EXHIBIT 10.17
STOCK RESTRICTION AGREEMENT
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AGREEMENT made this ______ day of __________________________, between
Audible Inc., a Delaware corporation (the "Company"), and (the
"Employee").
WHEREAS, the Employee wishes to purchase an aggregate of _________________
shares of Common Stock, $.01 par value, of the Company (the "Common Stock"); and
WHEREAS, the Company wishes to sell such shares to the Employee.
For valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:
1. Purchase of Shares. The Employee hereby subscribes for and, upon
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acceptance hereof, shall purchase, subject to the terms and conditions set forth
in this Agreement, ______ shares (the "Shares") of Common Stock, at a purchase
price of $______ per share (the "Purchase Price"). In consideration of the
receipt by the Employee of the Shares, the Employee shall deliver to the Company
the aggregate Purchase Price in cash, by promissory note or by a combination of
both. Upon receipt of the aggregate Purchase Price by the Company for the
Shares, the Company shall issue to the Employee one certificate in the name of
the Employee for that number of shares purchased by the Employee. The Employee
agrees that the Shares shall be subject to the Purchase Option (as defined
below) set forth in Section 2 of this Agreement and the restrictions on transfer
set forth in Section 4 of this Agreement.
2. Purchase Option.
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(a) In the event that the Employee ceases to be employed by the
Company for any reason or no reason, with or without cause, prior to the date
when all Shares shall have vested hereunder, the Company shall have the right
and option (the "Purchase Option") to purchase from the Employee, for a sum of
$ per share (the "Option Price"), up to that number of Shares that remains
unvested at the time the Employee ceases to be so employed. The Option Price
may, at the election of the Company, be paid to the Employee or be used to
reduce the indebtedness under a promissory note issued to the Company by the
Employee as payment for the Shares. The Shares shall vest as to _____________
Shares at _________________ and on the last day of each month thereafter until
all Shares have fully vested, _______________ shares shall vest monthly.
(b) In the event that the Employee's employment with the Company is
terminated by reason of death or disability, the number of the Shares then
subject to the Purchase Option shall be reduced by fifty percent (50%). For
this purpose, "disability" shall mean the inability of the Employee, due to a
medical reason, to carry out his duties as an employee of the Company for a
period of six consecutive months.
(c) In the event of a "change in control," as defined below,
notwithstanding the foregoing, this option shall vest and be exercisable with
respect to an additional number of shares
equal to 50% of the shares that remain subject to vesting as of the effective
date of the "change in control." The Company shall immediately exercise its
Purchase Option with respect to any unvested shares unless (x) the Board of
Directors in its sole discretion shall determine otherwise or (y) the acquiring
entity shall specifically assume this Agreement. For the purpose of this
Agreement, a "change in control" shall be deemed to occur upon the first of the
following events:
(I) any person becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding voting securities and
such person has the ability to elect a majority of the members of the Company's
Board of Directors, if such ownership is not in place on the date of this
Agreement;
(II) any person becomes the beneficial owner, directly or
indirectly, of securities of the Company sufficient to elect a majority of the
members of the Board of Directors of the Company, provided that Optionee's
responsibilities as an employee of the Company are materially adversely
diminished by such change in control; or
(III) the sale of all or substantially all the assets of the
Company, or a merger, consolidation, or similar transaction of the Company in
which the Company is not the surviving entity or the Company's stockholders
immediately prior to such transaction hold less than 50% of the voting
securities of the surviving entity.
A "change in control" shall not include either of the following
events:
(I) a transaction, the sole purpose of which is to change the
state of the Company's incorporation; or
(II) a transaction, the result of which is to sell all or
substantially all of the assets of the Company to another entity (the "surviving
entity"); provided that the surviving entity is owned directly or indirectly by
the Company's stockholders immediately following such transaction in
substantially the same proportions as their ownership of the Company's voting
capital stock immediately preceding such transaction.
(d) For purposes of this Agreement, employment with the Company shall
include employment with a parent or subsidiary of the Company.
3. Exercise of Purchase Option and Closing.
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(a) The Company may exercise the Purchase Option by delivering or
mailing to the Employee (or his estate), in accordance with Section 17, written
notice of exercise within 60 days after the termination of the employment of the
Employee with the Company. Such notice shall specify the number of Shares to be
purchased. If and to the extent the Purchase Option is not so exercised within
such 60-day period, the Purchase Option shall automatically expire and terminate
effective upon the expiration of such 60-day period.
