Common Stock Purchase Warrant - Audible Inc. and Microsoft Corp.
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.
COMMON STOCK PURCHASE WARRANT
Warrant No. M-1 Number of Shares Set Forth on Schedule I Hereto
AUDIBLE, INC.
1. Issuance. This Warrant is issued to Microsoft Corporation ("Microsoft")
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by Audible, Inc., a Delaware corporation (hereinafter with its successors called
the "Company").
2. Purchase Price; Number of Shares. Subject to the terms and conditions
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hereinafter set forth, the registered holder of this Warrant (the "Holder"),
commencing on the date hereof, is entitled upon surrender of this Warrant with
the subscription form annexed hereto duly executed, at the office of the Company
or such other office as the Company shall notify the Holder of in writing, to
purchase from the Company at the price per share (the "Purchase Price") set
forth on Schedule A hereto such number of fully paid and nonassessable shares of
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Common Stock, $0.01 par value, of the Company (the "Common Stock") as is set
forth on Schedule A hereto (the "Warrant Shares"). This Warrant is fully
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vested.
3. Payment of Purchase Price; Cashless Exercise.
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(a) The Purchase Price may be paid in cash, by check or wire transfer in
immediately available funds, or as provided in 3(b) below.
(b) At any time during the term of this Warrant, the Holder may also elect to
exercise this Warrant (the "Conversion Right") with respect to a particular
number of Warrant Shares (the "Converted Warrant Shares"), and the Company shall
deliver to the Holder (without payment by the Holder of the Purchase Price in
cash or any other consideration (other than the surrender of rights to receive
Warrant Shares hereunder)) that number of shares of Common Stock equal to the
quotient obtained by dividing: (x) the difference between (i) the product of (A)
the Current Market Price of a share of Common Stock multiplied by (B) the number
of Converted Warrant Shares and (ii) the product of (A) the Exercise Price
multiplied by (B) the number of the
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Converted Warrant Shares, in each case as of the Conversion Date (as defined in
Section 3(c) below)), by (y) the Current Market Price of a share of Common Stock
on the Conversion Date. No fractional Warrant Shares shall be issuable upon
exercise of the Conversion Right, and if the number of Warrant Shares to be
issued determined in accordance with the following formula is other than a whole
number, the Company shall pay to the holder of this Warrant an amount in cash
equal to the Current Market Price of the resulting fractional Warrant Share on
the Conversion Date.
(c) The Conversion Right may be exercised by the Holder by the surrender of
this Warrant as provided in Section 3(b), together with a written statement
specifying that the Holder thereby intends to exercise the Conversion Right and
indicating the number of Converted Warrant Shares which are covered by the
exercise of the Warrant. Such conversion shall be effective upon receipt by the
Corporation of this Warrant, together with the aforesaid written statement, or
on such later date as is specified therein (the "Conversion Date"). The
Corporation shall issue to the Holder as of the Conversion Date a certificate
for the Warrant Shares issuable upon exercise of the Conversion Right and, if
applicable, a new warrant of like tenor evidencing the balance of the Warrant
Shares remaining subject to this Warrant.
(d) The term "Current Market Price" for the Common Stock as of a specified
date shall mean: (i) if the Common Stock is publicly traded on such date, the
average closing price per share over the preceding 10 trading days as reported
on the principal stock exchange or quotation system on which the Common Stock is
listed or quoted; or (ii) if the Common Stock is not publicly traded on such
date, the Board of directors of the Company shall determine Current Market Price
in its reasonable good faith judgment. The foregoing notwithstanding, if Holder
advises the Board of Directors in writing that Holder disagrees with such
determination, then the Company and Holder shall promptly agree upon a reputable
investment banking firm to undertake such valuation. If the valuation of such
investment banking firm is greater than that determined by the Board of
Directors, then all fees and expenses of such investment banking firm shall be
paid by the Company. In all other circumstances, such fees and expenses shall
be paid by Holder.
