AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

DATED AS OF JANUARY 30, 2008

AMONG

AMAZON.COM, INC.

AZBC HOLDINGS, INC.

AND

AUDIBLE, INC.

ARTICLE I

THE OFFER AND THE MERGER

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER, dated as of January 30, 2008 (this “ Agreement ”), is among Amazon.com, Inc., a Delaware corporation (“ Parent ”), AZBC Holdings, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Parent (“ Purchaser ”), and Audible, Inc., a Delaware corporation (the “ Company ” and, collectively with Parent and Purchaser, the “ parties ”).

RECITALS

WHEREAS, the respective Boards of Directors of the Company, Parent and Purchaser have deemed it advisable and in the best interests of their respective corporations and stockholders that Parent acquire the Company on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, Purchaser has agreed, on the terms and subject to the conditions set forth in this Agreement, to commence a tender offer (the “ Offer ”) to purchase all of the outstanding shares of the Company Common Stock (the “ Shares ”), at a price per Share of $11.50 (such price or any higher price per Share that may be paid pursuant to the Offer being hereinafter referred to as the “ Offer Price ”), subject to any withholding of Taxes required by applicable law, net to the seller in cash without interest;

WHEREAS, following the consummation of the Offer, on the terms and subject to the conditions set forth in this Agreement, Purchaser will be merged with and into the Company with the Company as the Surviving Corporation (the “ Merger ” and, together with the Offer, the Top-Up Option and the other transactions contemplated by this Agreement, the “ Transactions ”), in accordance with the Delaware General Corporation Law (the “ DGCL ”), and in accordance therewith each issued and outstanding Share not held in treasury of the Company or owned directly or indirectly by Parent, Purchaser or any Company Subsidiary and not constituting Dissenting Shares will be converted into the right to receive the Offer Price in cash without interest, subject to any withholding of Taxes required by applicable law, in accordance with the terms hereof;

WHEREAS, the Board of Directors of the Company, on the terms and subject to the conditions set forth in this Agreement, has, by resolutions duly adopted, unanimously ( i ) determined that the Transactions are in the best interests of the Company and the Company’s stockholders, ( ii ) approved and declared advisable this Agreement and the Transactions, including the Offer, the Top-Up Option and the Merger, and ( iii ) determined to recommend that the Company’s stockholders accept the Offer and tender their Shares to Purchaser and, to the extent applicable, approve and adopt this Agreement;

WHEREAS, each of Parent and the Board of Directors of Purchaser has, on the terms and subject to the conditions set forth in this Agreement, approved, and the Board of Directors of Purchaser has declared advisable, this Agreement and the Transactions, including the Offer and the Merger;

WHEREAS, simultaneously with the execution and delivery of this Agreement, Parent and each of Donald R. Katz, Apax Excelsior VI, L.P., Apax Excelsior VI-A C.V., Apax Excelsior VI-B C.V. and Patricof Private Investment Club III, L.P. (each, a “ Principal Company Stockholder ”) are entering into an agreement pursuant to which each Principal Company Stockholder will agree to take specified actions in furtherance of the Offer and the Merger; and

WHEREAS, simultaneously with the execution and delivery of this Agreement, each of the persons listed on Schedule A has executed an offer letter and non-disclosure agreement, in each case to become effective at the Acceptance Time;

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth in this Agreement, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I

THE OFFER AND THE MERGER

Section 1.1 The Offer .

(a) Provided that this Agreement shall not have been terminated in accordance with Section 8.1 and none of the events set forth in paragraph (2)(iii) of Annex I shall exist or have occurred and be continuing, as promptly as practicable (and in any event within 10 Business Days) after the date of this Agreement, Purchaser shall (and Parent shall cause Purchaser to) commence (within the meaning of Rule 14d-2 promulgated under the Exchange Act) the Offer to purchase for cash all outstanding Shares at the Offer Price.

(b) Subject to the terms and conditions of this Agreement and the Offer, promptly after the latest of ( i ) the earliest date as of which Purchaser is permitted under applicable law to accept for payment Shares validly tendered and not withdrawn pursuant to the Offer, ( ii ) the earliest date as of which each of the conditions and requirements set forth in Annex I (the “ Offer Conditions ”) has been satisfied, or waived by Parent or Purchaser, and ( iii ) the Expiration Date, Purchaser shall (and Parent shall cause Purchaser to) consummate the Offer in accordance with its terms and accept for payment and pay for all Shares (without interest) validly tendered and not withdrawn pursuant to the Offer that Purchaser becomes obligated to purchase pursuant to the Offer. The obligation of

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Purchaser to accept for payment and pay for Shares (without interest) tendered and not withdrawn pursuant to the Offer shall be subject to the satisfaction, or waiver by Parent or Purchaser, of each of the Offer Conditions.

