case2: 01-cv-00640-rsl document148 filed 07/11/2005 page...

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Case 2 : 01-cv-00640-RSL Document 148 Filed 07/11/2005 Page 1 of 18

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THE HONORABLE ROBERT S. LASNIK

UNITED STATES DISTRICT COURTWESTERN DISTRICT OF WASHINGTON

AT SEATTLE

ARGENT CLASSIC CONVERTIBLEARBITRAGE FUND, L.P., on behalf of itselfall others similarly situated, No. C-01-0640-L

Plaintiff,

V.

AMAZON.COM INC., JEFFREY P. BEZOS,JOY COVEY, TOM A. ALBERG, SCOTT D.COOK, L. JOHN DOERR, AND PATRICIA Q.STONESIFER,

Defendants.

CLASS ACTION

AMENDED NOTICE OFPENDENCY AND PROPOSEDSETTLEMENT OF CLASSACTION

EXHIBIT A-1

TO: ALL PERSONS WHO PURCHASED AMAZON.COM, INC. 6.875% PREMIUMADJUSTABLE CONVERTIBLE SECURITIES DUE 2010 ("PEACS ) DURING THEPERIOD FROM FEBRUARY 7, 2000 THROUGH AND INCLUDING OCTOBER 24,2000 (THE "CLASS AS MORE PARTICULARLY DEFINED BELOW)

PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR

RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THIS LITIGATION. PLEASE NOTE

THAT IF YOU ARE A CLASS MEMBER (DEFINED BELOW), YOU MAY BE ENTITLED

TO SHARE IN THE PROCEEDS OF THE SETTLEMENT DESCRIBED IN THIS NOTICE.

TO CLAIM YOUR SHARE OF THIS FUND, THE CLAIMS ADMINISTRATOR MUST

RECEIVE YOUR VALID PROOF OF CLAIM AND RELEASE FORM BY NOVEMBER 5,

AMENDED NOTICE OF PENDENCY AND PROPOSED McKay Chadwell, PLLCSETTLEMENT OF CLASS ACTION (C-01-0640-L) - 1 600 University Street, Suite 1601G:\CLIENTS\01337\001\SETTLEMENT Seattle, Washington 98101PLEADINGS\AMENDED NOTICE PENDENCY PROPSETTLE EXA1_070605 .PLD.DOC (206) 233-2800 Fax (206) 233-2809


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2005. IF YOU ARE A MEMBER OF THE CLASS AND DO NOT SUBMIT A TIMELY

REQUEST FOR EXCLUSION, YOU WILL BE BOUND BY THE RELEASE WHETHER OR

NOT YOU SUBMIT A CLAIM.

1. SUMMARY OF SETTLEMENT AND RELATED MATTERS

This Notice has been sent to you pursuant to Rule 23 of the Federal Rules of Civil

Procedure and an Order of the United States District Court for the Western District of

Washington (at Seattle) (the "Court ). The purpose of this Notice is to inform you of the

pendency of this class action (the "Litigation ) and the proposed settlement thereof and of the

hearing to be held by the Court to consider the fairness , reasonableness , and adequacy of the

settlement. This Notice describes the rights you may have in connection with participation in

this settlement , what steps you may take in relation to the settlement and this class action

litigation, and alternatively, what steps you must take if you wish to be excluded from the

settlement and this class action.

The proposed settlement creates a fund in the amount of $20,000,000.00 in cash (the

"Settlement Fund ) and will include interest that accrues on the fund prior to distribution. Based

on Lead Plaintiffs estimate of the number ofPEACS entitled to participate in the settlement and

the anticipated number of claims to be submitted by Class Members, the average distribution per

unit to Class Members who purchased the PEACS would be approximately $90 per €1,000 par

value ofPEACS, before deduction of Court-approved fees and expenses (see the Plan of

Allocation below for a more detailed description of how the Settlement Fund will be allocated).

