AMZN_2021_2022_train_js.txt

PART I

Item 1. Business  

This Annual Report on Form 10-K and the documents incorporated herein by
reference contain forward-looking statements based on expectations, estimates,
and projections as of the date of this filing. Actual results and outcomes may
differ materially from those expressed in forward-looking statements. See Item
1A of Part I — “Risk Factors.” As used herein, “Amazon.com,” “we,” “our,” and
similar terms include Amazon.com, Inc. and its subsidiaries, unless the
context indicates otherwise.

General

We seek to be Earth’s most customer-centric company. We are guided by four
principles: customer obsession rather than competitor focus, passion for
invention, commitment to operational excellence, and long-term thinking. In
each of our segments, we serve our primary customer sets, consisting of
consumers, sellers, developers, enterprises, content creators, advertisers,
and employees.

We have organized our operations into three segments: North America,
International, and Amazon Web Services (“AWS”). These segments reflect the way
the Company evaluates its business performance and manages its operations.
Information on our net sales is contained in Item 8 of Part II, “Financial
Statements and Supplementary Data — Note 10 — Segment Information.”

Consumers

We serve consumers through our online and physical stores and focus on
selection, price, and convenience. We design our stores to enable hundreds of
millions of unique products to be sold by us and by third parties across
dozens of product categories. Customers access our offerings through our
websites, mobile apps, Alexa, devices, streaming, and physically visiting our
stores. We also manufacture and sell electronic devices, including Kindle,
Fire tablet, Fire TV, Echo, and Ring, and we develop and produce media
content. We seek to offer our customers low prices, fast and free delivery,
easy-to-use functionality, and timely customer service. In addition, we offer
subscription services such as Amazon Prime, a membership program that includes
fast, free shipping on millions of items, access to award-winning movies and
series, and other benefits.

We fulfill customer orders in a number of ways, including through: North
America and International fulfillment networks that we operate; co-sourced and
outsourced arrangements in certain countries; digital delivery; and through
our physical stores. We operate customer service centers globally, which are
supplemented by co-sourced arrangements. See Item 2 of Part I, “Properties.”

Sellers

We offer programs that enable sellers to grow their businesses, sell their
products in our stores, and fulfill orders through us. We are not the seller
of record in these transactions. We earn fixed fees, a percentage of sales,
per-unit activity fees, interest, or some combination thereof, for our seller
programs.

Developers and Enterprises

We serve developers and enterprises of all sizes, including start-ups,
government agencies, and academic institutions, through AWS, which offers a
broad set of on-demand technology services, including compute, storage,
database, analytics, and machine learning, and other services.

Content Creators

We serve authors and independent publishers with Kindle Direct Publishing, an
online service that lets independent authors and publishers choose a royalty
option and make their books available in the Kindle Store, along with Amazon’s
own publishing arm, Amazon Publishing. We also offer programs that allow
authors, musicians, filmmakers, Twitch streamers, skill and app developers,
and others to publish and sell content.

Advertisers

We provide advertising services to sellers, vendors, publishers, authors, and
others, through programs such as sponsored ads, display, and video
advertising.

Competition

Our businesses encompass a large variety of product types, service offerings,
and delivery channels. The worldwide marketplace in which we compete is
evolving rapidly and intensely competitive, and we face a broad array of
competitors from many different industry sectors around the world. Our current
and potential competitors include: (1) physical, e-commerce, and omnichannel
retailers, publishers, vendors, distributors, manufacturers, and producers of
the products we offer and sell to consumers and businesses; (2) publishers,
producers, and distributors of physical, digital, and interactive media of all
types and all distribution channels; (3) web search engines, comparison
shopping websites, social networks, web portals, and other online and app-
based means of discovering, using, or acquiring goods and services, either
directly or in collaboration with other retailers; (4) companies that provide
e-commerce services, including website development and hosting, omnichannel
sales, inventory and supply chain management, advertising, fulfillment,
customer service, and payment processing; (5) companies that provide
fulfillment and logistics services for themselves or for third parties,
whether online or offline; (6) companies that provide information technology
services or products, including on-premises or cloud-based infrastructure and
other services; (7) companies that design, manufacture, market, or sell
consumer electronics, telecommunication, and electronic devices; (8) companies
that sell grocery products online and in physical stores; and (9) companies
that provide advertising services, whether in digital or other formats. We
believe that the principal competitive factors in our retail businesses
include selection, price, and convenience, including fast and reliable
fulfillment. Additional competitive factors for our seller and enterprise
services include the quality, speed, and reliability of our services and
tools, as well as customers’ ability and willingness to change business
practices. Some of our current and potential competitors have greater
resources, longer histories, more customers, greater brand recognition, and
greater control over inputs critical to our various businesses. They may
secure better terms from suppliers, adopt more aggressive pricing, pursue
restrictive distribution agreements that restrict our access to supply, direct
consumers to their own offerings instead of ours, lock-in potential customers
with restrictive terms, and devote more resources to technology,
infrastructure, fulfillment, and marketing. The Internet facilitates
competitive entry and comparison shopping, which enhances the ability of new,
smaller, or lesser-known businesses to compete against us. Each of our
businesses is also subject to rapid change and the development of new business
models and the entry of new and well-funded competitors. Other companies also
may enter into business combinations or alliances that strengthen their
competitive positions.

Intellectual Property

We regard our trademarks, service marks, copyrights, patents, domain names,
trade dress, trade secrets, proprietary technologies, and similar intellectual
property as critical to our success, and we rely on trademark, copyright, and
patent law, trade-secret protection, and confidentiality and/or license
agreements with our employees, customers, partners, and others to protect our
proprietary rights. We have registered, or applied for the registration of, a
number of U.S. and international domain names, trademarks, service marks, and
copyrights. Additionally, we have filed U.S. and international patent
applications covering certain of our proprietary technology.

Seasonality

Our business is affected by seasonality, which historically has resulted in
higher sales volume during our fourth quarter, which ends December 31.

Human Capital

Our employees are critical to our mission of being Earth’s most customer-
centric company. As of December 31, 2021, we employed approximately 1,608,000
full-time and part-time employees. Additionally, we use independent
contractors and temporary personnel to supplement our workforce. Competition
for qualified personnel is intense, particularly for software engineers,
computer scientists, and other technical staff, and constrained labor markets
have increased competition for personnel across other parts of our business.

As we strive to be Earth’s best employer, we focus on investment and
innovation, inclusion and diversity, safety, and engagement to hire and
develop the best talent. We rely on numerous and evolving initiatives to
implement these objectives and invent mechanisms for talent development,
including competitive pay and benefits, flexible work arrangements, and skills
training and educational programs such as Amazon Career Choice (funded
education for hourly employees) and the Amazon Technical Academy (software
development engineer training). We also provide mentorship and support
resources to our employees, and have deployed numerous programs that advance
employee engagement, communication, and feedback.

Available Information

Our investor relations website is amazon.com/ir and we encourage investors to
use it as a way of easily finding information about us. We promptly make
available on this website, free of charge, the reports that we file or furnish
with the Securities and Exchange Commission (“SEC”), corporate governance
information (including our Code of Business Conduct and Ethics), and select
press releases.

Executive Officers and Directors

The following tables set forth certain information regarding our Executive
Officers and Directors as of January 26, 2022:

Information About Our Executive Officers

Name  Age  Position

Jeffrey P. Bezos  58  Executive Chair

Andrew R. Jassy  54  President and Chief Executive Officer

David H. Clark  49  CEO Worldwide Consumer

Brian T. Olsavsky  58  Senior Vice President and Chief Financial Officer

Shelley L. Reynolds  57  Vice President, Worldwide Controller, and
Principal Accounting Officer

Adam N. Selipsky  55  CEO Amazon Web Services

David A. Zapolsky  58  Senior Vice President, General Counsel, and
Secretary  

Jeffrey P. Bezos. Mr. Bezos founded Amazon.com in 1994 and has served as
Executive Chair since July 2021. He has served as Chair of the Board since
1994 and served as Chief Executive Officer from May 1996 until July 2021, and
as President from 1994 until June 1999 and again from October 2000 to July

Andrew R. Jassy. Mr. Jassy has served as President and Chief Executive Officer
since July 2021, CEO Amazon Web Services from April 2016 until July 2021, and
Senior Vice President, Amazon Web Services, from April 2006 until April 2016.

David H. Clark. Mr. Clark has served as CEO Worldwide Consumer since January
2021, and Senior Vice President, Worldwide Operations, from May 2014 until
January 2021.

Brian T. Olsavsky. Mr. Olsavsky has served as Senior Vice President and Chief
Financial Officer since June 2015, Vice President, Finance for the Global
Consumer Business from December 2011 to June 2015, and numerous financial
leadership roles across Amazon with global responsibility since April 2002.

Shelley L. Reynolds. Ms. Reynolds has served as Vice President, Worldwide
Controller, and Principal Accounting Officer since April 2007.

Adam N. Selipsky. Mr. Selipsky has served as CEO Amazon Web Services since
July 2021, Senior Vice President, Amazon Web Services from May 2021 until July
2021, President and CEO of Tableau Software from September 2016 until May
2021, and Vice President, Marketing, Sales and Support of Amazon Web Services
from May 2005 to September 2016.

David A. Zapolsky. Mr. Zapolsky has served as Senior Vice President, General
Counsel, and Secretary since May 2014, Vice President, General Counsel, and
Secretary from September 2012 to May 2014, and as Vice President and Associate
General Counsel for Litigation and Regulatory matters from April 2002 until
September 2012.

Board of Directors

Name  Age  Position

Jeffrey P. Bezos  58  Executive Chair

Andrew R. Jassy  54  President and Chief Executive Officer

Keith B. Alexander  70  Co-CEO, President, and Chair of IronNet
Cybersecurity, Inc.

Edith W. Cooper  60  Former Executive Vice President, Goldman Sachs Group,
Inc.

Jamie S. Gorelick  71  Partner, Wilmer Cutler Pickering Hale and Dorr LLP

Daniel P. Huttenlocher  63  Dean, MIT Schwarzman College of Computing

Judith A. McGrath  69  Former Chair and CEO, MTV Networks

Indra K. Nooyi  66  Former Chief Executive Officer, PepsiCo, Inc.

Jonathan J. Rubinstein  65  Former co-CEO, Bridgewater Associates, LP

Patricia Q. Stonesifer  65  Former President and Chief Executive Officer,
Martha’s Table

Wendell P. Weeks  62  Chief Executive Officer, Corning Incorporated  

Item 1A. Risk Factors  

Please carefully consider the following discussion of significant factors,
events, and uncertainties that make an investment in our securities risky. The
events and consequences discussed in these risk factors could, in
circumstances we may or may not be able to accurately predict, recognize, or
control, have a material adverse effect on our business, growth, reputation,
prospects, financial condition, operating results (including components of our
financial results), cash flows, liquidity, and stock price. These risk factors
do not identify all risks that we face; our operations could also be affected
by factors, events, or uncertainties that are not presently known to us or
that we currently do not consider to present significant risks to our
operations. In addition to the effects of the COVID-19 pandemic and resulting
global disruptions on our business and operations discussed in Item 7 of Part
II, “Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” and in the risk factors below, the global economic climate and
additional or unforeseen circumstances, developments, or events may give rise
to or amplify many of the risks discussed below.

Business and Industry Risks

We Face Intense Competition

Our businesses are rapidly evolving and intensely competitive, and we have
many competitors across geographies, including cross-border competition, and
in different industries, including physical, e-commerce, and omnichannel
retail, e-commerce services, web and infrastructure computing services,
electronic devices, digital content, advertising, grocery, and transportation
and logistics services. Some of our current and potential competitors have
greater resources, longer histories, more customers, and/or greater brand
recognition, particularly with our newly-launched products and services and in
our newer geographic regions. They may secure better terms from vendors, adopt
more aggressive pricing, and devote more resources to technology,
infrastructure, fulfillment, and marketing.

Competition continues to intensify, including with the development of new
business models and the entry of new and well-funded competitors, and as our
competitors enter into business combinations or alliances and established
companies in other market segments expand to become competitive with our
business. In addition, new and enhanced technologies, including search, web
and infrastructure computing services, digital content, and electronic devices
continue to increase our competition. The Internet facilitates competitive
entry and comparison shopping, which enhances the ability of new, smaller, or
lesser known businesses to compete against us. As a result of competition, our
product and service offerings may not be successful, we may fail to gain or
may lose business, and we may be required to increase our spending or lower
prices, any of which could materially reduce our sales and profits.

Our Expansion into New Products, Services, Technologies, and Geographic
Regions Subjects Us to Additional Risks

We may have limited or no experience in our newer market segments, and our
customers may not adopt our product or service offerings. These offerings,
which can present new and difficult technology challenges, may subject us to
claims if customers of these offerings experience service disruptions or
failures or other quality issues. In addition, profitability, if any, in our
newer activities may not meet our expectations, and we may not be successful
enough in these newer activities to recoup our investments in them. Failure to
realize the benefits of amounts we invest in new technologies, products, or
services could result in the value of those investments being written down or
written off. In addition, our sustainability initiatives may be unsuccessful
for a variety of reasons, including if we are unable to realize the expected
benefits of new technologies or if we do not successfully plan or execute new
strategies, which could harm our business or damage our reputation.

Our International Operations Expose Us to a Number of Risks

Our international activities are significant to our revenues and profits, and
we plan to further expand internationally. In certain international market
segments, we have relatively little operating experience and may not benefit
from any first-to-market advantages or otherwise succeed. It is costly to
establish, develop, and maintain international operations and stores, and
promote our brand internationally. Our international operations may not become
profitable on a sustained basis.

In addition to risks described elsewhere in this section, our international
sales and operations are subject to a number of risks, including:

•local economic and political conditions;

•government regulation (such as regulation of our product and service
offerings and of competition); restrictive governmental actions (such as trade
protection measures, including export duties and quotas and custom duties and
tariffs); nationalization; and restrictions on foreign ownership;

•restrictions on sales or distribution of certain products or services and
uncertainty regarding liability for products, services, and content, including
uncertainty as a result of less Internet-friendly legal systems, local laws,
lack of legal

precedent, and varying rules, regulations, and practices regarding the
physical and digital distribution of media products and enforcement of
intellectual property rights;

•business licensing or certification requirements, such as for imports,
exports, web services, and electronic devices;

•limitations on the repatriation and investment of funds and foreign currency
exchange restrictions;

•limited fulfillment and technology infrastructure;

•shorter payable and longer receivable cycles and the resultant negative
impact on cash flow;

•laws and regulations regarding privacy, data use, data protection, data
security, network security, consumer protection, payments, advertising, and
restrictions on pricing or discounts;

•lower levels of use of the Internet;

•lower levels of consumer spending and fewer opportunities for growth compared
to the U.S.;

•lower levels of credit card usage and increased payment risk;

•difficulty in staffing, developing, and managing foreign operations as a
result of distance, language, and cultural differences;

•different employee/employer relationships and the existence of works councils
and labor unions;

•compliance with the U.S. Foreign Corrupt Practices Act and other applicable
U.S. and foreign laws prohibiting corrupt payments to government officials and
other third parties;

•laws and policies of the U.S. and other jurisdictions affecting trade,
foreign investment, loans, and taxes; and

•geopolitical events, including war and terrorism.

As international physical, e-commerce, and omnichannel retail, cloud services,
and other services grow, competition will intensify, including through
adoption of evolving business models. Local companies may have a substantial
competitive advantage because of their greater understanding of, and focus on,
the local customer, as well as their more established local brand names. The
inability to hire, train, retain, and manage sufficient required personnel may
limit our international growth.

The People’s Republic of China (“PRC”) and India regulate Amazon’s and its
affiliates’ businesses and operations in country through regulations and
license requirements that may restrict (i) foreign investment in and operation
of the Internet, IT infrastructure, data centers, retail, delivery, and other
sectors, (ii) Internet content, and (iii) the sale of media and other products
and services. For example, in order to meet local ownership, regulatory
licensing, and cybersecurity requirements, we provide certain technology
services in China through contractual relationships with third parties that
hold PRC licenses to provide services. In India, the government restricts the
ownership or control of Indian companies by foreign entities involved in
online multi-brand retail trading activities. For www.amazon.in, we provide
certain marketing tools and logistics services to third-party sellers to
enable them to sell online and deliver to customers, and we hold indirect
minority interests in entities that are third-party sellers on the
www.amazon.in marketplace. Although we believe these structures and activities
comply with existing laws, they involve unique risks, and the PRC and India
may from time to time consider and implement additional changes in their
regulatory, licensing, or other requirements that could impact these
structures and activities. There are substantial uncertainties regarding the
interpretation of PRC and Indian laws and regulations, and it is possible that
these governments will ultimately take a view contrary to ours. In addition,
our Chinese and Indian businesses and operations may be unable to continue to
operate if we or our affiliates are unable to access sufficient funding or, in
China, enforce contractual relationships we or our affiliates have in place.
Violation of any existing or future PRC, Indian, or other laws or regulations
or changes in the interpretations of those laws and regulations could result
in our businesses in those countries being subject to fines and other
financial penalties, having licenses revoked, or being forced to restructure
our operations or shut down entirely.

The Variability in Our Retail Business Places Increased Strain on Our
Operations

Demand for our products and services can fluctuate significantly for many
reasons, including as a result of seasonality, promotions, product launches,
or unforeseeable events, such as in response to natural or human-caused
disasters (including public health crises) or extreme weather (including as a
result of climate change), or geopolitical events. For example, we expect a
disproportionate amount of our retail sales to occur during our fourth
quarter. Our failure to stock or restock popular products in sufficient
amounts such that we fail to meet customer demand could significantly affect
our revenue and our future growth. When we overstock products, we may be
required to take significant inventory markdowns or write-offs and incur
commitment costs, which could materially reduce profitability. We regularly
experience increases in our net shipping cost due to complimentary upgrades,
split-shipments, and additional long-zone shipments necessary to ensure timely
delivery for the holiday season. If too many customers access our websites
within a short period of time due to increased demand, we may experience
system interruptions that make our websites unavailable or prevent us from
efficiently fulfilling orders, which may reduce the volume of goods we offer
or sell and the attractiveness of our products and services. In addition, we
may be unable

to adequately staff our fulfillment network and customer service centers
during these peak periods and delivery and other fulfillment companies and
customer service co-sourcers may be unable to meet the seasonal demand. Risks
described elsewhere in this Item 1A relating to fulfillment network
optimization and inventory are magnified during periods of high demand.

We generally have payment terms with our retail vendors that extend beyond the
amount of time necessary to collect proceeds from our consumer customers. As a
result of holiday sales, as of December 31 of each year, our cash, cash
equivalents, and marketable securities balances typically reach their highest
level (other than as a result of cash flows provided by or used in investing
and financing activities). This operating cycle results in a corresponding
increase in accounts payable as of December 31. Our accounts payable balance
generally declines during the first three months of the year, resulting in a
corresponding decline in our cash, cash equivalents, and marketable securities
balances.

We Are Impacted by Fraudulent or Unlawful Activities of Sellers

The law relating to the liability of online service providers is currently
unsettled. In addition, governmental agencies have in the past and could in
the future require changes in the way this business is conducted. Under our
seller programs, we maintain policies and processes designed to prevent
sellers from collecting payments, fraudulently or otherwise, when buyers never
receive the products they ordered or when the products received are materially
different from the sellers’ descriptions, and to prevent sellers in our stores
or through other stores from selling unlawful, counterfeit, pirated, or stolen
goods, selling goods in an unlawful or unethical manner, violating the
proprietary rights of others, or otherwise violating our policies. When these
policies and processes are circumvented or fail to operate sufficiently, it
can harm our business or damage our reputation and we could face civil or
criminal liability for unlawful activities by our sellers. Under our A2Z
Guarantee, we reimburse buyers for payments up to certain limits in these
situations, and as our third-party seller sales grow, the cost of this program
will increase and could negatively affect our operating results.

We Face Risks Related to Adequately Protecting Our Intellectual Property
Rights and Being Accused of Infringing Intellectual Property Rights of Third
Parties

We regard our trademarks, service marks, copyrights, patents, trade dress,
trade secrets, proprietary technology, and similar intellectual property as
critical to our success, and we rely on trademark, copyright, and patent law,
trade secret protection, and confidentiality and/or license agreements with
our employees, customers, and others to protect our proprietary rights.
Effective intellectual property protection is not available in every country
in which our products and services are made available. We also may not be able
to acquire or maintain appropriate domain names in all countries in which we
do business. Furthermore, regulations governing domain names may not protect
our trademarks and similar proprietary rights. We may be unable to prevent
third parties from acquiring domain names that are similar to, infringe upon,
or diminish the value of our trademarks and other proprietary rights.

We are not always able to discover or determine the extent of any unauthorized
use of our proprietary rights. Actions taken by third parties that license our
proprietary rights may materially diminish the value of our proprietary rights
or reputation. The protection of our intellectual property requires the
expenditure of significant financial and managerial resources. Moreover, the
steps we take to protect our intellectual property do not always adequately
protect our rights or prevent third parties from infringing or
misappropriating our proprietary rights. We also cannot be certain that others
will not independently develop or otherwise acquire equivalent or superior
technology or other intellectual property rights.

We have been subject to, and expect to continue to be subject to, claims and
legal proceedings regarding alleged infringement by us of the intellectual
property rights of third parties. Such claims, whether or not meritorious,
have in the past, and may in the future, result in the expenditure of
significant financial and managerial resources, injunctions against us, or
significant payments for damages, including to satisfy indemnification
obligations or to obtain licenses from third parties who allege that we have
infringed their rights. Such licenses may not be available on terms acceptable
to us or at all. These risks have been amplified by the increase in third
parties whose sole or primary business is to assert such claims.

Our digital content offerings depend in part on effective digital rights
management technology to control access to digital content. Breach or
malfunctioning of the digital rights management technology that we use could
subject us to claims, and content providers may be unwilling to include their
content in our service.

We Have Foreign Exchange Risk

The results of operations of, and certain of our intercompany balances
associated with, our international stores and product and service offerings
are exposed to foreign exchange rate fluctuations. Due to these fluctuations,
operating results may differ materially from expectations, and we may record
significant gains or losses on the remeasurement of intercompany balances. As
we have expanded our international operations, our exposure to exchange rate
fluctuations has increased. We also hold cash equivalents and/or marketable
securities in foreign currencies such as British Pounds, Canadian Dollars,
Euros, and

Japanese Yen. When the U.S. Dollar strengthens compared to these currencies,
cash equivalents, and marketable securities balances, when translated, may be
materially less than expected and vice versa.

Operating Risks

Our Expansion Places a Significant Strain on our Management, Operational,
Financial, and Other Resources

We are continuing to rapidly and significantly expand our global operations,
including increasing our product and service offerings and scaling our
infrastructure to support our retail and services businesses. The complexity
of the current scale of our business can place significant strain on our
management, personnel, operations, systems, technical performance, financial
resources, and internal financial control and reporting functions, and our
expansion increases these factors. Failure to manage growth effectively could
damage our reputation, limit our growth, and negatively affect our operating
results.

We Experience Significant Fluctuations in Our Operating Results and Growth
Rate

We are not always able to accurately forecast our growth rate. We base our
expense levels and investment plans on sales estimates. A significant portion
of our expenses and investments is fixed, and we are not always able to adjust
our spending quickly enough if our sales are less than expected.

Our revenue growth may not be sustainable, and our percentage growth rates may
decrease. Our revenue and operating profit growth depends on the continued
growth of demand for the products and services offered by us or our sellers,
and our business is affected by general economic and business conditions
worldwide. A softening of demand, whether caused by changes in customer
preferences or a weakening of the U.S. or global economies, may result in
decreased revenue or growth.

Our sales and operating results will also fluctuate for many other reasons,
including due to factors described elsewhere in this section and the
following:

•our ability to retain and increase sales to existing customers, attract new
customers, and satisfy our customers’ demands;

•our ability to retain and expand our network of sellers;

•our ability to offer products on favorable terms, manage inventory, and
fulfill orders;

•the introduction of competitive stores, websites, products, services, price
decreases, or improvements;

•changes in usage or adoption rates of the Internet, e-commerce, electronic
devices, and web services, including outside the U.S.;

•timing, effectiveness, and costs of expansion and upgrades of our systems and
infrastructure;

•the success of our geographic, service, and product line expansions;

•the extent to which we finance, and the terms of any such financing for, our
current operations and future growth;

•the outcomes of legal proceedings and claims, which may include significant
monetary damages or injunctive relief and could have a material adverse impact
on our operating results;

•variations in the mix of products and services we sell;

•variations in our level of merchandise and vendor returns;

•the extent to which we offer fast and free delivery, continue to reduce
prices worldwide, and provide additional benefits to our customers;

•factors affecting our reputation or brand image (including any actual or
perceived inability to achieve our goals or commitments, whether related to
sustainability, customers, employees, or other topics);

•the extent to which we invest in technology and content, fulfillment, and
other expense categories;

•increases in the prices of fuel and gasoline, energy products, commodities
like paper and packing supplies and hardware products, and technology
infrastructure products;

•constrained labor markets, which increase our payroll costs;

•the extent to which operators of the networks between our customers and our
stores successfully charge fees to grant our customers unimpaired and
unconstrained access to our online services;

•our ability to collect amounts owed to us when they become due;

•the extent to which new and existing technologies, or industry trends,
restrict online advertising or affect our ability to customize advertising or
otherwise tailor our product and service offerings;

•the extent to which use of our services is affected by spyware, viruses,
phishing and other spam emails, denial of service attacks, data theft,
computer intrusions, outages, and similar events; and

•disruptions from natural or human-caused disasters (including public health
crises) or extreme weather (including as a result of climate change),
geopolitical events and security issues (including terrorist attacks and armed
hostilities), labor or trade disputes, and similar events.

We Face Risks Related to Successfully Optimizing and Operating Our Fulfillment
Network and Data Centers

Failures to adequately predict customer demand or otherwise optimize and
operate our fulfillment network and data centers successfully from time to
time result in excess or insufficient fulfillment or data center capacity,
service interruptions, increased costs, and impairment charges, any of which
could materially harm our business. As we continue to add fulfillment and data
center capability or add new businesses with different requirements, our
fulfillment and data center networks become increasingly complex and operating
them becomes more challenging. There can be no assurance that we will be able
to operate our networks effectively.

In addition, failure to optimize inventory or staffing in our fulfillment
network increases our net shipping cost by requiring long-zone or partial
shipments. We and our co-sourcers may be unable to adequately staff our
fulfillment network and customer service centers. For example, productivity
across our fulfillment network currently is being affected by global supply
chain constraints and constrained labor markets, which increase payroll costs
and make it difficult to hire, train, and deploy a sufficient number of people
to operate our fulfillment network as efficiently as we would like. We are
also subject to labor union efforts to organize groups of our employees from
time to time and, if successful, those organizational efforts may decrease our
operational flexibility, which could adversely affect our fulfillment network
operating efficiency.

Under some of our commercial agreements, we maintain the inventory of other
companies, thereby increasing the complexity of tracking inventory and
operating our fulfillment network. Our failure to properly handle such
inventory or the inability of the other businesses on whose behalf we perform
inventory fulfillment services to accurately forecast product demand may
result in us being unable to secure sufficient storage space or to optimize
our fulfillment network or cause other unexpected costs and other harm to our
business and reputation.

We rely on a limited number of shipping companies to deliver inventory to us
and completed orders to our customers. An inability to negotiate acceptable
terms with these companies or performance problems, staffing limitations, or
other difficulties experienced by these companies or by our own transportation
systems, including as a result of labor market constraints and related costs,
could negatively impact our operating results and customer experience. In
addition, our ability to receive inbound inventory efficiently and ship
completed orders to customers also may be negatively affected by natural or
human-caused disasters (including public health crises) or extreme weather
(including as a result of climate change), geopolitical events and security
issues, labor or trade disputes, and similar events.

We Could Be Harmed by Data Loss or Other Security Breaches

Because we collect, process, store, and transmit large amounts of data,
including confidential, sensitive, proprietary, and business and personal
information, failure to prevent or mitigate data loss, theft, misuse, or other
security breaches or vulnerabilities affecting our or our vendors’ or
customers’ technology, products, and systems, could: expose us or our
customers to a risk of loss, disclosure, or misuse of such information;
adversely affect our operating results; result in litigation, liability, or
regulatory action (including under laws related to privacy, data use, data
protection, data security, network security, and consumer protection); deter
customers or sellers from using our stores, products, and services; and
otherwise harm our business and reputation. We use third-party technology and
systems for a variety of reasons, including, without limitation, encryption
and authentication technology, employee email, content delivery to customers,
back-office support, and other functions. Some of our systems have experienced
past security breaches, and, although they did not have a material adverse
effect on our operating results, there can be no assurance that future
incidents will not have material adverse effects on our operations or
financial results. Although we have developed systems and processes that are
designed to protect customer data and prevent such incidents, including
systems and processes designed to reduce the impact of a security breach at a
third-party vendor or customer, such measures cannot provide absolute security
and may fail to operate as intended or be circumvented.

We Face Risks Related to System Interruption and Lack of Redundancy

We experience occasional system interruptions and delays that make our
websites and services unavailable or slow to respond and prevent us from
efficiently accepting or fulfilling orders or providing services to customers
and third parties, which may reduce our net sales and the attractiveness of
our products and services. Steps we take to add software and hardware, upgrade
our systems and network infrastructure, and improve the stability and
efficiency of our systems may not be sufficient to avoid system interruptions
or delays that could adversely affect our operating results.

Our computer and communications systems and operations in the past have been,
or in the future could be, damaged or interrupted due to events such as
natural or human-caused disasters (including public health crises) or extreme
weather (including as a result of climate change), geopolitical events and
security issues (including terrorist attacks and armed hostilities), computer
viruses, physical or electronic break-ins, operational failures, and similar
events or disruptions. Any of these events could cause system interruption,
delays, and loss of critical data, and could prevent us from accepting and
fulfilling customer orders and providing services, which could make our
product and service offerings less attractive and subject us to liability. Our
systems are not fully redundant and our disaster recovery planning may not be
sufficient. In addition, our insurance may not provide sufficient coverage to
compensate for related losses. Any of these events could damage our reputation
and be expensive to remedy.

The Loss of Key Senior Management Personnel or the Failure to Hire and Retain
Highly Skilled and Other Key Personnel Could Negatively Affect Our Business

We depend on our senior management and other key personnel, including our
President and CEO. We do not have “key person” life insurance policies. We
also rely on other highly skilled personnel. Competition for qualified
personnel in the industries in which we operate, as well as senior management,
has historically been intense. For example, we experience significant
competition in the technology industry, particularly for software engineers,
computer scientists, and other technical staff. In addition, changes we make
to our current and future work environments may not meet the needs or
expectations of our employees or may be perceived as less favorable compared
to other companies’ policies, which could negatively impact our ability to
hire and retain qualified personnel. The loss of any of our executive officers
or other key employees, the failure to successfully transition key roles, or
the inability to hire, train, retain, and manage qualified personnel, could
harm our business.

Our Supplier Relationships Subject Us to a Number of Risks

We have significant suppliers, including content and technology licensors, and
in some cases, limited or single-sources of supply, that are important to our
sourcing, services, manufacturing, and any related ongoing servicing of
merchandise and content. We do not have long-term arrangements with most of
our suppliers to guarantee availability of merchandise, content, components,
or services, particular payment terms, or the extension of credit limits.
Decisions by our current suppliers to limit or stop selling or licensing
merchandise, content, components, or services to us on acceptable terms, or
delay delivery, including as a result of one or more supplier bankruptcies due
to poor economic conditions, as a result of natural or human-caused disasters
(including public health crises), or for other reasons, may result in our
being unable to procure alternatives from other suppliers in a timely and
efficient manner and on acceptable terms, or at all. In addition, violations
by our suppliers or other vendors of applicable laws, regulations, contractual
terms, intellectual property rights of others, or our Supply Chain Standards,
as well as products or practices regarded as unethical, unsafe, or hazardous,
could expose us to claims, damage our reputation, limit our growth, and
negatively affect our operating results.

Our Commercial Agreements, Strategic Alliances, and Other Business
Relationships Expose Us to Risks

We provide physical, e-commerce, and omnichannel retail, cloud services, and
other services to businesses through commercial agreements, strategic
alliances, and business relationships. Under these agreements, we provide web
services, technology, fulfillment, computing, digital storage, and other
services, as well as enable sellers to offer products or services through our
stores. These arrangements are complex and require substantial infrastructure
capacity, personnel, and other resource commitments, which may limit the
amount of business we can service. We may not be able to implement, maintain,
and develop the components of these commercial relationships, which may
include web services, fulfillment, customer service, inventory management, tax
collection, payment processing, hardware, content, and third-party software,
and engaging third parties to perform services. The amount of compensation we
receive under certain of our commercial agreements is partially dependent on
the volume of the other company’s sales. Therefore, when the other company’s
offerings are not successful, the compensation we receive may be lower than
expected or the agreement may be terminated. Moreover, we may not be able to
enter into additional or alternative commercial relationships and strategic
alliances on favorable terms. We also may be subject to claims from businesses
to which we provide these services if we are unsuccessful in implementing,
maintaining, or developing these services.

As our agreements terminate, we may be unable to renew or replace these
agreements on comparable terms, or at all. We may in the future enter into
amendments on less favorable terms or encounter parties that have difficulty
meeting their contractual obligations to us, which could adversely affect our
operating results.

Our present and future commercial agreements, strategic alliances, and
business relationships create additional risks such as:

•disruption of our ongoing business, including loss of management focus on
existing businesses;

•impairment of other relationships;

•variability in revenue and income from entering into, amending, or
terminating such agreements or relationships; and

•difficulty integrating under the commercial agreements.

Our Business Suffers When We Are Unsuccessful in Making, Integrating, and
Maintaining Acquisitions and Investments

We have acquired and invested in a number of companies, and we may in the
future acquire or invest in or enter into joint ventures with additional
companies. These transactions create risks such as:

•disruption of our ongoing business, including loss of management focus on
existing businesses;

•problems retaining key personnel;

•additional operating losses and expenses of the businesses we acquired or in
which we invested;

•the potential impairment of tangible and intangible assets and goodwill,
including as a result of acquisitions;

•the potential impairment of customer and other relationships of the company
we acquired or in which we invested or our own customers as a result of any
integration of operations;

•the difficulty of completing such transactions and achieving anticipated
benefits within expected timeframes, or at all;

•the difficulty of incorporating acquired operations, technology, and rights
into our offerings, and unanticipated expenses related to such integration;

•the difficulty of integrating a new company’s accounting, financial
reporting, management, information and data security, human resource, and
other administrative systems to permit effective management, and the lack of
control if such integration is delayed or not successfully implemented;

•losses we may incur as a result of declines in the value of an investment or
as a result of incorporating an investee’s financial performance into our
financial results;

•for investments in which an investee’s financial performance is incorporated
into our financial results, either in full or in part, or investments for
which we are required to file financial statements or provide financial
information, the dependence on the investee’s accounting, financial reporting,
and similar systems, controls, and processes;

•the difficulty of implementing at companies we acquire the controls,
procedures, and policies appropriate for a larger public company;

•the risks associated with businesses we acquire or invest in, which may
differ from or be more significant than the risks our other businesses face;

•potential unknown liabilities associated with a company we acquire or in
which we invest; and

•for foreign transactions, additional risks related to the integration of
operations across different cultures and languages, and the economic,
political, and regulatory risks associated with specific countries.

As a result of future acquisitions or mergers, we might need to issue
additional equity securities, spend our cash, or incur debt, contingent
liabilities, or amortization expenses related to intangible assets, any of
which could reduce our profitability and harm our business or only be
available on unfavorable terms, if at all. In addition, valuations supporting
our acquisitions and strategic investments could change rapidly. We could
determine that such valuations have experienced impairments or other-than-
temporary declines in fair value which could adversely impact our financial
results.

We Face Significant Inventory Risk

In addition to risks described elsewhere in this Item 1A relating to
fulfillment network and inventory optimization by us and third parties, we are
exposed to significant inventory risks that may adversely affect our operating
results as a result of seasonality, new product launches, rapid changes in
product cycles and pricing, defective merchandise, changes in consumer demand
and consumer spending patterns, changes in consumer tastes with respect to our
products, spoilage, and other factors. We endeavor to accurately predict these
trends and avoid overstocking or understocking products we manufacture and/or
sell. Demand for products, however, can change significantly between the time
inventory or components are ordered and the date of sale. In addition, when we
begin selling or manufacturing a new product, it may be difficult to establish
vendor relationships, determine appropriate product or component selection,
and accurately forecast demand. The acquisition of certain types of inventory
or components requires significant lead-time and prepayment and they may not
be returnable. We carry a broad selection and significant inventory levels of
certain products, such as consumer electronics, and at times we are unable to
sell products in sufficient quantities or to meet demand during the relevant
selling seasons. Any one of the inventory risk factors set forth above may
adversely affect our operating results.

We Are Subject to Payments-Related Risks

We accept payments using a variety of methods, including credit card, debit
card, credit accounts (including promotional financing), gift cards, direct
debit from a customer’s bank account, consumer invoicing, physical bank check,
and payment upon delivery. For existing and future payment options we offer to
our customers, we currently are subject to, and may become subject to
additional, regulations and compliance requirements (including obligations to
implement enhanced authentication processes that could result in significant
costs and reduce the ease of use of our payments products), as well as fraud.
For certain payment methods, including credit and debit cards, we pay
interchange and other fees, which may increase over time and raise our
operating costs and lower profitability. We rely on third parties to provide
certain Amazon-branded payment methods and payment processing services,
including the processing of credit cards, debit cards, electronic checks, and
promotional financing. In each case, it could disrupt our business if these
companies become unwilling or unable to provide these services to us. We also
offer co-branded credit card programs, which could adversely affect our
operating results if renewed on less favorable terms or terminated. We are
also subject to payment card association operating rules, including data
security rules, certification requirements, and rules governing electronic
funds transfers, which could change or be reinterpreted to make it difficult
or impossible for us to comply. Failure to comply with these rules or
requirements, as well as any breach, compromise, or failure to otherwise
detect or prevent fraudulent activity involving our data security systems,
could result in our being liable for card issuing banks’ costs, subject to
fines and higher transaction fees, and loss of our ability to accept credit
and debit card payments from our customers, process electronic funds
transfers, or facilitate other types of online payments, and our business and
operating results could be adversely affected.

In addition, we provide regulated services in certain jurisdictions because we
enable customers to keep account balances with us and transfer money to third
parties, and because we provide services to third parties to facilitate
payments on their behalf. Jurisdictions subject us to requirements for
licensing, regulatory inspection, bonding and capital maintenance, the use,
handling, and segregation of transferred funds, consumer disclosures,
maintaining or processing data, and authentication. We are also subject to or
voluntarily comply with a number of other laws and regulations relating to
payments, money laundering, international money transfers, privacy, data use,
data protection, data security, network security, consumer protection, and
electronic fund transfers. If we were found to be in violation of applicable
laws or regulations, we could be subject to additional requirements and civil
and criminal penalties, or forced to cease providing certain services.

We Have a Rapidly Evolving Business Model and Our Stock Price Is Highly
Volatile

We have a rapidly evolving business model. The trading price of our common
stock fluctuates significantly in response to, among other risks, the risks
described elsewhere in this Item 1A, as well as:

•changes in interest rates;

•conditions or trends in the Internet and the industry segments we operate in;

•quarterly variations in operating results;

•fluctuations in the stock market in general and market prices for Internet-
related companies in particular;

•changes in financial estimates by us or decisions to increase or decrease
future spending or investment levels;

•changes in financial estimates and recommendations by securities analysts;

•changes in our capital structure, including issuance of additional debt or
equity to the public;

•changes in the valuation methodology of, or performance by, other e-commerce
or technology companies; and

•transactions in our common stock by major investors and certain analyst
reports, news, and speculation.

Volatility in our stock price could adversely affect our business and
financing opportunities and force us to increase our cash compensation to
employees or grant larger stock awards than we have historically, which could
hurt our operating results or reduce the percentage ownership of our existing
stockholders, or both.

Legal and Regulatory Risks

Government Regulation Is Evolving and Unfavorable Changes Could Harm Our
Business

We are subject to general business regulations and laws, as well as
regulations and laws specifically governing the Internet, physical,
e-commerce, and omnichannel retail, digital content, web services, electronic
devices, advertising, artificial intelligence technologies and services, and
other products and services that we offer or sell. These regulations and laws
cover taxation, privacy, data use, data protection, data security, network
security, consumer protection, pricing, content, copyrights, distribution,
transportation, mobile communications, electronic device certification,
electronic waste, energy consumption, environmental regulation, electronic
contracts and other communications, competition, employment, trade and
protectionist measures, web services, the provision of online payment
services, registration, licensing, and information reporting

requirements, unencumbered Internet access to our services or access to our
facilities, the design and operation of websites, health, safety, and
sanitation standards, the characteristics, legality, and quality of products
and services, product labeling, the commercial operation of unmanned aircraft
systems, healthcare, and other matters. It is not clear how existing laws
governing issues such as property ownership, libel, privacy, data use, data
protection, data security, network security, and consumer protection apply to
aspects of our operations such as the Internet, e-commerce, digital content,
web services, electronic devices, advertising, and artificial intelligence
technologies and services. A large number of jurisdictions regulate our
operations, and the extent, nature, and scope of such regulations is evolving
and expanding as the scope of our businesses expand. We are regularly subject
to formal and informal reviews and investigations by governments and
regulatory authorities under existing laws, regulations, or interpretations or
pursuing new and novel approaches to regulate our operations. For example, we
face a number of open investigations based on claims that aspects of our
operations violate competition rules, including aspects of Amazon’s European
marketplace for sellers, particularly with respect to use of data, fulfillment
services, and featured offers. Unfavorable regulations, laws, decisions, or
interpretations by government or regulatory authorities applying those laws
and regulations, or inquiries, investigations, or enforcement actions
threatened or initiated by them, could cause us to incur substantial costs,
expose us to unanticipated civil and criminal liability or penalties
(including substantial monetary fines), diminish the demand for, or
availability of, our products and services, increase our cost of doing
business, require us to change our business practices in a manner materially
adverse to our business, damage our reputation, impede our growth, or
otherwise have a material effect on our operations. The media, political, and
regulatory scrutiny we face, which may continue to increase, amplifies these
risks.

Claims, Litigation, Government Investigations, and Other Proceedings May
Adversely Affect Our Business and Results of Operations

As an innovative company offering a wide range of consumer and business
products and services around the world, we are regularly subject to actual and
threatened claims, litigation, reviews, investigations, and other proceedings,
including proceedings by governments and regulatory authorities, involving a
wide range of issues, including patent and other intellectual property
matters, taxes, labor and employment, competition and antitrust, privacy, data
use, data protection, data security, network security, consumer protection,
commercial disputes, goods and services offered by us and by third parties,
and other matters. The number and scale of these proceedings have increased
over time as our businesses have expanded in scope and geographic reach and
our products, services, and operations have become more complex and available
to, and used by, more people. Any of these types of proceedings can have an
adverse effect on us because of legal costs, disruption of our operations,
diversion of management resources, negative publicity, and other factors. The
outcomes of these matters are inherently unpredictable and subject to
significant uncertainties. Determining legal reserves or possible losses from
such matters involves judgment and may not reflect the full range of
uncertainties and unpredictable outcomes. Until the final resolution of such
matters, we may be exposed to losses in excess of the amount recorded, and
such amounts could be material. Should any of our estimates and assumptions
change or prove to have been incorrect, it could have a material effect on our
business, consolidated financial position, results of operations, or cash
flows. In addition, it is possible that a resolution of one or more such
proceedings, including as a result of a settlement, could involve licenses,
sanctions, consent decrees, or orders requiring us to make substantial future
payments, preventing us from offering certain products or services, requiring
us to change our business practices in a manner materially adverse to our
business, requiring development of non-infringing or otherwise altered
products or technologies, damaging our reputation, or otherwise having a
material effect on our operations.

We Are Subject to Product Liability Claims When People or Property Are Harmed
by the Products We Sell or Manufacture

Some of the products we sell or manufacture expose us to product liability or
food safety claims relating to personal injury or illness, death, or
environmental or property damage, and can require product recalls or other
actions. Third parties who sell products using our services and stores also
expose us to product liability claims. Although we maintain liability
insurance, we cannot be certain that our coverage will be adequate for
liabilities actually incurred or that insurance will continue to be available
to us on economically reasonable terms, or at all. Although we impose
contractual terms on sellers that are intended to prohibit sales of certain
type of products, we may not be able to detect, enforce, or collect sufficient
damages for breaches of such agreements. In addition, some of our agreements
with our vendors and sellers do not indemnify us from product liability.

We Face Additional Tax Liabilities and Collection Obligations

We are subject to a variety of taxes and tax collection obligations in the
U.S. (federal and state) and numerous foreign jurisdictions. We may recognize
additional tax expense and be subject to additional tax liabilities, including
other liabilities for tax collection obligations due to changes in laws,
regulations, administrative practices, principles, and interpretations related
to tax, including changes to the global tax framework, competition, and other
laws and accounting rules in various jurisdictions. Such changes could come
about as a result of economic, political, and other conditions. An increasing
number of jurisdictions are considering or have adopted laws or administrative
practices that impose new tax measures, including revenue-based taxes,
targeting online commerce and the remote selling of goods and services. These
include new obligations to collect sales,

consumption, value added, or other taxes on online marketplaces and remote
sellers, or other requirements that may result in liability for third party
obligations. For example, non-U.S. jurisdictions have proposed or enacted
taxes on online advertising and marketplace service revenues. Proliferation of
these or similar unilateral tax measures may continue unless broader
international tax reform is implemented. Our results of operations and cash
flows could be adversely affected by additional taxes imposed on us
prospectively or retroactively or additional taxes or penalties resulting from
the failure to comply with any collection obligations or failure to provide
information about our customers, suppliers, and other third parties for tax
reporting purposes to various government agencies. In some cases we also may
not have sufficient notice to enable us to build systems and adopt processes
to properly comply with new reporting or collection obligations by the
effective date.

Our tax expense and liabilities are also affected by other factors, such as
changes in our business operations, acquisitions, investments, entry into new
businesses and geographies, intercompany transactions, the relative amount of
our foreign earnings, losses incurred in jurisdictions for which we are not
able to realize related tax benefits, the applicability of special or
extraterritorial tax regimes, changes in foreign currency exchange rates,
changes in our stock price, changes to our forecasts of income and loss and
the mix of jurisdictions to which they relate, and changes in our tax assets
and liabilities and their valuation. In the ordinary course of our business,
there are many transactions and calculations for which the ultimate tax
determination is uncertain. Significant judgment is required in evaluating and
estimating our tax expense, assets, and liabilities.

We are also subject to tax controversies in various jurisdictions that can
result in tax assessments against us. Developments in an audit, investigation,
or other tax controversy can have a material effect on our operating results
or cash flows in the period or periods for which that development occurs, as
well as for prior and subsequent periods. We regularly assess the likelihood
of an adverse outcome resulting from these proceedings to determine the
adequacy of our tax accruals. Although we believe our tax estimates are
reasonable, the final outcome of audits, investigations, and any other tax
controversies could be materially different from our historical tax accruals.

We Are Subject to Risks Related to Government Contracts and Related
Procurement Regulations

Our contracts with U.S., as well as state, local, and foreign, government
entities are subject to various procurement regulations and other requirements
relating to their formation, administration, and performance. We are subject
to audits and investigations relating to our government contracts, and any
violations could result in various civil and criminal penalties and
administrative sanctions, including termination of contract, refunding or
suspending of payments, forfeiture of profits, payment of fines, and
suspension or debarment from future government business. In addition, some of
these contracts are subject to periodic funding approval and/or provide for
termination by the government at any time, without cause.

Item 1B. Unresolved Staff Comments  

None.

Item 2. Properties  

As of December 31, 2021, we operated the following facilities (in thousands):

(1)For leased properties, represents the total leased space excluding sub-
leased space.

(2)This includes 672 North America and 7 International stores as of December

(1)Segment amounts exclude corporate facilities. Shared facilities are
allocated among the segments based on usage and primarily relate to facilities
that hold our technology infrastructure. See Item 8 of Part II, “Financial
Statements and Supplementary Data — Note 10 — Segment Information.”

We own and lease our corporate headquarters in Washington’s Puget Sound region
and Arlington, Virginia.

Item 3. Legal Proceedings  

See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 —
Commitments and Contingencies — Legal Proceedings.”

Item 4. Mine Safety Disclosures  

Not applicable.

PART II

Item 5. Market for the Registrant’s Common Stock, Related Shareholder
Matters, and Issuer Purchases of Equity Securities  

Market Information

Our common stock is traded on the Nasdaq Global Select Market under the symbol
“AMZN.”

Holders

As of January 26, 2022, there were 7,282 shareholders of record of our common
stock, although there is a much larger number of beneficial owners.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

Item 6. Reserved  

Item 7A. Quantitative and Qualitative Disclosures About Market Risk  

We are exposed to market risk for the effect of interest rate changes, foreign
currency fluctuations, and changes in the market values of our investments.
Information relating to quantitative and qualitative disclosures about market
risk is set forth below and in Item 7 of Part II, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations — Liquidity and
Capital Resources.”

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to
our investment portfolio and our long-term debt. Our long-term debt is carried
at amortized cost and fluctuations in interest rates do not impact our
consolidated financial statements. However, the fair value of our debt, which
pays interest at a fixed rate, will generally fluctuate with movements of
interest rates, increasing in periods of declining rates of interest and
declining in periods of increasing rates of interest.

We generally invest our excess cash in AAA-rated money market funds and
investment grade short- to intermediate-term fixed income securities. Fixed
income securities may have their fair market value adversely affected due to a
rise in interest rates, and we may suffer losses in principal if forced to
sell securities that have declined in market value due to changes in interest
rates. The following table provides information about our cash equivalents and
marketable fixed income securities, including principal cash flows by expected
maturity and the related weighted-average interest rates as of December 31,
2021 (in millions, except percentages):

As of December 31, 2021, we had long-term debt with a face value of $50.6
billion, including the current portion, primarily consisting of fixed rate
unsecured senior notes. See Item 8 of Part II, “Financial Statements and
Supplementary Data — Note 6 — Debt” for additional information.

Foreign Exchange Risk

During 2021, net sales from our International segment accounted for 27% of our
consolidated revenues. Net sales and related expenses generated from our
internationally-focused stores, including within Canada and Mexico (which are
included in our North America segment), are primarily denominated in the
functional currencies of the corresponding stores and primarily include Euros,
British Pounds, and Japanese Yen. The results of operations of, and certain of
our intercompany balances associated with, our internationally-focused stores
and AWS are exposed to foreign exchange rate fluctuations. Upon consolidation,
as foreign exchange rates vary, net sales and other operating results may
differ materially from expectations, and we may record significant gains or
losses on the remeasurement of intercompany balances. For example, as a result
of fluctuations in foreign exchange rates throughout the year compared to
rates in effect the prior year, International segment net sales increased by
$3.0 billion in comparison with the prior year.

We have foreign exchange risk related to foreign-denominated cash, cash
equivalents, and marketable securities (“foreign funds”). Based on the balance
of foreign funds as of December 31, 2021, of $22.7 billion, an assumed 5%,
10%, and 20% adverse change to foreign exchange would result in fair value
declines of $1.1 billion, $2.3 billion, and $4.5 billion. Fluctuations in fair
value are recorded in “Accumulated other comprehensive income (loss),” a
separate component of stockholders’ equity. Equity securities with readily
determinable fair values are included in “Marketable securities” on our
consolidated balance sheets and are measured at fair value with changes
recognized in net income.

We have foreign exchange risk related to our intercompany balances denominated
in various foreign currencies. Based on the intercompany balances as of
December 31, 2021, an assumed 5%, 10%, and 20% adverse change to foreign
exchange rates would result in losses of $285 million, $575 million, and $1.1
billion, recorded to “Other income (expense), net.”

See Item 7 of Part II, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Results of Operations — Effect of
Foreign Exchange Rates” for additional information on the effect on reported
results of changes in foreign exchange rates.

Equity Investment Risk

As of December 31, 2021, our recorded value in equity and equity warrant
investments in public and private companies was $22.3 billion. Our equity and
equity warrant investments in publicly traded companies, which primarily
relate to Rivian Automotive, Inc., represent $20.3 billion of our investments
as of December 31, 2021, and are recorded at fair value, which is subject to
market price volatility. We record our equity warrant investments in private
companies at fair value and adjust our equity investments in private companies
for observable price changes or impairments. Valuations of private companies
are inherently more complex due to the lack of readily available market data.
The current global economic climate provides additional uncertainty. As such,
we believe that market sensitivities are not practicable. See Item 8 of Part
II, “Financial Statements and Supplementary Data — Note 1 — Description of
Business, Accounting Policies, and Supplemental Disclosures” for additional
information.

Item 8. Financial Statements and Supplementary Data  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page  

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
(PCAOB ID: 42)

Consolidated Statements of Cash Flows

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Stockholders’ Equity

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Amazon.com, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Amazon.com,
Inc. (the Company) as of December 31, 2021 and 2020, and the related
consolidated statements of operations, comprehensive income, stockholders’
equity, and cash flows for each of the three years in the period ended
December 31, 2021, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial
position of the Company at December 31, 2021 and 2020, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2021, in conformity with U.S. generally accepted accounting
principles.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the Company’s internal
control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control — Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (2013 framework) and
our report dated February 3, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on the
Company’s consolidated financial statements based on our audits. We are a
public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included
performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial
statements. We believe that our audits provide a reasonable basis for our
opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the
current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that:
(1) relates to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially challenging, subjective
or complex judgments. The communication of the critical audit matter does not
alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts
or disclosures to which it relates.

Income Taxes

Description of

the Matter

As discussed in Notes 1 and 9 of the consolidated financial statements, the
Company is subject to income taxes in the U.S. and numerous foreign
jurisdictions and during the ordinary course of business, there are many tax
positions for which the ultimate tax determination is uncertain. As a result,
significant judgment is required in evaluating the Company’s tax positions and
determining its provision for income taxes. The Company uses significant
judgment in (1) determining whether a tax position’s technical merits are more
likely than not to be sustained and (2) measuring the amount of tax benefit
that qualifies for recognition.

Auditing the recognition and measurement of the Company’s tax contingencies
was challenging because the evaluation of whether a tax position is more
likely than not to be sustained and the measurement of the benefit of various
tax positions can be complex and involves significant auditor judgment.
Management’s evaluation of tax positions may involve the use of valuation
methodologies and assumptions, including forecasts of income or loss, and is
based on interpretations of tax laws and legal rulings.  

How We Addressed the Matter in Our Audit

We tested controls over the Company’s process to assess the technical merits
of its tax contingencies, including controls over the assessment as to whether
a tax position is more likely than not to be sustained; measurement of the
benefit of its tax positions, including the selection of valuation
methodologies and assumptions; determination of forecasts of income or loss;
and development of the related disclosures.

We involved our international tax, transfer pricing, and research and
development tax professionals in assessing the technical merits of certain of
the Company’s tax positions. Depending on the nature of the specific tax
position and, as applicable, developments with the relevant tax authorities
relating thereto, our procedures included obtaining and examining the
Company’s analysis including the Company’s correspondence with such tax
authorities and evaluating the underlying facts upon which the tax positions
are based. We used our knowledge of and experience with international,
transfer pricing, and other income tax laws by the relevant income tax
authorities to evaluate the Company’s accounting for its tax contingencies. We
evaluated developments in the applicable regulatory environments to assess
potential effects on the Company’s positions, including recent decisions in
relevant court cases. We analyzed the appropriateness of the Company’s
valuation methodologies and assumptions, including the determination of
forecasts of income or loss, and the accuracy of the Company’s calculations
and data used to determine the amount of tax benefits to recognize. We have
also evaluated the Company’s income tax disclosures in relation to these
matters.  

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1996.

Seattle, Washington

February 3, 2022

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — DESCRIPTION OF BUSINESS, ACCOUNTING POLICIES, AND SUPPLEMENTAL
DISCLOSURES

Description of Business

We seek to be Earth’s most customer-centric company. In each of our segments,
we serve our primary customer sets, consisting of consumers, sellers,
developers, enterprises, content creators, advertisers, and employees. We
serve consumers through our online and physical stores and focus on selection,
price, and convenience. We offer programs that enable sellers to grow their
businesses, sell their products in our stores, and fulfill orders through us,
and programs that allow authors, musicians, filmmakers, Twitch streamers,
skill and app developers, and others to publish and sell content. We serve
developers and enterprises of all sizes through AWS, which offers a broad set
of on-demand technology services, including compute, storage, database,
analytics, and machine learning, and other services. We also manufacture and
sell electronic devices. In addition, we provide advertising services to
sellers, vendors, publishers, authors, and others, through programs such as
sponsored ads, display, and video advertising.

We have organized our operations into three segments: North America,
International, and AWS. See “Note 10 — Segment Information.”

Principles of Consolidation

The consolidated financial statements include the accounts of Amazon.com, Inc.
and its consolidated entities (collectively, the “Company”), consisting of its
wholly-owned subsidiaries and those entities in which we have a variable
interest and of which we are the primary beneficiary, including certain
entities in India and certain entities that support our seller lending
financing activities. Intercompany balances and transactions between
consolidated entities are eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires
estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses, and related disclosures of contingent
liabilities in the consolidated financial statements and accompanying notes.
Estimates are used for, but not limited to, income taxes, useful lives of
equipment, commitments and contingencies, valuation of acquired intangibles
and goodwill, stock-based compensation forfeiture rates, vendor funding,
inventory valuation, collectability of receivables, and valuation and
impairment of investments. Actual results could differ materially from these
estimates. For example, in Q4 2021 we completed a useful life study for our
servers and networking equipment and are increasing the useful lives from four
years to five years for servers and from five years to six years for
networking equipment in January 2022, which, based on servers and networking
equipment that are included in “Property and equipment, net” as of December
31, 2021, will have an anticipated impact to our 2022 operating income of $3.1
billion. We had previously increased the useful life of our servers from three
years to four years in January 2020.

Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in millions):

Earnings Per Share

Basic earnings per share is calculated using our weighted-average outstanding
common shares. Diluted earnings per share is calculated using our weighted-
average outstanding common shares including the dilutive effect of stock
awards as determined under the treasury stock method. In periods when we have
a net loss, stock awards are excluded from our calculation of earnings per
share as their inclusion would have an antidilutive effect.

The following table shows the calculation of diluted shares (in millions):

Revenue

Revenue is measured based on the amount of consideration that we expect to
receive, reduced by estimates for return allowances, promotional discounts,
and rebates. Revenue also excludes any amounts collected on behalf of third
parties, including sales and indirect taxes. In arrangements where we have
multiple performance obligations, the transaction price is allocated to each
performance obligation using the relative stand-alone selling price. We
generally determine stand-alone selling prices based on the prices charged to
customers or using expected cost plus a margin.

A description of our principal revenue generating activities is as follows:

Retail sales - We offer consumer products through our online and physical
stores. Revenue is recognized when control of the goods is transferred to the
customer, which generally occurs upon our delivery to a third-party carrier
or, in the case of an Amazon delivery, to the customer.

Third-party seller services - We offer programs that enable sellers to sell
their products in our stores, and fulfill orders through us. We are not the
seller of record in these transactions. The commissions and any related
fulfillment and shipping fees we earn from these arrangements are recognized
when the services are rendered, which generally occurs upon delivery of the
related products to a third-party carrier or, in the case of an Amazon
delivery, to the customer.

Subscription services - Our subscription sales include fees associated with
Amazon Prime memberships and access to content including digital video,
audiobooks, digital music, e-books, and other non-AWS subscription services.
Prime memberships provide our customers with access to an evolving suite of
benefits that represent a single stand-ready obligation. Subscriptions are
paid for at the time of or in advance of delivering the services. Revenue from
such arrangements is recognized over the subscription period.

Advertising services - We provide advertising services to sellers, vendors,
publishers, authors, and others, through programs such as sponsored ads,
display, and video advertising. Revenue is recognized as ads are delivered
based on the number of clicks or impressions.

AWS - Our AWS arrangements include global sales of compute, storage,
database, and other services. Revenue is allocated to services using stand-
alone selling prices and is primarily recognized when the customer uses these
services, based on the quantity of services rendered, such as compute or
storage capacity delivered on-demand. Certain services, including compute and
database, are also offered as a fixed quantity over a specified term, for
which revenue is recognized ratably. Sales commissions we pay in connection
with contracts that exceed one year are capitalized and amortized over the
contract term.

Other - Other revenue includes sales related to various other service
offerings, which are recognized as or when those services are performed.

Return Allowances

Return allowances, which reduce revenue and cost of sales, are estimated using
historical experience. Liabilities for return allowances are included in
“Accrued expenses and other” and were $712 million, $859 million, and $1.0
billion as of December 31, 2019, 2020, and 2021. Additions to the allowance
were $2.5 billion, $3.5 billion, and $5.1 billion and deductions from the
allowance were $2.5 billion, $3.6 billion, and $4.9 billion in 2019, 2020, and
2021. Included in “Inventories” on our consolidated balance sheets are assets
totaling $629 million, $852 million, and $882 million as of December 31, 2019,
2020, and 2021, for the rights to recover products from customers associated
with our liabilities for return allowances.