(c) The Offer shall be made by means of an offer to purchase (the “ Offer to Purchase ”) that contains, among other things, the terms set forth in this Agreement, the Minimum Condition and the other conditions and requirements set forth in Annex I. Parent and Purchaser expressly reserve the right to ( x ) increase the Offer Price and ( y ) to waive any Offer Conditions and make any other changes to the terms and conditions of the Offer; provided , however , that unless otherwise provided by this Agreement, without the prior written consent of the Company, neither Parent nor Purchaser shall ( i ) decrease the Offer Price, ( ii ) change the form of consideration payable in the Offer, ( iii ) decrease the number of Shares sought to be purchased in the Offer, ( iv ) impose additional conditions to the Offer, ( v ) except as required by any Governmental Entity, amend or modify any terms in a manner adverse to the holders of Shares, ( vi ) change or waive the Minimum Condition or ( vii ) extend or otherwise change the expiration date of the Offer other than as required or permitted by this Agreement.

(d) Unless extended pursuant to and in accordance with the terms of this Agreement, the Offer shall expire at midnight (New York City time) on the date that is 20 Business Days following the commencement (within the meaning of Rule 14d-2 promulgated under the Exchange Act) of the Offer (the “ Initial Expiration Date ”) or, in the event the Initial Expiration Date has been extended pursuant to and in accordance with the terms of this Agreement, the date to which the Offer has been so extended (the Initial Expiration Date, or such later date to which the Initial Expiration Date has been extended pursuant to and in accordance with the terms of this Agreement, is referred to as the “ Expiration Date ”).

(e) The Offer may be extended from time to time as follows:

(i) If, on or prior to any then scheduled Expiration Date, all of the Offer Conditions (including the Minimum Condition and all other Offer Conditions) shall not have been satisfied, or waived by Parent or Purchaser if permitted hereunder, Purchaser shall (and Parent shall cause Purchaser to), at the request of the Company, extend the Offer for one or more successive periods of not more than 10 Business Days in order to permit the satisfaction of such conditions, each until the earlier of ( x ) the termination of this Agreement pursuant to Section 8.1 and ( y ) ( A ) the date that is 180 days after commencement of the Offer (the “ Initial Outside Date ”) or ( B ) the date that is 270 days after commencement of the Offer in the event that the HSR Condition or the Governmental Approval Condition shall not have been satisfied, or waived by Parent or Purchaser if permitted hereunder, by the Initial Outside Date (the “ Extended Outside Date ”), if any such extension of not more than 10 Business Days would otherwise end after the Initial Outside Date or the Extended Outside Date, as applicable;

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(ii) Purchaser may, in its sole discretion, without consent of the Company, extend the Offer for one or more successive periods of not more than 10 Business Days each, if at any otherwise scheduled Expiration Date any of the Offer Conditions shall have not been satisfied, or waived by Parent or Purchaser if permitted hereunder; and

(iii) Purchaser shall extend the Offer for any period or periods required by applicable law, rule, regulation, interpretation or position of the Securities and Exchange Commission (the “ SEC ”) or its staff or Nasdaq or its staff.

(f) Purchaser may, in its sole discretion, provide for a “subsequent offering period” in accordance with Rule 14d-11 promulgated under the Exchange Act. Subject to the terms and conditions of this Agreement and the Offer, Purchaser shall (and Parent shall cause Purchaser to) accept for payment, and pay for, all Shares that are validly tendered and not withdrawn pursuant to the Offer during any such “subsequent offering period” promptly after any such Shares are tendered during such “subsequent offering period.” The Offer Documents will provide for the possibility of a “subsequent offering period” in a manner consistent with the terms of this Section 1.1(f).

(g) Purchaser shall not terminate the Offer prior to any scheduled Expiration Date without the prior written consent of the Company, except in the event that this Agreement is terminated pursuant to Section 8.1 or as required by applicable law. In the event that this Agreement is terminated pursuant to Section 8.1, Purchaser shall (and Parent shall cause Purchaser to) promptly terminate the Offer and shall not acquire any Shares pursuant to the Offer.