Your actual recovery from this Settlement Fund will depend on a number of variables, including:

the number of claimants and the amounts ofPEACS they purchased, the amounts ofPEACS you

purchased, the expense of administering the claims process, the timing of your purchases and

AMENDED NOTICE OF PENDENCY AND PROPOSED

SETTLEMENT OF CLASS ACTION (C-01-0640-L) - 2G:\CLIENTS\01337\001\SETTLEMENTPLEADINGS\AMENDED NOTICE PENDENCY PROPSETTLE EXA1_070605 .PLD.DOC

McKay Chadwell, PLLC

600 University Street, Suite 1601

Seattle, Washington 98101(206) 233-2800 Fax (206) 233-2809

Case 2:01-cv-00640-RSL Document 148 Filed 07/11/2005 Page 3 of 18

sales , if any, and the amount (if any) of the PEACS you redeemed pursuant to Amazon.com's

2 March 2005 partial redemption of the PEACS (see Plan of Allocation below).

Lead Plaintiff and Defendants do not agree on the average amount of damages per €1,000

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par value ofPEACS that would be recoverable if Lead Plaintiff were to have prevailed on each

claim asserted. The issues on which the parties disagree include: (1) the appropriate method for

determining the amount by which the PEACS were allegedly artificially inflated (if at all) during

the Class Period; (2) the amount by which the PEACS were allegedly artificially inflated (if at

all) during the Class Period; (3) the effect of various market forces influencing the trading price

of the PEACS at various times during the Class Period; (4) the extent to which external factors,

such as general market conditions , influenced the trading price of the PEACS at various times

during the Class Period; (5) the extent to which the various matters that Lead Plaintiff alleged

were materially false or misleading influenced (if at all) the price of the PEACS at various times

during the Class Period; (6) the extent to which the various allegedly adverse material facts that

Lead Plaintiff alleged were omitted influenced (if at all) the price of the PEACS at various times

during the Class Period; and (7) whether the statements made or facts allegedly omitted were

false, material or otherwise actionable under the federal securities laws.

Counsel for the Lead Plaintiff believes that the proposed settlement is a good recovery

and is in the best interests of the Class. Because of the risks associated with continuing to

litigate and proceeding to trial, there was a danger that Lead Plaintiff would not have prevailed

on any of its claims , in which case the Class would receive nothing. For example, if the

Litigation did not settle, Defendants intended to file a number of summary judgment motions

with respect to the merits of claims. In addition, the amount of damages recoverable by the

Class was and is challenged by Defendants. Recoverable damages in this case are limited to

AMENDED NOTICE OF PENDENCY AND PROPOSEDSETTLEMENT OF CLASS ACTION (C-01-0640-L) - 3G:\CLIENTS\01337\001\SETTLEMENTPLEADINGS\AMENDED NOTICE PENDENCY PROPSETTLE EXA1_070605 .PLD.DOC





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losses caused by conduct actionable under applicable law and, had the Litigation gone to trial,

Defendants intended to assert that all or most of the losses of Class Members were caused by

non-actionable market, industry or general economic factors. Defendants would also assert that

throughout the Class Period, the uncertainties and risks associated with Amazon.com's business

and financial condition were fully and adequately disclosed.

Lead Plaintiffs counsel have not received any payment for their services in conducting

the Litigation on behalf of the Lead Plaintiff and the Members of the Class, nor have they been

reimbursed for their out-of-pocket expenditures . If the settlement is approved by the Court, Lead

Counsel for the plaintiffs in this case will apply to the court for attorneys' fees of 30% of the

settlement proceeds, as well as reimbursement of out-of-pocket expenses not to exceed

$325,000.00 paid from the Settlement Fund. If the amount requested by counsel is approved by

the Court, the average cost per €1 ,000 par value of PEACS would be $30. The average cost per

€1,000 par value ofPEACS could vary depending on the number ofPEACS for which claims are

filed.

This Notice is not an expression of any opinion by the court about the merits of any of the

claims or defenses asserted by any party in this Litigation or the fairness or adequacy of the

proposed settlement.

For further information regarding this settlement you may contact: Mark Strauss, Kirby

McInerney & Squire LLP, 830 Third Avenue, 10th Floor, New York, New York, 10022,

Telephone: (888) 529-4787. Please do not call any representative of Amazon.com or the Court.

II. NOTICE OF HEARING ON PROPOSED SETTLEMENT

A settlement hearing will be held on October 20, 2005 at 8:30a.m., before the Honorable

Robert S. Lasnik, Chief United States District Judge, at the Western District of Washington (at







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Seattle), U. S. Courthouse, 700 Stewart Street, Seattle, Washington (the "Settlement Hearing )

The purpose of the Settlement Hearing will be to determine : (1) whether the settlement

consisting of $20,000,000 in cash plus accrued interest should be approved as fair, reasonable

and adequate to each of the parties; (2) whether the proposed plan to distribute the settlement

proceeds (the "Plan of Allocation ) is fair, reasonable and adequate; (3) whether the application

by Lead Plaintiffs counsel for an award of attorneys' fees and expenses should be approved; and

(4) whether the Litigation should be dismissed with prejudice. The Court may adjourn or

continue the Settlement Hearing without further notice to the Class.

