**Exhibit 10.36**
**REGISTRATION RIGHTS AGREEMENT**
     This Registration Rights Agreement (the “Agreement”) is made and enteredinto as of this 15th day of February, 2002 by and among Audible, Inc., aDelaware corporation (the “Company”), and the “Investors” named in that certainPurchase Agreement by and among the Company and the Investors (the “PurchaseAgreement”).
     The parties hereby agree as follows:
     1.     Certain Definitions.
                    As used in this Agreement, the following terms shall have the followingmeanings:
                  “Affiliate” means, with respect to any person, any other person whichdirectly or indirectly controls, is controlled by, or is under common controlwith, such person.
                  “Business Day” means a day, other than a Saturday or Sunday, on whichbanks in New York City are open for the general transaction of business.
                  “Closing Price” as of any date means (a) the closing bid price of oneshare of Common Stock as reported on The Nasdaq Stock Market, Inc. NationalMarket System (“Nasdaq”) on such date, (b) if no closing bid price isavailable, the average of the high bid and the low asked price quoted on Nasdaqon such date, or (c) if the shares of Common Stock are not then quoted onNasdaq, the value of one share of Common Stock on such date as shall bedetermined in good faith by the Board of Directors of the Company and theRequired Investors (as defined in the Purchase Agreement), provided, that ifthe Board of Directors of the Company and the Required Investors are unable toagree upon the value of a share of Common Stock pursuant to this subpart (c),the Company and the Required Investors shall jointly select an appraiser who isexperienced in such matters. The decision of such appraiser shall be final andconclusive, and the cost of such appraiser shall be borne one half by theCompany and one half by the Investors.
                  “Common Stock” shall mean the Company’s common stock, par value $.01 pershare.
                  “Investors” shall mean the Investors identified in the Purchase Agreementand any Affiliate or permitted transferee of any Investor who is a subsequentholder of any Warrants or Registrable Securities.
                  “Prospectus” shall mean the prospectus included in any RegistrationStatement, as amended or supplemented by any prospectus supplement, withrespect to the terms of the offering of any portion of the RegistrableSecurities covered by such Registration Statement and by all other amendmentsand supplements to the prospectus, including post-effective amendments and allmaterial incorporated by reference in such prospectus.
 

 

                  “Register,” “registered” and “registration” refer to a registration madeby preparing and filing a Registration Statement or similar document incompliance with the 1933 Act (as defined below), and the declaration orordering of effectiveness of such Registration Statement or document.
                  “Registrable Securities” shall mean the shares of Common Stock issuable(i) pursuant to the Purchase Agreement, (ii) upon the exercise of the Warrants,and (iii) pursuant to the provisions of Sections 2(a) and 2(c) below, and anyother securities issued or issuable with respect to or in exchange forRegistrable Securities; provided, that, a security shall cease to be aRegistrable Security upon (A) sale pursuant to a Registration Statement or Rule144 under the 1933 Act, or (B) such security becoming eligible for sale by theInvestors pursuant to Rule 144(k).
                  “Registration Statement” shall mean any registration statement of theCompany filed under the 1933 Act that covers the resale of any of theRegistrable Securities pursuant to the provisions of this Agreement, amendmentsand supplements to such Registration Statement, including post-effectiveamendments, all exhibits and all material incorporated by reference in suchRegistration Statement.
                  “SEC” means the U.S. Securities and Exchange Commission.
                  “1933 Act” means the Securities Act of 1933, as amended, and the rules andregulations promulgated thereunder.
                  “1934 Act” means the Securities Exchange Act of 1934, as amended, and therules and regulations promulgated thereunder.
                  “Warrants” means, the warrants to purchase shares of Common Stock issuedto the Investors pursuant to the Purchase Agreement, the form of which isattached to the Purchase Agreement as Exhibit A.
     2.     Registration.
                          (a)     Registration Statements.