(h) On the date of the commencement of the Offer (within the meaning of Rule 14d-2 promulgated under the Exchange Act), Purchaser shall (and Parent shall cause Purchaser to) file with the SEC, pursuant to Regulation M-A under the Exchange Act (“ Regulation M-A ”), a Tender Offer Statement on Schedule TO with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule TO ”) that will comply in all material respects with the provisions of all applicable Federal and other securities Laws. The Schedule TO shall include, as exhibits, the Offer to Purchase and a form of letter of transmittal and summary advertisement (collectively, together with any amendments and supplements thereto, the “ Offer Documents ”). Parent and Purchaser shall take all steps necessary to cause the Offer Documents to be filed with the SEC and disseminated to holders of the Shares, in each case as and to the extent required by the Exchange Act. Each of Parent, Purchaser and the Company shall correct promptly any information provided by it for use in the Offer Documents if and to the extent that such information shall have become false or misleading in any material

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respect or as otherwise required by applicable law. Parent and Purchaser further agree to take all steps necessary to cause the Offer Documents, as so corrected (if applicable), to be filed with the SEC and disseminated to holders of the Shares, in each case as and to the extent required by the Exchange Act. The Company and its counsel shall be given a reasonable opportunity to review the Schedule TO and the Offer Documents before they are filed with the SEC, and Parent and Purchaser shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel. In addition, Parent and Purchaser shall provide the Company and its counsel with copies of any written comments, and shall inform them of any oral comments, that Parent, Purchaser or their counsel may receive from time to time from the SEC or its staff with respect to the Schedule TO or the Offer Documents promptly after receipt of such comments, and any written or oral responses thereto. Parent and Purchaser shall give the Company and its counsel a reasonable opportunity to review any such written responses and shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel. Parent and Purchaser shall use their reasonable best efforts to respond promptly to any comments of the SEC or its staff with respect to the Offer Documents. The Company hereby consents to the inclusion in the Offer Documents of the Company Recommendation, as such Company Recommendation may be amended and until such Company Recommendation may be withdrawn, in each case as permitted by this Agreement. If Purchaser terminates or withdraws the Offer, or this Agreement is terminated prior to the purchase of Shares in the Offer, Purchaser shall promptly return, and shall cause any depository acting on behalf of Purchaser to return, all tendered Shares to the registered holders thereof.

(i) The Offer Price shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Company Common Stock), cash dividend, reorganization, recapitalization, reclassification, combination or other like change with respect to Common Stock occurring on or after the date of this Agreement and prior to the time Purchaser accepts for payment and pays for any Shares tendered and not withdrawn pursuant to the Offer (the “ Acceptance Time ”), if any.

Section 1.2 Company Actions .

(a) Contemporaneous with the filing of the Schedule TO, the Company shall, in a manner that complies with Rule 14d-9 promulgated under the Exchange Act, file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule 14D-9 ”) that shall, subject to the provisions of Section 6.4, contain the Company Recommendation and that will comply in all material respects with the provisions of all applicable Federal and other securities Laws. The Company shall take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by the

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Exchange Act. Each of Parent, Purchaser and the Company shall correct promptly any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by applicable law. The Company shall take all steps necessary to cause the Schedule 14D-9, as so corrected (if applicable), to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by the Exchange Act. Parent, Purchaser and their counsel shall be given a reasonable opportunity to review the Schedule 14D-9 before it is filed with the SEC, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel. In addition, the Company shall provide Parent, Purchaser and their counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after the Company’s receipt of such comments, and any written or oral responses thereto. The Company shall give Parent, Purchaser and their counsel a reasonable opportunity to review any such written responses, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel. The Company shall use its reasonable best efforts to respond promptly to any comments of the SEC or its staff with respect to the Schedule 14D-9.

(b) If approval of the stockholders of the Company is required under the DGCL to consummate the Merger, as promptly as practicable following the Acceptance Time and the expiration of any “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, if applicable, and in any event within 14 days after the Acceptance Time and the expiration of such “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, the Company shall prepare and file with the SEC in preliminary form a proxy or information statement for the Special Meeting (together with any amendments thereof or supplements thereto and any other required solicitation materials or information, the “ Proxy Statement ”) relating to the Merger and this Agreement that shall, subject to the provisions of Section 6.4(c), contain the Company Recommendation. The Company shall take all steps necessary to cause the Proxy Statement to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by the DGCL, the Exchange Act or the SEC (or its staff). Each of Parent, Purchaser and the Company shall correct promptly any information provided by it for use in the Proxy Statement if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by applicable law. The Company shall take all steps necessary to cause the Proxy Statement, as so corrected (if applicable), to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by the DGCL, the Exchange Act or the SEC (or its staff). Parent, Purchaser and their counsel shall be given a reasonable opportunity to review the Proxy Statement before it is filed with the SEC, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel.

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In addition, the Company shall provide Parent, Purchaser and their counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Proxy Statement promptly after the Company’s receipt of such comments, and any written or oral responses thereto. The Company shall give Parent, Purchaser and their counsel a reasonable opportunity to review any such written responses, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel. The Company shall use its reasonable best efforts to respond promptly to any comments of the SEC or its staff with respect to the Proxy Statement.