III. DEFINITIONS USED IN THIS NOTICE

1. "PEACS means the 6 . 875% Premium Adjustable Convertible Securities of

Amazon.com due 2010.

2. "Class means a class consisting of all Persons (other than those Persons who timely

and validly request exclusion from the Class) who purchased PEACS during the Class Period.

Excluded from the Class are Defendants, members of the immediate families of the Defendants,

any entity in which any Defendant has or had a controlling interest, present or former directors

and officers of Amazon.com, and the legal representatives , heirs , successors , or assigns of any

such Defendant.

3. "Class Period means the period from February 7, 2000 through and including

October 24, 2000.

4. "Class Member or "Member of the Class mean a Person who falls within the

definition of the Class as set forth in 12 above.

5. "Defendants means Amazon. com, Jeffrey P. Bezos, Joy Covey, Tom A. Alberg,

Scott D . Cook, L. John Doerr, and Patricia Q. Stonesifer.






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6. "Related Persons means each of a Defendant's past or present directors, officers,

managers, employees, partners, members, principals, agents, underwriters, insurers and co-

insurers and their reinsurers, controlling shareholders, venture capital investors, attorneys,

accountants or auditors, banks or investment banks, financial advisors, indenture trustees, foreign

exchange representatives, associates, personal or legal representatives, predecessors, successors,

parents, subsidiaries, divisions, joint ventures, assigns, spouses, heirs, related or affiliated

entities, any entity in which a Defendant has a controlling interest, any members of an Individual

Defendant's immediate families, or any trust of which any Defendant is the settlor or which is

for the benefit of any Defendant and/or member(s) of his or her family.

7. "Released Claims shall collectively mean all claims (including "Unknown Claims

as defined in 19 hereof), demands, rights, liabilities and causes of action under federal or state

law, including the Securities Act of 1933, whether based upon statutory or common law, class or

individual in nature, known or unknown, concealed or hidden, and that either were asserted or

could have been asserted, by Lead Plaintiff or Class Members against the Released Amazon

Parties arising from both: (a) the purchase of the PEACS during the Class Period, and (b) the

acts, facts, statements , or omissions that were or could have been alleged in the Litigation;

provided, however, that Released Claims do not include any claims under the Securities

Exchange Act of 1934 (the "1934 Act ) that are being separately settled and released pursuant to

a Stipulation of Settlement in In re Amazon.com, Inc. Securities Litigation , No. C-01-0358-L,

pending in the United States District Court for the Western District of Washington; and further

provided that Lead Plaintiff and Plaintiffs Counsel herein covenant and agree not to seek to

amend the Complaint in the Litigation, or to assert in any other forum, any claim arising under

the 1934 Act.






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8. "Released Amazon Parties means each and all of the Defendants and their Related

Persons.

9. "Unknown Claims means any Released Claims that the Lead Plaintiff or Class

Member does not know or suspect to exist in his, her, or its favor at the time of the release of the

Released Amazon Parties, which, if known by him, her, or it, might have affected his, her, or its

settlement with and release of the Released Amazon Parties, or might have affected his, her, or

its decision(s) with respect to the settlement . With respect to any and all Released Claims, the

Settling Parties stipulate and agree that, upon the Effective Date, Lead Plaintiff shall expressly

waive, and each of the Class Members shall be deemed to have, and by operation of the

Judgment shall have, expressly waived the provisions, rights, and benefits conferred by any law

of any state or territory of the United States, or principle of common law, which is similar,

comparable or equivalent to California Civil Code § 1542, which provides:

A general release does not extend to claims which thecreditor does not know or suspect to exist in his or herfavor at the time of executing the release, which if knownby him or her must have materially affected his or hersettlement with the debtor.

The Lead Plaintiff and Class Members may hereafter discover facts in addition to or

different from those that any of them now knows or believes to be true related to the subject

matter of the Released Claims, but the Lead Plaintiff shall expressly and each Class Member,

upon the Effective Date, shall be deemed to have, and by operation of the Judgment shall have,

fully, finally, and forever settled and released any and all Released Claims, known or unknown,

suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden,

which now exist, or heretofore have existed upon any theory of law or equity now existing or

coming into existence in the future, including, but not limited to, conduct that is negligent,







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intentional, with or without malice, or a breach of any duty, law or rule, without regard to the

subsequent discovery or existence of such different or additional facts. The Lead Plaintiff

acknowledges, and the Class Members shall be deemed by operation of the Judgment to have

acknowledged, that the inclusion of "Unknown Claims in the definition of Released Claims was

separately bargained for and is a key element of the settlement of which this release is a part.

