      My spouse’s name (if applicable):

☐   In the names of my spouse and myself as community property with the right of survivorship [US Community Property States Only]

     

 

☐   In the names of my spouse and myself as joint tenants with the right of survivorship

     

☐   Other:                                                      

 

    In the name of an eligible revocable trust [requires Company Consent and Stock Transfer Agreement]

     

Full legal name of revocable trust:

 

 

 

The certificate for the Purchased Shares should be sent to the following address:   

         

 

 

R EPRESENTATIONS AND A CKNOWLEDGMENTS OF THE O PTIONEE :

 

1. I represent and warrant to the Company that I am acquiring and will hold the Purchased Shares for investment for my account only, and not with a view to, or for resale in connection with, any “distribution” of the Purchased Shares within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

 

2. I understand that the Purchased Shares have not been registered under the Securities Act by reason of a specific exemption therefrom and that the Purchased Shares must be held indefinitely, unless they are subsequently registered under the Securities Act or I obtain an opinion of counsel (in form and substance satisfactory to the Company and its counsel) that registration is not required.

 

3. I acknowledge that the Company is under no obligation to register the Purchased Shares.

 

4. I am aware of the adoption by the Securities and Exchange Commission of Rule 144 under the Securities Act, which permits limited public resales of securities acquired in a non-public offering, subject to the satisfaction of certain conditions. These conditions may include (without limitation) that certain current public information about the issuer be available, that the resale occur only after a holding period required by Rule 144 has been satisfied, that the sale occur through an unsolicited “broker’s transaction” and that the amount of securities being sold during any three-month period not exceed specified limitations. I understand that the conditions for resale set forth in Rule 144 have not been satisfied and that the Company is not required to take action to satisfy any conditions applicable to it.

 

5. I will not sell, transfer or otherwise dispose of the Purchased Shares in violation of the Securities Act, the Securities Exchange Act of 1934, or the rules promulgated thereunder, including Rule 144 under the Securities Act.

 

2


6. I acknowledge that I have received and had access to such information as I consider necessary or appropriate for deciding whether to invest in the Purchased Shares and that I had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of the Purchased Shares.

 

7. I am aware that my investment in the Company is a speculative investment that has limited liquidity and is subject to the risk of complete loss. I am able, without impairing my financial condition, to hold the Purchased Shares for an indefinite period and to suffer a complete loss of my investment in the Purchased Shares.

 

8. I acknowledge that the Purchased Shares remain subject to the Company’s right of first refusal and the market stand-off (sometimes referred to as the “lock-up”), all in accordance with the applicable Notice of Stock Option Grant and Stock Option Agreement.

 

9. I acknowledge that any sale, transfer or other disposition of the Purchased Shares remains subject to the prior approval of the Company’s Board of Directors in accordance with the applicable Notice of Stock Option Grant and Stock Option Agreement.

 

10. I acknowledge that I am acquiring the Purchased Shares subject to all other terms of the Notice of Stock Option Grant and Stock Option Agreement.

 

11. I acknowledge that I have been granted access to and have had a chance to review (i) a summary of the material terms of the Plan, the Notice of Stock Option Grant and Stock Option Agreement, (ii) a summary disclosure of risk factors associated with investing in the securities of the Company, and (iii) financial statements of the Company dated not more than 180 days prior to the date hereof, all of which have been made available to me a reasonable time prior to the date hereof.

 

12. I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership that is appropriate for me. In the event that I choose to transfer my Purchased Shares to a trust, I agree to sign a Stock Transfer Agreement. In the event that I choose to transfer my Purchased Shares to a trust that does not satisfy the requirements described in the attached explanation (i.e., a trust that is not an eligible revocable trust), I also acknowledge that the transfer will be treated as a “disposition” for tax purposes. As a result, the favorable ISO tax treatment will be unavailable and other unfavorable tax consequences may occur.

 

13. I acknowledge that I have received a copy of the Company’s explanation of the US federal income tax consequences of an option exercise. I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring the Purchased Shares at this time.

 

14. I agree that the Company does not have a duty to design or administer the 2010 Stock Plan or its other compensation programs in a manner that minimizes my tax liabilities. I will not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from my options or my other compensation. In particular, I acknowledge that my options are exempt from section 409A of the US Internal Revenue Code only if the exercise price per share is at least equal to the fair market value per share of the Company’s Common Stock at the time the option was granted by the Company’s Board of Directors. Since shares of the Company’s Common Stock are not traded on an established securities market, the determination of their fair market value was made by the Company’s Board of Directors or by an independent valuation firm retained by the Company. I acknowledge that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and I will not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low.

 

15. I agree to seek the consent of my spouse to the extent required by the Company to enforce the foregoing.

 

3


S IGNATURE :                                                              D ATE :

 

                                                                                                                

 

4


E VENTBRITE , I NC . 2010 S TOCK P LAN

N OTICE OF RSU G RANT

The Grantee has been granted RSUs of Eventbrite, Inc. on the following terms:

 

Name of Grantee:                                                 
Total Number of RSUs:                                                 
Date of Grant:                                                 
Vesting Requirements:    Time Vesting and Performance Vesting Condition
Time Vesting Schedule:    The RSUs shall time-vest in 16 equal quarterly installments following the Vesting Commencement Date subject to the Grantee’s continuous Service through each such date.
Performance Vesting Condition:    First to occur of a Change in Control or an IPO.
Time Vesting Commencement Date:                                                 
Expiration Date:                                                  [ Note: 7 years after Date of Grant ]

[Remainder of page intentionally left blank]


By signing below, the Grantee and the Company agree that the grant of the RSUs is governed by the terms and conditions of the 2010 Stock Plan and the Global Restricted Stock Unit Agreement. Both of these documents are attached to, and made a part of, this Notice of RSU Grant . Section 6(a) and Section 10 of the Global Restricted Stock Unit Agreement and Section 1 of Appendix A to the Global Restricted Stock Unit Agreement contain important acknowledgements of the Grantee.

IN ADDITION, BY SIGNING BELOW, THE GRANTEE ALSO AGREES THAT IN CONSIDERATION OF THE GRANT OF THE RSUS, THE TRANSFER RESTRICTIONS SET FORTH IN SECTION 3 OF THE ATTACHED GLOBAL RESTRICTED STOCK UNIT AGREEMENT SHALL ALSO APPLY (I) TO ALL SHARES CURRENTLY HELD BY THE GRANTEE REGARDLESS OF HOW THEY WERE ACQUIRED AND (II) TO ALL SHARES SUBJECT TO ANY EQUITY AWARDS PREVIOUSLY GRANTED TO THE GRANTEE BY THE COMPANY (WHETHER PURSUANT TO THE 2010 STOCK PLAN OR OTHERWISE).

 

G RANTEE :    E VENTBRITE , I NC .
                                                                     By:                                                      
Name                                                            Title:                                                   
Address:                                                      


THE RSUS GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE SETTLEMENT THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

E VENTBRITE , I NC . 2010 S TOCK P LAN :

G LOBAL R ESTRICTED S TOCK U NIT A GREEMENT

SECTION 1. GRANT OF RSUS.