(c) In connection with the Offer, the Company shall promptly after execution of this Agreement furnish or cause to be furnished to Parent and Purchaser ( i ) a list of the names and addresses of the record holders of Shares as of the most recent practicable date, as well as mailing labels containing such names and addresses and ( ii ) all lists of stockholders, security position lists, computer files and all other information identifying the beneficial owners of Shares as of the most recent practicable date which the Company or its transfer agent has in its possession or control or can obtain without unreasonable effort or expense. The Company shall furnish or cause to be furnished to Parent and Purchaser such additional information (including updates of the items provided pursuant to the preceding sentence) and such other assistance as Parent or Purchaser or their respective agents may reasonably request for the purpose of communicating the Offer to the record and beneficial owners of Shares. Subject to the requirements of applicable law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer, the Merger and the other Transactions, Purchaser shall hold in confidence the information contained in any such labels, listings and files, shall use such information only in connection with the Offer, the Merger and the other Transactions, and, if this Agreement shall be terminated, shall, upon the Company’s written request, promptly deliver to the Company the original and all copies of such information then in its possession or control.

Section 1.3 Board of Directors .

(a) Upon the Acceptance Time, and from time to time thereafter as Shares are acquired by Parent or Purchaser, subject to compliance with the provisions of the Constituent Documents of the Company, applicable Law and the applicable Marketplace Rules of the NASDAQ, Purchaser shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as is equal to the product of (i) the total number of directors on the Board of Directors of the Company (after giving effect to the directors elected or designated by Purchaser pursuant to this sentence) 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

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unexercisable Company Stock Options, Warrants and all other unvested rights to acquire shares of the Company Common Stock). The Company shall, upon any exercise of such right by Purchaser, take all such actions as are necessary or desirable to (A) elect or designate to the Board of Directors of the Company the individuals designated by Purchaser and permitted to be so elected or designated by the first sentence of this Section 1.3(a), including promptly filling vacancies or newly created directorships on the Board of Directors of the Company, promptly increasing the size of the Board of Directors of the Company (including by action of the Board of Directors of the Company and by the amendment of the by-laws of the Company, if necessary, so as to increase the size of the Board of Directors of the Company) and/or promptly securing the resignations of such number of its incumbent directors as are necessary or desirable to enable Purchaser’s designees to be so elected or designated to the Board of Directors of the Company, and (B) cause the Persons designated by Purchaser to constitute the same percentage (rounded up to the next whole number) as is on the Board of Directors of the Company of the members of (I) each committee of the Board of Directors of the Company (II) each board of directors (or similar body) of each Company Subsidiary, and (III) each committee (or similar body) of each such board of directors (or similar body), in each case to the full extent permitted by the provisions of the Constituent Documents of the Company, applicable Law and the NASDAQ Marketplace Rules. From and after the Acceptance Time and until the Effective Time, the Company shall take all action necessary to elect to be treated as a “controlled company” as defined by NASDAQ Marketplace Rule 4350(c)(5) and make all necessary filings and disclosures associated with such status. The Company shall promptly upon execution of this Agreement take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under this Section 1.3(a), including mailing to shareholders (together with the Schedule 14D-9) the information required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder to enable Purchaser’s designees to be elected or designated to the Board of Directors of the Company. Purchaser shall supply the Company with information with respect to Purchaser’s designees and Parent’s and Purchaser’s respective officers, directors and affiliates to the extent required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The provisions of this Section 1.3(a) are in addition to and shall not limit any rights that any of Purchaser, Parent or any of their respective affiliates may have as a holder or beneficial owner of Shares as a matter of applicable law with respect to the election of directors or otherwise.

(b) In the event that Purchaser’s designees are elected or designated to the Board of Directors of the Company pursuant to Section 1.3(a), then, subject to the Constituent Documents of the Company, until the Effective Time, the Company shall cause the Board of Directors of the Company to maintain 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, at least one of whom shall be an “audit committee financial expert,” as defined in Item 401(h) of

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Regulation S-K and the instructions thereto (any such “independent directors” as of the date of this Agreement (and their successors as provided below), the “ Continuing Directors ”); provided , however , that if any Continuing Director is unable to serve due to death, disability or resignation, the Company, Purchaser and Parent shall take all necessary action (including creating a committee of the Board of Directors of the Company) so that the entire Board of Directors of the Company shall be entitled to designate another Person or Persons to fill such vacancy or vacancies, and such Person or Persons thereafter shall be deemed to be a Continuing Director for purposes of this Agreement. If no Continuing Director then remains, the other directors shall designate Persons to fill such vacancies and such Persons shall be deemed Continuing Directors for all purposes of this Agreement. Notwithstanding anything in this Agreement to the contrary, if Purchaser’s designees constitute a majority of the Board of Directors of the Company after the Acceptance Time and prior to the Effective Time, then the affirmative vote of a majority of the Continuing Directors shall be required ( i ) to authorize any agreement between the Company or any of its Subsidiaries, on the one hand, and Parent, Purchaser or any of their Affiliates (other than the Company or any of its Subsidiaries), on the other hand, ( ii ) for the Company to amend or terminate this Agreement, ( iii ) to exercise or waive any of the Company’s rights, benefits or remedies hereunder, ( iv ) to extend the time for performance of Parent’s or Purchaser’s obligations hereunder or ( v ) to amend the Constituent Documents of the Company. The Continuing Directors shall have the authority to retain such counsel (which may include current counsel to the Company) and other advisors at the reasonable expense of the Company as determined appropriate by the Continuing Directors, and shall have the authority to institute any action on behalf of the Company to enforce the performance of this Agreement.

