Stock Purchase Warrant - Amazon.com Inc. and Deutsche Bank AG
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
DECEMBER 23, 1997 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT OR LAWS OR THE RULES AND
REGULATIONS THEREUNDER (PROVIDED AMAZON RECEIVES AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT TO SUCH EFFECT) OR THE PROVISIONS OF THIS
WARRANT.
STOCK PURCHASE WARRANT
Closing Date: December 23, 1997 Certificate No. 1
For value received, Amazon.com, Inc., a Delaware corporation
("Amazon"), hereby grants to Deutsche Bank AG, New York Branch, for the benefit
of the lenders party to that certain Credit Agreement (as hereinafter defined),
or its registered assigns (the "Registered Holder"), the right to purchase from
Amazon 750,000 shares of Warrant Stock at a price of $52.11 per share (as
adjusted from time to time hereunder), (the "Exercise Price"). This Warrant is
the warrant (the "Warrant") issued pursuant to the terms of the Credit Agreement
(as amended or modified, the "Credit Agreement"), dated as of December 23, 1997,
among Amazon, the other financial institutions party thereto and Deutsche Bank
AG, New York Branch, as administrative agent. Certain capitalized terms used
herein are defined in Section 6 hereof. Capitalized terms used herein but not
otherwise defined herein shall have the meanings set forth for such terms in the
Credit Agreement. The amount and kind of securities purchasable pursuant to the
rights granted hereunder and the Exercise Price are subject to adjustment
pursuant to the provisions contained in this Warrant.
Amazon and the Registered Holder agree that the value of this
Warrant shall be zero ($0) for tax purposes.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1.A. Exercise Period. Subject to Section 2.D, the Registered
Holder may exercise, in whole or in part, the purchase rights represented by
this Warrant at any time and from time to time in series as follows (provided
any such exercise shall be for
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a minimum of 100 shares of Warrant Stock unless less than 100 shares of Warrant
Stock are then issuable hereunder):
(i) with respect to 75,000 shares of Warrant Stock (as adjusted
from time to time hereunder) issuable upon exercise of this Warrant, on
December 23, 1998 (the "Series I Warrant Stock");
(ii) with respect to 225,000 shares of Warrant Stock (as adjusted
from time to time hereunder) issuable upon exercise of this Warrant, on
December 23, 1999 (the "Series II Warrant Stock"); and
(iii) with respect to 450,000 shares of Warrant Stock (as
adjusted from time to time hereunder) issuable upon exercise of this
Warrant, on December 23, 2000 (the "Series III Warrant Stock"),
in each case to and including the fifth anniversary of the date on which such
series first becomes exercisable (the "Exercise Period").
1.B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when
Amazon has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1.C
below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in Exhibit
II hereto evidencing the assignment of this Warrant to the Purchaser, in
which case the Registered Holder shall have complied with the provisions
set forth in Section 8 hereof; and
(d) either (1) a check payable to Amazon in an amount equal to
the product of the Exercise Price multiplied by the number of shares of
Warrant Stock being purchased upon such exercise (the "Aggregate
Exercise Price"), (2) a written notice to Amazon that the Person is
exercising the Warrant (or a portion thereof) by authorizing Amazon to
withhold from issuance a number of shares of Warrant Stock issuable
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upon such exercise of the Warrant which when multiplied by the Market
Price of the Warrant Stock is equal to the Aggregate Exercise Price (and
such withheld shares shall no longer be issuable under this Warrant).
(ii) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by Amazon to the Purchaser within
five business days after the date of the Exercise Time. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
Amazon shall prepare a new Warrant, substantially identical hereto, representing
the rights formerly represented by this Warrant which have not expired or been
exercised and shall, within such five-day period, deliver such new Warrant to
the Person designated for delivery in the Exercise Agreement. The rights of, and
restrictions on, the holders of Underlying Common Stock set forth herein will
survive the expiration of this Warrant and the exercise in full of all of the
purchase rights represented hereby.
(iii) The Warrant Stock issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
record holder of such Warrant Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Warrant Stock
upon exercise of this Warrant shall be made without charge to the Registered
Holder or the Purchaser for any issuance tax in respect thereof or other cost
incurred by Amazon in connection with such exercise and the related issuance of
shares of Warrant Stock (other than any transfer taxes resulting from a
simultaneous exercise and transfer). Each share of Warrant Stock issuable upon
exercise of this Warrant shall, upon payment of the Exercise Price therefor, be
fully paid and nonassessable and free from all liens, encumbrances, adverse
claims and charges with respect to the issuance thereof.
(v) Amazon shall not close its books against the transfer of this
Warrant or of any share of Warrant Stock issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. Amazon shall from time to time take all such action as may be necessary
to assure that the par value per share of the unissued Warrant Stock acquirable
upon exercise of this Warrant is at all times equal to or less than the sum of
the Exercise Price then in effect.
(vi) Amazon shall assist and cooperate with any Registered Holder
or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in
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connection with any exercise of this Warrant (including, without limitation,
making any filings required to be made by Amazon).
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or a sale of Amazon, the exercise of any portion of this Warrant may,
at the election of the holder hereof, be conditioned upon the consummation of
the public offering or such sale of Amazon in which case such exercise shall not
be deemed to be effective until the consummation of such transaction.