(a) Grant . On the terms and conditions set forth in the Notice of RSU Grant and this Agreement, the Company grants to the Grantee the number of RSUs set forth in the Notice of RSU Grant.

(b) General Restrictions. The RSUs may not be sold, transferred, pledged, assigned or otherwise encumbered or disposed of by the Grantee.

(c) Stock Plan and Defined Terms . The grant of RSUs is subject to the Plan, a copy of which the Grantee acknowledges having received. The provisions of the Plan are incorporated into this Agreement by this reference. Certain capitalized terms are defined in Section 11 of this Agreement and capitalized terms used herein but not otherwise defined have the meaning set forth in the Plan.

SECTION 2. VESTING CONDITIONS AND SETTLEMENT OF RSUS.

(a) Vesting Conditions. The RSUs are subject to both a time-based vesting schedule as set forth in the Notice of RSU Grant (the “ Time Condition ”) and performance-based vesting condition as set forth in the Notice of RSU Grant (the “ Performance Vesting ”), both of which must be satisfied prior to the Expiration Date before an RSU will be deemed vested and may be settled in accordance with this Agreement; provided, however, that if the Performance Vesting is satisfied prior to the Expiration Date, then the RSUs shall not be forfeited at that time but shall remain subject to the Time Condition.

(b) Vesting Date. Each date as of which both the Time Condition and Performance Vesting described above have been satisfied with respect to an RSU shall be referred to as a “ Vesting Date .” If the Performance Vesting has not occurred prior to the Expiration Date, then no Vesting Date shall occur after the Expiration Date. To the extent an RSU has not satisfied the Performance Vesting, such RSU (whether or not the Time Condition has been satisfied) shall expire and be of no further force or effect on the Expiration Date. The Company shall not issue any fraction of a Share under this Agreement, and any fraction of a Share resulting from a computation made pursuant to the Time Condition shall be rounded to the nearest whole Share (with any one-half Share being rounded upward).


(c) Termination of Service. If the Grantee’s Service terminates for any reason prior to the satisfaction of the Time Condition, any RSUs that have not satisfied the Time Condition as of such date shall automatically and without notice terminate and be forfeited, and neither the Grantee nor any of his or her successors, heirs, assigns, or personal representatives will thereafter have any further rights or interests in such forfeited RSUs. Any RSUs that have satisfied the Time Condition as of the date that the Grantee’s Service terminates shall remain subject to the Performance Vesting set forth in the Notice of RSU Grant above, but shall expire and be of no further force or effect on the Expiration Date if no Vesting Date occurs prior to such Expiration Date.

(d) Settlement of RSUs. As soon as practicable following each Vesting Date, but in no event later than March 15th of the year following the calendar year in which the Vesting Date occurs, the Company shall issue to the Grantee the number of Shares equal to the number of RSUs that have satisfied the Time Condition and Performance Vesting on such Vesting Date; provided, however, that if the Performance Vesting is satisfied by an IPO, then any RSUs that have satisfied the Time Condition prior to the expiration of the Market Stand-Off shall be settled immediately following the expiration of the Market Stand-Off but in no event later than March 15 th of the year following the calendar year in which the IPO occurs.

(e) Additional Shares or Substituted Securities . In the event of the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, the Grantee’s RSUs may be adjusted pursuant to the Plan and the restrictions and conditions contained in this Agreement shall apply with equal force to additional and/or substitute securities or other property (including money paid other than as an ordinary cash dividend), if any, received by the Grantee.

(f) Part-Time Employment and Leaves of Absence . If the Grantee commences working on a part-time basis, then the Company may adjust the time vesting schedule set forth in the Notice of RSU Grant. If the Grantee goes on a leave of absence, then the Company may adjust the time vesting schedule set forth in the Notice of RSU Grant in accordance with the Company’s leave of absence policy or the terms of such leave. Except as provided in the preceding sentence, Service shall be deemed to continue while the Grantee is on a bona fide leave of absence, if (i) such leave was approved by the Company in writing and (ii) continued crediting of Service is expressly required by the terms of such leave or by applicable law (as determined by the Company). Service shall be deemed to terminate when such leave ends, unless the Grantee immediately returns to active work.

SECTION 3. APPROVAL RIGHT AND RIGHT OF FIRST REFUSAL.

(a) Approval Right. The Grantee shall not Transfer any Shares without first obtaining the express written approval of the Board of Directors. In the event that the Grantee


proposes to Transfer any Shares, the Grantee shall first give a written Transfer Notice to the Company along with a request to the Board of Directors to approve such Transfer. The Transfer Notice shall fully describe the proposed Transfer, including the number of Shares proposed to be Transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed Transfer will not violate any applicable federal, State or foreign securities laws. Such Transfer Notice must be signed by the Grantee. Within a reasonable period of time after receiving the Transfer Notice, the Board of Directors shall either grant or deny the approval of such Transfer in its sole and absolute discretion. If the Board of Directors does not approve of such Transfer, the Grantee shall not be permitted to Transfer such Shares.

(b) Right of First Refusal . If the Board of Directors has approved the Grantee’s proposed Transfer of Shares pursuant to Subsection 3(a) above, the Grantee must then present to the Company the Transfer Notice signed both by the Grantee and by the proposed Transferee and such Transfer Notice must constitute a binding commitment of both parties to the Transfer of the Shares (the “ Second Transfer Notice ”). The Company shall have the Right of First Refusal with respect to all or any portion of such Shares. The Company shall have the right to purchase all or any portion of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (c) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date on which the Second Transfer Notice was received by the Company.

(c) Transfer of Shares . If the Company fails to fully exercise its Right of First Refusal within 30 days after the date on which it received the Second Transfer Notice, the Grantee may, not later than 90 days following receipt of such Second Transfer Notice by the Company, conclude a Transfer of the Shares subject to the Second Transfer Notice (and not otherwise elected to be purchased by the Company) on the terms and conditions described in the Second Transfer Notice, provided that any such Transfer is made in compliance with applicable federal, State and foreign securities laws and Company policies in effect at the time of Transfer (including the payment of any applicable Transfer charges imposed by the Company) and not in violation of any other contractual restrictions to which the Grantee is bound. Any proposed Transfer on terms and conditions different from those described in the Second Transfer Notice, as well as any subsequent proposed Transfer by the Grantee, shall again be subject to the Approval Right and the Right of First Refusal and shall require compliance with the procedures described in Subsections (a) and (b) above. If the Company exercises its Right of First Refusal, the parties shall consummate the Transfer of the Shares that the Company elected to purchase on the terms set forth in the Second Transfer Notice within 60 days after the date on which the Company received the Second Transfer Notice; provided, however, that in the event the Second Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of Transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Second Transfer Notice.

(d) Additional or Exchanged Securities and Property . In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in


conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 3 shall immediately be subject to the Approval Right and the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 3.

(e) Termination of Approval Right and Right of First Refusal . Any other provision of this Section 3 notwithstanding, in the event that the Stock is publicly traded on an established securities market when the Grantee desires to Transfer Shares, the Company shall have no Approval Right or Right of First Refusal, and the Grantee shall have no obligation to comply with the procedures prescribed by Subsections (a), (b) and (c) above.