Section 1.4 The Top-Up Option .

(a) The Company hereby grants to Purchaser an irrevocable option (the “ Top-Up Option ”) to purchase that number of Shares (the “ Top-Up Option 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 such exercise, shall constitute one Share more than the number of Shares necessary for Purchaser to be merged with and into the Company pursuant to Section 253 of the DGCL at a price per Share equal to the Offer Price (a “ Short Form Merger ”).

(b) The Top-Up Option shall be exercisable once or multiple times at any time and from time to time after the Acceptance Time and prior to the earlier to occur of ( A ) the Effective Time and ( B ) the termination of this Agreement pursuant to Section 8.1; provided , however , that notwithstanding anything continued in this Agreement to the contrary the Top-Up Option shall not be exercisable if ( i ) any provision of any applicable Law or any judgment, injunction, order or decree of any Governmental Entity shall prohibit the exercise of the Top-Up Option or the delivery of the Top-Up Option Shares in respect to such exercise, ( ii ) the issuance of the Top-Up Option Shares would require

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shareholder approval under the rules of Nasdaq, ( iii ) the number of Top-Up Option Shares would exceed the number of authorized but unissued Shares or ( iv ) after issuance of Shares pursuant to the Top-Up Option, it will be insufficient to allow Purchaser to effect the Short Form Merger and; provided , further , that the Top-Up Option shall terminate concurrently with the termination of this Agreement pursuant to Section 8.1.

(c) In the event Purchaser wishes to exercise the Top-Up Option, Purchaser shall so notify the Company in writing, and shall set forth in such notice ( i ) the number of Shares owned by Parent, Purchaser and their respective affiliates immediately preceding the purchase of the Top-Up Option Shares and ( ii ) the place and time for the closing of the purchase of the Top-Up Option Shares (the “ Top-Up Closing ”). The Company shall, as soon as practicable following receipt of such notice, notify Parent and Purchaser in writing of the number of Shares then outstanding and the number of Top-Up Option Shares. At the Top-Up Closing, Purchaser shall pay the Company the aggregate price required to be paid for the Top-Up Option Shares by delivery of, at Purchaser’s option, ( A ) immediately available funds by wire transfer to an account designated by the Company, ( B ) a promissory note, bearing interest at 6-Month USD LIBOR Rate, and due six months after the Top-Up Closing, or ( C ) any combination thereof, and the Company shall cause to be issued to Purchaser a certificate representing the Top-Up Option Shares.

(d) Parent and Purchaser acknowledge that the Shares which Purchaser may acquire upon exercise of the Top-Up Option will not be registered under the U.S. securities laws and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. Parent and Purchaser represent and warrant to the Company that Purchaser is, or will be upon the purchase of the Top-Up Option Shares, an “accredited investor,” as defined in Rule 501 of Regulation D under the Securities Act. Purchaser agrees that the Top-Up Option and the Top-Up Options Shares to be acquired upon exercise of the Top-Up Option are being and will be acquired by Purchaser for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof (within the meaning of the Securities Act).

Section 1.5 The Merger . Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Purchaser shall be merged with and into the Company and the separate corporate existence of Purchaser shall thereupon cease. The Company shall be the surviving corporation in the Merger (with respect to all post-closing periods, the “ Surviving Corporation ”). At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Purchaser shall become the debts, liabilities and duties of the Surviving Corporation.

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Section 1.6 Closing . The closing of the Merger (the “ Closing ”) shall, subject to the fulfillment or waiver of the conditions set forth in Article VII, take place at the offices of Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York at 9:00 a.m. New York City time on the second Business Day after all of the conditions set forth in Article VII have been fulfilled or waived (other than those conditions that by their nature are to be satisfied at the Closing) in accordance with this Agreement, or at such other place and time and/or on such other date as the Company and Parent may agree in writing (the “ Closing Date ”).

Section 1.7 Effective Time . Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file a certificate of merger as contemplated by the DGCL (the “ Certificate of Merger ”), together with any required related certificates, with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with such Secretary of State on the Closing Date, or at such later time as Parent and the Company shall agree and specify in the Certificate of Merger. As used herein, the “ Effective Time ” shall mean the time at which the Merger shall become effective.

