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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 7, 1997
Date of Report
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(Date of earliest event
reported)
AMAZON.COM, INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-22513 91-1646860
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(State or other (Commission File (IRS Employer
jurisdiction of No.) Identification No.)
incorporation)
1516 Second Avenue
Seattle, Washington 98101
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(Address of principal executive offices, including zip code)
(206) 622-2335
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On November 7, 1997, Amazon.com, Inc. (the "Company") entered into a
commitment letter for a $75,000,000 three year senior secured term credit
facility (the "Facility") with Deutsche Bank AG, New York Branch ("Deutsche") as
administrative agent and Deutsche Morgan Grenfell, Inc. ("DMG") as arranger. The
Facility may be increased to an amount not to exceed $100,000,000, at the
determination of both the Company and DMG.
The purpose of the Facility is to finance working capital, capital
additions, acquisitions, operations, joint ventures and general corporate
purposes. The Facility will be secured by a first priority lien on substantially
all of the Company's assets. The Company has the option to choose from the
following interest rate options: (i) a variable rate adjusted every one, two,
three or six months at the Company's option and based on the London Interbank
Offered Rate ("LIBOR") plus 3.50% per annum for the first six months of the
Facility and 4.00% thereafter, or (ii) a variable rate of interest based on
Deutsche's Base Rate plus 1.50% per annum for the first six months of the
Facility and 2.00% thereafter. In connection with the Facility, the Company will
enter into certain interest rate risk management agreements. The Company is
required to make mandatory prepayments on the Facility equal to 50% of the
proceeds from any debt and/or equity offerings (other than the proceeds of
certain permitted debt) and 100% of the proceeds from certain sales of assets
that are not reinvested in replacement assets.
The Facility will include covenants restricting certain activities by
the Company, including (i) the incurrence of additional indebtedness, (ii)
consolidations, mergers and sales of assets and (iii) dividends and
distributions to stockholders. In addition, financial covenants will require the
Company to, among other things, maintain a minimum cash balance, maintain
certain levels of earnings or losses before interest, taxes, depreciation and
amortization, limit its accounts payable aging and limit its capital and
acquisition expenditures. The Facility will contain standard events of default
including, among other things, a change in ownership or control.
The Company will issue to Deutsche warrants to purchase a total of
750,000 shares of the Company's Common Stock. The warrants will be canceled if
the Company repays the Facility in full according to the following schedule: all
warrants if repayment occurs within 12 months; warrants to purchase 675,000
shares if repayment occurs within 15 months; warrants to purchase 562,500 shares
if repayment occurs within 18 months; warrants to purchase 450,000 shares if
repayment occurs within 24 months; warrants to purchase 225,000 shares if
repayment occurs within 30 months; and no warrants if repayment occurs after 30
months. Warrants become exercisable when they can no longer be canceled and
remain exercisable for five years after such date. The exercise price for the
warrants will be the average market price of the Common Stock during the 30
business days prior to the time of execution of the commitment letter.
The Facility has been approved by the Company's Board of Directors and
Deutsche, but is subject to the satisfaction of several conditions, including
the absence of material adverse change, satisfactory completion of definitive
documents and satisfactory completion of Deutsche's due
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diligence. Subject to the fulfillment of these conditions, the Company expects
to close the Facility in December 1997.
The Company expects to use the proceeds of the Facility to expand its
business and may commit to significant fixed expenditures. The ability of the
Company to generate planned future revenues, and therefore its ability to comply
with the covenants contained in the Facility, may be affected by events beyond
its control. If the Company cannot satisfy the Facility's covenants, the Company
will be in default. In such event, the lending institutions will be able to
exercise their remedies, including the right to declare all principal and
interest immediately due and payable. If the Company were unable to make such
payment, or to repay the amount owing under the Facility at the end of its term,
the lending institutions could foreclose on the Company's assets, substantially
all of which will be pledged as security for the Facility. See the Company's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1997 and its final
prospectus dated May 15, 1997 for information regarding factors that may impact
the Company's future results.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMAZON.COM, INC.
Dated: November 7, 1997
By /s/ JOY D. COVEY
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Joy D. Covey
Chief Financial Officer, Vice President Finance
and Administration, Treasurer and Secretary