(f) Permitted Transfers . This Section 3 shall not apply to (i) a Transfer to the Company, (ii) a Transfer by will or intestate succession or (iii) a Transfer to one or more members of the Grantee’s Immediate Family or to a trust established by the Grantee for the benefit of the Grantee and/or one or more members of the Grantee’s Immediate Family, in each case for bona fide estate planning purposes, provided in any case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Grantee Transfers any Shares acquired under this Agreement, either under this Subsection (f) or after the Company has failed to fully exercise the Right of First Refusal following the approval of such Transfer, then this Agreement shall apply to the Transferee to the same extent as to the Grantee.

(g) Termination of Rights as Stockholder . If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 3, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.

(h) Assignment of Right of First Refusal . The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part. Any person who accepts an assignment of the Right of First Refusal from the Company shall assume all of the Company’s rights and obligations under this Section 3.

SECTION 4. LEGALITY OF INITIAL ISSUANCE.

No Shares shall be issued upon the settlement of the RSUs unless and until the Company has determined that:

(a) It and the Grantee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof;


(b) Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

(c) Any other applicable provision of federal, State or foreign law has been satisfied.

SECTION 5. NO REGISTRATION RIGHTS.

The Company may, but shall not be obligated to, register or qualify the Transfer of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the Transfer of Shares under this Agreement to comply with any law.

SECTION 6. OTHER RESTRICTIONS ON TRANSFER.

(a) Grantee Representations . In connection with any issuance of Shares upon settlement of RSUs under this Agreement, the Grantee hereby represents and warrants to the Company as follows (to the extent applicable):

(i) The Grantee is acquiring and will hold the Shares for investment for his or her account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

(ii) The Grantee understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom and that the Shares must be held indefinitely, unless they are subsequently registered under the Securities Act or the Grantee obtains an opinion of counsel, in form and substance satisfactory to the Company and its counsel, that such registration is not required. The Grantee further acknowledges and understands that the Company is under no obligation to register the Shares.

(iii) The Grantee is aware of the adoption of Rule 144 by the U.S. Securities and Exchange Commission under the Securities Act, which permits limited public resales of securities acquired in a non-public offering, subject to the satisfaction of certain conditions, including (without limitation) the availability of certain current public information about the issuer, the resale occurring only after the holding period required by Rule 144 has been satisfied, the sale occurring through an unsolicited “broker’s transaction,” and the amount of securities being sold during any three-month period not exceeding specified limitations. The Grantee acknowledges and understands that the conditions for resale set forth in Rule 144 have not been satisfied and that the Company has no plans to satisfy these conditions in the foreseeable future.

(iv) The Grantee will not sell, transfer or otherwise dispose of the Shares in violation of the Securities Act, the Exchange Act, or the rules promulgated thereunder, including Rule 144 under the Securities Act. The


Grantee agrees that he or she will not dispose of the Shares unless and until he or she has complied with all requirements of this Agreement applicable to the disposition of Shares and he or she has provided the Company with written assurances, in substance and form satisfactory to the Company, that (A) the proposed disposition does not require registration of the Shares under the Securities Act or all appropriate action necessary for compliance with the registration requirements of the Securities Act or with any exemption from registration available under the Securities Act (including Rule 144) has been taken and (B) the proposed disposition will not result in the contravention of any transfer restrictions applicable to the Shares under applicable state law.

(v) The Grantee is able, without impairing his or her financial condition, to hold the Shares for an indefinite period and to suffer a complete loss of the Shares.

(b) Securities Law Restrictions . Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any State or foreign jurisdiction, the Company at its discretion may impose restrictions upon the Transfer of such Shares (including the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any State or foreign jurisdiction or any other law.

(c) Market Stand-Off . In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s IPO, the Grantee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its managing underwriter. Such restriction (the “ Market Stand-Off ”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriter. In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions. The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (c). This Subsection (c) shall not apply to Shares registered in the public offering under the Securities Act.


(d) Legends . All certificates evidencing Shares acquired under this Agreement shall bear the following legend:

“THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN APPROVAL RIGHTS AND RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

All certificates evidencing Shares acquired under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

(e) Removal of Legends . If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

(f) Administration . Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 6 shall be conclusive and binding on the Grantee and all other persons.

SECTION 7. TAX WITHHOLDING.

(a) The Grantee acknowledges that, regardless of any action taken by the Company or, if different, any Parent or Subsidiary employing or retaining the Grantee (the “ Employer ”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Grantee’s participation in the Plan and legally applicable to the Grantee (“ Tax-Related Items ”), is and remains the Grantee’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer. The Grantee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or dividend equivalents; and (ii) do not commit to and are under


no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Grantee’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Grantee is subject to Tax-Related Items in more than one jurisdiction, the Grantee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b) Prior to any relevant taxable or tax withholding event, as applicable, the Grantee agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Grantee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the Grantee’s wages or other cash compensation paid to the Grantee by the Company and/or the Employer; (ii) withholding from proceeds of the sale of Shares acquired upon settlement of the RSUs either through a voluntary sale or through a mandatory sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization); (iii) withholding from Shares to be issued to the Grantee upon settlement of the RSUs, provided, however, that if the Grantee is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event, as applicable, unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case, the obligation for Tax-Related Items may be satisfied by one or a combination of methods (i) and (ii) above; or (iv) any other method of withholding determined by the Company and permitted by applicable law.

(c) Depending on the withholding method, the Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates in the Grantee’s jurisdiction(s), in which case the Grantee may receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent amount in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Grantee is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

(d) The Grantee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Grantee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares, or the proceeds of the sale of Shares, if the Grantee fails to comply with his or her obligations in connection with the Tax-Related Items.

SECTION 8. ADJUSTMENT OF SHARES.

In the event of any transaction described in Section 8(a) of the Plan, the terms of this award (including, without limitation, the number and kind of Shares subject to this award) shall be adjusted as set forth in Section 8(a) of the Plan. In the event that the Company is a party to a merger or consolidation, this option shall be subject to the agreement of merger or consolidation, as provided in Section 8(b) of the Plan.


SECTION 9. MISCELLANEOUS PROVISIONS.

(a) Rights as a Stockholder . Neither the Grantee nor the Grantee’s representative shall have any rights as a stockholder with respect to any Shares subject to the RSUs until the Grantee or the Grantee’s representative becomes entitled to receive such Shares upon settlement in accordance with Section 2(d) of this Agreement.

(b) No Retention Rights . Nothing in these RSUs or in the Plan shall create a right to employment or be interpreted as forming or amending an employment or service contract with the Company or any Parent or Subsidiary and shall not interfere with or otherwise restrict in any way the rights of the Company, the Employer or of the Grantee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause. For purposes of the RSUs, the Grantee’s Service will be considered terminated as of the date the Grantee is no longer actively providing Service to the Company or any Parent or Subsidiary (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Grantee is employed or the terms of the Grantee’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the Grantee’s right to vest in the RSUs under the Plan, if any, will terminate as of such date and will not be extended by any notice period ( e.g ., the Grantee’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Grantee is employed or the terms of the Grantee’s employment agreement, if any).

