{"id":40018,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/incentive-stock-option-letter-agreement-amazon-com-inc-and-joy.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"incentive-stock-option-letter-agreement-amazon-com-inc-and-joy","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/incentive-stock-option-letter-agreement-amazon-com-inc-and-joy.html","title":{"rendered":"Incentive Stock Option Letter Agreement &#8211; Amazon.com Inc. and Joy D. Covey"},"content":{"rendered":"<pre>\n\n                                AMAZON.COM, INC.\n\n                     INCENTIVE STOCK OPTION LETTER AGREEMENT\n\n\nTO:      Joy D. Covey\n\n         We are pleased to inform you that you have been selected by the Board\nof Directors of Amazon.com, Inc., a Delaware corporation (the 'Company'), to\nreceive a stock option (the 'Option') for the purchase of 160,000 shares (the\n'Option Shares') of the Company's Common Stock at an exercise price of $1.50 per\nshare.\n\n         The terms of the Option are as set forth in this Agreement and in the\nCompany's Amended and Restated 1994 Stock Option Plan (the 'Plan'), a copy of\nwhich is attached. This Agreement is limited by and subject to the express terms\nand provisions of the Plan. Unless otherwise provided in this Agreement, defined\nterms will have the meaning given to such terms in the Plan.\n\n         1. DATE OF GRANT: The Option is granted effective as of December 20,\n1996.\n\n         2. STATUS OF OPTION: The Option is intended to be an incentive stock\noption as described in Section 422 of the Internal Revenue Code of 1986, as\namended (the 'Code'), but the Company does not represent or warrant that the\nOption qualifies as such.\n\n         3. TERM: The term of the Option is ten years from the date of grant,\nunless sooner terminated as a result of termination of your employment or\nservices with the Company or upon a Terminating Event, as described in the Plan\nand Section 12 of this Agreement.\n\n         4. VESTING: The Option shall vest according to the following schedule:\n\n\n\n            DATE ON AND AFTER WHICH OPTION IS                          PORTION OF TOTAL OPTION WHICH IS\n                         VESTED                                                     VESTED\n                         ------                                                     ------\n\n                    DECEMBER 9, 1997                                                  20%\n                    DECEMBER 9, 1998                                                  40%\n              Every three months thereafter                                    An additional 5%\n\n\nAny Option Shares that have not yet vested according to the schedule set forth\nabove shall be considered 'Unvested Shares.' Upon cessation of your employment\nor services on behalf of the Company for any reason, no further vesting of the\nOption will occur and any unvested portion of the Option will terminate.\n\n         4.1 ACCELERATION OF VESTING: In the event of a 'Transfer of Control'\nthe vesting schedule set forth above shall accelerate automatically by one year\nfor each remaining unvested installment of the Option. Such acceleration shall\nnot be contingent upon any change in employment status, role, or responsibility\nlevel occurring in connection with such an event. For this purpose, a Transfer\nof Control shall be deemed to have occurred in the event of any of the following\nevents with respect to the Company: (i) the direct or indirect sale or exchange\nby the stockholders of the Company of all or substantially all of the stock of\nthe Company where the stockholders of the Company before such sale or exchange\ndo not retain, directly or indirectly, at least a majority of the beneficial\ninterest in the voting stock of the Company after such sale or exchange; (ii) a\nmerger in which the Company is not the surviving corporation; (iii) a merger in\nwhich the Company is the surviving corporation where the stockholders of the\nCompany before such merger do not retain, directly or indirectly, at least a\nmajority of the beneficial interest in the voting stock of the Company after\nsuch merger; (iv) the sale, exchange, or transfer of all or substantially all of\nthe Company's assets; or (v) a liquidation or dissolution of the Company.\n\n         5. RIGHT TO EXERCISE: The Option shall be immediately exercisable for\nany or all of the Option Shares, subject to your agreement that any unvested\nshares of stock purchased upon exercise are subject to the Company's repurchase\nrights set forth in paragraph 6 below. Notwithstanding the foregoing, except as\nprovided in paragraph 15 below, the aggregate fair market value of the stock\nwith respect to which you may exercise the Option for the first time during any\ncalendar year, together with any other incentive stock options which are\nexercisable by you for the first time under any Company plan during any such\nyear, as determined in accordance with Section 422 of the Code, shall not exceed\n$100,000 (the '$100,000 Exercise Limitation'). To the extent the exercisability\nof the Option is deferred by reason of the $100,000 Exercise Limitation, the\ndeferred portion of the Option will first become exercisable in the first\ncalendar year or years thereafter in which the $100,000 Exercise Limitation\nwould not be contravened.