IV. THE LITIGATION AND RELATED PROCEEDINGS

This action was filed in the United States District Court for the Western District of

Washington (the "Court ) as a securities class action on behalf ofpersons who purchased the

6.875% Premium Adjusted Convertibles Securities due 2010 ("PEACS ) of Amazon.com, Inc.

By Order dated July 12, 2001, the Court appointed Argent Classic Convertible Arbitrage

Fund, L.P. as Lead Plaintiff and approved Lead Plaintiffs selection of Lead Counsel.

On April 8, 2002, Lead Plaintiff filed a First Amended Complaint (the "Complaint ) for

violation of the Securities Act of 1933 (the "Securities Act ). The Complaint alleges violations

of §§ 11, 12 and 15 of the Securities Act. The Complaint is brought on behalf of a class of all

persons who purchased PEACS during the period February 7, 2000 through and including

October 24, 2000. The Defendants are Amazon.com and certain directors and officers of the

company.

Defendants moved to dismiss the amended complaint on May 24, 2002. On January 6,

2003, the Court granted Defendants' motions in part and denied them in part. On February 21,

2003, Defendants filed their Answer to the Complaint. On March 9, 2004, the Court granted

Plaintiffs motion for class certification.

The parties have engaged in extensive settlement discussions over the course of nearly

twenty (20) months. In 2003, the parties agreed to participate in formal mediation before the

AMENDED NOTICE OF PENDENCY AND PROPOSEDSETTLEMENT OF CLASS ACTION (C-01-0640-L) - 8G:\CLIENTS\01337\001\SETTLEMENTPLEADINGS\AMENDED NOTICE PENDENCY PROPSETTLE EXA1_070605.PLD.DOC





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Honorable Layn Phillips (Ret.). The parties mediated face-to-face before Judge Phillips on June

20, 2003. The parties were unable to reach agreement before Judge Phillips. Subsequently, the

parties agreed to mediation before the Honorable Nicholas Politan (Ret.). The parties mediated

face-to-face with Judge Politan for two days in New York on July 1 and 2, 2004, and again on

August 9, 2004 in San Francisco, with all parties, including representatives from Amazon.com's

insurance carriers, present. While the parties made substantial progress at these mediations, it

was only after continued negotiations that the parties reached an agreement-in-principle to settle

the Litigation. On April 25, 2005, the parties executed a Memorandum of Understanding.

There is a separate action pending in the United States District Court for the Western

District of Washington, In re Amazon.com, Inc. Securities Litigation, No. C-01-0358-L, which

asserts claims under the Securities Exchange Act of 1934. This settlement does not release any

claims under the Securities Exchange Act of 1934 asserted in the In re Amazon. com action.

V. CLAIMS OF THE LEAD PLAINTIFF AND BENEFITS OF SETTLEMENT

The Lead Plaintiff believes that the claims asserted in the Litigation have merit.

However, counsel for the Lead Plaintiff recognizes and acknowledges the expense and length of

continued proceedings necessary to prosecute the Litigation against the Defendants through trial

and through appeals . Counsel for the Lead Plaintiff also has taken into account the uncertain

outcome and the risk of any litigation, especially in complex actions such as the Litigation, as

well as the difficulties and delays inherent in such litigation. Counsel for the Lead Plaintiff also

is mindful of the inherent problems ofproof under and possible defenses to the violations

asserted in the Litigation. Counsel for the Lead Plaintiff believes that the settlement set forth in

the Stipulation confers substantial benefits upon the Class. Based on their evaluation, counsel

for the Lead Plaintiff has determined that the settlement set forth in the Stipulation is in the best






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interests of the Lead Plaintiff and the Class.

VI. DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY

The Defendants have denied and continue to deny each and all of the claims and

contentions alleged by the Lead Plaintiffs in the Litigation. The Defendants expressly have

denied and continue to deny all charges of wrongdoing or liability against them arising out of

any of the conduct, statements , acts or omissions alleged, or that could have been alleged, in the

Litigation. The Defendants also have denied and continue to deny, inter alia, the allegations that

the Lead Plaintiff or the Class have suffered damage, that the price of the PEACS was artificially

inflated by reasons of alleged misrepresentations , non-disclosures or otherwise, that any such

misrepresentations or non-disclosures caused the alleged losses to any Class Member, or that the

Lead Plaintiff or the Class were otherwise harmed by the conduct alleged in the Litigation.