(c) Notice . Subject to Section 10(b) with respect to notices from the Company, any notice required by the terms of this Agreement shall be given in writing. It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service or local country equivalent, by registered or certified mail, with postage and fees prepaid or (iii) deposit with Federal Express Corporation, with shipping charges prepaid. Notice shall be addressed to the Company at its principal executive office and to the Grantee at the address that he or she most recently provided to the Company in accordance with this Subsection (c).

(d) Modifications and Waivers . No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Grantee and by an authorized officer of the Company (other than the Grantee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(e) Entire Agreement . The Notice of RSU Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.


(f) Choice of Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State, without regard to such state’s conflict of laws provisions.

(g) Venue . Unless the Grantee and the Company and/or the Employer have agreed otherwise in a separate written alternative dispute resolution agreement, for purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the RSUs or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of San Francisco County, California, or the federal courts for the United States for the Northern District of California, where this grant is made and/or to be performed, and no other courts.

(h) Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

(i) Appendix . If the Grantee resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, the RSUs shall be subject to the additional terms and conditions set forth in Appendix A to this Agreement and to the terms and provisions as set forth in Appendix B for the Grantee’s country, if any. Moreover, if the Grantee relocates to one of the countries included in Appendix B during the life of the RSUs, the special terms and conditions for such country shall apply to the Grantee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons.

(j) Imposition of Other Requirements . The Company reserves the right to impose other requirements on the RSUs and the Shares acquired upon settlement of the RSUs, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Grantee to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.

SECTION 10. ACKNOWLEDGEMENTS OF THE GRANTEE.

(a) Tax Consequences . The Grantee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Grantee’s tax liabilities. The Grantee shall not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from the RSUs or the Grantee’s other compensation. Finally, the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Grantee’s participation in the Plan or the Grantee’s acquisition or sale of Shares. The Grantee understands and agrees that he or she should consult with his or her personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

(b) Electronic Delivery and Acceptance of Documents . The Grantee agrees to accept by email all documents relating to the Company, the Plan or these RSUs and all other


documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by the U.S. Securities and Exchange Commission). The Grantee also agrees that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. The Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through the electronic acceptance procedure established and maintained by the Company or a third party designated by the Company. If the Company posts these documents on a website, it shall notify the Grantee by email of their availability. The Grantee acknowledges that he or she may incur costs in connection with electronic delivery, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere with his or her ability to access the documents. This consent shall remain in effect until the RSUs expire or until the Grantee gives the Company written notice that it should deliver paper documents.

(c) Waiver of Statutory Information Rights . The Grantee understands and agrees that, but for the waiver made herein, the Grantee would be entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of the Grantee as may be provided for in Section 220, the “ Inspection Rights ”). In light of the foregoing, until the first sale of Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the U.S. Securities and Exchange Commission under the Securities Act, the Grantee hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver shall not affect any rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to any contractual inspection rights of the Grantee under any other written agreement between the Grantee and the Company.

SECTION 11. DEFINITIONS.

(a) “ Agreement ” shall mean this Global Restricted Stock Unit Agreement, including Appendices A and B.

(b) “ Approval Right ” shall mean the requirement that the Grantee obtain the prior approval of the Board of Directors to any Transfer.

(c) “ Board of Directors ” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

(d) “ Change in Control ” shall mean the consummation of (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity; (ii) a merger, reorganization or consolidation pursuant to which the holders of the


Company’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the surviving or resulting entity (or its ultimate parent, if applicable); or (iii) the acquisition of all or a majority of the outstanding voting stock of the Company in a single transaction or a series of related transactions; provided however that a merger effected solely to change the Company’s domicile shall not constitute a Change in Control.

(e) “ Code ” shall mean the U.S. Internal Revenue Code of 1986, as amended.

(f) “ Committee ” shall mean a committee of the Board of Directors, as described in Section 2 of the Plan.

(g) “ Company ” shall mean Eventbrite, Inc., a Delaware corporation.

(h) “ Date of Grant ” shall mean the date of grant specified in the Notice of RSU Grant, which date shall be the later of (i) the date on which the Board of Directors resolved to grant these RSUs or (ii) the first day of the Grantee’s Service.

(i) “ Employee ” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

(j) “ Employer ” shall have the meaning set forth in Section 7(a).

(k) “ Grantee ” shall mean the individual named in the Notice of RSU Grant.

(l) “ Immediate Family ” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

(m) “ IPO ” shall mean the first firm commitment underwritten public offering pursuant to a registration statement under the Securities Act covering the offer and sale by the Company of its equity securities, as a result of or following which the Stock shall be publicly traded.

(n) “ Market Stand-Off ” shall have the meaning set forth in Section 6(c).

(o) “ Notice of RSU Grant ” shall mean the document so entitled to which this Agreement is attached.

(p) “ Parent ” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(q) “ Plan ” shall mean the Eventbrite, Inc. 2010 Stock Plan, as amended.

(r) “ Right of First Refusal ” shall mean the Company’s right of first refusal described in Section 3.


(s) “ Sale Price ” means the value as determined by the Board of Directors of the consideration payable per Share pursuant to a Change in Control.

(t) “ Second Transfer Notice ” shall have the meaning set forth in Section 3(b).

(u) “ Securities Act ” shall mean the U.S. Securities Act of 1933, as amended.

(v) “ Service ” shall mean service as an Employee, Outside Director or Consultant.

(w) “ Share ” shall mean one share of Stock, as adjusted in accordance with Section 8 of the Plan (if applicable).

(x) “ Stock ” shall mean the Common Stock of the Company.

(y) “ Subsidiary ” shall mean any corporation (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 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(z) “ Tax-Related Items ” shall have the meaning set forth in Section 7(a).

(aa) “ Transfer, ” “ Transferred ,” and words of similar import shall mean any assignment, sale, offer to sell, pledge, mortgage, hypothecation, encumbrance, attachment, disposition or sale under execution of or any other like transfer or encumbering of any Shares or any interest therein (by operation of law or otherwise).

(bb) “ Transferee ” shall mean any person to whom the Grantee has directly or indirectly Transferred any Share acquired under this Agreement.

(cc) “ Transfer Notice ” shall mean the notice of a proposed Transfer of Shares described in Section 3(a).


A PPENDIX A

TO THE G LOBAL R ESTRICTED S TOCK U NIT A GREEMENT

The following terms and conditions apply to Grantees who reside outside the United States or who are otherwise subject to the laws of a country other than the United States. In general, the terms and conditions in this Appendix A supplement the provisions of the Agreement, unless otherwise indicated herein. Capitalized terms used but not defined herein have the meanings given to them in the Agreement and/or the Plan.

SECTION 1. NATURE OF GRANT.