Cost of Sales

Cost of sales primarily consists of the purchase price of consumer products,
inbound and outbound shipping costs, including costs related to sortation and
delivery centers and where we are the transportation service provider, and
digital media content costs where we record revenue gross, including video and
music. Shipping costs to receive products from our suppliers are included in
our inventory, and recognized as cost of sales upon sale of products to our
customers. Payment processing and related transaction costs, including those
associated with seller transactions, are classified in “Fulfillment” on our
consolidated statements of operations.

Vendor Agreements

We have agreements with our vendors to receive consideration primarily for
cooperative marketing efforts, promotions, incentives, and volume rebates. We
generally consider these amounts received from vendors to be a reduction of
the prices we pay for their goods, including property and equipment, or
services, and are recorded as a reduction of the cost of inventory, cost of
services, or cost of property and equipment. Volume rebates typically depend
on reaching minimum purchase thresholds. We evaluate the likelihood of
reaching purchase thresholds using past experience and current year forecasts.
When volume rebates can be reasonably estimated, we record a portion of the
rebate as we make progress towards the purchase threshold.

Fulfillment

Fulfillment costs primarily consist of those costs incurred in operating and
staffing our North America and International segments’ fulfillment centers,
physical stores, and customer service centers, including facilities and
equipment expenses, such as depreciation and amortization, and rent; costs
attributable to buying, receiving, inspecting, and warehousing inventories;
picking, packaging, and preparing customer orders for shipment; payment
processing and related transaction costs, including costs associated with our
guarantee for certain seller transactions; responding to inquiries from
customers; and supply chain management for our manufactured electronic
devices. Fulfillment costs also include amounts paid to third parties that
assist us in fulfillment and customer service operations.

Technology and Content

Technology and content costs include payroll and related expenses for
employees involved in the research and development of new and existing
products and services, development, design, and maintenance of our stores,
curation and display of products and services made available in our online
stores, and infrastructure costs. Infrastructure costs include servers,
networking equipment, and data center related depreciation and amortization,
rent, utilities, and other expenses necessary to support AWS and other Amazon
businesses. Collectively, these costs reflect the investments we make in order
to offer a wide variety of products and services to our customers. Technology
and content costs are generally expensed as incurred.

Marketing

Marketing costs primarily consist of advertising and payroll and related
expenses for personnel engaged in marketing and selling activities, including
sales commissions related to AWS. We pay commissions to third parties when
their customer referrals result in sales. We also participate in cooperative
advertising arrangements with certain of our vendors, and other third parties.

Advertising and other promotional costs to market our products and services
are expensed as incurred and were $11.0 billion, $10.9 billion, and $16.9
billion in 2019, 2020, and 2021.

General and Administrative

General and administrative expenses primarily consist of costs for corporate
functions, including payroll and related expenses; facilities and equipment
expenses, such as depreciation and amortization expense and rent; and
professional fees.

Stock-Based Compensation

Compensation cost for all equity-classified stock awards expected to vest is
measured at fair value on the date of grant and recognized over the service
period. The fair value of restricted stock units is determined based on the
number of shares granted and the quoted price of our common stock. Such value
is recognized as expense over the service period, net of estimated
forfeitures, using the accelerated method. The estimated number of stock
awards that will ultimately vest requires judgment, and to the extent actual
results or updated estimates differ from our current estimates, such amounts
will be recorded as a cumulative adjustment in the period estimates are
revised. We consider many factors when estimating expected forfeitures,
including historical forfeiture experience and employee level. Additionally,
stock-based compensation includes stock

appreciation rights that are expected to settle in cash. These liability-
classified awards are remeasured to fair value at the end of each reporting
period until settlement or expiration.

Other Operating Expense (Income), Net

Other operating expense (income), net, consists primarily of a benefit from
accelerated vesting of warrants to acquire equity of a vendor in Q4 2020,
offset by a lease impairment in Q2 2020 and the amortization of intangible
assets.

Other Income (Expense), Net

Other income (expense), net, is as follows (in millions):

Included in other income (expense), net in 2021 is a marketable equity
securities valuation gain of $11.8 billion from our equity investment in
Rivian Automotive, Inc. (“Rivian”). Our investment in Rivian’s preferred stock
was accounted for at cost, with adjustments for observable changes in prices
or impairments, prior to Rivian’s initial public offering in November 2021,
which resulted in the conversion of our preferred stock to Class A common
stock. As of December 31, 2021, we held 158 million shares of Rivian’s Class A
common stock, representing an approximate 18% ownership interest, and an
approximate 16% voting interest. We determined that we have the ability to
exercise significant influence over Rivian through our equity investment, our
commercial arrangement for the purchase of electric vehicles, and one of our
employees serving on Rivian’s board of directors. We elected the fair value
option to account for our equity investment in Rivian, and the 2021 valuation
gain is primarily comprised of the gain recognized upon the initial public
offering, and also includes subsequent changes in fair value through December
31, 2021. As of December 31, 2021, our equity investment in Rivian had a fair
value of $15.6 billion, which reflects a discount for lack of marketability
until Q1 2022 of approximately $800 million due to regulatory sales
restrictions, and is included in “Marketable securities” on our consolidated
balance sheets.

Summarized financial information of Rivian as disclosed in its SEC filings is
as follows (in millions):

Income Taxes

Income tax expense includes U.S. (federal and state) and foreign income taxes.
Certain foreign subsidiary earnings and losses are subject to current U.S.
taxation and the subsequent repatriation of those earnings is not subject to
tax in the U.S. We intend to invest substantially all of our foreign
subsidiary earnings, as well as our capital in our foreign subsidiaries,
indefinitely outside of the U.S. in those jurisdictions in which we would
incur significant, additional costs upon repatriation of such amounts.

Deferred income tax balances reflect the effects of temporary differences
between the carrying amounts of assets and liabilities and their tax bases, as
well as net operating loss and tax credit carryforwards, and are stated at
enacted tax rates expected to be in effect when taxes are actually paid or
recovered.

Deferred tax assets represent amounts available to reduce income taxes payable
in future periods. Deferred tax assets are evaluated for future realization
and reduced by a valuation allowance to the extent we believe they will not be
realized. We consider many factors when assessing the likelihood of future
realization of our deferred tax assets, including our recent cumulative loss
experience and expectations of future earnings, capital gains and investment
in such jurisdiction, the carry-forward periods available to us for tax
reporting purposes, and other relevant factors.

We utilize a two-step approach to recognizing and measuring uncertain income
tax positions (tax contingencies). The first step is to evaluate the tax
position for recognition by determining if the weight of available evidence
indicates it is more likely than not the position will be sustained on audit,
including resolution of related appeals or litigation processes. The second
step is to measure the tax benefit as the largest amount which is more than
50% likely of being realized upon ultimate settlement. We consider many
factors when evaluating our tax positions and estimating our tax benefits,
which may require periodic adjustments and which may not accurately forecast
actual outcomes. We include interest and penalties related to our tax
contingencies in income tax expense.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date. To increase the comparability of fair
value measures, the following hierarchy prioritizes the inputs to valuation
methodologies used to measure fair value:

Level 1 — Valuations based on quoted prices for identical assets and
liabilities in active markets.

Level 2 — Valuations based on observable inputs other than quoted prices
included in Level 1, such as quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and
liabilities in markets that are not active, or other inputs that are
observable or can be corroborated by observable market data.

Level 3 — Valuations based on unobservable inputs reflecting our own
assumptions, consistent with reasonably available assumptions made by other
market participants. These valuations require significant judgment.

We measure the fair value of money market funds and certain marketable equity
securities based on quoted prices in active markets for identical assets or
liabilities. Other marketable securities were valued either based on recent
trades of securities in inactive markets or based on quoted market prices of
similar instruments and other significant inputs derived from or corroborated
by observable market data. We did not hold significant amounts of marketable
securities categorized as Level 3 assets as of December 31, 2020 and 2021.

We hold equity warrants giving us the right to acquire stock of other
companies. As of December 31, 2020 and 2021, these warrants had a fair value
of $3.0 billion and $3.4 billion, and are recorded within “Other assets” on
our consolidated balance sheets with gains and losses recognized in “Other
income (expense), net” on our consolidated statements of operations. These
warrants are primarily classified as Level 2 assets.

Cash and Cash Equivalents

We classify all highly liquid instruments with an original maturity of three
months or less as cash equivalents.

Inventories

Inventories, consisting of products available for sale, are primarily
accounted for using the first-in, first-out method, and are valued at the
lower of cost and net realizable value. This valuation requires us to make
judgments, based on currently available information, about the likely method
of disposition, such as through sales to individual customers, returns to
product vendors, or liquidations, and expected recoverable values of each
disposition category. The inventory valuation allowance, representing a write-
down of inventory, was $2.3 billion and $2.6 billion as of December 31, 2020
and 2021.

We provide Fulfillment by Amazon services in connection with certain of our
sellers’ programs. Third-party sellers maintain ownership of their inventory,
regardless of whether fulfillment is provided by us or the third-party
sellers, and therefore these products are not included in our inventories.

We also purchase electronic device components from a variety of suppliers and
use several contract manufacturers to provide manufacturing services for our
products. During the normal course of business, in order to manage
manufacturing lead times and help ensure adequate supply, we enter into
agreements with contract manufacturers and suppliers for certain electronic
device components. A portion of our reported purchase commitments arising from
these agreements consists of firm, non-cancellable commitments. These
commitments are based on forecasted customer demand. If we reduce these
commitments, we may incur additional costs. We also have firm, non-cancellable
commitments for certain products offered in our Whole Foods Market stores.

Accounts Receivable, Net and Other

Included in “Accounts receivable, net and other” on our consolidated balance
sheets are amounts primarily related to customers, vendors, and sellers. As of
December 31, 2020 and 2021, customer receivables, net, were $14.8 billion and
$20.2 billion, vendor receivables, net, were $4.8 billion and $5.3 billion,
and seller receivables, net, were $381 million and $1.0 billion. Seller
receivables are amounts due from sellers related to our seller lending
program, which provides funding to sellers primarily to procure inventory.

We estimate losses on receivables based on expected losses, including our
historical experience of actual losses. Receivables are considered impaired
and written-off when it is probable that all contractual payments due will not
be collected in accordance with the terms of the agreement. The allowance for
doubtful accounts was $718 million, $1.1 billion, and $1.1 billion as of
December 31, 2019, 2020, and 2021. Additions to the allowance were $1.0
billion, $1.4 billion, and $1.0 billion, and deductions to the allowance were
$793 million, $1.0 billion, and $1.1 billion in 2019, 2020, and 2021.

Software Development Costs

We incur software development costs related to products to be sold, leased, or
marketed to external users, internal-use software, and our websites. Software
development costs capitalized were not significant for the years presented.
All other costs, including those related to design or maintenance, are
expensed as incurred.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and
amortization. Incentives that we receive from property and equipment vendors
are recorded as a reduction to our costs. Property includes buildings and land
that we own, along with property we have acquired under build-to-suit lease
arrangements when we have control over the building during the construction
period and finance lease arrangements. Equipment includes assets such as
servers and networking equipment, heavy equipment, and other fulfillment
equipment. Depreciation and amortization is recorded on a straight-line basis
over the estimated useful lives of the assets (generally the lesser of 40
years or the remaining life of the underlying building, three years prior to
January 1, 2020 and four years subsequent to January 1, 2020 for our servers,
five years for networking equipment, ten years for heavy equipment, and three
to ten years for other fulfillment equipment). Depreciation and amortization
expense is classified within the corresponding operating expense categories on
our consolidated statements of operations.

Leases

We categorize leases with contractual terms longer than twelve months as
either operating or finance. Finance leases are generally those leases that
allow us to substantially utilize or pay for the entire asset over its
estimated life. Assets acquired under finance leases are recorded in “Property
and equipment, net.” All other leases are categorized as operating leases. Our
leases generally have terms that range from one to ten years for equipment and
one to twenty years for property.

Certain lease contracts include obligations to pay for other services, such as
operations and maintenance. For leases of property, we account for these other
services as a component of the lease. For substantially all other leases, the
services are accounted for separately and we allocate payments to the lease
and other services components based on estimated stand-alone prices.

Lease liabilities are recognized at the present value of the fixed lease
payments, reduced by landlord incentives using a discount rate based on
similarly secured borrowings available to us. Lease assets are recognized
based on the initial present value of the fixed lease payments, reduced by
landlord incentives, plus any direct costs from executing the leases or lease
prepayments reclassified from “Other assets” upon lease commencement.
Leasehold improvements are capitalized at cost and amortized over the lesser
of their expected useful life or the lease term.

When we have the option to extend the lease term, terminate the lease before
the contractual expiration date, or purchase the leased asset, and it is
reasonably certain that we will exercise the option, we consider the option in
determining the classification and measurement of the lease. Our leases may
include variable payments based on measures that include changes in price
indices, market interest rates, or the level of sales at a physical store,
which are expensed as incurred.

Costs associated with operating lease assets are recognized on a straight-line
basis within operating expenses over the term of the lease. Finance lease
assets are amortized within operating expenses on a straight-line basis over
the shorter of the estimated useful lives of the assets or, in the instance
where title does not transfer at the end of the lease term, the lease term.
The interest component of a finance lease is included in interest expense and
recognized using the effective interest method over the lease term.

We establish assets and liabilities for the present value of estimated future
costs to retire long-lived assets at the termination or expiration of a lease.
Such assets are amortized over the lease period into operating expense, and
the recorded liabilities are accreted to the future value of the estimated
retirement costs.

Financing Obligations

We record assets and liabilities for estimated construction costs under build-
to-suit lease arrangements when we have control over the building during the
construction period. If we continue to control the building after the
construction period, the arrangement is classified as a financing obligation
instead of a lease. The building is depreciated over the shorter of its useful
life or the term of the obligation.

If we do not control the building after the construction period ends, the
assets and liabilities for construction costs are derecognized, and we
classify the lease as operating.

Goodwill and Indefinite-Lived Intangible Assets

We evaluate goodwill and indefinite-lived intangible assets for impairment
annually or more frequently when an event occurs or circumstances change that
indicate the carrying value may not be recoverable. We may elect to utilize a
qualitative assessment to evaluate whether it is more likely than not that the
fair value of a reporting unit or indefinite-lived intangible asset is less
than its carrying value and if so, we perform a quantitative test. We compare
the carrying value of each reporting unit and indefinite-lived intangible
asset to its estimated fair value and if the fair value is determined to be
less than the carrying value, we recognize an impairment loss for the
difference. We estimate the fair value of the reporting units using discounted
cash flows. Forecasts of future cash flows are based on our best estimate of
future net sales and operating expenses, based primarily on expected category
expansion, pricing, market segment share, and general economic conditions.

We completed the required annual impairment test of goodwill for all reporting
units and indefinite-lived intangible assets as of April 1, 2021, resulting in
no impairments. The fair value of our reporting units substantially exceeded
their carrying value. There were no events that caused us to update our annual
impairment test. See “Note 5 — Acquisitions, Goodwill, and Acquired Intangible
Assets.”

Other Assets

Included in “Other assets” on our consolidated balance sheets are amounts
primarily related to video and music content, net of accumulated amortization;
acquired intangible assets, net of accumulated amortization; equity warrant
assets; long-term deferred tax assets; and certain equity investments.

Digital Video and Music Content

We obtain video content, inclusive of episodic television and movies, and
music content for customers through licensing agreements that have a wide
range of licensing provisions including both fixed and variable payment
schedules. When the license fee for a specific video or music title is
determinable or reasonably estimable and the content is available to us, we
recognize an asset and a corresponding liability for the amounts owed. We
reduce the liability as payments are made and we amortize the asset to “Cost
of sales” on an accelerated basis, based on estimated usage or viewing
patterns, or on a straight-line basis. If the licensing fee is not
determinable or reasonably estimable, no asset or liability is recorded and
licensing costs are expensed as incurred. We also develop original video
content for which the production costs are capitalized and amortized to “Cost
of sales” predominantly on an accelerated basis that follows the viewing
patterns associated with the content. The weighted average remaining life of
our capitalized video content is 2.6 years.

Our produced and licensed video content is primarily monetized together as a
unit, referred to as a film group, in each major geography where we offer
Amazon Prime memberships. These film groups are evaluated for impairment
whenever an event occurs or circumstances change indicating the fair value is
less than the carrying value. The total capitalized costs of video, which is
primarily released content, and music as of December 31, 2020 and 2021 were
$6.8 billion and $10.7 billion.

Total video and music expense was $11.0 billion and $13.0 billion for the year
ended December 31, 2020 and 2021. Total video and music expense includes
licensing and production costs associated with content offered within Amazon
Prime memberships, and costs associated with digital subscriptions and sold or
rented content.

Investments

We generally invest our excess cash in AAA-rated money market funds and
investment grade short- to intermediate-term fixed income securities. Such
investments are included in “Cash and cash equivalents” or “Marketable
securities” on the accompanying consolidated balance sheets.

Marketable fixed income securities are classified as available-for-sale and
reported at fair value with unrealized gains and losses included in
“Accumulated other comprehensive income (loss).” Each reporting period, we
evaluate whether declines in fair value below carrying value are due to
expected credit losses, as well as our ability and intent to hold the
investment until a forecasted recovery occurs. Expected credit losses are
recorded as an allowance through “Other income (expense), net” on our
consolidated statements of operations.

Equity investments in private companies for which we do not have the ability
to exercise significant influence are accounted for at cost, with adjustments
for observable changes in prices or impairments, and are classified as “Other
assets” on our consolidated balance sheets with adjustments recognized in
“Other income (expense), net” on our consolidated statements of operations.
Each reporting period, we perform a qualitative assessment to evaluate whether
the investment is impaired. Our assessment includes a review of recent
operating results and trends, recent sales/acquisitions of the investee
securities, and other publicly available data. If the investment is impaired,
we write it down to its estimated fair value. As of December 31, 2020 and
2021, these investments had a carrying value of $2.7 billion and $603 million.

Equity investments are accounted for using the equity method of accounting, or
at fair value if we elect the fair value option, if the investment gives us
the ability to exercise significant influence, but not control, over an
investee. Equity-method investments are included within “Other assets” on our
consolidated balance sheets. Our share of the earnings or losses as reported
by equity-method investees, amortization of basis differences, related gains
or losses, and impairments, if any, are recognized in “Equity-method
investment activity, net of tax” on our consolidated statements of operations.
Each reporting period, we evaluate whether declines in fair value below
carrying value are other-than-temporary and if so, we write down the
investment to its estimated fair value.

Equity investments that have readily determinable fair values, including
investments for which we have elected the fair value option, are included in
“Marketable securities” on our consolidated balance sheets and measured at
fair value with changes recognized in “Other income (expense), net” on our
consolidated statements of operations.

Long-Lived Assets

Long-lived assets, other than goodwill and indefinite-lived intangible assets,
are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets might not be recoverable.
Conditions that would necessitate an impairment assessment include a
significant decline in the observable market value of an asset, a significant
change in the extent or manner in which an asset is used, or any other
significant adverse change that would indicate that the carrying amount of an
asset or group of assets may not be recoverable.

For long-lived assets used in operations, including lease assets, impairment
losses are only recorded if the asset’s carrying amount is not recoverable
through its undiscounted, probability-weighted future cash flows. We measure
the impairment loss based on the difference between the carrying amount and
estimated fair value. Long-lived assets are considered held for sale when
certain criteria are met, including when management has committed to a plan to
sell the asset, the asset is available for sale in its immediate condition,
and the sale is probable within one year of the reporting date. Assets held
for sale are reported at the lower of cost or fair value less costs to sell.
Assets held for sale were not significant as of December 31, 2020 and 2021.

Accrued Expenses and Other

Included in “Accrued expenses and other” on our consolidated balance sheets
are liabilities primarily related to leases and asset retirement obligations,
tax-related liabilities, payroll and related expenses, unredeemed gift cards,
customer liabilities, marketing liabilities, current debt, acquired digital
media content, and other operating expenses.

As of December 31, 2020 and 2021, our liabilities for payroll related expenses
were $7.6 billion and $9.1 billion and our liabilities for unredeemed gift
cards were $4.7 billion and $5.2 billion. We reduce the liability for a gift
card when redeemed by a customer. The portion of gift cards that we do not
expect to be redeemed is recognized based on customer usage patterns.

Unearned Revenue

Unearned revenue is recorded when payments are received or due in advance of
performing our service obligations and is recognized over the service period.
Unearned revenue primarily relates to prepayments of AWS services and Amazon
Prime memberships. Our total unearned revenue as of December 31, 2020 was
$11.6 billion, of which $9.3 billion was recognized as revenue during the year
ended December 31, 2021 and our total unearned revenue as of December 31, 2021
was $14.0 billion. Included in “Other long-term liabilities” on our
consolidated balance sheets was $1.9 billion and $2.2 billion of unearned
revenue as of December 31, 2020 and 2021.

Additionally, we have performance obligations, primarily related to AWS,
associated with commitments in customer contracts for future services that
have not yet been recognized in our financial statements. For contracts with
original terms that exceed one year, those commitments not yet recognized were
$80.4 billion as of December 31, 2021. The weighted average remaining life of
our long-term contracts is 3.8 years. However, the amount and timing of
revenue recognition is largely driven by customer usage, which can extend
beyond the original contractual term.

Other Long-Term Liabilities

Included in “Other long-term liabilities” on our consolidated balance sheets
are liabilities primarily related to financing obligations, asset retirement
obligations, deferred tax liabilities, unearned revenue, tax contingencies,
and digital video and music content.

Foreign Currency

We have internationally-focused stores for which the net sales generated, as
well as most of the related expenses directly incurred from those operations,
are denominated in local functional currencies. The functional currency of our
subsidiaries that either operate or support these stores is generally the same
as the local currency. Assets and liabilities of these subsidiaries are
translated into U.S. Dollars at period-end foreign exchange rates, and
revenues and expenses are translated at average rates prevailing throughout
the period. Translation adjustments are included in “Accumulated other
comprehensive income (loss),” a separate component of stockholders’ equity,
and in the “Foreign currency effect on cash, cash equivalents, and restricted
cash,” on our consolidated statements of cash flows. Transaction gains and
losses including intercompany transactions denominated in a currency other
than the functional currency of the entity involved are included in “Other
income (expense), net” on our consolidated statements of operations. In
connection with the settlement and remeasurement of intercompany balances, we
recorded gains (losses) of $(95) million, $(118) million, and $19 million in
2019, 2020, and 2021.

Note 2 — FINANCIAL INSTRUMENTS

Cash, Cash Equivalents, Restricted Cash, and Marketable Securities

As of December 31, 2020 and 2021, our cash, cash equivalents, restricted cash,
and marketable securities primarily consisted of cash, AAA-rated money market
funds, U.S. and foreign government and agency securities, other investment
grade securities, and marketable equity securities. Cash equivalents and
marketable securities are recorded at fair value. The following table
summarizes, by major security type, our cash, cash equivalents, restricted
cash, and marketable securities that are measured at fair value on a recurring
basis and are categorized using the fair value hierarchy (in millions):

(1)The related unrealized gain (loss) recorded in “Other income (expense),
net” was $4 million, $448 million, and $11.6 billion for the years ended
December 31, 2019, 2020, and 2021.

(2)We are required to pledge or otherwise restrict a portion of our cash, cash
equivalents, and marketable fixed income securities primarily as collateral
for real estate, amounts due to third-party sellers in certain jurisdictions,
debt, and standby and trade letters of credit. We classify cash, cash
equivalents, and marketable fixed income securities with use restrictions of
less than twelve months as “Accounts receivable, net and other” and of twelve
months or longer as non-current “Other assets” on our consolidated balance
sheets. See “Note 7 — Commitments and Contingencies.”

(3)Our equity investment in Rivian of $15.6 billion reflects a discount for
lack of marketability until Q1 2022 due to regulatory sales restrictions. In
addition, we are subject to contractual sales restrictions until Q2 2022.

The following table summarizes gross gains and gross losses realized on sales
of marketable fixed income securities (in millions):

The following table summarizes the remaining contractual maturities of our
cash equivalents and marketable fixed income securities as of December 31,
2021 (in millions):

Actual maturities may differ from the contractual maturities because borrowers
may have certain prepayment conditions.

Consolidated Statements of Cash Flows Reconciliation

The following table provides a reconciliation of the amount of cash, cash
equivalents, and restricted cash reported within the consolidated balance
sheets to the total of the same such amounts shown in the consolidated
statements of cash flows (in millions):

Note 3 — PROPERTY AND EQUIPMENT

Property and equipment, at cost, consisted of the following (in millions):

(1)Includes the original cost and accumulated depreciation of fully-
depreciated assets.

Depreciation and amortization expense on property and equipment was $15.1
billion, $16.2 billion, and $22.9 billion which includes amortization of
property and equipment acquired under finance leases of $10.1 billion, $8.5
billion, and $9.9 billion for 2019, 2020, and 2021.

Note 4 — LEASES

We have entered into non-cancellable operating and finance leases for
fulfillment, delivery, office, physical store, data center, and sortation
facilities as well as server and networking equipment, vehicles, and aircraft.
Gross assets acquired under finance leases, inclusive of those where title
transfers at the end of the lease, are recorded in “Property and equipment,
net” and were $68.1 billion and $72.2 billion as of December 31, 2020 and
2021. Accumulated amortization associated with finance leases was $36.5
billion and $43.4 billion as of December 31, 2020 and 2021.

Lease cost recognized in our consolidated statements of operations is
summarized as follows (in millions):

Other information about lease amounts recognized in our consolidated financial
statements is as follows:

Our lease liabilities were as follows (in millions):

Note 5 — ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS

2019 Acquisition Activity

During 2019, we acquired certain companies for an aggregate purchase price of
$315 million, net of cash acquired.

2020 Acquisition Activity

During 2020, we acquired certain companies for an aggregate purchase price of
$1.2 billion, net of cash acquired, of which $1.1 billion was capitalized to
in-process research and development intangible assets (“IPR&D”).

2021 Acquisition Activity

During 2021, we acquired certain companies for an aggregate purchase price of
$496 million, net of cash acquired.

The primary reason for all acquisitions was to acquire technologies and know-
how to enable Amazon to serve customers more effectively. Acquisition-related
costs were expensed as incurred.

Pro forma results of operations have not been presented because the effects of
2021 acquisitions, individually and in the aggregate, were not material to our
consolidated results of operations.

Goodwill

The goodwill of the acquired companies is primarily related to expected
improvements in technology performance and functionality, as well as sales
growth from future product and service offerings and new customers, together
with certain intangible assets that do not qualify for separate recognition.
The goodwill of the acquired companies is generally not deductible for tax
purposes. The following summarizes our goodwill activity in 2020 and 2021 by
segment (in millions):

(1)Primarily includes changes in foreign exchange rates.

Intangible Assets

Acquired identifiable intangible assets are valued primarily by using
discounted cash flows. These assets are included within “Other assets” on our
consolidated balance sheets and consist of the following (in millions):

(1)Excludes the original cost and accumulated amortization of fully-amortized
intangibles.

(2)Finite-lived intangible assets have estimated useful lives of between one
and twenty-five years, and are being amortized to operating expenses on a
straight-line basis.

(3)Intangible assets acquired in a business combination that are in-process
and used in research and development activities are considered indefinite-
lived until the completion or abandonment of the research and development
efforts. Once the research and development efforts are completed, we determine
the useful life and begin amortizing the assets.

Amortization expense for acquired finite-lived intangibles was $565 million,
$509 million, and $512 million in 2019, 2020, and 2021. Expected future
amortization expense of acquired finite-lived intangible assets as of December
31, 2021 is as follows (in millions):

Note 6 — DEBT

As of December 31, 2021, we had $49.7 billion of unsecured senior notes
outstanding (the “Notes”). We issued $18.5 billion of Notes in May 2021, of
which $1.0 billion was issued for green or social projects, such as projects
related to clean transportation, renewable energy, sustainable buildings,
affordable housing, or socioeconomic advancement and empowerment, and the
remainder for general corporate purposes. We also had other long-term debt and
borrowings under our credit facility of $924 million and $803 million as of
December 31, 2020 and 2021. Our total long-term debt obligations are as
follows (in millions):

(1)The weighted-average remaining lives of the 2012, 2014, 2017, 2020 and 2021
Notes were 0.9, 13.6, 15.2, 17.7 and 14.3 years as of December 31, 2021. The
combined weighted-average remaining life of the Notes was 14.9 years as of
December 31, 2021.

Interest on the Notes is payable semi-annually in arrears. We may redeem the
Notes at any time in whole, or from time to time, in part at specified
redemption prices. We are not subject to any financial covenants under the
Notes. The estimated fair value of the Notes was approximately $37.7 billion
and $53.3 billion as of December 31, 2020 and 2021, which is based on quoted
prices for our debt as of those dates.

We have a $1.0 billion secured revolving credit facility with a lender that is
secured by certain seller receivables, which we increased from $740 million in
November 2021 and may from time to time increase in the future subject to
lender approval (the “Credit Facility”). The Credit Facility is available
until October 2022, bears interest at the London interbank offered rate
(“LIBOR”) plus 1.40%, and has a commitment fee of 0.50% on the undrawn
portion. There were $338 million and $803 million of borrowings outstanding
under the Credit Facility as of December 31, 2020 and 2021, which had a
weighted-average interest rate of 3.0% and 2.7%, respectively. As of December
31, 2020 and 2021, we have pledged $398 million and $918 million of our cash
and seller receivables as collateral for debt related to our Credit Facility.
The estimated fair value of the Credit Facility, which is based on Level 2
inputs, approximated its carrying value as of December 31, 2020 and 2021.

As of December 31, 2021, future principal payments for our total long-term
debt were as follows (in millions):

We have U.S. Dollar and Euro commercial paper programs (the “Commercial Paper
Programs”) under which we may from time to time issue unsecured commercial
paper up to a total of $10.0 billion (including up to €3.0 billion) at the
date of issue, with individual maturities that may vary but will not exceed
397 days from the date of issue. There were $725 million of borrowings
outstanding under the Commercial Paper Programs as of December 31, 2020 and
2021, which were included in “Accrued expenses and other” on our consolidated
balance sheets and had a weighted-average effective interest rate, including

issuance costs, of 0.11% and 0.08%, respectively. We use the net proceeds from
the issuance of commercial paper for general corporate purposes.

We also have a $7.0 billion unsecured revolving credit facility with a
syndicate of lenders with a term that extends to June 2023, which was amended
in November 2021 to replace LIBOR as the applicable benchmark rate for loans
denominated in certain foreign currencies (the “Credit Agreement”). It may be
extended for up to three additional one-year terms if approved by the lenders.
The interest rate applicable to outstanding balances under the Credit
Agreement is the applicable benchmark rate specified in the Credit Agreement
plus 0.50%, with a commitment fee of 0.04% on the undrawn portion of the
credit facility. There were no borrowings outstanding under the Credit
Agreement as of December 31, 2020 and 2021.

We also utilize other short-term credit facilities for working capital
purposes. These amounts are included in “Accrued expenses and other” on our
consolidated balance sheets. In addition, we had $7.2 billion of unused
letters of credit as of December 31, 2021.

Note 7 — COMMITMENTS AND CONTINGENCIES

Commitments

The following summarizes our principal contractual commitments, excluding open
orders for purchases that support normal operations and are generally
cancellable, as of December 31, 2021 (in millions):

(1)Includes non-cancellable financing obligations for fulfillment, sortation,
and data center facilities. Excluding interest, current financing obligations
of $111 million and $196 million are recorded within “Accrued expenses and
other” and $3.4 billion and $6.2 billion are recorded within “Other long-term
liabilities” as of December 31, 2020 and 2021. The weighted-average remaining
term of the financing obligations was 19.0 and 18.8 years and the weighted-
average imputed interest rate was 3.8% and 3.2% as of December 31, 2020 and

(2)Includes unconditional purchase obligations related to long-term agreements
to acquire and license digital media content that are not reflected on the
consolidated balance sheets and certain products offered in our Whole Foods
Market stores. For those digital media content agreements with variable terms,
we do not estimate the total obligation beyond any minimum quantities and/or
pricing as of the reporting date. Purchase obligations associated with renewal
provisions solely at the option of the content provider are included to the
extent such commitments are fixed or a minimum amount is specified.

(3)Includes the estimated timing and amounts of payments for rent and tenant
improvements associated with build-to-suit lease arrangements that are under
construction, asset retirement obligations, and liabilities associated with
digital media content agreements with initial terms greater than one year.

(4)Excludes approximately $3.2 billion of accrued tax contingencies for which
we cannot make a reasonably reliable estimate of the amount and period of
payment, if any.

In addition, in May 2021, we entered into an agreement to acquire MGM Holdings
Inc. (“MGM”) for approximately $8.5 billion, including MGM’s debt, subject to
customary closing conditions. We expect to fund this acquisition with cash on
hand.

Suppliers

During 2021, no vendor accounted for 10% or more of our purchases. We
generally do not have long-term contracts or arrangements with our vendors to
guarantee the availability of merchandise, particular payment terms, or the
extension of credit limits.

Other Contingencies

We are disputing claims and denials of refunds or credits related to various
non-income taxes (such as sales, value added, consumption, service, and
similar taxes), including in jurisdictions in which we already collect and
remit these taxes. These non-income tax controversies typically relate to (i)
the taxability of products and services, including cross-border intercompany
transactions, (ii) collection and withholding on transactions with third
parties, and (iii) the adequacy of compliance with reporting obligations,
including evolving documentation requirements. Due to the inherent complexity
and uncertainty of these matters and the judicial and regulatory processes in
certain jurisdictions, the final outcome of any such controversies may be
materially different from our expectations.

Legal Proceedings

The Company is involved from time to time in claims, proceedings, and
litigation, including the following:

In November 2015, Eolas Technologies, Inc. filed a complaint against
Amazon.com, Inc. in the United States District Court for the Eastern District
of Texas. The complaint alleges, among other things, that the use of
“interactive features” on www.amazon.com, including “search suggestions and
search results,” infringes U.S. Patent No. 9,195,507, entitled “Distributed
Hypermedia Method and System for Automatically Invoking External Application
Providing Interaction and Display of Embedded Objects Within A Hypermedia
Document.” The complaint sought a judgment of infringement together with costs
and attorneys’ fees. In February 2016, Eolas filed an amended complaint
seeking, among other things, an unspecified amount of damages. In February
2017, Eolas alleged in its damages report that in the event of a finding of
liability Amazon could be subject to $130-$250 million in damages. In April
2017, the case was transferred to the United States District Court for the
Northern District of California. We dispute the allegations of wrongdoing and
intend to defend ourselves vigorously in this matter.

In May 2018, Rensselaer Polytechnic Institute and CF Dynamic Advances LLC
filed a complaint against Amazon.com, Inc. in the United States District Court
for the Northern District of New York. The complaint alleges, among other
things, that “Alexa Voice Software and Alexa enabled devices” infringe U.S.
Patent No. 7,177,798, entitled “Natural Language Interface Using Constrained
Intermediate Dictionary of Results.” The complaint seeks an injunction, an
unspecified amount of damages, enhanced damages, an ongoing royalty, pre- and
post-judgment interest, attorneys’ fees, and costs. We dispute the allegations
of wrongdoing and intend to defend ourselves vigorously in this matter.

In December 2018, Kove IO, Inc. filed a complaint against Amazon Web Services,
Inc. in the United States District Court for the Northern District of
Illinois. The complaint alleges, among other things, that Amazon S3 and
DynamoDB infringe U.S. Patent Nos. 7,814,170 and 7,103,640, both entitled
“Network Distributed Tracking Wire Transfer Protocol,” and 7,233,978, entitled
“Method And Apparatus For Managing Location Information In A Network Separate
From The Data To Which The Location Information Pertains.” The complaint seeks
an unspecified amount of damages, enhanced damages, attorneys’ fees, costs,
interest, and injunctive relief. We dispute the allegations of wrongdoing and
intend to defend ourselves vigorously in this matter.

Beginning in March 2020, with Frame-Wilson v. Amazon.com, Inc. filed in the
United States District Court for the Western District of Washington, a number
of cases have been filed in the U.S. and Canada alleging, among other things,
price fixing arrangements between Amazon.com, Inc. and third-party sellers in
Amazon’s stores, monopolization and attempted monopolization, and consumer
protection and unjust enrichment claims. Some of the cases include allegations
of several distinct purported classes, including consumers who purchased a
product through Amazon’s stores and consumers who purchased a product offered
by Amazon through another e-commerce retailer. The complaints seek billions of
dollars of alleged actual damages, treble damages, punitive damages, and
injunctive relief. Individuals have also initiated arbitrations based on
substantially similar allegations. We dispute the allegations of wrongdoing
and intend to defend ourselves vigorously in these matters.

In November 2020, the European Commission issued a Statement of Objections
alleging that Amazon uses data relating to our marketplace sellers in a manner
that infringes EU competition rules. The Statement of Objections seeks to
impose unspecified fines and remedial actions. We disagree with the
preliminary assertions of the European Commission and intend to defend
ourselves vigorously in this matter.

In July 2021, the Luxembourg National Commission for Data Protection (the
“CNPD”) issued a decision against Amazon Europe Core S.à r.l. claiming that
Amazon’s processing of personal data did not comply with the EU General Data
Protection Regulation. The decision imposes a fine of €746 million and
corresponding practice revisions. We believe the CNPD’s decision to be without
merit and intend to defend ourselves vigorously in this matter.

In November 2021, Jawbone Innovations, LLC filed a complaint against
Amazon.com, Inc. and Amazon.com Services, Inc. in the United States District
Court for the Eastern District of Texas. The complaint alleges, among other
things, that Amazon Echo smart speakers and displays, Fire TV Cube, and Echo
Buds infringe U.S. Patent Nos. 7,246,058, entitled “Detecting Voiced and
Unvoiced Speech Using Both Acoustic and Nonacoustic Sensors”; 8,019,091,
entitled “Voice Activity

Detector (VAD)-Based Multiple-Microphone Acoustic Noise Suppression”;
8,280,072, entitled “Microphone Array with Rear Venting”; 8,321,213 and
8,326,611, both entitled “Acoustic Voice Activity Detection (AVAD) for
Electronic Systems”; 8,467,543, entitled “Microphone and Voice Activity
Detection (VAD) Configurations for Use with Communications Systems”;
10,779,080, entitled “Dual Omnidirectional Microphone Array (DOMA)”; and
11,122,357, entitled “Forming Virtual Microphone Arrays Using Dual
Omnidirectional Microphone Array (DOMA).” The complaint seeks an unspecified
amount of damages, enhanced damages, attorneys’ fees, costs, interest, and
injunctive relief. We dispute the allegations of wrongdoing and intend to
defend ourselves vigorously in this matter.

In December 2021, the Italian Competition Authority (the “ICA”) issued a
decision against Amazon Services Europe S.à r.l., Amazon Europe Core S.à r.l.,
Amazon EU S.à r.l., Amazon Italia Services S.r.l., and Amazon Italia Logistica
S.r.l. claiming that certain of our marketplace and logistics practices in
Italy infringed EU competition rules. The decision imposes a fine of €1.13
billion and remedial actions. We believe the ICA’s decision to be without
merit and intend to defend ourselves vigorously in this matter.

In January 2022, VideoLabs, Inc. and VL Collective IP LLC filed a complaint
against Amazon.com, Inc. and Amazon Web Services, Inc. in the United States
District Court for the Western District of Texas. The complaint alleges, among
other things, that Amazon Prime Video, Amazon Glow, Amazon Echo Show, Fire TV,
Fire TV Cube, Fire TV Stick, Fire Tablets, AWS Elemental MediaConvert, AWS
Elemental Live, AWS Elemental Server, AWS Elemental MediaPackage, AWS
Elemental MediaLive, and Amazon Elastic Transcoder infringe U.S. Patent Nos.
7,769,238 and 8,139,878, both entitled “Picture Coding Method and Picture
Decoding Method”; and 7,970,059, entitled “Variable Length Coding Method and
Variable Length Decoding Method”; that Amazon Prime Video, AWS Elemental
MediaConvert, AWS Elemental Live, AWS Elemental Server, AWS Elemental
MediaPackage, AWS Elemental MediaLive, Amazon Elastic Transcoder, and Amazon
Kinesis Video Streams infringe U.S. Patent No. 8,605,794, entitled “Method for
Synchronizing Content-Dependent Data Segments of Files”; that Amazon Echo
Show, Amazon Echo Spot, Amazon Connect, Amazon Chime, and Amazon Kinesis Video
Streams infringe U.S. Patent No. 7,266,682, entitled “Method and System for
Transmitting Data from a Transmitter to a Receiver and Transmitter and
Receiver Therefore”; that AWS Auto Scaling and Amazon EC2 Auto Scaling
infringe U.S. Patent No. 6,880,156, entitled “Demand Responsive Method and
Apparatus to Automatically Activate Spare Servers”; and that Amazon Prime
Video infringes U.S. Patent No. 7,440,559, entitled “System and Associated
Terminal, Method and Computer Program Product for Controlling the Flow of
Content.” The complaint seeks an unspecified amount of damages, enhanced
damages, attorneys’ fees, costs, interest, and injunctive relief. We dispute
the allegations of wrongdoing and intend to defend ourselves vigorously in
this matter.

In addition, we are regularly subject to claims, litigation, and other
proceedings, including potential regulatory proceedings, involving patent and
other intellectual property matters, taxes, labor and employment, competition
and antitrust, privacy and data protection, consumer protection, commercial
disputes, goods and services offered by us and by third parties, and other
matters.

The outcomes of our legal proceedings and other contingencies are inherently
unpredictable, subject to significant uncertainties, and could be material to
our operating results and cash flows for a particular period. We evaluate, on
a regular basis, developments in our legal proceedings and other contingencies
that could affect the amount of liability, including amounts in excess of any
previous accruals and reasonably possible losses disclosed, and make
adjustments and changes to our accruals and disclosures as appropriate. For
the matters we disclose that do not include an estimate of the amount of loss
or range of losses, such an estimate is not possible or is immaterial, and we
may be unable to estimate the possible loss or range of losses that could
potentially result from the application of non-monetary remedies. Until the
final resolution of such matters, if any of our estimates and assumptions
change or prove to have been incorrect, we may experience losses in excess of
the amounts recorded, which could have a material effect on our business,
consolidated financial position, results of operations, or cash flows.

See also “Note 9 — Income Taxes.”

Note 8 — STOCKHOLDERS’ EQUITY

Preferred Stock

We have authorized 500 million shares of $0.01 par value preferred stock. No
preferred stock was outstanding for any year presented.

Common Stock

Common shares outstanding plus shares underlying outstanding stock awards
totaled 512 million, 518 million, and 523 million, as of December 31, 2019,
2020, and 2021. These totals include all vested and unvested stock awards
outstanding, including those awards we estimate will be forfeited.

Stock Repurchase Activity

In February 2016, the Board of Directors authorized a program to repurchase up
to $5.0 billion of our common stock, with no fixed expiration. There were no
repurchases of common stock in 2019, 2020, or 2021. During the period from
January 1, 2022 through February 2, 2022, we repurchased 0.5 million shares of
our common stock for $1.3 billion.

Stock Award Plans

Employees vest in restricted stock unit awards over the corresponding service
term, generally between two and five years.

Stock Award Activity

Stock-based compensation expense is as follows (in millions):

(1)The related tax benefits were $1.4 billion, $1.9 billion, and $2.7 billion
for 2019, 2020, and 2021.

The following table summarizes our restricted stock unit activity (in
millions):

Scheduled vesting for outstanding restricted stock units as of December 31,
2021, is as follows (in millions):

As of December 31, 2021, there was $16.6 billion of net unrecognized
compensation cost related to unvested stock-based compensation arrangements.
This compensation is recognized on an accelerated basis with approximately
half of the compensation expected to be expensed in the next twelve months,
and has a remaining weighted-average recognition period of 1.1 years. The
estimated forfeiture rate as of December 31, 2019, 2020, and 2021 was 27%.
Changes in our estimates and assumptions relating to forfeitures may cause us
to realize material changes in stock-based compensation expense in the future.

During 2019, 2020, and 2021, the fair value of restricted stock units that
vested was $11.7 billion, $15.5 billion, and $18.2 billion.

Common Stock Available for Future Issuance

As of December 31, 2021, common stock available for future issuance to
employees is 97 million shares.

Note 9 — INCOME TAXES

In 2019, 2020, and 2021, we recorded net tax provisions of $2.4 billion, $2.9
billion, and $4.8 billion. Tax benefits relating to excess stock-based
compensation deductions and accelerated depreciation deductions are reducing
our U.S. taxable income. Cash taxes paid, net of refunds, were $881 million,
$1.7 billion, and $3.7 billion for 2019, 2020, and 2021.

Certain foreign subsidiary earnings and losses are subject to current U.S.
taxation and the subsequent repatriation of those earnings is not subject to
tax in the U.S. The U.S. tax rules also provide for enhanced accelerated
depreciation deductions by allowing the election of full expensing of
qualified property, primarily equipment, through 2022. Our federal tax
provision included the election of full expensing of qualified property for
2019 and a partial election for 2020 and 2021.

The components of the provision for income taxes, net are as follows (in
millions):

U.S. and international components of income before income taxes are as follows
(in millions):

The items accounting for differences between income taxes computed at the
federal statutory rate and the provision recorded for income taxes are as
follows (in millions):

(1)Includes non-deductible stock-based compensation and excess tax benefits
from stock-based compensation. Our tax provision includes $1.4 billion, $1.8
billion, and $1.9 billion of excess tax benefits from stock-based compensation
for 2019, 2020, and 2021.

(2)U.S. companies are eligible for a deduction that lowers the effective tax
rate on certain foreign income. This regime is referred to as the Foreign-
Derived Intangible Income deduction (“FDII”).

Our provision for income taxes in 2020 was higher than in 2019 primarily due
to an increase in pretax income. This was partially offset by the impact of
developments in our ongoing global tax controversies on taxes related to our
foreign earnings and losses, an increase in excess tax benefits from stock-
based compensation, and an increase in our foreign income deduction under
FDII. In addition, our Luxembourg operations generated earnings in 2020 and
utilized deferred tax assets previously subject to valuation allowances.

Our provision for income taxes in 2021 was higher than in 2020 primarily due
to an increase in pretax income. This was partially offset by an increase in
U.S. federal research and development credits and the impact of the
distribution of certain intangible assets from Luxembourg to the U.S. in Q4
2021, resulting in the utilization of $2.6 billion of Luxembourg deferred tax
assets previously subject to a valuation allowance.

We intend to invest substantially all of our foreign subsidiary earnings, as
well as our capital in our foreign subsidiaries, indefinitely outside of the
U.S. in those jurisdictions in which we would incur significant, additional
costs upon repatriation of such amounts.

Deferred income tax assets and liabilities are as follows (in millions):

(1)Deferred tax assets are presented after tax effects and net of tax
contingencies.

(2)Relates primarily to deferred tax assets that would only be realizable upon
the generation of net income in certain foreign taxing jurisdictions.

Our valuation allowances primarily relate to foreign deferred tax assets,
including substantially all of our foreign net operating loss carryforwards as
of December 31, 2021. Our foreign net operating loss carryforwards for income
tax purposes as of December 31, 2021 were approximately $9.2 billion before
tax effects and certain of these amounts are subject to annual limitations
under applicable tax law. If not utilized, a portion of these losses will
begin to expire in 2022.

Tax Contingencies

We are subject to income taxes in the U.S. (federal and state) and numerous
foreign jurisdictions. Significant judgment is required in evaluating our tax
positions and determining our provision for income taxes. During the ordinary
course of business, there are many transactions and calculations for which the
ultimate tax determination is uncertain. We establish reserves for tax-related
uncertainties based on estimates of whether, and the extent to which,
additional taxes will be due. These reserves are established when we believe
that certain positions might be challenged despite our belief that our tax
return positions are fully supportable. We adjust these reserves in light of
changing facts and circumstances, such as the outcome of tax audits. The
provision for income taxes includes the impact of reserve provisions and
changes to reserves that are considered appropriate.

The reconciliation of our tax contingencies is as follows (in millions):

(1)As of December 31, 2021, we had approximately $3.2 billion of accrued tax
contingencies of which $1.6 billion, if fully recognized, would decrease our
effective tax rate.

As of December 31, 2020 and 2021, we had accrued interest and penalties, net
of federal income tax benefit, related to tax contingencies of $83 million and
$110 million. Interest and penalties, net of federal income tax benefit,
recognized for the years ended December 31, 2019, 2020, and 2021 was $4
million, $(48) million, and $28 million.

We are under examination, or may be subject to examination, by the Internal
Revenue Service (“IRS”) for the calendar year 2016 and thereafter. These
examinations may lead to ordinary course adjustments or proposed adjustments
to our taxes or our net operating losses with respect to years under
examination as well as subsequent periods. We resolved the audits of tax years
2007 through 2015 with the IRS for amounts that were materially consistent
with our accrual.

In October 2014, the European Commission opened a formal investigation to
examine whether decisions by the tax authorities in Luxembourg with regard to
the corporate income tax paid by certain of our subsidiaries comply with
European Union rules on state aid. On October 4, 2017, the European Commission
announced its decision that determinations by the tax authorities in
Luxembourg did not comply with European Union rules on state aid. Based on
that decision the European Commission announced an estimated recovery amount
of approximately €250 million, plus interest, for the period May 2006 through
June 2014, and ordered Luxembourg tax authorities to calculate the actual
amount of additional taxes subject to recovery. Luxembourg computed an initial
recovery amount, consistent with the European Commission’s decision, which we
deposited into escrow in March 2018, subject to adjustment pending conclusion
of all appeals. In December 2017, Luxembourg appealed the European
Commission’s decision. In May 2018, we appealed. On May 12, 2021, the European
Union General Court annulled the European Commission’s state aid decision. In
July 2021, the European Commission appealed the decision to the European Court
of Justice. We will continue to defend ourselves vigorously in this matter. We
are also subject to taxation in various states and other foreign jurisdictions
including China, France, Germany, India, Japan, Luxembourg, and the United
Kingdom. We are under, or may be subject to, audit or examination and
additional assessments by the relevant authorities in respect of these
particular jurisdictions primarily for 2009 and thereafter.

Changes in tax laws, regulations, administrative practices, principles, and
interpretations may impact our tax contingencies. The timing of the resolution
of income tax controversies is highly uncertain, and the amounts ultimately
paid, if any, upon resolution of the issues raised by the taxing authorities
may differ from the amounts accrued. It is reasonably possible that within the
next twelve months we will receive additional assessments by various tax
authorities or possibly reach resolution of income tax controversies in one or
more jurisdictions. These assessments or settlements could result in changes
to our contingencies related to positions on prior years’ tax filings. The
actual amount of any change could vary significantly depending on the ultimate
timing and nature of any settlements. We cannot currently provide an estimate
of the range of possible outcomes.

Note 10 — SEGMENT INFORMATION

We have organized our operations into three segments: North America,
International, and AWS. We allocate to segment results the operating expenses
“Fulfillment,” “Technology and content,” “Marketing,” and “General and
administrative” based on usage, which is generally reflected in the segment in
which the costs are incurred. The majority of technology infrastructure costs
are allocated to the AWS segment based on usage. The majority of the remaining
non-infrastructure technology costs are incurred in the U.S. and are allocated
to our North America segment. There are no internal revenue transactions
between our reportable segments. These segments reflect the way our chief
operating decision maker evaluates the Company’s business performance and
manages its operations.

North America

The North America segment primarily consists of amounts earned from retail
sales of consumer products (including from sellers) and subscriptions through
North America-focused online and physical stores. This segment includes export
sales from these online stores.

International

The International segment primarily consists of amounts earned from retail
sales of consumer products (including from sellers) and subscriptions through
internationally-focused online stores. This segment includes export sales from
these internationally-focused online stores (including export sales from these
online stores to customers in the U.S., Mexico, and Canada), but excludes
export sales from our North America-focused online stores.

AWS

The AWS segment consists of amounts earned from global sales of compute,
storage, database, and other services for start-ups, enterprises, government
agencies, and academic institutions.

Information on reportable segments and reconciliation to consolidated net
income (loss) is as follows (in millions):

Net sales by groups of similar products and services, which also have similar
economic characteristics, is as follows (in millions):

(1)Includes product sales and digital media content where we record revenue
gross. We leverage our retail infrastructure to offer a wide selection of
consumable and durable goods that includes media products available in both a
physical and digital format, such as books, videos, games, music, and
software. These product sales include digital products sold on a transactional
basis. Digital product subscriptions that provide unlimited viewing or usage
rights are included in “Subscription services.”

(2)Includes product sales where our customers physically select items in a
store. Sales to customers who order goods online for delivery or pickup at our
physical stores are included in “Online stores.”

(3)Includes commissions and any related fulfillment and shipping fees, and
other third-party seller services.

(4)Includes annual and monthly fees associated with Amazon Prime memberships,
as well as digital video, audiobook, digital music, e-book, and other non-AWS
subscription services.

(5)Includes sales of advertising services to sellers, vendors, publishers,
authors, and others, through programs such as sponsored ads, display, and
video advertising.

(6)Includes sales related to various other service offerings.

Net sales are attributed to countries primarily based on country-focused
online and physical stores or, for AWS purposes, the selling entity. Net sales
attributed to countries that represent a significant portion of consolidated
net sales are as follows (in millions):

Total segment assets exclude corporate assets, such as cash and cash
equivalents, marketable securities, other long-term investments, corporate
facilities, goodwill and other acquired intangible assets, and tax assets.
Technology infrastructure assets are allocated among the segments based on
usage, with the majority allocated to the AWS segment. Total segment assets
reconciled to consolidated amounts are as follows (in millions):

(1)North America and International segment assets primarily consist of
property and equipment, operating leases, inventory, and accounts receivable.

(2)AWS segment assets primarily consist of property and equipment and accounts
receivable.

Property and equipment, net by segment is as follows (in millions):

Total net additions to property and equipment by segment are as follows (in
millions):

(1)Includes property and equipment added under finance leases of $3.8 billion,
$5.6 billion, and $3.6 billion in 2019, 2020, and 2021, and under build-to-
suit lease arrangements of $1.3 billion, $2.7 billion, and $5.6 billion in
2019, 2020, and 2021.

(2)Includes property and equipment added under finance leases of $10.6
billion, $7.7 billion, and $3.5 billion in 2019, 2020, and 2021, and under
build-to-suit lease arrangements of $0 million, $130 million, and $51 million
in 2019, 2020, and 2021.

U.S. property and equipment, net and operating leases were $69.8 billion,
$109.5 billion, and $155.0 billion, in 2019, 2020, and 2021, and non-U.S.
property and equipment, net and operating leases were $28.0 billion, $41.2
billion, and $61.3 billion in 2019, 2020, and 2021. Except for the U.S.,
property and equipment, net and operating leases in any single country were
less than 10% of consolidated property and equipment, net and operating
leases.

Depreciation and amortization expense on property and equipment, including
corporate property and equipment, are allocated to all segments based on
usage. Total depreciation and amortization expense, by segment, is as follows
(in millions):

Item 9. Changes in and Disagreements with Accountants On Accounting and
Financial Disclosure  

None.

Item 9A. Controls and Procedures  

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation required by the Securities Exchange Act of 1934
(the “1934 Act”), under the supervision and with the participation of our
principal executive officer and principal financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rule 13a-15(e) of the 1934 Act, as of December 31,
2021. Based on this evaluation, our principal executive officer and principal
financial officer concluded that, as of December 31, 2021, our disclosure
controls and procedures were effective to provide reasonable assurance that
information required to be disclosed by us in the reports that we file or
submit under the 1934 Act is recorded, processed, summarized, and reported
within the time periods specified in the SEC’s rules and forms and to provide
reasonable assurance that such information is accumulated and communicated to
our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Rule 13a-15(f) of the 1934
Act. Management has assessed the effectiveness of our internal control over
financial reporting as of December 31, 2021 based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. As a result of this
assessment, management concluded that, as of December 31, 2021, our internal
control over financial reporting was effective in providing reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. Ernst & Young has independently assessed the
effectiveness of our internal control over financial reporting and its report
is included below.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during
the quarter ended December 31, 2021 that materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

Limitations on Controls

Our disclosure controls and procedures and internal control over financial
reporting are designed to provide reasonable assurance of achieving their
objectives as specified above. Management does not expect, however, that our
disclosure controls and procedures or our internal control over financial
reporting will prevent or detect all error and fraud. Any control system, no
matter how well designed and operated, is based upon certain assumptions and
can provide only reasonable, not absolute, assurance that its objectives will
be met. Further, no evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, within the Company have been detected.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Amazon.com, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Amazon.com, Inc.’s internal control over financial reporting
as of December 31, 2021, based on criteria established in Internal Control —
Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (2013 framework) (the COSO criteria). In our opinion,
Amazon.com, Inc. (the Company) maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2021, based on
the COSO criteria.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the consolidated balance
sheets of the Company as of December 31, 2021 and 2020, and the related
consolidated statements of operations, comprehensive income, stockholders’
equity, and cash flows for each of the three years in the period ended
December 31, 2021 and the related notes and our report dated February 3, 2022
expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness
of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting
was maintained in all material respects.

Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Seattle, Washington

February 3, 2022

Item 9B. Other Information  

Not applicable.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections  

Not applicable.

PART III

Item 10.

Directors, Executive Officers, and Corporate Governance  

Information regarding our Executive Officers required by Item 10 of Part III
is set forth in Item 1 of Part I “Business — Information About Our Executive
Officers.” Information required by Item 10 of Part III regarding our Directors
and any material changes to the process by which security holders may
recommend nominees to the Board of Directors is included in our Proxy
Statement relating to our 2022 Annual Meeting of Shareholders, and is
incorporated herein by reference. Information relating to our Code of Business
Conduct and Ethics and, to the extent applicable, compliance with Section
16(a) of the 1934 Act is set forth in our Proxy Statement relating to our 2022
Annual Meeting of Shareholders and is incorporated herein by reference. To the
extent permissible under Nasdaq rules, we intend to disclose amendments to our
Code of Business Conduct and Ethics, as well as waivers of the provisions
thereof, on our investor relations website under the heading “Corporate
Governance” at amazon.com/ir.

Item 11.

Executive Compensation  

Information required by Item 11 of Part III is included in our Proxy Statement
relating to our 2022 Annual Meeting of Shareholders and is incorporated herein
by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters  

Information required by Item 12 of Part III is included in our Proxy Statement
relating to our 2022 Annual Meeting of Shareholders and is incorporated herein
by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Independence  

Information required by Item 13 of Part III is included in our Proxy Statement
relating to our 2022 Annual Meeting of Shareholders and is incorporated herein
by reference.

Item 14.

Principal Accountant Fees and Services  

Information required by Item 14 of Part III is included in our Proxy Statement
relating to our 2022 Annual Meeting of Shareholders and is incorporated herein
by reference.

PART IV

Item 15.

Exhibits, Financial Statement Schedules  

(a) List of Documents Filed as a Part of This Report:

(1) Index to Consolidated Financial Statements:

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

Consolidated Statements of Cash Flows for each of the three years ended
December 31, 2021

Consolidated Statements of Operations for each of the three years ended
December 31, 2021

Consolidated Statements of Comprehensive Income for each of the three years
ended December 31, 2021

Consolidated Balance Sheets as of December 31, 2020 and 2021

Consolidated Statements of Stockholders’ Equity for each of the three years
ended December 31, 2021

Notes to Consolidated Financial Statements

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

(2) Index to Financial Statement Schedules:

All schedules have been omitted because the required information is included
in the consolidated financial statements or the notes thereto, or because it
is not required.

(3) Index to Exhibits

See exhibits listed under Part (b) below.

(b) Exhibits:

Officers’ Certificate of Amazon.com, Inc., dated as of May 12, 2021,
containing Form of 0.250% Note due 2023, Form of 0.450% Note due 2024, Form of
1.000% Note due 2026, Form of 1.650% Note due 2028, Form of 2.100% Note due
2031, Form of 2.875% Note due 2041, Form of 3.100% Note due 2051, and Form of
3.250% Note due 2061 (incorporated by reference to the Company’s Current
Report on Form 8-K, filed May 12,
 
Description of Securities (incorporated by reference to the Company’s Annual
Report on Form 10-K for the Year ended December 31,
 
1997 Stock Incentive Plan (amended and restated) (incorporated by reference
to the Company’s Quarterly Report on Form 10-Q for the Quarter ended March 31,
 
1999 Nonofficer Employee Stock Option Plan (amended and restated)
(incorporated by reference to the Company’s Quarterly Report on Form 10-Q for
the Quarter ended March 31,
 
Form of Indemnification Agreement between the Company and each of its
Directors (incorporated by reference to Exhibit 10.1 to the Company’s
Registration Statement on Form S-1 (Registration No. 333-23795) filed March
24, 1997, as amended on April 21,
 
Form of Restricted Stock Unit Agreement for Officers and Employees
(incorporated by reference to the Company’s Annual Report on Form 10-K for the
Year ended December 31,
 
Form of Restricted Stock Unit Agreement for Directors (incorporated by
reference to the Company’s Annual Report on Form 10-K for the Year ended
December 31,
 
Form of Restricted Stock Agreement (incorporated by reference to the
Company’s Annual Report on Form 10-K for the Year ended December 31,
 
Form of Global Restricted Stock Unit Award Agreement for Executive
Officers

Amended and Restated Credit Agreement, dated as of June 23,
 as amended by the First Amendment thereto,
dated as of November 24, 2021,
 among Amazon.com,
Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other
lenders party thereto
 
List of Significant Subsidiaries.
 