(viii) Amazon shall at all times reserve and keep available out
of its authorized but unissued shares of Warrant Stock, solely for the purpose
of issuance upon the exercise of the Warrant, such number of shares of Warrant
Stock as are issuable upon the exercise of the Warrant. All shares of Warrant
Stock which are so issuable shall, when issued, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens, encumbrances,
adverse claims and charges. Amazon shall take all such actions as may be
necessary to ensure that all such shares of Warrant Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any securities exchange (or the Nasdaq Stock Market) upon which
shares of Warrant Stock may be listed (except for official notice of issuance
which shall be immediately delivered by Amazon upon each such issuance).
1.C. Exercise Agreement. Upon any exercise of this Warrant, the
Exercise Agreement shall be substantially in the form set forth in Exhibit I
hereto, except that if the shares of Warrant Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Warrant Stock are to be issued, and if the number of shares of
Warrant Stock to be issued does not include all the shares of Warrant Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered.
Section 2. Adjustment of Exercise Price and Number of Shares. The
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2, and the number of shares of Warrant Stock obtainable upon
exercise of this Warrant shall be subject to adjustment from time to time as
provided in this Section 2.
2.A. Subdivision or Combination of Common Stock. If Amazon at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its
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outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision shall be proportionately
reduced and the number of shares of Warrant Stock obtainable upon exercise of
this Warrant shall be proportionately increased. If Amazon at any time combines
(by reverse stock split or otherwise) one or more classes of its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased
and the number of shares of Warrant Stock obtainable upon exercise of this
Warrant shall be proportionately decreased.
2.B. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of Amazon's assets to another Person or
other transaction which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, other than
an event otherwise provided for in this Section 2, is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, Amazon shall
make appropriate provision to ensure that the holders of this Warrant shall
thereafter have the right to acquire and receive, upon exercise of this Warrant
during the Exercise Period and upon payment of the Exercise Price then in
effect, such shares of stock, securities or other assets as may be issued or
payable with respect to or in exchange for the number of shares of Warrant Stock
immediately theretofore acquirable and receivable upon exercise of this Warrant
had such Organic Change not taken place. In any such case, Amazon shall make
appropriate provision with respect to such holders' rights and interests to
ensure that the provisions of this Section 2 and Section 3 hereof shall
thereafter be applicable to the Warrants. Amazon shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than Amazon) resulting from consolidation or merger
or the entity purchasing such assets assumes by written instrument the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire.
2.C. Minimum Adjustment; Rounding. In the event any adjustment of
the Exercise Price pursuant to this Section 2 shall result in an adjustment of
the Exercise Price of less than $.05 per share, no such adjustment shall be
made, but any such lesser adjustment shall be carried forward and shall be made
at the time and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to $.05 or more per share;
provided, however, that upon any adjustment of the
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Exercise Price resulting from any event set forth in this Section 2, the
foregoing figure of $.05 per share (or such figure as last adjusted) shall be
proportionately adjusted; and provided, further, that upon the exercise of this
Warrant, the Company shall make all necessary adjustments not theretofore made
to the Exercise Price up to and including the date upon which this Warrant is
exercised or repurchased. All calculations under this Section 2 shall be rounded
to the nearest cent or the nearest share, as the case may be.
2.D. Clawback. In the event Amazon repays all outstanding
principal, accrued interest, fees and expenses (for which expenses Amazon has
received notice from Agent or any Lender as of the date the principal is repaid
in full) in accordance with the terms of the Credit Agreement in full and the
Commitment of the Lenders is terminated on the dates set forth below, this
Warrant shall immediately (with no further action on the part of Amazon or the
Registered Holder) terminate and be of no further force or effect with respect
to the number of shares of Warrant Stock set forth in the corresponding column
below:
<TABLE>
<CAPTION>
================================================================================
Payment and Termination Date Warrant Terminated with
respect to:
--------------------------------------------------------------------------------
<S> <C>
on or prior to December 23, 1998 100% of Series I, II and III
--------------------------------------------------------------------------------
After December 23, 1998 but 100% of Series II and III
prior to March 23, 1999
--------------------------------------------------------------------------------
After March 23, 1999, but 50% of Series II and 100% of
prior to June 23, 1999 Series III
--------------------------------------------------------------------------------
After June 23, 1999, but 100% of Series III
prior to December 23, 1999
--------------------------------------------------------------------------------
After December 23, 1999, but 50% of Series III
prior to June 23, 2000
--------------------------------------------------------------------------------
Thereafter None
================================================================================
</TABLE>
Section 3. Liquidating Dividends. If Amazon pays a dividend upon
the Common Stock payable otherwise than in cash out of earnings or earned
surplus (determined in accordance with applicable corporate law and generally
accepted accounting principles consistently applied), except for a stock
dividend payable in shares of Common Stock or any distribution to holders of
Common Stock in respect of the sale of all or substantially all of Amazon's
assets to another Person; provided that Amazon has complied with Section 2 of
this Warrant (a "Liquidating Dividend"), then, (i) upon exercise hereof and
payment of the
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Exercise Price, Amazon shall pay to the Registered Holder of this Warrant, the
Liquidating Dividend which would have been paid to such Registered Holder on the
Warrant Stock had this Warrant been fully exercised immediately prior to the
date on which a record is taken for such Liquidating Dividend, or, if no record
is taken, the date as of which the record holders of Common Stock entitled to
such dividends are to be determined; or (ii) in lieu of clause (i), at the
option of the holder (such option to be exercised in writing by the holder at
least 10 days after receipt of notice of such dividend from Amazon), the
Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of any class of securities
entitled to receive such Liquidating Dividend shall be reduced, effective as of
the close of business on such record date, to a price determined by multiplying
such Exercise Price by a fraction:
(A) the numerator of which shall be the Market Price in
effect on such record date or, if any class of Common Stock
trades on an ex-dividend basis, the date prior to the
commencement of ex-dividend trading, less the value of such
dividend or distribution (as determined by the Board of Directors
of the Company in the good faith, reasonable exercise of its
business judgment) applicable to one share of Common Stock, and
(B) the denominator of which shall be such Market Price.
