ex10-36



 



Exhibit 10.36



REGISTRATION RIGHTS AGREEMENT


     This Registration Rights Agreement (the “Agreement”) is made and entered
into as of this 15th day of February, 2002 by and among Audible, Inc., a
Delaware corporation (the “Company”), and the “Investors” named in that certain
Purchase Agreement by and among the Company and the Investors (the “Purchase
Agreement”).


     The parties hereby agree as follows:


     1.     Certain Definitions.


     
        
       As used in this Agreement, the following terms shall have the following
meanings:



     
        
     “Affiliate” means, with respect to any person, any other person which
directly or indirectly controls, is controlled by, or is under common control
with, such person.



     
        
     “Business Day” means a day, other than a Saturday or Sunday, on which
banks 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 one
share of Common Stock as reported on The Nasdaq Stock Market, Inc. National
Market System (“Nasdaq”) on such date, (b) if no closing bid price is
available, the average of the high bid and the low asked price quoted on Nasdaq
on such date, or (c) if the shares of Common Stock are not then quoted on
Nasdaq, the value of one share of Common Stock on such date as shall be
determined in good faith by the Board of Directors of the Company and the
Required Investors (as defined in the Purchase Agreement), provided, that if
the Board of Directors of the Company and the Required Investors are unable to
agree 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 is
experienced in such matters. The decision of such appraiser shall be final and
conclusive, and the cost of such appraiser shall be borne one half by the
Company and one half by the Investors.



     
        
     “Common Stock” shall mean the Company’s common stock, par value $.01 per
share.



     
        
     “Investors” shall mean the Investors identified in the Purchase Agreement
and any Affiliate or permitted transferee of any Investor who is a subsequent
holder of any Warrants or Registrable Securities.



     
        
     “Prospectus” shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.


 






 



     
        
     “Register,” “registered” and “registration” refer to a registration made
by preparing and filing a Registration Statement or similar document in
compliance with the 1933 Act (as defined below), and the declaration or
ordering 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 any
other securities issued or issuable with respect to or in exchange for
Registrable Securities; provided, that, a security shall cease to be a
Registrable Security upon (A) sale pursuant to a Registration Statement or Rule
144 under the 1933 Act, or (B) such security becoming eligible for sale by the
Investors pursuant to Rule 144(k).



     
        
     “Registration Statement” shall mean any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
Registration Statement.



     
        
     “SEC” means the U.S. Securities and Exchange Commission.



     
        
     “1933 Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.



     
        
     “1934 Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.



     
        
     “Warrants” means, the warrants to purchase shares of Common Stock issued
to the Investors pursuant to the Purchase Agreement, the form of which is
attached to the Purchase Agreement as Exhibit A.


     2.     Registration.



     
        
        
     (a)     Registration Statements.



     
        
        
     (i)      Promptly following the closing of the purchase and sale of shares of
Common Stock and Warrants contemplated by the Purchase Agreement (the “Closing
Date”) but no later than April 2, 2002, the Company shall prepare and file with
the SEC one Registration Statement on Form S-3 (or, if Form S-3 is not then
available to the Company, on such form of registration statement as is then
available to effect a registration for resale of the Registrable Securities,
subject to the Investors’ consent), covering the resale of the Registrable
Securities in an amount at least equal to the number of shares of Common Stock
issued to the Investors on the Closing Date plus the number of shares of Common
Stock necessary to permit the exercise in full of the Warrants. Such
Registration Statement also shall cover, to the extent allowable under the 1933
Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities. The Company shall


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use its reasonable best efforts to obtain from
each person who now has
piggyback registration rights a waiver of those rights with respect to the
Registration Statement. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) to the Investors and their
counsel prior to its filing or other submission. If a Registration Statement
covering the Registrable Securities is not filed with the SEC on or before
April 2, 2002, the Company will make pro rata payments to each Investor, as
liquidated damages and not as a penalty, in an amount equal to 1.0% of the
aggregate amount paid by such Investor on the Closing Date to the Company for
any 30-day period or pro rata for any portion thereof following the date by
which such Registration Statement should have been filed for which no
Registration Statement is filed with respect to the Registrable Securities.
Such payments shall be in partial compensation to the Investors, and shall not
constitute the Investors’ exclusive remedy for such events. Such payments
shall be made to each Investor in cash or, at the option of such Investor, in
additional fully paid and non-assessable shares of Common Stock not later than
three 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 the
arithmetic mean of the Closing Prices for the ten (10) trading days beginning
twenty (20) trading days prior to the issuance of such shares.