4. Partial Exercise. This Warrant may be exercised in part, and the Holder
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shall be entitled to receive a new warrant, which shall be dated as of the date
of this Warrant, covering the number of shares in respect of which this Warrant
shall not have been exercised.
5. Issuance Date. The person or persons in whose name or names any
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certificate representing shares of Common Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby as
at the close of business on the date this Warrant is exercised with respect to
such shares, whether or not the transfer books of the Company shall be closed.
6. Expiration Date. This Warrant shall expire at the close of business on
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November 18, 2003, and shall be void thereafter.
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7. Reserved Shares; Valid Issuance. The Company covenants that it will at
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all times from and after the date hereof reserve and keep available such number
of its authorized shares of Common Stock, free from all preemptive or similar
rights therein, as will be sufficient to permit the exercise of this Warrant in
full. The Company further covenants that such shares as may be issued pursuant
to the exercise of this Warrant will, upon issuance, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
8. Adjustment of Number of Shares; Exercise Price; Nature of Securities
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Issuable Upon Exercise of Warrants.
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(a) Exercise Price; Adjustment of Number of Shares. The Exercise Price set
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forth in Schedule A hereto and the number of shares purchasable hereunder shall
be subject to adjustment from time to time as hereinafter provided.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. If any
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capital reorganization or reclassification of the capital stock of the Company,
or any consolidation or merger of the Company with another entity, or the sale
of all or substantially all of the Company's assets to another person or entity
(collectively referred to as a "Transaction") shall be effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities,
cash or assets with respect to or in exchange for Common Stock, then, as a
condition of such Transaction, reasonable, lawful and adequate provisions shall
be made whereby the holder of this Warrant shall thereafter have the right to
purchase and receive upon the basis and upon the terms and conditions specified
in this Warrant, upon exercise of this Warrant and in lieu of the Warrant Shares
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such number, amount and like kind of shares of stock,
securities, cash or assets as may be issued or payable pursuant to the terms of
the Transaction with respect to or in exchange for the number of shares of
Common Stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby as if such shares were outstanding
immediately prior to the Transaction, and in any such case appropriate provision
shall be made with respect to the rights and interest of the holders to the end
that the provisions hereof (including, without limitation, provisions for
adjustments of the Exercise Price and of the number of Warrant Shares
purchasable and receivable upon the exercise of this Warrant) shall thereafter
be applicable, as nearly as may be practicable, in relation to any shares of
stock or securities thereafter deliverable upon the exercise hereof.
(c) Stock Splits, Stock Dividends and Reverse Stock Splits. If at any time
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after the first to occur of: (i) the IPO or (ii) the date 12 months after the
date hereof, the Company shall subdivide its outstanding shares of Common Stock
into a greater number of shares, or shall declare and pay any stock dividend
with respect to its outstanding stock that has the effect of increasing the
number of outstanding shares of Common Stock, the Exercise Price in effect
immediately prior to such subdivision or stock dividend shall be proportionately
reduced and the number of Warrant Shares purchasable pursuant to this Warrant
immediately prior to such subdivision or stock dividend shall be proportionately
increased, and conversely, in case at any time after the first to occur of: (i)
the IPO or (ii) the date 12 months after the date hereof, the
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Company shall combine its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
purchasable upon the exercise of this Warrant immediately prior to such
combination shall be proportionately reduced.
(d) Dissolution, Liquidation or Wind-Up. In case the Company shall, at
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any time prior to the exercise of this Warrant, dissolve, liquidate or wind up
its affairs, the holder hereof shall be entitled, upon the exercise of this
Warrant, to receive, in lieu of the Warrant Shares which the holder would have
been entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to such holder upon any such dissolution,
liquidation or winding up with respect to such Warrant Shares, had such holder
hereof been the holder of record of the Warrant Shares receivable upon the
exercise of this Warrant on the record date for the determination of those
persons entitled to receive any such liquidating distribution.