There shall be no additional adjustments under this Section 3 upon the
consummation of any such Liquidating Dividend.
Section 4. Certificates, Notices and Consents.
4.A. Certificates. Upon the occurrence of any event requiring
adjustments of the Exercise Price and/or number of shares subject to this
Warrant pursuant to Section 2, Amazon shall mail to the Registered Holder (by
registered or certified mail, postage prepaid) a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer of
Amazon, setting forth in reasonable detail the events requiring the adjustment
and the method by which such proposed adjustment was calculated, specifying the
adjusted Exercise Price and/or number of shares subject to this Warrant after
giving effect to the proposed adjustment(s).
4.B. Notices. If Amazon after the date hereof, and so long as
this Warrant(s) shall be outstanding, shall propose to:
(i) pay any dividend (including, without limitation, any
extraordinary dividend) payable in
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stock to the holders of Common Stock or to make any other distribution
to the holders of Common Stock, or any pro rata subscription offer to
holders of Common Stock to purchase any additional shares of any class
of stock or any other rights or options (other than stock repurchases
under Amazon's employee stock option plans as in effect on the date
hereof or similar plans or other repurchase agreements in effect on the
date hereof; or
(ii) effect any Organic Change or sale transaction described in
Section 2.B or the liquidation, dissolution or winding up of Amazon;
then, in each such case, Amazon shall mail (by registered or certified
mail, postage prepaid) to the Registered Holders notice of such proposed
action, which shall specify the date on which the books of Amazon shall
close, or a record date shall be established, for determining holders of
Common Stock entitled to receive such stock dividends or other
distribution or participate in such offering, or the date on which such
Organic Change, liquidation, dissolution or winding up shall take place
or commence, as the case may be, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to receive
securities or other property deliverable upon such action, if any such
date is to be fixed.
Such notice shall be mailed, in the case of any action described by clause (i)
above, at least 10 days prior to the record date for determining holders of
Common Stock for purposes of receiving such payment or offer, and in case of
clause (ii) above, at least 20 days prior to the date upon which such action
takes place.
4.C. Failure and Defects. Failure to mail any certificate or
notice, or any defect in any certificate or notice, pursuant to this Section 4,
shall not affect the legality or validity of the adjustment of the Exercise
Price and/or number of shares of Warrant Stock subject to this Warrant pursuant
to Section 2.
Section 5. Registration and Qualification.
5.A. Piggyback Registration. If prior to December 23, 2007 Amazon
proposes (whether at the request of any other Person or otherwise) to register
any security under the Securities Act on any registration form (otherwise than
for the registration of securities to be offered and sold pursuant to (a) an
employee
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benefit plan, (b) a dividend or interest reinvestment plan, (c) other similar
plans or (d) reclassifications of securities, mergers, consolidations and
acquisitions of assets on Form S-4 or any successor thereto) prescribed by the
Securities and Exchange Commission (the "Commission") permitting a secondary
offering or distribution, Amazon shall promptly give to the holders of
Underlying Common Stock written notice of such proposal which shall describe in
detail the proposed registration and distribution (including those jurisdictions
where registration or qualification under the securities or blue sky laws is
intended) and, upon the written request of any holder of Underlying Common Stock
given within 15 days after the date of any such notice, proceed to include in
such registration such shares of Underlying Common Stock as have been requested
by any such holder to be included in such registration; provided, however, that
Amazon shall not be required to give such notice to the holder of a Warrant if
the Warrant is not exercisable prior to the anticipated effective date of the
registration. Amazon shall in each instance use its reasonable best efforts to
cause any Underlying Common Stock (the holders of which shall have so requested
registration thereof) to be registered under the Securities Act and qualified
under the securities or blue sky laws of any jurisdiction requested by a
prospective seller, all to the extent necessary to permit the sale or other
disposition thereof (in the manner stated in such request) by a prospective
seller of the securities so registered.