Consent of Independent Registered Public Accounting
Firm.
 
Certification of 
Andrew R.
Jassy

President
 and Chief
Executive Officer of Amazon.com, Inc., pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.
 
Certification of Brian T. Olsavsky, Senior Vice President and Chief Financial
Officer of Amazon.com, Inc., pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
 
Certification of 
Andrew R.
Jassy

President
 and Chief
Executive Officer of Amazon.com, Inc., pursuant to 18 U.S.C. Section
 
Certification of Brian T. Olsavsky, Senior Vice President and Chief Financial
Officer of Amazon.com, Inc., pursuant to 18 U.S.C. Section
 
101  The following financial statements from the Company’s Annual Report on
Consolidated Statements of Cash Flows, (ii) Consolidated Statements of
Operations, (iii) Consolidated Statements of Comprehensive Income, (iv)
Consolidated Balance Sheets, (v) Consolidated Statements of Stockholders’
Equity, and (vi) Notes to Consolidated Financial Statements, tagged as blocks
of text and including detailed tags.  

As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has
not filed with this Annual Report on Form 10-K certain instruments defining
the rights of holders of long-term debt of the Company and its subsidiaries
because the total amount of securities authorized thereunder does not exceed
10 percent of the total assets of the Company and its subsidiaries on a
consolidated basis. The Company agrees to furnish a copy of such agreements to
the Commission upon request.  

† Executive Compensation Plan or Agreement.

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized, as of February 3, 2022.

AMAZON.COM, INC.  

By: /s/ Andrew R. Jassy

  Andrew R. Jassy

  President and Chief Executive Officer  

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of February 3, 2022.

Signature  Title  

/s/ Andrew R. Jassy 

Andrew R. Jassy  President and Chief Executive Officer (Principal Executive
Officer)  

/s/ Brian T. Olsavsky 

Brian T. Olsavsky  Senior Vice President and Chief Financial Officer
(Principal Financial Officer)  

/s/ Shelley L. Reynolds 

Shelley L. Reynolds  Vice President, Worldwide Controller (Principal
Accounting Officer)  

/s/ Jeffrey P. Bezos 

Jeffrey P. Bezos  Executive Chair  

/s/ Keith B. Alexander 

Keith B. Alexander  Director  

/s/ Edith W. Cooper 

Edith W. Cooper  Director  

/s/ Jamie S. Gorelick 

Jamie S. Gorelick  Director  

/s/ Daniel P. Huttenlocher 

Daniel P. Huttenlocher  Director  

/s/ Judith A. McGrath 

Judith A. McGrath  Director  

/s/ Indra K. Nooyi 

Indra K. Nooyi  Director  

/s/ Jonathan J. Rubinstein 

Jonathan J. Rubinstein  Director  

/s/ Patricia Q. Stonesifer 

Patricia Q. Stonesifer  Director  

/s/ Wendell P. Weeks 

Wendell P. Weeks  Director  

EX-10.7 2 amzn-20211231xex107.htm EX-10.7  Document

Exhibit 10.7

THE SHARES ISSUABLE UPON VESTING OF THIS AWARD WILL NOT BE RELEASED TO YOU
UNTIL ALL APPLICABLE TAX-RELATED ITEMS HAVE BEEN COLLECTED FROM YOU OR HAVE
OTHERWISE BEEN PROVIDED FOR.  

AMAZON.COM, INC.

GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT

TO: <

You have been granted this restricted stock unit award (the "Award") by
Amazon.com, Inc. (the "Company") pursuant to the Company's 1997 Stock
Incentive Plan (the "Plan"). The Award represents an unsecured and unfunded
promise of the Company to deliver Common Stock of the Company in the future
subject to the fulfillment of the vesting conditions set forth in this Global
Restricted Stock Unit Award Agreement.

1.Introduction. The terms of the Award are as set forth in this Global
Restricted Stock Unit Award Agreement including any country-specific terms in
the Appendix hereto (the "Appendix") (together, this "Agreement") and in the
Plan. The Plan is incorporated into this Agreement by reference, which means
that this Agreement is limited by and subject to the express terms and
provisions of the Plan. In the event of a conflict between the terms of this
Agreement and the terms of the Plan, the terms of the Plan shall control.
Capitalized terms that are not defined in this Agreement have the meanings
given to them in the Plan. The most important terms of the Award are
summarized as follows:

2.Award Date:

3.Number of Restricted Stock Units Subject to this Award:

4.Vesting Schedule: Subject to your continuous employment and the terms of
this Agreement, including, without limitation, Sections 6 and 7, the Award
will vest according to the following schedule:

Vest Date Number of Shares

The number of Restricted Stock Units, vesting schedule of the Restricted Stock
Units, and Award Date with respect to this Award, all of which are accessible
to you through your brokerage account with the Company’s designated brokerage
firm (“the Designated Broker”), are hereby incorporated into this Agreement by
reference if not set forth above.

Notwithstanding the foregoing, if at any time you become an officer required
to file reports pursuant to Section 16 of the Securities Exchange Act of 1934,
as amended, then with respect to any part of this Award that is then unvested,
vesting shall in addition be contingent on and subject to satisfaction of such
performance criteria for such performance period as the Plan Administrator
shall establish with specific reference to this Award, and this Award shall be
cancelled without the issuance of Common Stock if and to the extent any such
performance criteria are not satisfied.

5.Conversion of Restricted Stock Units and Issuance of Shares. Upon each
vesting of the Award (each, a "Vest Date"), one share of Common Stock shall be
issuable for each restricted stock unit that vests on such Vest Date (the
“Shares”), subject to the terms and provisions of the Plan and this Agreement.
Thereafter, the Company will transfer such Shares to you upon satisfaction of
any required Tax-Related Items (as defined in Section 9). No fractional shares
shall be issued under this Agreement.

6.Termination of Employment. The unvested portion of the Award will terminate
automatically and be forfeited to the Company immediately and without further
notice upon the voluntary or involuntary termination of your employment with
the Company or any Subsidiary for any reason (including as a result of death
or disability), except to the extent that the Plan Administrator has provided
for accelerated vesting in the event of death. Notwithstanding the foregoing,
in no event shall accelerated vesting on death apply if, at the time of grant
of this Award or at any time thereafter, you become employed as the Chief
Executive Officer of the Company. No Shares shall be issued or issuable with
respect to any portion of the Award that terminates unvested and is forfeited.

For purposes of the Award, your employment will be considered terminated as of
the date the Company determines you are no longer actively providing services
to the Company or a Subsidiary (regardless of the reason for such termination
and whether or not later found to be invalid or in breach of employment laws
in the jurisdiction where you are employed or the terms of your employment
agreement, if any), and unless otherwise expressly provided in this Agreement
or determined by the Company, your right to continue to vest in the Award, if
any, will terminate as of such date and will not be extended by any notice
period (e.g., your period of service would not include any contractual notice
period or any period of "garden leave" or similar period mandated under
employment laws, statutory laws, regulatory laws or common laws in the
jurisdiction where you are employed or the terms of your employment agreement,
if any).

Unless the Plan Administrator determines otherwise, a transfer of employment
or services between or among the Company and its Subsidiaries shall not be
considered a termination of employment. Further, unless the Plan Administrator
determines otherwise, including through policies it may adopt from time to
time regarding part-time work arrangements or reduced work schedules, and
except as otherwise required by local law, for purposes of this Award only,
any reduction in your regular hours of employment to less than thirty hours
per week is deemed a termination of your employment with the Company or any
Subsidiary. In case of termination of your employment for Cause or for a
violation of the Company’s code of business conduct and ethics, the Award
shall automatically terminate upon first notification to you of such
termination, unless the Plan Administrator determines otherwise. If your
employment is suspended pending an investigation of whether you should be
terminated for Cause or for a violation of the Company’s code of business
conduct and ethics, all of your rights under the Award likewise may be
suspended during the period of investigation. The Plan Administrator, the Vice
President of Human Resources, the Associate General Counsel, Labor and
Employment, or any other officer of the Company delegated such authority by
the Plan Administrator shall have the exclusive discretion to determine when
you are no longer actively providing services to the Company or any Subsidiary
or when your rights under the Award may be suspended pending an investigation
of whether you should be terminated for Cause or a violation of the Company’s
code of business conduct and ethics.

7.Leave of Absence and Change in Work Schedule. Your rights under the Award in
the event of a leave of absence or a change in your regularly scheduled hours
of employment (other than a change addressed in Section 6 of this Agreement)
will be affected in accordance with applicable Company policies, including its
leave of absence policy and policies regarding part-time work arrangements or
reduced work schedules, and this Agreement. A copy of the Company's leave of
absence policy or other applicable policies may be obtained by contacting the
Company's stock plan administration team.

8.Right to Shares. You shall not have any right in, to or with respect to any
of the Shares (including any voting rights or rights with respect to dividends
paid on the Common Stock) issuable under the Award until the Award is settled
by the issuance of such Shares to you.

9.Taxes.

(a)Responsibility for Taxes. You acknowledge that, regardless of any action
taken by the Company or, if different, your employer (the "Employer"), the
ultimate liability for all income tax, social insurance payroll tax, fringe
benefits tax, payment on account or other tax-related items related to your
participation in the Plan and legally applicable to you or deemed by the
Company or the Employer in its discretion to be an appropriate charge to you
even if legally applicable to the Company or the Employer (collectively, "Tax-
Related Items") is and remains your responsibility and may exceed the amount
(if any) withheld by the Company or the Employer. You further acknowledge that
(i) neither the Company nor the Employer make any representation or
undertaking regarding the treatment of any Tax-Related Items in connection
with any aspect of the Award including without limitation, the grant, vesting,
or settlement of the Award or the subsequent sale of Shares issued pursuant to
the Award; and (ii) the Company and the Employer do not commit to and are
under no obligation to structure the Award to reduce or eliminate your
liability for Tax-Related Items or achieve any particular tax result. Further,
if you are subject to Tax-Related Items in more than one jurisdiction between
the Award Date and the date of any relevant taxable or tax withholding event,
as applicable, you acknowledge that the Company or the Employer (or former
employer, as applicable) may be required to withhold or account for Tax-
Related Items in more than one jurisdiction.

(b)Payment of Tax-Related Items. Prior to any event in connection with the
Award (e.g., vesting) that gives rise to a Tax-Related Items obligation, you
must arrange for the satisfaction of such Tax -Related Items in a manner
acceptable to the Company and the Employer.

(i)By Sale of Shares. Unless you choose to satisfy the Tax-Related Items by
some other means in accordance with clause (ii) below, your acceptance of this
Award constitutes your instruction and authorization to the Company and the
Designated Broker to sell on your behalf a number of Shares from those Shares
issued to you as the Company determines to be appropriate to generate cash
proceeds sufficient to satisfy your obligation for Tax-Related

Items. Such Shares will be sold on the day of the event giving rise to the
Tax-Related Items (e.g., a Vest Date) or as soon thereafter as practicable.
You will be responsible for all broker's fees and other costs of sale, and you
agree to indemnify and hold the Company harmless from any losses, costs,
damages, or expenses relating to any such sale. The number of Shares sold may
be determined by considering any applicable withholding rates, including
maximum applicable rates, and to the extent the proceeds of such sale exceed
your obligation for Tax-Related Items, the Company agrees to pay such excess
in cash to you through payroll or otherwise as soon as practicable and you
acknowledge that you have no entitlement to the equivalent in Shares. You
further acknowledge that the Company or its designee is under no obligation to
arrange for such sale at any particular price, and that the proceeds of any
such sale may not be sufficient to satisfy your obligation for Tax-Related
Items. Accordingly, you agree to pay to the Company or any of its Subsidiaries
including the Employer as soon as practicable, including through additional
payroll withholding, any amount of the Tax -Related Items that is not
satisfied by the sale of Shares described above.

(ii)By Wire Transfer or Other Means. At any time not less than five business
days before any obligation for Tax-Related Items arises (e.g., a Vest Date),
you may elect to satisfy your obligation for Tax-Related Items by delivering
to the Company an amount that the Company determines is sufficient to satisfy
the Tax-Related Items by wire transfer to such account as the Company may
direct, or such other means as the Company may establish or permit. If you
have made an election to satisfy your obligation for Tax-Related Items by wire
transfer or other means and, as determined by the Company, have not adequately
funded the obligation for Tax-Related Items within five business days before a
Vest Date for this Award or any other award of restricted stock units granted
to you under the Plan, the Company reserves the right to satisfy your
obligation for Tax-Related Items pursuant to the method described above in
9(b)(i).

(c)Right to Retain Shares or Cash. The Company may refuse to issue or deliver
any Shares or the proceeds from the sale of Shares to you until the obligation
for any Tax-Related Items due in connection with the Award has been satisfied.
To the extent permitted by law, the Company has the right to retain, without
notice, from Shares issuable under the Award, Shares having a value sufficient
to satisfy the Tax-Related Items. Further, the Company or the Employer has the
right to retain, without notice, from salary or other amounts payable to you,
cash sufficient to satisfy the Tax-Related Items. If your obligation for Tax-
Related Items is satisfied by the Company withholding in Shares, for tax
purposes, you are deemed to have been issued the full number of Shares subject
to the vested Award, notwithstanding that a number of the Shares is held back
solely for the purpose of paying the Tax-Related Items. You agree to pay to
the Company or the Employer any amount of Tax-Related Items that the Company
or the Employer may be required to withhold or account for as a result of your
participation in the Plan that cannot be satisfied by the means described in
this Section 9.

10.Registration. The Company currently has an effective registration statement
on file with the U.S. Securities and Exchange Commission with respect to the
Shares subject to the Award. The Company intends to maintain this registration
but has no obligation to do so. If the registration ceases to be effective,
you will not be able to transfer or sell Shares issued to you pursuant to the
Award unless exemptions from registration under applicable securities laws are
available. Such exemptions from registration are very limited and might be
unavailable. You agree that any resale by you of the Shares issued pursuant to
the Award shall comply in all respects with the requirements of all applicable
securities laws, rules and regulations, including, without limitation, the
provisions of the Securities Act, the Exchange Act and the respective rules
and regulations promulgated thereunder, and any other law, rule or regulation
including, without limitation, applicable securities law and exchange control
regulations for your country of residence, as all may be amended from time to
time. The Company shall not be obligated to either issue the Shares (or any
benefit in lieu of the Shares) or permit the resale of any Shares if such
issuance or resale would violate any such requirements.

11.Limitation on Rights; Nature of Grant. By entering into this Agreement and
accepting the Award, you acknowledge, understand and agree that:

(a) the Plan is established voluntarily by the Company, it is discretionary in
nature and it may be modified, suspended or terminated by the Company at any
time, to the extent permitted by the Plan;

(b)the grant of the Award is a one-time benefit and does not create any
contractual or other right to receive future grants of awards or benefits in
lieu of awards, even if awards have been granted in the past;

(c)all determinations with respect to any future grants, of awards will be at
the sole discretion of the Company;

(d)your participation in the Plan is voluntary;

(e)the Award and the Shares subject to the Award are not intended to replace
any pension rights or compensation;

(f)the Award and the Shares subject to the Award, and the income and value of
same, are not part of normal or expected compensation for purposes of
calculating any benefits, severance, resignation, termination, redundancy,
dismissal, end of service payments, bonuses, long-service awards, pension or
retirement or welfare benefits or similar payments;

(g)no claim or entitlement to compensation or damages shall arise as a
consequence of your forfeiture of any unvested portion of the Award as a
result of the termination of your employment (for any reason whatsoever,
whether or not later found to be invalid or in breach of employment laws in
the jurisdiction where you are employed or the terms of your employment
agreement, if any) and, in consideration of the grant of the Award to which
you are otherwise not entitled, you irrevocably agree never to institute any
claim against the Company, any Subsidiary or the Employer;

(h)the future value of the Common Stock subject to the Award is unknown,
indeterminable and cannot be predicted with certainty,

(i)neither the Plan, the Award nor the issuance of the Shares shall create a
right to employment or be interpreted to form an employment contract with the
Employer, the Company, or any Subsidiary and shall not interfere with the
ability of the Company, any Subsidiary or the Employer, as applicable, to
terminate your employment at any time;

(j)unless otherwise provided in the Plan or by the Company in its discretion,
the Award and the benefit evidenced by this Agreement do not create any
entitlement to have the Award or any such benefits transferred to, or assumed
by, another company nor to be exchanged, cashed out or substituted for, in
connection with any corporate transaction affecting the Shares; and

(k)the following provisions apply to you only if you are providing services
outside the United States:

(i) notwithstanding subsection 11(f) hereof, the Award and the Shares subject
to the Award are not part of normal or expected compensation or salary for any
purpose; and

(ii) you acknowledge and agree that neither the Company or any Subsidiary nor
the Employer shall be liable for any foreign exchange rate fluctuation between
your local currency and the U.S. dollar that may affect the value of the Award
or of any amounts due to you pursuant to the settlement of the Award or the
subsequent sale of any Shares issued upon settlement.

12.No Advice Regarding Grant. The Company is not providing any tax, legal or
financial advice, nor is the Company making any recommendations regarding your
participation in the Plan, or your acquisition or sale of the underlying
Shares. You are hereby advised to consult with your own personal tax, legal
and financial advisors regarding your participation in the Plan before taking
any action related to the Plan.

13.Employee Data Privacy. By entering into this Agreement and accepting the
Award:

(a)you explicitly and unambiguously consent to the collection, use and
transfer, in electronic or other form, of any of your personal data as
described in this Agreement and any other restricted stock unit grant
materials (“Data”) by and among, as applicable, the Employer, the Company and
its Subsidiaries for the exclusive purpose of implementing, administering and
managing your participation in the Plan;

(b)you understand that the Company and the Employer may, for the exclusive
purpose of implementing, administering and managing the Plan, hold certain
personal information about you, including but not limited to your name, home
address and telephone number, date of birth, social insurance number or other
identification number, salary, nationality, job title, and details of all
awards or entitlements to Common Stock granted to you under the Plan or
otherwise (“Data”);

(c)you understand that Data will be transferred to, in electronic or other
form, and stored by, a broker or stock plan service provider selected by the
Company, to assist the Company with the implementation, administration and
management of the Plan. You understand that the recipients of the Data may be
located in the United States or elsewhere, and that the recipients’ country
may have different data privacy laws and protections than your country. You
authorize the Company, the broker or stock plan services provider, and any
other possible recipients that may

assist the Company (presently or in the future) with implementing,
administering and managing the Plan to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the sole purpose of
implementing, administering and managing your participation in the Plan.

(d)you understand that Data will be held only as long as is necessary to
implement, administer and manage your participation in the Plan.

(e)you understand that you are providing the consents herein on a purely
voluntary basis, and that if you do not consent, or if you later seek to
revoke your consent, your employment and career with the Employer will not be
adversely affected, and the only adverse consequence of refusing or
withdrawing your consent is that the Company would not be able to grant you
restricted stock units or other equity awards or administer or maintain such
awards, and you therefore understand that refusing or withdrawing your consent
may affect your ability to participate in the Plan; and

(f) you understand that, if you reside outside of the United States, you may,
at any time, request a list with the names and addresses of any potential
recipients of the Data, request access to the Data, request additional
information about the storage and processing of Data, require any necessary
amendments to Data or refuse or withdraw the consents herein, in any case
without cost, by contacting in writing your human resources representative.

14.Severability. In the event that any provision of this Agreement is deemed
to be invalid or unenforceable, in whole or in part, the remaining provisions
shall nevertheless remain in full force and effect without being impaired or
invalidated in any way.

15.Governing Law and Venue. The Award and this Agreement shall be governed by
and construed in accordance with the laws of the State of Washington, U.S.A.,
without regard to conflict of laws principles. Each party agrees to exclusive
personal jurisdiction and venue in the federal and state courts in King
County, Washington, U.S.A., for any dispute arising out of this Agreement.

16.Language. If you have received this Agreement or any other document related
to the Plan or the Award translated into a language other than English and if
the meaning of the translated version is different than the English version,
the English version will control.

17.Electronic Delivery and Acceptance. The Company may, in its sole
discretion, decide to deliver any documents related to the Award and
participation in the Plan or future Awards that may be granted under the Plan
by electronic means or to request your consent to participate in the Plan by
electronic means. You hereby consent to receive such documents by electronic
delivery and, if requested, to agree to participate in the Plan through an on-
line or electronic system established and maintained by the Company or a third
party designated by the Company.

18.Appendix. Notwithstanding the provisions of this Agreement, the Award shall
be subject to any special terms and conditions for your country set forth in
the Appendix to this Agreement. To the extent any provision in the Appendix is
inconsistent with a provision in the body of this Agreement, the provision in
the Appendix shall prevail. Moreover, if you relocate to one of the countries
included in the Appendix, the terms and conditions for such country will apply
to you to the extent the Company determines that the application of such terms
and conditions is necessary or advisable for legal or administrative reasons.

19.Compliance with Applicable Laws. You acknowledge that, as a result of your
participation in the Plan, you may have obligations under applicable
securities, exchange control or other laws or regulations in effect in your
country. Without limitation, such obligations may include obligations to
report your acquisition of Awards or Shares to local regulators, to repatriate
proceeds from the sale of Shares and dividends (if any) to your home country,
to engage a locally licensed intermediary to assist with transactions in the
Shares, or to obtain licenses or approvals from local regulators prior to
acquiring or selling Shares. Further, depending on your country of residence,
you may be subject to insider trading restrictions or market abuse laws, which
may affect your ability to acquire or sell Shares or rights to Shares (e.g.,
restricted stock units) under the Plan during such times as you are considered
to have “inside information” regarding the Company (as defined by the laws in
your country). Any restrictions under these insider trading or market abuse
laws or regulations are separate from and in addition to any restrictions that
may be imposed under any applicable Company insider trading policy. Neither
the Company, the Employer, nor any Subsidiary will be liable for any fines or
penalties that you may incur as a result of your failure to comply with any
applicable laws. You should be aware that securities, exchange control,
insider trading and other laws may change frequently and often without notice.
You are hereby advised to confirm the legal obligations that may arise from
your participation in the Plan with a qualified advisor.

20.Imposition of Other Requirements. The Company reserves the right to impose
other requirements on your participation in the Plan, on the Award and on any
Shares issued in settlement of the Award, to the extent the Company determines
it is necessary or advisable for legal or administrative reasons, and to
require you to sign any additional agreements or undertakings that may be
necessary to accomplish the foregoing.

21.Waiver. You acknowledge that a waiver by the Company of breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any other provision of this Agreement, or of any subsequent breach by you or
any other Participant.

22.Recoupment. By entering into this Agreement and accepting the Award, you
agree that if, at the time of grant of this Award or at any time thereafter,
you (a) are an officer required to file reports under Section 16 of the
Securities Exchange Act of 1934, as amended, or (b) become employed at level
11 or above, this Award and any other equity awards granted to you, the shares
issuable or issued under any such awards, the proceeds from sales of any such
shares, and any cash bonuses paid to you by the Company are subject to
recoupment pursuant to the Company's clawback policy contained in the
Guidelines on Significant Corporate Governance Issues, as amended from time to
time.

23.Execution of Agreement. By electronically or otherwise accepting this
Agreement, you acknowledge your understanding and acceptance of the terms and
conditions of the Award. The Company has no obligation to issue you Shares
under this Agreement if you do not accept the Award. Further, any acceptance
of Shares issued pursuant to this Agreement shall constitute your acceptance
of the Award and your agreement with all terms and conditions of the Award, as
set forth in the Plan and this Agreement.

ACCEPTANCE AND ACKNOWLEDGMENT

If the Company requests that your acceptance of this Agreement be evidenced
other than electronically, please complete and sign the following:

I, a resident of (state, or country if other than U.S.), accept and agree to
the terms of the Restricted Stock Unit Award described in this Agreement and
in the Plan, acknowledge receipt of a copy of this Agreement, the Plan and the
applicable Plan Summary, and acknowledge that I have read them carefully and
that I fully understand their contents.

Dated:

Taxpayer I.D. Number  <

Address:  

AMAZON.COM, INC.

By: 

Title: 

APPENDIX TO THE

AMAZON.COM, INC.

GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT

UNITED STATES

Code Section 409A. For U.S. taxpayers, it is the intent that the grant of the
Award as set forth in this Agreement shall qualify for exemption from or
comply with the requirements of Section 409A of the Code, and any ambiguities
herein will be interpreted to so qualify or comply. The Company reserves the
right, to the extent the Company deems necessary or advisable in its sole
discretion, to unilaterally amend or modify this Agreement as may be necessary
to ensure that all payments provided for under this Agreement are made in a
manner that qualifies for exemption from or complies with Section 409A of the
Code; provided, however, that the Company makes no representation that the
grant, vesting, or settlement of the Award will be exempt from or comply with
Section 409A of the Code and makes no undertaking to preclude Section 409A of
the Code from applying to the grant, vesting or settlement of the Award
granted pursuant to this Agreement. The Company will have no liability to you
or any other party if the Award, the delivery of Shares upon settlement of the
Award or other payment hereunder that is intended to be exempt from, or
compliant with, Section 409A of the Code, is not so exempt or compliant, or
for any action taken by the Company with respect thereto.

EX-10.8 3 amzn-20211231xex108.htm EX-10.8  Document

Exhibit 10.8

EXECUTION VERSION

FIRST AMENDMENT dated as of November 24, 2021 (this “Agreement”), to the
Amended and Restated Credit Agreement dated as of June 23, 2020 (the “Existing
Credit Agreement”), among AMAZON.COM, INC., a Delaware corporation (the
“Company”), certain SUBSIDIARIES of the Company party thereto, each LENDER
from time to time party thereto and JPMORGAN CHASE BANK, N.A., as
Administrative Agent.

WHEREAS, in view of the occurrence of a Benchmark Transition Event with
respect to the LIBO Rate, the Company, the Administrative Agent and the
Lenders desire, subject to the terms and conditions set forth below, to amend
the Existing Credit Agreement on the terms set forth herein (the Existing
Credit Agreement, as so amended, is referred to as the “Amended Credit
Agreement”).

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Capitalized terms used and not otherwise defined
herein (including in the preliminary statements hereto) have the meanings
assigned to them in the Amended Credit Agreement.

SECTION 2. Amendments to the Existing Credit Agreement.

(a) Effective as of the First Amendment Effective Date (as defined below), the
Existing Credit Agreement is hereby amended to be in the form of Exhibit A
attached hereto.

(b) Effective as of the First Amendment Effective Date, Exhibit A to the
Existing Credit Agreement is hereby amended and restated in its entirety to be
in the form of Exhibit B attached hereto.

SECTION 3. Representations and Warranties. The Company represents and warrants
to the other parties hereto that this Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 4. Effectiveness of this Agreement. This Agreement and the amendment
of the Existing Credit Agreement as set forth in Section 2 hereof shall become
effective as of the first date (the “First Amendment Effective Date”) on which
the Administrative Agent shall have executed a counterpart of this Agreement
and shall have received from the Company and each Lender a counterpart of this
Agreement signed on behalf of each party (which, subject to Section 11.10 of
the Existing Credit Agreement, may include any

Electronic Signatures transmitted by facsimile, emailed .pdf or any other
electronic means that reproduces an image of an actual executed signature page
of this Agreement).

The Administrative Agent shall promptly notify, in writing, the Company and
the Lenders of the First Amendment Effective Date, and such notice shall be
conclusive and binding.

SECTION 5. Effect of Amendment; No Novation. (a) Except as expressly set forth
herein, this Agreement shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect the rights and remedies of the
Administrative Agent or the Lenders under the Existing Credit Agreement and
shall not alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Existing
Credit Agreement, all of which shall continue in full force and effect in
accordance with the provisions thereof. Nothing herein shall be deemed to
entitle any of the Borrowers on any other occasion to a consent to, or a
waiver, amendment, modification or other change of, any of the terms,
conditions, obligations, covenants or agreements contained in the Amended
Credit Agreement in similar or different circumstances. Neither this Agreement
nor any provision hereof may be waived, amended or modified except in
accordance with the provisions of Section 11.01 of the Amended Credit
Agreement. This Agreement constitutes a Loan Document for all purposes of the
Amended Credit Agreement and the other Loan Documents.

(b) On and after the First Amendment Effective Date, each reference in the
Existing Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”
or words of like import, as used in the Existing Credit Agreement, shall refer
to the Existing Credit Agreement as amended hereby.

(c) Neither this Agreement nor the effectiveness of the amendments to the
Existing Credit Agreement effected hereby shall extinguish the obligations for
the payment of money outstanding under the Existing Credit Agreement. Nothing
herein contained shall be construed as a substitution or novation of any of
the obligations outstanding under the Existing Credit Agreement, which shall
remain in full force and effect, except as modified hereby. Nothing expressed
or implied in this Agreement or the Amended Credit Agreement shall be
construed as a release or other discharge of any of the Borrowers under the
Existing Credit Agreement from any of its obligations and liabilities
thereunder, as amended hereby.

SECTION 6. Counterparts. This Agreement may be executed in counterparts (and
by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute
a single contract. Delivery of an executed counterpart of a signature page of
or any other electronic means that reproduces an image of the actual executed
signature page shall be effective as delivery of a manually executed
counterpart of this Agreement.

SECTION 7. GOVERNING LAW. THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE
OR CAUSE OF ACTION (WHETHER IN

CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK..

SECTION 8. Headings. Section headings herein are included for convenience of
reference only and shall not affect the interpretation of this Agreement.

SECTION 9. Incorporation by Reference. Sections 11.12, 11.14(b), 11.14(c),
11.14(d), 11.15 and 11.17 of the Existing Credit Agreement are hereby
incorporated by reference herein, mutatis mutandis.

[The remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective authorized officers as of the day
and year first above written.

AMAZON.COM, INC.

by

 /s/ Tony Masone

 Name: Tony Masone  

Title: VP and Treasurer  

[Signature Page to First Amendment to the Credit Agreement]

JPMORGAN CHASE BANK, N.A., as the Administrative Agent  

by  

/s/ Heather Hoopingarner  

Title: Vice President  

[Signature Page to First Amendment to the Credit Agreement]

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

Name of Institution: BANK OF AMERICA, N.A.

by

 /s/ Marie Harrison

 Name: Marie Harrison

Title: Director  

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

CITIBANK, N.A.

by

 /s/ Carmen-Christina Kelleher

 Name: Carmen-Christina Kelleher

Title: Vice President  

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender

by

 /s/ Ming K. Chu

 Name: Ming K. Chu

Title: Director  

For any Lender requiring a second signature block:

by

 /s/ Douglas Darman

 Name: Douglas Darman

Title: Director  

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

Goldman Sachs Bank USA:

by

 /s/ Dan Martis

 Name: Dan Martis

Title: Authorized Signatory  

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

HSBC Bank USA, N.A. :

by

 /s/ Jamie Mariano

 Name: Jaime Mariano

Title: Senior Vice President #21440  

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

Name of Institution: MORGAN STANLEY SENIOR FUNDING, INC., as a Lender

by

 /s/ Phillip Magdaleno

 Name: Phillip Magdaleno

Title: Authorized Signatory  

For any Lender requiring a second signature block:

by

 N/A

 Name:

Title:  

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

MUFG UNION BANK, N.A., as a Lender

 /s/ Lillian Kim

 Name: Lillian Kim

Title: Director  

[Signature Page to First Amendment to the Credit Agreement]

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

SOCIETE GENERALE

by

 /s/ Andrew Johnman

 Name: Andrew Johnman

Title: Co-Head of Technology Banking  

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

THE TORONTO-DOMINION BANK, NEW YORK BRANCH, as a Lender  

By: /s/ Jing Ye

 Name: Jing Ye

Title: Authorized Signatory  

SIGNATURE PAGE TO

FIRST AMENDMENT TO

THE CREDIT AGREEMENT OF

AMAZON.COM, INC.

Name of Institution: Wells Fargo Bank, N.A.

by

 /s/ Derek Jensen

 Name: Derek Jensen

Title: Vice President  

For any Lender requiring a second signature block:

by  

Title:  

EXHIBIT A

Amended Credit Agreement

[Attached]

EXHIBIT A

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of June 23, 2020,  

among  

AMAZON.COM, INC.,  

The DESIGNATED BORROWERS Party Hereto,  

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent  

and  

The LENDERS Party Hereto  

JPMORGAN CHASE BANK, N.A.,

as Sole Lead Arranger  

JPMORGAN CHASE BANK, N.A.,

BOFA SECURITIES, INC.,

HSBC SECURITIES (USA) INC.,

CITIGROUP GLOBAL MARKETS INC.,

DEUTSCHE BANK SECURITIES INC.,

GOLDMAN SACHS BANK USA,

MORGAN STANLEY MUFG LOAN PARTNERS, LLC,

SOCIÉTÉ GÉNÉRALE,

TD SECURITIES (USA) LLC,

and

WELLS FARGO SECURITIES, LLC

as Joint Bookrunners  

JPMORGAN CHASE BANK, N.A.,

as Syndication Agent

CITIBANK, N.A.,

DEUTSCHE BANK AG NEW YORK BRANCH,

GOLDMAN SACHS BANK USA,

JPMORGAN CHASE BANK, N.A.,

MORGAN STANLEY MUFG LOAN PARTNERS, LLC,

SOCIÉTÉ GÉNÉRALE,

THE TORONTO-DOMINION BANK, NEW YORK BRANCH,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Co-Documentation Agents

TABLE OF CONTENTS

Page

i

ii

iii

SCHEDULES

2.01 Commitments

7.01 Existing Liens

11.02 Administrative Agent’s Office; Certain Addresses for Notices

EXHIBITS

Form of

A Loan Notice

B Note

C Assignment and Assumption

D (1-4) U.S. Tax Compliance Certificates

E-1 Designated Borrower Request and Assumption Agreement

E-2 Designated Borrower Notice

[Note: Except for Exhibit A, exhibits and schedules have been omitted pursuant
to Item 601(a)(5) of Regulation S-K.]

iv

AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 23, 2020 (this
“Agreement”), is entered into by and among AMAZON.COM, INC., a Delaware
corporation (the “Company”), certain SUBSIDIARIES of the Company party hereto
pursuant to Section 2.14 (each a “Designated Borrower” and, together with the
Company, the “Borrowers” and, each a “Borrower”), each LENDER from time to
time party hereto (collectively, the “Lenders” and each, a “Lender”), and
JPMORGAN CHASE BANK, N.A., as Administrative Agent.

The Company, the lenders party thereto and Bank of America, N.A., as
administrative agent, are party to that certain Amended and Restated Credit
Agreement, dated as of April 27, 2018 (the “Existing Credit Agreement”), and
the Company, the Administrative Agent and the Lenders desire that this
Agreement be treated as an amendment and restatement of the Existing Credit
Agreement in its entirety upon and subject to the terms and conditions set
forth herein.

In connection with the amendment and restatement of the Existing Credit
Agreement, the Company has requested that the Lenders provide a revolving
credit facility to the Borrowers, and the Lenders are willing to do so on the
terms and conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

“Administrative Agent” means JPMorgan Chase Bank, N.A. in its capacity as
administrative agent under the Loan Documents, or any successor administrative
agent appointed in accordance with Section 9.06. Unless the context requires
otherwise, the term “Administrative Agent” shall include any Affiliate of
JPMorgan Chase Bank, N.A. through which it shall perform any of its
obligations in such capacity under the Loan Documents.

“Administrative Agent’s Office” means, with respect to any currency, the
Administrative Agent’s address and, as appropriate, account as set forth on
Schedule 11.02 with respect to such currency, or such other address or account
with respect to such currency as the Administrative Agent may from time to
time notify to the Company and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in the
form supplied by the Administrative Agent.

“Affected Financial Institution” means (a) any EEA Financial Institution or
(b) any UK Financial Institution.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

“Aggregate Commitments” means the Commitments of all the Lenders. As of the
Closing Date, the Aggregate Commitments equal $7,000,000,000.

“Agreement” has the meaning specified in the preamble hereto.

“Alternative Currency” means Euro, Sterling, Yen and each other currency
(other than Dollars) that is approved in accordance with Section 1.05.

“Alternative Currency Sublimit” means an amount equal to the lesser of the
Aggregate Commitments and $3,000,000,000. The Alternative Currency Sublimit is
part of, and not in addition to, the Aggregate Commitments.

“Amazon Capital Funding LLC” means Amazon Capital Funding LLC, a Delaware
limited liability company, and its successors.

“Amazon Seller Lending Entity” means (a) Amazon Capital Funding LLC and/or (b)
any other Subsidiary of the Company that replaces and/or substitutes Amazon
Capital Funding LLC under the Amazon Seller Lending Facility.

“Amazon Seller Lending Facility” means that certain Revolving Credit and
Security Agreement, dated as of October 13, 2016 (as amended, restated,
amended and restated, replaced (whether or not with the same lenders and/or
agent), refinanced, supplemented or otherwise modified from time to time),
among the Amazon Seller Lending Entity, the lenders from time to time party
thereto, Bank of America, N.A., as the administrative agent on behalf of the
lenders, and Wilmington Trust, National Association, as collateral trustee for
the secured parties thereunder.

“Applicable Percentage” means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate
Commitments represented by such Lender’s Commitment at such time. If the
Commitment of each Lender has been terminated pursuant to Section 8.02 or if
the Aggregate Commitments have terminated pursuant to Section 2.04, then the
Applicable Percentage of each Lender shall be determined based on the
Applicable Percentage of such Lender most recently in effect, giving effect to
any subsequent assignments.

“Applicable Rate” means (a) with respect to Base Rate Loans, 0.00% per annum,
(b) with respect to Eurocurrency Rate Loans or SONIA Loans, 0.50% per annum,
and (c) with respect to the commitment fee set forth in Section 2.07(a), 0.04%
per annum.

“Applicable Time” means, with respect to any borrowings and payments in any
Alternative Currency, the local time in the place of settlement for such
Alternative Currency as may be determined by the Administrative Agent to be
necessary for timely settlement on the relevant date in accordance with normal
banking procedures in the place of payment.

“Applicant Borrower” has the meaning specified in Section 2.14(a).

“Approved Fund” means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

“Arranger” means JPMorgan Chase Bank, N.A., in its capacities as sole lead
arranger and joint bookrunner.

“Assignment and Assumption” means an assignment and assumption entered into by
a Lender and an Eligible Assignee (with the consent of any party whose consent
is required by Section 11.06(b)), and accepted by the Administrative Agent, in
substantially the form of Exhibit C or any other form (including electronic
documentation generated by use of an electronic platform) reasonably
satisfactory to the Administrative Agent.

“Attributable Indebtedness” means, on any date, (a) in respect of any capital
lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount
of the remaining lease payments under the relevant lease that would appear on
a balance sheet of such Person prepared as of such date in accordance with
GAAP if such lease were accounted for as a capital lease.

“Audited Financial Statements” means the audited consolidated balance sheet of
the Company and its Subsidiaries as of December 31, 2019 and the related
consolidated statements of income or operations, stockholders’ equity and cash
flows of the Company and its Subsidiaries for the fiscal year then ended,
including the notes thereto.

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.04 and (c) the date of termination
of the Commitment of each Lender pursuant to Section 8.02.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable Resolution Authority in respect of any liability of any
Affected Financial Institution.

“Bail-In Legislation” means (a) with respect to any EEA Member Country
implementing Article 55 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law, regulation, rule
or requirement for such EEA Member Country from time to time that is described
in the EU Bail-In Legislation Schedule and (b) with respect to the United
Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time
to time) and any other law, regulation or rule applicable in the United
Kingdom relating to the resolution of unsound or failing banks, investment
firms or other financial institutions or their Affiliates (other than through
liquidation, administration or other insolvency proceedings).

“Base Rate” means, for any day, a fluctuating rate per annum equal to the
highest of (a) the NYFRB Rate plus 1/2 of 1% per annum, (b) the Prime Rate in
effect on such day and (c) the LIBO Rate on such day (or, if such day is not a
Business Day, the immediately preceding Business Day) for a deposit in Dollars
with a maturity of one month plus the difference between the Applicable Rate
for Eurocurrency Rate Loans and the Applicable Rate for Base Rate Loans on
such day. For purposes of clause (c) above, the LIBO Rate on any day shall be
based on the LIBO Screen Rate at approximately 11:00 a.m., London time, on
such day for deposits in Dollars with a maturity of one month (or, if the LIBO
Screen Rate is not available for a maturity of one month with respect to
Dollars but is available for periods both longer and shorter than such period,
the Interpolated Screen Rate as of such time); provided that if such rate
shall be less than zero, such rate shall be deemed to be zero. Any change in
the Base Rate due to a change in the NYFRB Rate, the Prime Rate or the LIBO
Rate shall be effective from and including the effective date of such change
in the NYFRB Rate, the Prime Rate or the LIBO Rate, as the case may be. If the
Base Rate is being used as an alternate rate of interest pursuant to Section
3.03 (for the avoidance of doubt, only until an amendment hereto has become
effective pursuant to Section 3.03(b)), then for purposes of clause (c) above
the LIBO Rate shall be deemed to be zero.

“Base Rate Borrowing” means any Borrowing comprised of Base Rate Loans.

“Base Rate Loan” means a Loan that bears interest based on the Base Rate. All
Base Rate Loans shall be denominated in Dollars.

“Benchmark Replacement” means the sum of: (a) the alternate benchmark rate
(which may be a SOFR-Based Rate) that has been selected by the Administrative
Agent and the Company giving due consideration to (i) any selection or
recommendation of a replacement rate or the mechanism for determining such a
rate by the Relevant Governmental Body and/or (ii) any evolving or then-
prevailing

market convention for determining a rate of interest as a replacement to the
LIBO Rate for syndicated credit facilities denominated in the applicable
currency and (b) the Benchmark Replacement Adjustment; provided that if the
Benchmark Replacement as so determined would be less than zero, the Benchmark
Replacement will be deemed to be zero for the purposes of this Agreement;
provided further that any such Benchmark Replacement shall be administratively
feasible as determined by the Administrative Agent in its reasonable
discretion.

“Benchmark Replacement Adjustment” means the spread adjustment, or method for
calculating or determining such spread adjustment (which may be a positive or
negative value or zero), that has been selected by the Administrative Agent
and the Company giving due consideration to (a) any selection or
recommendation of a spread adjustment, or method for calculating or
determining such spread adjustment, for the replacement of the LIBO Rate with
the applicable Unadjusted Benchmark Replacement by the Relevant Governmental
Body and/or (b) any evolving or then-prevailing market convention for
determining a spread adjustment, or method for calculating or determining such
spread adjustment, for the replacement of the LIBO Rate with the applicable
Unadjusted Benchmark Replacement for syndicated credit facilities denominated
in the applicable currency at such time; provided that such spread adjustment
shall be subject to the consent of the Company.

“Benchmark Replacement Conforming Changes” means, with respect to any
Benchmark Replacement, any technical, administrative or operational changes
(including changes to the definition of “Base Rate”, the definition of
“Interest Period”, timing and frequency of determining rates and making
payments of interest, the deadlines for providing Loan Notices and other
administrative matters) that the Administrative Agent determines in its
reasonable discretion may be appropriate to reflect the adoption and
implementation of such Benchmark Replacement and to permit the administration
thereof by the Administrative Agent in a manner substantially consistent with
market practice (or, if the Administrative Agent determines in its reasonable
discretion that adoption of any portion of such market practice is not
administratively feasible or if the Administrative Agent determines that no
market practice for the administration of the Benchmark Replacement exists, in
such other manner of administration as the Administrative Agent determines in
its reasonable discretion is reasonably necessary in connection with the
administration of this Agreement).

“Benchmark Replacement Date” means the earlier to occur of the following
events with respect to the LIBO Rate:

(a) in the case of clause (a) or (b) of the definition of “Benchmark
Transition Event”, the later of (i) the date of the public statement or
publication of information referenced therein and (ii) the date on which the
administrator of the LIBO Screen Rate permanently or indefinitely ceases to
provide the LIBO Screen Rate; or

(b) in the case of clause (c) of the definition of “Benchmark Transition
Event”, the date of the public statement or publication of information
referenced therein.

“Benchmark Transition Event” means the occurrence of one or more of the
following events with respect to the LIBO Rate:

(a)a public statement or publication of information by or on behalf of the
administrator of the LIBO Screen Rate announcing that such administrator has
ceased or will cease to provide the LIBO Screen Rate, permanently or
indefinitely; provided that, at the time of such statement or publication,
there is no successor administrator that will continue to provide the LIBO
Screen Rate;

(b)a public statement or publication of information by the regulatory
supervisor for the administrator of the LIBO Screen Rate, the U.S. Federal
Reserve System, an insolvency official with jurisdiction over the
administrator for the LIBO Screen Rate, a resolution authority with
jurisdiction over the administrator for the LIBO Screen Rate or a court or an
entity with similar insolvency or resolution authority over the administrator
for the LIBO Screen Rate, in each case which states that the administrator of
the LIBO Screen Rate has ceased or will cease to provide the LIBO Screen Rate
permanently or indefinitely; provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide
the LIBO Screen Rate; and/or

(c)a public statement or publication of information by the regulatory
supervisor for the administrator of the LIBO Screen Rate announcing that the
LIBO Screen Rate is no longer representative.

“Benchmark Transition Start Date” means (a) in the case of a Benchmark
Transition Event, the earlier of (i) the applicable Benchmark Replacement Date
and (ii) if such Benchmark Transition Event is a public statement or
publication of information of a prospective event, the 90th day prior to the
expected date of such event as of such public statement or publication of
information (or if the expected date of such prospective event is fewer than
90 days after such statement or publication, the date of such statement or
publication) and (b) in the case of an Early Opt-in Election, the date
specified by the Administrative Agent, the Company or the Required Lenders, as
applicable, by notice to the Company (in the case of such notice by the
Administrative Agent or the Required Lenders), the Administrative Agent (in
the case of such notice by the Company or the Required Lenders) and the
Lenders.

“Benchmark Unavailability Period” means, if a Benchmark Transition Event and
its related Benchmark Replacement Date have occurred with respect to the LIBO
Rate and solely to the extent that the LIBO Rate has not been replaced with a
Benchmark Replacement, the period (a) beginning at the time that such
Benchmark Replacement Date has occurred if, at such time, no Benchmark
Replacement has replaced the LIBO Rate for all purposes hereunder in
accordance with Section 3.03 and (b) ending at the time that a Benchmark
Replacement has replaced the LIBO Rate for all purposes hereunder pursuant to
Section 3.03.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in
ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section
4975 of the Code or (c) any Person whose assets include (for purposes of ERISA
Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of
the Code) the assets of any such “employee benefit plan” or “plan”.

“Borrower” and “Borrowers” each has the meaning specified in the preamble
hereto.

“Borrower Materials” has the meaning specified in Section 6.02.

“Borrowing” means Loans of the same Type, in the same currency and to the same
Borrower, made, converted or continued on the same day and, in the case of
Eurocurrency Rate Loans, having the same Interest Period.

“Borrowing Minimum” means (a) in the case of a Borrowing of Base Rate Loans,
$1,000,000, (b) in the case of a Borrowing of Eurocurrency Rate Loans
denominated in Dollars, $5,000,000 and (c) in the case of a Borrowing
denominated in an Alternative Currency, the smallest amount of such
Alternative Currency that is a multiple of 1,000,000 units of such currency
and that has a Dollar Equivalent of $5,000,000 or more.

“Borrowing Multiple” means (a) in the case of a Borrowing of Base Rate Loans,
$500,000, (b) in the case of a Borrowing of Eurocurrency Rate Loans
denominated in Dollars, $1,000,000 and (c) in the case of a Borrowing
denominated in any Alternative Currency, the smallest amount of such
Alternative Currency that is a multiple of 1,000,000 units of such currency
and that has a Dollar Equivalent of $1,000,000 or more.

“Business Day” means any day other than a Saturday, a Sunday or any other day
on which commercial banks are authorized to remain closed under the Laws of,
or are in fact closed in, New York City, New York; provided that (a) when used
in relation to any interest rate settings as to a LIBOR Loan, any fundings,
disbursements, settlements or payments in respect of any LIBOR Loan or any
other dealings to be carried out pursuant to this Agreement in respect of any
LIBOR Loan, such day shall also be a London Banking Day, (b) when used in
relation to Loans denominated in Euros or in relation to the calculation or
computation of the EURIBO Rate, such day shall also be a TARGET Day, (c) when
used in relation to Loans denominated in Yen or in relation to the calculation
or computation of the TIBO Rate, such day shall also be a day on which banks
are open for business in Tokyo and (d) when used in relation to Loans
denominated in Sterling, such day shall also be a SONIA Business Day.

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or treaty or
in the administration, interpretation, implementation or application thereof
by any Governmental Authority or (c) the making or issuance of any request,
rule, guideline or directive by any Governmental Authority; provided that
notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, guidelines
or directives thereunder or issued in connection therewith and (y) all
requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed
to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Change of Control” means an event or series of events by which any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of
the Company or its Subsidiaries, and any Person acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan), other
than the Permitted Holders, becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time (such
right, an “option right”)), directly or indirectly, of 50% or more of the
equity securities of the Company entitled to vote for members of the board of
directors or equivalent governing body of the Company on a fully-diluted basis
(and taking into account all such securities that such person or group has the
right to acquire pursuant to any option right).

“Closing Date” means the first date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 11.01.

“Code” means the U.S. Internal Revenue Code of 1986.

“Commitment” means, as to each Lender, its obligation to make Loans to the
Borrowers pursuant to Section 2.01, in an aggregate principal amount at any
one time outstanding that would not result in the Revolving Credit Exposure of
such Lender to exceed the Dollar amount set forth opposite such Lender’s name
on Schedule 2.01 or in the Assignment and Assumption pursuant to which such
Lender becomes a party hereto, as applicable, as such amount may be adjusted
from time to time in accordance with this Agreement.

“Company” has the meaning specified in the preamble hereto.

“Compounded SOFR” means the compounded average of SOFRs for the applicable
Corresponding Tenor, with the rate, or methodology for this rate, and
conventions for this rate (which may include compounding in arrears with a
lookback and/or suspension period as a mechanism to determine the interest
amount payable prior to the end of each Interest Period) being established by
the Administrative Agent in accordance with:

(a)the rate, or methodology for this rate, and conventions for this rate
selected or recommended by the Relevant Governmental Body for determining
compounded SOFR; or

(b)if, and to the extent that, the Administrative Agent determines in its
reasonable discretion that Compounded SOFR cannot be determined in accordance
with clause (a) above, then the rate, or methodology for this rate, and
conventions for this rate that the Administrative Agent determines in its
reasonable discretion are substantially consistent with any evolving or then-
prevailing market convention for determining compounded SOFR for syndicated
credit facilities denominated in the applicable currency at such time;

provided that if the Administrative Agent decides that any such rate,
methodology or convention determined in accordance with clause (a) or clause
(b) is not administratively feasible for the Administrative Agent, then
Compounded SOFR will be deemed unable to be determined for purposes of the
definition of “Benchmark Replacement”.

“Consolidated Tangible Net Worth” means, as of any date of determination, (a)
Stockholders’ Equity on such date minus (b) the Intangible Assets of the
Company and its Subsidiaries on such date determined on a consolidated basis
in accordance with GAAP.

“Contractual Obligation” means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Corresponding Tenor” with respect to a Benchmark Replacement means a tenor
(including overnight) having approximately the same length (disregarding
business day adjustment) as the applicable tenor for the applicable Interest
Period with respect to the LIBO Rate.

“Credit Parties” means, collectively, the Administrative Agent, the Lenders,
the Indemnitees and each co-agent or sub-agent appointed by the Administrative
Agent from time to time pursuant to Section 9.05.

“Daily Simple SONIA” means, for any day (a “SONIA Interest Day”) with respect
to any Loan denominated in Sterling, an interest rate per annum equal to the
greater of (a) SONIA for the day that is five SONIA Business Days prior to (i)
if such SONIA Interest Day is a SONIA Business Day, such SONIA Interest Day or
(ii) if such SONIA Interest Day is not a SONIA Business Day, the SONIA
Business Day immediately preceding such SONIA Interest Day and (b) 0.00%.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement,

receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions from time to time in effect.

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the
Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum;
provided that with respect to a Eurocurrency Rate Loan, a SONIA Loan or, in
each case, any interest thereon, the Default Rate shall be an interest rate
equal to the interest rate (including any Applicable Rate) otherwise
applicable to such Loan plus 2% per annum.

“Defaulting Lender” means, subject to Section 2.13(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within two Business Days of
the date such Loans were required to be funded hereunder unless such Lender
notifies the Administrative Agent and the applicable Borrower in writing that
such failure is the result of such Lender’s determination that one or more
conditions precedent to funding (each of which conditions precedent, together
with any applicable Default, shall be specifically identified in such writing)
has not been satisfied, or (ii) pay to the Administrative Agent or any other
Lender any other amount required to be paid by it hereunder within two
Business Days of the date when due, (b) has notified the Company or the
Administrative Agent in writing that it does not intend to comply with its
funding obligations hereunder, or has made a public statement to that effect
(unless such writing or public statement relates to such Lender’s obligation
to fund a Loan hereunder and states that such position is based on such
Lender’s determination that a condition precedent to funding (which condition
precedent, together with any applicable Default, shall be specifically
identified in such writing or public statement) cannot be satisfied), (c) has
failed, within three Business Days after written request by the Administrative
Agent or the Company, to confirm in writing to the Administrative Agent and
the Company that it will comply with its prospective funding obligations
hereunder (provided that such Lender shall cease to be a Defaulting Lender
pursuant to this clause (c) upon receipt of such written confirmation by the
Administrative Agent and the Company), or (d) has, or has a direct or indirect
parent company that has, (i) become the subject of a proceeding under any
Debtor Relief Law, (ii) had appointed for it a receiver, custodian,
conservator, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization or liquidation of its business or
assets, including the Federal Deposit Insurance Corporation or any other state
or federal regulatory authority acting in such a capacity or (iii) become the
subject of a Bail-In Action; provided that a Lender shall not be a Defaulting
Lender solely by virtue of the ownership or acquisition of any equity interest
in that Lender or any direct or indirect parent company thereof by a
Governmental Authority so long as such ownership interest does not result in
or provide such Lender with immunity from the jurisdiction of courts within
the United States or from the enforcement of judgments or writs of attachment
on its assets or permit such Lender (or such Governmental Authority) to
reject, repudiate, disavow or disaffirm any contracts or agreements made with
such Lender. Any determination by the Administrative Agent that a Lender is a
Defaulting Lender under any one or more of clauses (a) through (d) above, and
of the effective date of such status, shall be conclusive and binding absent
manifest error, and such Lender shall be deemed to be a Defaulting Lender
(subject to Section 2.13(b)) as of the date established therefor by the
Administrative Agent in a written notice of such determination, which shall be
delivered by the Administrative Agent to each Borrower and each Lender
promptly following such determination.

“Designated Borrower” has the meaning specified in the preamble hereto.

“Designated Borrower Notice” has the meaning specified in Section 2.14(a).

“Designated Borrower Request and Assumption Agreement” has the meaning
specified in Section 2.14(a).

“Designated Jurisdiction” means any country or territory to the extent that
such country or territory itself is the subject of any Sanction.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with
or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.

“Dollar” and “$” mean lawful money of the United States.

“Dollar Equivalent” means, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in
Dollars as determined by the Administrative Agent pursuant to Section 1.04 on
the basis of the Exchange Rate with respect to such Alternative Currency at
the time in effect under the provisions of Section 1.04.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

“Early Opt-in Election” means the occurrence of:

(a)(i) a determination by the Administrative Agent or the Company or (ii) a
notification by the Required Lenders to the Administrative Agent (with a copy
to the Company) that the Required Lenders have determined that syndicated
credit facilities denominated in the applicable currency being executed at
such time, or that include language similar to that contained in Section
3.03(b), are being executed or amended, as applicable, to incorporate or adopt
a new benchmark interest rate to replace the LIBO Rate, and

(b)(i) the election by the Administrative Agent or the Company or (ii) the
election by the Required Lenders, as the case may be, to declare that an Early
Opt-in Election has occurred and the provision, as applicable, by the
Administrative Agent of written notice of such election to the Company and the
Lenders, by the Company of written notice of such election to the
Administrative Agent or by the Required Lenders of written notice of such
election to the Administrative Agent.

“EEA Financial Institution” means (a) any credit institution or investment
firm established in any EEA Member Country which is subject to the supervision
of an EEA Resolution Authority, (b) any entity established in an EEA Member
Country which is a parent of an institution described in clause (a) of this
definition, or (c) any financial institution established in an EEA Member
Country which is a subsidiary of an institution described in clauses (a) or
(b) of this definition and is subject to consolidated supervision with its
parent.

“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member
Country (including any delegee) having responsibility for the resolution of
any EEA Financial Institution.

“Electronic Signature” means an electronic sound, symbol, or process attached
to, or associated with, a contract or other record and adopted by a Person
with the intent to sign, authenticate or accept such contract or record.

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Sections 11.06(b)(iii) and 11.06(b)(v) (subject to such
consents, if any, as may be required under Section 11.06(b)(iii)).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b)
the withdrawal of the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA or a
cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal (within the meanings of
Section 4203 or 4205 of ERISA) by the Company or, to the knowledge of the
Company, any ERISA Affiliate from a Multiemployer Plan, or notification
received by the Company that a Multiemployer Plan is in “critical status”
(within the meaning of Sections 4245 of ERISA); (d) the filing of a notice by
the Pension Plan administrator of intent to terminate or the treatment of a
Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA;
(e) the institution by the PBGC of proceedings to terminate a Pension Plan;
(f) any event or condition which constitutes grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan; (g) the determination that any Pension Plan is considered an
at-risk plan or a plan in endangered or critical status within the meaning of
Section 430 of the Code or Section 305 of ERISA; or (h) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in
effect from time to time.

“EURIBO Rate” means, with respect to any Borrowing denominated in Euros for
any Interest Period, the EURIBOR Screen Rate at approximately 11:00 a.m.,
Brussels time, two TARGET Days prior to the commencement of such Interest
Period; provided that if the EURIBO Screen Rate shall not be available at such
time for such Interest Period, then the EURIBO Rate shall be the Interpolated
Screen Rate at such time.

“EURIBO Screen Rate” means a rate per annum equal to the euro interbank
offered rate administered by the European Money Market Institute (or any other
Person that takes over the administration of such rate) for the applicable
period, as displayed (before any correction, recalculation or republication by
the administrator) on the Reuters screen page that displays such rate
(currently EURIBOR01) (or, in the event such rate does not appear on a page of
the Reuters screen, on any successor or substitute page on such screen that
displays such rate, or on the appropriate page of such other information
service that publishes such rate as shall be selected by the Administrative
Agent from time to time in its reasonable discretion); provided that if the
EURIBO Screen Rate, determined as provided above, would be less than zero,
then the EURIBO Screen Rate shall be deemed to be zero for purposes hereof.

“EURIBOR Borrowing” means any Borrowing comprised of EURIBOR Loans.

“EURIBOR Loan” means a Loan that bears interest at a rate based on the EURIBO
Rate.

“Euro” and “€” mean the single currency of the Participating Member States.

“Eurocurrency Rate Borrowing” means any Borrowing comprised of Eurocurrency
Rate Loans.

“Eurocurrency Rate Loan” means a Loan that bears interest at a rate based on
the LIBO Rate, the EURIBO Rate or the TIBO Rate.

“Event of Default” has the meaning specified in Section 8.01.

“Exchange Rate” means on any day, for purposes of determining the Dollar
Equivalent of any Alternative Currency, the rate at which such Alternative
Currency may be exchanged into Dollars at the time of determination on such
day as last provided (either by publication or as may otherwise be provided to
the Administrative Agent) by the applicable Reuters source on the Business Day
(determined based on New York City time) immediately preceding such day of
determination (or, if a Reuters source ceases to be available or Reuters
ceases to provide such rate of exchange, as last provided by such other
publicly available information service that provides such rate of exchange at
such time as shall be selected by the Administrative Agent from time to time
in its reasonable discretion).

“Excluded Taxes” means any of the following Taxes imposed on or with respect
to any Recipient or required to be withheld or deducted from a payment to a
Recipient: (a) Taxes imposed on or measured by net income (however
denominated), franchise Taxes, branch profits Taxes, business and occupation
Taxes, and gross receipts Taxes imposed in lieu of net income Taxes, in each
case, (i) imposed as a result of such Recipient being organized under the laws
of, or having its principal office or, in the case of any Lender, its Lending
Office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case
of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or
for the account of such Lender with respect to an applicable interest in a
Loan or Commitment pursuant to a law in effect on the date on which (i) such
Lender acquires such interest in the Loan or Commitment (other than pursuant
to an assignment request by the Company under Section 11.13) or (ii) such
Lender changes its Lending Office, except in each case to the extent that,
pursuant to Section 3.01(a)(ii) or 3.01(c), amounts with respect to such Taxes
were payable either to such Lender’s assignor immediately before such Lender
became a party hereto or to such Lender immediately before it changed its
Lending Office, (c) Taxes attributable to such Recipient’s failure to comply
with Section 3.01(e) and (d) any Taxes imposed pursuant to FATCA; provided
that, for the avoidance of doubt, for purposes of clause (b)(i), in the case
of an interest in a Loan acquired by a Lender pursuant to the funding of a
Commitment, such Lender shall be treated as acquiring such interest on the
date such Lender acquired an interest in the Commitment pursuant to which such
Loan was funded.