Defendants believe that if the case did not settle, they would prevail.

Nonetheless, the Defendants have concluded that further conduct of the Litigation would

be protracted and expensive, and that it is desirable that the Litigation be fully and finally settled

in the manner and upon the terms and conditions set forth in the Stipulation. The Defendants

also have taken into account the uncertainty and risks inherent in any litigation, especially in

complex cases like the Litigation. The Defendants have, therefore, determined that it is desirable

and beneficial to them that the Litigation be settled in the manner and upon the terms and

conditions set forth in the Stipulation.

VII. TERMS OF THE PROPOSED SETTLEMENT

Amazon.com, on behalf of itself and each of the Individual Defendants, will pay or cause

to be paid into an escrow account, pursuant to the terms of the Stipulation of Settlement dated as

of July 6, 2005 (the "Stipulation ), cash in the amount of $20,000,000 . 00 which will earn





Case 2 : 01-cv-00640 -RSL Document 148 Filed 07/11 /2005 Page 11 of 18

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interest for the benefit of the Class.

Fifteen Million, Six Hundred and Thirty-Five Thousand, Seven Hundred and Ninety-Two

Dollars ($15,635,792.00) (the "Initial Sum ) will be paid into an interest bearing account within

thirty (30) business days following the Court's issuance of an order preliminarily approving the

Settlement (the "Preliminary Order ) (the "Due Date ). Any amount not paid by the Due Date

will bear interest at the rate of two (2) percent per annum, until the monies are paid. The final

Four Million, Three Hundred and Sixty-Four Thousand, Two Hundred and Eight Dollars

($4,364,208.00) of the Settlement Fund shall be paid by Amazon.com within nine months

following the Court's issuance of the preliminary order (the "Final Payment ) or such earlier

date as is necessary to fully fund a final distribution of the Settlement Amount to the Class

Members prior to the expiration of such nine month period; provided, however, that

Amazon.com shall be given written notice of such earlier deadline for making the final payment,

which deadline shall be no sooner than two weeks prior to such final distribution. The Final

Payment shall bear interest at the rate of two (2) percent per annum, beginning on the Due Date,

and such interest shall be paid into the Settlement Fund by Amazon.com at the same time as the

Final Payment. If such amounts are not paid, Lead Plaintiff can terminate the settlement or enter

a consent judgment against Defendants for the unpaid amount, plus any interest due.

A portion of the Settlement Fund will be used for certain administrative expenses,

including costs of printing and mailing this Notice, the cost ofpublishing newspaper notices,

payment of any taxes assessed against the Settlement Fund and costs associated with the

processing of claims submitted. In addition, as explained below, a portion of the Settlement

Fund may be awarded by the Court to counsel for Lead Plaintiff for attorneys' fees and for

reimbursement of out-of-pocket expenses . The balance of the Settlement Fund (the "Net


SETTLEMENT OF CLASS ACTION (C-0 1 -0640-L) - 11G:\CLIENTS\01337\001\SETTLEMENTPLEADINGS\AMENDED NOTICE PENDENCY PROPSETTLE EXA1_070605.PLD.DOC




Case 2 : 01-cv-00640 -RSL Document 148 Filed 07/11/2005 Page 12 of 18

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Settlement Fund ) will be distributed according to the Plan of Allocation described below to

Class Members who submit valid and timely Proof of Claim forms and establish their right to

recovery.

VIII. PLAN OF ALLOCATION

The Net Settlement Fund will be distributed to Class Members who submit valid, timely

Proof of Claim forms ("Authorized Claimants ) under the Plan of Allocation described below.

The Plan of Allocation provides that you will be eligible to participate in the distribution of the

Net Settlement Fund only if you purchased PEACS during the Class Period and sold those

PEACS, during the Class Period or thereafter, at a loss.

Each Authorized Claimant shall be paid the percentage of the Net Settlement Fund that

each Authorized Claimant's claim (the "Recognized Loss ) bears to the total of the claims of all

Authorized Claimants. Payment in this manner shall be deemed conclusive against all

Authorized Claimants.

Calculation of each Authorized Claimant's Recognized Loss proceeds as follows:

A. For PEACS purchased during the Class Period and sold, at a loss , prior to the end

of the Class Period (i.e., prior to October 25, 2000), the Recognized Loss shall be 40% of

the actual loss (i.e., 40% of the difference between the cost of the purchase and the

proceeds from the sale).