If the registration of which Amazon gives notices is for a registered
public offering involving an underwriting, Amazon shall so advise the holders of
Underlying Common Stock as a part of the written notice given pursuant to this
section. In such event, the right of any holder of Underlying Common Stock to
registration pursuant to this section shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such holder's Underlying
Common Stock in the underwriting, to the extent requested, to the extent
provided herein. All holders of Underlying Common Stock proposing to distribute
their securities through such underwriting shall (together with Amazon and the
other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the managing underwriter
selected for such underwriting by Amazon. Notwithstanding any other provision of
this section, if the managing underwriter determines and advises Amazon in
writing that, in its opinion, the inclusion of the Underlying Common Stock with
the securities being registered by Amazon and other shares of prospective
sellers would materially adversely affect the distribution of all such
securities, then the managing underwriter may limit the number of shares of
Underlying Common Stock and other prospective sellers to be included in the
registration and underwriting, on a pro rata basis based on the
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total number of securities (including, without limitation, Underlying Common
Stock) entitled to registration pursuant to registration rights granted by
Amazon; provided, however, no such reduction may reduce the number of securities
being sold by all the holders of securities entitled to registration other than
Amazon to less than fifteen percent (15%) of the shares being sold in such
offering. To facilitate the allocation of shares in accordance with the above
provisions, Amazon or the underwriters may round the number of shares allocated
to any holder of Underlying Common Stock or other holder to the nearest 100
shares. If any holder of Underlying Common Stock or other securities entitled to
registration disapproves of the terms of any such underwriting, such holder may
elect to withdraw therefrom by written notice to Amazon and the managing
underwriter delivered at least twenty-one (21) days prior to the effective date
of the registration statement. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to one hundred twenty (120) days
after the effective date of the registration statement relating thereto. In the
event of such delay, Amazon shall use its reasonable best efforts to effect any
registration or qualification under the Securities Act and the securities or
blue sky laws of any jurisdiction as may be necessary to permit such prospective
seller to make its proposed offering and sale following the end of such period
of delay.
The Company shall have the right to terminate or withdraw any
registration initiated by it under this section prior to the effectiveness of
such registration, whether or not any holder of Underlying Common Stock has
elected to include securities in such registration.
The holder of Underlying Common Stock who has requested
Underlying Common Stock to be included in a registration pursuant to this
Section 5.A by acceptance hereof or thereof, agrees to execute an underwriting
agreement with such underwriter that is (i) reasonably satisfactory to such
holder and (ii) in customary form.
5.B. Registration and Qualification Procedures. Whenever Amazon is
required by the provisions of Section 5.A to use its reasonable best efforts to
effect the registration of any of its securities under the Securities Act,
Amazon shall, as expeditiously as possible:
(i) prepare and file with the Commission a registration statement with
respect to such securities and use its reasonable best efforts to cause such
registration statement to become effective and, before filing a registration
statement or prospectus or any amendments or supplements thereto, furnish to
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counsel selected by the majority of holders of Underlying Common Stock
participating in such registration copies of all documents proposed to be filed
with the Commission or other federal, state or local agencies, which documents
shall be subject to the review and comments of such counsel;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
the prospectus current for up to 60 days after the effectiveness of the
registration statement (or such shorter time as is required to effect the
distribution and sale of all the securities subject to such registration
statement) and, subject to the foregoing limitations, to comply with the
provisions of the Securities Act with respect to the sale of all securities
covered by such registration statement whenever the seller of such securities
shall desire to sell the same;
(iii) furnish to each seller such number of copies of preliminary
prospectuses and prospectuses and each supplement or amendment thereto and such
other documents as each seller may reasonably request in order to facilitate the
sale or other disposition of the securities owned by such seller in conformity
with (A) the requirements of the Securities Act and (B) the seller's proposed
method of distribution;
(iv) use its reasonable best efforts to register or qualify the
securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions within the United States as each seller shall
reasonably request, and do such other reasonable acts and things as may be
required of it to enable each seller to consummate the sale or other disposition
in such jurisdictions of the securities owned by such seller; provided, however,
that Amazon shall not be required in order to accomplish any of the foregoing to
(A) qualify as a foreign corporation or consent to a general and unlimited
service of process in any such jurisdiction, (B) qualify as a dealer in
securities or (C) register or qualify in any jurisdiction if Amazon would be
required to pay income taxes in such jurisdictions solely as a result of such
registration or qualification;
(v) if such registration is underwritten, use its reasonable best
efforts to furnish, at the request of any underwriter (A) on the date such
securities are delivered to the underwriters for sale pursuant to such
registration, an opinion, dated such date, of counsel representing Amazon for
purposes of such registration, addressed to the underwriters covering such legal
matters with respect to the registration in respect of which such opinion is
being given as the underwriters may reasonably request and are customarily
included in such an opinion and (B) letters, dated the
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effective date of the registration statement and the date such securities are
delivered to the underwriters for sale pursuant to such registration, from a
firm of independent certified public accountants of recognized standing selected
by Amazon, addressed to the underwriters covering such financial, statistical
and accounting matters with respect to the registration in respect of which such
letters are being given as the underwriters may reasonably request and are
customarily included in such letters;
(vi) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders as soon as reasonably practicable an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act;
(vii) enter into and perform an underwriting agreement with the managing
underwriter, if any, selected as provided in Section 5.A, containing customary
terms;
(viii) provide a transfer agent and registrar for all such Underlying
Common Stock not later than the effective date of such registration statement;
(ix) notify each seller of any Underlying Common Stock included in any
such registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and, at the request of any such
seller, Amazon shall prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of the Common Stock or other
securities, such prospectus shall not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein not
misleading; and
(x) otherwise keep each seller advised in writing as to the initiation
and progress of any registration under Section 5.A.