                          (i)      Promptly following the closing of the purchase and sale of shares ofCommon Stock and Warrants contemplated by the Purchase Agreement (the “ClosingDate”) but no later than April 2, 2002, the Company shall prepare and file withthe SEC one Registration Statement on Form S-3 (or, if Form S-3 is not thenavailable to the Company, on such form of registration statement as is thenavailable to effect a registration for resale of the Registrable Securities,subject to the Investors’ consent), covering the resale of the RegistrableSecurities in an amount at least equal to the number of shares of Common Stockissued to the Investors on the Closing Date plus the number of shares of CommonStock necessary to permit the exercise in full of the Warrants. SuchRegistration Statement also shall cover, to the extent allowable under the 1933Act and the rules promulgated thereunder (including Rule 416), suchindeterminate number of additional shares of Common Stock resulting from stocksplits, stock dividends or similar transactions with respect to the RegistrableSecurities. The Company shall
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use its reasonable best efforts to obtain fromeach person who now haspiggyback registration rights a waiver of those rights with respect to theRegistration Statement. The Registration Statement (and each amendment orsupplement thereto, and each request for acceleration of effectiveness thereof)shall be provided in accordance with Section 3(c) to the Investors and theircounsel prior to its filing or other submission. If a Registration Statementcovering the Registrable Securities is not filed with the SEC on or beforeApril 2, 2002, the Company will make pro rata payments to each Investor, asliquidated damages and not as a penalty, in an amount equal to 1.0% of theaggregate amount paid by such Investor on the Closing Date to the Company forany 30-day period or pro rata for any portion thereof following the date bywhich such Registration Statement should have been filed for which noRegistration Statement is filed with respect to the Registrable Securities.Such payments shall be in partial compensation to the Investors, and shall notconstitute the Investors’ exclusive remedy for such events. Such paymentsshall be made to each Investor in cash or, at the option of such Investor, inadditional fully paid and non-assessable shares of Common Stock not later thanthree Business Days following the end of each 30-day period. For this purpose,each share of Common Stock shall be deemed to have a value equal to thearithmetic mean of the Closing Prices for the ten (10) trading days beginningtwenty (20) trading days prior to the issuance of such shares.
                          (ii)     Additional Registrable Securities. Upon the written demand of anyInvestor and upon the issuance or deemed issuance by the Company of shares ofCommon Stock such as to trigger the anti-dilution provisions contained in theWarrants regarding issuances or deemed issuances by the Company of shares ofCommon Stock at a price per share less than the then effective Warrant Price(as defined in the Warrant), or any other change in the Warrant Price such thatadditional shares of Common Stock become issuable pursuant to the Warrants, theCompany shall prepare and file with the SEC one or more Registration Statementson Form S-3 (or, if Form S-3 is not then available to the Company, on such formof registration statement as is then available to effect a registration forresale of such additional shares of Common Stock (the “Additional WarrantShares”), subject to the Investors’ consent) covering the resale of theAdditional Warrant Shares, but only to the extent the Additional Warrant Sharesare not at the time covered by an effective Registration Statement. SuchRegistration Statement also shall cover, to the extent allowable under the 1933Act and the rules promulgated thereunder (including Rule 416), suchindeterminate number of additional shares of Common Stock resulting from stocksplits, stock dividends or similar transactions with respect to the AdditionalWarrant Shares. The Company shall use its reasonable best efforts to obtainfrom each person who now has piggyback registration rights a waiver of thoserights with respect to such Registration Statement. The Registration Statement(and each amendment or supplement thereto, and each request for acceleration ofeffectiveness thereof) shall be provided in accordance with Section 3(c) to theInvestors and their counsel prior to its filing or other submission. If aRegistration Statement covering the Additional Warrant Shares is required to befiled under this Section 2(a)(ii) and is not filed with the SEC within twentyBusiness Days of the request of any Investor, the Company will make pro ratapayments to each Investor, as liquidated damages and not as a penalty, in anamount equal to 1.0% of the aggregate amount paid by such Investor on theClosing Date to the Company for 30-day period or pro rata for any portionthereof following the date by which such Registration Statement should havebeen filed for which no
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Registration Statement is filed with respect to theAdditional Warrant Shares. Such payments shall be in partial compensation tothe Investors, and shall not constitute the Investors’exclusive remedy for such events. Such payments shall be made to eachInvestor in cash or, at the option of such Investor, in additional fully paidand non-assessable shares of Common Stock not later than three Business Daysfollowing the end of each 30-day period. Each share of Common Stock shall bedeemed to have a value equal to the arithmetic mean of the Closing Prices forthe ten (10) trading days beginning twenty (20) trading days prior to theissuance of such shares.