     
        
        
     (ii)     Additional Registrable Securities. Upon the written demand of any
Investor and upon the issuance or deemed issuance by the Company of shares of
Common Stock such as to trigger the anti-dilution provisions contained in the
Warrants regarding issuances or deemed issuances by the Company of shares of
Common 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 that
additional shares of Common Stock become issuable pursuant to the Warrants, the
Company shall prepare and file with the SEC one or more Registration Statements
on Form S-3 (or, if Form S-3 is not then available to the Company, on such form
of registration statement as is then available to effect a registration for
resale of such additional shares of Common Stock (the “Additional Warrant
Shares”), subject to the Investors’ consent) covering the resale of the
Additional Warrant Shares, but only to the extent the Additional Warrant Shares
are not at the time covered by an effective Registration Statement. Such
Registration Statement also shall cover, to the extent allowable under the 1933
Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Additional
Warrant Shares. The Company shall use its reasonable best efforts to obtain
from each person who now has piggyback registration rights a waiver of those
rights with respect to such Registration Statement. The Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with Section 3(c) to the
Investors and their counsel prior to its filing or other submission. If a
Registration Statement covering the Additional Warrant Shares is required to be
filed under this Section 2(a)(ii) and is not filed with the SEC within twenty
Business Days of the request of any Investor, the Company will make pro rata
payments to each Investor, as liquidated damages and not as a penalty, in an
amount equal to 1.0% of the aggregate amount paid by such Investor on the
Closing Date to the Company for 30-day period or pro rata for any portion
thereof following the date by which such Registration Statement should have
been filed for which no


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Registration Statement is filed with respect to the
Additional Warrant Shares. Such payments shall be in partial compensation to
the Investors, and shall not constitute the Investors’
exclusive remedy for such events. Such payments shall be made to each
Investor in cash or, at the option of such Investor, in additional fully paid
and non-assessable shares of Common Stock not later than three Business Days
following the end of each 30-day period. Each share of Common Stock shall be
deemed to have a value equal to the arithmetic mean of the Closing Prices for
the ten (10) trading days beginning twenty (20) trading days prior to the
issuance of such shares.



     
        
        
     (b)     Expenses. The Company will pay all expenses associated with each
registration, including filing and printing fees, counsel and accounting fees
and expenses, costs associated with clearing the Registrable Securities for
sale under applicable state securities laws, listing fees and the Investors’
reasonable expenses in connection with the registration, but excluding
discounts, commissions, fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals with respect to the Registrable
Securities being sold.



     
        
        
     (c)     Effectiveness.



     
        
        
     (i)      The Company shall use commercially reasonable efforts to have the
Registration Statement declared effective as soon as practicable. If (x) a
Registration Statement covering the Registrable Securities is not declared
effective by the SEC on or prior to June 2, 2002, or (y) a Registration
Statement covering Additional Warrant Shares is not declared effective by the
SEC within 60 days following the demand of an Investor relating to the
Additional Warrant Shares covered thereby, then the Company will make pro rata
payments to each Investor, as liquidated damages and not as a penalty, in an
amount equal to 1.0% of the aggregate amount invested by such Investor in the
Initial Securities and/or the Remaining Securities, as applicable, for any
month or pro rata for any portion thereof following the date by which such
Registration Statement should have been effective (the “Blackout Period”).
Such payments shall be in partial compensation to the Investors, and shall not
constitute the Investors’ exclusive remedy for such events. The amounts
payable as liquidated damages pursuant to this paragraph shall be paid monthly
within three (3) Business Days of the last day of each month following the
commencement of the Blackout Period until the termination of the Blackout
Period. Such payments shall be made to each Investor in cash or, at the option
of such Investor, in additional fully paid and non-assessable shares of Common
Stock. Each share of Common Stock shall be deemed to have a value equal to the
arithmetic mean of the Closing Prices for the ten (10) trading days beginning
twenty (20) trading days prior to the issuance of such shares.



