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Filed Pursuant to
Rule 424(b)(3)
Registration Statement
No. 333-65091
PROSPECTUS
2,662,125 SHARES
LOGO
COMMON STOCK
This Prospectus relates to the sale of up to 2,662,125 shares (the
"Shares") of common stock, $0.01 par value per share (the "Common Stock"), of
Amazon.com, Inc. (the "Company" or "Amazon.com"). The Shares may be offered by
certain stockholders of the Company (the "Selling Stockholders") or by their
pledgees, donees, distributees or other successors-in-interest, from time to
time in transactions (which may include block transactions) in the
over-the-counter market through the Nasdaq National Market ("Nasdaq"), or on one
or more other securities markets and exchanges, in privately negotiated
transactions, or otherwise, at fixed prices that may be changed, at market
prices prevailing at the time of sale, at prices relating to such prevailing
market prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares directly to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agents or to whom they may
sell as principals, or both (which compensation as to a particular broker-dealer
may be in excess of customary commissions). See "Selling Stockholders" and "Plan
of Distribution."
The Company issued the Shares to the Selling Stockholders as a result of
certain private placements as follows: (i) on April 24, 1998 in connection with
the merger of a wholly owned subsidiary of the Company with and into Telebook,
Inc., a Florida corporation (the "Telebook Merger"), (ii) on August 12, 1998 in
connection with the merger of a wholly owned subsidiary of the Company with and
into Junglee Corp., a Delaware corporation (the "Junglee Merger"), and (iii) on
August 27, 1998 in connection with the merger of a wholly owned subsidiary of
the Company with and into Sage Enterprises, Inc., a Massachusetts corporation
(the "PlanetAll Merger" and together with the Telebook Merger and the Junglee
Merger, the "Mergers"). In addition, the Company issued certain of the Shares to
the Selling Stockholders on a private placement basis upon the exercise of
certain stock options. The Shares issued in connection with the Mergers and to
those persons upon exercise of stock options constitute the Shares being
registered hereunder. In connection with any sales, the Selling Stockholders and
any brokers participating in such sales may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"). See "Selling Stockholders."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has agreed to bear all
expenses (other than broker's commissions and similar charges) in connection
with the registration and sale of the Shares being offered by the Selling
Stockholders that initially were issued as a result of the Mergers. The Company
has agreed to indemnify the Selling Stockholders and any broker-dealers who act
in connection with the sale of the Shares hereunder that initially were issued
as a result of the Mergers against certain liabilities, including liabilities
under the Securities Act.
The Common Stock is quoted on Nasdaq under the symbol "AMZN." On October
21, 1998, the closing sales price for the Common Stock as reported on Nasdaq was
$110 per share.
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THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is October 22, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information filed by the Company with
the Commission can be inspected and copied (at prescribed rates) at the public
reference facilities maintained by the Commission in Washington, D.C. (450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549) and at the Commission's
Regional Offices in New York (7 World Trade Center, 13th Floor, New York, New
York 10048) and Chicago (Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661). The Company is an electronic filer and the Commission
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of the web site is http://www.sec.gov. The Company's
reports, proxy and information statements and other information may also be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus is part of a Registration Statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") filed
with the Commission under the Securities Act with respect to the Shares offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted in
accordance with the Commission's rules and regulations. For further information
with respect to the Company and the Shares offered hereby, reference is made to
the Registration Statement and the exhibits thereto. The statements in this
Prospectus are qualified in their entirety by reference to the contents of any
agreement or other document incorporated herein by reference, a copy of which is
filed as an exhibit to either the Registration Statement or other filings by the
Company with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon such
person's written or oral request, a copy of any and all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates). Requests should be directed to Amazon.com,
Inc., 1516 Second Avenue, Seattle, Washington 98101, Attention: Investor
Relations, telephone: (206) 622-2335.
The following documents filed with the Commission (File No. 000-22513) by
the Company are incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1998 and June 30, 1998;
(c) The Company's Current Reports on Form 8-K filed April 27, 1998,
April 28, 1998, May 1, 1998, May 6, 1998, August 7, 1998, August 27, 1998
and September 11, 1998; and
(d) The description of the Company's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on May 2,
1997, under Section 12(g) of the Exchange Act.
All documents filed with the Commission by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed modified, superseded or replaced for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies, supersedes or replaces such statement. Any
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statement so modified, superseded or replaced shall not be deemed, except as so
modified, superseded or replaced, to constitute a part of this Prospectus.
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The Company's principal executive offices are located at 1516 Second
Avenue, Seattle, Washington 98101, telephone: (206) 622-2335.
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated herein by reference contain
forward-looking statements based on current expectations, estimates and
projections about the Company's industry, management's beliefs and certain
assumptions made by management. All statements, trends, analyses and other
information contained in this Prospectus and the documents incorporated herein
by reference relative to trends in net sales, gross margin, anticipated expense
levels and liquidity and capital resources, as well as other statements
including, but not limited to, words such as "anticipate," "believe," "plan,"
"estimate," "expect," "seek" and "intend," and other similar expressions,
constitute forward-looking statements. These forward-looking statements involve
risks and uncertainties, and actual results may differ materially from those
anticipated or expressed in such statements. Potential risks and uncertainties
include, among others, those set forth herein under "Risk Factors," as well as
set forth under "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Overview," "-- Liquidity and Capital Resources" and
"-- Additional Factors That May Affect Future Results" in the Company's
Quarterly Report on Form 10-Q filed for the quarter ended June 30, 1998 and
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Overview" and "-- Liquidity and Capital Resources" and
"Business -- Additional Factors That May Affect Future Results" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, as amended by
the Company's Current Report on Form 8-K dated August 27, 1998. Particular
attention should be paid to the cautionary statements involving the Company's
limited operating history, the unpredictability of its future revenues, the
unpredictable and evolving nature of its business model, the intensely
competitive online commerce and retail book and music industries and the risks
associated with capacity constraints, systems development, management of growth,
acquisitions, any new products and international or domestic business expansion.
Except as required by law, the Company undertakes no obligation to update any
forward-looking statement, whether as a result of new information, future events
or otherwise. Readers, however, should carefully review the factors set forth in
other reports or documents that the Company files from time to time with the
Commission.