In accepting the grant of RSUs, the Grantee acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b) the grant of the RSUs is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of restricted stock units, or benefits in lieu of restricted stock units, even if restricted stock units have been granted in the past;

(c) all decisions with respect to future restricted stock units or other grants, if any, will be at the sole discretion of the Company;

(d) the Grantee is voluntarily participating in the Plan;

(e) the RSUs and any Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;

(f) unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the Service the Grantee may provide as a director of a Subsidiary;

(g) the RSUs and any Shares subject to the RSUs and the income from and value of same, are not part of normal or expected compensation for any purpose, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, holiday pay, pension or retirement or welfare benefits or similar mandatory payments;

(h) the future value of the Shares underlying the RSUs is unknown, indeterminable, and cannot be predicted with certainty;

(i) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the termination of the Grantee’s Service (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Grantee is employed or the terms of the Grantee’s employment agreement, if any);


(j) unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by the Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares of the Company; and

(k) neither the Company, the Employer nor any Parent or Subsidiary shall be liable for any foreign exchange rate fluctuation between the Grantee’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Grantee pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.

SECTION 2. DATA PRIVACY.

(a) The Grantee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Grantee’s personal data as described in this Agreement and any other RSU grant materials (“Data”) by and among, as applicable, the Employer, the Company and any Parent or Subsidiaries for the exclusive purpose of implementing, administering and managing the Grantee’s participation in the Plan.

(b) The Grantee understands that the Company and the Employer may hold certain personal information about the Grantee, including, but not limited to, the Grantee’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Grantee’s favor, for the exclusive purpose of implementing, administering and managing the Plan.

(c) The Grantee understands that Data will be transferred to such stock plan service providers as may be currently engaged by the Company or selected by the Company in the future to assist the Company and/or the Employer with the implementation, administration and management of the Plan, including, without limitation, brokers, benefit managers, equity software providers and outside legal and accounting advisors. The Grantee understands that these Data recipients may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than the Grantee’s country. The Grantee understands that he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative. The Grantee authorizes the Company and these Data recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purposes of implementing, administering and managing the Grantee’s participation in the Plan. The Grantee understands that Data will be held only as long as is necessary to implement, administer and manage the Grantee’s participation in the Plan and as required by applicable laws. The Grantee understands that he or she may, at any time, view Data, request


information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Grantee understands that he or she is providing the consents herein on a purely voluntary basis. If the Grantee does not consent, or if the Grantee later seeks to revoke his or her consent, his or her employment status or Service with the Employer will not be affected; the only consequence of refusing or withdrawing the Grantee’s consent is that the Company would not be able to grant RSUs or other equity awards to the Grantee or administer or maintain such awards. Therefore, the Grantee understands that refusing or withdrawing his or her consent may affect the Grantee’s ability to participate in the Plan. For more information on the consequences of the Grantee’s refusal to consent or withdrawal of consent, the Grantee understands that he or she may contact his or her local human resources representative.

(d) Finally, upon request of the Company or the Employer, the Grantee agrees to provide an executed data privacy consent form (or any other agreements or consents that may be required by the Company and/or the Employer) that the Company and/or the Employer may deem necessary to obtain from the Grantee for the purpose of administering the Grantee’s participation in the Plan in compliance with the data privacy laws in the Grantee’s country, either now or in the future. The Grantee understands and agrees that the Grantee will not be able to participate in the Plan if the Grantee fails to provide any such consent or agreement requested by the Company and/or the Employer.

SECTION 3. LANGUAGE.

If the Grantee has received this Agreement, or any other documents related to the RSUs and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

SECTION 4. INSIDER TRADING RESTRICTIONS / MARKET ABUSE LAWS.

By accepting the RSUs, the Grantee acknowledges that he or she is bound by all the terms and conditions of the Company’s insider trading policy as may be in effect from time to time. The Grantee further acknowledges that, depending on the Grantee’s or his or her broker’s country of residence or where the Shares are listed, he or she may be subject to insider trading restrictions and/or market abuse laws which may affect the Grantee’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares ( e.g. , RSUs) or rights linked to the value of Shares under the Plan during such times as the Grantee is considered to have “inside information” regarding the Company (as defined by the laws in the Grantee’s country). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Grantee placed before the Grantee possessed inside information. Furthermore, the Grantee could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under the Company’s insider trading policy as may be in effect from time to time. The Grantee acknowledges that it is the Grantee’s responsibility to comply with any applicable restrictions, and the Grantee should speak to his or her personal advisor on this matter.


SECTION 5. FOREIGN ASSET / ACCOUNT, EXCHANGE CONTROL AND TAX REPORTING.

Depending on the Grantee’s country, the Grantee may be subject to foreign asset/account, exchange control, tax reporting or other requirements which may affect the Grantee’s ability acquire or hold RSUs or Shares under the Plan or cash received from participating in the Plan (including dividends and the proceeds arising from the sale of Shares) in a brokerage/bank account outside the Grantee’s country. The applicable laws of the Grantee’s country may require that he or she report such RSUs, Shares, accounts, assets or transactions to the applicable authorities in such country and/or repatriate funds received in connection with the Plan to the Grantee’s country within a certain time period or according to certain procedures. The Grantee acknowledges that he or she is responsible for ensuring compliance with any applicable requirements and should consult his or her personal legal advisor to ensure compliance with applicable laws.


A PPENDIX B

TO THE G LOBAL R ESTRICTED S TOCK U NIT A GREEMENT

Terms and Conditions

This Appendix B includes terms and conditions applicable to Grantees in the countries below. These terms and conditions are in addition to, or, if so indicated, in place of, the terms and conditions set forth in the Agreement, including Appendix A. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement and/or the Plan.

If the Grantee is a citizen or resident of a country other than the one in which he or she is currently working and/or residing, transfers to another country after the Date of Grant, changes employment status, or is considered a resident of another country for local law purposes, the Company shall, in its sole discretion, determine the extent to which the terms and conditions contained herein shall be applicable to the Grantee.

Notifications

This Appendix B also includes information regarding exchange controls and certain other issues of which the Grantee should be aware with respect to the Grantee’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of December 2017. Such laws are often complex and change frequently. As a result, the Grantee should not rely on the information noted herein as the only source of information relating to the consequences of participation in the Plan because the information may be out of date by the time the Grantee vests in the RSUs, acquires or sells the Shares issued upon settlement of the RSUs.

In addition, the information contained in this Appendix B is general in nature and may not apply to the Grantee’s particular situation, and the Company is not in a position to assure the Grantee of any particular result. Accordingly, the Grantee should seek appropriate professional advice as to how the applicable laws in his or her country may apply to his or her situation.

Finally, if the Grantee is a citizen or resident of a country other than the one in which he or she is currently residing and/or working, transfers to another country after the Date of Grant, or is considered a resident of another country for local law purposes, the notifications contained herein may not be applicable to the Grantee in the same manner.


ARGENTINA

Terms and Conditions

Nature of Grant .

The following provision supplements Section 1 of Appendix A:

In accepting the grant of RSUs, the Grantee acknowledges and agrees that the grant of RSUs is made by the Company (not the Employer) in its sole discretion and that the value of any RSUs or Shares acquired under the Plan shall not constitute salary or wages for any purpose under Argentine law, including the calculation of (i) any labor benefits including, but not limited to, vacation pay, thirteenth salary, compensation in lieu of notice, annual bonus, disability, and leave of absence payments, or (ii) any termination or severance indemnities.