“Existing Credit Agreement” has the meaning assigned to such term in the
recitals hereto.

“FASB ASC” means the Accounting Standards Codification of the Financial
Accounting Standards Board.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version), any current or future
regulations or official interpretations thereof, any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any applicable
intergovernmental agreements and any legislation or other official guidance or
official requirements adopted pursuant to any applicable intergovernmental
agreement, treaty, or convention among Governmental Authorities and
implementing such Sections of the Code.

“Federal Funds Rate” means, for any day, the rate calculated by the NYFRB
based on such day’s federal funds transactions by depository institutions, as
determined in such manner as shall be set forth on the NYFRB Website from time
to time, and published on the next succeeding Business Day by the NYFRB as the
effective federal funds rate; provided that if such rate shall be less than
zero, such rate shall be deemed to be zero for all purposes of this Agreement.

“Fee Letter” means the letter agreement, dated May 20, 2020, between the
Company and JPMorgan Chase Bank, N.A.

“Foreign Lender” means, with respect to any Borrower, (a) if such Borrower is
a U.S. Person, a Lender that is not a U.S. Person, and (b) if such Borrower is
not a U.S. Person, a Lender that is resident or organized under the laws of a
jurisdiction other than that in which such Borrower is resident for tax
purposes. For purposes of this definition, the United States, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its
activities.

“GAAP” means generally accepted accounting principles in the United States as
set forth in the Accounting Standards Codification established by the
Financial Accounting Standards Board and defined in FASB ASC 105.

“Governmental Authority” means the government of the United States or any
other nation, or of any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central
bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).

“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise,
of any holder of such Indebtedness to obtain any such Lien); provided, that
the term “Guarantee” shall not include endorsements for collection or deposit,
in either case in the ordinary course of business, or contingent or inchoate
indemnity obligations in effect on the Closing Date or entered into in
connection with any acquisition or Disposition (other than such obligations
with respect to Indebtedness). The amount of any Guarantee shall be deemed to
be an amount equal to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the guaranteeing Person in good faith. The
term “Guarantee” as a verb has a corresponding meaning.

“Guarantee Obligations” has the meaning specified in Section 10.01.

“Guaranty” means the Guarantee of the Obligations of the Designated Borrowers
made by the Company in favor of the Credit Parties under Article X.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a)all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b)all direct or contingent obligations of such Person arising under letters
of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;

(c)net obligations of such Person under any Swap Contract that has been
terminated or otherwise comes due in accordance with its terms;

(d)all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

(e)indebtedness (excluding prepaid interest thereon) of others secured by a
Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements) whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse (but limited, in the event such indebtedness
has not been assumed by such Person, to the lesser of (i) the amount of such
indebtedness and (ii) the fair market value of such property securing such
indebtedness);

(f)capital leases and Synthetic Lease Obligations (but excluding any operating
leases under GAAP); and

(g)all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such
Person is a general partner or a joint venturer, unless such Indebtedness is
expressly made non-recourse to such Person. The amount of any net obligation
under any Swap Contract on any date shall be deemed to be the Swap Termination
Value thereof as of such date. The amount of any capital lease or Synthetic
Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any
Loan Party under any Loan Document and (b) to the extent not otherwise
described in clause (a), Other Taxes.

“Indemnitees” has the meaning specified in Section 11.04(b).

“Information” has the meaning specified in Section 11.07.

“Intangible Assets” means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, computer software, copyrights,
trade names, trademarks, patents, franchises, licenses, unamortized deferred
charges, unamortized debt discount and capitalized research and development
costs.

“Interest Payment Date” means (a) as to any Eurocurrency Rate Loan, the last
day of each Interest Period applicable to such Loan and the Maturity Date;
provided, however, that if any Interest Period for a Eurocurrency Rate Loan
exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates;
(b) as to any Base Rate Loan, the last Business Day of each March, June,
September and December and the Maturity Date; and (c) as to any SONIA Loan,
each date that is on the numerically corresponding day in each calendar month
that is one month after the date of the Borrowing of which such Loan is a part
(or, if there is no such numerically corresponding day in such month, then the
last day of such month) and the Maturity Date.

“Interest Period” means, as to each Eurocurrency Rate Loan, the period
commencing on the date such Eurocurrency Rate Loan is disbursed or converted
to or continued as a Eurocurrency Rate Loan and ending on the date one, three
or six months thereafter, as selected by the applicable Borrower in its Loan
Notice, or such other period that is twelve months or less requested by such
Borrower and consented to by all the Lenders; provided that:

(i)any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day;

(ii)any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

(iii)no Interest Period shall extend beyond the Maturity Date.

“Interim Financial Statements” means the unaudited consolidated balance sheet
of the Company and its Subsidiaries as of March 31, 2020 and the related
consolidated statements of income or operations, stockholders’ equity and cash
flows of the Company and its Subsidiaries for the fiscal quarter then ended,
including the notes thereto.

“Interpolated Screen Rate” means, with respect to any Eurocurrency Rate Loan
for any Interest Period or clause (c) of the definition of Base Rate, a rate
per annum that results from interpolating on a linear basis between (a) the
Relevant Screen Rate for the longest maturity (for which the Relevant Screen
Rate is available) that is shorter than the applicable period and (b) the
Relevant Screen Rate for the shortest maturity (for which the Relevant Screen
Rate is available) that is longer than the applicable period, in each case, as
of the time the Interpolated Screen Rate is otherwise required to be
determined in accordance with the Agreement; provided that if such rate would
be less than zero, such rate shall be deemed to be zero.

“IRS” means the United States Internal Revenue Service.

“Laws” means, collectively, all international, foreign, Federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.

“Lender” has the meaning specified in the introductory paragraph hereto.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time

to time notify each Borrower and the Administrative Agent, which office may
include any Affiliate of such Lender or any domestic or foreign branch of such
Lender or such Affiliate. Unless the context otherwise requires each reference
to a Lender shall include its applicable Lending Office.

“LIBO Rate” means, with respect to any Borrowing denominated in Dollars for
any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period;
provided that if the LIBO Screen Rate shall not be available at such time for
such Interest Period, then the LIBO Rate shall be the Interpolated Screen Rate
at such time.

“LIBO Screen Rate” means a rate per annum equal to the London interbank
offered rate as administered by the ICE Benchmark Administration (or any other
Person that takes over the administration of such rate) for deposits in US
Dollars for the applicable period, as displayed on the Reuters screen page
that displays such rate (currently LIBOR01 or LIBOR02) (or, in the event such
rate does not appear on a page of the Reuters screen, on any successor or
substitute page on such screen that displays such rate, or on the appropriate
page of such other information service that publishes such rate as shall be
selected by the Administrative Agent from time to time in its reasonable
discretion); provided that if the LIBO Screen Rate, determined as provided
above, would be less than zero, then the LIBO Screen Rate shall be deemed to
be zero for all purposes.

“LIBOR”, when used in reference to any Loan or Borrowing, refers to whether
such Loan is, or the Loans comprising such Borrowing are, bearing interest at
a rate determined by reference to the LIBO Rate.

“LIBOR Borrowing” means any Borrowing comprised of LIBOR Loans.

“LIBOR Loan” means a Loan that bears interest at a rate based on the LIBO
Rate.

“Lien” means any mortgage, pledge, hypothecation, collateral assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or other
security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).

“Loan” has the meaning specified in Section 2.01.

“Loan Documents” means this Agreement, each Note, each Designated Borrower
Request and Assumption Agreement, each Designated Borrower Notice and the Fee
Letter.

“Loan Notice” means a notice of (a) a borrowing of Loans, (b) a conversion of
Loans denominated in Dollars from one Type to another, or (c) a continuation
of Eurocurrency Rate Loans, in each case, pursuant to Section 2.02(a),
substantially in the form of Exhibit A or such other form as may be reasonably
satisfactory to the Administrative Agent (including any form on an electronic
platform or electronic transmission system as shall be approved by the
Administrative Agent), appropriately completed and signed by a Responsible
Officer of a Borrower.

“Loan Parties” means, collectively, the Company and each Designated Borrower.

“London Banking Day” means any day on which dealings in deposits in Dollars
are conducted by and between banks in the London interbank market.

“Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the financial condition of the Company and its
Subsidiaries, taken as a whole; (b) a material impairment of the ability of
any Loan Party to perform its obligations under any Loan Document to which

it is a party; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against any Loan Party of any Loan Document
to which it is a party.

“Material Subsidiary” means any Subsidiary (a) that is a Designated Borrower
or (b) that is a “significant subsidiary” of the Company, as the term
“significant subsidiary” is defined in Regulation S-X promulgated by the SEC.

“Maturity Date” means the later of (a) June 23, 2023 and (b) if maturity is
extended pursuant to Section 2.12, such extended maturity date as determined
pursuant to such Section; provided that, in each case, if such date is not a
Business Day, the Maturity Date shall be the immediately preceding Business
Day.

“MNPI” has the meaning specified in Section 6.02.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA that is subject to Title IV of ERISA and to which
the Company or any ERISA Affiliate makes or is obligated to make
contributions.

“Non-Consenting Lender” means any Lender that does not approve any consent,
waiver or amendment that (a) requires the approval of all Lenders or all
affected Lenders in accordance with the terms of Section 11.01 and (b) has
been approved by the Required Lenders.

“Non-Extending Lender” has the meaning specified in Section 2.12(b).

“Non-Defaulting Lender” means, at any time, each Lender that is not a
Defaulting Lender at such time.

“Nondisclosure Agreement” has the meaning specified in Section 11.07.

“Note” means a promissory note made by a Borrower in favor of a Lender
evidencing Loans made by such Lender to such Borrower, substantially in the
form of Exhibit B.

“NYFRB” means the Federal Reserve Bank of New York.

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Rate in
effect on such day and (b) the Overnight Bank Funding Rate in effect on such
day (or for any day that is not a Business Day, for the immediately preceding
Business Day); provided that if none of such rates are published for any day
that is a Business Day, the term “NYFRB Rate” means the rate for a federal
funds transaction quoted at 11:00 a.m., New York City time, on such day
received by the Administrative Agent from a federal funds broker of recognized
standing selected by it; provided, further, that if any of the aforesaid rates
as so determined be less than zero, such rate shall be deemed to be zero.

“NYFRB Website” means the website of the NYFRB at http://www.newyorkfed.org,
or any successor source.

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due,
now existing or hereafter arising and including interest and fees that accrue
after the commencement by or against any Loan Party or any Affiliate thereof
of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement
of formation or organization and any agreement, instrument, filing or notice
with respect thereto filed in connection with its formation or organization
with the applicable Governmental Authority in the jurisdiction of its
formation or organization and, if applicable, any certificate or articles of
formation or organization of such entity.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed
as a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Permitted Liens” means, with respect to any Person, (a) Liens on the
property or assets of such Person existing at the time that such Person
becomes a Subsidiary of the Company (provided that such Liens are not incurred
in anticipation of such Person’s becoming a Subsidiary of the Company and do
not extend to any property or assets other than those of such Person); (b)
Liens to secure the payment of all or any part of the purchase price of any
property or assets acquired by such Person, or Liens to secure any
Indebtedness incurred for the purpose of financing all or any part of the
purchase price of any property or assets (including equity interests in any
Person) or all or any part of the cost of construction or improvements to any
property or assets, in each case, incurred prior to, at the time of, or within
180 days after, the acquisition thereof or the latest of the completion of
construction, the completion of improvements or the commencement of
substantial commercial operation of such property, as applicable; (c) Liens on
the property or assets of such Person existing at the time that such Person is
merged into or consolidated with the Company or any of its Subsidiaries or
otherwise acquired by the Company or any of its Subsidiaries or at the time of
sale, lease or other disposition of all or substantially all of the property
or assets of such Person to the Company or any of its Subsidiaries (provided
that such Liens are not incurred in anticipation of such merger or
consolidation or sale, lease or other disposition and do not extend to any
property or assets other than those of the Person merged into or consolidated
with the Company or any of its Subsidiaries or such property or assets that
are sold, leased or disposed); (d) Liens in favor of any Governmental
Authority to secure partial, progress, advance or other payments pursuant to
any contract or statute or to secure any Indebtedness incurred for the purpose
of financing all or any part of the purchase price or the cost of constructing
or improving property or assets subject to such Liens; (e) Liens in favor of
the Company or any of its Subsidiaries to secure intercompany Indebtedness in
the ordinary course of business; and (f) Liens consisting of deposits of
property or assets to secure (or in lieu of) safety, appeal or customs bonds
in proceedings to which the Company or any of its Subsidiaries is a party in
the ordinary course of business.

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment
made under, from the execution, delivery, performance, enforcement or
registration of, from the receipt or perfection of a security interest under,
or otherwise with respect to, any Loan Document, except Excluded Taxes and any
such Taxes that are Other Connection Taxes imposed with respect to an
assignment (other than an assignment made pursuant to Section 3.06).

“Outstanding Amount” means, on any date with respect to any Loans, the sum of
the Dollar Equivalents of the outstanding principal amount of such Loans after
giving effect to any borrowings and prepayments or repayments of such Loans
occurring on such date.

“Overnight Bank Funding Rate” means, for any day, the rate comprised of both
overnight federal funds and overnight Eurodollar borrowings by U.S.-managed
banking offices of depository institutions, as such composite rate shall be
determined by the NYFRB as set forth on the NYFRB Website from time to time,
and published on the next succeeding Business Day by the NYFRB as an overnight
bank funding rate; provided that if any of the aforesaid rates as so
determined be less than zero, such rate shall be deemed to be zero for all
purposes of this Agreement.

“Participant” has the meaning specified in Section 11.06(d).

“Participant Register” has the meaning specified in Section 11.06(d).

“Participating Member State” means any member state of the European Union that
has the Euro as its lawful currency in accordance with legislation of the
European Union relating to Economic and Monetary Union.

“Patriot Act” has the meaning specified in Section 11.18.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Act” means the Pension Protection Act of 2006.

“Pension Funding Rules” means the rules of the Code and ERISA regarding
minimum required contributions (including any installment payment thereof) to
Pension Plans and set forth in, with respect to plan years ending prior to the
effective date of the Pension Act, Section 412 of the Code and Section 302 of
ERISA, each as in effect prior to the Pension Act and, thereafter, Section
412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of
ERISA.

“Pension Plan” means any “employee pension benefit plan,” as defined in
Section 3(2) of ERISA (other than any Multiemployer Plan) that is maintained
or is contributed to by the Company and any ERISA Affiliate and is either
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Code.

“Permitted Holder” means, as of any date of determination, (a) the person who
is the Company’s Chairman, Chief Executive Officer and President on the
Closing Date, (b) any family members or relatives of such person, (c) any
trusts, family limited partnerships, limited liability companies, or other
similar entities created for the benefit of such persons described in clauses
(a) and (b), and (d) in the event of the incompetence or death of any of the
persons described in clauses (a) or (b), such person’s estate, executor,
administrator, committee or other personal representative or beneficiaries, in
each case, who as of such date beneficially own or have the right to acquire,
directly or indirectly, voting equity securities of the Company.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

“Platform” has the meaning specified in Section 6.02.

“Prime Rate” means the rate of interest last quoted by The Wall Street Journal
as the “Prime Rate” in the United States or, if The Wall Street Journal ceases
to quote such rate, the highest per annum interest rate published by the
Federal Reserve Board in Federal Reserve Statistical Release H.15 (519)
(Selected

Interest Rates) as the “bank prime loan” rate or, if such rate is no longer
quoted therein, any similar release by the Federal Reserve Board (as
determined by the Administrative Agent in its reasonable discretion). Each
change in the Prime Rate shall be effective from and including the date such
change is publicly announced or quoted as being effective.

“PTE” means a prohibited transaction class exemption issued by the U.S.
Department of Labor, as any such exemption may be amended from time to time.

“Recipient” means the Administrative Agent, any Lender or any other recipient
of any payment to be made by or on account of any obligation of any Loan Party
hereunder or under any other Loan Document.

“Register” has the meaning specified in Section 11.06(c).

“Regulatory Information” has the meaning specified in Section 2.14(a).

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers and employees (and, solely to the extent
acting on behalf of or at the express instructions of any of the foregoing,
agents and advisors of the foregoing) of such Person and of such Person’s
Affiliates.

“Relevant Governmental Body” means the FRB and/or the NYFRB, or a committee
officially endorsed or convened by the FRB and/or the NYFRB or, in each case,
any successor thereto.

“Relevant Rate” means (a) with respect to any Loan or Borrowing denominated in
Dollars, the LIBO Rate, (b) with respect to any Loan or Borrowing denominated
in Euros, the EURIBO Rate, (c) with respect to any Loan or Borrowing
denominated in Yen, the TIBO Screen Rate and (d) with respect to any Loan or
Borrowing denominated in Sterling, the Daily Simple SONIA.

“Relevant Screen Rate” means (a) with respect to any Loan or Borrowing
denominated in Dollars, the LIBO Screen Rate, (b) with respect to any Loan or
Borrowing denominated in Euros, the EURIBO Screen Rate and (c) with respect to
any Loan or Borrowing denominated in Yen, the TIBO Screen Rate.

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

“Required Lenders” means, at any time, Lenders having Total Credit Exposures
representing more than 50% of the Total Credit Exposures of all Lenders. The
Total Credit Exposure of any Defaulting Lender shall be disregarded in
determining Required Lenders at any time.

“Resolution Authority” means an EEA Resolution Authority or, with respect to
any UK Financial Institution, a UK Resolution Authority.

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer or controller of a Loan
Party, solely for purposes of the delivery of incumbency certificates pursuant
to Section 4.01, the secretary or any assistant secretary of a Loan Party and,
solely for purposes of notices given pursuant to Article II, any other officer
or employee of the applicable Loan Party so designated by any of the foregoing
officers in a notice to the Administrative Agent or any other officer or
employee of the applicable Loan Party designated in or pursuant to an
agreement between the applicable Loan Party and the Administrative Agent. Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on
behalf of such Loan Party.

“Revaluation Date” means, with respect to any Loan denominated in an
Alternative Currency, (a) the date of the commencement of the initial Interest
Period therefor (or, in the case of a SONIA Loan, the date on which such SONIA
Loan is made), (b) the date of the commencement of each subsequent Interest
Period therefor (or, in the case of a SONIA Loan, each date that shall occur
at intervals of three months’ duration after the date on which such SONIA Loan
is made) and (c) such additional dates as the Administrative Agent shall
reasonably determine or the Required Lenders shall require.

“Revolving Credit Exposure” means, as to any Lender at any time, the aggregate
Outstanding Amount at such time of its Loans.

“Reuters” means Thomson Reuters Corporation, Refinitiv or, in each case, a
successor thereto.

“Same Day Funds” means (a) with respect to disbursements and payments in
Dollars, immediately available funds, and (b) with respect to disbursements
and payments in an Alternative Currency, same day or other funds as may be
reasonably determined by the Administrative Agent to be customary in the place
of disbursement or payment for the settlement of international banking
transactions in the relevant Alternative Currency.

“Sanction(s)” means any sanction administered or enforced by the United States
Government (including, without limitation, OFAC), the United Nations Security
Council, the European Union, or Her Majesty’s Treasury.

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“SOFR” with respect to any day means the secured overnight financing rate
published for such day by the NYFRB, as the administrator of the benchmark (or
a successor administrator), on the NYFRB’s Website.

“SOFR-Based Rate” means SOFR, Compounded SOFR or Term SOFR.

“SONIA” means, with respect to any Business Day, a rate per annum equal to the
Sterling Overnight Index Average for such Business Day published by the SONIA
Administrator on the SONIA Administrator Website on the immediately succeeding
Business Day.

“SONIA Administrator” means the Bank of England (or any successor
administrator of the Sterling Overnight Index Average).

“SONIA Administrator Website” means the Bank of England’s website, currently
at http://www.bankofengland.co.uk, or any successor source for the Sterling
Overnight Index Average identified as such by the SONIA Administrator from
time to time.

“SONIA Borrowing” means any Borrowing comprised of SONIA Loans.

“SONIA Business Day” means any day that is not a Saturday, Sunday or other day
on which banks are closed for general business in London.

“SONIA Interest Day” has the meaning specified in the definition of “Daily
Simple SONIA”.

“SONIA Loan” means a Loan that bears interest at a rate based on the Daily
Simple SONIA.

“Special Notice Currency” means, at any time, an Alternative Currency, other
than the currency of a country that is a member of the Organization for
Economic Cooperation and Development at such time located in North America or
Europe.

“Sterling” and “£” mean the lawful currency of the United Kingdom.

“Stockholders’ Equity” means, as of any date of determination, consolidated
stockholders’ equity of the Company and its Subsidiaries as of that date
determined in accordance with GAAP.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries
of the Company.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps
or options, bond or bond price or bond index swaps or options or forward bond
or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master
Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the
date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).

“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do
not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of
such Person (without regard to accounting treatment).

“Taxes” means all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

“TARGET” means the Trans-European Automated Real-time Gross Settlement Express
Transfer (TARGET2) payment system (or, if such payment system ceases to be
operative, such other payment system (if any) determined by the Administrative
Agent to be a suitable replacement).

“TARGET Day” means any day on which the TARGET is open for the settlement of
payments in Euro.

“Term SOFR” means the forward-looking term rate based on SOFR that has been
selected or recommended by the Relevant Governmental Body.

“TIBO Rate” means, with respect to any Borrowing denominated in Yen for any
Interest Period, the TIBO Screen Rate at approximately 11:00 a.m., Tokyo time,
two Business Days prior to the commencement of such Interest Period; provided
that if the TIBO Screen Rate shall not be available at such time for such
Interest Period, then the TIBO Rate shall be the Interpolated Screen Rate at
such time.

“TIBO Screen Rate” means a rate per annum equal to the Tokyo interbank offered
rate administered by the Ippan Shadan Hojin JBA TIBOR Administration (or any
other Person which takes over the administration of that rate) for deposits in
Yen for the applicable period, as displayed on the Reuters screen page that
displays such rate (currently DTIBOR0) (or, in the event such rate does not
appear on a page of the Reuters screen, on any successor or substitute page on
such screen that displays such rate, or on the appropriate page of such other
information service that publishes such rate as shall be selected by the
Administrative Agent from time to time in its reasonable discretion); provided
that if the TIBO Screen Rate, determined as provided above, would be less than
zero, then the TIBO Screen Rate shall be deemed to be zero for all purposes.

“TIBOR Borrowing” means any Borrowing comprised of TIBOR Loans.

“TIBOR Loan” means a Loan that bears interest at a rate based on the TIBO
Rate.

“Total Credit Exposure” means, as to any Lender at any time, the unused
Commitment and the Revolving Credit Exposure of such Lender at such time.

“Total Outstandings” means, at any time, the aggregate Outstanding Amount of
all Loans at such time.

“Type” means, with respect to a Loan, its character as a Base Rate Loan, a
LIBOR Loan, a EURIBOR Loan, a TIBOR Loan or a SONIA Loan.

“UK Financial Institution” means any BRRD Undertaking (as such term is defined
under the PRA Rulebook (as amended form time to time) promulgated by the
United Kingdom Prudential Regulation Authority) or any Person falling within
IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by
the United Kingdom Financial Conduct Authority, which includes certain credit
institutions and investment firms, and certain Affiliates of such credit
institutions or investment firms.

“UK Resolution Authority” means the Bank of England or any other public
administrative authority having responsibility for the resolution of any UK
Financial Institution.

“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding
the Benchmark Replacement Adjustment; provided that, if the Unadjusted
Benchmark Replacement as so determined would be less than zero, the Unadjusted
Benchmark Replacement will be deemed to be zero for the purposes of this
Agreement.

“United States” and “U.S.” mean the United States of America.

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning specified in Section
3.01(e)(ii)(B)(3).

“Write-Down and Conversion Powers” means (a) with respect to any EEA
Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the
applicable EEA Member Country, which write-down and conversion powers are
described in the EU Bail-In Legislation Schedule, and (b) with respect to the
United Kingdom, any powers of the applicable Resolution Authority under the
Bail-In Legislation to cancel, reduce, modify or change the form of a
liability of any UK Financial Institution or any contract or instrument under
which that liability arises, to convert all or part of that liability into
shares, securities or obligations of that Person or any other Person, to
provide that any such contract or instrument is to have effect as if a right
had been exercised under it or to suspend any obligation in respect of that
liability or any of the powers under that Bail-In Legislation that are related
to or ancillary to any of those powers.

“Yen” and “¥” mean the lawful currency of Japan.

1.02Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

(a)The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words “include”, “includes” and “including” shall be deemed to be followed
by the phrase “without limitation.” The word “will” shall be construed to have
the same meaning and effect as the word “shall.” Unless the context requires
otherwise, (i) any definition of or reference to any agreement, instrument or
other document (including any Loan Document or any Organization Document)
shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein or in any other Loan Document), (ii) any reference herein to
any Person shall be construed to include such Person’s successors and
permitted assigns, (iii) the words “hereto”, “herein”, “hereof” and
“hereunder”, and words of similar import when used in any Loan Document, shall
be construed to refer to such Loan Document in its entirety and not to any
particular provision thereof, (iv) all references in a Loan Document to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

(b)In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including”; the words “to” and
“until” each mean “to but excluding”; and the word “through” means “to and
including”.

(c)Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

1.03Accounting Terms.

(a)Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data required
to be submitted pursuant to this Agreement shall be prepared in conformity
with, GAAP applied on a consistent basis, as in effect from time to time.

Notwithstanding the foregoing, for purposes of determining compliance with any
covenant contained herein, Indebtedness of the Company and its Subsidiaries
shall be deemed to be carried at 100% of the outstanding principal amount
thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial
liabilities shall be disregarded.

(b)Changes in GAAP. If at any time any change in GAAP would affect the
computation of any requirement set forth in any Loan Document, and either the
Company or the Required Lenders shall so request, the Administrative Agent,
the Lenders and the Company shall negotiate in good faith to amend such
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders and the Borrowers);
provided that, until so amended, (i) such requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the
Company shall provide to the Administrative Agent and the Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of
such requirement made before and after giving effect to such change in GAAP.

(c)Consolidation of Variable Interest Entities. All references herein to
consolidated financial statements of the Company and its Subsidiaries or to
the determination of any amount for the Company and its Subsidiaries on a
consolidated basis or any similar reference shall, in each case, be deemed to
include each variable interest entity that the Company is required to
consolidate pursuant to FASB ASC 810 as if such variable interest entity were
a Subsidiary as defined herein.

1.04Exchange Rates. The Administrative Agent shall determine the Dollar
Equivalent of any Loan denominated in an Alternative Currency as of each
applicable Revaluation Date, in each case using the Exchange Rate for such
Alternative Currency in relation to Dollars, and each such amount shall be the
Dollar Equivalent of such Loan until the next required calculation thereof
pursuant to this sentence.

1.05Additional Alternative Currencies.

(a)A Borrower may from time to time request that Loans be made in a currency
other than those specifically listed in the definition of “Alternative
Currency”; provided that such requested currency is a lawful currency (other
than Dollars) that is readily available and freely transferable and
convertible into Dollars.

(b)Any such request shall be made to the Administrative Agent not later than
1:00 p.m., ten (10) Business Days prior to the date of the desired Borrowing
(or such other time or date as may be agreed by the Administrative Agent in
its sole discretion). The Administrative Agent shall promptly notify each
Lender of any such request. Each Lender shall notify the Administrative Agent,
not later than 1:00 p.m., five (5) Business Days after receipt of such request
whether it consents, in its sole discretion, to the making of Loans in such
requested currency.

(c)Any failure by a Lender to respond to such request within the time period
specified in the preceding sentence shall be deemed to be a refusal by such
Lender to permit Loans to be made in such requested currency. If the
Administrative Agent and all the Lenders consent to making Loans in such
requested currency, the Administrative Agent shall so notify the Borrowers and
such currency shall thereupon be deemed for all purposes to be an Alternative
Currency hereunder for purposes of any Borrowings of Loans. If the
Administrative Agent shall fail to obtain consent to any request for an
additional currency under this Section, the Administrative Agent shall
promptly so notify the Borrowers.

1.06[Intentionally Omitted].

1.07Times of Day. Unless otherwise specified, all references herein to times
of day shall be references to Eastern time (daylight or standard, as
applicable).

1.08Interest Rate; Benchmark Notification. The interest rate on a Loan
denominated in Dollars or any Alternative Currency may be derived from an
interest rate benchmark that is, or may in the future become, the subject of
regulatory reform. Regulators have signaled the need to use alternative
benchmark reference rates for some of these interest rate benchmarks and, as a
result, such interest rate benchmarks may cease to comply with applicable
Laws, may be permanently discontinued, and/or the basis on which they are
calculated may change. The London interbank offered rate is intended to
represent the rate at which contributing banks may obtain short-term
borrowings from each other in the London interbank market. In July 2017, the
U.K. Financial Conduct Authority announced that, after the end of 2021, it
would no longer persuade or compel contributing banks to make rate submissions
to the ICE Benchmark Administration (together with any successor to the ICE
Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London
interbank offered rate. As a result, it is possible that commencing in 2022,
the London interbank offered rate may no longer be available or may no longer
be deemed an appropriate reference rate upon which to determine the interest
rate on LIBOR Loans. In light of this eventuality, public and private sector
industry initiatives are currently underway to identify new or alternative
reference rates to be used in place of the London interbank offered rate. Upon
the occurrence of a Benchmark Transition Event or an Early Opt-In Election,
Section 3.03(b) provides a mechanism for determining an alternative rate of
interest. The Administrative Agent will promptly notify the Company, pursuant
to Section 3.03(b), of any change to the reference rate upon which the
interest rate on LIBOR Loans is based. However, the Administrative Agent does
not warrant or accept any responsibility for, and shall not have any liability
with respect to, the administration, submission or any other matter related to
the London interbank offered rate or with respect to any alternative or
successor rate thereto, or replacement rate thereof (including, without
limitation, (i) any such alternative, successor or replacement rate
implemented pursuant to Section 3.03(b), whether upon the occurrence of a
Benchmark Transition Event or an Early Opt-in Election, and (ii) the
implementation of any Benchmark Replacement Conforming Changes pursuant to
Section 3.03(b)), including, without limitation, whether the composition or
characteristics of any such alternative, successor or replacement reference
rate will be similar to, or produce the same value or economic equivalence of,
the LIBO Rate or have the same volume or liquidity as did the London interbank
offered rate prior to its discontinuance or unavailability.

1.09Divisions. For all purposes under this Agreement, in connection with any
division or plan of division under Delaware law (or any comparable event under
a different jurisdiction’s laws): (a) if any asset, right, obligation or
liability of any Person becomes the asset, right, obligation or liability of a
different Person, then it shall be deemed to have been transferred from the
original Person to the subsequent Person, and (b) if any new Person comes into
existence, such new Person shall be deemed to have been organized and acquired
on the first date of its existence by the holders of its capital stock or
similar equity interests at such time.

ARTICLE II.

THE COMMITMENTS AND LOANS

2.01Loans. Subject to the terms and conditions set forth herein, each Lender
severally agrees to make loans (each such loan, a “Loan”) to the Borrowers in
Dollars or in one or more Alternative Currencies from time to time on any
Business Day during the Availability Period; provided, however, that after
giving effect to any Borrowing, (i) the Total Outstandings shall not exceed
the Aggregate Commitments, (ii) the Revolving Credit Exposure of any Lender
shall not exceed such Lender’s Commitment, and (iii) the aggregate Outstanding
Amount of all Loans denominated in Alternative Currencies shall not exceed the
Alternative Currency Sublimit. Within the limits of each Lender’s

Commitment, and subject to the other terms and conditions hereof, the
Borrowers may borrow under this Section, prepay under Section 2.03, and
reborrow under this Section. Loans denominated in Dollars may be Base Rate
Loans or LIBOR Loans, Loans denominated in Euros may only be EURIBOR Loans,
Loans denominated in Sterling may only be SONIA Loans and Loans denominated in
Yen may only be TIBOR Loans, in each case, as further provided herein.

2.02Borrowings, Conversions and Continuations of Loans.

(a)Each borrowing of Loans, each conversion of Loans denominated in Dollars
from one Type to another and each continuation of Eurocurrency Rate Loans
shall be made upon the applicable Borrower’s irrevocable notice to the
Administrative Agent, which may be given by telephone or delivery of a Loan
Notice; provided that any telephonic notice must be confirmed immediately by
delivery to the Administrative Agent of a Loan Notice. Each Loan Notice must
be received by the Administrative Agent not later than 1:00 p.m. (i) three
Business Days prior to the requested date of any borrowing of, conversion to
or continuation of Eurocurrency Rate Loans denominated in Dollars or of any
conversion of Eurocurrency Rate Loans denominated in Dollars to Base Rate
Loans, (ii) four Business Days (or five Business Days in the case of a Special
Notice Currency) prior to the requested date of any borrowing or continuation
of Eurocurrency Rate Loans denominated in Alternative Currencies or SONIA
Loans and (iii) on the requested date of any borrowing of Base Rate Loans;
provided that if the applicable Borrower wishes to request Eurocurrency Rate
Loans having an Interest Period other than one, three or six months in
duration as provided in the definition of “Interest Period”, the applicable
notice must be received by the Administrative Agent not later than 1:00 p.m.
(i) four Business Days prior to the requested date of such borrowing,
conversion or continuation of Eurocurrency Rate Loans denominated in Dollars,
or (ii) five Business Days (or six Business Days in the case of a Special
Notice Currency) prior to the requested date of such borrowing or continuation
of Eurocurrency Rate Loans denominated in Alternative Currencies, whereupon
the Administrative Agent shall give prompt notice to the Lenders of such
request and determine whether the requested Interest Period is acceptable to
all of them. Not later than 1:00 p.m. (i) three Business Days before the
requested date of such borrowing, conversion or continuation of Eurocurrency
Rate Loans denominated in Dollars, or (ii) four Business Days (or five
Business Days in the case of a Special Notice Currency) prior to the requested
date of such borrowing or continuation of Eurocurrency Rate Loans denominated
in Alternative Currencies, the Administrative Agent shall notify the Company
and the applicable Borrower (which notice may be by telephone) whether or not
the requested Interest Period has been consented to by all the Lenders. Each
borrowing of, conversion to or continuation of Eurocurrency Rate Loans shall
be in an aggregate amount that is an integral multiple of the Borrowing
Multiple and not less than the Borrowing Minimum. Each borrowing of or
conversion to Base Rate Loans or borrowing of SONIA Loans shall be in an
aggregate amount that is an integral multiple of the Borrowing Multiple and
not less than the Borrowing Minimum. Each Loan Notice shall specify (i)
whether the applicable Borrower is requesting a borrowing of Loans, a
conversion of Loans denominated in Dollars from one Type to another or a
continuation of Eurocurrency Rate Loans, (ii) the requested date of the
borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Loans to be borrowed, converted
or continued, (iv) the Type of Loans to be borrowed, continued or to which
existing Loans are to be converted, (v) if applicable, the duration of the
Interest Period with respect thereto, (vi) the currency of the Loans to be
borrowed and (vii) if applicable, the Designated Borrower. In the case of any
conversion or continuation of any Loans, such conversion or continuation shall
apply to Loans comprising the same existing Borrowing, it being understood
that the applicable Borrower may elect different conversion or continuation
options with respect to different portions of the affected existing Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each
such portion shall be considered a separate Borrowing. If the applicable
Borrower fails to specify a currency in a Loan Notice requesting a borrowing
of Loans, then the Loans so requested shall be made in Dollars. If the
applicable Borrower fails to specify a Type of Loan in a Loan Notice or if the
applicable Borrower fails to give a timely notice requesting a conversion or

continuation of any Eurocurrency Rate Borrowing then the applicable Loans
shall be made as, or continued as, (i) in the case of Loans denominated in
Dollars, LIBOR Loans, (ii) in the case of Loans denominated in Euros, EURIBOR
Loans, (iii) in the case of Loans denominated in Yen, TIBOR Loans and (iv) in
the case of Loans denominated in Sterling, SONIA Loans, in each case (other
than in the case of SONIA Loans), with an Interest Period of one month. Any
such automatic continuation as Eurocurrency Rate Loans with an Interest Period
of one month shall be effective as of the last day of the Interest Period then
in effect with respect to the applicable Eurocurrency Rate Borrowing. If the
applicable Borrower requests a borrowing of, conversion to or continuation of
Eurocurrency Rate Loans in any such Loan Notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month. No Loan may be converted into or continued as a Loan denominated in a
different currency, but instead must be prepaid in the original currency of
such Loan and reborrowed in the other currency.

(b)Following receipt of a Loan Notice, the Administrative Agent shall promptly
notify each Lender of the details thereof and, in the case of a Loan Notice
requesting a borrowing of Loans, of the amount (and currency) of its
Applicable Percentage of the applicable Loans, and if no timely notice of a
conversion or continuation of any Eurocurrency Rate Borrowing is provided by
the applicable Borrower, the Administrative Agent shall notify each Lender of
the details of any automatic continuation as Eurocurrency Rate Loans as
described in the preceding subsection. In the case of a borrowing of Loans,
each Lender shall make the amount of its Loan available to the Administrative
Agent in Same Day Funds at the Administrative Agent’s Office for the
applicable currency not later than 1:00 p.m., in the case of any Loan
denominated in Dollars (or, in the case of a Base Rate Loans with respect to
which a Loan Notice was delivered after 11:00 a.m. on the date of such
borrowing, not later than two hours after the delivery of such Loan Notice),
and not later than the Applicable Time specified by the Administrative Agent
in the case of any Loan denominated in an Alternative Currency, in each case
on the Business Day specified in the applicable Loan Notice. The
Administrative Agent shall make all funds so received available to the
applicable Borrower in like funds as received by the Administrative Agent
either by (i) crediting the account of such Borrower on the books of the
Administrative Agent with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the applicable Borrower.

(c)Except as otherwise provided herein, a Eurocurrency Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurocurrency Rate Loan. During the existence of an Event of Default, upon the
request of the Required Lenders, (i) no Loans denominated in Dollars shall be
converted to or continued as Eurocurrency Rate Loans without the consent of
the Required Lenders and (ii) no Loans denominated in any Alternative Currency
shall be continued as Eurocurrency Rate Loans with an Interest Period greater
than one month without the consent of the Required Lenders.

(d)The Administrative Agent shall promptly notify the Company, the applicable
Borrower and the Lenders of the interest rate applicable to any Interest
Period for Eurocurrency Rate Loans upon determination of such interest rate.

(e)After giving effect to all borrowings of Loans, all conversions of Loans
from one Type to another, and all continuations of Loans as the same Type,
there shall not be more than ten Eurocurrency Rate Borrowings and SONIA
Borrowings outstanding at any given time.

2.03Prepayments.

(a)Any Borrower may, upon notice to the Administrative Agent from such
Borrower, at any time or from time to time voluntarily prepay any Borrowing in
whole or in part without premium or penalty; provided that (i) such notice
must be received by the Administrative Agent not later than 1:00 p.m. (A)
three Business Days prior to any date of prepayment of Eurocurrency Rate Loans
denominated in Dollars,

(B) four Business Days (or five Business Days in the case of prepayment of
Loans denominated in Special Notice Currencies) prior to any date of
prepayment of Eurocurrency Rate Loans denominated in Alternative Currencies or
SONIA Loans and (C) on the date of prepayment of Base Rate Loans and (ii) any
prepayment of any Borrowing shall be in an aggregate amount that is an
integral multiple of the Borrowing Multiple and not less than the Borrowing
Minimum or, if less, the entire principal amount of such Borrowing then
outstanding. Each such notice shall specify the date and amount of such
prepayment and the Borrowing or Borrowings to be prepaid and, if a
Eurocurrency Rate Borrowing is to be prepaid, the Interest Period applicable
thereto. The Administrative Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender’s Applicable
Percentage of such prepayment. If such notice is given by a Borrower, such
Borrower shall make such prepayment, and the payment amount specified in such
notice shall be due and payable, on the date specified in the applicable
notice; provided that if such notice is given in connection with a full or
partial refinancing of the Commitments, such notice may condition the
prepayment upon the effectiveness of such refinancing, in which case such
notice may be revoked by such Borrower (by notice to the Administrative Agent
on or prior to the date of such prepayment) if such condition is not
satisfied. Any prepayment of a Eurocurrency Rate Loan or SONIA Loan shall be
accompanied by all accrued interest on the amount prepaid. Subject to Section
2.13, each prepayment of a Borrowing shall be applied to the Loans of the
Lenders comprising such Borrowing in accordance with their respective
Applicable Percentages.

(b)If the Administrative Agent notifies the Borrowers at any time that (i)
solely as a result of fluctuations in currency exchange rates, the Total
Outstandings at such time exceed an amount equal to 105% of the Aggregate
Commitments then in effect or (ii) other than as a result of fluctuations in
currency exchange rates, the Total Outstandings at such time exceed the
Aggregate Commitments then in effect, then, in either case, within two
Business Days after receipt of such notice, the Borrowers shall prepay Loans
in an aggregate amount at least equal to such excess.

(c)If the Administrative Agent notifies the Borrowers at any time that (i)
solely as a result of fluctuations in currency exchange rates, the Outstanding
Amount of all Loans denominated in Alternative Currencies at such time exceeds
an amount equal to 105% of the Alternative Currency Sublimit then in effect or
(ii) other than as a result of fluctuations in currency exchange rates, the
Outstanding Amount of all Loans denominated in Alternative Currencies at such
time exceeds the Alternative Currency Sublimit then in effect, then, in either
case, within two Business Days after receipt of such notice, the Borrowers
shall prepay Loans denominated in Alternative Currencies in an aggregate
amount sufficient to reduce such Outstanding Amount as of such date of payment
to an amount not to exceed 100% of the Alternative Currency Sublimit then in
effect.

2.04Termination or Reduction of Commitments. The Company may, upon notice to
the Administrative Agent, terminate the Aggregate Commitments, or from time to
time permanently reduce the Aggregate Commitments; provided that (i) any such
notice shall be received by the Administrative Agent not later than 1:00 p.m.
three Business Days prior to the date of termination or reduction (or such
shorter period as may be agreed by the Administrative Agent in its sole
discretion), (ii) any such partial reduction shall be (unless the Aggregate
Commitments are less than such amount) a whole multiple of $1,000,000, (iii)
the Company shall not terminate or reduce the Aggregate Commitments if, after
giving effect thereto and to any concurrent prepayments hereunder, the Total
Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving
effect to any reduction of the Aggregate Commitments, the Alternative Currency
Sublimit exceeds the amount of the Aggregate Commitments, the Alternative
Currency Sublimit shall be automatically reduced by the amount of such excess.
The Administrative Agent will promptly notify the Lenders of any such notice
of termination or reduction of the Aggregate Commitments. Except as provided
in clause (iv) above, the amount of any such Aggregate Commitment reduction
shall not be applied to the Alternative Currency Sublimit unless otherwise
specified by the Company. Any reduction of the Aggregate Commitments shall be
applied to the Commitment of each

Lender according to its Applicable Percentage. Unless previously terminated,
the Aggregate Commitments shall automatically terminate at 5:00 p.m. on the
Maturity Date. Any reduction or termination of the Aggregate Commitments shall
be permanent. All unpaid fees accrued pursuant to Section 2.07(a) until the
effective date of any reduction or termination of the Aggregate Commitments
(in the case of any reduction, in respect of the aggregate amount of the
Commitments subject to such reduction) shall be paid on the effective date of
such reduction or termination.

2.05Repayment of Loans. Each Borrower shall repay to the Lenders on the
Maturity Date the aggregate principal amount of Loans made to such Borrower
and outstanding on such date.

2.06Interest.

(a)Subject to the provisions of subsection (b) below, (i) each LIBOR Borrowing
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the LIBO Rate for such Interest
Period plus the Applicable Rate; (ii) each EURIBOR Borrowing shall bear
interest on the outstanding principal amount thereof for each Interest Period
at a rate per annum equal to the EURIBO Rate for such Interest Period plus the
Applicable Rate; (iii) each TIBOR Borrowing shall bear interest on the
outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the TIBO Rate for such Interest Period plus the Applicable
Rate; (iv) each SONIA Loan shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to
the Daily Simple SONIA plus the Applicable Rate and (v) each Base Rate Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing or conversion date at a rate per annum equal to the Base
Rate plus the Applicable Rate.

(b)If any amount payable by any Loan Party under any Loan Document is not paid
when due (after giving effect to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, then such overdue amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.
Accrued and unpaid interest on past due amounts (including interest on past
due interest) shall be due and payable upon demand.

(c)Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the
terms hereof before and after judgment, and before and after the commencement
of any proceeding under any Debtor Relief Law.

2.07Fees.

(a)Commitment Fee. The Company shall pay to the Administrative Agent, for the
account of each Lender in accordance with its Applicable Percentage, a
commitment fee in Dollars equal to the Applicable Rate times the actual daily
amount by which the Aggregate Commitments exceed the Total Outstandings,
subject to adjustment as provided in Section 2.13. The commitment fee shall
accrue at all times during the Availability Period, including at any time
during which one or more of the conditions in Article IV is not met, and shall
be due and payable quarterly in arrears on the last Business Day of each
March, June, September and December, commencing with the first such date to
occur after the Closing Date, and on the last day of the Availability Period.
The commitment fee shall be calculated quarterly in arrears, and if there is
any change in the Applicable Rate during any quarter, the actual daily amount
shall be computed and multiplied by the Applicable Rate separately for each
period during such quarter that such Applicable Rate was in effect.

(b)Other Fees. The Company shall pay to the Administrative Agent for its own
account, in Dollars, fees in the amounts and at the times specified in the Fee
Letter. Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

2.08Computation of Interest and Fees. All computations of interest for Base
Rate Loans when the Base Rate is determined by reference to the Prime Rate and
all computations of interest by reference to the Daily Simple SONIA shall be
made on the basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed (including the first day, but excluding the last day). All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (including the first day, but excluding the last day)
(which results in more fees or interest, as applicable, being paid than if
computed on the basis of a 365-day year), or, in the case of interest in
respect of Loans denominated in Alternative Currencies as to which market
practice differs from the foregoing, in accordance with such market practice.
Interest shall accrue on each Loan for the day on which the Loan is made, and
shall not accrue on a Loan, or any portion thereof, for the day on which the
Loan or such portion is paid; provided that any Loan that is repaid on the
same day on which it is made shall, subject to Section 2.10(a), bear interest
for one day. Each determination by the Administrative Agent of an interest
rate or fee hereunder shall be conclusive and binding for all purposes, absent
manifest error. With respect to all Alternative Currencies, the calculation of
the applicable interest rate shall be determined in accordance with market
practice.

2.09Evidence of Debt. The Loans made by each Lender shall be evidenced by one
or more accounts or records maintained by such Lender and by the
Administrative Agent in the ordinary course of business. The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Loans made by the
Lenders to the Borrowers and the interest and payments thereon. Any failure to
so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrowers hereunder to pay any amount owing with
respect to the Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error. Upon
the request of any Lender to a Borrower made through the Administrative Agent,
such Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Note, which shall evidence such Lender’s Loans to such
Borrower in addition to such accounts or records. Each Lender may attach
schedules to a Note and endorse thereon the date, Type (if applicable),
amount, currency and maturity of its Loans and payments with respect thereto.

2.10Payments Generally; Administrative Agent’s Clawback.

(a)General. All payments to be made by the Borrowers shall be made free and
clear of and without condition or deduction for any counterclaim, defense,
recoupment or setoff. Except as otherwise expressly provided herein and except
with respect to principal of and interest on Loans denominated in an
Alternative Currency, all payments by the Borrowers hereunder shall be made to
the Administrative Agent, for the account of the respective Lenders to which
such payment is owed, at the applicable Administrative Agent’s Office in
Dollars and in Same Day Funds not later than 4:00 p.m. on the date specified
herein. Except as otherwise expressly provided herein, all payments by the
Borrowers hereunder with respect to principal and interest on Loans
denominated in an Alternative Currency shall be made to the Administrative
Agent, for the account of the respective Lenders to which such payment is
owed, at the applicable Administrative Agent’s Office in such Alternative
Currency and in Same Day Funds not later than the Applicable Time specified by
the Administrative Agent on the dates specified herein. Without limiting the
generality of the foregoing, if the Administrative Agent reasonably determines
that it is required to do so for legal, operational or regulatory reasons, the
Administrative Agent may require that any payments due under this Agreement be
made in the United States. For purposes of the preceding sentence, a payment

shall be treated as made in the United States if a wire transfer is made
through a bank located in the United States at the direction of a Borrower.
If, for any reason, any Borrower is prohibited by any Law from making any
required payment hereunder in an Alternative Currency, such Borrower shall
make such payment in Dollars in the Dollar Equivalent of the Alternative
Currency payment amount. The Administrative Agent will promptly distribute to
each Lender its Applicable Percentage (or other applicable share as provided
herein) of such payment in like funds as received by wire transfer to such
Lender’s Lending Office. All payments received by the Administrative Agent (i)
after 4:00 p.m., in the case of payments in Dollars, or (ii) after the
Applicable Time specified by the Administrative Agent in the case of payments
in an Alternative Currency, shall in each case be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue. If any payment to be made by any Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following
Business Day, and such extension of time shall be reflected in computing
interest or fees, as the case may be.

(b)(i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any borrowing of Loans that such Lender will not make
available to the Administrative Agent such Lender’s share of such borrowing,
the Administrative Agent may assume that such Lender has made such share
available on such date in accordance with Section 2.02 and may, in reliance
upon such assumption, make available to the applicable Borrower a
corresponding amount. In such event, if a Lender has not in fact made its
share of the applicable Borrowing available to the Administrative Agent, then
the applicable Lender and the applicable Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount in Same
Day Funds with interest thereon, for each day from and including the date such
amount is made available to such Borrower to but excluding the date of payment
to the Administrative Agent, at (A) in the case of a payment to be made by
such Lender, the rate determined by the Administrative Agent in accordance
with banking industry rules and conventions on interbank compensation (or, if
such payment is in Dollars, if greater, the NYFRB Rate), plus any
administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (B) in the case of
a payment to be made by the Borrower, the interest rate applicable to the
Loans comprising such Borrowing. If such Borrower and such Lender shall pay
such interest to the Administrative Agent for the same or an overlapping
period, the Administrative Agent shall promptly remit to such Borrower the
amount of such interest paid by such Borrower for such period. If such Lender
pays its share of the applicable Borrowing to the Administrative Agent, then
the amount so paid shall constitute such Lender’s Loan included in such
Borrowing. Any payment by a Borrower shall be without prejudice to any claim
such Borrower may have against a Lender that shall have failed to make such
payment to the Administrative Agent.

(ii) Payments by the Borrowers; Presumptions by Administrative Agent. Unless
the Administrative Agent shall have received notice from a Borrower prior to
the date on which any payment is due to the Administrative Agent for the
account of the Lenders hereunder that such Borrower will not make such
payment, the Administrative Agent may assume that such Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if such
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender in Same Day Funds with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the rate
determined by the Administrative Agent in accordance with banking industry
rules and conventions on interbank compensation (or, if such payment is in
Dollars, if greater, the NYFRB Rate), plus any administrative, processing or
similar fees customarily charged by the Administrative Agent in connection
with the foregoing.

A notice of the Administrative Agent to any Lender or Borrower with respect to
any amount owing under this subsection (b) shall be conclusive, absent
manifest error.

(c)Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Loan to be made by such Lender to any
Borrower as provided in the foregoing provisions of this Article II, and such
funds are not made available to such Borrower by the Administrative Agent
because the conditions to the applicable Borrowing set forth in Article IV are
not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

(d)Obligations of Lenders Several. The obligations of the Lenders hereunder to
make Loans and to make payments pursuant to Section 11.04(c) or 11.05 are
several and not joint. The failure of any Lender to make any Loan or to make
any payment under Section 11.04(c) or 11.05 on any date required hereunder
shall not relieve any other Lender of its corresponding obligation to do so on
such date, and no Lender shall be responsible for the failure of any other
Lender to so make its Loan or to make its payment under Section 11.04(c) or

(e)Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for any Loan in any particular place or manner.

2.11Sharing of Payments by Lenders. If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Loans made by it resulting in such
Lender receiving payment of a proportion of the aggregate amount of such Loans
and accrued interest thereon greater than its pro rata share thereof as
provided herein, then the Lender receiving such greater proportion shall (a)
notify the Administrative Agent of such fact, and (b) purchase (for cash at
face value) participations in the Loans of the other Lenders, or make such
other adjustments as shall be equitable, so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Loans; provided that:

(i)if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest; and

(ii)the provisions of this Section shall not be construed to apply to (x) any
payment made by or on behalf of any Borrower pursuant to and in accordance
with the express terms of this Agreement (for the avoidance of doubt, as
amended from time to time) (including the application of funds arising from
the existence of a Defaulting Lender) or (y) any payment obtained by a Lender
as consideration for the assignment of or sale of a participation in any of
its Loans to any assignee or participant, other than to the Company or any
other Borrower or any Affiliate of any of the foregoing (as to which the
provisions of this Section shall apply).

Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Loan
Party in the amount of such participation.

2.12Extension of Maturity Date.

(a)Requests for Extension. The Company may (but only on three separate
occasions during the term of this Agreement), by notice to the Administrative
Agent (which shall promptly notify the Lenders), request that each Lender
agree to extend the Maturity Date to the first anniversary of the Maturity
Date then in effect (the “Existing Maturity Date”).

(b)Lender Elections to Extend. Each Lender shall, by notice to the
Administrative Agent not later than the date that is 20 days after the date
the Company requests an extension of the Maturity Date (the “Response Date”),
advise the Administrative Agent whether or not such Lender agrees to such
extension, provided that any Lender that does not advise the Administrative
Agent on or prior to the Response Date shall be deemed to be have declined to
agree to such extension (each Lender agreeing to the requested extension being
called an “Extending Lender”, and each Lender declining or deemed to have
declined to agree to the requested extension being called a “Non-Extending
Lender”). The election of any Lender to agree or to decline to agree to any
requested extension shall be in its sole and individual discretion, and the
agreement of any Lender shall not obligate any other Lender to so agree.

(c)Notification by Administrative Agent. The Administrative Agent shall notify
the Company of each Lender’s determination under this Section promptly after
the Response Date.

(d)Additional Commitment Lenders. The Company shall have the right to replace
each NonExtending Lender with one or more Eligible Assignees as provided in
Section 11.13.

(e)Extension of Existing Maturity Date. If Lenders constituting not less than
the Required Lenders shall have agreed to extend the Maturity Date before the
anniversary of the Closing Date immediately following the delivery of the
notice from the Company requesting such extension, then, effective as of the
Extension Closing Date with respect thereto, the Maturity Date applicable to
the Extending Lenders shall be the first anniversary of the Existing Maturity
Date; provided that no extension of the Maturity Date pursuant to this Section
shall become effective unless (the first date on which such consent of the
Required Lenders is obtained and the conditions specified in this proviso are
satisfied with respect to the applicable requested Extension being called the
“Extension Closing Date” with respect thereto), the Company shall have
delivered to the Administrative Agent a certificate (together with resolutions
adopted by each Borrower approving or otherwise consenting to such extension)
on or prior to the Extension Closing Date signed by a Responsible Officer of
the Company certifying that, before and after giving effect to such extension
(A) the representations and warranties contained in Article V (and, in the
case of a Designated Borrower, in its Designated Borrower Request and
Assumption Agreement) are true and correct in all material respects (except to
the extent that such representations and warranties are already qualified by
materiality, in which case they shall be true and correct in all respects) on
and as of the Extension Closing Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct in all material respects (except to the extent
that such representations and warranties are already qualified by materiality,
in which case they shall be true and correct in all respects) as of such
earlier date, and except that for purposes of this Section, the
representations and warranties contained in subsections (a) and (b) of Section
5.05 shall be deemed to refer to the most recent statements delivered (or
otherwise made available) pursuant to subsections (a) and (b), respectively,
of Section 6.01, and (B) no Default exists. The Commitment of each Non-
Extending Lender shall terminate on the Existing Maturity Date, and the
principal amount of any outstanding Loans made by such Non-Extending Lender,
together with any accrued interest thereon, and any accrued fees and other
amounts payable to or for the account of such Non-Extending Lender hereunder,
shall be due and payable on the Existing Maturity Date.

(f)Conflicting Provisions. This Section shall supersede any provisions in
Section 2.11 or 11.01 to the contrary.

2.13Defaulting Lenders.

(a)Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
applicable Law:

(i)Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement or
any other Loan Document shall be restricted as set forth in the definition of
“Required Lenders” and Section 11.01.

(ii)Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article VIII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 11.08 shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to
the payment of any amounts owing by such Defaulting Lender to the
Administrative Agent hereunder; second, as the Company may request (so long as
no Default exists), to the funding of any Loan in respect of which such
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by the Administrative Agent; third, if so determined
by the Administrative Agent and the Company, to be held in a deposit account
and released pro rata in order to satisfy such Defaulting Lender’s potential
future funding obligations with respect to Loans under this Agreement; fourth,
to the payment of any amounts owing to the Lenders as a result of any judgment
of a court of competent jurisdiction obtained by any Lender against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; fifth, so long as no Event of Default
exists, to the payment of any amounts owing to the Company as a result of any
judgment of a court of competent jurisdiction obtained by the Company against
such Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; and sixth, to such Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided that if (x)
such payment is a payment of the principal amount of any Loans in respect of
which such Defaulting Lender has not fully funded its appropriate share, and
(y) such Loans were made at a time when the conditions set forth in Section
4.02 were satisfied or waived, such payment shall be applied solely to pay the
Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied
to the payment of any Loans of such Defaulting Lender until such time as all
Loans are held by the Lenders pro rata in accordance with the Commitments
hereunder. Any payments, prepayments or other amounts paid or payable to a
Defaulting Lender that are applied (or held) to pay amounts owed by a
Defaulting Lender pursuant to this Section shall be deemed paid to and
redirected by such Defaulting Lender, and each Lender irrevocably consents
hereto.

(iii)Certain Fees. No Defaulting Lender shall be entitled to receive any fee
payable under Section 2.07(a) for any period during which that Lender is a
Defaulting Lender (and the Company shall not be required to pay any such fee
that otherwise would have been required to have been paid to that Defaulting
Lender).

(b)Defaulting Lender Cure. If the Company and the Administrative Agent agree
in writing that a Lender is no longer a Defaulting Lender, the Administrative
Agent will so notify the parties hereto, whereupon as of the effective date
specified in such notice and subject to any conditions set forth therein, that
Lender will, to the extent applicable, purchase at par that portion of
outstanding Loans of the other Lenders or take such other actions as the
Administrative Agent may determine to be necessary to cause the Loans to be
held on a pro rata basis by the Lenders in accordance with their Applicable
Percentages, whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Company while such

Lender was a Defaulting Lender and all amendments, waivers or modifications
effected without consent of such Lender's consent in accordance with the
provisions of Section 11.01 and this Section while such Lender was a
Defaulting Lender shall be binding on it; and provided further that except to
the extent otherwise expressly agreed by the affected parties, no change
hereunder from Defaulting Lender to Lender will constitute a waiver or release
of any claim of any party hereunder arising from that Lender’s having been a
Defaulting Lender.

2.14Designated Borrowers.

(a)The Company may at any time, upon not less than 10 Business Days’ notice
from the Company to the Administrative Agent (or such shorter period as may be
agreed by the Administrative Agent in its sole discretion), designate any
additional Subsidiary of the Company (an “Applicant Borrower”) as a Designated
Borrower, subject to the approval of each of the Lenders, to receive Loans
hereunder by delivering to the Administrative Agent (which shall promptly
deliver counterparts thereof to each Lender) a duly executed notice and
agreement in substantially the form of Exhibit E-1 (a “Designated Borrower
Request and Assumption Agreement”). The parties hereto acknowledge and agree
that prior to any Applicant Borrower becoming entitled to utilize the credit
facilities provided for herein the Administrative Agent and the Lenders shall
have received (i) such supporting resolutions, incumbency certificates and
opinions of counsel, (ii) at least 5 Business Days prior to the effective date
for such Applicant Borrower becoming a Designated Borrower hereunder, if
reasonably requested by a Lender, other information and documentation (all
such information and documentation, the “Regulatory Information”) that is
required with respect to this Agreement by regulatory authorities under
applicable “Know Your Customer” and anti-money laundering rules and
regulations, including OFAC, the PATRIOT Act and, to the extent such Applicant
Borrower qualifies as “legal entity customer”, Beneficial Ownership
Regulation, in each case of (i) and (ii) above, in form, content and scope
reasonably satisfactory to the Administrative Agent, as may be required by the
Administrative Agent or the Required Lenders in their sole discretion, and
(iii) Notes signed by such Applicant Borrower to the extent any Lenders so
require. If the Administrative Agent and each of the Lenders agree that an
Applicant Borrower shall be entitled to receive Loans hereunder, then promptly
following receipt of all such requested resolutions, incumbency certificates,
opinions of counsel and Regulatory Information, the Administrative Agent shall
send a notice in substantially the form of Exhibit E-2 (a “Designated Borrower
Notice”) to the Company and the Lenders specifying the effective date upon
which such Applicant Borrower shall constitute a Designated Borrower for
purposes hereof, whereupon each of the Lenders agrees to permit such
Designated Borrower to receive Loans hereunder, on the terms and conditions
set forth herein, and each of the parties agrees that such Designated Borrower
otherwise shall be a Borrower for all purposes of this Agreement. For so long
as it is a Designated Borrower, the Company shall not permit any Designated
Borrower to cease to be a Subsidiary of the Company.

