Shareholder's Agreement - Amazon.com Inc. and Lawrence P. Gise
SHAREHOLDER'S AGREEMENT
OF
AMAZON.COM, INC.
THIS SHAREHOLDER'S AGREEMENT (this "Agreement"), is made and entered into as of
this 24th day of July 1995 by and between Amazon.com, Inc. (the "Company"), a
Delaware corporation, and Lawrence P. Gise (the "Shareholder"). (Shares to be
registered for and held under Gise Family Trust under agreement dated 4/21/93.)
SELECT only one of the following:
______ For purposes of this Agreement, the Shareholder is an employee
shareholder (an "Employee Shareholder") and is bound to all the provisions of
this agreement including Article 9. Shareholder's Initials:________
x For purposes of this Agreement, the Shareholder is not an Employee
Shareholder and is not bound to the provisions of Article 9 of this Agreement.
Shareholder's Initials: LPG
WHEREAS, the parties hereto deem it in their best interest to provide for
ultimate ownership of the shares of the Company (the "Stock"), or rights
thereto, including the right to transfer such Stock and the right to purchase
such Stock upon the occurrence of certain events;
NOW, THEREFORE, in consideration of the foregoing and in consideration of the
mutual promises set forth herein, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
RESTRICTION ON DISPOSITION
1.1 Disposition Prohibited. The Shareholder shall not dispose of any of his or
her Stock except as permitted by this Agreement, and any such attempted
disposition shall be void and shall not be recognized or registered upon the
books of the Company.
1.2 Definition of "Dispose". The term "dispose" includes, but is not limited to,
the acts of selling, assigning, transferring, pledging, encumbering, giving
away, devising, and any other form of conveying, including conveyances caused by
marital separation, divorce, receivership, or bankruptcy, whether voluntary or
involuntary or by operation of law.
1.3 Notice of Involuntary Disposition. The Shareholder, or his or her personal
representative, shall notify the Company immediately upon the occurrence of an
involuntary disposal of his or her Stock. The Company shall notify the other
shareholders of any such involuntary transfer.
1.4 Role of Offeror or Transferor. If the Company is entitled to elect to
purchase or redeem any Stock owned by the Shareholder hereunder, the Shareholder
shall not participate in or interfere with, and shall abstain from any vote upon
(but shall be present for the purpose of meeting any quorum requirement), any
action to be taken by the Company in effecting such an election. The
Shareholder, or the legal representative of the Shareholder, shall cooperate in
effecting all company action and execute and deliver all papers as may be
necessary to consummate any purchase by the Company of such Stock. Unless
otherwise set forth herein, the option of the Company to purchase or redeem
Stock owned by the Shareholder shall be exercised only upon a majority vote of
the Board of Directors.
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ARTICLE 2
DISPOSITIONS DURING LIFE
2.1 Voluntary Disposition.
(a) Disposition of Stock prior to and on December 31, 1999. This
Agreement prohibits the Shareholder from disposing of any Stock until after
December 31, 1999, unless prior written consent is received from the Company,
which consent can be given only upon a majority vote of the Board of Directors.
(b) Disposition of Stock after December 31, 1999. In the event that the
Shareholder ("the Offering Shareholder") receives a bona fide offer (the
"Offer") after December 31, 1999, to purchase all or any portion of his or her
Stock (the "Shares") and the Offering Shareholder desires to sell his or her
Shares pursuant to the terms of the Offer, then the Offering Shareholder shall
forthwith deliver to the Company written notice of such offer. Such written
notice shall contain the name and address of the bona fide offeror, and the bona
fide purchase price offered for the Shares and all other terms of such offer.
The Company shall convey such notice to each other shareholder who is at that
time a current shareholder of the Company ("the Remaining Shareholders"). Within
sixty (60) days after receipt by the Company of the written notice of the Offer
(the "Option Period"), the Company shall have the right to purchase or redeem
all of the Shares included in such Offer either upon the price and terms set
forth in the Offer or, at the election of the Company, upon the price and terms
described in Article 5. A vote by the majority of the members of the Board of
Directors shall be required to exercise or waive the option, except that a
Director who is the proposed transferor may not participate in the voting, and
shall not be included in the number of Directors when computing whether a
majority vote of the member of the Board was obtained. If the Company does not
exercise such right within the Option Period, or exercises such right only as to
a portion of such shares, the Remaining Shareholders shall have the right for a
period of thirty (30) days following the end of the Option Period ("the Second
Option Period") to purchase all of the Shares included in the Offer that are not
purchased by the Company, upon the same terms as are available to the Company as
follows:
(1) Each Remaining Shareholder shall, during the Second Option
Period, advise the Secretary of the Company whether such Remaining Shareholder
wishes to exercise his or her right to purchase Shares and the maximum number of
Shares that he or she wishes to purchase.