                          (b)     Expenses. The Company will pay all expenses associated with eachregistration, including filing and printing fees, counsel and accounting feesand expenses, costs associated with clearing the Registrable Securities forsale under applicable state securities laws, listing fees and the Investors’reasonable expenses in connection with the registration, but excludingdiscounts, commissions, fees of underwriters, selling brokers, dealer managersor similar securities industry professionals with respect to the RegistrableSecurities being sold.
                          (c)     Effectiveness.
                          (i)      The Company shall use commercially reasonable efforts to have theRegistration Statement declared effective as soon as practicable. If (x) aRegistration Statement covering the Registrable Securities is not declaredeffective by the SEC on or prior to June 2, 2002, or (y) a RegistrationStatement covering Additional Warrant Shares is not declared effective by theSEC within 60 days following the demand of an Investor relating to theAdditional Warrant Shares covered thereby, then the Company will make pro ratapayments to each Investor, as liquidated damages and not as a penalty, in anamount equal to 1.0% of the aggregate amount invested by such Investor in theInitial Securities and/or the Remaining Securities, as applicable, for anymonth or pro rata for any portion thereof following the date by which suchRegistration Statement should have been effective (the “Blackout Period”).Such payments shall be in partial compensation to the Investors, and shall notconstitute the Investors’ exclusive remedy for such events. The amountspayable as liquidated damages pursuant to this paragraph shall be paid monthlywithin three (3) Business Days of the last day of each month following thecommencement of the Blackout Period until the termination of the BlackoutPeriod. Such payments shall be made to each Investor in cash or, at the optionof such Investor, in additional fully paid and non-assessable shares of CommonStock. Each share of Common Stock shall be deemed to have a value equal to thearithmetic mean of the Closing Prices for the ten (10) trading days beginningtwenty (20) trading days prior to the issuance of such shares.
                          (ii)     For not more than twenty (20) consecutive days or for a total of notmore than forty-five (45) days in any twelve (12) month period, the Company maydelay the disclosure of material non-public information concerning the Company,by suspending the use of any Prospectus included in any registrationcontemplated by this Section containing such information, the disclosure ofwhich at the time is not, in the good faith opinion of the Company, in the bestinterests of the Company (an “Allowed Delay”); provided, that the Company shallpromptly (a) notify the Investors in writing of the existence of (but in noevent, without the prior written consent of an Investor, shall the Companydisclose to such Investor any of the facts or circumstances regarding) materialnon-public information giving rise to an Allowed Delay, and
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(b)  advise theInvestors in writing to cease all sales under the Registration Statement untilthe end of the Allowed Delay.
                          (d)     Underwritten Offering. If any offering pursuant to a RegistrationStatement pursuant to Section 2(a) hereof involves an underwritten offering,the Company shall have the right to select an investment banker and manager toadminister the offering, which investment banker or manager shall be reasonablysatisfactory to the Required Investors.
