EXHIBIT 2
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.
PERFORMANCE BASED 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 called the "Company").
2. Applicable 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
at prices to be determined in accordance with the provisions of Schedule A,
such number (subject to adjustment as provided herein) of fully paid and
nonassessable shares of the Company's Common Stock, $0.01 par value (the "Common
Stock") as is set forth on Schedule A (the "Performance Warrant Shares"). The
Performance Warrant Shares are subject to vesting as provided on Schedule A.
3. Payment of Applicable Exercise Price; Cashless Exercise.
(a) The Applicable Exercise Price, as defined in Schedule A hereto,
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 Performance Warrant Shares (the "Converted Performance
Warrant Shares"), and the Company shall deliver to the Holder (without payment
by the Holder of the Applicable Exercise Price in cash or any other
consideration (other than the surrender of rights to receive Performance 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 Performance Warrant Shares and (ii) the product of (A) the Applicable
Exercise Price multiplied by (B) the number of the Converted Performance 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 Performance Warrant Shares shall be issuable upon
exercise of the Conversion Right, and if the number of Performance 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 Performance 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 Performance Warrant Shares issuable upon
exercise of the Conversion Right and, if applicable, a new warrant of like tenor
evidencing the balance of the Performance 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.
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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.
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 Performance Warrant Shares have not been registered under
the Securities Act of 1933 (the "Securities Act"), as amended, or any applicable
state securities laws. The Performance 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; Applicable Exercise Price;
Nature of Securities Issuable Upon Exercise of Warrants.
(a) Applicable Exercise Price; Adjustment of Number of Shares. The
Applicable Exercise Price set 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 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
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upon the basis and upon the terms and conditions specified in this Warrant, upon
exercise of this Warrant and in lieu of the Performance 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 (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 Applicable Exercise Price and of the number of Performance 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 Applicable
Exercise Price in effect immediately prior to such subdivision or stock dividend
shall be proportionately reduced and the number of Performance 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 Applicable Exercise Price
in effect immediately prior to such combination shall be proportionately
increased and the number of Performance 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 Performance 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 Performance Warrant
Shares, had such holder hereof been the holder of record of the Performance
Warrant Shares receivable upon the exercise
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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 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 twenty
(20) days prior to the date specified in such notice on which any such action is
to be taken.
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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.
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) Number of Performance Warrant Shares
Subject to Random House's achievement of the customer revenue targets
set forth below, the Performance Warrant Shares shall vest and become
exercisable at the end of the applicable fiscal year of the Company for that
number of Performance Warrant Shares as follows:
(a) if the Customer Revenue from Random House Products (as defined
below) during the second year of that certain Co-Publishing, Marketing and
Distribution Agreement by and between the Company and Random House, dated as of
the date hereof (the "CMD Agreement") meets or exceeds $2,000,000, then the
Holder may purchase that number of Performance Warrant Shares equal to $500,000
divided by the Applicable Exercise Price (as defined below);
(b) if the Customer Revenue from Random House Products during the
third year of the CMD Agreement meets or exceeds $9,200,000, then the Holder may
purchase that number of Performance Warrant Shares equal to $1,000,000 divided
by the Applicable Exercise Price; and
(c) if the Customer Revenue from Random House Products during the
fourth year of the CMD Agreement meets or exceeds $24,600,000, then the Holder
may purchase that number of Performance Warrant Shares equal to $1,500,000
divided by the Applicable Exercise Price.
The prices (in each case, the "Applicable Exercise Price") at which the
Performance Warrant Shares may be purchased shall be equal to the average
closing price of the Company's stock on the NASDAQ exchange for the five trading
days prior to the last day of the then current fiscal year.
"Customer Revenue from Random House Products" with respect to a period shall
mean (i) revenue generated from Audible's sales to its customers of Titles and
Programs released under the Imprint (as defined in the CMD Agreement), and (ii)
revenue generated from Audible's sales to its customers of other audio product
purchased by Audible from Random House Audio Publishing Group, as determined in
accordance with generally accepted accounting principles, consistently applied.
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Subscription
To:____________________ Date:________________________
The undersigned hereby subscribes for __________ shares of Common Stock
at an Applicable 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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Assignment
For value received _________________ hereby sells, assigns and transfers
unto___________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
[Please print or typewrite name and address of Assignee above]
a portion of the within Warrant equal to __________ shares, and does hereby
irrevocably constitute and appoint __________ its attorney to transfer said
portion of the within Warrant on the books of the within named Company with full
power of substitution on the premises.
Dated:_________________
______________________________
In the Presence of:
_______________________
Assignment
For value received _________________ hereby sells, assigns and transfers
unto ___________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
[Please print or typewrite name and address of Assignee above]
a portion of the within Warrant equal to __________ shares, and does hereby
irrevocably constitute and appoint ____________________ its attorney to transfer
said portion of the within Warrant on the books of the within named Company
with full power of substitution on the premises.
Dated:_________________
________________________________
In the Presence of:
_______________________