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(b) Within 10 days after his receipt of the Company's notice of the
exercise of the Purchase Option pursuant to subsection (a) above, the Employee
(or his estate) shall tender to the Company at its principal offices the
certificate or certificates representing the Shares which the Company has
elected to purchase, duly endorsed in blank by the Employee or with duly
endorsed stock powers attached thereto, all in form suitable for the transfer of
such Shares to the Company.
(c) After the time at which any Shares are required to be delivered to
the Company for transfer to the Company pursuant to subsection (b) above, the
Company shall not pay any dividend to the Employee on account of such Shares or
permit the Employee to exercise any of the privileges or rights of a stockholder
with respect to such Shares, but shall, in so far as permitted by law, treat the
Company as the owner of such Shares.
(d) The Option Price may be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of the Employee
to the Company or in cash (by check) or both. Such action shall take place
promptly upon receipt of the Shares.
(e) The Company shall not purchase any fraction of a Share upon
exercise of the Purchase Option, and any fraction of a Share resulting from a
computation made pursuant to Section 2 of this Agreement shall be rounded to the
nearest whole Share (with any one-half Share being rounded upward).
4. Restrictions on Transfer.
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(a) Except as otherwise provided in subsection (b) below, the Employee
shall not, sell, assign, transfer, pledge, hypothecate or otherwise dispose of,
by operation of law or otherwise (collectively "transfer"), any of the Shares,
or any interest therein, unless and until such Shares are no longer subject to
the Purchase Option. In addition, Shares which are released from the Purchase
Option shall not be transferred in contravention of the Right of First Refusal
under Section 6 or the market stand-off provisions of Section 8.
(b) Notwithstanding the foregoing, the Employee may transfer Shares to
or for the benefit of any spouse, child or grandchild, or to a trust for their
benefit, provided that such Shares shall remain subject to this Agreement
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(including without limitation the restrictions on transfer set forth in this
Section 4, the Purchase Option, the Right of First Refusal and the Market Stand-
Off) and such permitted transferee shall, as a condition to such transfer,
deliver to the Company a written instrument confirming that such transferee
shall be bound by all of the terms and conditions of this Agreement.
5. Effect of Prohibited Transfer. The Company shall not be required (a)
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to transfer on its books any of the Shares which shall have been sold
or transferred in violation of any of the provisions set forth in this
Agreement, or (b) to treat as owner of such Shares or to pay dividends
to any transferee to whom any such Shares shall have been so sold or
transferred.
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6. Right of First Refusal on Dispositions.
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(a) At any time prior to (i) a Qualifying Public Offering, or (ii) a
Change in Control Transaction, each as defined below, if the Employee desires to
transfer all or any part of its Shares pursuant to a bona fide offer from a
third party (the "Proposed Transferee"), the Employee shall submit a written
offer (the "Offer") to sell such Shares (the "Offered Shares") to the Company on
the same terms and conditions, including price, or terms as reasonably similar
as possible, and in no event less favorable to the Company than those on which
the Employee proposes to transfer such Offered Shares to the Proposed
Transferee. The Offer shall disclose the identity of the Proposed Transferee,
the Offered Shares proposed to be transferred, the total number of Shares owned
by the Employee, the terms and conditions, including price, of the proposed
transfer, and any other material facts relating to the proposed transfer. The
Offer shall further state that the Company may acquire, in accordance with the
provisions of this Agreement, all or any portion of the Offered Shares for the
price and upon the other terms and conditions, including deferred payment (if
applicable), set forth therein. Should the purchase price specified in the
Offer be payable in property other than cash or evidences of indebtedness, the
Company shall have the right to pay the purchase price in the form of cash equal
in amount to the fair market value of such property. If Employee and the
Company (or its assignees) cannot agree on such cash value with the ten (10)
days after the Company's receipt of the Offer, the valuation shall be made by an
appraiser of recognized standing selected by Employee and the Company.
(b) If the Company desires to purchase all or any part of the Offered
Shares, the Company shall communicate in writing its election to purchase to the
Employee, which communication shall state the number of Offered Shares the
Company desires to purchase and shall be given to the Employee in accordance
with Section 17 below within 15 days of the date the Offer was made. Such
communication shall, when taken in conjunction with the Offer, be deemed to
constitute a valid, legally binding and enforceable agreement for the sale and
purchase of such Offered Shares. The sale of the Offered Shares to be sold to
the Company pursuant to this Section 6 shall be made at the offices of the
Company on the 15th day following the date the Offer was made (or if such 15th
day is not a business day, then on the next succeeding business day). Such sale
shall be effected by the Employee's delivery to the Company of a certificate or
certificates evidencing the Offered Shares to be purchased by it, duly endorsed
for transfer to the Company, against payment to the Employee of the purchase
price therefor by the Company.