     3.     Company Obligations. The Company will use commercially reasonableefforts to effect the registration of the Registrable Securities in accordancewith the terms hereof, and pursuant thereto the Company will, as expeditiouslyas possible:
                          (a)     use commercially reasonable efforts to cause such RegistrationStatement to become effective and to remain continuously effective for a periodthat will terminate upon the earlier of (i) the date on which all RegistrableSecurities covered by such Registration Statement as amended from time to time,have been sold, and (ii) the date on which all Registrable Securities coveredby such Registration Statement may be sold pursuant to Rule 144(k);
                          (b)     prepare and file with the SEC such amendments and post-effectiveamendments to the Registration Statement and the Prospectus as may be necessaryto keep the Registration Statement effective for the period specified inSection 3(a) and to comply with the provisions of the 1933 Act and the 1934 Actwith respect to the distribution of all of the Registrable Securities coveredthereby;
                          (c)     provide copies to and permit counsel designated by the Investors toreview each Registration Statement and all amendments and supplements theretono fewer than three (3) days prior to their filing with the SEC and not fileany document to which such counsel reasonably objects;
                          (d)     furnish to the Investors and their legal counsel (i) promptly afterthe same is prepared and publicly distributed, filed with the SEC, or receivedby the Company (but not later than two (2) Business Days after the filing date,receipt date or sending date, as the case may be, one (1) copy of anyRegistration Statement and any amendment thereto, each preliminary prospectusand Prospectus and each amendment or supplement thereto, and each letterwritten by or on behalf of the Company to the SEC or the staff of the SEC, andeach item of correspondence from the SEC or the staff of the SEC, in each caserelating to such Registration Statement (other than any portion of any thereofwhich contains information for which the Company has sought confidentialtreatment), and (ii) such number of copies of a Prospectus, including apreliminary prospectus, and all amendments and supplements thereto and suchother documents as each Investor may reasonably request in order to facilitatethe disposition of the Registrable Securities owned by such Investor that arecovered by the related Registration Statement;
                          (e)     in the event the Company selects an underwriter for the offering, theCompany shall enter into and perform its reasonable obligations under anunderwriting
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agreement, in usual and customary form, including, withoutlimitation, customary indemnification and contribution obligations, with theunderwriter of such offering;
                          (f)     if required by the underwriter, or if any Investor is described in theRegistration Statement as an underwriter, the Company shall furnish, on theeffective date of the Registration Statement (except with respect to clause (i)below) and on the date that Registrable Securities are delivered to anunderwriter, if any, for sale in connection with the Registration Statement(including any Investor deemed to be an underwriter), (i) (A) in the case of anunderwritten offering, an opinion, dated as of the closing date of the sale ofRegistrable Securities to the underwriters, from independent legal counselrepresenting the Company for purposes of such Registration Statement, in form,scope and substance as is customarily given in an underwritten public offering,addressed to the underwriters and the Investors participating in suchunderwritten offering or (B) in the case of an “at the market” offering, anopinion, dated as of or promptly after the effective date of the RegistrationStatement to the Investors, from independent legal counsel representing theCompany for purposes of such Registration Statement, in form, scope andsubstance as is customarily given in a public offering, addressed to theInvestors, and (ii) a letter, dated as of the effective date of suchRegistration Statement and confirmed as of the applicable dates describedabove, from the Company’s independent certified public accountants in form andsubstance as is customarily given by independent certified public accountantsto underwriters in an underwritten public offering, addressed to theunderwriters (including any Investor deemed to be an underwriter);
                          (g)     use commercially reasonable efforts to (i) prevent the issuance of anystop order or other suspension of effectiveness and, (ii) if such order isissued, obtain the withdrawal of any such order at the earliest possiblemoment;
                          (h)     prior to any public offering of Registrable Securities, usecommercially reasonable efforts to register or qualify or cooperate with theInvestors and their counsel in connection with the registration orqualification of such Registrable Securities for offer and sale under thesecurities or blue sky laws of such jurisdictions requested by the Investorsand do any and all other commercially reasonable acts or things necessary oradvisable to enable the distribution in such jurisdictions of the RegistrableSecurities covered by the Registration Statement;
                          (i)      use commercially reasonable efforts to cause all RegistrableSecurities covered by a Registration Statement to be listed on each securitiesexchange, interdealer quotation system or other market on which similarsecurities issued by the Company are then listed;
                          (j)     immediately notify the Investors, at any time when a Prospectusrelating to Registrable Securities is required to be delivered under the 1933Act, upon discovery that, or upon the happening of any event as a result ofwhich, the Prospectus included in a Registration Statement, as then in effect,includes an untrue statement of a material fact or omits to state any materialfact required to be stated therein or necessary to make the statements thereinnot misleading in light of the circumstances then existing, and at the requestof any such holder, promptly prepare and furnish to such holder a reasonablenumber of copies of a supplement to or
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an amendment of such Prospectus as maybe necessary so that, as thereafter delivered to the purchasers of suchRegistrable Securities, such Prospectus shall not include an untrue statementof a material fact or omit to state a material fact required to be statedtherein or necessary to make the statements therein not misleading in light ofthe circumstances then existing; and
                          (k)     otherwise use commercially reasonable efforts to comply with allapplicable rules and regulations of the SEC under the 1933 Act and the 1934Act, take such other actions as may be reasonably necessary to facilitate theregistration of the Registrable Securities hereunder; and make available to itssecurity holders, as soon as reasonably practicable, but not later than theAvailability Date (as defined below), an earnings statement covering a periodof at least twelve (12) months, beginning after the effective date of eachRegistration Statement, which earnings statement shall satisfy the provisionsof Section 11(a) of the 1933 Act (for the purpose of this subsection 3(k),“Availability Date” means the 45th day following the end of the fourth fiscalquarter that includes the effective date of such Registration Statement, exceptthat, if such fourth fiscal quarter is the last quarter of the Company’s fiscalyear, “Availability Date” means the 90th day after the end of such fourthfiscal quarter).