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RISK FACTORS
In addition to the other information contained in this Prospectus,
investors should carefully consider the following risk factors before making an
investment decision concerning the Shares:
Limited Operating History; Accumulated Deficit; Anticipated Losses. The
Company was incorporated in July 1994 and commenced offering products for sale
on its Web site in July 1995. Accordingly, the Company has a limited operating
history on which to base an evaluation of its business and prospects. The
Company's prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets such as
online commerce. Such risks for the Company include, but are not limited to, an
evolving and unpredictable business model and the management of growth. To
address these risks, the Company must, among other things, maintain and increase
its customer base, implement and successfully execute its business and marketing
strategy and its expansion into new product or geographic markets, effectively
manage and integrate acquisitions and other business combinations, continue to
develop and upgrade its technology and transaction-processing systems, improve
its Web site, provide superior customer service and order fulfillment, respond
to competitive developments, and attract, retain and motivate qualified
personnel. There can be no assurance that the Company will be successful in
addressing such risks, and the failure to do so could have a material adverse
effect on the Company's business, prospects, financial condition and results of
operations.
Since inception, the Company has incurred significant losses, and as of
June 30, 1998 had an accumulated deficit of $70.5 million. The Company believes
that its success will depend in large part on its ability to (i) extend its
brand position, (ii) provide its customers with outstanding value and a superior
shopping experience, and (iii) achieve sufficient sales volume to realize
economies of scale. Accordingly, the Company intends to continue to invest
heavily in marketing and promotion, product development and technology and
operating infrastructure development. The Company also offers attractive pricing
programs, which have resulted in relatively low product gross margins. As a
result, achieving profitability given planned investment levels depends on the
Company's ability to generate and sustain substantially increased revenue
levels. In addition, amounts associated with the Company's recent acquisitions,
including amortization of goodwill and other purchased intangibles and ongoing
operating expenses of those companies, as well as interest expense related to
the Senior Discount Notes (as defined below) will further affect the Company's
operating results. As a result of the foregoing factors, the Company believes
that it will continue to incur substantial operating losses for the foreseeable
future and that the rate at which such losses will be incurred will increase
significantly from current levels. Although the Company has experienced
significant revenue growth in recent periods, such growth rates are not
sustainable and will decrease in the future. In view of the rapidly evolving
nature of the Company's business and its limited operating history, the Company
believes that period-to-period comparisons of its operating results, including
the Company's gross profit and operating expenses as a percentage of net sales,
are not necessarily meaningful and should not be relied on as an indication of
future performance.
Unpredictability of Future Revenues; Potential Fluctuations in Quarterly
Operating Results; Seasonality. As a result of the Company's limited operating
history and the emerging nature of the markets in which it competes, the Company
is unable to accurately forecast its revenues. The Company's current and future
expense levels are based largely on its investment plans and estimates of future
revenues and are to a large extent fixed. Sales and operating results generally
depend on the volume of, timing of and ability to fulfill orders received, which
are difficult to forecast. The Company may be unable to adjust spending in a
timely manner to compensate for any unexpected revenue shortfall. Accordingly,
any significant shortfall in revenues in relation to the Company's planned
expenditures would have an immediate adverse effect on the Company's business,
prospects, financial condition and results of operations. Further, as a
strategic response to changes in the competitive environment, the Company may
from time to time make certain pricing, service, marketing or acquisition
decisions that could have a material adverse effect on its business, prospects,
financial condition and results of operations. For example, the Company has
recently announced acquisitions that will result in the Company's incurring
significant charges, including amortization of goodwill and other purchased
intangibles and ongoing operating expenses of the acquired companies.
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The Company expects to experience significant fluctuations in its future
quarterly operating results due to a variety of factors, many of which are
outside the Company's control. Factors that may adversely affect the Company's
quarterly operating results include, among others, (i) the Company's ability to
retain existing customers, attract new customers at a steady rate and maintain
customer satisfaction, (ii) the Company's ability to acquire product, to
maintain appropriate inventory levels and to manage fulfillment operations,
(iii) the Company's ability to maintain gross margins in its existing business
and in future product lines and markets, (iv) the development, announcement or
introduction of new sites, services and products by the Company and its
competitors, (v) price competition or higher wholesale prices in the industry,
(vi) the level of use of the Internet and online services and increasing
consumer acceptance of the Internet and other online services for the purchase
of products such as those offered by the Company, (vii) the Company's ability to
upgrade and develop its systems and infrastructure, (viii) the Company's ability
to attract new personnel in a timely and effective manner, (ix) the level of
traffic on the Company's Web site, (x) the Company's ability to manage
effectively its development of new business segments and markets, (xi) the
Company's ability to successfully manage the integration of operations and
technology of acquisitions or other business combinations, (xii) technical
difficulties, system downtime or Internet brownouts, (xiii) the amount and
timing of operating costs and capital expenditures relating to expansion of the
Company's business, operations and infrastructure, (xiv) the number of popular
books, music selections and other products introduced during the period, (xv)
the level of merchandise returns experienced by the Company, (xvi) governmental
regulation and taxation policies, (xvii) disruptions in service by common
carriers due to strikes or otherwise, and (xviii) general economic conditions
and economic conditions specific to the Internet, online commerce and the book
and music industries.
The Company expects that it will experience seasonality in its business,
reflecting a combination of seasonal fluctuations in Internet usage and
traditional retail seasonality patterns. Internet usage and the rate of Internet
growth may be expected to decline during the summer. Further, sales in the
traditional retail book and music industries are generally significantly higher
in the fourth calendar quarter of each year.
Due to the foregoing factors, in one or more future quarters the Company's
operating results may fall below the expectations of securities analysts or
investors. In such event, the trading price of the Common Stock would likely be
materially adversely affected.
Competition. The online commerce market, particularly over the Web, is new,
rapidly evolving and intensely competitive. In addition, the retail book and
music industries are intensely competitive. The Company's current or potential
competitors include (i) various online booksellers and vendors of other products
such as CDs and videotapes, including entrants into narrow specialty niches,
(ii) a number of indirect competitors that specialize in online commerce or
derive a substantial portion of their revenues from online commerce, through
which retailers other than the Company may offer products, and (iii) publishers,
distributors and retail vendors of books, music and other products, including
Barnes & Noble, Inc. ("Barnes & Noble") Bertelsmann AG ("Bertelsmann") and other
large specialty booksellers and integrated media corporations, many of which
possess significant brand awareness, sales volume and customer bases. The
Company believes that the principal competitive factors in its market are brand
recognition, selection, personalized services, convenience, price,
accessibility, customer service, quality of search tools, quality of editorial
and other site content and reliability and speed of fulfillment. Many of the
Company's competitors have longer operating histories, larger customer bases,
greater brand recognition and significantly greater financial, marketing and
other resources than the Company. Certain of the Company's competitors may be
able to secure merchandise from vendors on more favorable terms, devote greater
resources to marketing and promotional campaigns, adopt more aggressive pricing
or inventory availability policies and devote substantially more resources to
Web site and systems development than the Company. Increased competition may
result in reduced operating margins, loss of market share and a diminished brand
franchise. The Company anticipates that as the online commerce market continues
to grow, a certain amount of consolidation may occur. For example, Bertelsmann
recently announced that it purchased a 50% interest in Barnes & Noble's online
venture, barnesandnoble.com inc. In addition, online music retailers CDnow, Inc.
and N2K Inc. recently announced that they are in negotiations regarding an
unspecified transaction. There can be no assurance that the Company will be able
to compete successfully against current and future competitors.