B. For PEACS purchased during the Class Period and sold, at a loss , after the Class

Period (i.e., after October 24, 2000), the Recognized Loss shall be calculated by

disaggregating the PEACS price declines into pre- and post-Class Period declines. Such

claimants' Recognized Loss shall be: (i) 40% of losses stemming from PEACS price

declines between 100% of Par Value (the start of the Class Period) and 60% of Par Value







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(the PEACS price at the close of the Class Period on October 24, 2000); and (ii) 80% of

losses stemming from PEACS price declines below 60% of Par Value.

C. For any PEACS purchased during the Class Period and either (i) redeemed at par

value pursuant to Amazon. com's February/March 2005 partial redemption of the PEACS,

or (ii) still held by the Authorized Claimant, there is no actual loss and thus the

Recognized Loss shall be $0.

The date ofpurchase or sale is the "contract or "trade date as distinguished from the

"settlement date. The determination of the price paid and the price received shall be exclusive

of all commissions, taxes, fees and charges.

For Class Members who made multiple purchases during the Class Period and multiple

sales during or subsequent to the Class Period, the earliest sale shall be matched with the earliest

purchase and chronologically thereafter for purposes of the claim calculations.

The Court has reserved jurisdiction to allow, disallow or adjust the claim of any Class

Member on equitable grounds.

IX. ORDER CERTIFYING A CLASS

On March 29, 2004, the Court certified a class comprised of all persons or entities who

purchased PEACS during the period between February 7, 2000, and October 24, 2000 whose

purchases were pursuant to or traceable to an offering by Amazon.com occurring on or about

February 7, 2000 and who were damaged. Excluded from the Class are the defendants, members

of the Amazon.com Individual Defendants' families, any entity in which any defendant has a

controlling interest or is a part or subsidiary of or is controlled by the Company, and officers,

directors, employees, affiliates, legal representatives, heirs, predecessors, successors and assigns

of any of the defendants.





Case 2 : 01 -cv-00640-RSL Document 148 Filed 07/11/2005 Page 14 of 18

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X. PARTICIPATION IN THE CLASS

If you fall within the definition of the Class, you will remain a Class Member unless you

I elect to be excluded from the Class. If you do not request to be excluded from the Class, you

will be bound by any judgment entered with respect to the settlement in the Litigation whether or

not you file a Proof of Claim.

Ifyou wish to remain a Class Member, you need do nothing (other than timely file a

ProofofClaim and Release ifyou wish to participate in the distribution ofthe Net Settlement

Fund). Your interests will be represented by counselfor Lead Plaintiff. If you choose, you

may enter an appearance individually or through your own counsel at your own expense.

TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT

FUND, YOU MUST TIMELY COMPLETE AND RETURN THE PROOF OF CLAIM

AND RELEASE FORM THAT ACCOMPANIES THIS NOTICE AND WAS FILED

WITH THE COURT ON JULY 6, 2005. The Proof of Claim and Release must be received on

or before November 5, 2005, and delivered to the Claims Administrator at: Amazon PEACS

Securities Litigation, c/o The Garden City Group , Inc., P.O. Box 9000 #6293, Merrick, NY

11566-9000. Unless the Court orders otherwise, if you do not timely submit a valid Proof of

Claim, you will be barred from receiving any payments from the Net Settlement Fund, but will in

all other respects be bound by the provisions of the Stipulation and the Judgment.

XI. EXCLUSION FROM THE CLASS

You may request to be excluded from the Class. To do so, you must mail a written

request, stating that you wish to be excluded from the Class, to all three addresses listed below:

Amazon PEACS Securities LitigationEXCLUSIONS

c/o The Garden City Group, Inc. - and -Claims Administrator



Mark A. StraussKirby McInerney & Squire LLP830 Third Avenue, 10' Floor

New York, NY 10022





P.O. Box 9000 #62931 Merrick, N.Y. 11566-90002 - and - Jonathan C. Dickey

Gibson, Dunn & Crutcher LLP3 1881 Page Mill Road4 Palo Alto, CA 94304

5 The request for exclusion must state: (a) your name, address, and telephone number; and

6 (b) all purchases and sales of PEACS, including the dates ofpurchase or sale, the face value of

7 PEACS purchased or sold and the price paid or received per PEAC. YOUR EXCLUSION

8REQUEST MUST BE RECEIVED OR BEFORE SEPTEMBER 16, 2005. If you submit a valid

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10and timely request for exclusion, you shall have no rights under the settlement, shall not share in

11 the distribution of the Net Settlement Fund, and shall not be bound by the Stipulation or the

12 Judgment. Defendants may withdraw from and terminate the settlement if Class Members who

13purchased in excess of a certain amount ofPEACS exclude themselves from the Class.