     4.     Due Diligence Review; Information. The Company shall make available,during normal business hours, for inspection and review by the Investors,advisors to and representatives of the Investors (who may or may not beaffiliated with the Investors and who are reasonably acceptable to theCompany), any underwriter participating in any disposition of shares of CommonStock on behalf of the Investors pursuant to a Registration Statement oramendments or supplements thereto or any blue sky, NASD or other filing, allfinancial and other records, all SEC Filings (as defined in the PurchaseAgreement) and other filings with the SEC, and all other corporate documentsand properties of the Company as may be reasonably necessary for the purpose ofsuch review, and cause the Company’s officers, directors and employees, withina reasonable time period, to supply all such information reasonably requestedby the Investors or any such representative, advisor or underwriter inconnection with such Registration Statement (including, without limitation, inresponse to all questions and other inquiries reasonably made or submitted byany of them), prior to and from time to time after the filing and effectivenessof the Registration Statement for the sole purpose of enabling the Investorsand such representatives, advisors and underwriters and their respectiveaccountants and attorneys to conduct initial and ongoing due diligence withrespect to the Company and the accuracy of such Registration Statement.
            The Company shall not disclose material nonpublic information to theInvestors, or to advisors to or representatives of the Investors, unless priorto disclosure of such information the Company identifies such information asbeing material nonpublic information and provides the Investors, such advisorsand representatives with the opportunity to accept or refuse to accept suchmaterial nonpublic information for review.
     5.     Obligations of the Investors.
                          (a)     Each Investor shall furnish in writing to the Company such informationregarding itself, the Registrable Securities held by it and the intended methodof disposition of the Registrable Securities held by it, as shall be reasonablyrequired to effect the
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registration of such Registrable Securities and shallexecute such documents in connection with such registration as the Company mayreasonably request. At least five (5) Business Days prior to the firstanticipated filing date of any Registration Statement, the Company shall notifyeach Investor of the information the Company requires from such Investor ifsuch Investor elects to have any of the Registrable Securitiesincluded in the Registration Statement. An Investor shall provide suchinformation to the Company at least two (2) Business Days prior to the firstanticipated filing date of such Registration Statement if such Investor electsto have any of the Registrable Securities included in the RegistrationStatement.
                          (b)     Each Investor, by its acceptance of the Registrable Securities agreesto cooperate with the Company as reasonably requested by the Company inconnection with the preparation and filing of a Registration Statementhereunder, unless such Investor has notified the Company in writing of itselection to exclude all of its Registrable Securities from such RegistrationStatement.
                          (c)     In the event the Company, at the request of the Investors, determinesto engage the services of an underwriter, such Investor agrees to enter intoand perform its obligations under an underwriting agreement, in usual andcustomary form, including, without limitation, customary indemnification andcontribution obligations, with the managing underwriter of such offering andtake such other actions as are reasonably required in order to expedite orfacilitate the dispositions of the Registrable Securities.