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The Company expects that competition in the Internet and online commerce
markets will intensify in the future. For example, as various Internet market
segments obtain large, loyal customer bases, participants in those segments may
seek to leverage their market power to the detriment of participants in other
market segments. In addition, new technologies and the expansion of existing
technologies may increase the competitive pressures on online retailers,
including the Company. For example, "shopping agent" technologies permit
customers to quickly compare the Company's prices with those of its competitors.
Competitive pressures created by any one of the Company's competitors, or by the
Company's competitors collectively, could have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
System Development and Operation Risks. The Company's revenues depend on
the number of visitors who shop on its Web site and the volume of orders it
fulfills. Any system interruptions that result in the unavailability of the
Company's Web site or reduced order fulfillment performance would reduce the
volume of goods sold and the attractiveness of the Company's product and service
offerings. The Company has experienced periodic system interruptions, which it
believes will continue to occur from time to time. The Company uses an
internally developed system for its Web site and substantially all aspects of
transaction processing, including order management, cash and credit card
processing, purchasing, inventory management and shipping. The Company will be
required to add additional software and hardware and further develop and upgrade
its existing technology, transaction-processing systems and network
infrastructure to accommodate increased traffic on its Web site and increased
sales volume through its transaction-processing systems. Any inability to do so
may cause unanticipated system disruptions, slower response times, degradation
in levels of customer service, impaired quality and speed of order fulfillment,
or delays in reporting accurate financial information. There can be no assurance
that the Company will be able to accurately project the rate or timing of
increases, if any, in the use of its Web site or in a timely manner to
effectively upgrade and expand its transaction-processing systems or to
integrate smoothly any newly developed or purchased modules with its existing
systems. Any inability to do so could have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
Substantially all of the Company's computer and communications hardware is
located at a single leased facility in Seattle, Washington. The Company's
systems and operations are vulnerable to damage or interruption from fire,
flood, power loss, telecommunications failure, break-ins, earthquake and similar
events. The Company does not currently have redundant systems or a formal
disaster recovery plan and in the event of a major interruption does not have
sufficient business interruption insurance to compensate it for losses that may
occur. Despite the implementation of network security measures by the Company,
its servers are vulnerable to computer viruses, physical or electronic break-ins
and similar disruptions, which could lead to interruptions, delays, loss of
critical data or the inability to accept and fulfill customer orders. The
occurrence of any of the foregoing events could have a material adverse effect
on the Company's business, prospects, financial condition and results of
operations.
Management of Potential Growth. The Company has rapidly and significantly
expanded its operations and anticipates that further expansion will be required
to address potential growth in its customer base, to expand its product and
service offerings and its international operations, and to pursue other market
opportunities. The expansion of the Company's operations and employee base has
placed, and is expected to continue to place, a significant strain on the
Company's management, operational and financial resources. To manage the
expected growth of its operations and personnel, the Company will be required to
improve existing and implement new transaction-processing, operational and
financial systems, procedures and controls, as well as to expand, train and
manage its growing employee base. There can be no assurance that the Company's
current and planned personnel, systems, procedures and controls will be adequate
to support the Company's future operations, that management will be able to
hire, train, retain, motivate and manage required personnel or that Company
management will be able to successfully identify, manage and exploit existing
and potential market opportunities. If the Company is unable to manage growth
effectively, such inability could have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
Risks of New Business Areas. The Company over time intends to expand its
operations by promoting new or complementary products or sales formats and by
expanding the breadth and depth of its product or
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service offerings. For example, the Company introduced its music store in June
1998. Expansion of the Company's operations in this manner will require
significant additional expenses and development, operations and editorial
resources and could strain the Company's management, financial and operational
resources. Furthermore, the Company may not benefit from the first-mover
advantage that it experienced in the online book market, and gross margins
attributable to new business areas may be lower than those associated with the
Company's existing business activities. There can be no assurance that the
Company will be able to expand its operations in a cost-effective or timely
manner. Furthermore, any new business launched by the Company that is not
favorably received by consumers could damage the Company's reputation or the
Amazon.com brand. The lack of market acceptance of such efforts or the Company's
inability to generate satisfactory revenues from such expanded services or
products to offset their cost could have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
Risks of International Expansion. The Company expects to expand its
presence in foreign markets and in April 1998 acquired two international online
booksellers to accelerate this expansion. To date, the Company has only limited
experience in sourcing, marketing and distributing products on an international
basis and in developing localized versions of its Web site and other systems.
The Company expects to incur significant costs in establishing international
facilities and operations, in promoting its brand internationally, in developing
localized versions of its Web site and other systems and in sourcing, marketing
and distributing products in foreign markets. There can be no assurance that the
Company's international efforts will be successful. If the revenues resulting
from international activities are inadequate to offset the expense of
establishing and maintaining foreign operations, such inadequacy could have a
material adverse effect on the Company's business, prospects, financial
condition and results of operations. In addition, there are certain risks
inherent in doing business on an international level, such as unexpected changes
in regulatory requirements, export and import restrictions, tariffs and other
trade barriers, difficulties in staffing and managing foreign operations, longer
payment cycles, political instability, fluctuations in currency exchange rates,
seasonal reductions in business activity in other parts of the world and
potentially adverse tax consequences, any of which could adversely affect the
success of the Company's international operations. Furthermore, it is possible
that governments in certain foreign jurisdictions may have or enact legislation
with respect to the Internet or other online services in such areas as content,
privacy, network security, encryption or distribution that may affect the
Company's ability to conduct business abroad. There can be no assurance that one
or more of such factors will not have a material adverse effect on the Company's
future international operations and, consequently, on the Company's business,
prospects, financial condition and results of operations.
