Amazon.com 2002 Annual Report Download - page 28

the United Kingdom and France are located in Bad Hersfeld, Marston Gate and Orleans, respectively, and
the lease terms expire in December 2009, October 2025 and March 2009, respectively.
In January 2001, we closed our fulÑllment centers in McDonough, Georgia and Seattle, Washington.
Our lease for the Seattle facility, which covers approximately 76,000 square feet (a portion of which is
currently subleased) will expire in April 2004. We recently negotiated a termination agreement for our
McDonough facility lease that accelerated the termination date to December 2002 for a portion of the
building and to March 2003 for the remainder of the building (contingent on our payment of the Ñnal
termination fee). At December 31, 2002, the lease for our McDonough facility covered approximately
520,000 square feet.
We believe our properties are suitable and adequate for our present and anticipated near term needs.
Item 3. Legal Proceedings
On April 12, 2001, we received a request from the SEC staÅ for the voluntary production of
documents and information concerning, among other things, previously reported sales of our common stock
by our Chairman and Chief Executive OÇcer, JeÅrey Bezos, on February 2 and 5, 2001. We are
cooperating with the SEC staÅ's continuing inquiry.
A number of purported class action complaints were Ñled by holders of our equity and debt securities
against us, our directors and certain of our senior oÇcers during 2001, in the United States District Court
for the Western District of Washington, alleging violations of the Securities Act of 1933 (the ""1933 Act'')
and/or the Securities Exchange Act of 1934 (the ""1934 Act''). On October 5, 2001, plaintiÅs in the 1934
Act cases Ñled a consolidated amended complaint alleging that we, together with certain of our oÇcers
and directors and certain third parties, made false or misleading statements during the period from
October 29, 1998 through July 23, 2001 concerning our business, Ñnancial condition and results,
inventories, future prospects and strategic alliance transactions. The 1933 Act complaint alleges that the
defendants made false or misleading statements in connection with our February 2000 oÅering of the
6.875% PEACS. The complaints seek recissionary and/or compensatory damages and injunctive relief
against all defendants. We dispute the allegations of wrongdoing in these complaints and intend to
vigorously defend ourselves in these matters.
On August 28, 2002, the Trustee for the Creditors' Trust for Living.com instituted an adversary
proceeding against a subsidiary of the Company in the United States Bankruptcy Court for the Western
District of Texas. The plaintiÅ alleges that Living.com's creditors are entitled to a contractual recovery of
approximately $58 million in fees that Living.com had previously paid in 2000 primarily by issuing
Living.com stock to the Company. We dispute the plaintiÅ's allegations and intend to vigorously defend
ourselves in this matter.
On October 29, 2002, Gary Gerlinger, individually and on behalf of all other similarly situated
consumers in the United States who, during the period from August 1, 2001 to the present, purchased
books online from either Amazon.com or Borders.com, instituted an action against the Company and
Borders in the United States District Court for the Northern District of California. The Complaint alleges
that the agreement pursuant to which an aÇliate of Amazon.com operates Borders.com as a co-branded
site violates federal anti-trust laws, California statutory law and the common law of unjust enrichment.
The Complaint seeks injunctive relief, damages, including treble damages or statutory damages where
applicable, attorneys fees, costs and disbursements, disgorgement of all sums obtained by allegedly
wrongful acts, interest and declaratory relief. We dispute the plaintiÅ's allegations of wrongdoing and
intend to vigorously defend ourselves in this matter.
Depending on the amount and the timing, an unfavorable resolution of some or all of these matters
could materially aÅect our business, future results of operations, Ñnancial position or cash Öows in a
particular period.
From time to time, we are subject to other legal proceedings and claims in the ordinary course of
business, including claims of alleged infringement of trademarks, copyrights, patents and other intellectual
19