                          (d)     Each Investor agrees that, upon receipt of any notice from the Companyof either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii)or (ii) the happening of an event pursuant to Section 3(j) hereof, suchInvestor will immediately discontinue disposition of Registrable Securitiespursuant to the Registration Statement covering such Registrable Securities,until the Investor’s receipt of the copies of the supplemented or amendedprospectus filed with the SEC and declared effective and, if so directed by theCompany, the Investor shall deliver to the Company (at the expense of theCompany) or destroy (and deliver to the Company a certificate of destruction)all copies in the Investor’s possession of the Prospectus covering theRegistrable Securities current at the time of receipt of such notice.
                          (e)     No Investor may participate in any third party underwrittenregistration hereunder unless it (i) agrees to sell the Registrable Securitieson the basis provided in any underwriting arrangements in usual and customaryform entered into by the Company, (ii) completes and executes allquestionnaires, powers of attorney, indemnities, underwriting agreements andother documents reasonably required under the terms of such underwritingarrangements, and (iii) agrees to pay its pro rata share of all underwritingdiscounts and commissions. Notwithstanding the foregoing, no Investor shall berequired to make any representations to such underwriter, other than those withrespect to itself and the Registrable Securities owned by it, including itsright to sell the Registrable Securities, and any indemnification in favor ofthe underwriter by the Investors shall be several and not joint and limited inthe case of any Investor, to the proceeds received by such Investor from thesale of its Registrable Securities. The scope of any such indemnification infavor of an underwriter shall be limited to the same extent as the indemnityprovided in Section 6(b) hereof.
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     6.     Indemnification.
                          (a)     Indemnification by the Company. The Company will indemnify and holdharmless each Investor and its officers, directors, members, employees andagents, successors andassigns, and each other person, if any, who controls such Investor withinthe meaning of the 1933 Act, against any losses, claims, damages orliabilities, joint or several, to which such seller, officer, director, member,or controlling person may become subject under the 1933 Act or otherwise,insofar as such losses, claims, damages or liabilities (or actions in respectthereof) arise out of or are based upon: (i) any untrue statement or allegeduntrue statement of any material fact contained in any Registration Statement,any preliminary prospectus or final prospectus contained therein, or anyamendment or supplement thereof; (ii) any blue sky application or otherdocument executed by the Company specifically for that purpose or based uponwritten information furnished by the Company filed in any state or otherjurisdiction in order to qualify any or all of the Registrable Securities underthe securities laws thereof (any such application, document or informationherein called a “Blue Sky Application”); (iii) the omission or alleged omissionto state therein a material fact required to be stated therein or necessary tomake the statements therein not misleading; (iv) any violation by the Companyor its agents of any rule or regulation promulgated under the 1933 Actapplicable to the Company or its agents and relating to action or inactionrequired of the Company in connection with such registration; or (v) anyfailure to register or qualify the Registrable Securities included in any suchRegistration in any state where the Company or its agents has affirmativelyundertaken or agreed in writing that the Company will undertake suchregistration or qualification on an Investor’s behalf (the undertaking of anyunderwriter chosen by the Company being attributed to the Company) and willreimburse such Investor, and each such officer, director or member and eachsuch controlling person for any legal or other expenses reasonably incurred bythem in connection with investigating or defending any such loss, claim,damage, liability or action; provided, however, that the Company will not beliable in any such case if and to the extent that any such loss, claim, damageor liability arises out of or is based upon an untrue statement or allegeduntrue statement or omission or alleged omission so made in conformity withinformation furnished by such Investor or any such controlling person inwriting specifically for use in such Registration Statement or Prospectus.
                          (b)     Indemnification by the Investors. In connection with any registrationpursuant to the terms of this Agreement, each Investor will furnish to theCompany in writing such information as the Company reasonably requestsconcerning the holders of Registrable Securities or the proposed manner ofdistribution for use in connection with any Registration Statement orProspectus and agrees, severally but not jointly, to indemnify and holdharmless, to the fullest extent permitted by law, the Company, its directors,officers, employees, stockholders and each person who controls the Company(within the meaning of the 1933 Act) against any losses, claims, damages,liabilities and expense (including reasonable attorney fees) resulting from anyuntrue statement of a material fact or any omission of a material fact requiredto be stated in the Registration Statement or Prospectus or preliminaryprospectus or amendment or supplement thereto or necessary to make thestatements therein not misleading, to the extent, but only to the extent thatsuch untrue statement or omission is contained in any information furnished inwriting by such Investor to the Company specifically for inclusion in suchRegistration Statement or Prospectus or amendment or supplement thereto. In noevent shall the
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liability of an Investor be greater in amount than the dollaramount of the proceeds (net of all expense paid by such Investor and the amountof any damages such holder has otherwise been required to pay by reason of suchuntrue statement or omission) received by such Investor upon the saleof the Registrable Securities included in the Registration Statementgiving rise to such indemnification obligation.