14XII. DISMISSAL AND RELEASES

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16 If the proposed settlement is approved, the Court will enter a Final Judgment and Order

17 of Dismissal with Prejudice (the "Judgment ). The Judgment will dismiss the Released Claims

18 with prejudice as to all Released Amazon Parties.

19The Judgment will provide that all Class Members who do not validly and timely request

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21to be excluded from the Class shall be deemed to have released and forever discharged all

22 Released Claims (to the extent Members of the Class have such claims) against all Released

23 Amazon Parties.

24XIII. MOTION FOR FEES AND EXPENSES

25At the Settlement Hearing, counsel for Lead Plaintiff will request the Court to award

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27attorneys' fees of 30% of the Settlement Fund, plus reimbursement of the expenses, not to

28 exceed $325,000.00, which were advanced in connection with the Litigation, plus interest

AMENDED NOTICE OF PENDENCY AND PROPOSED McKay Chadwell, PLLCSETTLEMENT OF CLASS ACTION (C-01-0640-L) - 15 600 University Street, Suite 1601G:\CLIENTS\01337\001\SETTLEMENT Seattle, Washington 98101PLEADINGS\AMENDEDNOTICE PENDENCY PROPSETTLE EXA1_070605.PLD.DOC (206) 233-2800 Fax (206) 233-2809


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thereon. Class Members are not personally liable for any such fees or expenses.

To date, counsel for Lead Plaintiff have not received any payment for their services in

conducting this Litigation on behalf of Lead Plaintiff and the Members of the Class, nor have

counsel been reimbursed for their out-of-pocket expenses. The fee requested by counsel for

Lead Plaintiff would compensate counsel for their efforts in achieving the Settlement Fund for

the benefit of the Class, and for their risk in undertaking this representation on a contingency

basis. The fee requested is within the range of fees awarded to plaintiffs' counsel under similar

circumstances in litigation of this type.

XIV. CONDITIONS FOR SETTLEMENT

The settlement is conditioned upon the occurrence of certain events described in the

Stipulation. Those events include , among other things : (a) entry of the Judgment by the Court,

as provided for in the Stipulation; and (b) expiration of the time to appeal from or alter or amend

the Judgment. If, for any reason, any one of the conditions described in the Stipulation is not

met, the Stipulation might be terminated and, if terminated, will become null and void, and the

parties to the Stipulation will be restored to their respective positions as of June 30, 2005.

XV. THE RIGHT TO BE HEARD AT THE HEARING

Any Class Member who has not validly and timely requested to be excluded from the

Class, and who objects to any aspect of the settlement, the Plan of Allocation, or the application

for attorneys' fees, costs and expenses, may appear and be heard at the Settlement Hearing. Any

such Person must submit a written notice of objection, filed with the Clerk of the Court at the

address listed below on or before September 16, 2005:

CLERK OF THE COURTWESTERN DISTRICT WASHINGTONU. S. COURTHOUSE700 Stewart Street

AMENDED NOTICE OF PENDENCY AND PROPOSED McKay Chadwell, PLLCSETTLEMENT OF CLASS ACTION (C-01-0640-L) - 16 600 University Street, Suite 1601G:\CLIENTS\01337\001\SETTLEMENT Seattle, Washington 98101PLEADINGS\AMENDED NOTICE PENDENCY PROPSETTLE EXA1_070605 .PLD.DOC (206) 233-2800 Fax (206) 233-2809


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Seattle , WA 98101

The written notice of objection must also be received on or before September 16, 2005 by

each of the following:

Lead Counsel for Lead Plaintiff and the Class

Mark A. StraussKIRBY McINERNEY & SQUIRE, LLP830 Third Avenue, 10th FloorNew York, NY 10022

Lead Counsel for Defendants

Jonathan C. DickeyGIBSON, DUNN & CRUTCHER LLP1881 Page Mill RoadPalo Alto , CA 94304

The notice of objection must demonstrate the objecting Person's membership in the Class,

including the par value ofPEACS purchased during the Class Period and sold during or after the

Class Period, and contain a statement of the reasons for objection. Only Members of the Class

who have submitted written notices of objection in this manner will be entitled to be heard at the

Settlement Hearing, unless the Court orders otherwise.