Risks of Business Combinations and Strategic Alliances. The Company may
choose to expand its operations or market presence by entering into business
combinations, investments, joint ventures or other strategic alliances with
third parties such as the Company's April acquisitions of two international
online booksellers and of Internet Movie Database Limited and August
acquisitions of Junglee Corp. ("Junglee") and Sage Enterprises, Inc.
("PlanetAll"). Any such transaction will be accompanied by risks commonly
encountered in such transactions, which include, among others, the difficulty of
assimilating the operations, technology and personnel of the combined companies,
the potential disruption of the Company's ongoing business, the possible
inability to retain key technical and managerial personnel, the potential
inability of management to maximize the financial and strategic position of the
Company through the successful integration of acquired businesses, additional
expenses associated with amortization of goodwill and purchased intangible
assets, additional operating losses and expenses associated with the activities
and expansion of acquired businesses, the maintenance of uniform standards,
controls and policies and the possible impairment of relationships with existing
employees and customers. There can be no assurance that the Company will be
successful in overcoming these risks or any other problems encountered in
connection with such business combinations, investments, joint ventures or other
strategic alliances, or that such transactions will not have a material adverse
effect on the Company's business, prospects, financial condition and results of
operations.
Rapid Technological Change. To remain competitive, the Company must
continue to enhance and improve the responsiveness, functionality and features
of the Amazon.com online store. The Internet and the online commerce industry
are characterized by rapid technological change, changes in user and customer
requirements and preferences, frequent new products and service introductions
embodying new technologies
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and the emergence of new industry standards and practices that could render the
Company's existing Web site and proprietary technology and systems obsolete. The
Company's success will depend, in part, on its ability to license leading
technologies useful in its business, enhance its existing services, develop new
services and technology that address the increasingly sophisticated and varied
needs of its prospective customers and respond to technological advances and
emerging industry standards and practices on a cost-effective and timely basis.
The development of a Web site and other proprietary technology entails
significant technical, financial and business risks. There can be no assurance
that the Company will successfully implement new technologies or adapt its Web
site, proprietary technology and transaction-processing systems to customer
requirements or emerging industry standards. If the Company is unable, for
technical, legal, financial or other reasons, to adapt in a timely manner in
response to changing market conditions or customer requirements, such inability
could have a material adverse effect on the Company's business, prospects,
financial condition and results of operations.
Dependence on Key Personnel. The Company's performance is substantially
dependent on the continued services and on the performance of its senior
management and other key personnel, particularly Jeffrey P. Bezos, its
President, Chief Executive Officer and Chairman of the Board. The Company does
not have long-term employment agreements with any of its key personnel and
maintains no "key person" life insurance policies. The loss of the services of
its executive officers or other key employees could have a material adverse
effect on the Company's business, prospects, financial condition and results of
operations.
Reliance on Certain Suppliers. The Company purchases a substantial majority
of its products from two major vendors, Ingram Book Group ("Ingram") and Baker &
Taylor, Inc. Ingram is the Company's single largest supplier and accounted for
58% and 59% of the Company's inventory purchases in 1997 and 1996, respectively.
The Company has no long-term contracts or arrangements with any of its vendors
that guarantee the availability of merchandise, the continuation of particular
payment terms or the extension of credit limits. There can be no assurance that
the Company's current vendors will continue to sell merchandise to the Company
on current terms or that the Company will be able to establish new or extend
current vendor relationships to ensure acquisition of merchandise in a timely
and efficient manner and on acceptable commercial terms. If the Company were
unable to develop and maintain relationships with vendors that would allow it to
obtain sufficient quantities of merchandise on acceptable commercial terms, such
inability could have a material adverse effect on the Company's business,
prospects, financial condition and results of operations.
Increased Leverage. The Company has significant indebtedness outstanding,
principally $326 million gross proceeds of 10% Senior Discount Notes due 2008
(the "Senior Discount Notes"), capitalized lease obligations and other equipment
financing. The Company may incur substantial additional indebtedness in the
future. The level of the Company's indebtedness, among other things, could (i)
make it difficult for the Company to make payments on the Senior Discount Notes,
(ii) make it difficult for the Company to obtain any necessary financing in the
future for working capital, capital expenditures, debt service requirements or
other purposes, (iii) limit the Company's flexibility in planning for, or
reacting to changes in, its business, and (iv) make it more vulnerable in the
event of a downturn in its business. There can be no assurance that the Company
will be able to improve its earnings before fixed charges or that the Company
will be able to meet its debt service obligations, including its obligations
under the Senior Discount Notes. In the event the Company's cash flow is
inadequate to meet its obligations, the Company could face substantial liquidity
problems. If the Company is unable to generate sufficient cash flow or otherwise
obtain funds necessary to make required payments, or if the Company otherwise
fails to comply with the various covenants in its indebtedness, it would be in
default under the terms thereof, which would permit the holders of such
indebtedness to accelerate the maturity of such indebtedness and could cause
defaults under other indebtedness of the Company. Any such default could have a
material adverse effect on the Company's business, prospects, financial
condition and results of operations.
Risks Associated With Domain Names. The Company currently holds various Web
domain names relating to its brand, including the "Amazon.com" domain name. The
acquisition and maintenance of domain names generally is regulated by
governmental agencies and their designees. For example, in the United States,
the National Science Foundation has appointed Network Solutions, Inc. as the
current exclusive registrar for
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the ".com," ".net" and ".org" generic top-level domains. The regulation of
domain names in the United States and in foreign countries is subject to change
in the near future. Such changes in the United States are expected to include a
transition from the current system to a system that is controlled by a nonprofit
corporation and the creation of additional top-level domains. Governing bodies
may establish additional top-level domains, appoint additional domain name
registrars or modify the requirements for holding domain names. As a result,
there can be no assurance that the Company will be able to acquire or maintain
relevant domain names in all countries in which it conducts business.
Furthermore, the relationship between regulations governing domain names and
laws protecting trademarks and similar proprietary rights is unclear. The
Company, therefore, may be unable to prevent third parties from acquiring domain
names that are similar to, infringe upon or otherwise decrease the value of its
trademarks and other proprietary rights. Any such inability could have a
material adverse effect on the Company's business, prospects, financial
condition and results of operations.