Section 1.8 Certificate of Incorporation . The certificate of incorporation of the Surviving Corporation shall be amended and restated at the Effective Time to be in the form of Exhibit A and, as so amended and restated, such certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation (the “ Certificate of Incorporation ”), until thereafter amended as provided therein or by applicable Law.

Section 1.9 By-Laws . The by-laws of Purchaser in effect immediately prior to the Effective Time shall be the by-laws of the Surviving Corporation (the “ By-Laws ”) until thereafter amended as provided therein or by applicable Law.

Section 1.10 Directors . The directors of Purchaser immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Certificate of Incorporation and the By-Laws.

Section 1.11 Officers . The officers of the Company immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Certificate of Incorporation and the By-Laws.

Section 1.12 Stockholder’s Meeting . If approval of the stockholders of the Company is required under the DGCL to consummate the Merger:

(a) The Company, acting through (or upon authorization by) the Board of Directors of the Company, shall, in accordance with and subject to the requirements of the Company’s Constituent Documents and applicable law:

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(i) ( A ) as promptly as practicable following the Acceptance Time and the expiration of any “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, if applicable, duly set a record date for, call and give notice of a special meeting of its stockholders (the “ Special Meeting ”) for the purpose of considering and taking action upon this Agreement (with the record date and meeting date set in consultation with Purchaser), and ( B ) as promptly as practicable following the Acceptance Time and the expiration of any “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, if applicable, convene and hold the Special Meeting;

(ii) cause the definitive Proxy Statement to be mailed to its stockholders as promptly as possible after the date that the SEC staff advises that it has no further comments thereon or that the Company may commence mailing the proxy statement; and

(iii) use its reasonable best efforts to secure any approval in favor of the approval and adoption of the Agreement by the stockholders of the Company that is required by the Company’s Constituent Documents and the DGCL and any other applicable law to effect the Merger.

(b) The Company shall not postpone or adjourn the Special Meeting except that, after receiving the written consent of the Parent, the Company may adjourn or postpone the Special Meeting to the extent legally necessary to ensure that any required supplement or amendment to the Proxy Statement is provided to the Company’s stockholders or, if as of the time for which the Special Meeting is originally scheduled (as set forth in the Proxy Statement) there are insufficient Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Special Meeting. After the Acceptance Time, the Company shall prepare and distribute as promptly as practicable any such required supplement or amendment to the Proxy Statement and following any such adjournment or postponement of the Special Meeting, the Company shall take all action necessary to reconvene the Special Meeting as promptly as practicable after such adjournment or postponement.

(c) At the Special Meeting or any postponement or adjournment thereof, Parent shall vote, or cause to be voted, all of the Shares then owned by it, Purchaser or any of their respective affiliates in favor of the approval and adoption of this Agreement and to deliver or provide, in its capacity as a stockholder of the Company or otherwise, any other approvals that are required by the DGCL and any other applicable law to effect the Merger.

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Section 1.13 Merger Without Meeting of Stockholders . Notwithstanding the terms of Section 1.12, in the event that Parent, Purchaser and their respective affiliates shall own, in the aggregate, at least 90% of the outstanding Shares, following the Acceptance Time and the expiration of any “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, if applicable, the parties hereto shall take all necessary and appropriate action to cause the Merger to become effective as promptly as practicable thereafter, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL.

Section 1.14 Effect on Capital Stock .

(a) At the Effective Time, by virtue of the Merger and without any action on the part of any holder thereof, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares) shall be converted into the right to receive an amount equal to the Offer Price, without interest (the “ Merger Consideration ”), subject to any applicable withholding Taxes.

(b) At the Effective Time, by virtue of the Merger and without any action on the part of any holder thereof, all shares of Company Common Stock (other than Excluded Shares) shall cease to be outstanding and shall be canceled and retired, and each certificate which immediately prior to the Effective Time represented any such shares of Company Common Stock (the “ Certificates ”) shall thereafter represent only the right to receive the Merger Consideration with respect to the shares of Company Common Stock (other than Excluded Shares) formerly represented thereby; provided , however , that the Merger Consideration payable in respect of any such shares that, at the Effective Time, were unvested Company Restricted Stock shall be converted into Parent Common Stock in accordance with the provisions of Section 1.16(d).

(c) Each Excluded Share at the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding and shall be canceled and retired and no consideration shall be delivered in exchange therefor.

(d) At the Effective Time, by virtue of the Merger and without any action on the part of any holder thereof, each share of common stock of Purchaser issued and outstanding immediately prior to the Effective Time, shall be converted into one validly issued, fully paid and non-assessable share of the Surviving Corporation and such shares shall constitute the only issued and outstanding shares of common stock of the Surviving Corporation.

