Employment Agreement - Amazon.com Inc. and Joseph Galli
June 23, 1999
Mr. Joseph Galli
2809 Boston Street, Apt. 110
Baltimore, MD 21224
RE: OFFER OF EMPLOYMENT
Dear Joe:
On behalf of Amazon.com, Inc. (the "Company"), I am very pleased to offer
you the position of President and Chief Operating Officer. This letter clarifies
and confirms the terms of your employment with the Company.
1. START DATE
Unless we mutually agree otherwise, you will commence employment on June
24, 1999 (the "Start Date").
2. SALARY
Your starting salary will be $16,666.70 per month, ($200,000 annualized),
payable monthly in accordance with the Company's standard payroll practice and
subject to applicable withholding taxes. Because your position is exempt from
overtime pay, your salary will compensate you for all hours worked. Your base
salary will be reviewed annually by the Board of Directors or its Compensation
Committee, and any increases will be effective as of the date determined by the
Board or its Compensation Committee.
3. BONUS
In addition to your base salary, you will be entitled to a $5,000,000
signing bonus. The signing bonus will be payable in two installments: $3,000,000
on the first anniversary of the Start Date, and $2,000,000 on the second
anniversary of the Start Date.
4. BENEFITS
You will also be entitled, during the term of your employment, to such
vacation, medical and other employee benefits as the Company may offer from time
to time, subject to applicable eligibility requirements. The Company does
reserve the right to make any modifications in this benefits package that it
deems appropriate. The Company's current vacation policy is to provide you with
two weeks paid vacation per year in the first year of your employment and three
weeks per year thereafter during the term of your employment. You are also
eligible to participate in Amazon.com's 401(k) retirement plan the first quarter
after 90 days of employment and to enroll in our major medical plan on the first
entry date following the commencement of your employment.
5. STOCK OPTIONS
As we discussed, the Company takes a long-term approach to investment, and
its employees are its most important investment. Our compensation structure is
weighted towards equity ownership because we believe we will create the most
value for the Company and its shareholders over time by having employees think
and act like, and therefore be, owners. To this end, and subject to Board of
Directors' approval, you will be granted a 20-year option to purchase 735,000
shares of Amazon.com
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common stock, which will vest at the rate of 73,500 shares at the end of each
year of employment during the first 10 years of employment. In addition, you
will be granted a 20-year option to purchase 1,225,000 shares of Amazon.com
common stock, which will vest at the rate of 122,500 shares at the end of each
year of employment after the first 10 years of employment. The strike price on
your stock option grants will be the fair market value per share of such stock
on the Start Date.
If you are an employee of the Company on the fourth anniversary of the
Start Date, the Company commits to pay you a bonus or bonuses (the "Bonus
Commitment"), over a period of seven years (i.e., beginning on the fourth
anniversary and ending on the eleventh anniversary of the Start Date) so long as
you continue to be employed by the Company (the "Bonus Period"), equal to a
maximum of $20 million (the "Maximum Bonus Value") less the amount that the
aggregate fair market value of the shares of stock issued upon exercise of the
options vesting during the first 10 years of your employment (the "Covered
Stock") exceeds the aggregate exercise price of such options. The terms of the
Bonus Commitment will be as follows:
(a) When you sell shares of Covered Stock during the Bonus Period, the
Company will pay to you the excess, if any, of (i) the product obtained by
multiplying (x) the Maximum Bonus Value by (y) the Applicable Percentage
(as defined below) over (ii) the aggregate Net Sales Price of the Covered
Stock sold by you; provided, however, that in no event shall the Company be
obligated to make a payment to you if the sum of (1) the aggregate Net
Sales Price of all shares of Covered Stock sold by you since the Start Date
and (2) the aggregate payments made to you by the Company pursuant to the
Bonus Commitment equals or exceeds the Maximum Bonus Value multiplied by a
fraction, the numerator of which is the number of shares of Covered Stock
sold by you since the Start Date and the denominator is 735,000
(proportionately adjusted for stock splits and similar events).
(b) The Applicable Percentage shall be equal to the number of shares of
Covered Stock sold by you in the applicable transaction divided by 735,000
(proportionally adjusted for stock splits and similar events).
(c) The Net Sales Price shall be the sales price of the applicable Covered
Stock without deduction of selling expenses or commissions less the
exercise price for the applicable Covered Stock.
(d) Notwithstanding whether the Bonus Period has expired, the Bonus
Commitment shall terminate with respect to sales of Covered Stock after the
earlier of (i) termination of your employment by you or termination of your
employment by the Company with Cause (as defined below) and (ii) 90 days
after termination of your employment by the Company without Cause.