                          (c)     Conduct of Indemnification Proceedings. Any person entitled toindemnification hereunder shall (i) give prompt notice to the indemnifyingparty of any claim with respect to which it seeks indemnification and (ii)permit such indemnifying party to assume the defense of such claim with counselreasonably satisfactory to the indemnified party; provided that any personentitled to indemnification hereunder shall have the right to employ separatecounsel and to participate in the defense of such claim, but the fees andexpenses of such counsel shall be at the expense of such person unless (a) theindemnifying party has agreed to pay such fees or expenses, or (b) theindemnifying party shall have failed to assume the defense of such claim andemploy counsel reasonably satisfactory to such person or (c) in the reasonablejudgment of any such person, based upon written advice of its counsel, aconflict of interest exists between such person and the indemnifying party withrespect to such claims (in which case, if the person notifies the indemnifyingparty in writing that such person elects to employ separate counsel at theexpense of the indemnifying party, the indemnifying party shall not have theright to assume the defense of such claim on behalf of such person); andprovided, further, that the failure of any indemnified party to give notice asprovided herein shall not relieve the indemnifying party of its obligationshereunder, except to the extent that such failure to give notice shallmaterially adversely affect the indemnifying party in the defense of any suchclaim or litigation. It is understood that the indemnifying party shall not,in connection with any proceeding in the same jurisdiction, be liable for feesor expenses of more than one separate firm of attorneys at any time for allsuch indemnified parties. No indemnifying party will, except with the consentof the indemnified party, consent to entry of any judgment or enter into anysettlement that does not include as an unconditional term thereof the giving bythe claimant or plaintiff to such indemnified party of a release from allliability in respect of such claim or litigation.
                          (d)     Contribution. If for any reason the indemnification provided for inthe preceding paragraphs (a) and (b) is unavailable to an indemnified party orinsufficient to hold it harmless, other than as expressly specified therein,then the indemnifying party shall contribute to the amount paid or payable bythe indemnified party as a result of such loss, claim, damage or liability insuch proportion as is appropriate to reflect the relative fault of theindemnified party and the indemnifying party, as well as any other relevantequitable considerations. No person guilty of fraudulent misrepresentationwithin the meaning of Section 11(f) of the 1933 Act shall be entitled tocontribution from any person not guilty of such fraudulent misrepresentation.In no event shall the contribution obligation of a holder of RegistrableSecurities be greater in amount than the dollar amount of the proceeds (net ofall expenses paid by such holder and the amount of any damages such holder hasotherwise been required to pay by reason of such untrue or alleged untruestatement or omission or alleged omission) received by it upon the sale of theRegistrable Securities giving rise to such contribution obligation.
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     7.     Miscellaneous.
                          (a)     Amendments and Waivers. This Agreement may be amended only by awriting signed by the parties hereto. The Company may take any action hereinprohibited, or omit toperform any act herein required to be performed by it, only if the Companyshall have obtained the written consent to such amendment, action or omissionto act, of the Required Investors.
                          (b)     Notices. All notices and other communications provided for orpermitted hereunder shall be made as set forth in Section 9.4 of the PurchaseAgreement.
                          (c)     Assignments and Transfers by Investors. The provisions of thisAgreement shall be binding upon and inure to the benefit of the Investors andtheir respective successors and assigns. An Investor may transfer or assign,in whole or from time to time in part, to one or more persons its rightshereunder in connection with the transfer of Registrable Securities by suchInvestor to such person, provided that such Investor complies with all lawsapplicable thereto and provides written notice of assignment to the Companypromptly after such assignment is effected.