Governmental Regulation and Legal Uncertainties. The Company is not
currently subject to direct regulation by any domestic or foreign governmental
agency, other than regulations applicable to businesses generally and laws or
regulations directly applicable to access to online commerce. However, due to
the increasing popularity and use of the Internet and other online services, it
is possible that a number of laws and regulations may be adopted with respect to
the Internet or other online services covering issues such as user privacy,
pricing, content, copyrights, distribution and characteristics and quality of
products and services. Furthermore, the growth and development of the market for
online commerce may prompt calls for more stringent consumer protection laws
that may impose additional burdens on those companies conducting business
online. The adoption of any additional laws or regulations may decrease the
growth of the Internet or other online services, which could, in turn, decrease
the demand for the Company's products and services and increase the Company's
cost of doing business, or otherwise have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
Moreover, the applicability to the Internet and other online services of
existing laws in various jurisdictions governing issues such as property
ownership, sales and other taxes, libel and personal privacy is uncertain and
may take years to resolve. Any such new legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not
currently apply to the Company's business, or the application of existing laws
and regulations to the Internet and other online services could have a material
adverse effect on the Company's business, prospects, financial condition and
results of operations.
Restrictions on Payment of Dividends. The Company has never paid any cash
dividends on its Common Stock. The Company's Board of Directors will determine
future dividend policy based on the Company's results of operations, financial
condition, capital requirements and other circumstances. The Indenture, dated as
of May 8, 1998, between the Company and the Bank of New York, as Trustee,
relating to the Senior Discount Notes, prohibits the Company from paying cash
dividends on its capital stock, subject to certain exceptions. It is not
anticipated that any cash dividends will be paid on the Common Stock in the
foreseeable future.
Year 2000 Compliance. The Company has developed a plan to modify its
information technology to recognize the Year 2000 and has, to the extent
necessary, begun converting its critical data processing systems. Since the
Company's systems and software are relatively new, management does not expect
Year 2000 issues related to its own internal systems to be significant and does
not anticipate that it will incur significant operating expenses or be required
to invest heavily in computer systems improvements to be Year 2000 compliant.
The Company has initiated formal communications with certain of its significant
suppliers and service providers to determine the extent to which the Company's
interface systems may be vulnerable should those third parties fail to address
and correct their own Year 2000 issues. The Company currently expects the
project to be completed in the third quarter of 1999. There can be no guarantee
that the systems of suppliers or other companies on which the Company relies
will be converted in a timely manner and will not have a material adverse effect
on the Company's systems. Additionally, there can be no guarantee that the
computer systems necessary to maintain the viability of the Internet or any of
the Web sites that direct consumers to the Company's online store will be Year
2000 compliant. As part of the Company's overall Year 2000 compliance
9
<PAGE> 10
plan, the Company intends to monitor systems performance and plans to develop a
rapid response program in the event of any significant disruption as a result of
the Year 2000 issues.
Volatility of Stock Price. The trading price of the Common Stock is subject
to wide fluctuations. For example, for the 52-week period ended October 16,
1998, the reported closing price of the Common Stock on Nasdaq was as high as
$139.50 and as low as $21.75 per share (as adjusted for the Company's 2-for-1
stock split effected June 1, 1998). Trading prices of the Common Stock may
fluctuate in response to a number of events and factors, such as quarterly
variations in operating results, announcements of innovations, new products,
strategic developments or business combinations by the Company or its
competitors, changes in the Company's expected operating expense levels or
losses, changes in financial estimates and recommendations by securities
analysts, the operating and stock price performance of other companies that
investors may deem comparable to the Company, news reports relating to trends in
the Internet, book or music industries and other events or factors many of which
are beyond the Company's control. In addition, the stock market in general, and
the market prices for Internet-related companies in particular, have experienced
extreme volatility that often has been unrelated to the operating performance of
such companies. These broad market and industry fluctuations may adversely
affect the trading price of the Common Stock, regardless of the Company's
operating performance.
10
<PAGE> 11
SELLING STOCKHOLDERS
The following table provides certain information regarding the Selling
Stockholders and the number of Shares being offered by them as of September 30,
1998.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING
-------------------------
PERCENTAGE OF SHARES
COMMON BENEFICIALLY
STOCK SHARES THAT MAY OWNED AFTER
NAME AND ADDRESS AMOUNT OUTSTANDING BE SOLD OFFERING(1)
---------------- ------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
PLANETALL MERGER
Warren William Adams...................... 166,907(2) * 166,907 0
William Allocca........................... 1,578(3) * 5 1,573
Kenneth Edward Barrett.................... 1,814 * 1,814 0
Thomas Jason Black........................ 99(2) * 99 0
David Bullock............................. 6,751 * 6,751 0
Rachael Burger............................ 736(4) * 5 731
Jason Peter Butler........................ 161(5) * 5 156
Steven James Carbone...................... 156 * 156 0
CMG @Ventures II, LLC..................... 225,557(2) * 225,557 0
Digital Ventures Limited.................. 120,952(2) * 120,952 0
Kenneth Lee Dinovo........................ 903(6) * 5 898
Steven Richard Dyer....................... 847(7) * 5 842
Robert A. Ferrari......................... 23 * 23 0
Stuart Gannes............................. 557 * 557 0
Nancy T. Garland.......................... 121(8) * 5 116
Growth Partners........................... 6,590 * 6,590 0
John William Gurley....................... 4,274 * 4,274 0
John Hummer............................... 4,274 * 4,274 0
Thomas R. Johnson......................... 69 * 69 0
Alexander Kaplevatsky..................... 2 * 2 0
Brian J. Kennealy......................... 562(9) * 5 557
Alan Kipust............................... 3,157 * 3,157 0
James R. Lane............................. 3,076 * 3,076 0
Frank Nelson Levy......................... 4,963(10) * 5 4,958