If, notwithstanding the foregoing, any benefits awarded under the Plan are considered for purposes of calculating any termination or severance indemnities, the Grantee acknowledges and agrees that such benefits shall accrue no more frequently than on an annual basis.

Notifications

Securities Law Information .

Neither the RSUs nor the Shares are publicly offered or listed on any stock exchange in Argentina and, as a result, they have not been and will not be registered with the Argentine Securities Commission ( Comisión Nacional de Valores or “ CNV ”). The offer is private and not subject to the supervision of any Argentine governmental authority. Neither this nor any other offering material related to the RSUs nor the underlying Shares may be utilized in connection with any general offering to the public in Argentina. Argentine residents who acquire RSUs under the Plan do so according to the terms of a private offering made from outside Argentina.

Exchange Control Information .

Please note that exchange control regulations in Argentina are subject to frequent change. The Grantee is solely responsible for complying with any and all Argentine currency exchange restrictions, approvals and reporting requirements in connection with the Grantee’s participation in the Plan. The Grantee should consult with the Grantee’s personal legal advisor to ensure compliance with the applicable requirements.

Foreign Asset / Account Reporting Information .

Argentine residents must report any Shares they may hold on December 31st of each year on their annual tax return for that year. Argentine residents should consult with their personal tax advisor to ensure compliance with all applicable reporting requirements.


AUSTRALIA

Notifications

Australian Offer Document .

Additional details regarding the offer of the RSUs are set forth in the Offer Document for the Offer of Restricted Stock Units to Australian Resident Employees.

Nature of Plan .

Subdivision 83A-C of the Income Tax Assessment Act, 1997, applies to RSUs granted under the Plan, such that the RSUs are intended to be subject to deferred taxation.

Exchange Control Information .

Exchange control reporting is required for cash transactions exceeding A$10,000 and international funds transfers ( e.g. , the remittance of sale proceeds related to Shares). The Australian bank assisting with the transaction may file the report for the Grantee. If there is no Australian bank involved in the transfer, the Grantee will be required to file the report him/herself. The Grantee should consult with his or her personal advisor to ensure proper compliance with applicable reporting requirements in Australia.

BRAZIL

Terms and Conditions

Compliance with Law .

By accepting the RSUs, the Grantee acknowledges and agrees to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items.

Labor Law Acknowledgement .

By accepting the RSUs, the Grantee agrees that (i) he or she is making an investment decision, (ii) the RSUs will vest and Shares will be issued only if the vesting conditions are met, and (iii) the value of the underlying Shares is not fixed and may increase or decrease over the vesting and holding periods without compensation to the Grantee.

Notifications

Exchange Control Information .

Brazilian residents are required to submit an annual or quarterly declaration of assets and rights (including Shares acquired under the Plan) held outside Brazil if the aggregate value of such rights and assets exceeds certain thresholds. The Grantee should consult with his or her personal legal advisor to determine whether he or she will be subject to this reporting requirement.


Tax on Financial Transaction (IOF) .

Payments to foreign countries and repatriation of funds into Brazil ( e.g. , proceeds from the sale of Shares) and the conversion between Brazilian Reals and the United States Dollar associated with such fund transfers may be subject to the IOF ( i.e. , tax on financial transactions). The Grantee is solely responsible for complying with any applicable IOF arising from the Grantee’s participation in the Plan. The Grantee should consult with his or her personal tax advisor for additional details.

GERMANY

Notifications

Exchange Control Information .

Cross-border payments in excess of €12,500 (including transactions made in connection with the sale of Shares) must be reported monthly to the German Federal Bank ( Bundesbank ). German residents who make or receive payments in excess of this amount must report the payments to Bundesbank electronically using the “General Statistics Reporting Portal” (“ Allgemeines Meldeportal Statistik ”) available via Bundesbank’s website ( www.bundesbank.de ). The Grantee is responsible for complying with applicable reporting requirements.

IRELAND

Notifications

Director Notification Requirement .

If the Grantee is a director, shadow director or secretary of an Irish Subsidiary, pursuant to the Company Act 2014, the Grantee must notify the Irish Subsidiary in writing if the Grantee receives or disposes of an interest exceeding 1% of the Company ( e.g ., RSUs, Shares), if the Grantee becomes aware of the event giving rise to the notification requirement, or if the Grantee becomes a director or secretary if such an interest exceeding 1% of the Company exists at that time. In some cases, this notification should be made to the Company within eight days of the event giving rise to the duty to make the notification. This notification requirement also applies with respect to the interests of a spouse, civil partner, or minor child (whose interests will be attributed to the director, shadow director or secretary, as the case may be). The Grantee should consult with his or her personal legal advisor to ensure compliance with the applicable requirements.

NETHERLANDS

There are no country-specific provisions.


UNITED KINGDOM

Terms and Conditions

Withholding Taxes .

This provision supplements Section 7 of the Agreement and applies if the Shares are considered readily convertible assets under U.K. law at the time of settlement:

Without limitation to Section 7 of the Agreement, the Grantee agrees that Grantee is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items as and when requested by the Company or any affiliate or by Her Majesty’s Revenue and Customs (“ HMRC ”) (or any other tax authority or any other relevant authority). The Grantee also agrees to indemnify and keep indemnified the Company and any affiliate against any Tax-Related Items that they are required to pay or withhold or have paid or will pay on the Grantee’s behalf to HMRC (or any other tax authority or any other relevant authority).

Notwithstanding the foregoing, if the Grantee is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), the Grantee understands that he or she may not be able to indemnify the Company for the amount of any income tax not collected from or paid by the Grantee within ninety (90) days of the end of the U.K. tax year in which the event giving rise to the Tax-Related Items occurs, as it may be considered to be a loan and, therefore, it may constitute a benefit to the Grantee on which additional income tax and National Insurance contributions (“ NICs ”) may be payable. The Grantee understands that he or she will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying to the Company and/or the Employer (as appropriate) the amount of any NICs due on this additional benefit, which may also be recovered from the Grantee by any of the means referred to in Section 7(b) of the Agreement.

Joint Election for Transfer of Liability for Employer National Insurance Contributions .

As a condition of participation in the Plan and the vesting of the RSUs and the issuance of Shares at a time when the Shares are considered readily convertible assets under U.K. law, the Grantee agrees to accept any liability for secondary Class 1 NICs that may be payable by the Company, the Employer, any Parent or Subsidiary in connection with the RSUs and any event giving rise to Tax-Related Items (“ Employer NICs ”). Without prejudice to the foregoing, the Grantee agrees to execute a joint election with the Company or the Employer, the form of such joint election (the “ Joint Election ”) having been approved formally by HMRC, if required, and any other required consent or election prior to settlement of the RSUs. The Grantee further agrees to execute such other joint elections as may be required between the Grantee and any successor to the Company, the Employer, any Parent or Subsidiary. The Grantee further agrees that the Company, the Employer, any Parent or Subsidiary may collect the Employer NICs from the Grantee by any of the means set forth in Section 7(b) of the Agreement.