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Section 1.15 Treatment of Company Stock Options .

(a) Company Stock Options . At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, Parent will assume each then outstanding option to purchase shares of Company Common Stock granted pursuant to a Company Benefit Plan (a “ Company Stock Option ”), whether or not exercisable at the Effective Time and regardless of the exercise price thereof, in a manner consistent with the requirements of Section 424(a) of the Code. Pursuant to the immediately preceding sentence, the following process shall be applied to effect the assumption of such Company Stock Options. Parent shall determine the ratio (the “ Company Option Ratio ”) of ( i ) the exercise price for a share of Company Common Stock subject to each Company Stock Option (the “ Company Exercise Price ”) to ( ii ) the Offer Price. Parent shall also determine the product of ( i ) the remainder of ( A ) the Offer Price minus ( B ) the Company Exercise Price, multiplied by ( ii ) the number of shares of Company Common Stock subject to such Company Stock Option (such product hereinafter called the “ Company Option Spread ”). Parent shall establish the exercise price to purchase a share of Parent Common Stock (the “ Parent Exercise Price ”) under each assumed option such that the ratio of ( i ) the Parent Exercise Price to ( ii ) the average closing price of a share of Parent Common Stock for the five trading days ending on the trading day immediately prior to the Effective Time (the “ Parent Closing Value ”) is equal to the Company Option Ratio. Parent shall determine the number of shares of Parent Common Stock subject to each assumed Company Stock Option by dividing ( i ) the Company Option Spread by ( ii ) the remainder of ( A ) the Parent Closing Value minus ( B ) the Parent Exercise Price; provided , that if the Company Option Spread is zero, the number of shares of Parent Common Stock subject to each assumed Company Stock Option shall equal the Offer Price multiplied by the number of shares of Company Common Stock subject to such Company Stock Option and divided by the Parent Closing Value; provided , further , that any fractional share of Parent Common Stock resulting from such quotient shall be cashed out based on the Parent Closing Value and taking into account the applicable portion of the Parent Exercise Price related thereto. Each assumed Company Stock Option shall be deemed vested immediately following the Effective Time as to the same percentage of the total number of shares subject thereto as it was vested immediately prior to the Effective Time, except to the extent such Company Stock Option by its written terms as set forth in the relevant option agreement as in effect immediately prior to the date hereof provides for acceleration of vesting by reason of the Transactions contemplated hereby. Each assumed Company Stock Option will otherwise continue to have, and be subject to, the same terms and conditions as in effect immediately prior to the Effective Time.

(b) Registrations . Prior to the Closing, Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Stock Options or in connection with any other Company Benefit Plan for which shares of Parent Common Stock are required to be

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reserved for issuance, the number of which is set forth in Section 3.3 of the Company Disclosure Letter. Reasonably promptly after the Effective Time, Parent shall file a registration statement on Form S-3 or Form S-8, as the case may be (or any successor or other appropriate forms), with respect to the shares of Parent Common Stock subject to such options or Company Benefit Plans for which registration of shares of Parent Common Stock is required and shall use commercially reasonable efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such options remain outstanding or for so long as such registration statement is required with respect to any other Company Benefit Plan.

(c) Section 16 Matters . Prior to the Effective Time, each of Parent and the Company shall take all such reasonable steps as may be required and are consistent with applicable Law and regulations to cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) in the Transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act.

Section 1.16 Company Restricted Stock Units and Company Restricted Stock .

(a) Amendments; Plan Termination . Prior to the Acceptance Time, the Company shall amend any agreement evidencing the grant of ( i ) any restricted stock unit granted pursuant to a Company Benefit Plan (a “ Company Restricted Stock Unit ”) or ( ii ) any shares of unvested restricted stock granted pursuant to a Company Benefit Plan (“ Company Restricted Stock ”) that would provide for the acceleration of vesting of more than 50% of the unvested portion of a Company Restricted Stock Unit or Company Restricted Stock by reason of the Transactions contemplated hereby to provide that only 50% of any unvested portion of such Company Restricted Stock Unit or Company Restricted Stock would be subject to accelerated vesting by reason of the Transactions contemplated hereby. Prior to the Closing Date, the Company shall terminate, effective as of the Effective Time, each Company Benefit Plan that grants Company Restricted Stock Units, Company Restricted Stock or Company Stock Options (including, but not limited to, the Audible, Inc. 1999 Stock Incentive Plan), in accordance with the terms of each such plan.