5.C. Allocation of Expenses. If Amazon is required by the provisions of
Section 5.A to use its reasonable best efforts to effect the registration or
qualification under the Securities Act or any state securities or blue sky laws
of any of the Underlying Common Stock, Amazon shall pay all expenses in
connection therewith, including, without limitation, (i) all expenses incident
to filing with the National Association of Securities Dealers, Inc., (ii)
registration fees, (iii) printing expenses, (iv) accounting and legal fees and
expenses, (v) expenses of any special audits incident to or required by any such
registration or
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qualification, (vi) expenses of complying with the securities or blue sky laws
of any jurisdictions in connection with such registration or qualification and
(vii) the reasonable fees and expenses of one counsel to the holders of
Underlying Common Stock selected by a majority of such holders participating in
such registration or qualification; provided, however, Amazon shall not be
liable for (A) any discounts or commissions to any underwriter applicable to the
securities registered on behalf of the holders of Underlying Common Stock or (B)
any stock transfer taxes incurred in respect of the Warrant Stock sold by the
sellers.
5.D. Indemnification. In connection with any registration or
qualification of securities under Section 5.A, Amazon shall indemnify the
participating holders of Underlying Common Stock and each underwriter thereof,
including each Person, if any, who is an officer or director of, or who
controls, such holders or underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against all actual
out-of-pocket losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and attorneys' fees and expenses, whether in
an action brought by a third party or by the parties hereto), arising, directly
or indirectly, out of or based upon (i) any untrue, or alleged untrue, statement
of a material fact contained in any registration statement, preliminary
prospectus, prospectus or notification or offering circular (as amended or
supplemented if Amazon shall have furnished any amendments or supplements
thereto); (ii) any omission, or alleged omission, to state therein a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances in which they were made,not misleading; or (iii)
any violation by Amazon of any federal, state or common law rule or regulation
applicable to Amazon and relating to action or inaction required of Amazon in
connection with any such registration, provided, however, that with respect to
any untrue statement or omission or alleged untrue statement or omission made in
any preliminary prospectus, the indemnity agreement contained in this sentence
shall not apply to the extent that (i) any loss, claim, damage, liability or
expense results from the fact that a current copy of the prospectus was sent or
given to the Person asserting any such loss, claim, damage, liability or expense
at or prior to the written confirmation of the sale of the Underlying Common
Stock confirmed to such Person if it is determined that it was the
responsibility of the participating holder or any of its directors, officers or
agents, or any underwriter, to provide such person with a current copy of the
prospectus and such current copy of the prospectus would have cured the defect
giving rise to such loss, claim, damage, liability or expense; and (ii) such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or alleged untrue statement or omission or alleged omission
based solely upon information furnished in
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writing to Amazon by such holder or underwriter expressly for use therein.
The participating holders of Underlying Common Stock shall indemnify
Amazon and each underwriter thereof, including each Person, if any, who is an
officer or director of Amazon or who controls Amazon or such underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and attorneys' fees and expenses, whether in
an action brought by a third party or by the parties hereto), arising out of or
based upon (x) any untrue, or alleged untrue, statement of a material fact
contained in any registration statement, preliminary prospectus or notification
or offering circular (as amended or supplemented if Amazon shall have furnished
any amendments or supplements thereto); or (y) any omission, or alleged
omission, to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made not misleading or (z) any violation by Amazon of any federal,
state or common law rule or regulation applicable to Amazon and relating to
action or inaction required of such holder in connection with any such
registration, but only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was based solely upon
information furnished in writing to Amazon by such holder of Underlying Common
Stock expressly for use therein; provided, however, that with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity agreement contained in this sentence shall
not apply to the extent that any loss, claim, damage, liability or expense
results from the fact that a current copy of the prospectus was not sent or
given to the Person asserting any such loss, claim, damage, liability or expense
at or prior to the written confirmation of the sale of the Underlying Common
Stock confirmed to such Person if it is determined that it was the
responsibility of Amazon or any of its directors, officers or agents, or any
underwriter, to provide such person with a current copy of the prospectus and
such current copy of the prospectus would have cured the defect giving rise to
such loss, claim, damage, liability or expense; and provided further, that the
obligations of each such holders of Underlying Common Stock shall be limited to
an amount equal to the net proceeds to such holder from the sale of Underlying
Common Stock as contemplated herein.
Promptly upon receipt by a party to be indemnified under this Section
5.D of notice of the commencement of any action against such indemnified party
in respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 5.D, such indemnified party shall notify
the
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indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may have to any indemnified party, unless such failure shall
materially adversely affect the defense of such action. If notice of
commencement of any such action shall be given to the indemnifying party as
above provided, the indemnifying party shall be entitled to participate in and,
to the extent it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own expense, with counsel
chosen by it and satisfactory to such indemnified party. The indemnified party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
(other than reasonable costs of investigation) shall be paid by the indemnified
party unless (i) the indemnifying party agrees in writing to pay the same, (ii)
the indemnifying party fails to assume the defense of such action with counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) have been advised by such
counsel that representation of such indemnified party and the indemnifying party
by the same counsel would be inappropriate under applicable standards of
professional conduct (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party).
No indemnifying party shall be liable for any settlement entered into without
its consent.