Phillip Preston Lohnes.................... 296 * 296 0
Lycos, Inc................................ 107,377(2) * 107,377 0
Thomas Mastrocola......................... 1,352 * 1,352 0
Jeffrey D. Mather......................... 33 * 33 0
Gerald Phillip Michalski.................. 427(2) * 427 0
John Kenneth Michaud...................... 23 * 23 0
James David Mirenda....................... 2,453 * 2,453 0
M. Bruce Nakao 1994 Trust 4/28/94......... 977 * 977 0
Wende Lawrence Niles...................... 147(11) * 5 142
Sung Kyu Park............................. 1,394 * 1,394 0
Puma Technology, Inc...................... 12,824 * 12,824 0
Clive Ramsay.............................. 2,255 * 2,255 0
Brian Roberts............................. 6,157 * 6,157 0
Brian David Robertson..................... 41,747(2) * 41,747 0
Henry W. Rossi............................ 2,714 * 2,714 0
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING
-------------------------
PERCENTAGE OF SHARES
COMMON BENEFICIALLY
STOCK SHARES THAT MAY OWNED AFTER
NAME AND ADDRESS AMOUNT OUTSTANDING BE SOLD OFFERING(1)
---------------- ------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
Bradley Alan Rowe......................... 977 * 977 0
Schwartz Communications, Inc.............. 1,090 * 1,090 0
Dennis Hyun Son........................... 156(2) * 156 0
Stevenson Family Investment, L.P.......... 1,581 * 1,581 0
SUN Capital Partners Limited.............. 39,356 * 39,356 0
Robert Blair Taylor....................... 1,767 * 1,767 0
Gwendolyn M. Thompson..................... 2,461 * 2,461 0
David F. Tufaro........................... 13,945(2) * 13,945 0
Sharon K. Tufaro.......................... 13,945(2) * 13,945 0
Vencor & Co............................... 1,804 * 1,804 0
Scott Wilhelm............................. 117(12) * 5 112
JUNGLEE MERGER
Yu Shun Chang............................. 5,412 * 5,412 0
Hon-Jane Chiu............................. 33,826 * 33,826 0
Linda Christensen......................... 634 * 634 0
CMC Magnetics Corporation................. 35,179 * 35,179 0
Martin Cooper............................. 3,382 * 3,382 0
Werner O. Daghofer........................ 3,949(13) * 2,663 1,286
Dip Yah International Corporation......... 2,706 * 2,706 0
Constantin S. Delivanis................... 10,148 * 10,148 0
Peter M. Donovan.......................... 2,706 * 2,706 0
F&W Investments 1997...................... 1,353 * 1,353 0
Gabriel Fernandez......................... 1,071 * 1,071 0
Fred M. Gibbons........................... 3,664 * 3,664 0
Anbarasan P. Gounder...................... 1,268(14) * 761 507
Ashish Gupta.............................. 175,899(15) * 175,899 0
Masumi Hara............................... 676 * 676 0
Venkatesh Harinarayan..................... 175,899(16) * 175,899 0
Kin Yuen Hoh.............................. 1,183 * 1,183 0
Mei Chin Huang............................ 13,530 * 13,530 0
Kankaku Investment Co., Ltd............... 5,412 * 5,412 0
KIC-3 Investment Partnership.............. 8,118 * 8,118 0
Kyocera Corporation....................... 45,102 * 45,102 0
Yen-Nan Lee............................... 27,061 * 27,061 0
Brian Lent................................ 6,267(17) * 5,186 1,081
Judy Ting-Lan Li.......................... 2,706 * 2,706 0
Steve W. Marchette........................ 243 * 243 0
Rakesh Mathur............................. 175,899(18) * 175,899 0
McKinsey & Company, Inc................... 8,698 * 8,698 0
Gordon Mortensen.......................... 270 * 270 0
Nichimen America, Inc..................... 45,102 * 45,102 0
Nichiman Corporation (Japan).............. 45,102 * 45,102 0
Peter Norvig.............................. 4,776(19) * 4,246 530
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING
-------------------------
PERCENTAGE OF SHARES
COMMON BENEFICIALLY
STOCK SHARES THAT MAY OWNED AFTER
NAME AND ADDRESS AMOUNT OUTSTANDING BE SOLD OFFERING(1)
---------------- ------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
Craig & Susan Olson Living Trust
Dated April 15, 1997, Through its
Trustees, Craig & Susan Olson............. 8,456 * 8,456 0
Zoe Oredson............................... 338 * 338 0
Nayantara H. Patel........................ 685(20) * 439 246
Yan L. Philipe............................ 403(21) * 338 65
Dallan Quass.............................. 35,179 * 35,179 0
Anand Rajaraman........................... 175,899(22) * 175,899 0
M.R. Rangaswami........................... 10,148 * 10,148 0
Michelle L. Rife.......................... 466 * 466 0
Robert C. Fitzwilson Trust................ 4,735 * 4,735 0
Robyn Sherman............................. 2,390 * 2,390 0
Hisato Shihodo............................ 27,061 * 27,061 0
Kavitark R. Shriram(23)................... 110,274(24) * 76,448 33,826
Silicon Valley Bank....................... 608 * 608 0
Damon Todd Silver......................... 537(25) * 394 143
Stanford University....................... 61,706 * 2,706 59,000
Sun Circle Pte. Ltd....................... 2,706 * 2,706 0
Susan Jackson, Trustee of the
Susan JacksonTrust dated 9/15/89.......... 4,735 * 4,735 0
Trans Cosmos USA Inc...................... 94,715 * 94,715 0
Tsyuoshi Taira............................ 47,357 * 47,357 0
The Washington Post Co.................... 202,961 * 202,961 0
Jeffrey D. Ullman......................... 5,412 * 5,412 0
Kenneth J. Virnig......................... 413 * 413 0
Win Win Venture Capital Corporation....... 22,551 * 22,551 0
WS Investment Company..................... 819 * 819 0
WS Investment Company 97B................. 819 * 819 0
Karen C. Yao.............................. 2,106(26) * 1,973 133
TELEBOOK MERGER
Michael J.G. Gleissner.................... 292,234(27) * 129,532 162,702
Christian Jagodzinski..................... 144,940(28) * 75,676 69,264
Maria Garcia Nielson...................... 5,878(29) * 3,778 2,100
Ulrike Stadler............................ 144,940(28) * 75,676 69,264
OTHER TRANSACTIONS
Tracy Adams............................... 533 * 533 0
Alan R. Bailey............................ 34 * 34 0
Vladimir Sukonnik......................... 1,574 * 1,574 0
</TABLE>
- ---------------
* Less than 1%.
(1) Assumes the sale of all the Shares offered by each of the Selling
Stockholders.
(2) These Shares are contractually ineligible for sale or transfer pursuant to
the Registration Statement or otherwise until the publication by the
Company of certain financial data that reflect the combined results of
operations of the Company and PlanetAll for a period of 30 days.
(3) Includes 1,573 Shares subject to options exercisable within 60 days of
September 30, 1998.
13
<PAGE> 14
(4) Includes 731 Shares subject to options exercisable within 60 days of
September 30, 1998.
(5) Includes 156 Shares subject to options exercisable within 60 days of
September 30, 1998.
(6) Includes 898 Shares subject to options exercisable within 60 days of
September 30, 1998.
(7) Includes 842 Shares subject to options exercisable within 60 days of
September 30, 1998.
(8) Includes 116 Shares subject to options exercisable within 60 days of
September 30, 1998.
(9) Includes 557 Shares subject to options exercisable within 60 days of
September 30, 1998.
(10) Includes 4,958 Shares subject to options exercisable within 60 days of
September 30, 1998.