(e) Accountant's Certificate. In each case of an adjustment in the
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Exercise Price, number of Warrant Shares or other stock, securities or property
receivable upon the exercise of this Warrant, the Company shall compute, and
upon the holder's request shall at the Company's expense cause independent
public accountants of recognized standing selected by the Company and reasonably
acceptable to the holder to certify such computation, such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment and showing in detail the facts upon which such adjustment
is based, including a statement of (i) the number of shares of Common Stock of
each class outstanding or deemed to be outstanding, (ii) the adjusted Exercise
Price and (iii) the number of Warrant Shares issuable upon exercise of this
Warrant. The Company will forthwith mail a copy of each such certificate to the
holder hereof. In the event that the holder disputes such adjustment, the holder
shall be entitled to select an additional firm of independent certified public
accountants of national standing and paid for by the holder to certify such
adjustment and the Company and the holder shall use their good faith best
efforts to agree on such adjustment based on the reports of the two accounting
firms. In the event that the Company and the holder are still unable to reach
agreement as to such adjustment, the Company and the holder agree to submit such
determination to binding arbitration. Upon determination of such adjustment, the
Board of Directors shall forthwith make the adjustments described therein.
9. Fractional Shares. In no event shall any fractional share of Common
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Stock be issued upon any exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Holder would, except as provided in this Section 9,
be entitled to receive a fractional share of Common Stock, then the Company
shall issue the next higher number of full shares of Common Stock, issuing a
full share with respect to such fractional share.
10. Notices of Record Date, Etc. In the event of:
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(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend
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or other distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right,
(b) any reclassification of the capital stock of the Company, capital
reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets,
or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reclassification, reorganization, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record in respect of
such event are to be determined. Such notice shall be mailed at least 20 days
prior to the date specified in such notice on which any such action is to be
taken.
11. Amendment. The terms of this Warrant may be amended, modified or
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waived only with the written consent of the Company and the holder of this
Warrant.
12. Governing Law. The provisions and terms of this Warrant shall be
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governed by and construed in accordance with the internal laws of the State of
New Jersey.
13. Successors and Assigns. This Warrant shall be binding upon the
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Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
14. Business Days. If the last or appointed day for the taking of any
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action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday, then such action may be taken or right
may be exercised on the next succeeding day which is not a Saturday or Sunday or
such a legal holiday.
Original Issue Date: April 23, 1999 AUDIBLE, INC.
By: /s/ Andrew J. Huffman
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Andrew J. Huffman
Title: President
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SCHEDULE I
The Holder shall be entitled to exercise this Warrant for shares of Common
Stock as follows:
(i) In the event of the closing of the Company's initial public offering of
shares of its Common Stock pursuant to an effective registration statement (the
"IPO") within 12 months of the date hereof, the Holder shall be entitled to
purchase 100,000 shares of Common Stock, as the Common Stock is then
constituted, without taking into effect any adjustment in the shares of Common
Stock by reason of reclassification, change, stock dividend, stock split,
reorganization or other increases in the Common Stock (an "Adjustment"); and the
"Purchase Price" shall be equal to the Company's initial per share "price to the
public" in the IPO as set forth on the cover page of the final prospectus for
the IPO.
(ii) In the event that the Company has not closed an IPO prior to 12 months of
the date hereof, the Holder shall be entitled to purchase 100,000 shares of
Common Stock, as the Common Stock is then constituted, without taking into
effect any Adjustment and the "Purchase Price" shall be $6.00 per share.
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Subscription
To:____________________ Date:_________________________
The undersigned hereby subscribes for __________ shares of Common Stock
covered by this Warrant. The certificate(s) for such shares shall be issued in
the name of the undersigned or as otherwise indicated below:
______________________________
Signature
______________________________
Name for Registration
______________________________
Mailing Address
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Assignment
For value received ____________________________ hereby sells,
assigns and transfers unto ______________________________________
_________________________________________________________________
Please print or typewrite name and address of Assignee
_________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
_______________________ its attorney to transfer the within Warrant on the books
of the within named Company with full power of substitution on the premises.
Dated:_______________________
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In the Presence of:
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