(2) If the aggregate of the maximum number of Shares covered by
the Offer to be purchased by all Remaining Shareholders exceeds the number of
Shares available for purchase by them, the number of Shares offered shall be
apportioned pro rata among the Remaining Shareholders electing to purchase based
upon a fraction, the numerator of which is the number of Shares outstanding held
by each such Remaining Shareholder and the denominator of which is the number
which is the aggregate number of Shares outstanding held by all Remaining
Shareholders electing to purchase. Fractions resulting in any such computation
shall be rounded to the next whole number. If such computation results in a
purchase of less than all Shares offered by the Offering Shareholder, then the
difference between the number of Shares agreed to be purchased and the number of
Shares offered shall be allocated to those Remaining Shareholders who have
offered to purchase a number of Shares greater than the number allocated to such
Remaining Shareholders in the first allocation. Such allocation shall be based
on a fraction, the numerator of which is the number of Shares outstanding held
by each such Remaining Shareholder and the denominator of which is the number
which is the aggregate number of Shares outstanding held by all Remaining
Shareholders who have offered to purchase a number of Shares greater than the
number allocated to them. For the purpose of accomplishing the allocations set
forth herein, the Secretary of the Company shall make the allocations and his or
her determination as to the allocations shall be conclusive.
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(3) If the maximum number of Shares to be purchased by the
Remaining Shareholders is less than the Shares offered by the Offering
Shareholder available for purchase by the Remaining Shareholders, or after
successive allocations each Remaining Shareholder has been allocated the maximum
number of Shares agreed to be purchased by him or her, and all Shares offered by
the Offering Shareholder are still not allocated to a Remaining Shareholder,
then the Company shall have the option to purchase the unallocated portion
within the Second Option Period upon the same terms as were available to the
Company in the Option Period.
(4) If neither the Company nor the Remaining Shareholders
exercises the right to purchase the entirety of the Shares within the time
provided for such exercise, the Offering Shareholder shall be free to sell any
remaining Shares so offered pursuant to the Offer, and only pursuant to the
Offer, for a period of sixty (60) days following the end of the Second Option
Period, provided, however, that the transferee of those Shares must first agree
in writing to be bound by the terms and conditions of this Agreement that apply
to the Shareholder. If no such sale is made by the Offering Shareholder within
such 60-day period, then the restrictions set forth in this Agreement shall
thereafter continue to apply to the Shares and no Stock, nor any interest
therein, shall thereafter be disposed, whether pursuant to an Offer or
otherwise, without again first complying with all of the provisions of this
Agreement.
2.2 This section remains only so as to preserve the numbering in this Agreement.
2.3 Closing. The closing of any purchase and sale under this Article 2 shall
take place at the principal office of the Company at the date designated by the
Company, which shall not be more than ninety (90) days after the written consent
of the Company pursuant to Section 2.1(a) or ninety (90) days after the end of
the Second Option Period pursuant to Section 2.1(b).
ARTICLE 3
This article remains only so as to preserve the numbering in this Agreement.
ARTICLE 4
This article remains only so as to preserve the numbering in this Agreement.
ARTICLE 5
VALUATION AND PAYMENT OF TERMS
5.1 Agreed Valuation and Terms. For purposes of Article 2, the value per share
of the Stock and the terms of the purchase or redemption shall be determined
annually by a majority vote of the Company's Board of Directors at the Company's
annual Directors' meeting, which is scheduled for December 31 of each year, or
at any other time prior to the closing of the proposed purchase or redemption.
If the necessary vote cannot be obtained or if the Offering Shareholder objects
to the value established by the Company's Board of Directors, then the value per
share shall be established pursuant to Section 5.4, and the terms of purchase or
redemption shall be those most recently adopted by the Directors pursuant to
this Section 5.1, or if no such terms have been so adopted or if the Offering
Shareholder objects to such terms, then those terms described in Section 5.2
below.
5.2 Initial Valuation and Terms.
a) The initial value per share of the Company's Stock is the book value.
b) The terms for payment are a down payment of ten percent (10%) of the purchase
or redemption price (or more at the purchaser's option) with the balance to be
paid in sixty (60) equal monthly installments of principal and interest
including interest on the declining principal balance calculated so that the
entire principal balances of the note shall be paid in full on the fifth
anniversary of the note.