Exhibit 10.18

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL AGREEMENT

This Executive Severance and Change in Control Agreement (the “Agreement”) is made this                          day of                             , 20    , by and between Eventbrite, Inc., a Delaware corporation (the “Company”), and                                  (the “Executive”).

WHEREAS, the Company and the Executive desire to enter into this Agreement, effective [                        ] (the “Effective Date”), in order to, among other things, provide for certain severance benefits upon a termination of employment both in connection with a change of control of the company and in connection with certain events not involving a change in control of the Company.

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein contained, the parties hereto agree as follows:

1. Purpose and Term .

(a) Purpose . The Compensation Committee of the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to provide the Executive with competitive compensation and benefits arrangements in the event his or her employment is involuntarily terminated under certain circumstances. Nothing in this Agreement shall be construed as creating an express or implied contract of employment; and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company, any successor to the Company or any successor of any business of the Company.

(b) Term . The terms of this Agreement shall commence on the Effective Date and shall continue until and including the third anniversary of the Effective Date unless earlier terminated as provided herein or extended as described in this paragraph (the “Initial Term”). The Initial Term shall be renewed automatically for periods of one year (each, an “Extended Term”) commencing at the third anniversary of the Effective Date and each subsequent anniversary thereof, unless written notice of non-renewal is given by the Company not less than 60 days prior to the end of the Initial Term or any Extended Term. As used herein, “Term” shall include the Initial Term and any Extended Term, but the Term shall end upon any termination of the Executive’s employment with the Company as provided herein. Notwithstanding the foregoing, in the event a Change in Control (as defined in Section 5(b)) occurs during the Initial Term or any Extended Term, the Term shall be extended until 12 months after the Change in Control.

2. Severance Benefits Not in Connection with a Change in Control . If, during the Term, the Executive’s employment is terminated by the Company for any reason other than for Cause, Disability or death, subject to the Executive signing a separation and release agreement containing, among other provisions, a general release of claims in favor of the Company and related persons and entities, confidentiality, return of property and non-disparagement, in a form and manner satisfactory to the Company (the “Separation Agreement and Release”), and the Separation Agreement and Release becoming irrevocable, all within 60 days after the earlier of (i) the Date of Termination or (ii)  the date the Executive is provided with the Separation Agreement and Release (the “60-day Period”), the Executive shall be entitled to the following:


(a) The Company shall pay the Executive a lump sum in cash in an amount equal to six (6)  months of the Executive’s then current base salary.

(b) If the Executive was participating in the Company’s group health plan immediately prior to the Date of Termination and elects COBRA health continuation, then the Company shall pay to the Executive a monthly cash payment for 6 months or the Executive’s COBRA health continuation period, whichever ends earlier, in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to the Executive if the Executive had remained employed by the Company.

(c) The amounts payable under this Section 2 shall be paid or commence to be paid within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payment shall be paid in the second calendar year by the last day of such 60-day period.

3. Change in Control Severance Benefits . The provisions of this Section 3 are intended to assure and encourage in advance the Executive’s continued attention and dedication to his or her assigned duties and his or her objectivity during the pendency and after the occurrence of a Change in Control. These provisions shall apply in lieu of, and expressly supersede, the provisions of Section  2 regarding severance pay and benefits upon a termination of employment, if such termination of employment occurs within 3 months before or 12 months after the occurrence of the first event constituting a Change in Control. These provisions shall terminate and be of no further force or effect beginning 12 months after the occurrence of a Change in Control (provided that any obligation to satisfy payment obligations thereafter shall remain in effect until all such payments are made).

(a) Change in Control Benefits . If, during the Term, upon or within 3 months before or 12 months after a Change in Control, the Executive’s employment is terminated by the Company for any reason other than for Cause, Disability or death, or if the Executive terminates his or her employment for Good Reason (each a “Terminating Event”), then, subject to the signing of the Separation Agreement and Release by the Executive and the Separation Agreement and Release becoming irrevocable, all within 60 days after the Date of Termination:

(i) the Company shall pay the Executive a lump sum in cash in an amount equal to twelve (12) months of the Executive’s base salary in effect on the date of the Terminating Event (or the Executive’s annual base salary in effect immediately prior to the Change in Control, if higher);

(ii) all equity awards held by the Executive shall immediately accelerate and become fully vested, exercisable (if applicable) and nonforfeitable;

(iii) if the Executive was participating in the Company’s group health plan immediately prior to the Date of Termination and elects COBRA health continuation, then the Company shall pay to the Executive a monthly cash payment for 12 months or the Executive’s COBRA health continuation period, whichever ends earlier, in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to the Executive if the Executive had remained employed by the Company; and

 

2


(iv) the amounts payable under this Section  3(a) shall be paid or commence to be paid within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payment shall be paid in the second calendar year by the last day of such 60-day period.

4. Additional Limitation under Section 280G .

(a) Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and the applicable regulations thereunder (the “Aggregate Payments”), would be subject to the excise tax imposed by Section  4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which the Executive becomes subject to the excise tax imposed by Section  4999 of the Code; provided that such reduction shall only occur if it would result in the Executive receiving a higher After Tax Amount (as defined below) than the Executive would receive if the Aggregate Payments were not subject to such reduction. In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section  280G of the Code: (1)  cash payments not subject to Section  409A of the Code; (2)  cash payments subject to Section  409A of the Code; (3)  equity-based payments and acceleration; and (4)  non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c)  shall be reduced before any amounts that are subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c).

(b) For purposes of this Section 4, the “After Tax Amount” means the amount of the Aggregate Payments less all federal, state, and local income, excise and employment taxes imposed on the Executive as a result of the Executive’s receipt of the Aggregate Payments. For purposes of determining the After Tax Amount, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(c) The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to Section 4(a) shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”) with the Executive’s consent, which will not be unreasonably withheld. The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Executive. Any determination by the Accounting Firm shall be binding upon the Company and the Executive.

 

3


5. Definitions . For purposes hereof, the following terms shall have the meanings set forth below:

(a) “Cause” shall mean:

(i) the Executive’s material act of misconduct in connection with the performance of the Executive’s duties to the Company; or

(ii) the Executive’s commission of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or any conduct that would reasonably be expected to result in material injury or reputational harm to the Company or any of its subsidiaries or affiliates if the Executive were retained in the Executive’s position; or

(iii) the Executive’s continued non-performance of the Executive’s duties to the Company 30 days following written notice thereof from the Company; or

(iv) the Executive’s breach of any material provisions of any written agreement between the Executive and the Company, including without limitation, the Proprietary Information and Invention Assignment Agreement; or

(v) the Executive’s material violation of the Company’s written employment policies; or

(vi) the Executive’s failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate.

(b) “Change in Control” shall mean a Sale Event (as defined in the Company’s 2018 Stock Option and Incentive Plan).