(11) Includes 142 Shares subject to options exercisable within 60 days of
September 30, 1998.
(12) Includes 112 Shares subject to options exercisable within 60 days of
September 30, 1998.
(13) Includes 1,286 Shares subject to options exercisable within 60 days of
September 30, 1998.
(14) Includes 507 Shares subject to options exercisable within 60 days of
September 30, 1998.
(15) Includes 78,249 Shares subject to a right of repurchase by the Company. As
a result, these Shares will not contractually be eligible for sale or
transfer pursuant to the Registration Statement or otherwise until such
Shares have vested and are released. Subject to the provision of continuous
services, 2,371 of such Shares will vest per month. The vesting of such
Shares will accelerate under certain circumstances pursuant to the terms of
Mr. Gupta's Restricted Stock Purchase Agreement.
(16) Includes 78,249 Shares subject to a right of repurchase by the Company. As
a result, these Shares will not contractually be eligible for sale or
transfer pursuant to the Registration Statement or otherwise until such
Shares have vested and are released. Subject to the provision of continuous
services, 2,371 of such Shares will vest per month. The vesting of such
Shares will accelerate under certain circumstances pursuant to the terms of
Mr. Harinarayan's Restricted Stock Purchase Agreement.
(17) Includes 1,081 Shares subject to options exercisable within 60 days of
September 30, 1998.
(18) Includes 78,249 Shares subject to a right of repurchase by the Company. As
a result, these Shares will not contractually be eligible for sale or
transfer pursuant to the Registration Statement or otherwise until such
Shares have vested and are released. Subject to the provision of continuous
services, 2,371 of such Shares will vest per month. The vesting of such
Shares will accelerate under certain circumstances pursuant to the terms of
Mr. Mathur's Restricted Stock Purchase Agreement.
(19) Includes 530 Shares subject to options exercisable within 60 days of
September 30, 1998.
(20) Includes 246 Shares subject to options exercisable within 60 days of
September 30, 1998.
(21) Includes 65 Shares subject to options exercisable within 60 days of
September 30, 1998.
(22) Includes 78,249 Shares subject to a right of repurchase by the Company. As
a result, these Shares will not contractually be eligible for sale or
transfer pursuant to the Registration Statement or otherwise until such
Shares have vested and are released. Subject to the provision of continuous
services, 2,371 of such Shares will vest per month. The vesting of such
Shares will accelerate under certain circumstances pursuant to the terms of
Mr. Rajaraman's Restricted Stock Purchase Agreement.
(23) Mr. Shriram currently serves as Vice President, Business Development of the
Company.
(24) Includes 22,551 Shares subject to a right of repurchase by the Company. As
a result, these Shares will not contractually be eligible for sale or
transfer pursuant to the Registration Statement or otherwise until such
Shares have vested and are released. Subject to the provision of continuous
services, 2,819 of such Shares will vest per month. Also includes 33,826
shares subject to options exercisable within 60 days of September 30, 1998.
(25) Includes 143 Shares subject to options exercisable within 60 days of
September 30, 1998.
(26) Includes 133 Shares subject to options exercisable within 60 days of
September 30, 1998.
(27) Includes 104,370 securities deposited with an escrow agent to secure
indemnification obligations under the Telebook Merger and 58,332 securities
pledged under an employment agreement to secure future services. The
securities placed in escrow and pledged under the employment agreement are
not included as Shares pursuant to the Registration Statement.
14
<PAGE> 15
(28) Includes 51,764 securities deposited with an escrow agent to secure
indemnification obligations under the Telebook Merger and 17,500 securities
pledged under an employment agreement to secure future services. The
securities placed in escrow and pledged under the employment agreement are
not included as Shares pursuant to the Registration Statement.
(29) Includes 2,100 securities deposited with an escrow agent to secure
indemnification obligations under the Telebook Merger. The securities
placed in escrow are not included as Shares pursuant to the Registration
Statement.
Except as noted above, none of the Selling Stockholders has had any
material relationship with the Company, or any of its affiliates, within the
past three years.
The former stockholders of PlanetAll have agreed to indemnify and hold the
Company harmless for any losses that may be suffered by the Company or its
affiliates arising out of or in connection with any inaccuracy in, or
misrepresentation or breach of, any representation or warranty made by PlanetAll
in the PlanetAll merger and related agreements, or any failure by PlanetAll to
perform its obligations under the PlanetAll merger and related agreements.
Approximately 10% of the Shares that initially were issued to each of the
Selling Stockholders as a result of the PlanetAll Merger have been deposited
with an escrow agent to secure such indemnification obligations. The securities
placed in escrow, although included as part of the Shares registered hereunder,
thus contractually may not be eligible for resale during the period in which the
Registration Statement remains effective.
The former stockholders of Junglee have agreed to indemnify and hold the
Company harmless for any losses that may be suffered by the Company or its
affiliates arising out of or in connection with any inaccuracy in, or
misrepresentation or breach of, any representation or warranty made by Junglee
in the Junglee merger and related agreements, or any failure by Junglee to
perform its obligations under the Junglee merger and related agreements.
Approximately 12% of the Shares that initially were issued to each of the
Selling Stockholders as a result of the Junglee Merger have been deposited with
an escrow agent to secure such indemnification obligations. The securities
placed in escrow, although included as part of the Shares registered hereunder,
thus contractually may not be eligible for resale during the period in which the
Registration Statement remains effective.
The Selling Stockholders have represented to the Company that they acquired
the Shares for their own account for investment only and not with a view toward
the public sale or distribution thereof, except pursuant to sales registered
under the Securities Act or exemptions therefrom. In recognition of the fact
that the Selling Stockholders, even though acquiring the Shares for investment,
may wish to be legally permitted to sell their Shares when they deem
appropriate, the Company agreed with the Selling Stockholders to file with the
Commission under the Securities Act a Registration Statement with respect to the
resale of the Shares from time to time and agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective during the periods negotiated in
connection with the respective mergers. With respect to the Shares issued in
connection with the PlanetAll Merger, the Registration Statement shall remain
effective until the earliest of (i) August 27, 1999, (ii) the date on which all
Shares have been registered and sold pursuant to the Registration Statement, or
(iii) the date on which the Shares issued in the PlanetAll Merger cease to meet
the definition of "Registrable Securities" as defined in the merger agreement
for the PlanetAll Merger. With respect to the Shares issued in connection with
the Junglee Merger, the Registration Statement shall remain effective until the
earliest of (i) August 12, 1999, (ii) the date on which all Shares have been
registered and sold pursuant to the Registration Statement, or (iii) the date on
which the Shares issued in the Junglee Merger cease to meet the definition of
"Registrable Securities" as defined in the merger agreement for the Junglee
Merger. With respect to the Shares issued in connection with the Telebook
Merger, the Registration Statement shall remain effective until the earlier of
(i) ten days after the Registration Statement becomes effective or (ii) the
distribution contemplated by the Registration Statement has been completed. See
"Plan of Distribution."
