ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On January 30, 2008, Audible, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Agreement”) with
Amazon.com, Inc., a Delaware corporation (“Parent”), and AZBC Holdings, Inc. (“Purchaser”), a Delaware corporation and a wholly owned subsidiary of Parent.
Under the terms of the Agreement, Purchaser will commence a tender offer (the “Offer”) to purchase all of the Company’s outstanding shares of common stock, par value $0.01 per share (the
“Shares”), for $11.50 per Share, net to the seller in cash (the “Offer Price”), subject to applicable withholding taxes. The closing of the Offer and Purchaser’s obligation to pay for all Shares tendered is subject to the
valid tender of a number of Shares that represents at least a majority of the total number of Shares outstanding, on a fully diluted basis. Completion of the Offer is also subject to other customary conditions, including regulatory approval, the
absence of injunctions or illegality and the absence of a material adverse effect on the Company.
The Agreement also provides that following completion of
the Offer, the parties will complete a second-step merger (the “Merger”) in which Purchaser will be merged with and into the Company, with the Company as the surviving corporation, and all Shares that remain outstanding following the
completion of the Offer (other than Shares held by the Company, Parent, Purchaser, any other wholly owned subsidiary of Parent, or a wholly owned subsidiary of the Company, or by holders who are entitled to and properly demand an appraisal of their
Shares) will be converted into the right to receive the Offer Price. The parties have agreed that if, following completion of the Offer, Parent, Purchaser or any of their respective affiliates own at least 90% of the outstanding Shares, the Merger
will be completed without a meeting of Company stockholders pursuant to Delaware’s “short form” merger statute.
In the Agreement, the
Company also granted Parent and Purchaser, subject to certain conditions and limitations, an irrevocable option, to be exercised after completion of the Offer, to acquire a number of Shares equal to the lowest number of Shares that, when added to
the number of Shares owned by Parent, Purchaser and their respective affiliates at the time of the exercise of the option, constitutes one share more than 90% of the number of Shares that will be outstanding after giving effect to the exercise of
the option, at a price per Share equal to the Offer Price (the “Top-Up Option”). The Top-Up Option is intended to expedite the timing of the completion of the Merger by permitting the Merger to occur pursuant to Delaware’s short form
merger statute.
The Agreement also provides that, upon the time Purchaser accepts for payment and pays for any Shares tendered and not withdrawn pursuant
to the Offer, and from time to time thereafter as Shares are acquired by Parent or Purchaser, Purchaser will be entitled to designate a number of directors, rounded up to the next whole number, equal to the product of (i) the total number of
directors on the board of directors of the Company multiplied by (ii) the percentage that the aggregate number of Shares beneficially owned by Parent, Purchaser and any of their affiliates bears to the total number of Shares then outstanding
(disregarding any unvested and unexercisable stock options, warrants or other unvested rights to acquire Shares). However, until the Merger occurs, the Company’s board of directors will contain at least such number of independent directors (as
defined by the NASDAQ Marketplace rules) as may be required by the NASDAQ Marketplace Rules or the federal securities laws (“Continuing Directors”). In addition, after Parent’s designees are elected or appointed to the Company’s
board of directors and prior to the completion of the Merger, approval by a majority of the Continuing Directors will be required to authorize any agreement between the Company or any of its subsidiaries and Parent, Purchaser or any of their
affiliates, amend or terminate the Agreement on behalf of the Company, exercise or waive any of the Company’s rights or remedies under the Agreement, extend the time for performance of Parent or Purchaser’s obligations under the Agreement,
or to amend the then-effective certificate of incorporation or bylaws of the Company.
The Company has made certain representations and warranties in the
Agreement and agreed to certain covenants, including covenants regarding operation of the business of the Company and its subsidiaries prior to the closing of the Offer and covenants prohibiting the Company from soliciting, or providing information
or entering into discussions concerning, proposals relating to alternative business combination transactions, except in limited circumstances relating to unsolicited proposals that are, or may reasonably be expected to become, superior to the
transactions contemplated by the Agreement.
The Agreement may be terminated before the consummation of the Offer under specified circumstances, including
(1) by the Company in order to accept a Superior Proposal (as defined in the Agreement) or (2) by the Company or Parent
in the event that Purchaser terminates the Offer or fails to accept Shares validly tendered in the Offer. Upon termination of the Agreement, under specified
circumstances (including the circumstances referred to in clause (1) above), the Company will be required to pay Parent a termination fee of $10 million. In addition, under specified circumstances, the Company will be required to reimburse
Parent for the transaction expenses of Parent or Purchaser up to $3.5 million.
The foregoing summary of the Agreement and the transactions contemplated
thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Agreement attached as Exhibit 2.1, which is incorporated herein by reference.