                          (d)     Assignments and Transfers by the Company. This Agreement may not beassigned by the Company (whether by operation of law or otherwise) without theprior written consent of each Investor, provided, however, that the Company mayassign its rights and delegate its duties hereunder to any surviving orsuccessor corporation in connection with a merger or consolidation of theCompany with another corporation, or a sale, transfer or other disposition ofall or substantially all of the Company’s assets to another corporation,without the prior written consent of the Investors, after notice duly given bythe Company to each Investor.
                          (e)     Benefits of the Agreement. The terms and conditions of this Agreementshall inure to the benefit of and be binding upon the respective permittedsuccessors and assigns of the parties. Nothing in this Agreement, express orimplied, is intended to confer upon any party other than the parties hereto ortheir respective successors and assigns any rights, remedies, obligations, orliabilities under or by reason of this Agreement, except as expressly providedin this Agreement.
                          (f)     Counterparts; Faxes. This Agreement may be executed in two or morecounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument. This Agreement may alsobe executed via facsimile, which shall be deemed an original.
                          (g)     Titles and Subtitles. The titles and subtitles used in this Agreementare used for convenience only and are not to be considered in construing orinterpreting this Agreement.
                          (h)     Severability. Any provision of this Agreement that is prohibited orunenforceable in any jurisdiction shall, as to such jurisdiction, beineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof but shall be
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interpreted as if itwere written so as to be enforceable to the maximum extent permitted byapplicable law, and any such prohibition or unenforceability in anyjurisdiction shall not invalidate or render unenforceable such provision in anyother jurisdiction. To the extent permitted by applicable law, the partieshereby waive any provision of law which renders any provisions hereofprohibited or unenforceable in any respect.
                          (i)      Further Assurances. The parties shall execute and deliver all suchfurther instruments and documents and take all such other actions as mayreasonably be required to carry out the transactions contemplated hereby and toevidence the fulfillment of the agreements herein contained.
                          (j)      Entire Agreement. This Agreement is intended by the parties as afinal expression of their agreement and intended to be a complete and exclusivestatement of the agreement and understanding of the parties hereto in respectof the subject matter contained herein. This Agreement supersedes all prioragreements and understandings between the parties with respect to such subjectmatter.
                          (k)     Governing Law; Consent to Jurisdiction. This Agreement shall begoverned by, and construed in accordance with, the internal laws of the Stateof New York without regard to the choice of law principles thereof. Each ofthe parties hereto irrevocably submits to the exclusive jurisdiction of thecourts of the State of New York located in New York County and the UnitedStates District Court for the Southern District of New York for the purpose ofany suit, action, proceeding or judgment relating to or arising out of thisAgreement and the transactions contemplated hereby. Service of process inconnection with any such suit, action or proceeding may be served on each partyhereto anywhere in the world by the same methods as are specified for thegiving of notices under this Agreement. Each of the parties hereto irrevocablyconsents to the jurisdiction of any such court in any such suit, action orproceeding and to the laying of venue in such court. Each party heretoirrevocably waives any objection to the laying of venue of any such suit,action or proceeding brought in such courts and irrevocably waives any claimthat any such suit, action or proceeding brought in any such court has beenbrought in an inconvenient forum.
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                  IN WITNESS WHEREOF, the parties have executed this Agreement or causedtheir duly authorized officers to execute this Agreement as of the date firstabove written.   The Company: AUDIBLE, INC.   By: /s/ Donald R. Katz  Name: Donald R. Katz  Title: Chairman and Chief Executive Officer The Investors: SPECIAL SITUATIONS FUND III, L.P.   By: /s/ Austin Marxe  Name: Austin Marxe  Title: General Partner   SPECIAL SITUATIONS CAYMAN FUND, L.P.   By: /s/ Austin Marxe  Name: Austin Marxe  Title: General Partner   SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.   By: /s/ Austin Marxe  Name: Austin Marxe  Title: General Partner   SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.   By: /s/ Austin Marxe  Name: Austin Marxe  Title: General Partner
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