(c) “Date of Termination” shall mean: (i) if the Executive’s employment is terminated by the Company without Cause, the date set forth on the Notice of Termination; and (ii)  if the Executive’s employment is terminated by the Executive with Good Reason, the date set forth on the Notice of Termination after the end of the Cure Period. Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and such acceleration shall not result in a separate termination by the Company for purposes of this Agreement.

(d) “Disability” shall mean that if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from his or her duties to the Company on a full-time basis for 180 calendar days in the aggregate in any 12 month period.

 

4


(e) “Good Reason” shall mean the Executive has complied with the “Good Reason Process” (hereinafter defined) following the occurrence of any of the following events without the Executive’s consent:

(i) a material reduction in the Executive’s base salary except for across-the-board salary reductions based on the Company’s financial performance similarly affecting all or substantially all senior management employees of the Company; or

(ii) a material diminution in the Executive’s authority, duties, or responsibilities; or

(iii) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report; or

(iv) a change of more than 50 miles in the geographic location in which the Executive must perform services for the Company.

(f) “Good Reason Process” shall mean that (1) the Executive reasonably determines in good faith that a “Good Reason” condition has occurred; (2)  the Executive notifies the Company in writing of the first occurrence of the Good Reason condition within 45 days of the first occurrence of such condition; (3)  the Executive cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the condition; (4)  notwithstanding such efforts, the Good Reason condition continues to exist; and (5)  the Executive terminates his or her employment within 60 days after the end of the Cure Period. If the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

(g) “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon. Any termination of the Executive’s employment by the Company or any such termination by the Executive hereunder shall be communicated by written Notice of Termination to the other party hereto.

6. Executive’s Covenant . The Executive has entered into a Proprietary Information and Invention Assignment Agreement with the Company dated on or before the Executive’s commencement of employment with the Company (the “Restrictive Covenant Agreement”), which is incorporated herein by reference and survives the termination or expiration of this Agreement. In consideration of the benefits received under this Agreement, the Executive hereby reconfirms his or her obligations under the Restrictive Covenant Agreement in all respects, and understands that violation of the Executive’s obligations under the Restrictive Covenant Agreement will result in forfeiture of severance benefits under this Agreement. The Executive understands that nothing contained in this Agreement or any other agreement limits the Executive’s ability to communicate with any federal, state or local governmental agency or commission, including to provide documents or other information to a governmental agency, without notice to the Company. The Executive also understands that nothing in this Agreement or any other agreement limits the Executive’s ability to share compensation information concerning the Executive or others, except that this does not permit the Executive to disclose

 

5


compensation information concerning others that the Executive obtains because the Executive’s job responsibilities require or allow access to such information. The Executive understands that pursuant to the federal Defend Trade Secrets Act of 2016, the Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made (i)  in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii)  solely for the purpose of reporting or investigating a suspected violation of law; or (b)  is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

7. Termination . This Agreement shall terminate upon the earliest of (a) the termination by the Company of the employment of the Executive for Cause or the failure by the Executive to perform his or her full-time duties with the Company by reason of his or her death or Disability, (b)  the resignation or termination of the Executive’s employment by the Executive without Good Reason, or (c)  at the end of the then current Term following delivery of a notice of non-renewal under Section  1(b) herein (subject to the terms of such Section  1(b)).

8. Section 409A .

(a) Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s separation from service within the meaning of Section 409A of the Code, the Company determines that the Executive is a “specified employee” within the meaning of Section  409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation otherwise subject to the 20  percent additional tax imposed pursuant to Section  409A(a) of the Code as a result of the application of Section  409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A)  six months and one day after the Executive’s separation from service, or (B)  the Executive’s death. If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule.

(b) All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses). Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

6


(c) To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.” The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section  1.409A-1(h).

(d) The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section  409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section  409A of the Code. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section  1.409A-2(b)(2). The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section  409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

(e) The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

9. Litigation and Regulatory Cooperation . During and after the Executive’s employment, the Executive shall cooperate fully with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired while the Executive was employed by the Company. The Executive’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. During and after the Executive’s employment, the Executive also shall cooperate fully with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while the Executive was employed by the Company. Any cooperation pursuant to this Section 9 is subject to the Company’s obligation to reimburse the Executive for any reasonable expenses incurred during activities performed at the Company’s request pursuant to this Section  9, subject to the same standards and procedures as apply to business expense reimbursements pursuant to the Company’s Travel and Expense reimbursement policy.

10. Arbitration of Disputes . Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise and any other claims based on any statute) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in San Francisco, California in accordance with the Employment Arbitration Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. In the event that any person or entity other than the Executive or the Company may be a party with regard to any such controversy or claim,

 

7


such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 10 shall be specifically enforceable. Notwithstanding the foregoing, this Section  10 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section  10.

11. Consent to Jurisdiction . To the extent that any court action is permitted consistent with or to enforce Section 10 of this Agreement, the parties hereby consent to the jurisdiction of the Superior Court of the State of California and the United States District Court for the Northern District of California. Accordingly, with respect to any such court action, the Executive (a)  submits to the personal jurisdiction of such courts; (b)  consents to service of process; and (c)  waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

12. Integration . This Agreement, together with the additional agreements referred to herein, constitute the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties concerning such subject matter.

13. Effect on Other Plans . An election by the Executive to resign for Good Reason under the provisions of this Agreement shall not be deemed a voluntary termination of employment by the Executive for the purpose of interpreting the provisions of any of the Company’s benefit plans, programs or policies. Nothing in this Agreement shall be construed to limit the rights of the Executive under the Company’s benefit plans, programs or policies except that the Executive shall have no rights to any severance benefits under any Company severance pay plan.

14. Withholding . All payments made by the Company to the Executive under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.

15. Successor to the Executive . This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees.

16. Enforceability . If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

17. Survival . The provisions of this Agreement shall survive the termination of this Agreement and/or the termination of the Executive’s employment to the extent necessary to effectuate the terms contained herein.

 

8


18. Waiver . No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

19. Notices . Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Company or, in the case of the Company, at its main offices, attention of the Chief Executive Officer.

20. Amendment . This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.

21. Governing Law . This is a California contract and shall be construed under and be governed in all respects by the laws of the State of California, without giving effect to the conflict of laws principles of such State.

22. Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

23. Successor to Company . The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement to the same extent that the Company would be required to perform it if no succession had taken place. Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of this Agreement.

24. Gender Neutral . Wherever used herein, a pronoun in the masculine gender shall be considered as including the feminine gender unless the context clearly indicates otherwise.

[Signature Page Follows]

 

9


IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company by its duly authorized officer, and by the Executive, as of the date first above written.

 

EVENTBRITE, INC.
By:  

 

  Julia Hartz
  Chief Executive Officer

 

Executive

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Amendment No. 2 to the Registration Statement on Form S-1 of Eventbrite, Inc. of our report dated June 15, 2018 relating to the financial statements and financial statement schedule, which appears in this Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

San Jose, California

August 27, 2018

Exhibit 23.2

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Amendment No. 2 to the Registration Statement on Form S-1 of Eventbrite, Inc. of our report dated June 15, 2018 relating to the financial statements of Ticketfly, LLC, which appears in this Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

San Jose, California

August 27, 2018