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5.3 Book Value. If the "book value" shall be used as the measurement of value,
per share, the following definition of "book value" shall apply:
Capital Stock plus retained earnings plus additional paid-in capital as of the
last day of the month preceding the date of purchase ("Valuation Date"), as
determined by the accountant regularly employed by the Company or, if no
accountant is regularly employed by the Company, then by an accountant selected
by mutual agreement of the parties.
5.4 Alternative Appraisal Value. If a valuation as provided for in Section 5.1
is not recorded for a particular year, the last previous valuation shall be
used; except that if no valuation is recorded within eighteen (18) months
preceding the proposed disposition, then in the event that the parties cannot
agree to use the last previous recorded valuation, the value per share shall be
determined by three appraisers. Within fifteen (15) days of the date that use of
the last previous recorded valuation was rejected, the rejecting party shall
select an appraiser and notify the other of the appraiser's name and address.
Within fifteen (15) days after receipt of that notice, the remaining party shall
select an appraiser and notify the first party of the name and address of such
appraiser. If any party is unable to or unwilling to agree upon an appraiser
within fifteen (15) days of the time designated for such selection, then the
appraiser shall be selected by the presiding judge of the King County Superior
Court. The two appraisers selected by the parties shall promptly appoint a third
appraiser as soon as practical. The three appraisers shall evaluate and agree
upon the value per share of the Stock as soon as practical after their
selection; the vote of two such appraisers shall be sufficient to establish the
value per share. The appraisers need not be licensed appraisers but should be
experienced in business matters and shall be independent of all parties. Each
party shall pay the fee charged for that party's appraiser; the fee charged by
the third appraiser and any costs related to the appraisal shall be borne
equally by each party.
5.5 Note for Unpaid Balance. Unless otherwise expressly provided herein, any
unpaid balance owing under this Agreement shall be evidenced by an installment
promissory note executed by the purchaser to the order of the seller providing
for an interest rate equal to the prime rate of Bank of America on the business
day prior to the closing date. The note shall give the purchaser the option of
prepaying the principal in full or in part at any time without penalty.
5.6 Setoff. In the event the Company purchases any Stock pursuant to this
Agreement, the Company shall set off against the purchase price for the Stock
any indebtedness owed to the Company by such Shareholder or his or her estate,
whether or not such indebtedness is then due. If any shareholder or other third
party purchases any Stock pursuant to this Agreement, as a condition of the
purchase, the purchaser agrees, prior to making any payment to the transferring
Shareholder, that the purchaser shall pay to the Company that part of the
purchase price equal to any indebtedness owed by the seller or his or her estate
to the Company, whether or not such indebtedness is then due, and such payments
shall be deemed payments on account of said purchase price or the promissory
note issued by such shareholder with respect thereto.
ARTICLE 6
ENDORSEMENT OF CERTIFICATE
6.1 The Secretary of the Company shall endorse all certificates representing
Stock owned by the Shareholder and all certificates representing Stock issued or
transferred after this Agreement is entered into with the following legend:
The transfer of the shares represented by this certificate is restricted by the
terms of a Shareholder's Agreement between the Shareholder and the Company dated
July 24 1995, a copy of which is on file in the office of the Company.
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ARTICLE 7
TERMINATION OF THIS AGREEMENT
7.1 Termination. This Agreement shall terminate at such time as the Common Stock
of the Company is listed on a recognized United States national securities
exchange or is traded in an over-the-counter market.
ARTICLE 8
AGREEMENT BINDING UPON TRANSFEREES
8.1 Except as otherwise provided for in this Agreement, in the event that any
Stock is at any time disposed of or transferred to any party pursuant to the
provisions hereof, the transferee shall take such Stock pursuant to all the
terms, provisions, conditions, and covenants of this Agreement, and the
transferee shall, as a condition precedent to the valid transfer of such Stock
to such transferee, be bound, and agree (for and on behalf of himself or
herself, his or her legal and personal representatives, his or her assigns, and
his or her transferees, direct or indirect) in writing to be bound, by all
provisions of this Agreement, including Article 9 in the case of a disposal or
transfer from an Employee Shareholder.