(b)The Obligations of each Designated Borrower shall be guaranteed by the
Company pursuant to the Guaranty contained in Article X. Notwithstanding
anything contained to the contrary herein or in any other Loan Document and
without in any way limiting the obligations of the Company in Article X or
otherwise, (i) no Designated Borrower shall be obligated with respect to any
Obligations of the Company or of any other Designated Borrower, (ii) the
Obligations owed by a Designated Borrower shall be several and not joint with
the Obligations of the Company or of any other Designated Borrower and (iii)
no Designated Borrower shall be obligated as a guarantor under Article X with
respect to the Guarantee Obligations.

(c)Each Subsidiary of the Company that is or becomes a “Designated Borrower”
pursuant to this Section hereby irrevocably appoints the Company as its agent
for purposes of (i) the giving and receipt of notices and (ii) the receipt of
the proceeds of any Loans made by the Lenders to such Designated Borrower
hereunder. Any notice, demand, consent, acknowledgement, direction,
certification or other

communication delivered to the Company in accordance with the terms of this
Agreement shall be deemed to have been delivered to each Designated Borrower.

(d)The Company may from time to time, upon not less than three (3) Business
Days’ notice from the Company to the Administrative Agent (or such shorter
period as may be agreed by the Administrative Agent in its sole discretion),
terminate a Designated Borrower’s status as such; provided that there are no
outstanding Loans payable by such Designated Borrower, or other amounts
payable by such Designated Borrower on account of any Loans made to it, as of
the effective date of such termination. The Administrative Agent will promptly
notify the Lenders of any such termination of a Designated Borrower’s status.

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01Taxes.

(a)Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes. (i) Any and all payments by or on account of any obligation of any Loan
Party under any Loan Document shall be made without deduction or withholding
for any Taxes, except as required by applicable Laws. If any applicable Laws
(as determined in the good faith discretion of the Administrative Agent)
require the deduction or withholding of any Tax from any such payment by the
Administrative Agent or a Loan Party, then the Administrative Agent or such
Loan Party shall be entitled to make such deduction or withholding, upon the
basis of the information and documentation to be delivered pursuant to
subsection (e) below.

(ii) If any Loan Party or the Administrative Agent shall be required by the
Code to withhold or deduct any Taxes, including both United States Federal
backup withholding and withholding taxes, from any payment, then (A) the
Administrative Agent shall withhold or make such deductions as are determined
by the Administrative Agent to be required based upon the information and
documentation it has received pursuant to subsection (e) below, (B) the
Administrative Agent shall timely pay the full amount withheld or deducted to
the relevant Governmental Authority in accordance with the Code, and (C) to
the extent that the withholding or deduction is made on account of Indemnified
Taxes, the sum payable by the applicable Loan Party shall be increased as
necessary so that after any required withholding or the making of all required
deductions (including deductions applicable to additional sums payable under
this Section) the applicable Recipient receives an amount equal to the sum it
would have received had no such withholding or deduction been made.

(iii) If any Loan Party or the Administrative Agent shall be required by any
applicable Laws other than the Code to withhold or deduct any Taxes from any
payment, then (A) such Loan Party or the Administrative Agent, as required by
such Laws, shall withhold or make such deductions as are determined by it to
be required based upon the information and documentation it has received
pursuant to subsection (e) below, (B) such Loan Party or the Administrative
Agent, to the extent required by such Laws, shall timely pay the full amount
withheld or deducted to the relevant Governmental Authority in accordance with
such Laws, and (C) to the extent that the withholding or deduction is made on
account of Indemnified Taxes, the sum payable by the applicable Loan Party
shall be increased as necessary so that after any required withholding or the
making of all required deductions (including deductions applicable to
additional sums payable under this Section) the applicable Recipient receives
an amount equal to the sum it would have received had no such withholding or
deduction been made.

(b)Payment of Other Taxes by the Loan Parties. Without limiting the provisions
of subsection (a) above, the Loan Parties shall timely pay to the relevant
Governmental Authority in accordance with applicable law, or at the option of
the Administrative Agent timely reimburse it for the payment of, any Other
Taxes.

(c)Tax Indemnifications. (i) Without duplication of amounts paid in Section
3.01(a), each of the Loan Parties shall, and does hereby, severally indemnify
each Recipient, and shall make payment in respect thereof within 10 days after
demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section) payable or paid by such Recipient or required to be
withheld or deducted from a payment to such Recipient, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority; provided, that the Loan
Parties shall not be obligated to make payment to any Recipient pursuant to
this Section 3.01(c) in respect of penalties, interest and other liabilities
attributable to any Indemnified Taxes if (x) written demand therefor has not
been made by such Recipient within 60 days from the date on which such
Recipient received written notice of the imposition of Indemnified Taxes by
the relevant Governmental Authority, but only to the extent such penalties,
interest and other similar liabilities are attributable to such failure or
delay by the Recipient in making such written demand, (y) such penalties,
interest and other liabilities have accrued after the relevant Loan Party had
indemnified or paid an additional amount due as of the date of such payment
pursuant to this Section 3.01 or (z) such penalties, interest and other
liabilities are attributable to the gross negligence or willful misconduct of
any of the Recipients or their Affiliates. A certificate as to the amount of
such payment or liability delivered to the Company by a Lender (with a copy to
the Administrative Agent), or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error. If the
Administrative Agent or any Lender receives a written notice of Tax assessment
from any Governmental Authority regarding any Tax in respect of which
indemnification may be required pursuant to this Section 3.01(c), the
Administrative Agent or such Lender shall notify the Company within 120 days
following the receipt of such notice that such notice has been received;
provided that the failure of the Administrative Agent or the Lender to provide
such notice shall not relieve the Loan Parties of the obligation to make any
indemnification payment under this Agreement, unless the delay is more than
two years from the date of receipt of such notice, in which case the Company
shall have no obligation to make any indemnification payment under this
Agreement. Each of the Loan Parties shall, and does hereby, severally
indemnify the Administrative Agent, and shall make payment in respect thereof
within 10 days after demand therefor, for any amount which a Lender for any
reason fails to pay indefeasibly to the Administrative Agent as required
pursuant to Section 3.01(c)(ii) below.

(ii) Each Lender shall, and does hereby, severally indemnify, and shall make
payment in respect thereof within 10 days after demand therefor, (w) the
Administrative Agent against any Indemnified Taxes attributable to such Lender
(but only to the extent that any Loan Party has not already indemnified the
Administrative Agent for such Indemnified Taxes and without limiting the
obligation of the Loan Parties to do so), (x) the Administrative Agent and
each Loan Party, as applicable, against any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 11.06(d) relating to
the maintenance of a Participant Register, (y) the Administrative Agent and
each Loan Party, as applicable, against any Taxes incurred by or asserted
against the Administrative Agent or such Loan Party by any Governmental
Authority as a result of the failure by such Lender to deliver, or as a result
of the inaccuracy, inadequacy or deficiency of, any documentation required to
be delivered pursuant to subsection (e) and (z) the Administrative Agent and
each Loan Party, as applicable, against any Excluded Taxes attributable to
such Lender that are payable or paid by the Administrative Agent or such Loan
Party in connection with any Loan Document, and any related losses, claims,
liabilities, penalties, interest and reasonable expenses (including the
reasonable fees, charges and disbursements of any counsel for the Borrowers or
the

Administrative Agent) arising therefrom or with respect thereto, whether or
not such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time
owing to such Lender under this Agreement or any other Loan Document against
any amount due to the Administrative Agent under this clause (ii).

(d)Evidence of Payments.  As soon as practicable after any payment of Taxes by
any Loan Party or by the Administrative Agent to a Governmental Authority as
provided in this Section, the Company shall deliver to the Administrative
Agent or the Administrative Agent shall deliver to the Company, as the case
may be, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required
by Laws to report such payment or other evidence of such payment reasonably
satisfactory to the Company or the Administrative Agent, as the case may be
(it being understood that any failure of the Administrative Agent to so notify
shall not relieve the Loan Parties of their indemnification obligations
hereunder).

(e)Status of Lenders; Tax Documentation. (i) Each Lender shall deliver to the
Company and the Administrative Agent, at the time or times prescribed by
applicable Laws or when reasonably requested by the Company or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law or the taxing authorities of a jurisdiction
pursuant to such applicable law or reasonably requested by the Company or the
Administrative Agent as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if
reasonably requested by the Company or the Administrative Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested
by the Company or the Administrative Agent as will enable the Company or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
either (A) set forth in Section 3.01(e)(ii)(A), (ii)(B) and (ii)(D) below or
(B) required by applicable law other than the Code or the taxing authorities
of the jurisdiction pursuant to such applicable law to comply with the
requirements for exemption or reduction of withholding tax in that
jurisdiction) shall not be required if in the applicable Lender’s reasonable
judgment such completion, execution or submission would subject such Lender to
any material unreimbursed cost or expense or would materially prejudice the
legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing, in the event that a
Borrower is a U.S. Person,

(A) any Lender that is a U.S. Person shall deliver to the Company and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Company or the Administrative Agent), executed
copies of IRS Form W9 certifying that such Lender is exempt from U.S. federal
backup withholding tax and the Administrative Agent shall deliver, on or prior
to the Closing Date and from time to time upon the reasonable request of the
Company, a properly completed and executed copy of IRS Form W-9; provided that
if the Administrative Agent fails to provide such IRS Form W-9 upon request of
the Company, the Company’s sole remedy shall be to withhold to the extent
required by the applicable United States Treasury Regulations and, in such
case, any such withheld Taxes shall be Excluded Taxes;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Company and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Company or the Administrative
Agent), whichever of the following is applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS
Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of,
U.S. federal withholding Tax pursuant to the “interest” article of such tax
treaty and (y) with respect to any other applicable payments under any Loan
Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“business profits” or “other income” article of such tax treaty;

(2) executed copies of IRS Form W-8ECI;

(3) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit D-1 to the effect that such Foreign
Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code,
a “10 percent shareholder” of the Company within the meaning of Section
881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y)
executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or

(4) to the extent a Foreign Lender is not the beneficial owner, executed
copies of IRS Form W-8IMY, accompanied by copies of IRS Form W-8ECI, IRS Form
W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in
the form of Exhibit D-2 or Exhibit D-3, IRS Form W-9, and/or other
certification documents from each beneficial owner, as applicable; provided
that if the Foreign Lender is a partnership and one or more direct or indirect
partners of such Foreign Lender are claiming the portfolio interest exemption,
such Foreign Lender may provide a U.S. Tax Compliance Certificate
substantially in the form of Exhibit D-4 on behalf of each such direct and
indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Company and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Company or the Administrative
Agent), executed originals of any other form prescribed by applicable law as a
basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be
prescribed by applicable law to permit the Company or the Administrative Agent
to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply

with the applicable reporting requirements of FATCA (including those contained
in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall
deliver to the Company and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the
Company or the Administrative Agent such documentation prescribed by
applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the
Code) and such additional documentation reasonably requested by the Company or
the Administrative Agent as may be necessary for the Company and the
Administrative Agent to comply with their obligations under FATCA and to
determine that such Lender has complied with such Lender’s obligations under
FATCA or to determine the amount to deduct and withhold from such payment.

(iii) Each Lender agrees that if any form or certification it previously
delivered pursuant to this Section expires or becomes obsolete or inaccurate
in any respect, it shall update such form or certification or promptly notify
the Company and the Administrative Agent in writing of its legal inability to
do so.

(f)Treatment of Certain Refunds. Unless required by applicable Laws, at no
time shall the Administrative Agent have any obligation to file for or
otherwise pursue on behalf of a Lender, or have any obligation to pay to any
Lender, any refund of Taxes withheld or deducted from funds paid for the
account of such Lender. If any Recipient determines, in its sole discretion
exercised in good faith, that it has received a refund of any Taxes as to
which it has been indemnified by any Loan Party or with respect to which any
Loan Party has paid additional amounts pursuant to this Section, it shall pay
to such Loan Party an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by a Loan Party under
this Section with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) incurred by such Recipient, and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided that each Loan Party, upon
the request of the Recipient, agrees to repay the amount paid over to such
Loan Party (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Recipient in the event the Recipient
is required to repay such refund to such Governmental Authority. This
subsection shall not be construed to require any Recipient to make available
its tax returns (or any other information relating to its taxes that it deems
confidential) to any Loan Party or any other Person.

(g)Contesting Indemnified Taxes. If any Loan Party determines in good faith
that a reasonable basis exists for contesting any Indemnified Taxes for which
additional amounts have been paid or are due under this Section 3.01, the
Administrative Agent or Lender (as applicable) shall use reasonable efforts to
cooperate with such Loan Party in challenging such Indemnified Taxes, at the
Loan Party’s expense, if so requested by the Loan Party in writing; provided
that nothing in this Section 3.01(g) shall obligate the Administrative Agent
or any Lender to take any action that, in its reasonable judgment, would be
materially disadvantageous to such Person.

(h)Survival. Each party’s obligations under this Section shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all other Obligations.

3.02Illegality. If any Lender reasonably determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for such Lender or its applicable Lending Office to make, maintain or fund
Loans whose interest is determined by reference to the Relevant Rate, or to
determine or charge interest rates based upon the Relevant Rate, or any
Governmental Authority has imposed material restrictions on the authority of
such Lender to purchase or sell, or to take deposits of, Dollars or any
Alternative Currency in the relevant interbank market, then, on notice thereof
by such Lender to the Company through the Administrative Agent, (i) any
obligation of such Lender to make or continue

Eurocurrency Rate Loans or SONIA Loans, as applicable, in the affected
currency or currencies or, in the case of Eurocurrency Rate Loans in Dollars,
to convert Base Rate Loans to Eurocurrency Rate Loans, shall be suspended, and
(ii) if such notice asserts the illegality of such Lender making or
maintaining Base Rate Loans the interest rate on which is determined by
reference to the LIBO Rate component of the Base Rate, the interest rate on
which Base Rate Loans of such Lender shall, if necessary to avoid such
illegality, be determined by the Administrative Agent without reference to the
LIBO Rate component of the Base Rate, in each case until such Lender notifies
the Administrative Agent and the Company that the circumstances giving rise to
such determination no longer exist. Upon receipt of such notice, (x) the
Borrowers shall, upon demand from such Lender (with a copy to the
Administrative Agent), prepay all Eurocurrency Rate Loans or SONIA Loans, as
applicable, of such Lender in the affected currency or currencies or, if
applicable and such Loans are denominated in Dollars, convert all Eurocurrency
Rate Loans of such Lender in Dollars to Base Rate Loans (the interest rate on
which Base Rate Loans of such Lender shall, if necessary to avoid such
illegality, be determined by the Administrative Agent without reference to the
LIBO Rate component of the Base Rate), either on the last day of the Interest
Period therefor, if such Lender may lawfully continue to maintain such
Eurocurrency Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurocurrency Rate Loans and in the case of
SONIA Loans, and (y) if such notice asserts the illegality of such Lender
determining or charging interest rates based upon the LIBO Rate, the
Administrative Agent shall during the period of such suspension compute the
Base Rate applicable to such Lender without reference to the LIBO Rate
component thereof until the Administrative Agent is advised in writing by such
Lender that it is no longer illegal for such Lender to determine or charge
interest rates based upon the LIBO Rate. Upon any such prepayment or
conversion, the Borrowers shall also pay accrued interest on the amount so
prepaid or converted.

3.03Alternate Rate of Interest.

(a)Subject to the provisions of Section 3.03(b), if, in connection with any
Loan Notice, (i) (A) in the case of a Eurocurrency Rate Borrowing, the
Administrative Agent reasonably determines that deposits (whether in Dollars
or an Alternative Currency) are not being offered to banks in the relevant
interbank market for such currency for the applicable amount and Interest
Period of such Eurocurrency Rate Borrowing, or (B) adequate and reasonable
means do not exist for determining (x) the LIBO Rate, the EURIBO Rate or the
TIBO Rate, as the case may be, for the requested Interest Period with respect
to any Eurocurrency Rate Borrowing (including because the Relevant Screen Rate
is not available or published on a current basis) or (y) the Daily Simple
SONIA with respect to any SONIA Borrowing, or (ii) the Administrative Agent or
the Required Lenders reasonably determine that for any reason the LIBO Rate,
the EURIBO Rate or the TIBO Rate for the requested Interest Period with
respect to any Eurocurrency Rate Borrowing or the Daily Simple SONIA with
respect to any SONIA Borrowing will not adequately and fairly reflect the cost
to such Lenders of funding such Eurocurrency Rate Borrowing or SONIA
Borrowing, as applicable, the Administrative Agent will promptly so notify the
Company, each other Borrower and each Lender. Upon receipt of such notice and
until the Administrative Agent (upon the instruction of the Required Lenders)
revokes such notice, (A) any Loan Notice that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, an affected Eurocurrency
Rate Borrowing shall be ineffective, (B) any affected Eurocurrency Rate
Borrowing that is requested to be continued shall (1) if denominated in
Dollars, be continued as a Base Rate Borrowing or (2) otherwise, be repaid on
the last day of the then current Interest Period applicable thereto, (C) any
Loan Notice that requests the making of any affected Eurocurrency Rate
Borrowing shall (1) if denominated in Dollars, be deemed a request for a Base
Rate Borrowing, or (2) otherwise, be ineffective, (D) any affected SONIA
Borrowing shall be repaid on the next Business Day and (E) any Loan Notice
that requests the making of an affected SONIA Borrowing shall be ineffective.

(b)(i) Notwithstanding anything to the contrary herein or in any other Loan
Document, upon the occurrence of a Benchmark Transition Event or an Early Opt-
in Election, as applicable,

the Administrative Agent and the Company may amend this Agreement in a manner
mutually agreeable to replace the LIBO Rate with a Benchmark Replacement. Any
such amendment with respect to a Benchmark Transition Event will become
effective at 5:00 p.m. on the fifth Business Day after the Administrative
Agent has posted such proposed amendment to all Lenders and the Company, so
long as the Administrative Agent has not received, by such time, written
notice of objection to such proposed amendment from Lenders comprising the
Required Lenders; provided that, with respect to any proposed amendment
containing any SOFR-Based Rate, the Lenders shall be entitled to object only
to the Benchmark Replacement Adjustment contained therein. Any such amendment
with respect to an Early Opt-in Election will become effective on the date
that Lenders comprising the Required Lenders have delivered to the
Administrative Agent written notice that such Lenders consent to such
amendment. No replacement of the LIBO Rate with a Benchmark Replacement will
occur prior to the applicable Benchmark Transition Start Date.

(ii)In connection with the implementation of a Benchmark Replacement, the
Administrative Agent will have the right to make, with the consent of the
Company, Benchmark Replacement Conforming Changes from time to time and,
notwithstanding anything to the contrary herein or in any other Loan Document,
any amendments implementing such Benchmark Replacement Conforming Changes will
become effective without any further action or consent of any other party to
this Agreement.

(iii)The Administrative Agent will promptly notify the Company and the Lenders
of (A) any occurrence of a Benchmark Transition Event or an Early Opt-in
Election, as applicable, (B) the implementation of any Benchmark Replacement,
(C) the effectiveness of any Benchmark Replacement Conforming Changes and (D)
the commencement or conclusion of any Benchmark Unavailability Period.

(iv)Upon the Company’s receipt of notice of the commencement of a Benchmark
Unavailability Period, (A) any Loan Notice that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a LIBOR Borrowing shall be
ineffective and, on the last day of the then current Interest Period
applicable thereto, such Borrowing shall be continued as or converted to a
Base Rate Borrowing and (B) any Loan Notice that requests the making of a
LIBOR Borrowing shall be deemed a request for a Base Rate Borrowing.

(v)Any determination, decision or election that may be made by the
Administrative Agent, the Company or the Lenders pursuant to this Section
3.03, including any determination with respect to a tenor, rate or adjustment
or of the occurrence or non-occurrence of an event, circumstance or date and
any decision to take or refrain from taking any action, will be conclusive and
binding absent manifest error and may be made in its or their sole discretion
and without consent from any other party hereto, except, in each case, as
expressly required pursuant to this Section 3.03.

3.04Increased Costs; Reserves on Eurocurrency Rate Loans.

(a)Increased Costs Generally. If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(except any reserve requirement contemplated by Section 3.04(e), other than as
set forth below); or

(ii)impose on any Lender or the relevant interbank market any other condition,
cost or expense affecting this Agreement or Eurocurrency Rate Loans or SONIA
Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making, converting to, continuing or maintaining any Loan (or of
maintaining its obligation to make any Loan), or to reduce the amount of any
sum received or receivable by such Lender hereunder (whether of principal,
interest or any other amount) then, upon request of such Lender, the Company
will pay (or cause the applicable Designated Borrower to pay) to such Lender
such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered. This Section 3.04 shall not
apply to Taxes, which shall be governed exclusively by Section 3.01.

(b)Capital and Liquidity Requirements. If any Lender reasonably determines
that any Change in Law affecting such Lender or any Lending Office of such
Lender or such Lender’s holding company, if any, regarding capital or
liquidity requirements has or would have the effect of reducing the rate of
return on such Lender’s capital or on the capital of such Lender’s holding
company, if any, as a consequence of this Agreement, the Commitment of such
Lender or the Loans made by such Lender to a level below that which such
Lender or such Lender’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s policies and the
policies of such Lender’s holding company with respect to capital adequacy and
liquidity), then from time to time the Company will pay (or cause the
applicable Designated Borrower to pay) to such Lender such additional amount
or amounts as will compensate such Lender or such Lender’s holding company for
any such reduction suffered.

(c)Certificates for Reimbursement. A certificate of a Lender setting forth in
reasonable detail the amount or amounts necessary to compensate such Lender or
its holding company, as the case may be, as specified in subsection (a) or (b)
of this Section and delivered to the Company shall be conclusive absent
manifest error. Such Lender shall also certify that it is generally charging
such costs to similarly situated customers of the applicable Lender under
agreements having provisions similar to this Section 3.04 after consideration
of such factors as such Lender then reasonably determines to be relevant
(which determination shall be made in good faith). The Company shall pay (or
cause the applicable Designated Borrower to pay) such Lender the amount shown
as due on any such certificate within 30 days after receipt thereof.

(d)Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Lender’s right to demand such compensation,
provided that no Borrower shall be required to compensate a Lender pursuant to
the foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than 120 days prior to the date that such Lender
notifies the Company of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 120-day period referred to above shall be
extended to include the period of retroactive effect thereof).

(e)Additional Reserve Requirements. The Company shall pay (or cause the
applicable Designated Borrower to pay) to each Lender, as long as such Lender
shall be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits, additional interest
on the unpaid principal amount of each Eurocurrency Rate Loan equal to the
actual costs of such reserves allocated to such Loan by such Lender (as
determined by such Lender in good faith, which determination shall be
conclusive). Such Lender shall deliver a certificate to the Company setting
forth in reasonable detail a calculation of such actual costs incurred by such
Lender and shall certify that it is generally charging such costs to similarly
situated customers of the applicable Lender under agreements having provisions
similar to this Section 3.04 after consideration of such factors as such
Lender then

reasonably determines to be relevant (which determination shall be made in
good faith). The Company shall pay such Lender the amount shown as due on any
such certificate on each date on which interest is payable on such Loan. If a
Lender fails to give notice 30 days prior to the relevant Interest Payment
Date, such additional interest or costs shall be due and payable 30 days from
receipt of such notice.

3.05Compensation for Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Company shall promptly compensate
(or cause the applicable Designated Borrower to promptly compensate) such
Lender for and hold such Lender harmless from any loss (other than lost
profit), cost or expense incurred by it (other than by reason of such Lender
being a Defaulting Lender) as a result of:

(a)any continuation, conversion, payment or prepayment of any Eurocurrency
Rate Loan on a day other than the last day of the Interest Period for such
Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise);

(b)any failure by any Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Eurocurrency
Rate Loan on the date or in the amount notified by the Company or the
applicable Designated Borrower;

(c)any failure by any Borrower to make payment of any Loan (or interest due
thereon) denominated in an Alternative Currency on its scheduled due date or
any payment thereof in a different currency; or

(d)any assignment of a Eurocurrency Rate Loan on a day other than the last day
of the Interest Period therefor as a result of a request by the Company
pursuant to Section 11.13;

including any foreign exchange losses and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan,
from fees payable to terminate the deposits from which such funds were
obtained or from the performance of any foreign exchange contract.

For purposes of calculating amounts payable by the Company (or the applicable
Designated Borrower) to the Lenders under this Section, each Lender shall be
deemed to have funded each Eurocurrency Rate Loan made by it at the LIBO Rate,
the EURIBO Rate or the TIBO Rate for such Loan, as applicable, and each SONIA
Loan made by it at the Daily Simple SONIA, in each case, by a matching deposit
or other borrowing in the relevant interbank market for a comparable amount
and for a comparable period, whether or not such Eurocurrency Rate Loan or
SONIA Loan was in fact so funded.

3.06Mitigation Obligations; Replacement of Lenders.

(a)Designation of a Different Lending Office. Each Lender may make any Loan to
a Borrower through any Lending Office; provided that the exercise of this
option shall not affect the obligation of such Borrower to repay the Loans in
accordance with the terms of this Agreement. If any Lender requests
compensation under Section 3.04, or any Borrower is required to pay any
Indemnified Taxes or additional amounts to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01, or if any
Lender gives a notice pursuant to Section 3.02, then such Lender shall use
reasonable efforts to designate a different Lending Office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or Affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.01 or 3.04, as the case may be, in the future,
or eliminate the need for the notice pursuant to Section 3.02, as applicable,
and (ii) in each case, would not subject such Lender to any unreimbursed cost
or expense and would not otherwise be disadvantageous to such Lender. The
Company hereby agrees to

pay (or cause the applicable Designated Borrower to pay) all reasonable costs
and expenses incurred by any Lender in connection with any such designation or
assignment.

(b)Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if any Borrower is required to pay any Indemnified Taxes or
additional amounts to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 3.01 and, in each case, such Lender has
declined or is unable to designate a different Lending Office in accordance
with Section 3.06(a), the Company may replace such Lender in accordance with
Section 11.13.

3.07Survival. All obligations of the Loan Parties under this Article III shall
survive termination of the Aggregate Commitments, repayment of all Obligations
hereunder, and resignation of the Administrative Agent.

ARTICLE IV.

CONDITIONS PRECEDENT TO BORROWINGS

4.01Conditions to Closing. The effectiveness of this Agreement and the
obligation of each Lender to make its initial Loan hereunder is subject to
satisfaction of the following conditions precedent:

(a)The Administrative Agent’s receipt of the following:

(i)a counterpart of this Agreement signed on behalf of each party hereto
(which, subject to Section 11.10, may include any Electronic Signatures
transmitted by facsimile, emailed pdf. or any other electronic means that
reproduces an image of an actual executed signature page of this Agreement);

(ii)Notes executed by the Company in favor of each Lender requesting Notes;

(iii)a certificate of the Secretary or an Assistant Secretary of the Company,
dated the Closing Date, certifying names and true signatures of officers of
the Company authorized to execute and deliver this Agreement and the Notes and
the other documents to be delivered hereunder from time to time and the
resolutions of the Board of Directors of the Company approving this Agreement
and the Notes, and of all documents evidencing other necessary corporate
action with respect to this Agreement and the Notes, including copies of the
certificate of incorporation and bylaws of the Company, and attaching a
certificate of good standing with respect to the Company dated within 30 days
of the Closing Date (or such longer period as agreed to by the Administrative
Agent in its sole discretion), such certificate to be issued by the
appropriate officer of the jurisdiction of organization of the Company;

(iv)a customary opinion of Gibson, Dunn & Crutcher LLP, special U.S. counsel
to the Company, addressed to the Administrative Agent and each Lender, as to
such matters concerning the Company and the Loan Documents as the
Administrative Agent may reasonably request;

(v)a certificate signed by a Responsible Officer of the Company, dated the
Closing Date, certifying (A) no Default exists on the date hereof and (B) that
the representations and warranties of the Company contained in Article V are
true and correct in all material respects (except to the extent that such
representations and warranties are already qualified by materiality, in which
case they shall be certified as true and correct in all respects) on and as of
the date hereof; and

(vi)all Regulatory Information reasonably requested by a Lender at least five
(5) Business Days prior to the Closing Date.

(b)Any fees required to be paid by the Company to the Arranger, the
Administrative Agent and the Lenders on or before the Closing Date shall have
been paid.

(c)All the principal, interest and fees outstanding under the Existing Credit
Agreement shall have been paid in full, and the Administrative Agent shall
have received customary evidence thereof.

(d)Unless waived by the Administrative Agent, the Company shall have paid
(subject to such limitations as shall have been agreed between the
Administrative Agent and the Company) all fees, charges and disbursements of
counsel to the Administrative Agent (directly to such counsel if requested by
the Administrative Agent) to the extent invoiced at least three Business Days
prior to the Closing Date, plus such additional amounts of such fees, charges
and disbursements as shall constitute its reasonable estimate of such fees,
charges and disbursements incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude a final
settling of accounts between the Company and the Administrative Agent).

Without limiting the generality of the provisions of the last paragraph of
Section 9.03, for purposes of determining compliance with the conditions
specified in this Section, each Lender that has signed this Agreement (and
each of such Lender’s Affiliates, successors and/or assigns) shall be deemed
to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent
shall have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

4.02Conditions to all Borrowings. The obligation of each Lender to honor any
Loan Notice (other than a Loan Notice requesting only a conversion of Loans to
another Type, or a continuation of Eurocurrency Rate Loans) is subject to the
following conditions precedent:

(a)The representations and warranties of (i) the Borrowers contained in
Article V (other than, after the Closing Date, Sections 5.05(c) and 5.06) and
(ii) each applicable Designated Borrower contained in each Designated Borrower
Request and Assumption Agreement (other than Sections 5.05(c) and 5.06 to the
extent incorporated by reference therein) shall be true and correct in all
material respects (except to the extent that such representations and
warranties are already qualified by materiality, in which case they shall be
true and correct in all respects) on and as of the date of such Borrowing,
except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they shall be true and correct in all
material respects (except to the extent that such representations and
warranties are already qualified by materiality, in which case they shall be
true and correct in all respects) as of such earlier date, and except that for
purposes of this Section, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to subsections (a) and (b), respectively,
of Section 6.01.

(b)No Default shall exist, or would result from such proposed Borrowing or
from the application of the proceeds thereof.

(c)The Administrative Agent shall have received a Loan Notice in accordance
with the requirements hereof.

(d)If the applicable Borrower is a Designated Borrower, then the conditions of
Section 2.14 to the designation of such Borrower as a Designated Borrower
shall have been met.

(e)In the case of a Borrowing to be denominated in an Alternative Currency
(other than Euro, Sterling or Yen), there shall not have occurred any change
in national or international financial, political or economic conditions or
currency exchange rates or exchange controls which in the reasonable opinion
of the Administrative Agent or the Required Lenders would make it
impracticable for such Borrowing to be denominated in the relevant Alternative
Currency.

Each Loan Notice (other than a Loan Notice requesting only a conversion of
Loans to another Type, or a continuation of Eurocurrency Rate Loans) submitted
by a Borrower shall be deemed to be a representation and warranty that the
conditions specified in Sections 4.02(a) and 4.02(b) have been satisfied on
and as of the date of the applicable Borrowing.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

Each Loan Party represents and warrants to the Administrative Agent and the
Lenders that:

5.01Existence, Qualification and Power. Each Loan Party (a) is duly organized
or formed, validly existing and, as applicable, in good standing under the
Laws of the jurisdiction of its incorporation or organization and (b) has all
requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to execute, deliver and perform its
obligations under the Loan Documents to which it is a party.

5.02Authorization; No Contravention. The execution, delivery and performance
by each Loan Party of each Loan Document to which such Person is or is to be a
party have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person’s Organization Documents; (b) conflict with or result in any
breach or contravention of any material Contractual Obligation to which such
Person is a party or affecting such Person or the properties of such Person;
or (c) violate any Law, except in any case for clauses (a), (b) or (c) where
such violations would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

5.03Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with,
any Governmental Authority or any other Person is required in connection with
the execution, delivery or performance by, or enforcement against, any Loan
Party of this Agreement or any other Loan Document other than (i) those that
have already been obtained and are in full force and effect and (ii)
approvals, consents, exemptions, authorizations, actions and notices the
absence of which would not reasonably be expected to result in a Material
Adverse Effect.

5.04Binding Effect. This Agreement has been, and each other Loan Document,
when delivered hereunder, will have been, duly executed and delivered by each
Loan Party that is party thereto. This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other Laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

5.05Financial Statements; No Material Adverse Effect.

(a)The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (ii) fairly

present in all material respects the financial condition of the Company and
its Subsidiaries as of the date thereof and their results of operations for
the period covered thereby in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein.

(b)The Interim Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein and subject to the omission of certain
information and footnote disclosures as permitted under the rules of the SEC,
and (ii) fairly present in all material respects the financial condition of
the Company and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein and subject to normal year-end audit adjustments.

(c)Since the date of the Audited Financial Statements, there has been no event
or circumstance, either individually or in the aggregate, that has had or
would reasonably be expected to have a Material Adverse Effect.

5.06Litigation. There are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of the Company, threatened in writing, at law, in
equity, in arbitration or before any Governmental Authority, by or against the
Company or any of its Subsidiaries that (i) either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect and
that has not been publicly disclosed (with reasonable specificity) prior to
the date of this Agreement or (ii) purport to enjoin or restrain the execution
or delivery of this Agreement or any other Loan Document, or any of the
transactions contemplated hereby.

5.07ERISA Compliance.

(a)Except as would not reasonably be expected to result in a Material Adverse
Effect, either individually or in the aggregate: (i) no ERISA Event has
occurred, and the Company is not aware of any fact, event or circumstance that
would reasonably be expected to constitute or result in an ERISA Event with
respect to any Pension Plan; (ii) the Company and each ERISA Affiliate has met
all applicable requirements under the Pension Funding Rules in respect of each
Pension Plan, and no waiver of the minimum funding standards under the Pension
Funding Rules has been applied for or obtained by the Company; (iii) neither
the Company nor any ERISA Affiliate has incurred any liability to the PBGC
other than for the payment of premiums, and there are no premium payments
which have become due that are delinquent under Section 4007 of ERISA; and
(iv) neither the Company nor any ERISA Affiliate has engaged in a transaction
that is subject to Section 4069 or Section 4212(c) of ERISA and (v) no Pension
Plan has been terminated by the plan administrator thereof nor by the PBGC,
and no event or circumstance has occurred or exists that would reasonably be
expected to cause the PBGC to institute proceedings under Title IV of ERISA to
terminate any Pension Plan.

(b)As of the Closing Date, each Borrower is not and will not be using “plan
assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section
3(42) of ERISA) of one or more Benefit Plans in connection with the Loans or
the Commitments.

5.08Investment Company Act. Neither the Company nor any other Borrower is or
is required to be registered as an “investment company” under the Investment
Company Act of 1940.

5.09Compliance with Laws. Each Loan Party and each Subsidiary thereof is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate
proceedings diligently conducted

or (b) the failure to comply therewith, either individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.

5.10Anti-Corruption. (a) No Borrower nor any Subsidiary thereof is in
violation of the United States Foreign Corrupt Practices Act of 1977, the UK
Bribery Act 2010, or other similar anti-corruption legislation in other
jurisdictions applicable to any Borrower or any Subsidiary from time to time,
the effect of which is or would reasonably be expected to be material to the
Borrowers and their Subsidiaries taken as a whole and (b) the Borrowers have
instituted and maintained policies and procedures reasonably designed to
promote and achieve compliance with such laws.

5.11Sanctions. Neither the Borrowers, nor any of their respective
Subsidiaries, nor, to the knowledge of the Borrowers, any director, officer or
(other than with respect to clause (iii) below) employee thereof, is an
individual or entity that is (i) currently the subject or target of any
Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, Her
Majesty’s Treasury’s Consolidated List of Financial Sanctions Targets and the
Investment Ban List, or any similar list enforced by the United States federal
government (including, without limitation, OFAC), the European Union or Her
Majesty’s Treasury or (iii) located, organized or resident in a Designated
Jurisdiction.

5.12Affected Financial Institution. The Company is not an Affected Financial
Institution.

ARTICLE VI.

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, the Company
shall, and shall (except in the case of the covenants set forth in Sections
6.01, 6.02, and 6.03) cause each Material Subsidiary to:

6.01Financial Statements. Deliver to the Administrative Agent and each Lender:

(a)as soon as available, but in any event within 120 days after the end of
each fiscal year of the Company, a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, changes in stockholders’
equity, and cash flows for such fiscal year, prepared in accordance with GAAP,
audited and accompanied by a report and opinion of an independent registered
public accounting firm of nationally recognized standing, it being agreed that
delivery of the Company’s annual report on Form 10-K will satisfy this
requirement; and

(b)as soon as available, but in any event within 45 days after the end of each
of the first three fiscal quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Subsidiaries as at the end
of such fiscal quarter, the related consolidated statements of income or
operations for such fiscal quarter and for the portion of the Company’s fiscal
year then ended, and the related consolidated statements of changes in
stockholders’ equity, and cash flows for the portion of the Company’s fiscal
year then ended, certified by the chief executive officer, chief financial
officer, treasurer or controller of the Company as having been prepared in
accordance with GAAP, subject only to normal year-end audit adjustments and
the omission of certain information and footnote disclosures as permitted
under the rules of the SEC, it being agreed that delivery of the Company’s
quarterly report on Form 10-Q will satisfy this requirement.

As to any information contained in materials furnished pursuant to Section
6.02(a), the Company shall not be separately required to furnish such
information under subsection (a) or (b) above, but the foregoing shall

not be in derogation of the obligation of the Company to furnish the
information and materials described in subsections (a) and (b) above at the
times specified therein.

6.02Certificates; Other Information. Deliver to the Administrative Agent and
each Lender:

(a)promptly after the same are publicly available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Company, and copies of all annual, regular, periodic
and special reports and registration statements which the Company may file or
be required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto;

(b)[intentionally omitted]; and

(c)promptly following any reasonable request therefor, such additional
information regarding the financial condition of the Company or any Loan
Party’s compliance with the terms of the Loan Documents, as the Administrative
Agent or any Lender may from time to time reasonably request; provided that
the Administrative Agent and the Lenders shall only be permitted to make a
request under this subclause (c) during the existence of a Default.

Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(a) shall be deemed to have been delivered on the date (i) on
which the Company posts such documents, or provides a link thereto, on the
Company’s website on the Internet at www.amazon.com/ir; (ii) on which such
documents are posted on the Company’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by the
Administrative Agent) or (iii) on which the Company publicly posts such
documents at www.sec.gov. The Administrative Agent shall have no obligation to
request the posting or other electronic delivery of the documents referred to
above and in any event shall have no responsibility to monitor compliance by
the Company.

Each Borrower hereby acknowledges that the Administrative Agent may, but shall
not be obligated to, make available to the Lenders any notices, demands,
communications, documents, materials and/or information provided by or on
behalf of any Borrower hereunder or under any other Loan Document
(collectively, “Borrower Materials”) by posting the Borrower Materials on
DebtDomain, IntraLinks, Syndtrak, ClearPar or any other electronic platform
chosen by the Administrative Agent to be its electronic transmission system
(the “Platform”). Each Borrower further acknowledges and agrees that (x) all
Borrower Materials will be treated as private and may contain material
nonpublic information with respect to the Company or its securities for
purposes of United States federal and state securities Laws (“MNPI”); and (y)
the Administrative Agent will treat all Borrower Materials as being suitable
only for posting on a portion of the Platform not designated “PUBLIC”, “Public
Investor”, “Public Lender” or a like term. Furthermore, the Company shall be
under no obligation to mark any Borrower Materials “PUBLIC”.

6.03Notices. Promptly after any Responsible Officer of the Company obtains
actual knowledge thereof, notify the Administrative Agent and each Lender of
(a) the occurrence of any Default and (b) any dispute, litigation,
investigation, proceeding or suspension between the Company or any Subsidiary
and any Governmental Authority or the commencement of, or any material
development in, any litigation or proceeding affecting the Company or any
Subsidiary, in each case that has resulted or would reasonably be expected to
result in a Material Adverse Effect. Each notice pursuant to this Section
shall be accompanied by a statement of a Responsible Officer of the Company
setting forth details of the occurrence referred to therein and stating what
action the Company or applicable Subsidiary has taken and proposes to take
with respect thereto.

6.04Payment of Taxes. Pay and discharge as the same shall become due and
payable, all Taxes upon it or its properties or assets that, if not paid,
would reasonably be expected to result in a Material Adverse Effect, unless
such Taxes are being contested in good faith by appropriate proceedings
diligently conducted.

6.05Preservation of Existence; Etc. In the case of each Loan Party, preserve
and maintain its corporate existence and the rights, licenses and permits
material to the conduct of its business; provided that the foregoing shall not
prohibit any transaction permitted under Section 7.02.

6.06Compliance with Laws. Comply in all material respects with the
requirements of all Laws (including all anti-corruption Laws) and all orders,
writs, injunctions and decrees applicable to it or to its business or
property, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith would not reasonably be expected to result in a Material Adverse
Effect.

6.07Books and Records. Maintain proper books of record and account that permit
the preparation of consolidated financial statements of the Company materially
in accordance with GAAP.

6.08Use of Proceeds. Use the proceeds of each Loan solely (a) to refinance
borrowings, if any, under the Existing Credit Agreement and (b) for working
capital, capital expenditures, acquisitions (including any related expenses,
earn-outs and deferred payments incurred in connection with any such
acquisition), payment of fees and expenses associated with this Agreement and
other general corporate purposes not in contravention of any Law or of any
Loan Document; provided that no Borrower will use the proceeds of the Loans in
a manner that violates Regulation U issued by the FRB.

6.09Anti-Corruption Laws and Sanctions.  Maintain policies and procedures
reasonably designed to promote and achieve compliance by the Company, its
Subsidiaries, its and their respective directors, officers and employees and
its and their respective agents acting in such capacity in connection with, or
benefitting from, this Agreement or the proceeds of any Loan hereunder, in
each case, with the United States Foreign Corrupt Practices Act of 1977, the
UK Bribery Act 2010 and other similar anti-corruption legislation in other
jurisdictions applicable to the Company or any Subsidiary from time to time
and the applicable Sanctions.

ARTICLE VII.

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied:

7.01Liens. The Company shall not, nor shall it permit any Subsidiary to,
create or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than the following:

(a)Liens pursuant to any Loan Document;

(b)Liens existing on the date hereof and listed on Schedule 7.01 and any
renewals, replacements or extensions thereof, provided that (i) the property
covered thereby is not changed (other than additions and improvements thereto)
and (ii) the principal amount secured or benefited thereby is not increased
(other than as a result of pay-in-kind interest);

(c)Liens for Taxes not yet delinquent or which are being contested in good
faith and by appropriate proceedings diligently conducted;

(d)carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
workmen’s, landlords’, bailees’ or other like Liens arising in the ordinary
course of business;

(e)pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, employee benefit plans from time to time in effect, other than
any Lien imposed by ERISA;

(f)Liens (i) incurred in the ordinary course of business to secure the
performance of tenders, statutory or regulatory obligations, surety, stay,
customs and appeal bonds, statutory bonds, bids, leases, government contracts,
trade contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money) or
(ii) arising by virtue of deposits made in the ordinary course of business to
secure liability for premiums to insurance carriers;

(g)easements, rights-of-way, restrictions (including zoning restrictions),
licenses, encroachments, protrusions and other similar charges or
encumbrances, and minor title deficiencies, affecting real property which, in
the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
applicable Person;

(h)Liens securing Indebtedness in respect of operating leases or capital
leases (including lease lines, interim lease lines or progress payment
agreements entered into in connection with or under capital leases), Synthetic
Lease Obligations, purchase money obligations and other obligations, in each
case, the proceeds of which are used in whole or in part to design, acquire,
install or construct or make progress or milestone payments with respect to
fixed or capital assets or improvements with respect thereto, or securing
other obligations of the Company or any of its Subsidiaries in respect of any
lease, and in each case of any of the foregoing, or any refinancings,
refundings, renewals, amendments or extensions thereof; provided that such
Liens do not at any time encumber any property other than the property
financed by such Indebtedness or otherwise subject to such lease;

(i)Liens securing judgments for the payment of money not constituting an Event
of Default under Section 8.01(g);

(j)Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by the Company or any
Subsidiary;

(k)(i) bankers’ Liens, rights of setoff, revocation, refund, chargeback or
overdraft protection, and other similar Liens existing solely with respect to
cash and cash equivalents on deposit in one or more accounts maintained by the
Company or any Subsidiary, in each case granted in the ordinary course of
business in favor of the bank or banks with which such accounts are
maintained, securing amounts owing to such bank with respect to cash
management and operating account arrangements, including those involving
pooled accounts and netting arrangements and (ii) Liens or rights of setoff
against credit balances of the Company or any Subsidiary with credit card
issuers or credit card processors or amounts owing by payment card issuers or
payment card processors to the Company or any of its Subsidiaries in the
ordinary course of business;

(l)(i) licenses, releases, immunities or other rights under, to or of
intellectual property granted by the Company or any Subsidiary in the ordinary
course of business and not interfering in any material respect with the
ordinary conduct of business of the Company and its Subsidiaries and (ii)
Liens arising

from leases, licenses, subleases or sublicenses granted to others in the
ordinary course of business which (A) would not reasonably be expected to have
a Material Adverse Effect and (B) do not secure any Indebtedness;

(m)the filing of UCC financing statements solely as a precautionary measure in
connection with operating leases, consignment of goods or private label credit
card programs in the United States, in any case, entered into or otherwise
consummated in the ordinary course of business;

(n)Liens arising under repurchase agreements, reserve repurchase agreements,
securities lending and borrowing agreements and similar transactions, in each
case entered into or otherwise consummated in the ordinary course of business;

(o)Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods;

(p)Liens incurred in connection with the purchase or shipping of goods or
assets on the related goods or assets and proceeds thereof in favor of the
seller or shipper of such goods or assets or pursuant to customary
reservations or retentions of title arising in the ordinary course of business
and in any case not securing Indebtedness;

(q)Liens consisting of contractual obligations of any Loan Party to sell or
otherwise Dispose of assets;

(r)inchoate Liens arising under ERISA to secure current service pension
liabilities as they are incurred under the provisions of employee benefit
plans from time to time in effect;

(s)Liens arising from obligations under Swap Contracts entered into in the
ordinary course of business and not for speculative purposes;

(t)Other Permitted Liens and any renewals, replacements or extensions thereof,
provided that such Liens do not at any time encumber any property other than
the property subject to such Other Permitted Liens prior to such renewal,
replacement or extension;

(u)Liens securing letters of credit; provided that at the time of incurrence
of any such Lien, the aggregate outstanding face amount of letters of credit
secured by Liens permitted under this Section 7.01 shall not exceed

(v)Liens arising from any monetization, securitization or other financing of
leases, loans, accounts receivable or other receivables (including any related
rights or claims); provided that such Liens do not encumber any property or
assets other than the leases, loans, accounts receivable or other receivables
(including any related rights or claims) subject to such monetization,
securitization or other financing, property securing or otherwise related to
such leases, loans, accounts receivable or other receivables, and any proceeds
of the foregoing; and

(w)other Liens not expressly permitted by clauses (a) through (v) above;
provided that the aggregate principal amount of outstanding Indebtedness
secured by such other Liens does not, at the time of, and after giving effect
to the incurrence of such Indebtedness, exceed 20% of Consolidated Tangible
Net Worth as of the end of the most recent fiscal quarter for which financial
statements have been delivered (or otherwise made available) pursuant to
Section 6.01.

Neither this Section 7.01 nor Section 7.02(b) below shall apply to any “margin
stock” (within the meaning of Regulation U issued by the FRB) in excess of 25%
in value of the assets of the Company and its Subsidiaries, taken as a whole.

7.02Fundamental Changes. No Loan Party shall, directly or indirectly:

(a)Merge, dissolve, liquidate, consolidate with or into another Person, except
that, so long as no Default exists or would result therefrom, a Borrower may
merge or otherwise consolidate with any Person if (a) such Borrower is the
surviving Person or (b) the surviving Person (i) is organized under the laws
of the United States (if the Company or a Designated Borrower that is a
Domestic Subsidiary) or the Laws of the jurisdiction in which such Borrower
was organized (if a Designated Borrower that is a Foreign Subsidiary) and (ii)
assumes in writing all of its Obligations pursuant to documentation reasonably
satisfactory to the Administrative Agent.

(b)Dispose (or permit the Disposition) of (whether in one transaction or in a
series of transactions) any of its assets if such assets would, in the
aggregate, otherwise constitute all or substantially all of the assets of the
Company and its Subsidiaries (taken as a whole) (whether now owned or
hereafter acquired) to or in favor of any Person (other than any wholly-owned
Subsidiary of the Company).

7.03Sanctions. No Loan Party shall directly or, to the knowledge of such Loan
Party, indirectly use the proceeds of any Loan, or lend, contribute or
otherwise make available such proceeds to any Subsidiary, joint venture
partner or other Person, to fund any activities of or business with any
Person, or in any Designated Jurisdiction, that, at the time of such funding,
is the subject of Sanctions except to the extent permissible under applicable
Sanctions, or, to the knowledge of such Loan Party, in any other manner that
will result in a violation by any Person (including any Person participating
in the transactions contemplated hereby, whether as Lender, Arranger,
Administrative Agent or otherwise) of Sanctions.

7.04Anti-Corruption Laws. No Loan Party shall directly or, to the knowledge of
such Loan Party, indirectly use the proceeds of any Loan for any purpose which
would breach the United States Foreign Corrupt Practices Act of 1977, the UK
Bribery Act 2010, or other similar anti-corruption legislation in other
jurisdictions applicable to any Loan Party from time to time.

7.05Amazon Seller Lending Facility. The Company shall not, nor shall it permit
any Subsidiary (other than any Amazon Seller Lending Entity) to, directly or
indirectly, create, incur, assume or suffer to exist any Indebtedness under or
pursuant to the Amazon Seller Lending Facility.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

8.01Events of Default. Any of the following shall constitute an “Event of
Default”:

(a)Non-Payment. Any Loan Party fails to pay (i) when and as required to be
paid herein, and in the currency required hereunder, any amount of principal
of any Loan or (ii) within five (5) Business Days after the same becomes due
or payable, any interest on any Loan, or any fee due hereunder or any other
amount payable hereunder or under any other Loan Document; or

(b)Specific Covenants. Any Loan Party fails to perform or observe any term,
covenant or agreement contained in any of Section 6.03(a) or 6.05 (as to the
existence of a Loan Party) or Article VII; or

(c)Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed in any material
respect (and such failure continues for 30 days after written notice thereof
shall have been given to the Company by the Administrative Agent); or

(d)Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of any Loan Party
herein, in any other Loan Document, or in any document delivered in connection
herewith or therewith shall be incorrect in any material respect (except to
the extent that such representation, warranty, certification or statement of
fact is already qualified by materiality, in which case it shall constitute an
Event of Default if any such representation, warranty, certification or
statement of fact is incorrect in any respect) when made or deemed made; or

(e)Cross-Acceleration. The Company or any Subsidiary (i) fails to make any
payment or payments when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guarantee (other than Indebtedness hereunder or Indebtedness under the
Amazon Seller Lending Facility or intercompany Indebtedness among the Company
and its Subsidiaries) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than the
$1,000,000,000 or (ii) fails to observe or perform any other agreement or
condition relating to any such Indebtedness or Guarantee or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, in each case of clause (i) and (ii) above, the effect of such
default or other event is to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to
repurchase, prepay, defease or redeem such Indebtedness to be made, prior to
its stated maturity, or such Guarantee to become payable or cash collateral in
respect thereof to be demanded; or

(f)Insolvency Proceedings, Etc. Any Loan Party or any Material Subsidiary
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies
for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is
entered in any such proceeding; or

(g)Judgments. There is entered against the Company or any Material Subsidiary
one or more final judgments or orders for the payment of money in an aggregate
amount (as to all such judgments or orders) exceeding $1,000,000,000 (to the
extent not covered by independent third-party insurance as to which the
insurer has been notified and does not dispute coverage) and (i) enforcement
proceedings (other than the filing of a judgment Lien) to attach or levy upon
the assets of the Company or any Material Subsidiary having an aggregate fair
value exceeding $1,000,000,000 are commenced by creditors upon such judgments
or orders or (ii) there is a period of 60 consecutive days during which a stay
of enforcement of such judgments or orders, by reason of a pending appeal or
otherwise, is not in effect and such judgments or orders shall not have been
satisfied, withdrawn, or settled; or

(h)ERISA. Any Loan Party shall incur liability that results in a Material
Adverse Effect as a result of the occurrence of any ERISA Event; or

(i)Change of Control. There occurs any Change of Control.

8.02Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with
the consent of, the Required Lenders, take any or all of the following
actions:

(a)declare the Commitment of each Lender to be terminated, whereupon the
Commitments shall be terminated;

(b)declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder
or under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrowers; or

(c)exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to any Borrower under the Bankruptcy Code of the
United States or any other applicable Debtor Relief Laws, the Commitments of
each Lender shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, in each case without further act of the
Administrative Agent or any Lender.

8.03Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable as set forth in the proviso to Section 8.02), any amounts received on
account of the Obligations shall be applied by the Administrative Agent in the
following order:

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to
the Lenders (including fees, charges and reasonable disbursements of counsel
to the respective Lenders and amounts payable under Article III), ratably
among them in proportion to the respective amounts described in this clause
Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and other Obligations, ratably among the Lenders
in proportion to the respective amounts described in this clause Third payable
to them;

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Fourth held by them; and

Last, the balance, if any, after all of the Obligations have been paid in
full, to the Company or as otherwise required by Law.

ARTICLE IX.

ADMINISTRATIVE AGENT

9.01Appointment and Authority. Each of the Lenders hereby irrevocably appoints
JPMorgan Chase Bank, N.A. to act as the Administrative Agent hereunder and
under the other Loan Documents and

authorizes the Administrative Agent to take such actions and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article (other than the Company’s consent
rights in Section 9.06) are solely for the benefit of the Administrative Agent
and the Lenders, and, except for such consent rights, neither the Company nor
any other Loan Party shall have rights as a third party beneficiary of any of
such provisions. It is understood and agreed that the use of the term “agent”
herein or in any other Loan Documents (or any other similar term) with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead such term is used as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
contracting parties.

9.02Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent, and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated or unless the context otherwise requires,
include the Person serving as the Administrative Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, own securities of, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with any
Borrower or any Subsidiary or other Affiliate thereof as if such Person were
not the Administrative Agent hereunder and without any duty to account
therefor to the Lenders.

9.03Exculpatory Provisions. The Administrative Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan
Documents, and its duties hereunder shall be administrative in nature. Without
limiting the generality of the foregoing, the Administrative Agent:

(a)shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing;

(b)shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative
Agent is required to exercise as directed in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents), provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable Law,
including for the avoidance of doubt any action that may be in violation of
the automatic stay under any Debtor Relief Law or that may effect a
forfeiture, modification or termination of property of a Defaulting Lender in
violation of any Debtor Relief Law; and

(c)shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to any Borrower or any of its Affiliates
that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence
of its own gross negligence or willful misconduct as determined by a court of
competent jurisdiction by final and nonappealable judgment. The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
notice

(stating that it is a “notice of default”) describing such Default is given in
writing to the Administrative Agent by the Company or a Lender.

The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions
set forth herein or therein or the occurrence of any Default, (iv) the
sufficiency, validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or
document (including, for the avoidance of doubt, in connection with the
Administrative Agent’s reliance on any Electronic Signature transmitted by
facsimile, emailed pdf. or any other electronic means that reproduces an image
of an actual executed signature page), (v) the satisfaction of any condition
set forth in Article IV or elsewhere herein, other than to confirm receipt of
items (which on their face purport to be such items) expressly required to be
delivered to the Administrative Agent or (vi) any determination that any
Lender is a Defaulting Lender, or the effective date of such status.

9.04Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or
other writing (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the proper Person, and shall
not incur any liability for relying thereon. In determining compliance with
any condition hereunder to the making of a Loan that by its terms must be
fulfilled to the satisfaction of a Lender, the Administrative Agent may
presume that such condition is satisfactory to such Lender unless the
Administrative Agent shall have received notice to the contrary from such
Lender prior to the making of such Loan. The Administrative Agent may consult
with legal counsel (who may be counsel for the Company), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

9.05Delegation of Duties. The Administrative Agent may perform any and all of
its duties and exercise its rights and powers hereunder or under any other
Loan Document by or through any one or more subagents appointed by the
Administrative Agent. The Administrative Agent and any such subagent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such subagent and to the Related Parties of the
Administrative Agent and any such subagent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any sub-agents except to the extent that a court of competent
jurisdiction determines in a final and nonappealable judgment that the
Administrative Agent acted with gross negligence or willful misconduct in the
selection of such sub-agents.

9.06Resignation of Administrative Agent.

(a)The Administrative Agent may at any time give notice of its resignation to
the Lenders and the Company. Upon receipt of any such notice of resignation,
the Required Lenders shall have the right, with the written consent of the
Company, to appoint a successor, which shall be a bank with an office in the
United States, or an Affiliate of any such bank with an office in the United
States, and which shall be a U.S. Person. If no such successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its

resignation (or such earlier day as shall be agreed by the Required Lenders)
(the “Resignation Effective Date”), then the retiring Administrative Agent may
(but shall not be obligated to) on behalf of the Lenders, appoint, with the
written consent of the Company, a successor Administrative Agent meeting the
qualifications set forth above. Whether or not a successor has been appointed,
such resignation shall become effective in accordance with such notice on the
Resignation Effective Date.

(b)If the Person serving as Administrative Agent is a Defaulting Lender
pursuant to clause (d) of the definition thereof, the Required Lenders may, to
the extent permitted by applicable Law, by notice in writing to the Company
and such Person remove such Person as Administrative Agent and, with the
written consent of the Company, appoint a successor, which successor shall be
a U.S. Person. If no such successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days (or
such earlier day as shall be agreed by the Required Lenders) (the “Removal
Effective Date”), then such removal shall nonetheless become effective in
accordance with such notice on the Removal Effective Date.

(c)With effect from the Resignation Effective Date or the Removal Effective
Date (as applicable) (1) the retiring or removed Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents and (2) except for any expense reimbursement or indemnity payments
or other amounts then owed to the retiring or removed Administrative Agent,
all payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender
directly, until such time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided for above. Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring or removed Administrative Agent (other than as
provided in Section 3.01(g) and other than any rights to expense reimbursement
or indemnity payments or other amounts owed to the retiring or removed
Administrative Agent as of the Resignation Effective Date or the Removal
Effective Date, as applicable), and the retiring or removed Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as
provided above in this Section). The fees payable by the Company to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Company and such successor.
After the retiring or removed Administrative Agent’s resignation or removal
hereunder and under the other Loan Documents, the provisions of this Article
and Section 11.04 shall continue in effect for the benefit of such retiring or
removed Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring or removed Administrative Agent was acting as
Administrative Agent.

9.07Acknowledgements of Lenders. Each Lender represents and warrants that (a)
the Loan Documents set forth the terms of a commercial lending facility, (b)
it is engaged in making, acquiring or holding commercial loans and in
providing other facilities set forth herein as may be applicable to such
Lender, in each case, in the ordinary course of business, and not for the
purpose of purchasing, acquiring or holding any other type of financial
instrument (and each Lender agrees not to assert a claim in contravention of
the foregoing), (c) it has, independently and without reliance upon the
Administrative Agent, the Arranger or any other Lender or any of their
respective Related Parties, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement as a Lender, and to make, acquire or hold Loans hereunder
and (d) it is sophisticated with respect to decisions to make, acquire and/or
hold commercial loans and to provide other facilities set forth herein, as may
be applicable to such Lender, and either it, or the Person exercising
discretion in making its decision to make, acquire and/or hold such commercial
loans or to provide such other facilities, is experienced in making, acquiring
or holding such commercial loans or providing such other facilities. Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent, the Arranger or any other Lender or any of their
respective Related Parties, and based on such documents

and information as it shall from time to time deem appropriate, continue to
make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document
furnished hereunder or thereunder. Each Lender, by delivering its signature
page to this Agreement on the Closing Date, or delivering its signature page
to an Assignment and Assumption or any other Loan Document pursuant to which
it shall become a Lender hereunder, shall be deemed to have acknowledged
receipt of, and consented to and approved, each Loan Document and each other
document required to be delivered to, or be approved by or satisfactory to,
the Administrative Agent or the Lenders on the Closing Date.