     
        
        
     (ii)     For not more than twenty (20) consecutive days or for a total of not
more than forty-five (45) days in any twelve (12) month period, the Company may
delay the disclosure of material non-public information concerning the Company,
by suspending the use of any Prospectus included in any registration
contemplated by this Section containing such information, the disclosure of
which at the time is not, in the good faith opinion of the Company, in the best
interests of the Company (an “Allowed Delay”); provided, that the Company shall
promptly (a) notify the Investors in writing of the existence of (but in no
event, without the prior written consent of an Investor, shall the Company
disclose to such Investor any of the facts or circumstances regarding) material
non-public information giving rise to an Allowed Delay, and


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(b)  advise the
Investors in writing to cease all sales under the Registration Statement until
the end of the Allowed Delay.



     
        
        
     (d)     Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering,
the Company shall have the right to select an investment banker and manager to
administer the offering, which investment banker or manager shall be reasonably
satisfactory to the Required Investors.


     3.     Company Obligations. The Company will use commercially reasonable
efforts to effect the registration of the Registrable Securities in accordance
with the terms hereof, and pursuant thereto the Company will, as expeditiously
as possible:



     
        
        
     (a)     use commercially reasonable efforts to cause such Registration
Statement to become effective and to remain continuously effective for a period
that will terminate upon the earlier of (i) the date on which all Registrable
Securities covered by such Registration Statement as amended from time to time,
have been sold, and (ii) the date on which all Registrable Securities covered
by such Registration Statement may be sold pursuant to Rule 144(k);



     
        
        
     (b)     prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the period specified in
Section 3(a) and to comply with the provisions of the 1933 Act and the 1934 Act
with respect to the distribution of all of the Registrable Securities covered
thereby;



     
        
        
     (c)     provide copies to and permit counsel designated by the Investors to
review each Registration Statement and all amendments and supplements thereto
no fewer than three (3) days prior to their filing with the SEC and not file
any document to which such counsel reasonably objects;



     
        
        
     (d)     furnish to the Investors and their legal counsel (i) promptly after
the same is prepared and publicly distributed, filed with the SEC, or received
by 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 any
Registration Statement and any amendment thereto, each preliminary prospectus
and Prospectus and each amendment or supplement thereto, and each letter
written by or on behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the SEC, in each case
relating to such Registration Statement (other than any portion of any thereof
which contains information for which the Company has sought confidential
treatment), and (ii) such number of copies of a Prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as each Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor that are
covered by the related Registration Statement;



     
        
        
     (e)     in the event the Company selects an underwriter for the offering, the
Company shall enter into and perform its reasonable obligations under an
underwriting


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agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriter of such offering;



     
        
        
     (f)     if required by the underwriter, or if any Investor is described in the
Registration Statement as an underwriter, the Company shall furnish, on the
effective date of the Registration Statement (except with respect to clause (i)
below) and on the date that Registrable Securities are delivered to an
underwriter, if any, for sale in connection with the Registration Statement
(including any Investor deemed to be an underwriter), (i) (A) in the case of an
underwritten offering, an opinion, dated as of the closing date of the sale of
Registrable Securities to the underwriters, from independent legal counsel
representing 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 such
underwritten offering or (B) in the case of an “at the market” offering, an
opinion, dated as of or promptly after the effective date of the Registration
Statement to the Investors, from independent legal counsel representing the
Company for purposes of such Registration Statement, in form, scope and
substance as is customarily given in a public offering, addressed to the
Investors, and (ii) a letter, dated as of the effective date of such
Registration Statement and confirmed as of the applicable dates described
above, from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the
underwriters (including any Investor deemed to be an underwriter);



     
        
        
     (g)     use commercially reasonable efforts to (i) prevent the issuance of any
stop order or other suspension of effectiveness and, (ii) if such order is
issued, obtain the withdrawal of any such order at the earliest possible
moment;



     
        
        
     (h)     prior to any public offering of Registrable Securities, use
commercially reasonable efforts to register or qualify or cooperate with the
Investors and their counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions requested by the Investors
and do any and all other commercially reasonable acts or things necessary or
advisable to enable the distribution in such jurisdictions of the Registrable
Securities covered by the Registration Statement;



     
        
        
     (i)      use commercially reasonable efforts to cause all Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;



     
        