If the indemnification provided for in this Section 5.D shall for any
reason be unenforceable by an indemnified party, although otherwise available in
accordance with its terms, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages, liabilities
or expenses with respect to which such indemnified party has claimed
indemnification, in such proportion as is appropriate to reflect the relative
fault of the indemnified party on the one hand and the indemnifying party on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations; provided, further, that the obligations of each such
holder of Underlying Common Stock shall be limited to an amount equal to the net
proceeds to such holder from the sale of Common Stock as contemplated herein.
Amazon and each holder of Underlying Common Stock agree that it would not be
just and equitable if contribution pursuant hereto were to be determined by pro
rata allocation or by any other method of allocation which does not take into
account such equitable considerations. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to herein shall be deemed to
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<PAGE> 16
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any action or claim
which is the subject hereof. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who is not guilty of such fraudulent
misrepresentation.
Each holder of Underlying Common Stock bearing the legend required by
Section 11, by acceptance hereof or thereof, as the case may be, agrees to the
indemnification provisions of this Section 5.D.
5.E. Supplying Information. Amazon and each holder of Underlying Common
Stock shall cooperate with each other in supplying such information as may be
necessary for any of such parties to complete and file any information reporting
forms presently or hereafter required by the Commission or any commissioner or
other authority administering the blue sky or securities laws of any
jurisdiction where shares of Common Stock are proposed to be sold pursuant to
Section 5.A.
Section 6. Definitions. The following terms have meanings set forth
below:
"Agent" has the meaning provided in the Credit Agreement.
"Commitment" has the meaning provided in the Credit Agreement.
"Common Stock" means the Common Stock and any capital stock of
any class of Amazon hereafter authorized which is not limited to a fixed
sum or percentage of par or stated value in respect to the rights of the
holders thereof to participate in dividends or in the distribution of
assets upon any liquidation, dissolution or winding up of Amazon.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Lenders" has the meaning provided in the Credit Agreement.
"Majority Warrant Holders" means the holders of Underlying Common
Stock representing a majority of the shares of Underlying Common Stock
then in existence.
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<PAGE> 17
"Market Price" means as to any security (other than the Warrants)
the average of the closing prices of such security's sales on all
domestic securities exchanges on which such security may at the time be
listed or quoted, including for this purpose, The Nasdaq Stock Market,
or, if there have been no sales on any such exchange on any day, the
average of the highest bid and lowest asked prices on all such exchanges
at the end of such day, or, if on any day such security is not so listed
or quoted, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 30 consecutive
business days immediately prior to the day as of which "Market Price" is
being determined; provided, that if such security is listed on any
domestic securities exchange the term "business days" as used in this
sentence means business days on which such exchange is open for trading.
If at any time such security is not listed on any domestic securities
exchange or quoted on The Nasdaq Stock Market or the domestic
over-the-counter market, the "Market Price" shall be the fair value
thereof determined by Amazon; provided, that if the holders of Warrants
representing a majority of the Warrant Stock issuable under
then-outstanding Warrants do not agree with Amazon's determination of
Market Price set forth in the notice delivered by Amazon in connection
with the event giving rise to the determination of Market Price, then
such holders of Warrants representing a majority of the Warrant Stock
issuable under then-outstanding Warrants may deliver written notice (the
"Objection Notice") specifying the Market Price as determined by such
holders within 10 days after receipt of Amazon's notice specifying the
Market Price. Amazon and the holders of Warrants representing a majority
of the Warrant Stock issuable under then-outstanding Warrants shall then
negotiate in good faith in an attempt to agree on the Market Price, and
if they are unable to agree within 20 days after delivery of the
Objection Notice, then Market Price shall be determined by an investment
banking firm selected by the American Arbitration Association (the
"Appraiser"). The fees and expenses of the Appraiser shall be paid by
Amazon. Any determination of Market Price of a security will be made
without giving effect to any discount for any lack of liquidity
attributable to a lack of a public market for such security, any block
discount or discount attributable to the size of any Person's
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<PAGE> 18
holdings of such security, any minority interest or any voting rights
thereof or lack thereof. The "Market Price" of a Warrant means the
excess of (i) the Market Price of the shares of Warrant Stock obtainable
upon exercise thereof over (ii) the Aggregate Exercise Price of the
Warrant Stock payable in connection with such exercise. For purposes of
Section 1.B(i)(d)(2) above, the "Market Price" of any debt security of
Amazon or any Subsidiary thereof shall be equal to the principal amount
thereof plus all accrued interest thereon plus all premium and other
amounts owing with respect thereto.
"Person" has the meaning provided in the Credit Agreement.
"Registered Holder" with respect to any Warrant means the Person
who is reflected as the holder thereof on the register maintained by
Amazon for such purpose, and "Registered Holders" at any time means all
Registered Holders of Warrants then outstanding.
"Securities Act" means the Securities Act of 1933, as amended.
"Underlying Common Stock" means (i) the Common Stock issued or
issuable upon exercise of the Warrants (including the Warrant Stock),
and (ii) any Common Stock issued or issuable with respect to the
securities referred to in clause (i) above by way of stock dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For
purposes of this Warrant, any Person who holds Warrants shall be deemed
to be the holder of the Underlying Common Stock obtainable upon exercise
of the Warrants in connection with the transfer thereof or otherwise
regardless of any restriction or limitation on the exercise of the
Warrants. As to any particular shares of Underlying Common Stock, such
shares shall cease to be Underlying Common Stock when they have been (a)
effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them or (b)
distributed to the public through a broker, dealer or market maker
pursuant to Rule 144 under the Securities Act (or any similar provision
then in force).