\n\n         6. COMPANY REPURCHASE RIGHT:\n\n                  (a) By accepting the Option, you hereby grant to the Company\nan option (the 'Repurchase Option') to repurchase any Option Shares that remain\nUnvested Shares on the earlier of (i) the date you cease to be employed by or\nprovide services to the Company (including a parent or subsidiary of the\nCompany) for any reason whatsoever, including, without limitation, termination\nwith or without cause, death or permanent disability and (ii) the date you or\nyour legal representative attempts to sell, exchange, transfer, pledge or\notherwise dispose of any Unvested Shares (other than pursuant to a Terminating\nEvent, as that term is defined in Section 10.2 of the Plan).\n\n                  (b) The Company may exercise the Repurchase Option by giving\nyou written notice within 60 days after (i) such termination of employment or\nservices (or\n\n                                      -2-\n\nexercise of the Option, if later) or (ii) the Company has received notice of the\nattempted disposition. If the Company fails to give notice within such 60-day\nperiod, the Repurchase Option shall terminate, unless you and the Company have\nextended the time for the exercise of the Repurchase Option. The Repurchase\nOption must be exercised, if at all, for all the Unvested Shares, except as you\nand the Company otherwise agree.\n\n                  (c) Payment to you by the Company shall be made in cash within\n30 days after the date of the mailing of the written notice of exercise of the\nRepurchase Option. For purposes of the foregoing, cancellation of any\nindebtedness you owe to the Company shall be treated as payment to you in cash\nto the extent of the unpaid principal and any accrued interest canceled. The\npurchase price per share being repurchased by the Company shall be an amount\nequal to your original cost per share, as adjusted as provided in the Plan. You\nshall deliver the shares of stock being repurchased to the Company at the same\ntime as the Company delivers the purchase price to you.\n\n                  (d) You hereby authorize and direct the Company's Chief\nFinancial Officer or transfer agent to transfer to the Company any Unvested\nShares as to which the Repurchase Option is exercised.\n\n                  (e) The Company shall have the right to assign the Repurchase\nOption at any time, whether or not the Repurchase Option is then exercisable, to\none or more persons as may be selected by the Company.\n\n                  (f) The Repurchase Option shall remain in full force and\neffect in the event of a Terminating Event, provided that if the Administrative\nCommittee determines that an assumption or substitution of options outstanding\nunder the Plan will not be made in connection with the Terminating Event and the\nvesting of such options is therefore accelerated pursuant to Section 10.2 of the\nPlan, the Repurchase Option shall terminate and all Unvested Shares shall\nimmediately vest in full.\n\n                  (g) Nothing in this Agreement shall affect in any manner\nwhatsoever the right or power of the Company, or a parent or subsidiary of the\nCompany, to terminate your employment or services on behalf of the Company, for\nany reason, with or without cause.\n\n                  (h) Subject to the terms and conditions of this Agreement, the\nUnvested Shares may not be sold, transferred, pledged, encumbered or disposed of\nunder any circumstances, whether voluntarily, by operation of law, by gift or by\nthe applicable laws of descent and distribution. Any attempted transfer of any\nUnvested Shares in conflict with this Agreement shall be null and void.\n\n         7. MARKET STANDOFF: By accepting the Option, you hereby agree that, in\nconnection with any underwritten public offering by the Company of its equity\nsecurities pursuant to an effective registration statement filed under the\nfederal Securities Act of\n\n                                      -3-\n\n1933, as amended (the 'Securities Act'), including the Company's initial public\noffering, you shall not sell or make any short sale of, loan, hypothecate,\npledge, grant any option for the purchase of, or otherwise dispose of or\ntransfer for value or otherwise agree to engage in any of the foregoing\ntransactions with respect to, any Option Shares without the prior written\nconsent of the Company or its underwriters. Such limitations (the 'Market\nStandoff') shall be in effect only if and to the extent and for such period of\ntime as may be requested by the Company or such underwriters and agreed to by\nthe Company's officers and directors; provided, however, that in no event shall\nthe weighted average number of days in such period exceed 180 days. The Market\nStandoff shall in all events terminate two years after the effective date of the\nCompany's initial public offering. In order to enforce the Market Standoff, the\nCompany may impose stop-transfer instructions with respect to the Option Shares\nuntil the end of the applicable standoff period.