        
     (j)     immediately notify the Investors, at any time when a Prospectus
relating to Registrable Securities is required to be delivered under the 1933
Act, upon discovery that, or upon the happening of any event as a result of
which, the Prospectus included in a Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and at the request
of any such holder, promptly prepare and furnish to such holder a reasonable
number of copies of a supplement to or


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an amendment of such Prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing; and



     
        
        
     (k)     otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC under the 1933 Act and the 1934
Act, take such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities hereunder; and make available to its
security holders, as soon as reasonably practicable, but not later than the
Availability Date (as defined below), an earnings statement covering a period
of at least twelve (12) months, beginning after the effective date of each
Registration Statement, which earnings statement shall satisfy the provisions
of 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 fiscal
quarter that includes the effective date of such Registration Statement, except
that, if such fourth fiscal quarter is the last quarter of the Company’s fiscal
year, “Availability Date” means the 90th day after the end of such fourth
fiscal 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 be
affiliated with the Investors and who are reasonably acceptable to the
Company), any underwriter participating in any disposition of shares of Common
Stock on behalf of the Investors pursuant to a Registration Statement or
amendments or supplements thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Filings (as defined in the Purchase
Agreement) and other filings with the SEC, and all other corporate documents
and properties of the Company as may be reasonably necessary for the purpose of
such review, and cause the Company’s officers, directors and employees, within
a reasonable time period, to supply all such information reasonably requested
by the Investors or any such representative, advisor or underwriter in
connection with such Registration Statement (including, without limitation, in
response to all questions and other inquiries reasonably made or submitted by
any of them), prior to and from time to time after the filing and effectiveness
of the Registration Statement for the sole purpose of enabling the Investors
and such representatives, advisors and underwriters and their respective
accountants and attorneys to conduct initial and ongoing due diligence with
respect to the Company and the accuracy of such Registration Statement.


            The Company shall not disclose material nonpublic information to the
Investors, or to advisors to or representatives of the Investors, unless prior
to disclosure of such information the Company identifies such information as
being material nonpublic information and provides the Investors, such advisors
and representatives with the opportunity to accept or refuse to accept such
material nonpublic information for review.


     5.     Obligations of the Investors.



     
        
        
     (a)     Each Investor shall furnish in writing to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it, as shall be reasonably
required to effect the


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registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least five (5) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
each Investor of the information the Company requires from such Investor if
such Investor elects to have any of the Registrable Securities
included in the Registration Statement. An Investor shall provide such
information to the Company at least two (2) Business Days prior to the first
anticipated filing date of such Registration Statement if such Investor elects
to have any of the Registrable Securities included in the Registration
Statement.



     
        
        
     (b)     Each Investor, by its acceptance of the Registrable Securities agrees
to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of a Registration Statement
hereunder, unless such Investor has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration
Statement.



     
        
        
     (c)     In the event the Company, at the request of the Investors, determines
to engage the services of an underwriter, such Investor agrees to enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the dispositions of the Registrable Securities.



     
        
        
     (d)     Each Investor agrees that, upon receipt of any notice from the Company
of 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, such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities,
until the Investor’s receipt of the copies of the supplemented or amended
prospectus filed with the SEC and declared effective and, if so directed by the
Company, the Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in the Investor’s possession of the Prospectus covering the
Registrable Securities current at the time of receipt of such notice.



     
        
        
     (e)     No Investor may participate in any third party underwritten
registration hereunder unless it (i) agrees to sell the Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions. Notwithstanding the foregoing, no Investor shall be
required to make any representations to such underwriter, other than those with
respect to itself and the Registrable Securities owned by it, including its
right to sell the Registrable Securities, and any indemnification in favor of
the underwriter by the Investors shall be several and not joint and limited in
the case of any Investor, to the proceeds received by such Investor from the
sale of its Registrable Securities. The scope of any such indemnification in
favor of an underwriter shall be limited to the same extent as the indemnity
provided in Section 6(b) hereof.


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     6.     Indemnification.



