EXHIBIT 1
THIS WARRANT AND THE OTHER SECURITIES REPRESENTED HEREBY HAVE 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.________
AUDIBLE, INC.
1. Issuance. This Warrant is issued to Random House Ventures L.L.C.
(together with its assignees, "Random House") by Audible, Inc., a Delaware
corporation (hereinafter, with its successors, the "Company").
2. Exercise Price; Number of Shares. Subject to the terms and
conditions hereinafter set forth, the registered holder, its successor or
permitted assigns 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 in writing, to purchase from the Company that
number (subject to adjustment as provided herein) of fully paid and
nonassessable shares (the "Warrant Shares") of the Company's Common Stock, $0.01
par value (the "Common Stock") as set forth on Schedule A hereto.
3. Payment of Exercise Price; Cashless Exercise.
(a) The applicable exercise price, as set forth on Schedule A (the
applicable "Exercise Price") may be paid in cash, by check or wire transfer in
immediately available funds, or as provided in 3(b) below. The Corporation shall
issue to the Holder upon payment of the Exercise Price a certificate for the
Warrant Shares issuable upon exercise of the Warrant and, if applicable, a new
warrant of like tenor evidencing the balance of the Warrants Shares remaining
subject to this Warrant.
(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 Exercise 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
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 the average closing price per share over the preceding
5 trading days as reported on the NASDAQ National Market or, if the shares of
such class of Common Stock then are listed and traded on the New York Stock
Exchange, Inc. ("NYSE"), the closing price on such day as reported on the NYSE
Composite Transactions Tape; if the shares of such class of Common Stock then
are not listed and traded on the NYSE, the closing price on such day as reported
by the principal national securities exchange on which the shares are listed and
traded; or if the shares of such class of Common Stock then are not traded on
any such principal national securities exchange, the average of the highest
reported bid and lowest reported asked price on such day as reported by NASDAQ.
If on any determination date the shares of such class of Common Stock are not
quoted by any such organization, the Current Market Price shall be the fair
market value of such shares on such determination date as determined by the
Board of Directors. If the Holder shall object to any determination by the Board
of Directors of the Current Market Price, the Current Market Price shall be the
fair market value per share of the applicable class of Common Stock as
determined by an independent appraiser retained by the Company at its expense
and reasonably acceptable to the Holder.
4. Partial Exercise. This Warrant may be exercised in part, and, in
the event of a partial exercise, the Holder shall be entitled to receive a new
warrant, which shall be dated as of the date of this Warrant, covering the
number of Warrant Shares in respect of which this Warrant shall not have been
exercised.
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5. Issuance Date. The person or persons in whose name or names any
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 received by the Company
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 the seventh (7th) anniversary of the Original Issue Date (the
"Expiration Date") and shall be void thereafter.
7. Reserved Shares; Valid Issuance; Restricted Stock.
(a) The Company covenants that it will at 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.
(b) The Warrant Shares have not been registered under the
Securities Act of 1933 (the "Securities Act"), as amended, or any applicable
state securities laws. The Warrant Shares may not be sold or transferred unless
such sale or transfer is in accordance with the registration requirements of the
Securities Act and applicable laws or some other exemption from the registration
requirements of the Securities Act and applicable laws - including a sale under
Rule 144 - is available with respect thereto.
8. Adjustment of Number of Shares; Exercise Price; Nature of
Securities Issuable Upon Exercise of Warrants.
(a) Exercise Price; Adjustment of Number of Shares. Each Exercise
Price 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 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, 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
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hereby as if such shares were outstanding immediately prior to the Transaction
(assuming that in the case of a consolidation merger, sale or transfer which
includes an election as to the consideration to be received by the holders, such
holder of Common Stock failed to exercise its rights of election as to the kind
or amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer is not the same for each share of Common Stock held
immediately prior to such consolidation, merger, sale or transfer by other than
a constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purpose of this paragraph 8(b) the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares), 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 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 date
hereof, the 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 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.
9. Fractional Shares. In no event shall any fractional share of
Common 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
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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. Exchange, Transfer or Assignment of Warrant. The Holder of this
Warrant shall be entitled without obtaining the consent of the Company to assign
and transfer this Warrant, at any time in whole or from time to time in part, to
any Person or Persons. Subject to the preceding sentence, upon surrender of this
Warrant to the Company, together with the attached Assignment Form duly
executed, the Company shall, without charge, execute and deliver a new Warrant
in the name of the assignee or assignees named in such instrument of assignment
and, if the Holder's entire interest is not being assigned, in the name of the
Holder, and this Warrant shall promptly be canceled. Each taker and holder of
this Warrant Certificate by taking or holding the same, consents and agrees that
the registered holder hereof may be treated by the Company and all other persons
dealing with this Warrant Certificate as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby.
11. Notices of Record Date, Etc. In the event of:
(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 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.
12. Amendment. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Company and the holder of this
Warrant.
13. Governing Law. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State of
New York.
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14. Successors and Assigns. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
15. Business Days. If the last or appointed day for the taking of
any 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: May 5, 2000 AUDIBLE, INC.
By: /s/ Xxxxxx X. Xxxx
------------------
Title: Chairman
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SCHEDULE A
The Holder shall be entitled to exercise this Warrant for shares of
Common Stock as follows:
(1) Subject to the vesting schedule set forth below, this warrant shall be
exercisable for the following number of shares and at the following exercise
prices:
(a) 600,000 shares at an Exercise Price of $5.89
(b) 50,000 shares at an Exercise Price of $8 per share.
(c) 50,000 shares at an Exercise Price of $10 per share.
(d) 50,000 shares at an Exercise Price of $12 per share.
(e) 50,000 shares at an Exercise Price of $20 per share.
(f) 33,333 shares at an Exercise Price of $30 per share.
(g) 25,000 shares at an Exercise Price of $40 per share.
(h) 20,000 shares at an Exercise Price of $50 per share.
(2) Vesting
The Warrant Shares shall become exercisable in accordance with the
following vesting schedule:
(a) Warrant Shares with an aggregate Exercise Price of $2,258,498
shall be exercisable on the date of execution of this Warrant; the holder may,
in its discretion, select which Warrant Shares are being exercised;
(b) Warrant Shares with an aggregate Exercise Price of $2,258,498
shall vest on each anniversary of the date hereof in 2002, 2003 and 2004;
provided that on such date that certain Co-Publishing, Marketing and
Distribution Agreement by and between the Company and Random House, dated as of
the date hereof, shall continue to be in full force and effect (unless it has
expired in accordance with its terms or has been terminated by Random House upon
the occurrence of an Event of Default (as defined in such agreement).
For the avoidance of doubt, this Warrant shall be exercisable in part
and in respect of any vested portion hereof until the Expiration Date.
Notwithstanding the foregoing, the Warrant Shares shall become 100% exercisable
immediately prior to the closing of an event described in Sections 8(b) or 8(d).
The Holder shall have the right to choose the per share
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Exercise Price to be applied in any given exercise, and the Holder need not
exercise this Warrant in the order of the Exercise Prices set forth above.
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Subscription
To:_______________ Date:________________
The undersigned hereby subscribes for __________ shares of Common Stock
at an Exercise Price of $__________ 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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