ARTICLE 9
GRANT OF IRREVOCABLE PROXY
9.1 Definition of Total Disability. As used in this Agreement, the term "Total
Disability" refers to a condition resulting from injury or illness to the
Employee Shareholder which prevents the Employee Shareholder from performing the
duties he or she has previously performed, and could be reasonably expected to
perform on behalf of the Company, for a period of 365 consecutive days (the
"Disability Period"), and Total Disability shall be deemed to occur on the first
day following the initial 365 day period (the "Total Disability Date"). In the
event that the disabled Employee Shareholder returns to the Company within the
Disability Period, but can fully perform the required services for less than
thirty (30) days, and then relapses to his or her disability, the Disability
Period shall not be considered to have been interrupted. In the event the
Company has disability insurance protection on the Employee Shareholder, or the
Employee Shareholder has an individual policy, the receipt of such disability
insurance payments shall be deemed proof that the Employee Shareholder is
disabled, and the waiting period and periods during which such Employee receives
disability payments from such insurance, shall be deemed proof of the extent of
time the Employee Shareholder has been disabled. Any dispute as to whether or
not an Employee Shareholder is "Totally Disabled" and for how long he or she has
been disabled as defined in this Agreement, shall be settled by mediation and/or
arbitration in accordance with the provisions of this Agreement.
9.2 Grant of Irrevocable Proxy. The Employee Shareholder hereby grants to the
Company an irrevocable proxy to vote all of the Stock held by the Employee
Shareholder upon or subsequent to his or her death, Total Disability as defined
above, or termination of employment with the Company, without regard to when or
for what reason, if any, such employment shall terminate. Such proxy is coupled
with an interest arising out of the terms of the Agreement, and such continues
so long as this Agreement remains in full force and effect.
The irrevocable proxies described in this Article 9 shall remain in effect until
the Company has issued and has outstanding shares of Common Stock held of record
by 300 stockholders or more and the Common Stock of the Company is quoted on a
recognized United States national securities exchange or the over-the-counter
market.
This irrevocable proxy is coupled with an interest arising out of the terms of
this Agreement, and continues as long as this Agreement remains in full force
and effect.
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ARTICLE 10
GENERAL PROVISIONS
10.1 Mediation and Arbitration. All controversies, claims, disputes and matters
in question arising out of or relating to this Agreement or the breach thereof,
shall be decided by mediation and/or arbitration in accordance with this Article
10.1. The party who seeks resolution of a controversy, claim, dispute or other
matter in question shall notify the other party in writing of the existence and
subject matter hereof, and shall designate in such notices the names of three
prospective mediators, each of whom shall be registered with the Seattle,
Washington office of the American Arbitration Association. The recipient party
shall select from such list one individual to act as a mediator in the dispute
set forth by the notifying party. The parties agree to meet with said mediator
in the City of Seattle within two weeks after the recipient party has received
notice of the dispute and agree to utilize their best efforts and all expediency
to resolve the matters in dispute. The mediation shall not continue longer than
one (1) hearing day without the written approval of both parties. Neither party
shall be bound by any recommendation of the mediator; however, any agreement
reached during mediation shall be final and conclusive.
If the dispute is not resolved by such mediation, it shall be decided by
mandatory arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Either party may apply to the American
Arbitration Association for a determination of the dispute set forth in the
notification thereof by the originating party. The parties agree that the
arbitration shall take place in the City of Seattle, and shall be governed by
the laws of the State of Washington. The award entered or decision made by the
arbitrator(s) shall be final and judgment may be entered upon it in accordance
with applicable law in any court having jurisdiction thereof. Expense of
mediation and/or arbitration shall be shared equally by both parties.
10.2 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties, their spouses, heirs, legal representatives,
successors, transferees and assigns.
10.3 Specific Performance. It is agreed that the remedy at law for any breach of
this Agreement would be inadequate, and that the aggrieved party shall be
entitled to injunctive relief as well as damages for such breach.
10.4 Notices. All notices, offers, acceptance, waivers and other acts under this
Agreement shall be in writing and shall be sufficiently given if delivered to
the addresses in person or if mailed, postage prepaid, return receipt requested,
to the addresses as follows or at any address that such party may designate by
written notice to the other:
If to the Company: Jeffrey P. Bezos
c/o Chuck Katz
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, WA 98101-3099
If to Lawrence P. Gise Lawrence P. Gise
600 Leona St.
Cotulla, TX 78014
10.5 Prior Agreements. This Agreement contains the entire agreement between the
parties and supersedes all prior agreements entered into by the parties relative
to the subject matter of this Agreement.
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