\n\n         8. SHAREHOLDERS AGREEMENT: By accepting the Option you hereby agree to\nexecute, on the date you exercise the Option, a shareholders agreement (the\n'Shareholders Agreement') in the form in use at such time (unless at such time\nthe Company's Common Stock is publicly traded or the Shareholders Agreement has\notherwise terminated), whereby under certain circumstances you grant the Company\nand certain of its other shareholders a right of first offer to purchase the\nOption Shares and agree not to dispose of the Option Shares until after December\n31, 1999 without the Company's prior consent.\n\n         9. CAPITAL ADJUSTMENTS: In the event of any stock dividend, stock split\nor consolidation of shares or any like capital adjustment of any of the\noutstanding securities of the Company, any and all new, substituted or\nadditional securities or other property to which you are entitled by reason of\nownership of the Option Shares shall be immediately subject to this Agreement\nand shall be included in the definition of the Option Shares for all purposes\nand shall be subject to the Repurchase Option, the Shareholders Agreement, the\nMarket Standoff and other terms of this Agreement. While the aggregate\nrepurchase price for Unvested Shares shall remain the same after each such\nevent, the repurchase price per Unvested Share upon execution of the Repurchase\nOption shall be appropriately adjusted.\n\n         10. METHOD OF EXERCISE: The Option may be exercised by written notice\nto the Company, in form and substance satisfactory to the Company, which must\nstate the election to exercise the Option, the number of shares of stock for\nwhich the Option is being exercised and such other representations and\nagreements as to your investment intent with respect to such shares as may be\nrequired pursuant to the provisions of this Agreement and the Plan. The written\nnotice must be accompanied by full payment of the exercise price for the number\nof shares of stock being purchased.\n\n                                      -4-\n\n         11. FORM OF PAYMENT: The Option exercise price may be paid, in whole or\nin part, (i) in cash, by check, or by cash equivalent, or (ii) by any other form\nof payment permitted by the Plan Administrator.\n\n         12. EARLY TERMINATION: The Option will terminate in its entirety three\nmonths after cessation of employment or services on behalf of the Company or its\naffiliated companies, unless cessation is due to (i) disability, in which case\nthe Option shall terminate one year after cessation of employment or services on\nbehalf of the Company, or (ii) death, in which case the Option will terminate\none year after death.\n\n         13. LIMITED TRANSFERABILITY: The Option is not transferable except by\nwill or by the applicable laws of descent and distribution. During your lifetime\nonly you can exercise the Option. The Plan provides for exercise of the Option\nby the personal representative of your estate or the beneficiary thereof\nfollowing your death.\n\n         14. NOTICE OF DISQUALIFYING DISPOSITION: To obtain certain tax benefits\nafforded to incentive stock options under Section 422 of the Code, an optionee\nmust hold the shares issued upon the exercise of an incentive stock option for\ntwo years after the date of grant of the option and one year from the date of\nexercise. An optionee may be subject to the alternative minimum tax at the time\nof exercise. Tax advice should be obtained when exercising any option and prior\nto the disposition of the shares issued upon the exercise of any option. By\naccepting the Option, you hereby agree to promptly notify the Company's Chief\nFinancial Officer if you dispose of any of the Option Shares within one year\nfrom the date you exercise all or part of the Option or within two years of the\ndate of grant of the Option.\n\n         15. EXCEPTION TO $100,000 EXERCISE LIMITATION: Notwithstanding any\nother provision of this Agreement, if compliance with the $100,000 Exercise\nLimitation as set forth in paragraph 5 above will result in the exercisability\nof any vested shares being delayed more than 30 days beyond the vesting date for\nsuch shares, the Option shall be deemed to be two options. The first Option\nshall be for the maximum number of shares subject to the Option that can comply\nwith the $100,000 Exercise Limitation without causing the Option to be\nunexercisable as to vested shares. The second Option, which shall not be treated\nas an incentive stock option, shall be for the balance of the shares subject to\nthe Option and shall be exercisable on the same terms and at the same time as\nset forth in this Agreement; provided, however, that (i) the second sentence of\nparagraph 4 above shall not apply to the second option and (ii) such shares\nshall become vested shares on the same date or dates as set forth in this\nAgreement without regard to this paragraph. Unless you specifically elect to the\ncontrary in your written notice of exercise, the first option shall be deemed to\nbe exercised first to the maximum possible extent and then the second option\nshall be deemed to be exercised.