"Warrant Stock" means the Common Stock or other securities issued
or issuable upon exercise of the
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<PAGE> 19
Warrant (including the Series I, Series II and Series III Warrant
Stock).
Section 7. No Voting Rights; Limitations of Liability. Prior to
the exercise of this Warrant and except as otherwise specifically provided
herein or in the Credit Agreement, this Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of Amazon. No
provision hereof, in the absence of affirmative action by the Registered Holder
to purchase Warrant Stock, and no enumeration herein of the rights or privileges
of the Registered Holder shall give rise to any liability of such holder for the
Exercise Price of Warrant Stock acquirable by exercise hereof or as a
stockholder of Amazon.
Section 8. Warrant Transferable. Subject to the transfer
conditions referred to in the legend endorsed hereon, this Warrant and all
rights hereunder are transferable, in whole or in part, without charge to the
Registered Holder, upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of Amazon;
provided that such transfer shall be at least equal to 3.3% of any series of
Warrant Stock being transferred. Notwithstanding the foregoing, this Warrant and
the Common Stock issued upon exercise of this Warrant may not be transferred
without the consent of Amazon, which consent will only be withheld or delayed,
if the proposed transferee is, has a major financial interest (excluding any
mutual fund, investment banker or similar investment advisor with any such major
financial interest as a result of accounts held by or on account of its
customers in the ordinary course of business), or is an employee or affiliate
of, a competitor of Amazon; provided, that the holders of Warrants may, without
the consent of Amazon, transfer any interest therein to any lender or to any
Affiliate of any lender.
Section 9. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of Amazon, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. All Warrants representing portions of the rights
hereunder are referred to herein as the "Warrants."
Section 10. Replacement. Upon receipt of evidence reasonably
satisfactory to Amazon (an affidavit of the Registered Holder shall be
satisfactory) of the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of an indemnity reasonably satisfactory to Amazon (it being
understood
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that an unsecured indemnity by the initial holder of the Warrants will in any
event be satisfactory), or in the case of any such mutilation, upon surrender of
such certificate, Amazon shall (at its expense) execute and deliver in lieu of
such certificate a new certificate of like tenor and dated the date of such
lost, stolen, destroyed or mutilated certificate.
Section 11. Legend. The certificates representing shares of
Warrant Stock issued upon exercise of the Warrants shall be endorsed with the
legend set forth as follows:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be transferred
unless registered under such Act or an exemption from registration is
available (provided that Amazon may require an opinion of counsel
reasonably satisfactory to it to such effect). Any transfer thereof is
also subject to the conditions specified in the Stock Purchase Warrant
of Amazon.com, Inc. (the "Company") dated as of December 23, 1997. A
copy of the form of such Warrant is on file with the Secretary of the
Company, and will be furnished without charge by the Company to the
holder of this certificate upon written request to the Secretary of the
Company at its headquarters."
Such legend shall be removed upon the request of the holder of such certificate;
provided that removal of such legend shall be in compliance with applicable
federal and state securities laws (and Amazon receives an opinion of counsel
reasonably satisfactory to it that such legend is no longer necessary on such
certificate to protect Amazon from a violation of such federal or state
securities) and that there are no further restrictions on shares represented by
such certificate under this Warrant.
Section 12. Securities Law Compliance. The holder of this
Warrant, by acceptance hereof, acknowledges that this Warrant is being acquired
for the holder's account, for the benefit of the Lenders under the Credit
Agreement, and for investment purposes only and not with a view toward
distribution or resale, and that the holder will not offer, sell, transfer,
assign or otherwise dispose of this Warrant or any shares of Common Stock to be
issued upon exercise hereof except under circumstances that will not result in a
violation of the Securities Act or any state securities laws.
Section 13. Rule 144 and 144A Reporting.
(i) With a view to making available to the Holders of Warrants or
any holders of Underlying Common Stock the benefits of certain rules and
regulations of the Commission which may permit
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<PAGE> 21
the sale of Underlying Common Stock to the public without registration, Amazon
agrees, to:
(a) make and keep public information available as those terms are
understood and defined in Rule 144;
(b) file with the Commission in a timely manner all reports and
other documents required of Amazon under the Securities Act and Exchange
Act; and
(c) furnish to the holder of Warrants or Underlying Common Stock
forthwith upon request of a written statement by Amazon as to its
compliance with the reporting requirements of Rule 144, and of the
Exchange Act, a copy of the most recent annual or quarterly report of
Amazon filed with the Commission, if any, and such other reports and
documents of Amazon and other information in the possession of or
reasonably obtainable by Amazon as the Holder or such holders may
reasonably request in availing themselves of any rule or regulation of
the Commission allowing them to sell securities without registration
under the Securities Act.