(c) If the Company does not purchase all of the Offered Shares, the
Offered Shares not so purchased may be sold by the Employee at any time within
90 days after the date the Offer was made, subject to the provisions of Section
2. Any such sale shall be to the Proposed Transferee, at not less than the
price and upon other terms and conditions, if any, not more favorable to the
Proposed Transferee than those specified in the Offer. Any Offered Shares not
sold within such 90-day period shall continue to be subject to the requirements
of a prior offer pursuant to this Section 6. If Offered Shares are sold
pursuant to this Section 6 to any purchaser who is not a party to this
Agreement, the Offered Shares so sold shall no longer be subject to this
Agreement.
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(d) A "Qualifying Public Offering" shall mean the closing of the sale
of shares of Common Stock, at a price of at least $4.00 per share (subject to
appropriate adjustment for stock splits, stock dividends, combinations and other
similar recapitalizations affecting such shares), in a public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, resulting in at least $10,000,000 of gross proceeds to the Company.
(e) A "Change in Control Transaction" shall mean a transaction
described in Section 2(c).
7. Escrow. For purposes of facilitating the enforcement of the provisions
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of this Agreement, the Employee agrees to deliver the certificate(s)
representing the Shares with a stock power executed by the Employee and by the
Employee's spouse (if required for transfer), in blank, to the Secretary of the
Company or its designee, to hold said certificate(s) and stock power(s) in
escrow and to take all such actions and to effectuate all such transfers and/or
releases as are in accordance with the terms of this Agreement. The Employee
hereby acknowledges that the Secretary of the Company (or its designee) is so
appointed as the escrow holder with the foregoing authorities as a material
inducement to make this Agreement and that said appointment is coupled with an
interest and is accordingly irrevocable. The Employee agrees that said escrow
holder shall not be liable to any party hereof (or to any other party) for any
actions or omission unless such escrow holder is grossly negligent. The escrow
holder may rely upon any letter, notice or other document executed by any
signature purported to be genuine and may resign at any time. The Secretary of
the Company initially shall act as the escrow holder with respect to such
Shares.
8. Market Stand-Off.
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(a) In connection with any underwritten public offering by the Company
of its equity securities pursuant to an effective registration statement filed
under the Securities Act, including the Company's initial public offering,
Employee shall not sell, make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose or transfer for value
or otherwise agree to engage in any of the foregoing transactions with respect
to, any Shares without prior written consent of the Company or its underwriters.
Such limitations shall be in effect for such period of time from and after the
effective date of the final prospectus for the offering as may be requested by
the Company or such underwriters; provided, however, that in no event shall such
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period exceed one hundred eighty (180) days. The limitations of this Section 8
shall in all events terminate three (3) years after the effective date of the
Company's initial public offering.
(b) In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the Company's
receipt of consideration, then any new, substituted or additional securities
distributed with respect to the Shares shall be immediately subject to the
provisions of this Section 8, to the same extent the Shares are at such time
covered by such provisions.
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(c) In order to enforce the limitations of this Section 8, the Company may
impose stop-transfer instructions with respect to the Shares until the end of
the applicable stand-off period.
9. Restrictive Legend. All certificates representing Shares shall have
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affixed thereto a legend in substantially the following form, in addition to any
other legends that may be required under federal or state securities laws:
"The shares of stock represented by this certificate are subject to
restrictions on transfer and an option to purchase set forth in a certain Stock
Restriction Agreement between the corporation and the registered owner of this
certificate (or his predecessor in interest), and such Agreement is available
for inspection without charge at the office of the Treasurer of the
corporation."
10. Investment Representations. The Employee represents, warrants and
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covenants as follows:
(a) The Employee is purchasing the Shares for his own account for
investment only, and not with a view to, or for sale in connection with, any
distribution of the Shares in violation of the Securities Act of 1933 (the
"Securities Act"), or any rule or regulation under the Securities Act.
(b) He has had such opportunity as he has deemed adequate to obtain
from representatives of the Company such information as is necessary to permit
him to evaluate the merits and risks of his investment in the Company.
(c) He has sufficient experience in business, financial and investment
matters to be able to evaluate the risks involved in the purchase of the Shares
and to make an informed investment decision with respect to such purchase.
(d) He can afford a complete loss of the value of the Shares and is
able to bear the economic risk of holding such Shares for an indefinite period.