\n\n                                      -5-\n\n         16. REGISTRATION: YOUR PARTICULAR ATTENTION IS DIRECTED TO SECTION 13\nOF THE PLAN, WHICH DESCRIBES CERTAIN IMPORTANT CONDITIONS RELATING TO FEDERAL\nAND STATE SECURITIES LAWS THAT MUST BE SATISFIED BEFORE THE OPTION CAN BE\nEXERCISED AND BEFORE THE COMPANY CAN ISSUE ANY SHARES TO YOU. By accepting the\nOption, you hereby acknowledge that you have read Section 13 of the Plan and\nthat you are hereby making the representations and acknowledgments to the\nCompany, and entering into the indemnity and other obligations to the Company,\ntherein specified.\n\n         17. BINDING EFFECT: This Agreement shall inure to the benefit of the\nsuccessors and assigns of the Company and be binding upon you and your heirs,\nexecutors, administrators, successors and assigns.\n\n         Please execute the following Acceptance and Acknowledgment and return\nit to the undersigned.\n\n                                     Very truly yours,\n\n                                     AMAZON.COM, INC.\n\n\n                                     By     Jeff P. Bezos\n                                        ---------------------------------------\n                                        Its\n                                           ------------------------------------\n\n                                      -6-\n\n\n\n                          ACCEPTANCE AND ACKNOWLEDGMENT\n\n\n         I, a resident of the State of Washington, accept the incentive stock\noption described in this Agreement and in Amazon.com, Inc.'s Amended and\nRestated 1994 Stock Option Plan, and acknowledge receipt of a copy of this\nAgreement and a copy of the Plan. I have read and understand the Plan, including\nthe provisions of Section 13, and I hereby make the representations, warranties\nand acknowledgments, and undertake the indemnity and other obligations, therein\nspecified. As a condition to my exercise of this stock option, I agree to\nexecute the Company's Shareholders Agreement and Stock Purchase Agreement in\neffect at such time.\n\nDated as of:  Dec 23, 1996\n            ----------------\n\n     XXX-XX-XXXX                                       Joy Covey\n-----------------------------                  --------------------------------\nTaxpayer I.D. Number                                  ------------------\n\n                                            Address 2432 E. Calhoun\n                                                   ----------------------------\n                                                  Seattle, WA  98112\n                                            -----------------------------------\n\n                                            -----------------------------------\n\n\n         By his or her signature below, the spouse of the Optionee, if such\nOptionee is legally married as of the date of his or her execution of this\nAgreement, acknowledges that he or she has read this Agreement and the Plan and\nis familiar with the terms and provisions thereof, and agrees to be bound by all\nthe terms and conditions of this Agreement and the Plan.\n\n         Dated:\n                ------------------\n\n\n                                            -----------------------------------\n                                            Spouse's Signature\n\n                                            -----------------------------------\n                                            Printed Name\n\n         By his or her signature below, the Optionee represents that he or she\nis not legally married as of the date of execution of this Agreement.\n\n         Dated:    Jan 5, 1997\n                ------------------\n\n                                              Joy Covey\n                                       ----------------------------------------\n                                       Optionee's Signature\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6645],"corporate_contracts_industries":[9492],"corporate_contracts_types":[9539,9544],"class_list":["post-40018","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-amazoncom-inc","corporate_contracts_industries-retail__books","corporate_contracts_types-compensation","corporate_contracts_types-compensation__employment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/40018","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=40018"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=40018"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=40018"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=40018"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}