(ii) With a view to making available to the holders of Warrants
or holders of Warrant Stock the benefits of certain rules and regulations of the
Commission which may permit the sale of Warrants or Warrant Stock to qualified
institutional buyers, Amazon agrees, upon request, to provide to such holders
and prospective purchasers of Warrants or Warrant Stock with the following
information which shall be reasonably current:
(a) a brief statement of the nature of the business of Amazon and
the products and services it offers; and
(b) a copy of Amazon's most recent balance sheet and profit and
loss and retained earnings statements and similar audited financial
statements for the two preceding fiscal years.
Section 14. Consent for Additional Registration Rights. Amazon
shall not grant rights to register any of its securities under the Securities
Act to any other Person or entity without the consent of the Majority Warrant
Holders if the grant of any such rights would be senior to the rights granted
hereunder to the holder of the Warrant. Amazon may grant registration rights in
the future which are on parity with those granted hereunder to the holders of
the Underlying Common Stock
Section 15. Notices. Except as otherwise expressly provided
herein, all notices referred to in this Warrant shall be
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<PAGE> 22
in writing (including facsimile) and shall be delivered either personally, sent
by reputable express courier service (charges prepaid) sent by registered or
certified mail, return receipt requested, postage prepaid or forwarded by
facsimile and shall be deemed to have been given when so delivered, sent or
deposited in the U. S. Mail (i) to Amazon, at its principal executive offices
and (ii) to the Registered Holder of this Warrant and the holders of Underlying
Common Stock, at such holder's address as it appears in the records of Amazon
(unless otherwise indicated by any such holder), or if given by facsimile, when
such facsimile is transmitted to the facsimile number specified in the Credit
Agreement with respect to Amazon and, with respect to the Registered Holder and
the holders of Underlying Common Stock, as it appears in the records of Amazon
(unless otherwise indicated by such holder).
Section 16. Amendment and Waiver. Except as otherwise provided
herein, the provisions of the Warrants may be amended and Amazon may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if Amazon has obtained the written consent of the Majority
Warrant Holders; provided, that no such action may change the Exercise Price of
the Warrants or the number of shares or class of stock obtainable upon exercise
of each Warrant without the written consent of the holders of Underlying Common
Stock representing 100% of the shares of Underlying Common Stock.
Section 17. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate law
of the State of Delaware shall govern all issues concerning the relative rights
of Amazon and its stockholders. All other questions concerning the construction,
validity and interpretation of this Warrant shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
giving effect to any choice of law or conflict provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
Section 18. Certain Expenses. In addition to any other amounts
payable hereunder, Amazon shall pay all issuance expenses incurred in connection
with, and all taxes (other than stock transfer taxes) and other governmental
charges that may be imposed in respect of, the issuance, sale and delivery of
the Warrants or the shares of Underlying Common Stock.
* * * * *
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<PAGE> 23
Warrant - Amazon.com, Inc.
IN WITNESS WHEREOF, Amazon has caused this Warrant to be signed
and attested by its duly authorized officers and to be dated the Closing Date
hereof.
AMAZON.COM, INC.
By: /s/ Joy D. Covey
---------------------------------------
Its: Chief Financial Officer
--------------------------------------
Attest:
/s/ Alan Caplan
-----------------------------
General Counsel
<PAGE> 24
EXHIBIT I
EXERCISE AGREEMENT
(To be executed only upon partial
or full exercise of the within Warrant)
The undersigned registered Holder of the within Warrant irrevocably
exercises the within Warrant for and subscribes for ______ shares of Common
Stock of Amazon.com, Inc. and agrees to make payment therefor in the amount of
$________, all at the price and on the terms and conditions specified in the
within Warrant and requests that a certificate (or __________ certificates in
denominations of ______ shares) for the shares of Common Stock of ________
hereby subscribed for be issued in the name of and delivered to [choose one] (a)
the undersigned or (b) ________, whose address is _____________ ____________,
and if such shares of Common Stock shall not include all the shares of Common
Stock issuable as provided in the within Warrant, that a new Warrant of like
tenor for the number of shares of Common Stock of _________ not being subscribed
for hereunder be issued in the name of and __________, whose address is
___________.
Dated: ______________, ____
By:
-------------------------------------
(Signature of Registered Holder)
Signature Guarantee:
-------------------------
By:______________________
[Title]
<PAGE> 25
EXHIBIT II
ASSIGNMENT FORM
(To be executed only upon the assignment
of the within Warrant)
FOR VALUE RECEIVED the undersigned registered Holder of the within
Warrant hereby sells, assigns and transfer unto (the "Transferee"), whose
address is all of the rights of the undersigned under the within Warrant, with
respect to ______ shares of Common Stock of Amazon.com, Inc. and if such shares
of Common Stock shall not include all the shares of Common Stock issuable as
provided in the within Warrant, that a new Warrant of like tenor for the number
of shares of Common Stock of _________________ not being transferred hereunder
be issued in the name of and delivered to the undersigned, and does hereby
irrevocably constitute and appoint
Attorney to register such transfer on the books of maintained for
the purpose, with full power of substitution in the premises. By signing below,
the transferee agrees to be bound by all of the terms and conditions of the
within Warrant.
Dated __________________, ____
Signature Guaranteed: By
----------------------------------
(Signature of Registered Holder)
----------------------------------
By
--------------------------------
[Title]
Accepted and Agreed this
____ day of ___________, ___:
By
--------------------------------
(Signature of Transferee)