9.08No Other Duties, Etc. Anything herein to the contrary notwithstanding,
none of the Arranger or other title holders listed on the cover page hereof
shall have any powers, duties or responsibilities under this Agreement or any
of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent or a Lender hereunder and its rights in respect of
expense reimbursement and indemnities provided for hereunder.

9.09Administrative Agent May File Proofs of Claim. In case of the pendency of
any proceeding under any Debtor Relief Law or any other judicial proceeding
relating to any Loan Party, the Administrative Agent (irrespective of whether
the principal of any Loan shall then be due and payable as herein expressed or
by declaration or otherwise and irrespective of whether the Administrative
Agent shall have made any demand on any Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise:

(a)to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and
their respective agents and counsel and all other amounts due the Lenders and
the Administrative Agent under Sections 2.07 and 11.04) allowed in such
judicial proceeding; and

(b)to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the
event that the Administrative Agent shall consent to the making of such
payments directly to the Lenders, to pay to the Administrative Agent any
amount due for the reasonable compensation, expenses, disbursements and
advances of the Administrative Agent and its agents and counsel, and any other
amounts due the Administrative Agent under Sections 2.07 and 11.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.

ARTICLE X.

COMPANY GUARANTY

10.01Continuing Guaranty. The Company hereby absolutely and unconditionally
guarantees, as a guaranty of payment and not merely as a guaranty of
collection, prompt payment when due, whether

at stated maturity, by required prepayment, upon acceleration, demand or
otherwise, and at all times thereafter, of any and all of the Obligations,
whether for principal, interest, premiums, fees, indemnities, damages, costs,
expenses or otherwise, of the Designated Borrowers to the Credit Parties,
arising hereunder or under any other Loan Document (including all renewals,
extensions, amendments, refinancings and other modifications thereof and all
costs, attorneys’ fees and expenses incurred by the Credit Parties in
connection with the collection or enforcement thereof, the “Guarantee
Obligations”). The Administrative Agent’s books and records showing the amount
of the Guarantee Obligations shall be admissible in evidence in any action or
proceeding, and shall be binding upon the Company, and conclusive for the
purpose of establishing the amount of the Guarantee Obligations absent
manifest error. This Guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Guarantee Obligations or any
instrument or agreement evidencing any Guarantee Obligations, or by the
existence, validity, enforceability, perfection, non-perfection or extent of
any collateral therefor, or by any fact or circumstance relating to the
Guarantee Obligations which might otherwise constitute a defense to the
obligations of the Company under this Guaranty (other than full payment and
performance), and the Company hereby irrevocably waives any defenses it may
now have or hereafter acquire in any way relating to any or all of the
foregoing.

10.02Rights of Credit Parties. The Company consents and agrees that the Credit
Parties may, at any time and from time to time, without notice or demand, and
without affecting the enforceability or continuing effectiveness hereof: (a)
amend, extend, renew, compromise, discharge, accelerate or otherwise change
the time for payment or the terms of the Guarantee Obligations or any part
thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect,
sell, or otherwise dispose of any security for the payment of this Guaranty or
any Guarantee Obligations; (c) apply such security and direct the order or
manner of sale thereof as the Administrative Agent and the Lenders in their
sole discretion may determine; and (d) release one or more of any endorsers or
other guarantors of any of the Guarantee Obligations. Without limiting the
generality of the foregoing, the Company consents to the taking of, or failure
to take, any action which might in any manner or to any extent vary the risks
of the Company under this Guaranty or which, but for this provision, might
operate as a discharge of the Company under this Guaranty.

10.03Certain Waivers. The Company waives (a) any defense arising by reason of
any disability or other defense of any Designated Borrower or any other
guarantors, or the cessation from any cause whatsoever (including any act or
omission of any Credit Party) of the liability of any Designated Borrower; (b)
any defense based on any claim that the Company’s obligations exceed or are
more burdensome than those of any Designated Borrower; (c) any benefit of and
any right to participate in any security now or hereafter held by any Credit
Party; (d) any defense arising from any law or regulation of any jurisdiction
or any other event affecting any term of an obligation of the Company; and (e)
to the fullest extent permitted by Law, any and all other defenses or benefits
that may be derived from or afforded by applicable Law limiting the liability
of or exonerating guarantors or sureties (other than full payment and
performance). The Company expressly waives all setoffs and counterclaims and
all presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all
other notices or demands of any kind or nature whatsoever with respect to the
Guarantee Obligations, and all notices of acceptance of this Guaranty or of
the existence, creation or incurrence of new or additional Guarantee
Obligations. As provided below, this Guaranty shall be governed by, and
construed in accordance with, the Laws of the State of New York.

10.04Obligations Independent. The obligations of the Company hereunder are
those of primary obligor, and not merely as surety, and are independent of the
Guarantee Obligations and the obligations of any other guarantor, and a
separate action may be brought against the Company to enforce this Guaranty
whether or not any Designated Borrower or any other Person is joined as a
party.

10.05Subrogation. The Company shall not exercise any right of subrogation,
contribution, indemnity, reimbursement or similar rights with respect to any
payments it makes under this Guaranty until

all of the Obligations and any other amounts payable under this Guaranty have
been paid and performed in full (other than unasserted indemnification, tax
gross up, expense reimbursement or yield protection obligations, in each case,
for which no claim has been made) and the Commitments are terminated. If any
amounts are paid to the Company in violation of the foregoing limitation, then
such amounts shall be held in trust for the benefit of the Credit Parties and
shall forthwith be paid to the Credit Parties to reduce the amount of the
Obligations, whether matured or unmatured.

10.06Termination; Reinstatement. This Guaranty is a continuing and irrevocable
guaranty of all Guarantee Obligations now or hereafter existing and shall
remain in full force and effect until all Obligations and any other amounts
payable under this Guaranty are paid in full in cash (other than unasserted
indemnification, tax gross up, expense reimbursement or yield protection
obligations, in each case, for which no claim has been made) and the
Commitments are terminated. Notwithstanding the foregoing, this Guaranty shall
continue in full force and effect or be revived, as the case may be, if any
payment by or on behalf of any Designated Borrower or the Company is made, or
any of the Credit Parties exercises its right of setoff, in respect of the
Obligations and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by any of the Credit Parties in their discretion) to be repaid to
a trustee, receiver or any other party, in connection with any proceeding
under any Debtor Relief Laws or otherwise, all as if such payment had not been
made or such setoff had not occurred and whether or not the Credit Parties are
in possession of or have released this Guaranty and regardless of any prior
revocation, rescission, termination or reduction. The obligations of Company
under this paragraph shall survive termination of this Guaranty.

10.07Subordination. The Company hereby subordinates the payment of all
obligations and indebtedness of any Designated Borrower owing to the Company,
whether now existing or hereafter arising, including any obligation of any
Designated Borrower to the Company as subrogee of the Credit Parties or
resulting from the Company’s performance under this Guaranty, to the
indefeasible payment in full in cash of all Obligations.

10.08Stay of Acceleration. If acceleration of the time for payment of any of
the Guarantee Obligations is stayed, in connection with any case commenced by
or against any Designated Borrower under any Debtor Relief Laws, or otherwise,
all such amounts shall nonetheless be payable by the Company immediately upon
demand by the Credit Parties.

10.09Condition of Designated Borrowers. The Company acknowledges and agrees
that it has the sole responsibility for, and has adequate means of, obtaining
from each applicable Designated Borrower and any other guarantor such
information concerning the financial condition, business and operations of
such Designated Borrower and any such other guarantor as the Company requires,
and that none of the Credit Parties has any duty, and the Company is not
relying on the Credit Parties at any time, to disclose to the Company any
information relating to the business, operations or financial condition of any
Designated Borrower or any other guarantor (with the Company waiving any duty
on the part of the Credit Parties to disclose such information and any defense
relating to the failure to provide the same).

ARTICLE XI.

MISCELLANEOUS

11.01Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Company or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders (or the Administrative Agent with the
consent of the Required Lenders) and the Borrowers or, in the case of any Loan
Document other than this

Agreement, the applicable Loan Party, as the case may be, and acknowledged by
the Administrative Agent, and each such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided that no such amendment, waiver or consent shall:

(a)extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written consent of
such Lender;

(b)postpone any scheduled date fixed by this Agreement or any other Loan
Document for any payment (excluding mandatory prepayments) of principal,
interest or fees due to the Lenders (or any of them) hereunder or under any
other Loan Document without the written consent of each Lender directly
affected thereby;

(c)reduce the principal of, or (subject, for the avoidance of doubt, to the
provisions of Section 3.03(b)) the rate of interest specified herein on, any
Loan or (subject to clause (ii) of the second proviso to this Section) any
fees payable hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby; provided, however, that only
the consent of the Required Lenders shall be necessary to amend the definition
of “Default Rate” or to waive any obligation of the Borrowers to pay interest
at the Default Rate;

(d)change Section 2.11 or 8.03 in a manner that would alter the pro rata
sharing of payments required thereby without the written consent of each
Lender;

(e)amend Section 1.05 or the definition of “Alternative Currency” without the
written consent of each Lender;

(f)change any provision of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder without the written
consent of each Lender; or

(g)release the Company from its Obligations under Article X hereof, without
the written consent of each Lender;

provided further that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document; (ii) the Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed only by the
parties thereto (and no consent of any other Person shall be required
therefor); (iii) this Agreement and the other Loan Documents may be amended
with only the written consent of the Administrative Agent and the Borrowers
solely to effect technical or jurisdiction-specific amendments relating to (A)
the availability of Loans in an additional currency approved by the
Administrative Agent and the Lenders in accordance with Section 1.05 or (B)
the designation of a Foreign Subsidiary as a Designated Borrower approved by
the Administrative Agent and the Lenders in accordance with Section 2.14, (iv)
this Agreement may be amended in the manner provided in Sections 2.12 and
3.03(b) and (v) any provision of this Agreement or any other Loan Document may
be amended by an agreement in writing entered into by the Borrowers (or, in
the case of any Loan Document other than this Agreement, the applicable Loan
Party) and the Administrative Agent to cure any ambiguity, omission, defect or
inconsistency so long as, in each case, the Lenders shall have received at
least five Business Days’ prior written notice and copy thereof and the
Administrative Agent shall not have received, within five Business Days of the
date of such notice to the Lenders, a written notice from the Required Lenders
stating that the Required Lenders object to such amendment. Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment,

waiver or consent hereunder or under any other Loan Document (and any
amendment, waiver or consent which by its terms requires the consent of all
Lenders or each affected Lender may be effected with the consent of the
applicable Lenders other than Defaulting Lenders), except with respect to any
amendment, waiver or consent referred to in clause (a), (b) or (c) above and
then only in the event such Defaulting Lender shall be directly affected by
such amendment, waiver or consent.

11.02Notices; Effectiveness; Electronic Communication.

(a)Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by facsimile or
e-mail, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:

(i) if to the Company or any other Loan Party or the Administrative Agent, to
the address, facsimile number, electronic mail address or telephone number
specified for such Person on Schedule 11.02 (with respect to notices and other
communications, excluding service of process, to the Company or any other Loan
Party to the address noted on Schedule 11.02 under the heading “Address for
Notices and Communications”); provided, that service of process to the Company
or any other Loan Party shall also be delivered by hand or overnight courier
service, mailed by certified or registered mail to the address noted on
Schedule 11.02 under the heading “Address for Service of Process”; and

(ii) if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its Administrative Questionnaire
(including, as appropriate, notices delivered solely to the Person designated
by a Lender on its Administrative Questionnaire then in effect for the
delivery of notices that may contain MNPI).

Notices and other communications sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given
when received; notices and other communications sent by facsimile shall be
deemed to have been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the
opening of business on the next Business Day for the recipient). Notices and
other communications delivered through electronic communications to the extent
provided in subsection (b) below shall be effective as provided in such
subsection (b).

(b)Electronic Communications. Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communication (including
email, FpML messaging, and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the foregoing
shall not apply to notices to any Lender pursuant to Article II if such Lender
has notified the Administrative Agent that it is incapable of receiving
notices under such Article by electronic communication. Notices and other
communications to the Administrative Agent or any Borrower may be delivered by
e-mail, and the Administrative Agent or any Borrower may each, in its
discretion, agree to accept notices and other communications to it hereunder
by other electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), and (ii) notices or communications posted to an
Internet or intranet website

shall be deemed received upon the deemed receipt by the intended recipient at
its e-mail address as described in the foregoing clause (i) of notification
that such notice or communication is available and identifying the website
address therefor; provided that, for both clauses (i) and (ii), if such
notice, email or other communication is not sent during the normal business
hours of the recipient, such notice, email or communication shall be deemed to
have been sent at the opening of business on the next business day for the
recipient.

(c)The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE
AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS
OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY
DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO
WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY
AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no
event shall the Administrative Agent or any of its Related Parties
(collectively, the “Agent Parties”) have any liability to any Borrower, any
Lender or any other Person for losses, claims, damages, liabilities or
expenses of any kind (whether in tort, contract or otherwise) arising out of
any Borrower’s, any other Loan Party’s or the Administrative Agent’s
transmission of Borrower Materials or notices through the Platform, any other
electronic platform or electronic messaging service, or through the Internet,
other than for direct or actual damages resulting from the gross negligence,
bad faith or willful misconduct of the Agent Party, as determined by a final
and nonappealable judgment of a court of competent jurisdiction.

(d)Change of Address, Etc. Each of the Borrowers and the Administrative Agent
may change its address, facsimile or telephone number or electronic mail
address for notices and other communications hereunder by notice to the other
parties hereto. Each Lender may change its address, facsimile or telephone
number or electronic mail address for notices and other communications
hereunder by notice to the Company and the Administrative Agent. In addition,
each Lender agrees to notify the Administrative Agent from time to time to
ensure that the Administrative Agent has on record (i) an effective address,
contact name, telephone number, facsimile number and electronic mail address
to which notices and other communications may be sent and (ii) accurate wire
instructions for such Lender.

(e)Telephonic Notices. All telephonic notices to and other telephonic
communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

11.03No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder or under any other
Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided, and provided under each other Loan Document, are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
Without limiting the generality of the foregoing, the execution and delivery
of this Agreement or any other Loan Document or the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or any of their respective Related Parties
may have had notice or knowledge of such Default at the time.

Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Loan

Parties or any of them shall be vested exclusively in, and all actions and
proceedings at law in connection with such enforcement shall be instituted and
maintained exclusively by, the Administrative Agent in accordance with Section
8.02 for the benefit of all the Lenders; provided that the foregoing shall not
prohibit (a) the Administrative Agent from exercising on its own behalf the
rights and remedies that inure to its benefit (solely in its capacity as
Administrative Agent) hereunder and under the other Loan Documents, (b) any
Lender from exercising setoff rights in accordance with Section 11.08 (subject
to the terms of Section 2.11), or (c) any Lender from filing proofs of claim
or appearing and filing pleadings on its own behalf during the pendency of a
proceeding relating to any Loan Party under any Debtor Relief Law; and
provided further that if at any time there is no Person acting as
Administrative Agent hereunder and under the other Loan Documents, then (i)
the Required Lenders shall have the rights otherwise ascribed to the
Administrative Agent pursuant to Section 8.02 and (ii) in addition to the
matters set forth in clauses (b) and (c) of the preceding proviso and subject
to Section 2.11, any Lender may, with the consent of the Required Lenders,
enforce any rights and remedies available to it and as authorized by the
Required Lenders.

11.04Expenses; Indemnity; Limitation of Liability.

(a)Costs and Expenses. The Company shall pay (i) all reasonable and documented
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates
(including the reasonable and documented out-of-pocket fees, charges and
disbursements of one counsel for the Administrative Agent (which, in the case
of subclause (i)(x) of this clause (a), shall be subject to such limitations
as shall be agreed between the Company and the Administrative Agent)) in
connection with (x) the syndication of the credit facilities provided for
herein, as well as the preparation, negotiation, execution and delivery of
this Agreement and the other Loan Documents, and (y) the administration of
this Agreement and the other Loan Documents, or any amendments, modifications
or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and (ii) all
reasonable and documented out-of-pocket expenses incurred by the
Administrative Agent or any Lender (including the reasonable fees, charges and
disbursements of one counsel for the Administrative Agent and any Lender and,
solely in the case of an actual or potential conflict of interest, one
additional legal counsel for the Administrative Agent and any Lender, as
needed to address any such actual or potential conflict of interest) in
connection with the enforcement or protection of its rights (A) in connection
with this Agreement and the other Loan Documents, including its rights under
this Section, or (B) in connection with the Loans made hereunder, including
all such reasonable and documented out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans.

(b)Indemnification by the Company. The Company shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and each Related
Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the
reasonable fees, charges and disbursements of a single outside counsel,
excluding the allocated cost of internal counsel, and, solely in the case of
an actual or potential conflict of interest, one additional legal counsel for
all Indemnitees, as needed to address any such actual or potential conflict of
interest) incurred by any Indemnitee or asserted against any Indemnitee by any
Person (including the Company or any other Loan Party) other than such
Indemnitee and its Related Parties arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder, the consummation of the transactions contemplated hereby or
thereby, or, in the case of the Administrative Agent (and any sub-agent
thereof) and its Related Parties only, the administration of this Agreement
and the other Loan Documents (including in respect of any matters addressed in
Section 3.01), (ii) any Loan or the use or proposed use of the proceeds
therefrom or (iii) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract,
tort or any other theory, whether brought by a third party or by any Loan
Party, and regardless of whether any Indemnitee

is a party thereto, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN
WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF
THE INDEMNITEE; provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence,
bad faith or willful misconduct of such Indemnitee or any of its Related
Indemnitees, (y) result from a claim brought by the Company or any other Loan
Party against an Indemnitee for material breach by such Indemnitee or any of
its Related Indemnitees of its obligations hereunder or under any other Loan
Document, if the Company or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction, or (z) relate to disputes among Indemnitees (other
than claims against any Indemnitee in its capacity as the Administrative Agent
or the Arranger or in fulfilling its role as such) that do not arise out of or
in connection with any act or omission of a Borrower or any of its Affiliates.
Without limiting the provisions of Section 3.01(c), this Section 11.04(b)
shall not apply with respect to Taxes, other than any Taxes that represent
losses, claims, damages, etc. arising from any non-Tax claim. For purposes of
this Section 11.04(b), “Related Indemnitee” means, with respect to any
Indemnitee, (i) any Subsidiary or Affiliate thereof, (ii) any director,
officer or employee of such Indemnitee or any Subsidiary or Affiliate thereof
or (iii) solely to the extent acting on behalf of or at the express
instructions of any of the foregoing, any agent or advisor of the foregoing.

(c)Reimbursement by Lenders. To the extent that the Company for any reason
fails to indefeasibly pay any amount required under subsection (a) or (b) of
this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof) or any Related Party of any of the foregoing, each Lender severally
agrees to pay to the Administrative Agent (or any such sub-agent) or such
Related Party, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought or, if such payment is sought after the date upon
which the Commitments shall have terminated, ratably in accordance with such
Applicable Percentage immediately prior to such date) of such unpaid amount
(including any such unpaid amount in respect of a claim asserted by such
Lender), provided further that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred
by or asserted against the Administrative Agent (or any such sub-agent) in its
capacity as such, or against any Related Party of any of the foregoing acting
for the Administrative Agent (or any such sub-agent) in connection with such
capacity. The obligations of the Lenders under this subsection (c) are subject
to the provisions of Section 2.10(d).

(d)Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, no party hereto shall assert, and each party hereto hereby
waives and acknowledges that no other party hereto shall have, any claim
against any party hereto, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages
(which may include special, indirect, consequential or punitive damages
asserted against any such party hereto by a third party)) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or the use of the proceeds thereof; provided that
this clause (d) shall not in any way limit the indemnification or
reimbursement obligations of any party hereto under this Section 11.04, under
any other provision of this Agreement or under any other Loan Document. None
of the Administrative Agent (or any sub-agent thereof), any Lender or any
Related Party of any of the foregoing Persons shall be liable for any damages
arising from the use by unintended recipients of any information or other
materials distributed to such unintended recipients through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby, other than for direct or actual damages
resulting from the gross negligence, bad faith or willful misconduct of the
Administrative Agent (or any sub-agent thereof), such Lender or such Related
Party, as the case may be, as determined by a final and nonappealable judgment
of a court of competent jurisdiction.

(e)Payments. All amounts due under this Section shall be payable not later
than 30 Business Days after demand therefor.

(f)Survival. The agreements in this Section shall survive the resignation of
the Administrative Agent, the replacement of any Lender, the termination of
the Aggregate Commitments and the repayment, satisfaction or discharge of all
the Obligations.

11.05Payments Set Aside. To the extent that any payment by or on behalf of any
Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender severally agrees to pay to the
Administrative Agent upon demand its applicable share (without duplication) of
any amount so recovered from or repaid by the Administrative Agent, plus
interest thereon from the date of such demand to the date such payment is made
at a rate per annum equal to the rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation (or, if
such payment is in Dollars, if greater, the NYFRB Rate), plus any
administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing. The obligations of the
Lenders under clause (b) of the preceding sentence shall survive the payment
in full of the Obligations and the termination of this Agreement.

11.06Successors and Assigns.

(a)Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that, other than as
expressly provided in Section 7.02(a), neither the Company nor any other Loan
Party may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Administrative Agent and
each Lender and no Lender may assign or otherwise transfer any of its rights
or obligations hereunder except (i) to an assignee in accordance with the
provisions of subsection (b) of this Section, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of subsection (e) of this Section (and any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of
this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

(b)Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it); provided that any such assignment shall be subject to the following
conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the
case of an

assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or,
if “Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $25,000,000 unless each of the Administrative
Agent and, so long as no Event of Default of the type referred to in clause
(a) or (f) of Section 8.01 has occurred and is continuing, the Company
otherwise consents (each such consent not to be unreasonably withheld or
delayed; provided that the Company shall be deemed to have consented to any
such assignment unless it shall object thereto by written notice to the
Administrative Agent within 10 Business Days after having received notice
thereof).

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned.

(iii) Required Consents. No consent shall be required for any assignment
except to the extent required by subsection (b)(i)(B) of this Section and, in
addition:

(A) the consent of the Company (such consent not to be unreasonably withheld
or delayed) shall be required unless (1) an Event of Default of the type
referred to in clause (a) or (f) of Section 8.01 has occurred and is
continuing at the time of such assignment or (2) such assignment is to a
Lender, an Affiliate of a Lender or an Approved Fund; provided that the
Company shall be deemed to have consented to any such assignment unless it
shall object thereto by written notice to the Administrative Agent within 10
Business Days after having received notice thereof; and

(B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required if such assignment is to a
Person that is not a Lender, an Affiliate of such Lender or an Approved Fund
with respect to such Lender.

(iv) Assignment and Assumption. The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee in the amount of $3,500; provided that
the Administrative Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment. The assignee, if
it is not a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.

(v) No Assignment to Certain Persons. No such assignment shall be made (A) to
the Company, any other Borrower or any such Person’s Affiliates or
Subsidiaries, (B) to any Defaulting Lender or any of its Subsidiaries, or any
Person that, upon becoming a Lender hereunder, would constitute any of the
foregoing Persons described in this clause (B), or (C) to a natural person (or
a holding company, investment vehicle or trust for, or owned and operated for
the primary benefit of a natural person).

(vi) Certain Additional Payments. In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall
be effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional
payments to the Administrative Agent in an aggregate amount sufficient, upon
distribution thereof as appropriate (which may be outright payment, purchases
by the assignee of participations or subparticipations, or other compensating
actions, including funding, with the consent of the Company and the
Administrative Agent, the applicable pro rata share of Loans previously
requested but not funded by the Defaulting Lender, to each of which the
applicable assignee and assignor hereby irrevocably consent), to (x) pay and
satisfy in full all payment liabilities then owed by such Defaulting Lender to
the Administrative Agent or any Lender hereunder (and interest accrued
thereon) and (y) acquire (and fund as appropriate) its full pro rata share of
all Loans in accordance with its Applicable Percentage. Notwithstanding the
foregoing, in the event that any assignment of rights and obligations of any
Defaulting Lender hereunder shall become effective under applicable Law
without compliance with the provisions of this paragraph, then the assignee of
such interest shall be deemed to be a Defaulting Lender for all purposes of
this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent
pursuant to subsection (c) of this Section, from and after the effective date
specified in each Assignment and Assumption, the assignee thereunder shall be
a party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of
the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and
11.04 with respect to facts and circumstances occurring prior to the effective
date of such assignment); provided that except to the extent otherwise
expressly agreed by the affected parties, no assignment by a Defaulting Lender
will constitute a waiver or release of any claim of any party hereunder
arising from that Lender’s having been a Defaulting Lender. Upon request, each
Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this subsection shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with subsection (d) of this Section.

(c)Register. The Administrative Agent, acting solely for this purpose as a
non-fiduciary agent of the Borrowers, shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Assumption delivered to it (or
the equivalent thereof in electronic form) and a register for the recordation
of the names and addresses of the Lenders, and the Commitments of, and
principal amounts (and stated interest) of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries
in the Register shall be conclusive absent manifest error, and the Borrowers,
the Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrowers and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.

(d)Participations. Any Lender may at any time, without the consent of, or
notice to, any Borrower or the Administrative Agent, sell participations to
any Person (other than a natural person (or a holding company, investment
vehicle or trust for, or owned and operated for the primary benefit of a
natural person), a Defaulting Lender or the Company, any Borrower or any such
Person’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s

obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrowers, the Administrative
Agent and the Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. For the avoidance of doubt, each Lender shall be responsible for
the indemnity under Section 11.04(c) without regard to the existence of any
participation.

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement or any other Loan Document; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 11.01 that affects such
Participant. The Company agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b)
of this Section (it being understood that the documentation required under
Section 3.01(e) shall be delivered to the Lender who sells the participation)
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section; provided that such
Participant (A) agrees to be subject to the provisions of Sections 3.06 and
11.13 as if it were an assignee under subsection (b) of this Section and (B)
shall not be entitled to receive any greater payment under Section 3.01 or
3.04, with respect to any participation, than the Lender from which it
acquired the applicable participation would have been entitled to receive.
Each Lender that sells a participation agrees, at the Company’s request and
expense, to use reasonable efforts to cooperate with the Company to effectuate
the provisions of Section 3.06 with respect to any Participant. Each Lender
that sells a participation shall, acting as a non-fiduciary agent, maintain a
register on which it enters the name and address of each Participant and the
principal amounts (and stated interest) of each Participant’s interest in the
Loans or other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all
or any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any
commitments, loans, letters of credit or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary
to establish that such commitment, loan, letter of credit or other obligation
is in registered form under Section 5f.103-1(c) of the United States Treasury
Regulations. The entries in the Participant Register shall be conclusive
absent manifest error, and such Lender shall treat each Person whose name is
recorded in the Participant Register as the owner of such participation for
all purposes of this Agreement notwithstanding any notice to the contrary. For
the avoidance of doubt, the Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining a
Participant Register.

(e)Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

11.07Treatment of Certain Information; Confidentiality. Subject to the last
sentence of this Section, each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to those of its Affiliates and
Related Parties that the Administrative Agent or any such Lender reasonably
determines needs to know such Information (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential in accordance with the provisions of this Section), (b) to the
extent required or requested by any regulatory authority that has or claims to
have jurisdiction over such Person or its Related Parties (including any self-

regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable Laws or by any
subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f)
subject to an agreement containing provisions substantively the same as (or
more restrictive than) those of this Section, to any assignee of or any
prospective assignee of, any of its rights and obligations under this
Agreement, (g) with the consent of the Company or (h) to the extent such
Information becomes publicly available other than as a result of a breach of
this Section. For purposes of this Section, “Information” means all
information received from the Company or any Subsidiary relating to the
Company or any Subsidiary or any of their respective businesses, other than
any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis prior to disclosure by the Company or any
Subsidiary. Notwithstanding anything contained herein to the contrary, (x)
nothing contained in this Section shall supersede any nondisclosure or
confidentiality provision contained in any nondisclosure agreement,
confidentiality agreement or other similar agreement (any such agreement, a
“Nondisclosure Agreement”) entered into between the Company or any of its
Affiliates, on the one hand, and any Lender or any of its Affiliates, on the
other, to the extent otherwise applicable to any Information; it being
understood and agreed that in the event of any conflict between the provisions
of this Section and the nondisclosure or confidentiality provisions contained
in any Nondisclosure Agreement as it relates to any Information, the
nondisclosure or confidentiality provision contained in such Nondisclosure
Agreement shall govern; and (y) whether or not any Loan Document constitutes
Information, the Loan Documents (other than the Fee Letter) can be shared on a
confidential basis with (i) any Participant or prospective Participant
hereunder, (ii) any actual or prospective party (or its Related Parties) to
any swap, derivative or other transaction under which payments are to be made
by reference to any Borrower and its obligations, this Agreement or payments
hereunder, (iii) any rating agency in connection with rating the Company or
its Subsidiaries or the credit facility provided hereunder, (iv) the CUSIP
Service Bureau or any similar agency in connection with the issuance and
monitoring of CUSIP numbers or other market identifiers with respect to the
credit facility provided hereunder or (v) in the case of this Agreement, any
market data collector or service provider.

11.08Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by applicable Law,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency, but excluding deposits in (i)
trust or other fiduciary accounts (to the extent of amounts held therein in
trust in the ordinary course of business on behalf of third parties that are
not Loan Parties), (ii) payroll accounts, (iii) health-savings accounts and
worker’s compensation accounts, (iv) withholding tax accounts and (v) zero
balance accounts used in the ordinary course of business) at any time held and
other obligations (in whatever currency) at any time owing by such Lender or
any such Affiliate to or for the credit or the account of the Company or any
other Loan Party against any and all of the obligations of the Company or such
Loan Party now or hereafter existing under this Agreement or any other Loan
Document to such Lender or its Affiliates, irrespective of whether or not such
obligations of the Company or such Loan Party are owed to a branch, office or
Affiliate of such Lender different from the branch, office or Affiliate
holding such deposit or obligated on such indebtedness; provided that in the
event that any Defaulting Lender shall exercise any such right of setoff, (x)
all amounts so set off shall be paid over immediately to the Administrative
Agent for further application in accordance with the provisions of Section
2.13 and, pending such payment, shall be segregated by such Defaulting Lender
from its other funds and deemed held in trust for the benefit of the
Administrative Agent and the Lenders, and (y) the Defaulting Lender shall
provide promptly to the Administrative Agent a statement describing in
reasonable detail the Obligations owing to such Defaulting Lender as to which
it exercised such right of setoff. The rights of each Lender and its
Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender or Affiliates may have.
Each Lender agrees to notify the

Company and the Administrative Agent promptly after any such setoff and
application, provided that the failure to give such notice shall not affect
the validity of such setoff and application.

11.09Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under
the Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent
or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or,
if it exceeds such unpaid principal, refunded to the Company. In determining
whether the interest contracted for, charged, or received by the
Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to
the extent permitted by applicable Law, (a) characterize any payment that is
not principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.

11.10Counterparts; Entire Agreement; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract. This Agreement, the
other Loan Documents, and any separate letter agreements with respect to fees
payable to the Administrative Agent, constitute the entire contract among the
parties relating to the subject matter hereof (OTHER THAN ANY NONDISCLOSURE OR
CONFIDENTIALITY PROVISIONS CONTAINED IN ANY NONDISCLOSURE AGREEMENT TO THE
EXTENT APPLICABLE TO THE INFORMATION (AS DEFINED HEREIN)) and supersede any
and all previous agreements and understandings, oral or written, relating to
the subject matter hereof (but do not supersede any provisions of any
engagement letter or any fee letter that by the terms of such documents
survive the effectiveness of this Agreement, all of which provisions shall
remain in full force and effect). There are no unwritten oral agreements among
the parties hereto with respect to the subject matter hereof. Except as
provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof that, when taken together, bear
the signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement (including an Electronic
Signature) by facsimile, emailed .pdf or any other electronic means that
reproduces an image of the actual executed signature page shall be effective
as delivery of a manually executed counterpart of this Agreement.

11.11Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge
of any Default at the time of any Borrowing, and shall continue in full force
and effect as long as any Loan or any other Obligation hereunder shall remain
unpaid or unsatisfied.

11.12Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions, the economic effect
of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. Without limiting the foregoing provisions of this
Section, if and to the extent that the enforceability of any provisions in
this Agreement relating to

Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in
good faith by the Administrative Agent, then such provisions shall be deemed
to be in effect only to the extent not so limited.

11.13Replacement of Lenders. If the Company is entitled to replace a Lender
pursuant to the provisions of Section 3.06, or if any Lender is a Defaulting
Lender, a Non-Extending Lender or a Non-Consenting Lender, then the Company
may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 11.06), all of its interests, rights (other than
its existing rights to payments pursuant to Sections 3.01 and 3.04) and
obligations under this Agreement and the related Loan Documents to an Eligible
Assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that:

(a)the Company shall have paid to the Administrative Agent the assignment fee
(if any) specified in Section 11.06(b);

(b)such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.05) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Company or
applicable Designated Borrower (in the case of all other amounts);

(c)in the case of any such assignment resulting from a claim for compensation
under Section 3.04 or payments required to be made pursuant to Section 3.01,
such assignment will result in a reduction in such compensation or payments
thereafter;

(d)such assignment does not conflict with applicable Laws; and

(e)in the case of an assignment resulting from a Lender becoming a Non-
Consenting Lender, the applicable assignee shall have consented to the
applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Company to require such assignment and delegation
cease to apply.

11.14Governing Law; Jurisdiction; Etc.

(a)GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS,
CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR
OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET
FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.

(b)SUBMISSION TO JURISDICTION. EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR
PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN
CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE COMPANY, THE ADMINISTRATIVE
AGENT, ANY LENDER OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR

THEREBY, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING
IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT; PROVIDED THAT, IN THE CASE OF ANY DESIGNATED BORROWER THAT IS A
FOREIGN SUBSIDIARY, NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE
HAVE TO BRING ANY SUCH ACTION, LITIGATION OR PROCEEDING AGAINST SUCH
DESIGNATED BORROWER OR ANY OF ITS PROPERTIES IN THE COURTS OF THE JURISDICTION
OF ORGANIZATION OF SUCH DESIGNATED BORROWER. EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW.

(c)WAIVER OF VENUE. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION, LITIGATION
OR PROCEEDING IN ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY
COURT REFERRED TO IN CLAUSE (b) OF THIS SECTION. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

(d)SERVICE OF PROCESS. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 11.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW.

(e)PROCESS AGENT. EACH DESIGNATED BORROWER THAT IS A FOREIGN SUBSIDIARY HEREBY
IRREVOCABLY AND UNCONDITIONALLY DESIGNATES, APPOINTS AND EMPOWERS THE COMPANY,
AND THE COMPANY HEREBY ACCEPTS SUCH APPOINTMENT, AS ITS DESIGNEE, APPOINTEE
AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN
RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS THAT MAY BE SERVED IN ANY ACTION, LITIGATION OR
PROCEEDING IN ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. SUCH
SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO SUCH
DESIGNATED BORROWER IN CARE OF THE COMPANY AT THE COMPANY’S ADDRESS USED FOR
PURPOSES OF GIVING NOTICES UNDER SECTION 11.02, AND EACH SUCH DESIGNATED
BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE COMPANY TO ACCEPT SUCH
SERVICE ON ITS BEHALF.

(f)NO IMMUNITY. IN THE EVENT ANY DESIGNATED BORROWER THAT IS A FOREIGN
SUBSIDIARY OR ANY OF ITS ASSETS HAS OR HEREAFTER ACQUIRES, IN ANY JURISDICTION
IN WHICH JUDICIAL PROCEEDINGS MAY AT ANY TIME BE COMMENCED WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, ANY IMMUNITY FROM JURISDICTION,
LEGAL PROCEEDINGS, ATTACHMENT (WHETHER BEFORE OR AFTER JUDGMENT), EXECUTION,
JUDGMENT OR SETOFF, SUCH DESIGNATED BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES NOT TO CLAIM AND HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES SUCH IMMUNITY.

11.15Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.16No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby or by any other Loan Document
(including in connection with any amendment, waiver or other modification
hereof or of any other Loan Document), the Company and each other Loan Party
acknowledges and agrees, and acknowledges its Affiliates’ understanding, that:
(i) (A) the arranging and other services regarding this Agreement provided by
the Administrative Agent, the Arranger, the Lenders and their respective
Affiliates are arm’s-length commercial transactions between the Company, each
other Loan Party and their respective Affiliates, on the one hand, and the
Administrative Agent, the Arranger, the Lenders and their respective
Affiliates, on the other hand, (B) each of the Company and the other Loan
Parties has consulted its own legal, accounting, regulatory and tax advisors
to the extent it has deemed appropriate, and none of the Administrative Agent,
the Arranger, the Lenders or their respective Affiliates has provided any
legal, accounting, regulatory, investment or tax advice with respect to any of
the transactions contemplated hereby and by the other Loan Documents, and (C)
each of the Company and the other Loan Parties is capable of evaluating, and
understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents; (ii) in connection with
the transactions contemplated hereby and by the other Loan Documents and the
process leading thereto (and irrespective of whether the Administrative Agent,
the Arranger, the Lenders or any of their respective Affiliates has advised or
is currently advising the Company or any of its Affiliates on other matters),
(A) each of the Administrative Agent, the Arranger, each Lender and each of
their respective Affiliates is and has been acting solely as a principal and,
except as expressly agreed in writing by the relevant parties, has not been,
is not, and will not be acting as, or be deemed to have assumed any
responsibility as, an advisor, agent or fiduciary for the Company, any other
Loan Party or any of their respective Affiliates, or any other Person and (B)
none of the Administrative Agent, the Arranger, any Lender or any of their
respective Affiliates has any obligation or implied duties to the Company, any
other Loan Party or any of their respective Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; and (iii) the Administrative Agent,
the Arranger, the Lenders and their respective Affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of
the Company, the other Loan Parties and their respective

Affiliates, and none of the Administrative Agent, the Arranger, any Lender or
any of their respective Affiliates has any obligation to disclose any of such
interests to the Company, any other Loan Party or any of their respective
Affiliates. To the fullest extent permitted by applicable Law, each of the
Company and each other Loan Party hereby agrees not to assert any claims
against the Administrative Agent, the Arranger, any Lender or any of their
respective Affiliates based on an alleged breach of agency or fiduciary duty
in connection with any aspect of any transaction contemplated hereby or by any
other Loan Document.

11.17Electronic Execution. The words “execute”, “execution”, “signed”,
“signature”, “delivery”, and words of like import in or relating to any
document to be signed in connection with this Agreement or any other Loan
Document and the transactions contemplated hereby (including without
limitation Assignment and Assumptions, amendments or other modifications, Loan
Notices, waivers and consents) shall be deemed to include Electronic
Signatures, deliveries or the keeping of records in electronic form, each of
which shall be of the same legal effect, validity or enforceability as a
manually executed signature, physical delivery thereof or the use of a paper-
based recordkeeping system, as the case may be, to the extent and as provided
for in any applicable law, including the Federal Electronic Signatures in
Global and National Commerce Act, the New York State Electronic Signatures and
Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act; provided that, notwithstanding anything contained herein to
the contrary, the Administrative Agent is under no obligation to agree to
accept electronic signatures in any form or in any format unless expressly
agreed to by it. Without limiting the generality of the foregoing, each of the
parties hereto hereby (i) agrees that, for all purposes, including in
connection with any workout, restructuring, enforcement of remedies,
bankruptcy proceedings or litigation among the Administrative Agent, the
Lenders and the Loan Parties, electronic images of this Agreement or any other
Loan Documents (in each case, including with respect to any signature pages
thereto) shall have the same legal effect, validity and enforceability as any
paper original, and (ii) waives any argument, defense or right to contest the
validity or enforceability of the Loan Documents based solely on the lack of
paper original copies of any Loan Documents, including with respect to any
signature pages thereto.

11.18USA PATRIOT Act. Each Lender and the Administrative Agent (for itself and
not on behalf of any Lender) hereby notifies the Borrowers that pursuant to
the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Patriot Act”) and/or Beneficial Ownership
Regulation, it is required to obtain, verify and record information that
identifies the Borrowers, which information includes the name and address of
each Borrower and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify the Borrowers in accordance
with the Patriot Act and the Beneficial Ownership Regulation. Each Borrower
shall, promptly following any reasonable request by the Administrative Agent
or any Lender, provide all Regulatory Information that the Administrative
Agent or such Lender requests in order to comply with its ongoing obligations
under applicable “know your customer” and anti-money laundering rules and
regulations, including the Patriot Act and the Beneficial Ownership
Regulation.

11.19Judgment Currency. If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder or any other Loan
Document in one currency into another currency, the rate of exchange used
shall be that at which in accordance with normal banking procedures the
Administrative Agent could purchase the first currency with such other
currency on the Business Day preceding that on which final judgment is given.
The obligation of each Borrower in respect of any such sum due from it to the
Administrative Agent or any Lender hereunder or under the other Loan Documents
shall, notwithstanding any judgment in a currency (the “Judgment Currency”)
other than that in which such sum is denominated in accordance with the
applicable provisions of this Agreement (the “Agreement Currency”), be
discharged only to the extent that on the Business Day following receipt by
the Administrative Agent or such Lender, as the case may be, of any sum
adjudged to be so due in the Judgment Currency, the Administrative Agent or
such Lender, as the case may be, may in accordance with normal banking
procedures purchase the Agreement Currency with the Judgment Currency. If the
amount of the

Agreement Currency so purchased is less than the sum originally due to the
Administrative Agent or any Lender from any Borrower in the Agreement
Currency, such Borrower agrees, as a separate obligation and notwithstanding
any such judgment, to indemnify the Administrative Agent or such Lender, as
the case may be, against such loss. If the amount of the Agreement Currency so
purchased is greater than the sum originally due to the Administrative Agent
or any Lender in such currency, the Administrative Agent or such Lender, as
the case may be, agrees to return the amount of any excess to the applicable
Borrower (or to any other Person who may be entitled thereto under applicable
Law).

11.20Non-Public Information. Each Lender acknowledges that all information
(including requests for waivers and amendments as well as certain of the
Information) furnished by or on behalf of any Borrower or the Administrative
Agent pursuant to or in connection with, or in the course of administering,
this Agreement will be syndicate-level information, which may contain MNPI.
Each Lender represents to each Borrower and the Administrative Agent that (i)
it has developed compliance procedures regarding the use of MNPI, (ii) it will
handle such MNPI in accordance with applicable Law, including United States
Federal and state securities Laws, and (iii) it has identified to the
Administrative Agent a contact who may receive information that may contain
MNPI in accordance with its compliance procedures and applicable Law,
including United States Federal and state securities Laws.

11.21Acknowledgment and Consent to Bail-In of Affected Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties related to the
transactions contemplated by the Loan Documents, each party hereto
acknowledges that any liability of any party hereto that is an Affected
Financial Institution arising under any Loan Document, to the extent such
liability is unsecured, may be subject to the Write-Down and Conversion Powers
of the applicable Resolution Authority and agrees and consents to, and
acknowledges and agrees to be bound by: (a) the application of any Write-Down
and Conversion Powers by the applicable Resolution Authority to any such
liabilities arising hereunder which may be payable to it by any party hereto
that is an Affected Financial Institution; and (b) the effects of any Bail-In
Action on any such liability, including, if applicable, (i) a reduction in
full or in part or cancellation of any such liability; (ii) a conversion of
all, or a portion of, such liability into shares or other instruments of
ownership in such Affected Financial Institution, its parent undertaking, or a
bridge institution that may be issued to it or otherwise conferred on it, and
that such shares or other instruments of ownership will be accepted by it in
lieu of any rights with respect to any such liability under this Agreement or
any other Loan Document; or (iii) the variation of the terms of such liability
in connection with the exercise of the Write-Down and Conversion Powers of any
applicable Resolution Authority.

11.22ERISA Matters.

(a)Each Lender (i) represents and warrants, as of the date such Person became
a Lender party hereto, to, and (ii) covenants, from the date such Person
became a Lender party hereto to the date such Person ceases being a Lender
party hereto, for the benefit of, the Administrative Agent, the Arranger and
their respective Affiliates, and not, for the avoidance of doubt, to or for
the benefit of the Company or any other Loan Party, that at least one of the
following is and will be true: (A) such Lender is not using “plan assets”
(within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of
ERISA) of one or more Benefit Plans in connection with the Loans or the
Commitments; (B) the transaction exemption set forth in one or more PTEs, such
as PTE 84-14 (a class exemption for certain transactions determined by
independent qualified professional asset managers), PTE 95-60 (a class
exemption for certain transactions involving insurance company general
accounts), PTE 90-1 (a class exemption for certain transactions involving
insurance company pooled separate accounts), PTE 91-38 (a class exemption for
certain transactions involving bank collective investment funds) or PTE 96-23
(a class exemption for certain transactions determined by in-house asset
managers), is applicable with respect to such

Lender’s entrance into, participation in, administration of and performance of
the Loans, the Commitments and this Agreement; (C) (1) such Lender is an
investment fund managed by a “Qualified Professional Asset Manager” (within
the meaning of Part VI of PTE 84-14), (2) such Qualified Professional Asset
Manager made the investment decision on behalf of such Lender to enter into,
participate in, administer and perform the Loans, the Commitments and this
Agreement, (3) the entrance into, participation in, administration of and
performance of the Loans, the Commitments and this Agreement satisfies the
requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (4) to
the best knowledge of such Lender, the requirements of subsection (a) of Part
I of PTE 84-14 are satisfied with respect to such Lender’s entrance into,
participation in, administration of and performance of the Loans, the
Commitments and this Agreement; or (D) such other representation, warranty and
covenant as may be agreed in writing between the Administrative Agent, in its
sole discretion, and such Lender.

(b)In addition, unless subclause (A) in the immediately preceding clause (a)
is true with respect to a Lender or such Lender has not provided another
representation, warranty and covenant as provided in subclause (D) in the
immediately preceding clause (a), such Lender further (i) represents and
warrants, as of the date such Person became a Lender party hereto, to, and
(ii) covenants, from the date such Person became a Lender party hereto to the
date such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent, the Arranger and their respective Affiliates, and not,
for the avoidance of doubt, to or for the benefit of the Company or any other
Loan Party, that: (A) none of the Administrative Agent, the Arranger or any of
their respective Affiliates is a fiduciary with respect to the assets of such
Lender (including in connection with the reservation or exercise of any rights
by the Administrative Agent under this Agreement, any other Loan Document or
any documents related to hereto or thereto); (B) the Person making the
investment decision on behalf of such Lender with respect to the entrance
into, participation in, administration of and performance of the Loans, the
Commitments and this Agreement is independent (within the meaning of 29 CFR §
2510.3-21) and is a bank, an insurance carrier, an investment adviser, a
broker-dealer or other person that holds, or has under management or control,
total assets of at least $50 million, in each case as described in 29 CFR §
2510.3-21(c)(1)(i)(A)-(E); (C) the Person making the investment decision on
behalf of such Lender with respect to the entrance into, participation in,
administration of and performance of the Loans, the Commitments and this
Agreement is capable of evaluating investment risks independently, both in
general and with regard to particular transactions and investment strategies
(including in respect of the Obligations); (D) the Person making the
investment decision on behalf of such Lender with respect to the entrance
into, participation in, administration of and performance of the Loans, the
Commitments and this Agreement is a fiduciary under ERISA or the Code, or
both, with respect to the Loans, the Commitments and this Agreement and is
responsible for exercising independent judgment in evaluating the transactions
hereunder; and (E) no fee or other compensation is being paid directly to the
Administrative Agent, the Arranger or any of their respective Affiliates for
investment advice (as opposed to other services) in connection with the Loans,
the Commitments or this Agreement.

(c)The Administrative Agent and the Arranger hereby informs the Lenders that
each such Person is not undertaking to provide impartial investment advice, or
to give advice in a fiduciary capacity, in connection with the transactions
contemplated hereby, and that such Person has a financial interest in the
transactions contemplated hereby in that such Person or an Affiliate thereof
(i) may receive interest or other payments with respect to the Loans, the
Commitments and this Agreement, (ii) may recognize a gain if it extended the
Loans or the Commitments for an amount less than the amount being paid for an
interest in the Loans or the Commitments by such Lender or (iii) may receive
fees or other payments in connection with the transactions contemplated
hereby, the other Loan Documents or otherwise, including structuring fees,
commitment fees,

arrangement fees, facility fees, upfront fees, underwriting fees, ticking
fees, agency fees, administrative agent or collateral agent fees, utilization
fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or
alternate transaction fees, amendment fees, processing fees, term out
premiums, banker’s acceptance fees, breakage or other early termination fees
or fees similar to the foregoing.

11.23Restatement of Existing Credit Agreement. Each Loan Party agrees that
this Agreement amends and restates and is substituted for the Existing Credit
Agreement. All rights, benefits, interest, liabilities and obligations of the
parties to the Existing Credit Agreement are hereby amended, restated,
substituted and superseded, in their entirety, on the terms and provisions set
forth herein. In furtherance of the foregoing, each party hereto acknowledges
and agrees that, on and as of the Closing Date, (i) Schedule 2.01 sets forth
all the Commitments of all the Lenders (and no Person whose name does not
appear on Schedule 2.01 shall have, or shall be deemed to have, a Commitment
on the Closing Date), (ii) Bank of America, N.A. shall cease to be the
administrative agent under the Loan Documents and shall be discharged from its
duties and obligations in such capacity under the Loan Documents, provided
that the provisions of Article IX and Section 11.04 shall continue in effect
for the benefit of Bank of America, N.A. in its capacity as the former
administrative agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while Bank
of America, N.A. was acting as administrative agent, and (iii) JPMorgan Chase
Bank, N.A. shall become the Administrative Agent and shall have the rights and
obligations as set forth herein.

[signature pages follow]

EXHIBIT B

Loan Notice

[Attached]

EXHIBIT A

FORM OF LOAN NOTICE

Date:  , 

To: JPMorgan Chase Bank, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of June 23, 2020 (as amended, restated, amended and restated, extended,
supplemented or otherwise modified in writing from time to time, the “Credit
Agreement”), among Amazon.com, Inc., a Delaware corporation (the “Company”),
certain Subsidiaries of the Company from time to time party thereto, the
Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as
Administrative Agent. The terms defined in the Credit Agreement are used
herein as defined therein.

The undersigned hereby requests (select one):

☐ A Borrowing of Loans ☐ A conversion or continuation of Loans

1. On  ,  (a Business Day).

2. In the amount of [$][€][£][¥]1.

3. Comprised of [Base Rate Loans][Eurocurrency Rate Loans][SONIA Loans].

4. For Eurocurrency Rate Loans: with an Interest Period of  months.

5. Currency of Loans:.

6. Borrower: [Company][specify the applicable Designated Borrower].

Delivery of an executed counterpart of a signature page of this notice by
facsimile or other electronic imaging means (e.g., “pdf” or “tif”) shall be
effective as delivery of a manually executed counterpart of this notice.

[signature page follows]

1 IF APPLICABLE, SUCH OTHER CURRENCY THAT IS APPROVED IN ACCORDANCE WITH
SECTION 1.05 OF THE CREDIT AGREEMENT.

[AMAZON.COM, INC.]

[DESIGNATED BORROWER]  

By:

 Name:  

Title:  

[Signature Page to Loan Notice]EX-21.1 4 amzn-20211231xex211.htm EX-21.1  Document

Exhibit 21.1

AMAZON.COM, INC.

LIST OF SIGNIFICANT SUBSIDIARIES

Legal Name  Jurisdiction  Percent Owned

Amazon.com Services LLC  Delaware  100  %

Amazon.com Sales, Inc.  Delaware  100  %

Amazon Data Services, Inc.  Delaware  100  %

Amazon Web Services, Inc.  Delaware  100  %

Amazon Technologies, Inc.  Nevada  100  %

Amazon.com NV Investment Holdings LLC  Nevada  100  %

Amazon US Services LLC  Delaware  100  %

A100 ROW, Inc.  Delaware  100  %  EX-23.1 5 amzn-20211231xex231.htm EX-23.1  Document

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration
Statements:

(a) Registration Statement (Form S-4 No. 333-55943), as amended, pertaining to
the acquisition shelf-registration of up to 30 million shares of common stock,

(b) Registration Statement (Form S-8 No. 333-28763), as amended, pertaining to
the Amazon.com, Inc. 1997 Stock Incentive Plan (formerly the “1997 Stock
Option Plan”) and the Amended and Restated 1994 Stock Option Plan of
Amazon.com, Inc.,

(c) Registration Statement (Form S-8 No. 333-74419) pertaining to the
Amazon.com, Inc. 1999 Nonofficer Employee Stock Option Plan,

(d) Registration Statement (Form S-8 POS No. 333-160831) pertaining to the
Zappos.com, Inc. 2009 Stock Plan,

(e) Registration Statement (Form S-8 No. 333-169470) pertaining to 25,000,000
shares of Common Stock, par value $0.01 per share, to be issued pursuant to
the Company’s 1997 Stock Incentive Plan,

(f) Registration Statement (Form S-8 No. 333-173054), pertaining to the
Quidsi, Inc. (fka1800Diapers, Inc.) 2006 Stock Option/Stock Issuance Plan,

(g) Registration Statement (Form S-8 No. 333-181073) pertaining to the Kiva
Systems, Inc. 2003 Stock Plan, as amended,

(h) Registration Statement (Form S-8 No. 333-199572) pertaining to the Twitch
Interactive, Inc. Amended and Restated 2007 Stock Plan,

(i) Registration Statement (Form S-8 No. 333-207591) pertaining to the
Elemental Technologies, Inc. 2006 Stock Incentive Plan, as amended and
restated,

(j) Registration Statement (Form S-3 No. 333-238831) pertaining to the shelf-
registration of Amazon.com, Inc. securities, and

(k) Registration Statement (Form S-8 No. 333-249847) pertaining to the
Amazon.com, Inc. 1997 Stock Incentive Plan (as Amended and Restated).

of our reports dated February 3, 2022, with respect to the consolidated
financial statements of Amazon.com, Inc. and the effectiveness of internal
control over financial reporting of Amazon.com, Inc. included in this Annual
Report (Form 10-K) of Amazon.com, Inc. for the year ended December 31, 2021.

/s/ Ernst & Young LLP

Seattle, Washington

February 3, 2022EX-31.1 6 amzn-20211231xex311.htm EX-31.1  Document

Exhibit 31.1

CERTIFICATIONS

I, Andrew R. Jassy, certify that:

1. I have reviewed this Form 10-K of Amazon.com, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control
over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting;
and

5. The registrant’s other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.

/s/ Andrew R. Jassy

 Andrew R. Jassy

 President and Chief Executive Officer

 (Principal Executive Officer)  

Date: February 3, 2022EX-31.2 7 amzn-20211231xex312.htm EX-31.2  Document

Exhibit 31.2

CERTIFICATIONS

I, Brian T. Olsavsky, certify that:

1. I have reviewed this Form 10-K of Amazon.com, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control
over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting;
and

5. The registrant’s other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.

/s/ Brian T. Olsavsky

 Brian T. Olsavsky

 Senior Vice President and

Chief Financial Officer

 (Principal Financial Officer)  

Date: February 3, 2022EX-32.1 8 amzn-20211231xex321.htm EX-32.1  Document

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350

In connection with the Annual Report of Amazon.com, Inc. (the “Company”) on
Form 10-K for the year ended December 31, 2021, as filed with the Securities
and Exchange Commission (the “SEC”) on or about the date hereof (the
“Report”), I, Andrew R. Jassy, President and Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company
and will be retained by the Company and furnished to the SEC or its staff upon
request.

/s/ Andrew R. Jassy

 Andrew R. Jassy

 President and Chief Executive Officer

 (Principal Executive Officer)  

Date: February 3, 2022EX-32.2 9 amzn-20211231xex322.htm EX-32.2  Document

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350

In connection with the Annual Report of Amazon.com, Inc. (the “Company”) on
Form 10-K for the year ended December 31, 2021, as filed with the Securities
and Exchange Commission (the “SEC”) on or about the date hereof (the
“Report”), I, Brian T. Olsavsky, Senior Vice President and Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company
and will be retained by the Company and furnished to the SEC or its staff upon
request.

/s/ Brian T. Olsavsky

 Brian T. Olsavsky

 Senior Vice President and

Chief Financial Officer

 (Principal Financial Officer)  

Date: February 3, 2022

PART I

Item 1. Business  

This Annual Report on Form 10-K and the documents incorporated herein by
reference contain forward-looking statements based on expectations, estimates,
and projections as of the date of this filing. Actual results may differ
materially from those expressed in forward-looking statements. See Item 1A of
Part I — “Risk Factors.”

Amazon.com, Inc.’s principal corporate offices are located in Seattle,
Washington. We completed our initial public offering in May 1997 and our
common stock is listed on the Nasdaq Global Select Market under the symbol
“AMZN.”

As used herein, “Amazon.com,” “we,” “our,” and similar terms include
Amazon.com, Inc. and its subsidiaries, unless the context indicates otherwise.

General

We seek to be Earth’s most customer-centric company. We are guided by four
principles: customer obsession rather than competitor focus, passion for
invention, commitment to operational excellence, and long-term thinking. In
each of our segments, we serve our primary customer sets, consisting of
consumers, sellers, developers, enterprises, and content creators. In
addition, we provide services, such as advertising to sellers, vendors,
publishers, authors, and others, through programs such as sponsored ads,
display, and video advertising.

We have organized our operations into three segments: North America,
International, and Amazon Web Services (“AWS”). These segments reflect the way
the Company evaluates its business performance and manages its operations.
Information on our net sales is contained in Item 8 of Part II, “Financial
Statements and Supplementary Data — Note 10 — Segment Information.”

Consumers

We serve consumers through our online and physical stores and focus on
selection, price, and convenience. We design our stores to enable hundreds of
millions of unique products to be sold by us and by third parties across
dozens of product categories. Customers access our offerings through our
websites, mobile apps, Alexa, devices, streaming, and physically visiting our
stores. We also manufacture and sell electronic devices, including Kindle,
Fire tablet, Fire TV, Echo, Ring, and other devices, and we develop and
produce media content. We seek to offer our customers low prices, fast and
free delivery, easy-to-use functionality, and timely customer service. In
addition, we offer Amazon Prime, a membership program that includes unlimited
free shipping on over 100 million items, access to unlimited streaming of tens
of thousands of movies and TV episodes, including Amazon Original content, and
other benefits.

We fulfill customer orders in a number of ways, including through: North
America and International fulfillment networks that we operate; co-sourced and
outsourced arrangements in certain countries; digital delivery; and through
our physical stores. We operate customer service centers globally, which are
supplemented by co-sourced arrangements. See Item 2 of Part I, “Properties.”

Sellers

We offer programs that enable sellers to grow their businesses, sell their
products in our stores, and fulfill orders through us. We are not the seller
of record in these transactions. We earn fixed fees, a percentage of sales,
per-unit activity fees, interest, or some combination thereof, for our seller
programs.

Developers and Enterprises

We serve developers and enterprises of all sizes, including start-ups,
government agencies, and academic institutions, through AWS, which offers a
broad set of on-demand technology services, including compute, storage,
database, analytics, and machine learning, and other services.

Content Creators

We serve authors and independent publishers with Kindle Direct Publishing, an
online service that lets independent authors and publishers choose a royalty
option and make their books available in the Kindle Store, along with Amazon’s
own publishing arm, Amazon Publishing. We also offer programs that allow
authors, musicians, filmmakers, skill and app developers, and others to
publish and sell content.

Competition

Our businesses encompass a large variety of product types, service offerings,
and delivery channels. The worldwide marketplace in which we compete is
evolving rapidly and intensely competitive, and we face a broad array of
competitors from many different industry sectors around the world. Our current
and potential competitors include: (1) physical, e-commerce, and omnichannel
retailers, publishers, vendors, distributors, manufacturers, and producers of
the products we offer and sell to consumers and businesses; (2) publishers,
producers, and distributors of physical, digital, and interactive media of all
types and all distribution channels; (3) web search engines, comparison
shopping websites, social networks, web portals, and other online and app-
based means of discovering, using, or acquiring goods and services, either
directly or in collaboration with other retailers; (4) companies that provide
e-commerce services, including website development and hosting, omnichannel
sales, inventory and supply chain management, advertising, fulfillment,
customer service, and payment processing; (5) companies that provide
fulfillment and logistics services for themselves or for third parties,
whether online or offline; (6) companies that provide information technology
services or products, including on-premises or cloud-based infrastructure and
other services; (7) companies that design, manufacture, market, or sell
consumer electronics, telecommunication, and electronic devices; (8) companies
that sell grocery products online and in physical stores; and (9) companies
that provide advertising services, whether in digital or other formats. We
believe that the principal competitive factors in our retail businesses
include selection, price, and convenience, including fast and reliable
fulfillment. Additional competitive factors for our seller and enterprise
services include the quality, speed, and reliability of our services and
tools, as well as customers’ ability and willingness to change business
practices. Some of our current and potential competitors have greater
resources, longer histories, more customers, greater brand recognition, and
greater control over inputs critical to our various businesses. They may
secure better terms from suppliers, adopt more aggressive pricing, pursue
restrictive distribution agreements that restrict our access to supply, direct
consumers to their own offerings instead of ours, lock-in potential customers
with restrictive terms, and devote more resources to technology,
infrastructure, fulfillment, and marketing. The Internet facilitates
competitive entry and comparison shopping, which enhances the ability of new,
smaller, or lesser-known businesses to compete against us. Each of our
businesses is also subject to rapid change and the development of new business
models and the entry of new and well-funded competitors. Other companies also
may enter into business combinations or alliances that strengthen their
competitive positions.