15
<PAGE> 16
PLAN OF DISTRIBUTION
All the Shares offered hereby may be sold from time to time by the Selling
Stockholders, or by their pledgees, donees, distributees, transferees or other
successors-in-interest. The sale of the Shares by the Selling Stockholders may
be effected from time to time in one or more types of transactions (which may
include block transactions) in the over-the-counter market through Nasdaq, or on
one or more other securities markets and exchanges, in privately negotiated
transactions, through put or call options transactions relating to the Shares,
through short sales of Shares, or through a combination of such methods of sale,
at fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices relating to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect the above-mentioned transactions by
selling the Shares directly to purchasers, acting as principals for their own
accounts, or by or through broker-dealers acting as agents for the Selling
Stockholders, or to broker-dealers who may purchase Shares as principals and
thereafter sell such Securities from time to time in transactions on any
exchange or market on which such securities are listed or quoted, as applicable,
in negotiated transactions, through a combination of such methods of sale, or
otherwise. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they may sell as principals, or both (which compensation as to a particular
broker-dealer may be in excess of customary commissions). None of the proceeds
from the sale of the Shares by the Selling Stockholders will be received by the
Company. In addition, any of the Shares that qualify for sale pursuant to Rule
144 promulgated under the Securities Act may be sold in transactions complying
with such Rule, rather than pursuant to this Prospectus.
In connection with distributions of the Shares or otherwise, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the Shares in the course of hedging the positions they assume with Selling
Stockholders. The Selling Stockholders may also sell shares short and redeliver
the Shares to close out such short positions. The Selling Stockholders may also
enter into option or other transactions with broker-dealers which require the
delivery to the broker-dealer of the Shares, which the broker-dealer may resell
or otherwise transfer pursuant to this Prospectus. The Selling Stockholder may
also loan or pledge the Shares to a broker-dealer and the broker-dealer may sell
the Shares so loaned or upon a default the broker-dealer may effect sales of the
pledged Shares pursuant to this Prospectus.
The Selling Stockholders and any broker-dealers who act in connection with
the sale of the Shares hereunder may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them and profit on any resale of the Shares as principal may be deemed to be
underwriting discounts and commissions under the Securities Act. The Company has
agreed to bear all reasonable expenses (other than broker's commissions and
similar charges) in connection with the registration and sale of the Shares
being offered by the Selling Stockholders that initially were issued as a result
of the Mergers. The Company has agreed to indemnify the Selling Stockholders and
any agent, dealer or broker-dealer who acts in connection with the sale of the
Shares hereunder that initially were issued as a result of the Mergers against
certain liabilities, including liabilities under the Securities Act.
If one or more Selling Stockholders shall propose to sell Shares pursuant
to this Prospectus, such Selling Stockholders shall deliver to the Company at
least three full trading days prior to such proposed sale a written notice
notifying the Company of their intent to sell (including the proposed manner and
timing of all sales), and the provision of such notice to the Company shall
conclusively be deemed to establish and confirm an agreement by such Selling
Stockholders to sell such Shares, in whole, in part or not at all, within a
period ending on the tenth trading day following the first such sale and to
comply with the other contractual registration provisions. To the extent the
Company has not exercised its rights to suspend (as described below), the
Company shall provide written notice to each of the other Selling Stockholders
regarding the availability of such ten trading day period.
The Company has the right to suspend use of this Prospectus for certain
periods of time (which may or may not last for a period of weeks) under certain
circumstances. The Company has agreed to use reasonable
16
<PAGE> 17
efforts to ensure that the Selling Stockholders shall have an aggregate of at
least ten trading days (prorated for partial fiscal quarters) under this
Prospectus during each fiscal quarter during the effective period hereof.
Upon the Company being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
Prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Stockholder and of
the participating broker-dealer(s), (ii) the number of Shares involved, (iii)
the price at which such Shares were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
forth or incorporated by reference in this Prospectus, and (vi) other facts
material to the transaction. In addition, upon the Company being notified by a
Selling Stockholder that a donee or pledgee intends to sell more than 500
Shares, a supplement to this Prospectus will be filed. In addition, to the
extent required, the number of the Shares to be sold, purchase prices, public
offering prices, the names of any agents, dealers or underwriters, and any
applicable commissions or discounts with respect to a particular offer will be
set forth by the Company in a supplement to this Prospectus or, if appropriate,
a post-effective amendment to the Registration Statement.
Offers or sales of the Shares have not been registered or qualified under
the laws of any country other than the United States. To comply with certain
states' securities laws, if applicable, the Shares will be offered or sold in
such jurisdictions only through registered or licensed brokers or dealers.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may be limited in its ability to engage
in market activities with respect to such Shares. In addition and without
limiting the foregoing, each Selling Stockholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder, which
provisions may limit the timing of purchases and sales of any of the Shares by
the Selling Stockholders. The foregoing may affect the marketability of the
Shares.
There can be no assurance that the Selling Stockholders will sell any or
all of the Shares offered by them hereunder.
LEGAL MATTERS
The validity of the Shares offered hereby has been passed on for the
Company by Perkins Coie LLP, Seattle, Washington.
EXPERTS
The financial statements of the Company appearing in the Company's Annual
Report (Form 10-K) for the year ended December 31, 1997 and the supplemental
consolidated financial statements of the Company appearing in the Company's
Current Report on Form 8-K filed September 11, 1998, have been audited by Ernst
& Young LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. Such financial statements
and supplemental consolidated financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
The financial statements of Junglee Corp., incorporated in this Prospectus
by reference from the Company's Current Report on Form 8-K filed August 27,
1998, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
17
<PAGE> 18
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
HEREIN CONTAINED AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SHARES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Forward-Looking Statements............ 3
Risk Factors.......................... 4
Selling Stockholders.................. 11
Plan of Distribution.................. 15
Legal Matters......................... 17
Experts............................... 17
</TABLE>
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AMAZON LOGO
2,662,125 Shares of
Common Stock
-----------------
PROSPECTUS
-----------------
OCTOBER 22, 1998
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