(e) Notwithstanding anything to the contrary in the foregoing provisions,
if your employment terminates due to your death or because you become
unable to perform your duties on account of a permanent disability (as
defined from time to time in the Company's long-term disability income
plan) or if the Company terminates your employment without Cause, and such
termination occurs during the four years between the Start Date and the
beginning of the Bonus Period, then you shall be entitled to the Bonus
Commitment (and the Bonus Period shall be deemed to have been effective)
for any sales of Covered Stock on or before the date that is 90 days after
the effective date of the termination of your employment.
Your option will be documented by delivery to you of a Stock Option Letter
Agreement specifying the terms and conditions of the option. All share amounts
will be proportionately adjusted for stock splits and similar events.
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6. TERMINATION OF EMPLOYMENT
Your employment may be terminated at any time by you with 30 days' prior
written notice to the Company's Board of Directors or by the Company with or
without Cause. The following matters will provide the Company with justification
for termination of your employment with "Cause":
(a) any act of fraud or embezzlement,
(b) any material breach by you of your Confidentiality, Noncompetition and
Invention Assignment Agreement with the Company,
(c) your conviction of any felony involving an act of dishonesty, moral
turpitude, deceit or fraud,
(d) any act of dishonesty or misconduct (whether in connection with your
responsibilities as an employee of the Company or otherwise) that either
materially impairs the Company's business, goodwill or reputation or
materially compromises your ability to represent the Company with the
public, or
(e) your material failure to perform your lawful duties to the Company
after receiving written notice from the Company's Board of Directors
describing such failure in reasonable detail.
7. PAYMENTS UPON TERMINATION OF EMPLOYMENT
The payments to which you will be entitled to receive from the Company and
amounts, if any, of the signing bonus that you will be obligated to repay to the
Company upon termination of your employment will be as follows:
(a) If before the second anniversary of the Start Date you terminate your
employment or if the Company terminates your employment with Cause, the
Company will not be obligated to pay you the second installment of the
signing bonus and you must repay the Company a proportionate amount of the
first installment of the signing bonus based on the number of days elapsed
from the first anniversary of the Start Date to the effective date of
termination of your employment divided by 365.
(b) If before the third anniversary of the Start Date you terminate your
employment or if the Company terminates your employment with Cause, you
must repay the Company a proportionate amount of the second installment of
the signing bonus based on the number of days elapsed from the second
anniversary of the Start Date to the effective date of termination of your
employment divided by 365.
(c) If you terminate your employment or if the Company terminates your
employment with or without Cause, the Company will pay you any accrued and
unpaid base salary (subject to normal withholding and other deductions) to
the effective date of termination of your employment. The Company may
offset against its payment of accrued and unpaid base salary any amount you
owe the Company under clause (a) or (b) above.
8. CONFIDENTIALITY, NONCOMPETITION AND INVENTION ASSIGNMENT AGREEMENT
As a condition of your employment pursuant to this offer letter, we require
that you sign the enclosed Confidentiality, Noncompetition and Invention
Assignment Agreement. The Company's willingness to grant you the stock options
referred to above is based in significant part on your commitment to fulfill the
obligations specified in that agreement. As further compensation for
satisfaction of your obligations under the that agreement, the Company will pay
you $3,000,000 on the Start Date.
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You should know that the agreement will significantly restrict your future
flexibility in many ways. For example, you will be unable to seek or accept
certain employment opportunities for a period of three years after you leave the
Company. Please review the agreement carefully and, if appropriate, have your
attorney review it as well.
9. ADDITIONAL PROVISIONS
Your employment pursuant to this letter is also contingent upon your
submitting the legally required proof of your identity and authorization to work
in the United States. On your first day of employment you must provide the
required identification.
If you accept this offer, the terms described in this letter will be the
terms of your employment, and this letter supersedes any previous discussions or
offers. Any additions or modifications of these terms would have to be in
writing and signed by you and an officer of the Company.
If you wish to accept employment with the Company, please indicate so by
signing both copies of this letter and both copies of the enclosed
Confidentiality, Noncompetition and Invention Assignment Agreement, retaining
one of each for your files. This offer and all terms of employment stated in
this letter will expire if you have not returned a signed copy to me on or prior
to June 24, 1999.
We are very excited about the possibility of your joining us. I hope that
you will accept this offer and look forward to a productive and mutually
beneficial working relationship. Please let me know if I can answer any
questions for you about any of the matters outlined in this letter.
Sincerely,
/s/ JEFFREY P. BEZOS
Jeffrey P. Bezos
Chairman and Chief Executive Officer
Amazon.com, Inc.
ACCEPTANCE
I accept employment with Amazon.com, Inc. under the terms set forth in this
letter:
/s/ JOSEPH GALLI
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Signature
Printed Name: JOSEPH GALLI
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