Intellectual Property

We regard our trademarks, service marks, copyrights, patents, domain names,
trade dress, trade secrets, proprietary technologies, and similar intellectual
property as critical to our success, and we rely on trademark, copyright, and
patent law, trade-secret protection, and confidentiality and/or license
agreements with our employees, customers, partners, and others to protect our
proprietary rights. We have registered, or applied for the registration of, a
number of U.S. and international domain names, trademarks, service marks, and
copyrights. Additionally, we have filed U.S. and international patent
applications covering certain of our proprietary technology.

Seasonality

Our business is affected by seasonality, which historically has resulted in
higher sales volume during our fourth quarter, which ends December 31.

Human Capital

Our employees are critical to our mission of being Earth’s most customer-
centric company. As of December 31, 2020, we employed approximately 1,298,000
full-time and part-time employees. Additionally, we utilize independent
contractors and temporary personnel to supplement our workforce. Competition
for qualified personnel has historically been intense, particularly for
software engineers, computer scientists, and other technical staff.

We focus on investment and innovation, inclusion and diversity, safety, and
engagement to hire and develop the best talent. We rely on numerous and
evolving initiatives to implement these objectives and invent mechanisms for
talent development, including industry-leading pay and benefits, skills
training programs such as Amazon Career Choice and the Amazon Technical
Academy, mentorship and support resources, and programs that advance
engagement, communication, and feedback.

Available Information

Our investor relations website is amazon.com/ir and we encourage investors to
use it as a way of easily finding information about us. We promptly make
available on this website, free of charge, the reports that we file or furnish
with the Securities and Exchange Commission (“SEC”), corporate governance
information (including our Code of Business Conduct and Ethics), and select
press releases.

Executive Officers and Directors

The following tables set forth certain information regarding our Executive
Officers and Directors as of January 20, 2021:

Information About Our Executive Officers

Name  Age  Position

Jeffrey P. Bezos  57  President, Chief Executive Officer, and Chairman of
the Board

David H. Clark  48  CEO, Worldwide Consumer

Andrew R. Jassy  53  CEO Amazon Web Services

Brian T. Olsavsky  57  Senior Vice President and Chief Financial Officer

Shelley L. Reynolds  56  Vice President, Worldwide Controller, and
Principal Accounting Officer

David A. Zapolsky  57  Senior Vice President, General Counsel, and
Secretary  

Jeffrey P. Bezos. Mr. Bezos has been Chairman of the Board of Amazon.com since
founding it in 1994 and Chief Executive Officer since May 1996. Mr. Bezos
served as President of the Company from founding until June 1999 and again
from October 2000 to the present.

David H. Clark. Mr. Clark has served as CEO Worldwide Consumer since January
2021, and Senior Vice President, Worldwide Operations, from May 2014 until
January 2021.

Andrew R. Jassy. Mr. Jassy has served as CEO Amazon Web Services since April
2016, and Senior Vice President, Amazon Web Services, from April 2006 until
April 2016.

Brian T. Olsavsky. Mr. Olsavsky has served as Senior Vice President and Chief
Financial Officer since June 2015, Vice President, Finance for the Global
Consumer Business from December 2011 to June 2015, and numerous financial
leadership roles across Amazon with global responsibility since April 2002.

Shelley L. Reynolds. Ms. Reynolds has served as Vice President, Worldwide
Controller, and Principal Accounting Officer since April 2007.

David A. Zapolsky. Mr. Zapolsky has served as Senior Vice President, General
Counsel, and Secretary since May 2014, Vice President, General Counsel, and
Secretary from September 2012 to May 2014, and as Vice President and Associate
General Counsel for Litigation and Regulatory matters from April 2002 until
September 2012.

Board of Directors

Name  Age  Position

Jeffrey P. Bezos  57  President, Chief Executive Officer, and Chairman of
the Board

Keith B. Alexander  69  Co-CEO, President, and Chair of IronNet
Cybersecurity, Inc.

Rosalind G. Brewer  58  Group President, Americas and Chief Operating
Officer, Starbucks Corporation

Jamie S. Gorelick  70  Partner, Wilmer Cutler Pickering Hale and Dorr LLP

Daniel P. Huttenlocher  62  Dean, MIT Schwarzman College of Computing

Judith A. McGrath  68  Former Chair and CEO, MTV Networks

Indra K. Nooyi  65  Former Chief Executive Officer, PepsiCo, Inc.

Jonathan J. Rubinstein  64  Former co-CEO, Bridgewater Associates, LP

Thomas O. Ryder  76  Retired, Former Chair, Reader’s Digest Association,
Inc.

Patricia Q. Stonesifer  64  Former President and Chief Executive Officer,
Martha’s Table

Wendell P. Weeks  61  Chief Executive Officer, Corning Incorporated  

Item 1A. Risk Factors  

Please carefully consider the following discussion of significant factors,
events, and uncertainties that make an investment in our securities risky. The
events and consequences discussed in these risk factors could, in
circumstances we may or may not be able to accurately predict, recognize, or
control, have a material adverse effect on our business, growth, reputation,
prospects, financial condition, operating results (including components of our
financial results), cash flows, liquidity, and stock price. These risk factors
do not identify all risks that we face; our operations could also be affected
by factors, events, or uncertainties that are not presently known to us or
that we currently do not consider to present significant risks to our
operations. In addition to the effects of the COVID-19 pandemic and resulting
global disruptions on our business and operations discussed in Item 7 of Part
II, “Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” and in the risk factors below, additional or unforeseen
effects from the COVID-19 pandemic and the global economic climate may give
rise to or amplify many of the risks discussed below.

Business and Industry Risks

We Face Intense Competition

Our businesses are rapidly evolving and intensely competitive, and we have
many competitors across geographies, including cross-border competition, and
in different industries, including physical, e-commerce, and omnichannel
retail, e-commerce services, web and infrastructure computing services,
electronic devices, digital content, advertising, grocery, and transportation
and logistics services. Some of our current and potential competitors have
greater resources, longer histories, more customers, and/or greater brand
recognition, particularly with our newly-launched products and services and in
our newer geographic regions. They may secure better terms from vendors, adopt
more aggressive pricing, and devote more resources to technology,
infrastructure, fulfillment, and marketing.

Competition continues to intensify, including with the development of new
business models and the entry of new and well-funded competitors, and as our
competitors enter into business combinations or alliances and established
companies in other market segments expand to become competitive with our
business. In addition, new and enhanced technologies, including search, web
and infrastructure computing services, digital content, and electronic devices
continue to increase our competition. The Internet facilitates competitive
entry and comparison shopping, which enhances the ability of new, smaller, or
lesser known businesses to compete against us. As a result of competition, our
product and service offerings may not be successful, we may fail to gain or
may lose business, and we may be required to increase our spending or lower
prices, any of which could materially reduce our sales and profits.

Our Expansion into New Products, Services, Technologies, and Geographic
Regions Subjects Us to Additional Risks

We may have limited or no experience in our newer market segments, and our
customers may not adopt our product or service offerings. These offerings,
which can present new and difficult technology challenges, may subject us to
claims if customers of these offerings experience service disruptions or
failures or other quality issues. In addition, profitability, if any, in our
newer activities may not meet our expectations, and we may not be successful
enough in these newer activities to recoup our investments in them. Failure to
realize the benefits of amounts we invest in new technologies, products, or
services could result in the value of those investments being written down or
written off.

Our International Operations Expose Us to a Number of Risks

Our international activities are significant to our revenues and profits, and
we plan to further expand internationally. In certain international market
segments, we have relatively little operating experience and may not benefit
from any first-to-market advantages or otherwise succeed. It is costly to
establish, develop, and maintain international operations and stores, and
promote our brand internationally. Our international operations may not become
profitable on a sustained basis.

In addition to risks described elsewhere in this section, our international
sales and operations are subject to a number of risks, including:

•local economic and political conditions;

•government regulation (such as regulation of our product and service
offerings and of competition); restrictive governmental actions (such as trade
protection measures, including export duties and quotas and custom duties and
tariffs); nationalization; and restrictions on foreign ownership;

•restrictions on sales or distribution of certain products or services and
uncertainty regarding liability for products, services, and content, including
uncertainty as a result of less Internet-friendly legal systems, local laws,
lack of legal precedent, and varying rules, regulations, and practices
regarding the physical and digital distribution of media products and
enforcement of intellectual property rights;

•business licensing or certification requirements, such as for imports,
exports, web services, and electronic devices;

•limitations on the repatriation and investment of funds and foreign currency
exchange restrictions;

•limited fulfillment and technology infrastructure;

•shorter payable and longer receivable cycles and the resultant negative
impact on cash flow;

•laws and regulations regarding privacy, data protection, data security,
network security, consumer protection, payments, advertising, and restrictions
on pricing or discounts;

•lower levels of use of the Internet;

•lower levels of consumer spending and fewer opportunities for growth compared
to the U.S.;

•lower levels of credit card usage and increased payment risk;

•difficulty in staffing, developing, and managing foreign operations as a
result of distance, language, and cultural differences;

•different employee/employer relationships and the existence of works councils
and labor unions;

•compliance with the U.S. Foreign Corrupt Practices Act and other applicable
U.S. and foreign laws prohibiting corrupt payments to government officials and
other third parties;

•laws and policies of the U.S. and other jurisdictions affecting trade,
foreign investment, loans, and taxes; and

•geopolitical events, including war and terrorism.

As international physical, e-commerce, and omnichannel retail and other
services grow, competition will intensify, including through adoption of
evolving business models. Local companies may have a substantial competitive
advantage because of their greater understanding of, and focus on, the local
customer, as well as their more established local brand names. The inability
to hire, train, retain, and manage sufficient required personnel may limit our
international growth.

The People’s Republic of China (“PRC”) and India regulate Amazon’s and its
affiliates’ businesses and operations in country through regulations and
license requirements that may restrict (i) foreign investment in and operation
of the Internet, IT infrastructure, data centers, retail, delivery, and other
sectors, (ii) Internet content, and (iii) the sale of media and other products
and services. For example, in order to meet local ownership, regulatory
licensing, and cybersecurity requirements, we provide certain technology
services in China through contractual relationships with third parties that
hold PRC licenses to provide services. In India, the government restricts the
ownership or control of Indian companies by foreign entities involved in
online multi-brand retail trading activities. For www.amazon.in, we provide
certain marketing tools and logistics services to third-party sellers to
enable them to sell online and deliver to customers, and we hold indirect
minority interests in entities that are third-party sellers on the
www.amazon.in marketplace. Although we believe these structures and activities
comply with existing laws, they involve unique risks, and the PRC and India
may from time to time consider and implement additional changes in their
regulatory, licensing, or other requirements that could impact these
structures and activities. There are substantial uncertainties regarding the
interpretation of PRC and Indian laws and regulations, and it is possible that
these governments will ultimately take a view contrary to ours. In addition,
our Chinese and Indian businesses and operations may be unable to continue to
operate if we or our affiliates are unable to access sufficient funding or, in
China, enforce contractual relationships we or our affiliates have in place.
Violation of any existing or future PRC, Indian, or other laws or regulations
or changes in the interpretations of those laws and regulations could result
in our businesses in those countries being subject to fines and other
financial penalties, having licenses revoked, or being forced to restructure
our operations or shut down entirely.

The Variability in Our Retail Business Places Increased Strain on Our
Operations

Demand for our products and services can fluctuate significantly for many
reasons, including as a result of seasonality, promotions, product launches,
or unforeseeable events, such as in response to natural or man-made disasters,
extreme weather, or geopolitical events. For example, we expect a
disproportionate amount of our retail sales to occur during our fourth
quarter. Our failure to stock or restock popular products in sufficient
amounts such that we fail to meet customer demand could significantly affect
our revenue and our future growth. When we overstock products, we may be
required to take significant inventory markdowns or write-offs and incur
commitment costs, which could materially reduce profitability. We regularly
experience increases in our net shipping cost due to complimentary upgrades,
split-shipments, and additional long-zone shipments necessary to ensure timely
delivery for the holiday season. If too many customers access our websites
within a short period of time due to increased demand, we may experience
system interruptions that make our websites unavailable or prevent us from
efficiently fulfilling orders, which may reduce the volume of goods we offer
or sell and the attractiveness of our products and services. In addition, we
may be unable to adequately staff our fulfillment network and customer service
centers during these peak periods and delivery and other fulfillment companies
and customer service co-sourcers may be unable to meet the seasonal demand.
Risks described elsewhere in this Item 1A relating to fulfillment network
optimization and inventory are magnified during periods of high demand.

We generally have payment terms with our retail vendors that extend beyond the
amount of time necessary to collect proceeds from our consumer customers. As a
result of holiday sales, as of December 31 of each year, our cash, cash
equivalents, and marketable securities balances typically reach their highest
level (other than as a result of cash flows provided by or used in investing
and financing activities). This operating cycle results in a corresponding
increase in accounts payable as of December 31. Our accounts payable balance
generally declines during the first three months of the year, resulting in a
corresponding decline in our cash, cash equivalents, and marketable securities
balances.

We Are Impacted by Fraudulent or Unlawful Activities of Sellers

The law relating to the liability of online service providers is currently
unsettled. In addition, governmental agencies have in the past and could in
the future require changes in the way this business is conducted. Under our
seller programs, we maintain policies and processes designed to prevent
sellers from collecting payments, fraudulently or otherwise, when buyers never
receive the products they ordered or when the products received are materially
different from the sellers’ descriptions, and to prevent sellers in our stores
or through other stores from selling unlawful, counterfeit, pirated, or stolen
goods, selling goods in an unlawful or unethical manner, violating the
proprietary rights of others, or otherwise violating our policies. When these
policies and processes are circumvented or fail to operate sufficiently, it
can harm our business or damage our reputation and we could face civil or
criminal liability for unlawful activities by our sellers. Under our A2Z
Guarantee, we reimburse buyers for payments up to certain limits in these
situations, and as our third-party seller sales grow, the cost of this program
will increase and could negatively affect our operating results.

We Face Risks Related to Adequately Protecting Our Intellectual Property
Rights and Being Accused of Infringing Intellectual Property Rights of Third
Parties

We regard our trademarks, service marks, copyrights, patents, trade dress,
trade secrets, proprietary technology, and similar intellectual property as
critical to our success, and we rely on trademark, copyright, and patent law,
trade secret protection, and confidentiality and/or license agreements with
our employees, customers, and others to protect our proprietary rights.
Effective intellectual property protection is not available in every country
in which our products and services are made available. We also may not be able
to acquire or maintain appropriate domain names in all countries in which we
do business. Furthermore, regulations governing domain names may not protect
our trademarks and similar proprietary rights. We may be unable to prevent
third parties from acquiring domain names that are similar to, infringe upon,
or diminish the value of our trademarks and other proprietary rights.

We are not always able to discover or determine the extent of any unauthorized
use of our proprietary rights. Actions taken by third parties that license our
proprietary rights may materially diminish the value of our proprietary rights
or reputation. The protection of our intellectual property requires the
expenditure of significant financial and managerial resources. Moreover, the
steps we take to protect our intellectual property do not always adequately
protect our rights or prevent third parties from infringing or
misappropriating our proprietary rights. We also cannot be certain that others
will not independently develop or otherwise acquire equivalent or superior
technology or other intellectual property rights.

We have been subject to, and expect to continue to be subject to, claims and
legal proceedings regarding alleged infringement by us of the intellectual
property rights of third parties. Such claims, whether or not meritorious,
have in the past, and may in the future, result in the expenditure of
significant financial and managerial resources, injunctions against us, or
significant payments for damages, including to satisfy indemnification
obligations or to obtain licenses from third parties who allege that we have
infringed their rights. Such licenses may not be available on terms acceptable
to us or at all. These risks have been amplified by the increase in third
parties whose sole or primary business is to assert such claims.

Our digital content offerings depend in part on effective digital rights
management technology to control access to digital content. Breach or
malfunctioning of the digital rights management technology that we use could
subject us to claims, and content providers may be unwilling to include their
content in our service.

We Have Foreign Exchange Risk

The results of operations of, and certain of our intercompany balances
associated with, our international stores and product and service offerings
are exposed to foreign exchange rate fluctuations. Due to these fluctuations,
operating results may differ materially from expectations, and we may record
significant gains or losses on the remeasurement of intercompany balances. As
we have expanded our international operations, our exposure to exchange rate
fluctuations has increased. We also hold cash equivalents and/or marketable
securities in foreign currencies including Euros, British Pounds, and Japanese
Yen. When the U.S. Dollar strengthens compared to these currencies, cash
equivalents, and marketable securities balances, when translated, may be
materially less than expected and vice versa.

Operating Risks

Our Expansion Places a Significant Strain on our Management, Operational,
Financial, and Other Resources

We are continuing to rapidly and significantly expand our global operations,
including increasing our product and service offerings and scaling our
infrastructure to support our retail and services businesses. The complexity
of the current scale of our business can place significant strain on our
management, personnel, operations, systems, technical performance, financial
resources, and internal financial control and reporting functions, and our
expansion increases these factors. Failure to manage growth effectively could
damage our reputation, limit our growth, and negatively affect our operating
results.

We Experience Significant Fluctuations in Our Operating Results and Growth
Rate

We are not always able to accurately forecast our growth rate. We base our
expense levels and investment plans on sales estimates. A significant portion
of our expenses and investments is fixed, and we are not always able to adjust
our spending quickly enough if our sales are less than expected.

Our revenue growth may not be sustainable, and our percentage growth rates may
decrease. Our revenue and operating profit growth depends on the continued
growth of demand for the products and services offered by us or our sellers,
and our business is affected by general economic and business conditions
worldwide. A softening of demand, whether caused by changes in customer
preferences or a weakening of the U.S. or global economies, may result in
decreased revenue or growth.

Our sales and operating results will also fluctuate for many other reasons,
including due to factors described elsewhere in this section and the
following:

•our ability to retain and increase sales to existing customers, attract new
customers, and satisfy our customers’ demands;

•our ability to retain and expand our network of sellers;

•our ability to offer products on favorable terms, manage inventory, and
fulfill orders;

•the introduction of competitive stores, websites, products, services, price
decreases, or improvements;

•changes in usage or adoption rates of the Internet, e-commerce, electronic
devices, and web services, including outside the U.S.;

•timing, effectiveness, and costs of expansion and upgrades of our systems and
infrastructure;

•the success of our geographic, service, and product line expansions;

•the extent to which we finance, and the terms of any such financing for, our
current operations and future growth;

•the outcomes of legal proceedings and claims, which may include significant
monetary damages or injunctive relief and could have a material adverse impact
on our operating results;

•variations in the mix of products and services we sell;

•variations in our level of merchandise and vendor returns;

•the extent to which we offer fast and free delivery, continue to reduce
prices worldwide, and provide additional benefits to our customers;

•factors affecting our reputation or brand image;

•the extent to which we invest in technology and content, fulfillment, and
other expense categories;

•increases in the prices of fuel and gasoline, as well as increases in the
prices of other energy products and commodities like paper and packing
supplies and hardware products;

•the extent to which operators of the networks between our customers and our
stores successfully charge fees to grant our customers unimpaired and
unconstrained access to our online services;

•our ability to collect amounts owed to us when they become due;

•the extent to which new and existing technologies, or industry trends,
restrict online advertising or affect our ability to customize advertising or
otherwise tailor our product and service offerings;

•the extent to which use of our services is affected by spyware, viruses,
phishing and other spam emails, denial of service attacks, data theft,
computer intrusions, outages, and similar events; and

•disruptions from natural or man-made disasters, extreme weather, geopolitical
events and security issues (including terrorist attacks and armed
hostilities), labor or trade disputes, and similar events.

We Face Risks Related to Successfully Optimizing and Operating Our Fulfillment
Network and Data Centers

Failures to adequately predict customer demand or otherwise optimize and
operate our fulfillment network and data centers successfully from time to
time result in excess or insufficient fulfillment or data center capacity,
increased costs, and impairment charges, any of which could materially harm
our business. As we continue to add fulfillment and data center capability or
add new businesses with different requirements, our fulfillment and data
center networks become increasingly complex and operating them becomes more
challenging. There can be no assurance that we will be able to operate our
networks effectively.

In addition, failure to optimize inventory in our fulfillment network
increases our net shipping cost by requiring long-zone or partial shipments.
We and our co-sourcers may be unable to adequately staff our fulfillment
network and customer service centers. Under some of our commercial agreements,
we maintain the inventory of other companies, thereby increasing the
complexity of tracking inventory and operating our fulfillment network. Our
failure to properly handle such inventory or the inability of the other
businesses on whose behalf we perform inventory fulfillment services to
accurately forecast product demand may result in us being unable to secure
sufficient storage space or to optimize our fulfillment network or cause other
unexpected costs and other harm to our business and reputation.

We rely on a limited number of shipping companies to deliver inventory to us
and completed orders to our customers. The inability to negotiate acceptable
terms with these companies or performance problems or other difficulties
experienced by these companies or by our own transportation systems could
negatively impact our operating results and customer experience. In addition,
our ability to receive inbound inventory efficiently and ship completed orders
to customers also may be negatively affected by natural or man-made disasters,
extreme weather, geopolitical events and security issues, labor or trade
disputes, and similar events.

We Could Be Harmed by Data Loss or Other Security Breaches

Because we collect, process, store, and transmit large amounts of data,
including confidential, sensitive, proprietary, and business and personal
information, failure to prevent or mitigate data loss, theft, misuse, or other
security breaches or vulnerabilities affecting our or our vendors’ or
customers’ technology, products, and systems, could: expose us or our
customers to a risk of loss, disclosure, or misuse of such information;
adversely affect our operating results; result in litigation, liability, or
regulatory action (including under laws related to privacy, data protection,
data security, network security, and consumer protection); deter customers or
sellers from using our stores and services; and otherwise harm our business
and reputation. We use third-party technology and systems for a variety of
reasons, including, without limitation, encryption and authentication
technology, employee email, content delivery to customers, back-office
support, and other functions. Some of our systems have experienced past
security breaches, and, although they did not have a material adverse effect
on our operating results, there can be no assurance of a similar result in the
future. Although we have developed systems and processes that are designed to
protect customer data and prevent such incidents, including systems and
processes designed to reduce the impact of a security breach at a third-party
vendor or customer, such measures cannot provide absolute security and may
fail to operate as intended or be circumvented.

We Face Risks Related to System Interruption and Lack of Redundancy

We experience occasional system interruptions and delays that make our
websites and services unavailable or slow to respond and prevent us from
efficiently accepting or fulfilling orders or providing services to third
parties, which may reduce our net sales and the attractiveness of our products
and services. Steps we take to add software and hardware, upgrade our systems
and network infrastructure, and improve the stability and efficiency of our
systems may not be sufficient to avoid system interruptions or delays that
could adversely affect our operating results.

Our computer and communications systems and operations in the past have been,
or in the future could be, damaged or interrupted due to events such as
natural or man-made disasters, extreme weather, geopolitical events and
security issues (including terrorist attacks and armed hostilities), computer
viruses, physical or electronic break-ins, and similar events or disruptions.
Any of these events could cause system interruption, delays, and loss of
critical data, and could prevent us from accepting and fulfilling customer
orders and providing services, which could make our product and service
offerings less attractive and subject us to liability. Our systems are not
fully redundant and our disaster recovery planning may not be sufficient. In
addition, our insurance may not provide sufficient coverage to compensate for
related losses. Any of these events could damage our reputation and be
expensive to remedy.

The Loss of Key Senior Management Personnel or the Failure to Hire and Retain
Highly Skilled and Other Key Personnel Could Negatively Affect Our Business

We depend on our senior management and other key personnel, particularly
Jeffrey P. Bezos, our President, CEO, and Chairman. We do not have “key
person” life insurance policies. We also rely on other highly skilled
personnel. Competition for qualified personnel in the technology industry has
historically been intense, particularly for software engineers, computer
scientists, and other technical staff. The loss of any of our executive
officers or other key employees or the inability to hire, train, retain, and
manage qualified personnel, could harm our business.

Our Supplier Relationships Subject Us to a Number of Risks

We have significant suppliers, including content and technology licensors, and
in some cases, limited or single-sources of supply, that are important to our
sourcing, services, manufacturing, and any related ongoing servicing of
merchandise and content. We do not have long-term arrangements with most of
our suppliers to guarantee availability of merchandise, content, components,
or services, particular payment terms, or the extension of credit limits.
Decisions by our current suppliers to limit or stop selling or licensing
merchandise, content, components, or services to us on acceptable terms, or
delay delivery, including as a result of one or more supplier bankruptcies due
to poor economic conditions, as a result of natural disasters, or for other
reasons, may result in our being unable to procure alternatives from other
suppliers in a timely and efficient manner and on acceptable terms, or at all.
In addition, violations by our suppliers or other vendors of applicable laws,
regulations, contractual terms, intellectual property rights of others, or our
Supply Chain Standards, as well as products or practices regarded as
unethical, unsafe, or hazardous, could expose us to claims, damage our
reputation, limit our growth, and negatively affect our operating results.

Our Commercial Agreements, Strategic Alliances, and Other Business
Relationships Expose Us to Risks

We provide physical, e-commerce, and omnichannel retail and other services to
businesses through commercial agreements, strategic alliances, and business
relationships. Under these agreements, we provide web services, technology,
fulfillment, computing, digital storage, and other services, as well as enable
sellers to offer products or services through our stores. These arrangements
are complex and require substantial infrastructure capacity, personnel, and
other resource commitments, which may limit the amount of business we can
service. We may not be able to implement, maintain, and develop the components
of these commercial relationships, which may include web services,
fulfillment, customer service, inventory management, tax collection, payment
processing, hardware, content, and third-party software, and engaging third
parties to perform services. The amount of compensation we receive under
certain of our commercial agreements is partially dependent on the volume of
the other company’s sales. Therefore, when the other company’s offerings are
not successful, the compensation we receive may be lower than expected or the
agreement may be terminated. Moreover, we may not be able to enter into
additional or alternative commercial relationships and strategic alliances on
favorable terms. We also may be subject to claims from businesses to which we
provide these services if we are unsuccessful in implementing, maintaining, or
developing these services.

As our agreements terminate, we may be unable to renew or replace these
agreements on comparable terms, or at all. We may in the future enter into
amendments on less favorable terms or encounter parties that have difficulty
meeting their contractual obligations to us, which could adversely affect our
operating results.

Our present and future e-commerce services agreements, other commercial
agreements, and strategic alliances create additional risks such as:

•disruption of our ongoing business, including loss of management focus on
existing businesses;

•impairment of other relationships;

•variability in revenue and income from entering into, amending, or
terminating such agreements or relationships; and

•difficulty integrating under the commercial agreements.

Our Business Suffers When We Are Unsuccessful in Making, Integrating, and
Maintaining Acquisitions and Investments

We have acquired and invested in a number of companies, and we may in the
future acquire or invest in or enter into joint ventures with additional
companies. These transactions create risks such as:

•disruption of our ongoing business, including loss of management focus on
existing businesses;

•problems retaining key personnel;

•additional operating losses and expenses of the businesses we acquired or in
which we invested;

•the potential impairment of tangible and intangible assets and goodwill,
including as a result of acquisitions;

•the potential impairment of customer and other relationships of the company
we acquired or in which we invested or our own customers as a result of any
integration of operations;

•the difficulty of completing such transactions and achieving anticipated
benefits within expected timeframes, or at all;

•the difficulty of incorporating acquired operations, technology, and rights
into our offerings, and unanticipated expenses related to such integration;

•the difficulty of integrating a new company’s accounting, financial
reporting, management, information and data security, human resource, and
other administrative systems to permit effective management, and the lack of
control if such integration is delayed or not successfully implemented;

•losses we may incur as a result of declines in the value of an investment or
as a result of incorporating an investee’s financial performance into our
financial results;

•for investments in which an investee’s financial performance is incorporated
into our financial results, either in full or in part, the dependence on the
investee’s accounting, financial reporting, and similar systems, controls, and
processes;

•the difficulty of implementing at companies we acquire the controls,
procedures, and policies appropriate for a larger public company;

•the risks associated with businesses we acquire or invest in, which may
differ from or be more significant than the risks our other businesses face;

•potential unknown liabilities associated with a company we acquire or in
which we invest; and

•for foreign transactions, additional risks related to the integration of
operations across different cultures and languages, and the economic,
political, and regulatory risks associated with specific countries.

As a result of future acquisitions or mergers, we might need to issue
additional equity securities, spend our cash, or incur debt, contingent
liabilities, or amortization expenses related to intangible assets, any of
which could reduce our profitability and harm our business or only be
available on unfavorable terms, if at all. In addition, valuations supporting
our acquisitions and strategic investments could change rapidly. We could
determine that such valuations have experienced impairments or other-than-
temporary declines in fair value which could adversely impact our financial
results.

We Face Significant Inventory Risk

In addition to risks described elsewhere in this Item 1A relating to
fulfillment network and inventory optimization by us and third parties, we are
exposed to significant inventory risks that may adversely affect our operating
results as a result of seasonality, new product launches, rapid changes in
product cycles and pricing, defective merchandise, changes in consumer demand
and consumer spending patterns, changes in consumer tastes with respect to our
products, spoilage, and other factors. We endeavor to accurately predict these
trends and avoid overstocking or understocking products we manufacture and/or
sell. Demand for products, however, can change significantly between the time
inventory or components are ordered and the date of sale. In addition, when we
begin selling or manufacturing a new product, it may be difficult to establish
vendor relationships, determine appropriate product or component selection,
and accurately forecast demand. The acquisition of certain types of inventory
or components requires significant lead-time and prepayment and they may not
be returnable. We carry a broad selection and significant inventory levels of
certain products, such as consumer electronics, and at times we are unable to
sell products in sufficient quantities or to meet demand during the relevant
selling seasons. Any one of the inventory risk factors set forth above may
adversely affect our operating results.

We Are Subject to Payments-Related Risks

We accept payments using a variety of methods, including credit card, debit
card, credit accounts (including promotional financing), gift cards, direct
debit from a customer’s bank account, consumer invoicing, physical bank check,
and payment upon delivery. For existing and future payment options we offer to
our customers, we currently are subject to, and may become subject to
additional, regulations and compliance requirements (including obligations to
implement enhanced authentication

processes that could result in significant costs and reduce the ease of use of
our payments products), as well as fraud. For certain payment methods,
including credit and debit cards, we pay interchange and other fees, which may
increase over time and raise our operating costs and lower profitability. We
rely on third parties to provide certain Amazon-branded payment methods and
payment processing services, including the processing of credit cards, debit
cards, electronic checks, and promotional financing. In each case, it could
disrupt our business if these companies become unwilling or unable to provide
these services to us. We also offer co-branded credit card programs, which
could adversely affect our operating results if renewed on less favorable
terms or terminated. We are also subject to payment card association operating
rules, including data security rules, certification requirements, and rules
governing electronic funds transfers, which could change or be reinterpreted
to make it difficult or impossible for us to comply. Failure to comply with
these rules or requirements, as well as any breach, compromise, or failure to
otherwise detect or prevent fraudulent activity involving our data security
systems, could result in our being liable for card issuing banks’ costs,
subject to fines and higher transaction fees, and loss of our ability to
accept credit and debit card payments from our customers, process electronic
funds transfers, or facilitate other types of online payments, and our
business and operating results could be adversely affected.

In addition, we provide regulated services in certain jurisdictions because we
enable customers to keep account balances with us and transfer money to third
parties, and because we provide services to third parties to facilitate
payments on their behalf. Jurisdictions subject us to requirements for
licensing, regulatory inspection, bonding and capital maintenance, the use,
handling, and segregation of transferred funds, consumer disclosures,
maintaining or processing data, and authentication. We are also subject to or
voluntarily comply with a number of other laws and regulations relating to
payments, money laundering, international money transfers, privacy, data
protection, data security, network security, consumer protection, and
electronic fund transfers. If we were found to be in violation of applicable
laws or regulations, we could be subject to additional requirements and civil
and criminal penalties, or forced to cease providing certain services.

We Have a Rapidly Evolving Business Model and Our Stock Price Is Highly
Volatile

We have a rapidly evolving business model. The trading price of our common
stock fluctuates significantly in response to, among other risks, the risks
described elsewhere in this Item 1A, as well as:

•changes in interest rates;

•conditions or trends in the Internet and the industry segments we operate in;

•quarterly variations in operating results;

•fluctuations in the stock market in general and market prices for Internet-
related companies in particular;

•changes in financial estimates by us or decisions to increase or decrease
future spending or investment levels;

•changes in financial estimates and recommendations by securities analysts;

•changes in our capital structure, including issuance of additional debt or
equity to the public;

•changes in the valuation methodology of, or performance by, other e-commerce
or technology companies; and

•transactions in our common stock by major investors and certain analyst
reports, news, and speculation.

Volatility in our stock price could adversely affect our business and
financing opportunities and force us to increase our cash compensation to
employees or grant larger stock awards than we have historically, which could
hurt our operating results or reduce the percentage ownership of our existing
stockholders, or both.

Legal and Regulatory Risks

Government Regulation Is Evolving and Unfavorable Changes Could Harm Our
Business

We are subject to general business regulations and laws, as well as
regulations and laws specifically governing the Internet, physical,
e-commerce, and omnichannel retail, digital content, web services, electronic
devices, advertising, artificial intelligence technologies and services, and
other products and services that we offer or sell. These regulations and laws
cover taxation, privacy, data protection, data security, network security,
consumer protection, pricing, content, copyrights, distribution,
transportation, mobile communications, electronic device certification,
electronic waste, energy consumption, environmental regulation, electronic
contracts and other communications, competition, employment, trade and
protectionist measures, web services, the provision of online payment
services, registration, licensing, and information reporting requirements,
unencumbered Internet access to our services or access to our facilities, the
design and operation of websites, health, safety, and sanitation standards,
the characteristics, legality, and quality of products and services, product
labeling, the commercial operation of unmanned aircraft systems, and other
matters. It is not clear how existing laws governing issues such as property
ownership, libel, privacy, data protection, data security, network security,
and consumer protection apply to aspects of our operations such as the
Internet, e-commerce, digital content, web services, electronic devices,
advertising, and artificial

intelligence technologies and services. A large number of jurisdictions
regulate our operations, and the extent, nature, and scope of such regulations
is evolving and expanding as the scope of our businesses expand. We are
regularly subject to formal and informal reviews and investigations by
governments and regulatory authorities under existing laws, regulations, or
interpretations or pursuing new and novel approaches to regulate our
operations. For example, a number of regulators have opened investigations to
assess whether aspects of our operations violate competition rules.
Unfavorable regulations, laws, decisions, or interpretations by government or
regulatory authorities applying those laws and regulations, or inquiries,
investigations, or enforcement actions threatened or initiated by them, could
cause us to incur substantial costs, expose us to unanticipated civil and
criminal liability or penalties (including substantial monetary fines),
diminish the demand for, or availability of, our products and services,
increase our cost of doing business, require us to change our business
practices in a manner materially adverse to our business, damage our
reputation, impede our growth, or otherwise have a material effect on our
operations.

Claims, Litigation, Government Investigations, and Other Proceedings May
Adversely Affect Our Business and Results of Operations

As an innovative company offering a wide range of consumer and business
products and services around the world, we are regularly subject to actual and
threatened claims, litigation, reviews, investigations, and other proceedings,
including proceedings by governments and regulatory authorities, involving a
wide range of issues, including patent and other intellectual property
matters, taxes, labor and employment, competition and antitrust, privacy, data
protection, data security, network security, consumer protection, commercial
disputes, goods and services offered by us and by third parties, and other
matters. The number and scale of these proceedings have increased over time as
our businesses have expanded in scope and geographic reach and our products,
services, and operations have become more complex and available to, and used
by, more people. Any of these types of proceedings can have an adverse effect
on us because of legal costs, disruption of our operations, diversion of
management resources, negative publicity, and other factors. The outcomes of
these matters are inherently unpredictable and subject to significant
uncertainties. Determining legal reserves or possible losses from such matters
involves judgment and may not reflect the full range of uncertainties and
unpredictable outcomes. Until the final resolution of such matters, we may be
exposed to losses in excess of the amount recorded, and such amounts could be
material. Should any of our estimates and assumptions change or prove to have
been incorrect, it could have a material effect on our business, consolidated
financial position, results of operations, or cash flows. In addition, it is
possible that a resolution of one or more such proceedings, including as a
result of a settlement, could involve licenses, sanctions, consent decrees, or
orders requiring us to make substantial future payments, preventing us from
offering certain products or services, requiring us to change our business
practices in a manner materially adverse to our business, requiring
development of non-infringing or otherwise altered products or technologies,
damaging our reputation, or otherwise having a material effect on our
operations.

We Are Subject to Product Liability Claims When People or Property Are Harmed
by the Products We Sell or Manufacture

Some of the products we sell or manufacture expose us to product liability or
food safety claims relating to personal injury or illness, death, or
environmental or property damage, and can require product recalls or other
actions. Third parties who sell products using our services and stores also
expose us to product liability claims. Although we maintain liability
insurance, we cannot be certain that our coverage will be adequate for
liabilities actually incurred or that insurance will continue to be available
to us on economically reasonable terms, or at all. Although we impose
contractual terms on sellers that are intended to prohibit sales of certain
type of products, we may not be able to detect, enforce, or collect sufficient
damages for breaches of such agreements. In addition, some of our agreements
with our vendors and sellers do not indemnify us from product liability.

We Face Additional Tax Liabilities and Collection Obligations

We are subject to a variety of taxes and tax collection obligations in the
U.S. (federal and state) and numerous foreign jurisdictions. We may recognize
additional tax expense and be subject to additional tax liabilities, including
other liabilities for tax collection obligations due to changes in laws,
regulations, administrative practices, principles, and interpretations related
to tax, including changes to the global tax framework, competition, and other
laws and accounting rules in various jurisdictions. Such changes could come
about as a result of economic, political, and other conditions. An increasing
number of jurisdictions are considering or have adopted laws or administrative
practices that impose new tax measures, including revenue-based taxes,
targeting online commerce and the remote selling of goods and services. These
include new obligations to collect sales, consumption, value added, or other
taxes on online marketplaces and remote sellers, or other requirements that
may result in liability for third party obligations. For example, the European
Union, certain member states, and other countries have proposed or enacted
taxes on online advertising and marketplace service revenues. Our results of
operations and cash flows could be adversely effected by additional taxes of
this nature imposed on us prospectively or retroactively or additional taxes
or penalties resulting from the failure to comply with any collection
obligations or failure to provide information about our customers, suppliers,
and other third parties for tax reporting purposes to various government
agencies. In some cases we also may not have sufficient notice to enable us to
build systems and adopt processes to properly comply with new reporting or
collection obligations by the effective date.

Our tax expense and liabilities are also affected by other factors, such as
changes in our business operations, acquisitions, investments, entry into new
businesses and geographies, intercompany transactions, the relative amount of
our foreign earnings, losses incurred in jurisdictions for which we are not
able to realize related tax benefits, the applicability of special or
extraterritorial tax regimes, changes in foreign currency exchange rates,
changes in our stock price, changes to our forecasts of income and loss and
the mix of jurisdictions to which they relate, and changes in our tax assets
and liabilities and their valuation. In the ordinary course of our business,
there are many transactions and calculations for which the ultimate tax
determination is uncertain. Significant judgment is required in evaluating and
estimating our tax expense, assets, and liabilities.

We are also subject to tax controversies in various jurisdictions that can
result in tax assessments against us. Developments in an audit, investigation,
or other tax controversy can have a material effect on our operating results
or cash flows in the period or periods for which that development occurs, as
well as for prior and subsequent periods. We regularly assess the likelihood
of an adverse outcome resulting from these proceedings to determine the
adequacy of our tax accruals. Although we believe our tax estimates are
reasonable, the final outcome of audits, investigations, and any other tax
controversies could be materially different from our historical tax accruals.

We Are Subject to Risks Related to Government Contracts and Related
Procurement Regulations

Our contracts with U.S., as well as state, local, and foreign, government
entities are subject to various procurement regulations and other requirements
relating to their formation, administration, and performance. We are subject
to audits and investigations relating to our government contracts, and any
violations could result in various civil and criminal penalties and
administrative sanctions, including termination of contract, refunding or
suspending of payments, forfeiture of profits, payment of fines, and
suspension or debarment from future government business. In addition, some of
these contracts are subject to periodic funding approval and/or provide for
termination by the government at any time, without cause.

Item 1B. Unresolved Staff Comments  

None.

Item 2. Properties  

As of December 31, 2020, we operated the following facilities (in thousands):

(1)For leased properties, represents the total leased space excluding sub-
leased space.

(2)This includes 611 North America and 7 International stores as of December

(1)Segment amounts exclude corporate facilities. Shared facilities are
allocated among the segments based on usage and primarily relate to facilities
that hold our technology infrastructure. See Item 8 of Part II, “Financial
Statements and Supplementary Data — Note 10 — Segment Information.”

We own and lease our corporate headquarters in Seattle, Washington and
Arlington, Virginia.

Item 3. Legal Proceedings  

See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 —
Commitments and Contingencies — Legal Proceedings.”

Item 4. Mine Safety Disclosures  

Not applicable.

PART II

Item 5. Market for the Registrant’s Common Stock, Related Shareholder
Matters, and Issuer Purchases of Equity Securities  

Market Information

Our common stock is traded on the Nasdaq Global Select Market under the symbol
“AMZN.”

Holders

As of January 20, 2021, there were 6,330 shareholders of record of our common
stock, although there is a much larger number of beneficial owners.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

Item 6. Selected Consolidated Financial Data  

The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and the notes thereto
in Item 8 of Part II, “Financial Statements and Supplementary Data,” and the
information contained in Item 7 of Part II, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations.” Historical results
are not necessarily indicative of future results.

(1)We acquired Whole Foods Market on August 28, 2017. The results of Whole
Foods Market have been included in our results of operation from the date of
acquisition.

(2)For further discussion of earnings per share, see Item 8 of Part II,
“Financial Statements and Supplementary Data — Note 1 — Description of
Business, Accounting Policies, and Supplemental Disclosures”

(3)As a result of the adoption of new accounting guidance, we retrospectively
adjusted our consolidated statements of cash flows to add restricted cash to
cash and cash equivalents, which restated cash provided by operating
activities by $(69) million in 2016 and 2017.

(4)As a result of the adoption of new accounting guidance on January 1, 2019,
we recognized lease assets and liabilities for operating leases with terms of
more than twelve months. Prior period amounts were not adjusted and continue
to be reported in accordance with our historic accounting policies.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk  

We are exposed to market risk for the effect of interest rate changes, foreign
currency fluctuations, and changes in the market values of our investments.
Information relating to quantitative and qualitative disclosures about market
risk is set forth below and in Item 7 of Part II, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations — Liquidity and
Capital Resources.”

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to
our investment portfolio and our long-term debt. Our long-term debt is carried
at amortized cost and fluctuations in interest rates do not impact our
consolidated financial statements. However, the fair value of our debt, which
pays interest at a fixed rate, will generally fluctuate with movements of
interest rates, increasing in periods of declining rates of interest and
declining in periods of increasing rates of interest.

We generally invest our excess cash in AAA-rated money market funds and
investment grade short- to intermediate-term fixed income securities. Fixed
income securities may have their fair market value adversely affected due to a
rise in interest rates, and we may suffer losses in principal if forced to
sell securities that have declined in market value due to changes in interest
rates. The following table provides information about our cash equivalents and
marketable fixed income securities, including principal cash flows by expected
maturity and the related weighted-average interest rates as of December 31,
2020 (in millions, except percentages):

As of December 31, 2020, we had long-term debt with a face value of $33.2
billion, including the current portion, primarily consisting of fixed rate
unsecured senior notes. See Item 8 of Part II, “Financial Statements and
Supplementary Data — Note 6 — Debt” for additional information.

Foreign Exchange Risk

During 2020, net sales from our International segment accounted for 27% of our
consolidated revenues. Net sales and related expenses generated from our
internationally-focused stores, including within Canada and Mexico (which are
included in our North America segment), are primarily denominated in the
functional currencies of the corresponding stores and primarily include Euros,
British Pounds, and Japanese Yen. The results of operations of, and certain of
our intercompany balances associated with, our internationally-focused stores
and AWS are exposed to foreign exchange rate fluctuations. Upon consolidation,
as foreign exchange rates vary, net sales and other operating results may
differ materially from expectations, and we may record significant gains or
losses on the remeasurement of intercompany balances. For example, as a result
of fluctuations in foreign exchange rates throughout the year compared to
rates in effect the prior year, International segment net sales increased by
$1.7 billion in comparison with the prior year.

We have foreign exchange risk related to foreign-denominated cash, cash
equivalents, and marketable securities (“foreign funds”). Based on the balance
of foreign funds as of December 31, 2020, of $23.5 billion, an assumed 5%,
10%, and 20% adverse change to foreign exchange would result in fair value
declines of $1.2 billion, $2.4 billion, and $4.7 billion. Fluctuations in fair
value are recorded in “Accumulated other comprehensive income (loss),” a
separate component of stockholders’ equity. Equity securities with readily
determinable fair values are included in “Marketable securities” on our
consolidated balance sheets and are measured at fair value with changes
recognized in net income.

We have foreign exchange risk related to our intercompany balances denominated
in various foreign currencies. Based on the intercompany balances as of
December 31, 2020, an assumed 5%, 10%, and 20% adverse change to foreign
exchange rates would result in losses of $245 million, $485 million, and $970
million, recorded to “Other income (expense), net.”

See Item 7 of Part II, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Results of Operations — Effect of
Foreign Exchange Rates” for additional information on the effect on reported
results of changes in foreign exchange rates.

Equity Investment Risk

As of December 31, 2020, our recorded value in equity and equity warrant
investments in public and private companies was $6.9 billion. Our equity and
equity warrant investments in publicly traded companies represent $3.2 billion
of our investments as of December 31, 2020, and are recorded at fair value,
which is subject to market price volatility. We assess our equity investments
in private companies for impairment. Valuations of private companies are
inherently more complex due to the lack of readily available market data. The
current global economic climate provides additional uncertainty. As such, we
believe that market sensitivities are not practicable.

Item 8. Financial Statements and Supplementary Data  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page  

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

Consolidated Statements of Cash Flows

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Stockholders’ Equity

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Amazon.com, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Amazon.com,
Inc. (the Company) as of December 31, 2020 and 2019, and the related
consolidated statements of operations, comprehensive income, stockholders’
equity, and cash flows for each of the three years in the period ended
December 31, 2020 and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial
position of the Company at December 31, 2020 and 2019, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2020, in conformity with U.S. generally accepted accounting
principles.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the Company’s internal
control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control — Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (2013 framework) and
our report dated February 2, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on the
Company’s consolidated financial statements based on our audits. We are a
public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included
performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial
statements. We believe that our audits provide a reasonable basis for our
opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the
current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that:
(1) relates to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially challenging, subjective,
or complex judgments. The communication of the critical audit matter does not
alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts
or disclosures to which it relates.

Uncertain Tax Positions

Description of the Matter

The Company is subject to income taxes in the U.S. and numerous foreign
jurisdictions and, as discussed in Note 9 of the consolidated financial
statements, during the ordinary course of business, there are many tax
positions for which the ultimate tax determination is uncertain. As a result,
significant judgment is required in evaluating the Company’s tax positions and
determining its provision for income taxes. The Company uses significant
judgment in (1) determining whether a tax position’s technical merits are more
likely than not to be sustained and (2) measuring the amount of tax benefit
that qualifies for recognition. As of December 31, 2020, the Company accrued
liabilities of $2.8 billion for various tax contingencies.

Auditing the measurement of the Company’s tax contingencies was challenging
because the evaluation of whether a tax position is more likely than not to be
sustained and the measurement of the benefit of various tax positions can be
complex, involves significant judgment, and is based on interpretations of tax
laws and legal rulings.  

How We Addressed the Matter in Our Audit

We tested controls over the Company’s process to assess the technical merits
of its tax contingencies, including controls over the assessment as to whether
a tax position is more likely than not to be sustained, management’s process
to measure the benefit of its tax positions, and the development of the
related disclosures.

We involved our international tax, transfer pricing, and research and
development tax professionals in assessing the technical merits of certain of
the Company’s tax positions. Depending on the nature of the specific tax
position and, as applicable, developments with the relevant tax authorities
relating thereto, our procedures included obtaining and examining the
Company’s analysis including the Company’s correspondence with such tax
authorities and evaluating the underlying facts upon which the tax positions
are based. We used our knowledge of, and experience with, international,
transfer pricing, and other income tax laws by the relevant income tax
authorities to evaluate the Company’s accounting for its tax contingencies. We
evaluated developments in the applicable regulatory environments to assess
potential effects on the Company’s positions, including recent decisions in
relevant court cases. We analyzed the Company’s assumptions and data used to
determine the amount of tax benefits to recognize and tested the accuracy of
the Company’s calculations. We have also evaluated the Company’s income tax
disclosures included in Note 9 in relation to these matters.  

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1996.

Seattle, Washington

February 2, 2021

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions)

See accompanying notes to consolidated financial statements.

AMAZON.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — DESCRIPTION OF BUSINESS, ACCOUNTING POLICIES, AND SUPPLEMENTAL
DISCLOSURES

Description of Business

We seek to be Earth’s most customer-centric company. In each of our segments,
we serve our primary customer sets, consisting of consumers, sellers,
developers, enterprises, and content creators. We serve consumers through our
online and physical stores and focus on selection, price, and convenience. We
offer programs that enable sellers to grow their businesses, sell their
products in our stores, and fulfill orders through us, and programs that allow
authors, musicians, filmmakers, skill and app developers, and others to
publish and sell content. We serve developers and enterprises of all sizes
through AWS, which offers a broad set of on-demand technology services,
including compute, storage, database, analytics, and machine learning, and
other services. We also manufacture and sell electronic devices. In addition,
we provide services, such as advertising to sellers, vendors, publishers,
authors, and others, through programs such as sponsored ads, display, and
video advertising.

We have organized our operations into three segments: North America,
International, and AWS. See “Note 10 — Segment Information.”

Prior Period Reclassifications

Certain prior period amounts have been reclassified to conform to the current
period presentation. “Proceeds from short-term debt, and other” were
reclassified from “Proceeds from long-term debt and other” and “Repayments of
short-term debt, and other” were reclassified from “Repayments of long-term
debt and other” on our consolidated statements of cash flows.

Principles of Consolidation

The consolidated financial statements include the accounts of Amazon.com, Inc.
and its consolidated entities (collectively, the “Company”), consisting of its
wholly-owned subsidiaries and those entities in which we have a variable
interest and of which we are the primary beneficiary, including certain
entities in India and certain entities that support our seller lending
financing activities. Intercompany balances and transactions between
consolidated entities are eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires
estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses, and related disclosures of contingent
liabilities in the consolidated financial statements and accompanying notes.
Estimates are used for, but not limited to, income taxes, useful lives of
equipment, commitments and contingencies, valuation of acquired intangibles
and goodwill, stock-based compensation forfeiture rates, vendor funding,
inventory valuation, collectability of receivables, and valuation and
impairment of investments. Given the global economic climate and additional or
unforeseen effects from the COVID-19 pandemic, these estimates have become
more challenging, and actual results could differ materially from these
estimates.

We review the useful lives of equipment on an ongoing basis, and effective
January 1, 2020 we changed our estimate of the useful life for our servers
from three years to four years. The longer useful life is due to continuous
improvements in our hardware, software, and data center designs. The effect of
this change in estimate for the year ended December 31, 2020, based on servers
that were included in “Property and equipment, net” as of December 31, 2019
and those acquired during the year ended December 31, 2020, was a reduction in
depreciation and amortization expense of $2.7 billion and an increase in net
income of $2.0 billion, or $4.06 per basic share and $3.98 per diluted share.

Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in millions):

Earnings per Share

Basic earnings per share is calculated using our weighted-average outstanding
common shares. Diluted earnings per share is calculated using our weighted-
average outstanding common shares including the dilutive effect of stock
awards as determined under the treasury stock method. In periods when we have
a net loss, stock awards are excluded from our calculation of earnings per
share as their inclusion would have an antidilutive effect.

The following table shows the calculation of diluted shares (in millions):

Revenue

Revenue is measured based on the amount of consideration that we expect to
receive, reduced by estimates for return allowances, promotional discounts,
and rebates. Revenue also excludes any amounts collected on behalf of third
parties, including sales and indirect taxes. In arrangements where we have
multiple performance obligations, the transaction price is allocated to each
performance obligation using the relative stand-alone selling price. We
generally determine stand-alone selling prices based on the prices charged to
customers or using expected cost plus a margin.

A description of our principal revenue generating activities is as follows:

Retail sales - We offer consumer products through our online and physical
stores. Revenue is recognized when control of the goods is transferred to the
customer, which generally occurs upon our delivery to a third-party carrier
or, in the case of an Amazon delivery, to the customer.

Third-party seller services - We offer programs that enable sellers to sell
their products in our stores, and fulfill orders through us. We are not the
seller of record in these transactions. The commissions and any related
fulfillment and shipping fees we earn from these arrangements are recognized
when the services are rendered, which generally occurs upon delivery of the
related products to a third-party carrier or, in the case of an Amazon
delivery, to the customer.

Subscription services - Our subscription sales include fees associated with
Amazon Prime memberships and access to content including digital video,
audiobooks, digital music, e-books, and other non-AWS subscription services.
Prime memberships provide our customers with access to an evolving suite of
benefits that represent a single stand-ready obligation. Subscriptions are
paid for at the time of or in advance of delivering the services. Revenue from
such arrangements is recognized over the subscription period.

AWS - Our AWS arrangements include global sales of compute, storage,
database, and other services. Revenue is allocated to services using stand-
alone selling prices and is primarily recognized when the customer uses these
services, based on the quantity of services rendered, such as compute or
storage capacity delivered on-demand. Certain services, including compute and
database, are also offered as a fixed quantity over a specified term, for
which revenue is recognized ratably. Sales commissions we pay in connection
with contracts that exceed one year are capitalized and amortized over the
contract term.

Other - Other revenue primarily includes sales of advertising services, which
are recognized as ads are delivered based on the number of clicks or
impressions.

Return Allowances

Return allowances, which reduce revenue and cost of sales, are estimated using
historical experience. Liabilities for return allowances are included in
“Accrued expenses and other” and were $623 million, $712 million, and $859
million as of December 31, 2018, 2019, and 2020. Additions to the allowance
were $2.3 billion, $2.5 billion, and $3.5 billion and deductions from the
allowance were $2.3 billion, $2.5 billion, and $3.6 billion in 2018, 2019, and
2020. Included in “Inventories” on our consolidated balance sheets are assets
totaling $519 million, $629 million, and $852 million as of December 31, 2018,
2019, and 2020, for the rights to recover products from customers associated
with our liabilities for return allowances.

Cost of Sales

Cost of sales primarily consists of the purchase price of consumer products,
inbound and outbound shipping costs, including costs related to sortation and
delivery centers and where we are the transportation service provider, and
digital media content costs where we record revenue gross, including video and
music. Shipping costs to receive products from our suppliers are included in
our inventory, and recognized as cost of sales upon sale of products to our
customers. Payment processing and related transaction costs, including those
associated with seller transactions, are classified in “Fulfillment” on our
consolidated statements of operations.

Vendor Agreements

We have agreements with our vendors to receive consideration primarily for
cooperative marketing efforts, promotions, incentives, and volume rebates. We
generally consider these amounts received from vendors to be a reduction of
the prices we pay for their goods, including property and equipment, or
services, and are recorded as a reduction of the cost of inventory, cost of
services, or cost of property and equipment. Volume rebates typically depend
on reaching minimum purchase thresholds. We evaluate the likelihood of
reaching purchase thresholds using past experience and current year forecasts.
When volume rebates can be reasonably estimated, we record a portion of the
rebate as we make progress towards the purchase threshold.

Fulfillment

Fulfillment costs primarily consist of those costs incurred in operating and
staffing our North America and International segments’ fulfillment centers,
physical stores, and customer service centers, including costs attributable to
buying, receiving, inspecting, and warehousing inventories; picking,
packaging, and preparing customer orders for shipment; payment processing and
related transaction costs, including costs associated with our guarantee for
certain seller transactions; responding to inquiries from customers; and
supply chain management for our manufactured electronic devices. Fulfillment
costs also include amounts paid to third parties that assist us in fulfillment
and customer service operations.

Technology and Content

Technology and content costs include payroll and related expenses for
employees involved in the research and development of new and existing
products and services, development, design, and maintenance of our stores,
curation and display of products and services made available in our online
stores, and infrastructure costs. Infrastructure costs include servers,
networking equipment, and data center related depreciation and amortization,
rent, utilities, and other expenses necessary to support AWS and other Amazon
businesses. Collectively, these costs reflect the investments we make in order
to offer a wide variety of products and services to our customers. Technology
and content costs are generally expensed as incurred.

Marketing

Marketing costs primarily consist of advertising and payroll and related
expenses for personnel engaged in marketing and selling activities, including
sales commissions related to AWS. We pay commissions to third parties when
their customer referrals result in sales. We also participate in cooperative
advertising arrangements with certain of our vendors, and other third parties.

Advertising and other promotional costs to market our products and services
are expensed as incurred and were $8.2 billion, $11.0 billion, and $10.9
billion in 2018, 2019, and 2020.

General and Administrative

General and administrative expenses primarily consist of costs for corporate
functions, including payroll and related expenses; facilities and equipment
expenses, such as depreciation and amortization expense and rent; and
professional fees and litigation costs.

Stock-Based Compensation

Compensation cost for all equity-classified stock awards expected to vest is
measured at fair value on the date of grant and recognized over the service
period. The fair value of restricted stock units is determined based on the
number of shares granted and the quoted price of our common stock. Such value
is recognized as expense over the service period, net of estimated
forfeitures, using the accelerated method. The estimated number of stock
awards that will ultimately vest requires judgment, and to the extent actual
results or updated estimates differ from our current estimates, such amounts
will be recorded as a cumulative adjustment in the period estimates are
revised. We consider many factors when estimating expected forfeitures,
including historical forfeiture experience and employee level. Additionally,
stock-based compensation includes stock appreciation rights that are expected
to settle in cash. These liability-classified awards are remeasured to fair
value at the end of each reporting period until settlement or expiration.

Other Operating Expense (Income), Net

Other operating expense (income), net, consists primarily of a benefit from
accelerated vesting of warrants to acquire equity of a vendor in Q4 2020,
offset by a lease impairment in Q2 2020 and the amortization of intangible
assets.

Other Income (Expense), Net

Other income (expense), net, consists primarily of valuations and adjustments
of equity securities of $145 million, $231 million, and $833 million in 2018,
2019, and 2020, equity warrant valuation gains (losses) of $(131) million, $11
million, and $1.5 billion in 2018, 2019, and 2020, and foreign currency gains
(losses) of $(206) million, $(20) million, and $35 million in 2018, 2019, and

During the period from January 1, 2021 to February 2, 2021, we expect to
record upward adjustments relating to equity investments in private companies
of approximately $1.5 billion. In addition, for this same period, our equity
and equity warrant investments in public companies, which are subject to
volatility based on changes in market prices, have experienced gains of
approximately $1.5 billion based on available trading prices.

Income Taxes

Income tax expense includes U.S. (federal and state) and foreign income taxes.
Certain foreign subsidiary earnings and losses are subject to current U.S.
taxation and the subsequent repatriation of those earnings is not subject to
tax in the U.S. We intend to invest substantially all of our foreign
subsidiary earnings, as well as our capital in our foreign subsidiaries,
indefinitely outside of the U.S. in those jurisdictions in which we would
incur significant, additional costs upon repatriation of such amounts.

Deferred income tax balances reflect the effects of temporary differences
between the carrying amounts of assets and liabilities and their tax bases, as
well as net operating loss and tax credit carryforwards, and are stated at
enacted tax rates expected to be in effect when taxes are actually paid or
recovered.

Deferred tax assets represent amounts available to reduce income taxes payable
in future periods. Deferred tax assets are evaluated for future realization
and reduced by a valuation allowance to the extent we believe they will not be
realized. We consider many factors when assessing the likelihood of future
realization of our deferred tax assets, including our recent cumulative loss
experience and expectations of future earnings, capital gains and investment
in such jurisdiction, the carry-forward periods available to us for tax
reporting purposes, and other relevant factors. The effects of the COVID-19
pandemic on our business make estimates of future earnings in relevant
jurisdictions more challenging.