(e) He understands that (i) the Shares have not been registered under
the Securities Act and are "restricted securities" within the meaning of Rule
144 under the Securities Act; (ii) the Shares cannot be sold, transferred or
otherwise disposed of unless they are subsequently registered under the
Securities Act or an exemption from registration is then available; (iii) in any
event, the exemption from registration under Rule 144 will not be available for
at least two years and even then will not be available unless a public market
then exists for the Common Stock, adequate information concerning the Company is
then available to the public, and other terms and conditions of Rule 144 are
complied with; and (iv) there is now no registration statement on file with the
Securities and Exchange Commission with respect to any stock of the Company and
the Company has no obligation or current intention to register the Shares under
the Securities Act.
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(f) A legend substantially in the following form will be placed on
the certificate representing the Shares:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be sold, transferred or
otherwise disposed of in the absence of an effective registration statement
under such Act or an opinion of counsel satisfactory to the corporation to the
effect that such registration is not required."
11. Adjustments for Stock Splits, Stock Dividends, etc.
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(a) If from time to time during the term of the Purchase Option there
is any stock split-up, stock dividend, stock distribution or other
reclassification of the Common Stock of the Company, any and all new,
substituted or additional securities to which the Employee is entitled by reason
of his ownership of the Shares shall be immediately subject to the Purchase
Option, the restrictions on transfer and other provisions of this Agreement in
the same manner and to the same extent as the Shares, and the Option Price shall
be appropriately adjusted.
(b) If the Shares are converted into or exchanged for, or
stockholders of the Company receive by reason of any distribution in total or
partial liquidation, securities of another corporation, or other property
(including cash), pursuant to any merger of the Company or acquisition of its
assets, then the rights of the Company under this Agreement shall inure to the
benefit of the Company's successor and this Agreement shall apply to the
securities or other property received upon such conversion, exchange or
distribution in the same manner and to the same extent as the Shares.
12. Withholding Taxes.
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(a) The Employee acknowledges and agrees that the Company has the
right to deduct from payments of any kind otherwise due to the Employee any
federal, state or local taxes of any kind required by law to be withheld with
respect to the purchase of the Shares by the Employee.
(b) If the Employee elects, in accordance with Section 83(b) of the
Internal Revenue Code of 1986, as amended, to recognize ordinary income in the
year of acquisition of the Shares, the Company will require at the time of such
election an additional payment for withholding tax purposes based on the
difference, if any, between the purchase price for such Shares and the fair
market value of such Shares as of the day immediately preceding the date of the
purchase of such Shares by the Employee.
13. Severability. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
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14. Waiver. Any provision contained in this Agreement may be waived,
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either generally or in any particular instance, by the Board of Directors of the
Company. The failure of the Company (or its assignees) in any instance to
exercise the Purchase Option or First Refusal Right shall not constitute a
waiver of any other repurchase rights and/or rights of first refusal that may
subsequently arise under the provisions of this Agreement or any other agreement
between the Company and Employee. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
15. Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the Company and the Employee and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in this Agreement.
16. No Rights To Employment. Nothing contained in this Agreement shall be
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construed as giving the Employee any right to be retained, in any position, as
an employee of the Company.
17. Notice. All notices required or permitted hereunder shall be in
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writing and deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address shown beneath his or its
respective signature to this Agreement, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 17.
18. Pronouns. Whenever the context may require, any pronouns used in this
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Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural, and vice
versa.
19. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties, and supersedes all prior agreements and understandings,
relating to the subject matter of this Agreement.
20. Amendment. This Agreement may be amended or modified only by a
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written instrument executed by both the Company and the Employee.
21. Governing Law. This Agreement shall be construed, interpreted and
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enforced in accordance with the laws of the State of Delaware.
22. Undertaking of Parties. The parties hereto hereby agree to take
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whatever additional action and execute whatever additional documents the Company
may deem necessary or advisable in order to carry out or effect one or more of
the obligations or restrictions imposed on the parties hereto pursuant to the
express provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
AUDIBLE INC.
By:________________________________
00 Xxxxxxxxxxx Xxxx, 0xx Xxxxx
Xxxxx, XX 00000
EMPLOYEE
___________________________________
Name
Address: _____________________________
_____________________________
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _____________________ hereby sells, assigns and
transfers unto Audible Inc. (the "Company"), ____________________ shares of
Common Stock of the Company standing in the name of ______________________ on
the books of the Company represented by Certificate No. __________ herewith and
does hereby irrevocably constitute and appoint _________________________
Attorney to transfer the said stock on the books of the Company with full power
of substitution in the premises.
Dated: ________________________
____________________________
Signature
_________________________________
Spouse
Instruction: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
repurchase right set forth in the Agreement without requiring additional
signatures.
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