     
        
        
     (a)     Indemnification by the Company. The Company will indemnify and hold
harmless each Investor and its officers, directors, members, employees and
agents, successors and
assigns, and each other person, if any, who controls such Investor within
the meaning of the 1933 Act, against any losses, claims, damages or
liabilities, 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 respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof; (ii) any blue sky application or other
document executed by the Company specifically for that purpose or based upon
written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable Securities under
the securities laws thereof (any such application, document or information
herein called a “Blue Sky Application”); (iii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; (iv) any violation by the Company
or its agents of any rule or regulation promulgated under the 1933 Act
applicable to the Company or its agents and relating to action or inaction
required of the Company in connection with such registration; or (v) any
failure to register or qualify the Registrable Securities included in any such
Registration in any state where the Company or its agents has affirmatively
undertaken or agreed in writing that the Company will undertake such
registration or qualification on an Investor’s behalf (the undertaking of any
underwriter chosen by the Company being attributed to the Company) and will
reimburse such Investor, and each such officer, director or member and each
such controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such Investor or any such controlling person in
writing specifically for use in such Registration Statement or Prospectus.



     
        
        
     (b)     Indemnification by the Investors. In connection with any registration
pursuant to the terms of this Agreement, each Investor will furnish to the
Company in writing such information as the Company reasonably requests
concerning the holders of Registrable Securities or the proposed manner of
distribution for use in connection with any Registration Statement or
Prospectus and agrees, severally but not jointly, to indemnify and hold
harmless, 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 any
untrue statement of a material fact or any omission of a material fact required
to be stated in the Registration Statement or Prospectus or preliminary
prospectus or amendment or supplement thereto or necessary to make the
statements therein not misleading, to the extent, but only to the extent that
such untrue statement or omission is contained in any information furnished in
writing by such Investor to the Company specifically for inclusion in such
Registration Statement or Prospectus or amendment or supplement thereto. In no
event shall the


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liability of an Investor be greater in amount than the dollar
amount of the proceeds (net of all expense paid by such Investor and the amount
of any damages such holder has otherwise been required to pay by reason of such
untrue statement or omission) received by such Investor upon the sale
of the Registrable Securities included in the Registration Statement
giving rise to such indemnification obligation.



     
        
        
     (c)     Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided that any person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person); and
provided, further, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall
materially adversely affect the indemnifying party in the defense of any such
claim or litigation. It is understood that the indemnifying party shall not,
in connection with any proceeding in the same jurisdiction, be liable for fees
or expenses of more than one separate firm of attorneys at any time for all
such indemnified parties. No indemnifying party will, except with the consent
of the indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.



     
        
        
     (d)     Contribution. If for any reason the indemnification provided for in
the preceding paragraphs (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation.
In no event shall the contribution obligation of a holder of Registrable
Securities be greater in amount than the dollar amount of the proceeds (net of
all expenses paid by such holder and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of the
Registrable Securities giving rise to such contribution obligation.


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     7.     Miscellaneous.



     
        
        
     (a)     Amendments and Waivers. This Agreement may be amended only by a
writing signed by the parties hereto. The Company may take any action herein
prohibited, or omit to
perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission
to act, of the Required Investors.



     
        
        
     (b)     Notices. All notices and other communications provided for or
permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.



     
        
        
     (c)     Assignments and Transfers by Investors. The provisions of this
Agreement shall be binding upon and inure to the benefit of the Investors and
their 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 rights
hereunder in connection with the transfer of Registrable Securities by such
Investor to such person, provided that such Investor complies with all laws
applicable thereto and provides written notice of assignment to the Company
promptly after such assignment is effected.



     
        
        
     (d)     Assignments and Transfers by the Company. This Agreement may not be
assigned by the Company (whether by operation of law or otherwise) without the
prior written consent of each Investor, provided, however, that the Company may
assign its rights and delegate its duties hereunder to any surviving or
successor corporation in connection with a merger or consolidation of the
Company with another corporation, or a sale, transfer or other disposition of
all or substantially all of the Company’s assets to another corporation,
without the prior written consent of the Investors, after notice duly given by
the Company to each Investor.



     
        
        
     (e)     Benefits of the Agreement. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.



     
        
        
     (f)     Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.



     
        
        
     (g)     Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.



     
        
        
     (h)     Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be


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interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereby waive any provision of law which renders any provisions hereof
prohibited or unenforceable in any respect.



     
        
        
     (i)      Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.



     
        
        
     (j)      Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.



     
        
        
     (k)     Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of New York without regard to the choice of law principles thereof. Each of
the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the
giving of notices under this Agreement. Each of the parties hereto irrevocably
consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.


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     IN WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above 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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