We utilize a two-step approach to recognizing and measuring uncertain income
tax positions (tax contingencies). The first step is to evaluate the tax
position for recognition by determining if the weight of available evidence
indicates it is more likely than not the position will be sustained on audit,
including resolution of related appeals or litigation processes. The second
step is to measure the tax benefit as the largest amount which is more than
50% likely of being realized upon ultimate settlement. We consider many
factors when evaluating our tax positions and estimating our tax benefits,
which may require periodic adjustments and which may not accurately forecast
actual outcomes. We include interest and penalties related to our tax
contingencies in income tax expense.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date. To increase the comparability of fair
value measures, the following hierarchy prioritizes the inputs to valuation
methodologies used to measure fair value:

Level 1 — Valuations based on quoted prices for identical assets and
liabilities in active markets.

Level 2 — Valuations based on observable inputs other than quoted prices
included in Level 1, such as quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and
liabilities in markets that are not active, or other inputs that are
observable or can be corroborated by observable market data.

Level 3 — Valuations based on unobservable inputs reflecting our own
assumptions, consistent with reasonably available assumptions made by other
market participants. These valuations require significant judgment.

We measure the fair value of money market funds and certain marketable equity
securities based on quoted prices in active markets for identical assets or
liabilities. Other marketable securities were valued either based on recent
trades of securities in inactive markets or based on quoted market prices of
similar instruments and other significant inputs derived from or corroborated
by observable market data. We did not hold significant amounts of marketable
securities categorized as Level 3 assets as of December 31, 2019 and 2020.

We hold equity warrants giving us the right to acquire stock of other
companies. As of December 31, 2019 and 2020, these warrants had a fair value
of $669 million and $3.0 billion, and are recorded within “Other assets” on
our consolidated balance sheets with gains and losses recognized in “Other
income (expense), net” on our consolidated statements of operations. These
warrants are primarily classified as Level 2 assets.

Cash and Cash Equivalents

We classify all highly liquid instruments with an original maturity of three
months or less as cash equivalents.

Inventories

Inventories, consisting of products available for sale, are primarily
accounted for using the first-in, first-out method, and are valued at the
lower of cost and net realizable value. This valuation requires us to make
judgments, based on currently available information, about the likely method
of disposition, such as through sales to individual customers, returns to
product vendors, or liquidations, and expected recoverable values of each
disposition category. The inventory valuation allowance, representing a write-
down of inventory, was $1.6 billion and $2.3 billion as of December 31, 2019
and 2020.

We provide Fulfillment by Amazon services in connection with certain of our
sellers’ programs. Third-party sellers maintain ownership of their inventory,
regardless of whether fulfillment is provided by us or the third-party
sellers, and therefore these products are not included in our inventories.

We also purchase electronic device components from a variety of suppliers and
use several contract manufacturers to provide manufacturing services for our
products. During the normal course of business, in order to manage
manufacturing lead times and help ensure adequate supply, we enter into
agreements with contract manufacturers and suppliers for certain electronic
device components. A portion of our reported purchase commitments arising from
these agreements consists of firm, non-cancellable commitments. These
commitments are based on forecasted customer demand. If we reduce these
commitments, we may incur additional costs. We also have firm, non-cancellable
commitments for certain products offered in our Whole Foods Market stores.

Accounts Receivable, Net and Other

Included in “Accounts receivable, net and other” on our consolidated balance
sheets are amounts primarily related to customers, vendors, and sellers. As of
December 31, 2019 and 2020, customer receivables, net, were $12.6 billion and
$14.8 billion, vendor receivables, net, were $4.2 billion and $4.8 billion,
and seller receivables, net, were $863 million and $381 million. Seller
receivables are amounts due from sellers related to our seller lending
program, which provides funding to sellers primarily to procure inventory.

We estimate losses on receivables based on expected losses, including our
historical experience of actual losses. Receivables are considered impaired
and written-off when it is probable that all contractual payments due will not
be collected in accordance with the terms of the agreement. The allowance for
doubtful accounts was $495 million, $718 million, and $1.1 billion as of
December 31, 2018, 2019, and 2020. Additions to the allowance were $878
million, $1.0 billion, and $1.4 billion, and deductions to the allowance were
$731 million, $793 million, and $1.0 billion in 2018, 2019, and 2020.

Software Development Costs

We incur software development costs related to products to be sold, leased, or
marketed to external users, internal-use software, and our websites. Software
development costs capitalized were not significant for the years presented.
All other costs, including those related to design or maintenance, are
expensed as incurred.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and
amortization. Incentives that we receive from property and equipment vendors
are recorded as a reduction to our costs. Property includes buildings and land
that we own, along with property we have acquired under build-to-suit lease
arrangements when we have control over the building during the construction
period and finance lease arrangements. Equipment includes assets such as
servers and networking equipment, heavy equipment, and other fulfillment
equipment. Depreciation and amortization is recorded on a straight-line basis
over the estimated useful lives of the assets (generally the lesser of 40
years or the remaining life of the underlying building, three years prior to
January 1, 2020 and four years subsequent to January 1, 2020 for our servers,
five years for networking equipment, ten years for heavy equipment, and three
to ten years for other fulfillment equipment). Depreciation and amortization
expense is classified within the corresponding operating expense categories on
our consolidated statements of operations.

Leases

We categorize leases with contractual terms longer than twelve months as
either operating or finance. Finance leases are generally those leases that
allow us to substantially utilize or pay for the entire asset over its
estimated life. Assets acquired under finance leases are recorded in “Property
and equipment, net.” All other leases are categorized as operating leases. Our
leases generally have terms that range from one to ten years for equipment and
one to twenty years for property.

Certain lease contracts include obligations to pay for other services, such as
operations and maintenance. For leases of property, we account for these other
services as a component of the lease. For substantially all other leases, the
services are accounted for separately and we allocate payments to the lease
and other services components based on estimated stand-alone prices.

Lease liabilities are recognized at the present value of the fixed lease
payments, reduced by landlord incentives using a discount rate based on
similarly secured borrowings available to us. Lease assets are recognized
based on the initial present value of the fixed lease payments, reduced by
landlord incentives, plus any direct costs from executing the leases or lease
prepayments reclassified from “Other assets” upon lease commencement.
Leasehold improvements are capitalized at cost and amortized over the lesser
of their expected useful life or the lease term.

When we have the option to extend the lease term, terminate the lease before
the contractual expiration date, or purchase the leased asset, and it is
reasonably certain that we will exercise the option, we consider the option in
determining the classification and measurement of the lease. Our leases may
include variable payments based on measures that include changes in price
indices, market interest rates, or the level of sales at a physical store,
which are expensed as incurred.

Costs associated with operating lease assets are recognized on a straight-line
basis within operating expenses over the term of the lease. Finance lease
assets are amortized within operating expenses on a straight-line basis over
the shorter of the estimated useful lives of the assets or, in the instance
where title does not transfer at the end of the lease term, the lease term.
The interest component of a finance lease is included in interest expense and
recognized using the effective interest method over the lease term.

We establish assets and liabilities for the present value of estimated future
costs to retire long-lived assets at the termination or expiration of a lease.
Such assets are amortized over the lease period into operating expense, and
the recorded liabilities are accreted to the future value of the estimated
retirement costs.

Financing Obligations

We record assets and liabilities for estimated construction costs under build-
to-suit lease arrangements when we have control over the building during the
construction period. If we continue to control the building after the
construction period, the arrangement is classified as a financing obligation
instead of a lease. The building is depreciated over the shorter of its useful
life or the term of the obligation.

If we do not control the building after the construction period ends, the
assets and liabilities for construction costs are derecognized, and we
classify the lease as either operating or finance.

Goodwill and Indefinite-Lived Intangible Assets

We evaluate goodwill and indefinite-lived intangible assets for impairment
annually or more frequently when an event occurs or circumstances change that
indicate the carrying value may not be recoverable. We may elect to utilize a
qualitative assessment to evaluate whether it is more likely than not that the
fair value of a reporting unit or indefinite-lived intangible asset is less
than its carrying value and if so, we perform a quantitative test. We compare
the carrying value of each reporting unit and indefinite-lived intangible
asset to its estimated fair value and if the fair value is determined to be
less than the carrying value, we recognize an impairment loss for the
difference. We estimate the fair value of the reporting units using discounted
cash flows. Forecasts of future cash flows are based on our best estimate of
future net sales and operating expenses, based primarily on expected category
expansion, pricing, market segment share, and general economic conditions.

We completed the required annual impairment test of goodwill for all reporting
units and indefinite-lived intangible assets as of April 1, 2020, resulting in
no impairments. The fair value of our reporting units substantially exceeded
their carrying value. There were no events that caused us to update our annual
impairment test. See “Note 5 — Acquisitions, Goodwill, and Acquired Intangible
Assets.”

Other Assets

Included in “Other assets” on our consolidated balance sheets are amounts
primarily related to video and music content, net of accumulated amortization;
acquired intangible assets, net of accumulated amortization; certain equity
investments; equity warrant assets; long-term deferred tax assets; and lease
prepayments made prior to lease commencement.

Digital Video and Music Content

We obtain video content, inclusive of episodic television and movies, and
music content for customers through licensing agreements that have a wide
range of licensing provisions including both fixed and variable payment
schedules. When the license fee for a specific video or music title is
determinable or reasonably estimable and the content is available to us, we
recognize an asset and a corresponding liability for the amounts owed. We
reduce the liability as payments are made and we amortize the asset to “Cost
of sales” on an accelerated basis, based on estimated usage or viewing
patterns, or on a straight-line basis. If the licensing fee is not
determinable or reasonably estimable, no asset or liability is recorded and
licensing costs are expensed as incurred. We also develop original video
content for which the production costs are capitalized and amortized to “Cost
of sales” predominantly on an accelerated basis that follows the viewing
patterns associated with the content. The weighted average remaining life of
our capitalized video content is 2.5 years.

Our produced and licensed video content is primarily monetized together as a
unit, referred to as a film group, in each major geography where we offer
Amazon Prime memberships. These film groups are evaluated for impairment
whenever an event occurs or circumstances change indicating the fair value is
less than the carrying value. The total capitalized costs of video, which is
primarily released content, and music as of December 31, 2019 and 2020 were
$5.8 billion and $6.8 billion. Total video and music expense was $7.8 billion
and $11.0 billion for the year ended December 31, 2019 and 2020. Total video
and music expense includes licensing and production costs associated with
content offered within Amazon Prime memberships, and costs associated with
digital subscriptions and sold or rented content.

Investments

We generally invest our excess cash in AAA-rated money market funds and
investment grade short- to intermediate-term fixed income securities. Such
investments are included in “Cash and cash equivalents” or “Marketable
securities” on the accompanying consolidated balance sheets.

Marketable debt securities are classified as available-for-sale and reported
at fair value with unrealized gains and losses included in “Accumulated other
comprehensive income (loss).” Each reporting period, we evaluate whether
declines in fair value below carrying value are due to expected credit losses,
as well as our ability and intent to hold the investment until a forecasted
recovery occurs. Expected credit losses are recorded as an allowance through
“Other income (expense), net” on our consolidated statements of operations.

Equity investments in private companies for which we do not have the ability
to exercise significant influence are accounted for at cost, with adjustments
for observable changes in prices or impairments, and are classified as “Other
assets” on our consolidated balance sheets with adjustments recognized in
“Other income (expense), net” on our consolidated statements of operations.
Each reporting period, we perform a qualitative assessment to evaluate whether
the investment is impaired. Our assessment includes a review of recent
operating results and trends, recent sales/acquisitions of the investee
securities, and other publicly available data. If the investment is impaired,
we write it down to its estimated fair value. As of December 31, 2019 and
2020, these investments had a carrying value of $1.5 billion and $2.7 billion.

Equity investments are accounted for using the equity method of accounting if
the investment gives us the ability to exercise significant influence, but not
control, over an investee. Equity-method investments are included within
“Other assets” on our consolidated balance sheets. Our share of the earnings
or losses as reported by equity-method investees, amortization of basis
differences, related gains or losses, and impairments, if any, are recognized
in “Equity-method investment activity, net of tax” on our consolidated
statements of operations. Each reporting period, we evaluate whether declines
in fair value below carrying value are other-than-temporary and if so, we
write down the investment to its estimated fair value.

Equity investments that have readily determinable fair values are included in
“Marketable securities” on our consolidated balance sheets and measured at
fair value with changes recognized in “Other income (expense), net” on our
consolidated statements of operations.

Long-Lived Assets

Long-lived assets, other than goodwill and indefinite-lived intangible assets,
are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets might not be recoverable.
Conditions that would necessitate an impairment assessment include a
significant decline in the observable market value of an asset, a significant
change in the extent or manner in which an asset is used, or any other
significant adverse change that would indicate that the carrying amount of an
asset or group of assets may not be recoverable.

For long-lived assets used in operations, including lease assets, impairment
losses are only recorded if the asset’s carrying amount is not recoverable
through its undiscounted, probability-weighted future cash flows. We measure
the impairment loss based on the difference between the carrying amount and
estimated fair value. Long-lived assets are considered held for sale when
certain criteria are met, including when management has committed to a plan to
sell the asset, the asset is available for sale in its immediate condition,
and the sale is probable within one year of the reporting date. Assets held
for sale are reported at the lower of cost or fair value less costs to sell.
Assets held for sale were not significant as of December 31, 2019 and 2020.

Accrued Expenses and Other

Included in “Accrued expenses and other” on our consolidated balance sheets
are liabilities primarily related to leases and asset retirement obligations,
payroll and related expenses, tax-related liabilities, unredeemed gift cards,
customer liabilities, current debt, acquired digital media content, and other
operating expenses.

As of December 31, 2019 and 2020, our liabilities for payroll related expenses
were $4.3 billion and $7.6 billion and our liabilities for unredeemed gift
cards were $3.3 billion and $4.7 billion. We reduce the liability for a gift
card when redeemed by a customer. The portion of gift cards that we do not
expect to be redeemed is recognized based on customer usage patterns.

Unearned Revenue

Unearned revenue is recorded when payments are received or due in advance of
performing our service obligations and is recognized over the service period.
Unearned revenue primarily relates to prepayments of AWS services and Amazon
Prime memberships. Our total unearned revenue as of December 31, 2019 was
$10.2 billion, of which $7.9 billion was recognized as revenue during the year
ended December 31, 2020 and our total unearned revenue as of December 31, 2020
was $11.6 billion. Included in “Other long-term liabilities” on our
consolidated balance sheets was $2.0 billion and $1.9 billion of unearned
revenue as of December 31, 2019 and 2020.

Additionally, we have performance obligations, primarily related to AWS,
associated with commitments in customer contracts for future services that
have not yet been recognized in our financial statements. For contracts with
original terms that exceed one year, those commitments not yet recognized were
$50.0 billion as of December 31, 2020. The weighted average remaining life of
our long-term contracts is 3.4 years. However, the amount and timing of
revenue recognition is largely driven by customer usage, which can extend
beyond the original contractual term.

Other Long-Term Liabilities

Included in “Other long-term liabilities” on our consolidated balance sheets
are liabilities primarily related to financing obligations, asset retirement
obligations, deferred tax liabilities, unearned revenue, tax contingencies,
and digital video and music content.

Foreign Currency

We have internationally-focused stores for which the net sales generated, as
well as most of the related expenses directly incurred from those operations,
are denominated in local functional currencies. The functional currency of our
subsidiaries that either operate or support these stores is generally the same
as the local currency. Assets and liabilities of these subsidiaries are
translated into U.S. Dollars at period-end foreign exchange rates, and
revenues and expenses are translated at average rates

prevailing throughout the period. Translation adjustments are included in
“Accumulated other comprehensive income (loss),” a separate component of
stockholders’ equity, and in the “Foreign currency effect on cash, cash
equivalents, and restricted cash,” on our consolidated statements of cash
flows. Transaction gains and losses including intercompany transactions
denominated in a currency other than the functional currency of the entity
involved are included in “Other income (expense), net” on our consolidated
statements of operations. In connection with the settlement and remeasurement
of intercompany balances, we recorded gains (losses) of $(186) million, $95
million, and $118 million in 2018, 2019, and 2020.

Note 2 — FINANCIAL INSTRUMENTS

Cash, Cash Equivalents, Restricted Cash, and Marketable Securities

As of December 31, 2019 and 2020, our cash, cash equivalents, restricted cash,
and marketable securities primarily consisted of cash, AAA-rated money market
funds, U.S. and foreign government and agency securities, and other investment
grade securities. Cash equivalents and marketable securities are recorded at
fair value. The following table summarizes, by major security type, our cash,
cash equivalents, restricted cash, and marketable securities that are measured
at fair value on a recurring basis and are categorized using the fair value
hierarchy (in millions):

(1)The related unrealized gain (loss) recorded in “Other income (expense),
net” was $448 million for the year ended December 31, 2020.

(2)We are required to pledge or otherwise restrict a portion of our cash, cash
equivalents, and marketable securities as collateral for real estate leases,
amounts due to third-party sellers in certain jurisdictions, debt, and standby
and trade letters of credit. We classify cash, cash equivalents, and
marketable securities with use restrictions of less than twelve months as
“Accounts receivable, net and other” and of twelve months or longer as non-
current “Other assets” on our consolidated balance sheets. See “Note 7 —
Commitments and Contingencies.”

The following table summarizes gross gains and gross losses realized on sales
of available-for-sale fixed income marketable securities (in millions):

The following table summarizes the remaining contractual maturities of our
cash equivalents and marketable fixed income securities as of December 31,
2020 (in millions):

Actual maturities may differ from the contractual maturities because borrowers
may have certain prepayment conditions.

Consolidated Statements of Cash Flows Reconciliation

The following table provides a reconciliation of the amount of cash, cash
equivalents, and restricted cash reported within the consolidated balance
sheets to the total of the same such amounts shown in the consolidated
statements of cash flows (in millions):

Note 3 — PROPERTY AND EQUIPMENT

Property and equipment, at cost, consisted of the following (in millions):

(1)Includes the original cost and accumulated depreciation of fully-
depreciated assets.

Depreciation and amortization expense on property and equipment was $12.1
billion, $15.1 billion, and $16.2 billion which includes amortization of
property and equipment acquired under finance leases of $7.3 billion, $10.1
billion, and $8.5 billion for 2018, 2019, and 2020.

Note 4 — LEASES

Gross assets acquired under finance leases, inclusive of those where title
transfers at the end of the lease, are recorded in “Property and equipment,
net” and were $57.4 billion and $68.1 billion as of December 31, 2019 and
2020. Accumulated amortization associated with finance leases was $30.0
billion and $36.5 billion as of December 31, 2019 and 2020.

Lease cost recognized in our consolidated statements of operations is
summarized as follows (in millions):

Other information about lease amounts recognized in our consolidated financial
statements is as follows:

Our lease liabilities were as follows (in millions):

Note 5 — ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS

2018 Acquisition Activity

On April 12, 2018, we acquired Ring Inc. for cash consideration of
approximately $839 million, net of cash acquired, and on September 11, 2018,
we acquired PillPack, Inc. for cash consideration of approximately $753
million, net of cash acquired, to expand our product and service offerings.
During 2018, we also acquired certain other companies for an aggregate
purchase price of $57 million.

2019 Acquisition Activity

During 2019, we acquired certain companies for an aggregate purchase price of
$315 million, net of cash acquired.

2020 Acquisition Activity

During 2020, we acquired certain companies for an aggregate purchase price of
$1.2 billion, net of cash acquired, of which $1.1 billion was capitalized to
in-process research and development intangible assets (“IPR&D”).

The primary reason for all acquisitions was to acquire technologies and know-
how to enable Amazon to serve customers more effectively. Acquisition-related
costs were expensed as incurred.

Pro forma results of operations have not been presented because the effects of
2020 acquisitions, individually and in the aggregate, were not material to our
consolidated results of operations.

Goodwill

The goodwill of the acquired companies is primarily related to expected
improvements in technology performance and functionality, as well as sales
growth from future product and service offerings and new customers, together
with certain intangible assets that do not qualify for separate recognition.
The goodwill of the acquired companies is generally not deductible for tax
purposes. The following summarizes our goodwill activity in 2019 and 2020 by
segment (in millions):

(1)Primarily includes changes in foreign exchange rates.

Intangible Assets

Acquired identifiable intangible assets are valued primarily by using
discounted cash flows. These assets are included within “Other assets” on our
consolidated balance sheets and consist of the following (in millions):

(1)Excludes the original cost and accumulated amortization of fully-amortized
intangibles.

(2)Finite-lived intangible assets have estimated useful lives of between one
and twenty-five years, and are being amortized to operating expenses on a
straight-line basis.

(3)Intangible assets acquired in a business combination that are in-process
and used in research and development activities are considered indefinite-
lived until the completion or abandonment of the research and development
efforts. Once the research and development efforts are completed, we determine
the useful life and begin amortizing the assets.

Amortization expense for acquired finite-lived intangibles was $475 million,
$565 million, and $509 million in 2018, 2019, and 2020. Expected future
amortization expense of acquired finite-lived intangible assets as of December
31, 2020 is as follows (in millions):

Note 6 — DEBT

As of December 31, 2020, we had $32.2 billion of unsecured senior notes
outstanding (the “Notes”), including $10.0 billion issued in June 2020 for
general corporate purposes. We also have other long-term debt and borrowings
under our credit facility of $1.6 billion and $924 million as of December 31,
2019 and 2020. Our total long-term debt obligations are as follows (in
millions):

(1)The weighted average remaining lives of the 2012, 2014, 2017, and 2020
Notes were 1.9, 11.8, 16.2, and 18.7 years as of December 31, 2020. The
combined weighted average remaining life of the Notes was 15.8 years as of
December 31, 2020.

Interest on the Notes is payable semi-annually in arrears. We may redeem the
Notes at any time in whole, or from time to time, in part at specified
redemption prices. We are not subject to any financial covenants under the
Notes. The estimated fair value of the Notes was approximately $26.2 billion
and $37.7 billion as of December 31, 2019 and 2020, which is based on quoted
prices for our debt as of those dates.

In October 2016, we entered into a $500 million secured revolving credit
facility with a lender that is secured by certain seller receivables, which we
subsequently increased to $740 million and may from time to time increase in
the future subject to lender approval (the “Credit Facility”). The Credit
Facility is available until October 2022, bears interest at the London
interbank offered rate (“LIBOR”) plus 1.40%, and has a commitment fee of 0.50%
on the undrawn portion. There were $740 million and $338 million of borrowings
outstanding under the Credit Facility as of December 31, 2019 and 2020, which
had a weighted-average interest rate of 3.4% and 3.0%, respectively. As of
December 31, 2019 and 2020, we have pledged $852 million and $398 million of
our cash and seller receivables as collateral for debt related to our Credit
Facility. The estimated fair value of the Credit Facility, which is based on
Level 2 inputs, approximated its carrying value as of December 31, 2019 and

Other long-term debt, including the current portion, had a weighted-average
interest rate of 4.1% and 2.9% as of December 31, 2019 and 2020. We used the
net proceeds from the issuance of this debt primarily to fund certain business
operations. The estimated fair value of other long-term debt, which is based
on Level 2 inputs, approximated its carrying value as of December 31, 2019 and

As of December 31, 2020, future principal payments for our total long-term
debt were as follows (in millions):

In April 2018, we established a commercial paper program (the “Commercial
Paper Program”) under which we may from time to time issue unsecured
commercial paper up to a total of $7.0 billion at any time, with individual
maturities that may vary but will not exceed 397 days from the date of issue.
In June 2020, we increased the size of the Commercial Paper Program to $10.0
billion. There were no borrowings outstanding under the Commercial Paper
Program as of December 31, 2019. There were $725 million of borrowings
outstanding under the Commercial Paper Program as of December 31, 2020, which
are included in “Accrued expenses and other” on our consolidated balance
sheets and have a weighted average effective interest rate, including issuance
costs, of 0.11%. We use the net proceeds from the issuance of commercial paper
for general corporate purposes.

In April 2018, in connection with our Commercial Paper Program, we amended and
restated our unsecured revolving credit facility (the “Credit Agreement”) with
a syndicate of lenders to increase our borrowing capacity thereunder to $7.0
billion. In June 2020, we further amended and restated the Credit Agreement to
extend the term to June 2023, and it may be extended for up to three
additional one-year terms if approved by the lenders. The interest rate
applicable to outstanding balances under the amended and restated Credit
Agreement is LIBOR plus 0.50%, with a commitment fee of 0.04% on the undrawn
portion of the credit facility. There were no borrowings outstanding under the
Credit Agreement as of December 31, 2019 and 2020.

We also utilize other short-term credit facilities for working capital
purposes. These amounts are included in “Accrued expenses and other” on our
consolidated balance sheets. In addition, we had $5.1 billion of unused
letters of credit as of December 31, 2020.

Note 7 — COMMITMENTS AND CONTINGENCIES

Commitments

We have entered into non-cancellable operating and finance leases and
financing obligations for equipment and office, fulfillment, sortation,
delivery, data center, physical store, and renewable energy facilities.

The following summarizes our principal contractual commitments, excluding open
orders for purchases that support normal operations and are generally
cancellable, as of December 31, 2020 (in millions):

(1)Includes unconditional purchase obligations related to certain products
offered in our Whole Foods Market stores and long-term agreements to acquire
and license digital media content that are not reflected on the consolidated
balance sheets. For those digital media content agreements with variable
terms, we do not estimate the total obligation beyond any minimum quantities
and/or pricing as of the reporting date. Purchase obligations associated with
renewal provisions solely at the option of the content provider are included
to the extent such commitments are fixed or a minimum amount is specified.

(2)Includes the estimated timing and amounts of payments for rent and tenant
improvements associated with build-to-suit lease arrangements that are under
construction, asset retirement obligations, and liabilities associated with
digital media content agreements with initial terms greater than one year.

(3)Excludes approximately $2.8 billion of accrued tax contingencies for which
we cannot make a reasonably reliable estimate of the amount and period of
payment, if any.

Pledged Assets

As of December 31, 2019 and 2020, we have pledged or otherwise restricted $994
million and $875 million of our cash, cash equivalents, and marketable
securities, and certain property and equipment as collateral for real estate
leases, amounts due to third-party sellers in certain jurisdictions, debt, and
standby and trade letters of credit. Additionally, we have pledged our cash
and seller receivables for debt related to our Credit Facility. See “Note 6 —
Debt.”

Suppliers

During 2020, no vendor accounted for 10% or more of our purchases. We
generally do not have long-term contracts or arrangements with our vendors to
guarantee the availability of merchandise, particular payment terms, or the
extension of credit limits.

Other Contingencies

We are subject to claims related to various indirect taxes (such as sales,
value added, consumption, service, and similar taxes), including in
jurisdictions in which we already collect and remit such taxes. If the
relevant taxing authorities were successfully to pursue these claims, we could
be subject to significant additional tax liabilities. For example, in June
2017, the State of South Carolina issued an assessment for uncollected sales
and use taxes for the period from January 2016 to March 2016, including
interest and penalties. South Carolina is alleging that we should have
collected sales and use taxes on transactions by our third-party sellers. In
September 2019, the South Carolina Administrative Law Court ruled in favor of
the Department of Revenue and we have appealed the decision to the state Court
of Appeals. We believe the assessment is without merit and intend to defend
ourselves vigorously in this matter. If other tax authorities were
successfully to seek additional adjustments of a similar nature, we could be
subject to significant additional tax liabilities.

Legal Proceedings

The Company is involved from time to time in claims, proceedings, and
litigation, including the following:

In March 2015, Zitovault, LLC filed a complaint against Amazon.com, Inc.,
Amazon.com, LLC, Amazon Web Services, Inc., and Amazon Web Services, LLC for
patent infringement in the United States District Court for the Eastern
District of Texas. The complaint alleges that Elastic Compute Cloud, Virtual
Private Cloud, Elastic Load Balancing, Auto-Scaling, and Elastic Beanstalk
infringe U.S. Patent No. 6,484,257, entitled “System and Method for
Maintaining N Number of Simultaneous Cryptographic Sessions Using a
Distributed Computing Environment.” The complaint seeks injunctive relief, an
unspecified amount of damages, enhanced damages, attorneys’ fees, costs, and
interest. In January 2016, the case was transferred to the United States
District Court for the Western District of Washington. In June 2016, the case
was stayed pending resolution of a review petition we filed with the United
States Patent and Trademark Office. In January 2019, the stay of the case was
lifted following resolution of the review petition. We dispute the allegations
of wrongdoing and intend to defend ourselves vigorously in this matter.

In November 2015, Eolas Technologies, Inc. filed a complaint against
Amazon.com, Inc. in the United States District Court for the Eastern District
of Texas. The complaint alleges, among other things, that the use of
“interactive features” on www.amazon.com, including “search suggestions and
search results,” infringes U.S. Patent No. 9,195,507, entitled “Distributed
Hypermedia Method and System for Automatically Invoking External Application
Providing Interaction and Display of Embedded Objects Within A Hypermedia
Document.” The complaint sought a judgment of infringement together with costs
and attorneys’ fees. In February 2016, Eolas filed an amended complaint
seeking, among other things, an unspecified amount of damages. In February
2017, Eolas alleged in its damages report that in the event of a finding of
liability Amazon could be subject to $130-$250 million in damages. In April
2017, the case was transferred to the United States District Court for the
Northern District of California. We dispute the allegations of wrongdoing and
intend to defend ourselves vigorously in this matter.

In May 2018, Rensselaer Polytechnic Institute and CF Dynamic Advances LLC
filed a complaint against Amazon.com, Inc. in the United States District Court
for the Northern District of New York. The complaint alleges, among other
things, that “Alexa Voice Software and Alexa enabled devices” infringe U.S.
Patent No. 7,177,798, entitled “Natural Language Interface Using Constrained
Intermediate Dictionary of Results.” The complaint seeks an injunction, an
unspecified amount of damages, enhanced damages, an ongoing royalty, pre- and
post-judgment interest, attorneys’ fees, and costs. We dispute the allegations
of wrongdoing and intend to defend ourselves vigorously in this matter.

In December 2018, Kove IO, Inc. filed a complaint against Amazon Web Services,
Inc. in the United States District Court for the Northern District of
Illinois. The complaint alleges, among other things, that Amazon S3 and
DynamoDB infringe U.S. Patent Nos. 7,814,170 and 7,103,640, both entitled
“Network Distributed Tracking Wire Transfer Protocol,” and 7,233,978, entitled
“Method And Apparatus For Managing Location Information In A Network Separate
From The Data To Which The Location Information Pertains.” The complaint seeks
an unspecified amount of damages, enhanced damages, attorneys’ fees, costs,
interest, and injunctive relief. We dispute the allegations of wrongdoing and
intend to defend ourselves vigorously in this matter.

Beginning in March 2020, a number of class-action complaints were filed
alleging, among other things, price fixing arrangements between Amazon.com,
Inc. and third-party sellers in Amazon’s stores, monopolization and attempted
monopolization of an alleged market in online retail or other submarkets, and
consumer protection and unjust enrichment claims. In March 2020, Frame-Wilson
v. Amazon.com, Inc. was filed in the United States District Court for the
Western District of Washington. Beginning in April 2020, class action
complaints were filed in the Superior Court of Quebec – Division of Montreal,
the Ontario Superior Court of Justice, and the Federal Court of Canada against
Amazon.com, Inc. and related entities. The complaints allege several distinct
purported classes, including consumers who purchased a product through
Amazon’s stores and consumers who purchased a product offered by Amazon
through another e-commerce retailer. The complaints seek billions of dollars
of alleged actual damages, treble damages, punitive damages, and injunctive
relief. We dispute the allegations of wrongdoing and intend to defend
ourselves vigorously in these matters.

In November 2020, the European Commission issued a Statement of Objections
alleging that Amazon uses data relating to our marketplace sellers in a manner
that infringes EU competition rules. The Statement of Objections seeks to
impose unspecified fines and remedial actions. We disagree with the
preliminary assertions of the European Commission and intend to defend
ourselves vigorously in this matter.

In addition, we are regularly subject to claims, litigation, and other
proceedings, including potential regulatory proceedings, involving patent and
other intellectual property matters, taxes, labor and employment, competition
and antitrust, privacy and data protection, consumer protection, commercial
disputes, goods and services offered by us and by third parties, and other
matters.

The outcomes of our legal proceedings and other contingencies are inherently
unpredictable, subject to significant uncertainties, and could be material to
our operating results and cash flows for a particular period. We evaluate, on
a regular

basis, developments in our legal proceedings and other contingencies that
could affect the amount of liability, including amounts in excess of any
previous accruals and reasonably possible losses disclosed, and make
adjustments and changes to our accruals and disclosures as appropriate. For
the matters we disclose that do not include an estimate of the amount of loss
or range of losses, such an estimate is not possible or is immaterial, and we
may be unable to estimate the possible loss or range of losses that could
potentially result from the application of non-monetary remedies. Until the
final resolution of such matters, if any of our estimates and assumptions
change or prove to have been incorrect, we may experience losses in excess of
the amounts recorded, which could have a material effect on our business,
consolidated financial position, results of operations, or cash flows.

See also “Note 9 — Income Taxes.”

Note 8 — STOCKHOLDERS’ EQUITY

Preferred Stock

We have authorized 500 million shares of $0.01 par value preferred stock. No
preferred stock was outstanding for any year presented.

Common Stock

Common shares outstanding plus shares underlying outstanding stock awards
totaled 507 million, 512 million, and 518 million, as of December 31, 2018,
2019, and 2020. These totals include all vested and unvested stock awards
outstanding, including those awards we estimate will be forfeited.

Stock Repurchase Activity

In February 2016, the Board of Directors authorized a program to repurchase up
to $5.0 billion of our common stock, with no fixed expiration. There were no
repurchases of common stock in 2018, 2019, or 2020.

Stock Award Plans

Employees vest in restricted stock unit awards over the corresponding service
term, generally between two and five years.

Stock Award Activity

Stock-based compensation expense is as follows (in millions):

(1)The related tax benefits were $1.1 billion, $1.4 billion, and $1.9 billion
for 2018, 2019, and 2020.

The following table summarizes our restricted stock unit activity (in
millions):

Scheduled vesting for outstanding restricted stock units as of December 31,
2020, is as follows (in millions):

As of December 31, 2020, there was $13.3 billion of net unrecognized
compensation cost related to unvested stock-based compensation arrangements.
This compensation is recognized on an accelerated basis with approximately
half of the compensation expected to be expensed in the next twelve months,
and has a remaining weighted-average recognition period of 1.2 years. The
estimated forfeiture rate as of December 31, 2018, 2019, and 2020 was 27%.
Changes in our estimates and assumptions relating to forfeitures may cause us
to realize material changes in stock-based compensation expense in the future.

During 2018, 2019, and 2020, the fair value of restricted stock units that
vested was $11.4 billion, $11.7 billion, and $15.5 billion.

Common Stock Available for Future Issuance

As of December 31, 2020, common stock available for future issuance to
employees is 102 million shares.

Note 9 — INCOME TAXES

In 2018, 2019, and 2020, we recorded net tax provisions of $1.2 billion, $2.4
billion, and $2.9 billion. Tax benefits relating to excess stock-based
compensation deductions and accelerated depreciation deductions are reducing
our U.S. taxable income. Cash taxes paid, net of refunds, were $1.2 billion,
$881 million, and $1.7 billion for 2018, 2019, and 2020.

U.S. companies are eligible for a deduction that lowers the effective tax rate
on certain foreign income. This regime is referred to as the Foreign-Derived
Intangible Income deduction (“FDII”). In addition, certain foreign subsidiary
earnings and losses are subject to current U.S. taxation and the subsequent
repatriation of those earnings is not subject to tax in the U.S. The U.S. tax
rules also provide for enhanced accelerated depreciation deductions by
allowing the election of full expensing of qualified property, primarily
equipment, through 2022. Our federal tax provision included the election of
full expensing of qualified property for 2018 and 2019 and a partial election
for 2020.

The components of the provision for income taxes, net are as follows (in
millions):

U.S. and international components of income before income taxes are as follows
(in millions):

The items accounting for differences between income taxes computed at the
federal statutory rate and the provision recorded for income taxes are as
follows (in millions):

(1)Includes non-deductible stock-based compensation and excess tax benefits
from stock-based compensation. Our tax provision includes $1.6 billion, $1.4
billion, and $1.8 billion of excess tax benefits from stock-based compensation
for 2018, 2019, and 2020.

Our provision for income taxes in 2019 was higher than in 2018 primarily due
to an increase in U.S. pre-tax income, a decline in excess tax benefits from
stock-based compensation, and the one-time provisional tax benefit of the U.S.
Tax Act recognized in 2018.

Our provision for income taxes in 2020 was higher than in 2019 primarily due
to an increase in pretax income. This was partially offset by the impact of
developments in our ongoing global tax controversies on taxes related to our
foreign earnings and losses, an increase in excess tax benefits from stock-
based compensation, and an increase in our foreign income deduction under
FDII. In addition, our Luxembourg operations generated earnings in 2020 and
utilized deferred tax assets previously subject to valuation allowances.

We intend to invest substantially all of our foreign subsidiary earnings, as
well as our capital in our foreign subsidiaries, indefinitely outside of the
U.S. in those jurisdictions in which we would incur significant, additional
costs upon repatriation of such amounts.

Deferred income tax assets and liabilities are as follows (in millions):

(1)Deferred tax assets are presented after tax effects and net of tax
contingencies.

(2)Relates primarily to deferred tax assets that would only be realizable upon
the generation of net income in certain foreign taxing jurisdictions.

Our valuation allowances primarily relate to foreign deferred tax assets,
including substantially all of our foreign net operating loss carryforwards as
of December 31, 2020. Our foreign net operating loss carryforwards for income
tax purposes as of December 31, 2020 were approximately $13.4 billion before
tax effects and certain of these amounts are subject to annual limitations
under applicable tax law. If not utilized, a portion of these losses will
begin to expire in 2021. All remaining federal tax credits, which were
primarily related to the U.S. federal research and development credit, reduced
our federal tax liability in 2020.

We regularly assess whether it is more likely than not that we will realize
our deferred tax assets in each taxing jurisdiction in which we operate. In
performing this assessment with respect to each jurisdiction, we review all
available evidence, including recent cumulative loss experience and
expectations of future earnings, capital gains, and investment in such
jurisdiction, the carry-forward periods available to us for tax reporting
purposes, and other relevant factors. The effects of the COVID-19 pandemic on
our business make estimates of future earnings more challenging. Since Q2
2017, we have recorded a valuation allowance against our net deferred tax
assets in Luxembourg. There is still significant uncertainty whether our
earnings in Luxembourg are sustainable in the future and we will maintain the
valuation allowance until sufficient positive evidence exists to support a
release of the valuation allowance.

Tax Contingencies

We are subject to income taxes in the U.S. (federal and state) and numerous
foreign jurisdictions. Significant judgment is required in evaluating our tax
positions and determining our provision for income taxes. During the ordinary
course of business, there are many transactions and calculations for which the
ultimate tax determination is uncertain. We establish reserves for tax-related
uncertainties based on estimates of whether, and the extent to which,
additional taxes will be due. These reserves are established when we believe
that certain positions might be challenged despite our belief that our tax
return positions are fully supportable. We adjust these reserves in light of
changing facts and circumstances, such as the outcome of tax audits. The
provision for income taxes includes the impact of reserve provisions and
changes to reserves that are considered appropriate.

The reconciliation of our tax contingencies is as follows (in millions):

(1)As of December 31, 2020, we had approximately $2.8 billion of accrued tax
contingencies of which $1.5 billion, if fully recognized, would decrease our
effective tax rate. The decrease in our tax contingencies in 2020 was
primarily a result of developments in our global tax controversies.

As of December 31, 2019 and 2020, we had accrued interest and penalties, net
of federal income tax benefit, related to tax contingencies of $131 million
and $83 million. Interest and penalties, net of federal income tax benefit,
recognized for the years ended December 31, 2018, 2019, and 2020 was $20
million, $4 million, and $(48) million.

We are under examination, or may be subject to examination, by the Internal
Revenue Service (“IRS”) for the calendar year 2013 and thereafter. These
examinations may lead to ordinary course adjustments or proposed adjustments
to our taxes or our net operating losses with respect to years under
examination as well as subsequent periods. During Q3 2020, we resolved the
audits of tax years 2007 through 2012 with the IRS for amounts that were
materially consistent with our accrual.

In October 2014, the European Commission opened a formal investigation to
examine whether decisions by the tax authorities in Luxembourg with regard to
the corporate income tax paid by certain of our subsidiaries comply with
European Union rules on state aid. On October 4, 2017, the European Commission
announced its decision that determinations by the tax authorities in
Luxembourg did not comply with European Union rules on state aid. Based on
that decision the European Commission announced an estimated recovery amount
of approximately €250 million, plus interest, for the period May 2006 through
June 2014, and ordered Luxembourg tax authorities to calculate the actual
amount of additional taxes subject to recovery. Luxembourg computed an initial
recovery amount, consistent with the European Commission’s decision, that we
deposited into escrow in March 2018, subject to adjustment pending conclusion
of all appeals. In December 2017, Luxembourg appealed the European
Commission’s decision. In May 2018, we appealed. We believe the European
Commission’s decision to be without merit and will continue to defend
ourselves vigorously in this matter. We are also subject to taxation in
various states and other foreign jurisdictions including China, Germany,
India, Japan, Luxembourg, and the United Kingdom. We are under, or may be
subject to, audit or examination and additional assessments by the relevant
authorities in respect of these particular jurisdictions primarily for 2009
and thereafter.

Changes in tax laws, regulations, administrative practices, principles, and
interpretations may impact our tax contingencies. The timing of the resolution
of income tax examinations is highly uncertain, and the amounts ultimately
paid, if any, upon resolution of the issues raised by the taxing authorities
may differ from the amounts accrued. It is reasonably possible that within the
next twelve months we will receive additional assessments by various tax
authorities or possibly reach resolution of income tax examinations in one or
more jurisdictions. These assessments or settlements could result in changes
to our contingencies related to positions on prior years’ tax filings. The
actual amount of any change could vary significantly depending on the ultimate
timing and nature of any settlements. We cannot currently provide an estimate
of the range of possible outcomes.

Note 10 — SEGMENT INFORMATION

We have organized our operations into three segments: North America,
International, and AWS. We allocate to segment results the operating expenses
“Fulfillment,” “Technology and content,” “Marketing,” and “General and
administrative” based on usage, which is generally reflected in the segment in
which the costs are incurred. The majority of technology infrastructure costs
are allocated to the AWS segment based on usage. The majority of the remaining
non-infrastructure technology costs are incurred in the U.S. and are allocated
to our North America segment. There are no internal revenue transactions
between our reportable segments. These segments reflect the way our chief
operating decision maker evaluates the Company’s business performance and
manages its operations.

North America

The North America segment primarily consists of amounts earned from retail
sales of consumer products (including from sellers) and subscriptions through
North America-focused online and physical stores. This segment includes export
sales from these online stores.

International

The International segment primarily consists of amounts earned from retail
sales of consumer products (including from sellers) and subscriptions through
internationally-focused online stores. This segment includes export sales from
these internationally-focused online stores (including export sales from these
online stores to customers in the U.S., Mexico, and Canada), but excludes
export sales from our North America-focused online stores.

AWS

The AWS segment consists of amounts earned from global sales of compute,
storage, database, and other services for start-ups, enterprises, government
agencies, and academic institutions.

Information on reportable segments and reconciliation to consolidated net
income (loss) is as follows (in millions):

Net sales by groups of similar products and services, which also have similar
economic characteristics, is as follows (in millions):

(1)Includes product sales and digital media content where we record revenue
gross. We leverage our retail infrastructure to offer a wide selection of
consumable and durable goods that includes media products available in both a
physical and digital format, such as books, videos, games, music, and
software. These product sales include digital products sold on a transactional
basis. Digital product subscriptions that provide unlimited viewing or usage
rights are included in “Subscription services.”

(2)Includes product sales where our customers physically select items in a
store. Sales to customers who order goods online for delivery or pickup at our
physical stores are included in “Online stores.”

(3)Includes commissions and any related fulfillment and shipping fees, and
other third-party seller services.

(4)Includes annual and monthly fees associated with Amazon Prime memberships,
as well as digital video, audiobook, digital music, e-book, and other non-AWS
subscription services.

(5)Primarily includes sales of advertising services, as well as sales related
to our other service offerings.

Net sales generated from our internationally-focused online stores are
denominated in local functional currencies. Revenues are translated at average
rates prevailing throughout the period. Net sales attributed to countries that
represent a significant portion of consolidated net sales are as follows (in
millions):

Total segment assets exclude corporate assets, such as cash and cash
equivalents, marketable securities, other long-term investments, corporate
facilities, goodwill and other acquired intangible assets, and tax assets.
Technology infrastructure assets are allocated among the segments based on
usage, with the majority allocated to the AWS segment. Total segment assets
reconciled to consolidated amounts are as follows (in millions):

(1)North America and International segment assets primarily consist of
property and equipment, operating leases, inventory, and accounts receivable.

(2)AWS segment assets primarily consist of property and equipment and accounts
receivable.

Property and equipment, net by segment is as follows (in millions):

Total net additions to property and equipment by segment are as follows (in
millions):

(1)Includes property and equipment added under finance leases of $2.0 billion,
$3.8 billion, and $5.6 billion in 2018, 2019, and 2020, and under financing
obligations of $3.0 billion, $1.3 billion, and $2.7 billion in 2018, 2019, and

(2)Includes property and equipment added under finance leases of $8.4 billion,
$10.6 billion, and $7.7 billion in 2018, 2019, and 2020, and under financing
obligations of $245 million, $0 million, and $130 million in 2018, 2019, and

U.S. property and equipment, net and operating leases were $45.1 billion,
$69.8 billion, and $109.5 billion, in 2018, 2019, and 2020, and non-U.S.
property and equipment, net and operating leases were $16.7 billion, $28.0
billion, and $41.2 billion in 2018, 2019, and 2020. Except for the U.S.,
property and equipment, net and operating leases in any single country were
less than 10% of consolidated property and equipment, net and operating
leases.

Depreciation and amortization expense on property and equipment, including
corporate property and equipment, are allocated to all segments based on
usage. Total depreciation and amortization expense, by segment, is as follows
(in millions):

Note 11 — QUARTERLY RESULTS (UNAUDITED)

The following tables contain selected unaudited statement of operations
information for each quarter of 2019 and 2020. The following information
reflects all normal recurring adjustments necessary for a fair presentation of
the information for the periods presented. The operating results for any
quarter are not necessarily indicative of results for any future period. Our
business is affected by seasonality, which historically has resulted in higher
sales volume during our fourth quarter. Unaudited quarterly results are as
follows (in millions, except per share data):

(1)The sum of quarterly amounts, including per share amounts, may not equal
amounts reported for year-to-date periods. This is due to the effects of
rounding and changes in the number of weighted-average shares outstanding for
each period.

Item 9. Changes in and Disagreements with Accountants On Accounting and
Financial Disclosure  

None.

Item 9A. Controls and Procedures  

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation required by the Securities Exchange Act of 1934
(the “1934 Act”), under the supervision and with the participation of our
principal executive officer and principal financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rule 13a-15(e) of the 1934 Act, as of December 31,
2020. Based on this evaluation, our principal executive officer and principal
financial officer concluded that, as of December 31, 2020, our disclosure
controls and procedures were effective to provide reasonable assurance that
information required to be disclosed by us in the reports that we file or
submit under the 1934 Act is recorded, processed, summarized, and reported
within the time periods specified in the SEC’s rules and forms and to provide
reasonable assurance that such information is accumulated and communicated to
our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Rule 13a-15(f) of the 1934
Act. Management has assessed the effectiveness of our internal control over
financial reporting as of December 31, 2020 based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. As a result of this
assessment, management concluded that, as of December 31, 2020, our internal
control over financial reporting was effective in providing reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. Ernst & Young has independently assessed the
effectiveness of our internal control over financial reporting and its report
is included below.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during
the quarter ended December 31, 2020 that materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

Limitations on Controls

Our disclosure controls and procedures and internal control over financial
reporting are designed to provide reasonable assurance of achieving their
objectives as specified above. Management does not expect, however, that our
disclosure controls and procedures or our internal control over financial
reporting will prevent or detect all error and fraud. Any control system, no
matter how well designed and operated, is based upon certain assumptions and
can provide only reasonable, not absolute, assurance that its objectives will
be met. Further, no evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, within the Company have been detected.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Amazon.com, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Amazon.com, Inc.’s internal control over financial reporting
as of December 31, 2020, based on criteria established in Internal Control —
Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (2013 framework) (the COSO criteria). In our opinion,
Amazon.com, Inc. (the Company) maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2020, based on
the COSO criteria.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the consolidated balance
sheets of the Company as of December 31, 2020 and 2019, and the related
consolidated statements of operations, comprehensive income, stockholders’
equity, and cash flows for each of the three years in the period ended
December 31, 2020 and the related notes and our report dated February 2, 2021
expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness
of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting
was maintained in all material respects.

Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Seattle, Washington

February 2, 2021

Item 9B. Other Information

Disclosure Pursuant to Section 13(r) of the Exchange Act

As previously disclosed, we determined that, between January 2012 and June
2020, we processed and delivered orders of consumer products for certain
individuals and entities located outside Iran covered by the Iran Threat
Reduction and Syria Human Rights Act. The information provided pursuant to
Section 13(r) of the Exchange Act in Item 5 of Part II of the Company’s
Quarterly Reports on 10-Q for the quarters ended 
March 31,

and 
June 30,

is hereby incorporated by reference to such reports.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance

Information regarding our Executive Officers required by Item 10 of Part III
is set forth in Item 1 of Part I “Business — Information About Our Executive
Officers.” Information required by Item 10 of Part III regarding our Directors
and any material changes to the process by which security holders may
recommend nominees to the Board of Directors is included in our Proxy
Statement relating to our 2021 Annual Meeting of Shareholders, and is
incorporated herein by reference. Information relating to our Code of Business
Conduct and Ethics and, to the extent applicable, compliance with Section
16(a) of the 1934 Act is set forth in our Proxy Statement relating to our 2021
Annual Meeting of Shareholders and is incorporated herein by reference. To the
extent permissible under Nasdaq rules, we intend to disclose amendments to our
Code of Business Conduct and Ethics, as well as waivers of the provisions
thereof, on our investor relations website under the heading “Corporate
Governance” at amazon.com/ir.

Item 11. Executive Compensation

Information required by Item 11 of Part III is included in our Proxy Statement
relating to our 2021 Annual Meeting of Shareholders and is incorporated herein
by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters

Information required by Item 12 of Part III is included in our Proxy Statement
relating to our 2021 Annual Meeting of Shareholders and is incorporated herein
by reference.

Item 13. Certain Relationships and Related Transactions, and Director
Independence

Information required by Item 13 of Part III is included in our Proxy Statement
relating to our 2021 Annual Meeting of Shareholders and is incorporated herein
by reference.

Item 14. Principal Accountant Fees and Services

Information required by Item 14 of Part III is included in our Proxy Statement
relating to our 2021 Annual Meeting of Shareholders and is incorporated herein
by reference.

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) List of Documents Filed as a Part of This Report:

(1) Index to Consolidated Financial Statements:

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

Consolidated Statements of Cash Flows for each of the three years ended
December 31, 2020

Consolidated Statements of Operations for each of the three years ended
December 31, 2020

Consolidated Statements of Comprehensive Income for each of the three years
ended December 31, 2020

Consolidated Balance Sheets as of December 31, 2019 and 2020

Consolidated Statements of Stockholders’ Equity for each of the three years
ended December 31, 2020

Notes to Consolidated Financial Statements

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

(2) Index to Financial Statement Schedules:

All schedules have been omitted because the required information is included
in the consolidated financial statements or the notes thereto, or because it
is not required.

(3) Index to Exhibits

See exhibits listed under Part (b) below.

(b) Exhibits:

1999 Nonofficer Employee Stock Option Plan (amended and restated)
(incorporated by reference to the Company’s Quarterly Report on Form 10-Q for
the Quarter ended March 31,
 
Form of Indemnification Agreement between the Company and each of its
Directors (incorporated by reference to Exhibit 10.1 to the Company’s
Registration Statement on Form S-1 (Registration No. 333-23795) filed March
24, 1997, as amended on April 21,
 
Form of Restricted Stock Unit Agreement for Officers and Employees
(incorporated by reference to the Company’s Annual Report on Form 10-K for the
Year ended December 31,
 
Form of Restricted Stock Unit Agreement for Directors (incorporated by
reference to the Company’s Annual Report on Form 10-K for the Year ended
December 31,
 
Form of Restricted Stock Agreement (incorporated by reference to the
Company’s Annual Report on Form 10-K for the Year ended December 31,
 
Form of Global Restricted Stock Unit Award Agreement for Executive Officers
(incorporated by reference to the Company’s Annual Report on Form 10-K for the
Year ended December 31,
 
Amended and Restated Credit Agreement, dated as of June 23, 2020, among
Amazon.com, Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the
other lenders party thereto (incorporated by reference to the Company’s
Current Report on Form 8-K, filed June 23,
 
List of Significant Subsidiaries.
 
Consent of Independent Registered Public Accounting
Firm.
 
Certification of Jeffrey P. Bezos, Chairman and Chief Executive Officer of
Amazon.com, Inc., pursuant to Rule 13a-14(a) under the Securities Exchange Act
of 1934.
 
Certification of Brian T. Olsavsky, Senior Vice President and Chief Financial
Officer of Amazon.com, Inc., pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
 
Certification of Jeffrey P. Bezos, Chairman and Chief Executive Officer of
Amazon.com, Inc., pursuant to 18 U.S.C. Section
 
Certification of Brian T. Olsavsky, Senior Vice President and Chief Financial
Officer of Amazon.com, Inc., pursuant to 18 U.S.C. Section
 
101  The following financial statements from the Company’s Annual Report on
Consolidated Statements of Cash Flows, (ii) Consolidated Statements of
Operations, (iii) Consolidated Statements of Comprehensive Income, (iv)
Consolidated Balance Sheets, (v) Consolidated Statements of Stockholders’
Equity, and (vi) Notes to Consolidated Financial Statements, tagged as blocks
of text and including detailed tags.  

As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has
not filed with this Annual Report on Form 10-K certain instruments defining
the rights of holders of long-term debt of the Company and its subsidiaries
because the total amount of securities authorized thereunder does not exceed
10 percent of the total assets of the Company and its subsidiaries on a
consolidated basis. The Company agrees to furnish a copy of such agreements to
the Commission upon request.  

104  The cover page from the Company’s Annual Report on Form 10-K for the

† Executive Compensation Plan or Agreement.

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized, as of February 2, 2021.

AMAZON.COM, INC.  

By: /s/ Jeffrey P. Bezos

  Jeffrey P. Bezos

  President, Chief Executive Officer,

and Chairman of the Board  

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of February 2, 2021.

Signature  Title  

/s/ Jeffrey P. Bezos   

Jeffrey P. Bezos

Chairman of the Board, President, and Chief Executive Officer (Principal
Executive Officer)  

/s/ Brian T. Olsavsky   

Brian T. Olsavsky

Senior Vice President and Chief Financial Officer (Principal Financial
Officer)  

/s/ Shelley L. Reynolds   

Shelley L. Reynolds

Vice President, Worldwide Controller (Principal Accounting Officer)  

/s/ Keith B. Alexander 

Keith B. Alexander  Director  

/s/ Rosalind G. Brewer   

Rosalind G. Brewer

Director  

/s/ Jamie S. Gorelick   

Jamie S. Gorelick

Director  

/s/ Daniel P. Huttenlocher   

Daniel P. Huttenlocher

Director  

/s/ Judith A. McGrath   

Judith A. McGrath

Director  

/s/ Indra K. Nooyi   

Indra K. Nooyi

Director  

/s/ Jonathan J. Rubinstein

Jonathan J. Rubinstein

Director  

/s/ Thomas O. Ryder   

Thomas O. Ryder

Director  

/s/ Patricia Q. Stonesifer 

Patricia Q. Stonesifer  Director  

/s/ Wendell P. Weeks 

Wendell P. Weeks  Director  

EX-21.1 2 amzn-20201231xex211.htm EXHIBIT 21.1  Document

Exhibit 21.1

AMAZON.COM, INC.

LIST OF SIGNIFICANT SUBSIDIARIES

Legal Name  Jurisdiction  Percent Owned

Amazon.com Services LLC  Delaware  100  %

Amazon.com Sales, Inc.  Delaware  100  %

Amazon Data Services, Inc.  Delaware  100  %

Amazon Overseas Holdings, Inc.  Delaware  100  %

Amazon Web Services, Inc.  Delaware  100  %

Amazon Technologies, Inc.  Nevada  100  %

Amazon.com NV Investment Holdings LLC  Nevada  100  %  EX-23.1 3 amzn-20201231xex231.htm EXHIBIT 23.1  Document

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration
Statements:

(a) Registration Statement (Form S-4 No. 333-55943), as amended, pertaining to
the acquisition shelf-registration of up to 30 million shares of common stock,

(b) Registration Statement (Form S-8 No. 333-28763), as amended, pertaining to
the Amazon.com, Inc. 1997 Stock Incentive Plan (formerly the “1997 Stock
Option Plan”) and the Amended and Restated 1994 Stock Option Plan of
Amazon.com, Inc.,

(c) Registration Statement (Form S-8 No. 333-74419) pertaining to the
Amazon.com, Inc. 1999 Nonofficer Employee Stock Option Plan,

(d) Registration Statement (Form S-8 POS No. 333-160831) pertaining to the
Zappos.com, Inc. 2009 Stock Plan,

(e) Registration Statement (Form S-8 No. 333-169470) pertaining to 25,000,000
shares of Common Stock, par value $0.01 per share, to be issued pursuant to
the Company’s 1997 Stock Incentive Plan,

(f) Registration Statement (Form S-8 No. 333-173054), pertaining to the
Quidsi, Inc. (fka1800Diapers, Inc.) 2006 Stock Option/Stock Issuance Plan,

(g) Registration Statement (Form S-8 No. 333-181073) pertaining to the Kiva
Systems, Inc. 2003 Stock Plan, as amended,

(h) Registration Statement (Form S-8 No. 333-199572) pertaining to the Twitch
Interactive, Inc. Amended and Restated 2007 Stock Plan,

(i) Registration Statement (Form S-8 No. 333-207591) pertaining to the
Elemental Technologies, Inc. 2006 Stock Incentive Plan, as amended and
restated,

(j) Registration Statement (Form S-3 No. 333-238831) pertaining to the shelf-
registration of Amazon.com, Inc. securities, and

(k) Registration Statement (Form S-8 No. 333-249847) pertaining to the
Amazon.com, Inc. 1997 Stock Incentive Plan (as Amended and Restated).

of our reports dated February 2, 2021, with respect to the consolidated
financial statements of Amazon.com, Inc. and the effectiveness of internal
control over financial reporting of Amazon.com, Inc. included in this Annual
Report (Form 10-K) of Amazon.com, Inc. for the year ended December 31, 2020.

/s/ Ernst & Young LLP

Seattle, Washington

February 2, 2021EX-31.1 4 amzn-20201231xex311.htm EXHIBIT 31.1  Document

Exhibit 31.1

CERTIFICATIONS

I, Jeffrey P. Bezos, certify that:

1. I have reviewed this Form 10-K of Amazon.com, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control
over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting;
and

5. The registrant’s other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.

/s/ Jeffrey P. Bezos

 Jeffrey P. Bezos

 Chairman and Chief Executive Officer

 (Principal Executive Officer)  

Date: February 2, 2021EX-31.2 5 amzn-20201231xex312.htm EXHIBIT 31.2  Document

Exhibit 31.2

CERTIFICATIONS

I, Brian T. Olsavsky, certify that:

1. I have reviewed this Form 10-K of Amazon.com, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control
over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting;
and

5. The registrant’s other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.

/s/ Brian T. Olsavsky  

Brian T. Olsavsky

 Senior Vice President and

Chief Financial Officer

 (Principal Financial Officer)  

Date: February 2, 2021EX-32.1 6 amzn-20201231xex321.htm EXHIBIT 32.1  Document

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350

In connection with the Annual Report of Amazon.com, Inc. (the “Company”) on
Form 10-K for the year ended December 31, 2020, as filed with the Securities
and Exchange Commission (the “SEC”) on or about the date hereof (the
“Report”), I, Jeffrey P. Bezos, Chairman and Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company
and will be retained by the Company and furnished to the SEC or its staff upon
request.

/s/ Jeffrey P. Bezos

 Jeffrey P. Bezos

 Chairman and Chief Executive Officer

 (Principal Executive Officer)  

Date: February 2, 2021EX-32.2 7 amzn-20201231xex322.htm EXHIBIT 32.2  Document

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350

In connection with the Annual Report of Amazon.com, Inc. (the “Company”) on
Form 10-K for the year ended December 31, 2020, as filed with the Securities
and Exchange Commission (the “SEC”) on or about the date hereof (the
“Report”), I, Brian T. Olsavsky, Senior Vice President and Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company
and will be retained by the Company and furnished to the SEC or its staff upon
request.

/s/ Brian T. Olsavsky

 Brian T. Olsavsky

 Senior Vice President and

Chief Financial Officer

 (Principal Financial Officer)  

Date: February 2, 2021