XVI. SPECIAL NOTICE TO NOMINEES

If you hold any PEACS purchased during the Class Period as nominee for a beneficial

owner, then, within ten (10) days after you receive this Notice, you must either: (a) send a copy

of this Notice and the Proof of Claim by first class mail to all such Persons; or (b) provide a list

of the names and addresses of such Persons to the Claims Administrator:

Amazon PEACS Securities Litigationc/o The Garden City Group, Inc.Claims AdministratorP.O. Box 9000 #6293Merrick, N.Y. 11566-9000







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If you choose to mail the Notice and Proof of Claim yourself, you may obtain from the Claims

Administrator (without cost to you) as many additional copies of these documents as you will

need to complete the mailing.

Regardless of whether you choose to complete the mailing yourself or elect to have the

mailing performed for you, you may obtain reimbursement for or advancement of reasonable

administrative costs actually incurred or expected to be incurred in connection with forwarding

the Notice and Proof of Claim and which would not have been incurred but for the obligation to

forward the Notice and Proof of Claim, upon submission of appropriate documentation to the

Claims Administrator.

XVII. EXAMINATION OF PAPERS

This Notice is a summary and does not describe all of the details of the Stipulation. For

full details of the matters discussed in this Notice, you may review the Stipulation filed with the

Court, which may be inspected during business hours , at the office of the Clerk of the Court,

Western District Washington, U.S. Courthouse, 700 Stewart Street, Seattle, Washington.

If you have any questions about the settlement of the Litigation, you may contact

Plaintiffs Settlement Counsel by writing or telephoning:

Mark A. StraussKIRBY McINERNEY & SQUIRE, LLP830 Third Avenue, 10th FloorNew York, NY 10022Telephone: (212) 371-6600Toll-Free: (888) 529-4787

DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE.

DATED: 12005 BY ORDER OF THE COURTUNITED STATES DISTRICT COURTWESTERN DISTRICT OF WASHINGTON

AMENDED NOTICE OF PENDENCY AND PROPOSED McKay Chadwell, PLLCSETTLEMENT OF CLASS ACTION (C-01-0640-L) - 18 600 University Street, Suite 1601G:\CLIENTS\01337\001\SETTLEMENT Seattle, Washington 98101PLEADINGS\AMENDEDNOTICE PENDENCY PROPSETTLE EXA1_070605.PLD.DOC (206) 233-2800 Fax (206) 233-2809

Case 2:01-cv-00640- SL Document 148-2 Filed 07/11/2005 Page 1 of 2

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CERTIFICATE OF SERVICE

I hereby certify that on July 11, 2005, I presented the foregoing to the Clerk of the Courtfor filing and uploading to the CM/ECF system which will send notification of such filing to thefollowing:

Jonathan C. DickeyJdi ckey@gib sondunn. com,

Paul J . Collinspcollins@gib sondunn. com

Kimberley A. Fortner

[email protected] , vmartin c ,gibsondunn.com

Steven J. JohnsonS j j ohnson(c^r,gib sondunn. com

Courtney Greene Powercpower(c gibsondunn.com

David A. Zapolskydavidz cr,amazon.com, lbaron Q,amazon.com

Anne E. Hawkins

[email protected]

Robert P. [email protected]

Stephen M. [email protected]

Jonathan B. Gaskini gaskin@orrick. com

CERTIFICATE OF SERVICEG:ACLIENTS\01337\001\PLEADINGS\CERT_SERVENOTICEOFPENDENCY071105.PLD.DOC

McKay Chadwell, PLLC600 University Street, Suite 1601

Seattle, Washington 98101

(206) 233-2800 Fax (206) 233-2809

Case 2:01-cv-00640- SL Document 148-2 Filed 07/11/2005 Page 2 of 2

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and I hereby certify that I have sent via U. S. Mail the document to the following non-CM/ECF participants:

Noran J. CampGibson Dunn & CrutcherOne Montgomery Street31st FloorSan Francisco , CA 94104

s/ Kathryn C. PinedaKathryn PinedaLegal AssistantMcKay Chadwell, PLLC600 University Street, Suite 1601

Seattle , WA 98101

Phone : (206) 233-2800Facsimile : (206) 233-2833E-mail : kcpic ,mckay-chadwell. com

CERTIFICATE OF SERVICEG:ACLIENTS\01337\001\PLEADINGS\CERT_SERVENOTICEOFPENDENCY071105.PLD.DOC

McKay Chadwell, PLLC600 University Street, Suite 1601

Seattle, Washington 98101

(206) 233-2800 Fax (206) 233-2809

case2: 01-cv-00640-rsl document148 filed 07/11/2005 page...

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