(b) Vested Company Restricted Stock Units . At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each then outstanding Company Restricted Stock Unit that ( i ) has become vested on or before the Closing by its written terms as set forth in the relevant award agreement as in effect immediately prior to the date hereof and as amended pursuant to Section 1.16(a) and ( ii ) has not been settled as of the Closing Date shall be converted into the right to receive the Merger Consideration. At the Effective Time, by virtue of the Merger and without

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any action on the part of the holders thereof, each such vested Company Restricted Stock Unit shall cease to be outstanding and shall be canceled, and any award agreement (or portion thereof) evidencing the grant of any such Company Restricted Stock Unit shall thereafter represent only the right to receive the Merger Consideration with respect to the Company Restricted Stock Units formerly represented thereby.

(c) Unvested Company Restricted Stock Units . At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, Parent shall assume each then outstanding Company Restricted Stock Unit that has not become vested on or before the Closing by its written terms as set forth in the relevant award agreement as in effect immediately prior to the date hereof and as amended pursuant to Section 1.16(a), such that any holder of such assumed Company Restricted Stock Units shall have the right to receive at the time and subject to the terms and conditions specified in the relevant award agreement as in effect immediately prior to the date hereof and as amended pursuant to Section 1.16(a) that number of shares of Parent Common Stock equal to the quotient of ( i ) the Offer Price, multiplied by the number of shares of Company Common Stock subject to such award agreement, divided by ( ii ) the Parent Closing Value; provided that any fractional share of Parent Common Stock resulting from such quotient shall be cashed out based on the Parent Closing Value. Each assumed Company Restricted Stock Unit will otherwise continue to have, and be subject to, the same terms and conditions as are in effect immediately prior to the Effective Time and as amended pursuant to Section 1.16(a).

(d) Company Restricted Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, the Merger Consideration payable in respect of each then outstanding share of Company Restricted Stock that has not become vested on or before the Effective Time by its written terms as set forth in the relevant award agreement, as in effect immediately prior to the date hereof and as amended pursuant to Section 1.16(a), shall be reinvested in that number of shares of Parent Common Stock equal to the quotient of ( i ) the Offer Price, multiplied by the number of shares of Company Common Stock subject to such award agreement, divided by ( ii ) the Parent Closing Value; provided that any fractional share of Parent Common Stock resulting from such quotient shall be cashed out based on the Parent Closing Value. By virtue of such reinvestment, immediately following the Effective Time, the rights of each holder of any such Company Restricted Stock shall be converted into rights in respect of the number of shares of Parent Common Stock determined pursuant to the immediately preceding sentence, which shall be subject to the same terms and conditions as were in effect with respect to such Company Restricted Stock immediately prior to the Effective Time.

Section 1.17 Treatment of Warrants . As of the Effective Time, each warrant to acquire Company Common Stock (each, a “ Warrant ”), other than the Warrants held by the Parent and its wholly owned Subsidiaries (the “ Excluded Warrants ”) (which

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Excluded Warrants shall terminate as of the Effective Time), shall be converted into the right to receive, in lieu of the Company Common Stock immediately issuable upon exercise of the Warrant, the Merger Consideration which the shares of Company Common Stock issuable upon exercise of such Warrant would be entitled to receive at the Effective Time had the Warrant been exercised immediately prior thereto, minus the exercise price of such Warrant.

Section 1.18 Certain Adjustments . If, between the date of this Agreement and the Effective Time, the outstanding Parent Common Stock or Company Common Stock shall have been changed into a different number of shares or different class by reason of any reclassification, recapitalization, stock split, split-up, combination or exchange of shares, or a stock dividend or dividend payable in any other securities shall be declared with a record date within such period, or any similar event shall have occurred, the Offer Price shall be appropriately adjusted to provide to the holders of Company Common Stock the same economic effect as contemplated by this Agreement prior to such event.

Section 1.19 Appraisal Rights . No holder of Dissenting Shares (a “ Dissenting Stockholder ”) shall be entitled to any Merger Consideration in respect of such Dissenting Shares unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost such holder’s right to seek appraisal of its Dissenting Shares under the DGCL, and any Dissenting Stockholder shall be entitled to receive only the payment provided by Section 262 of the DGCL with respect to the Dissenting Shares owned by such Dissenting Stockholder. If any Person who otherwise would be deemed a Dissenting Stockholder shall have failed properly to perfect or shall have effectively withdrawn or lost the right to seek appraisal with respect to any Dissenting Shares, such Dissenting Shares shall thereupon be treated as though such Dissenting Shares had been converted into the Merger Consideration pursuant to Section 1.14. The Company shall give Parent ( i ) prompt notice of any written demands for appraisal, attempted withdrawals of such demands, and any other instruments served pursuant to applicable Law received by the Company relating to stockholders’ rights of appraisal and ( ii ) the opportunity to direct all negotiations and proceedings with respect to demand for appraisal under the DGCL. The Company shall not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisals of Dissenting Shares, offer to settle or settle any such demands or approve any withdrawal of any such demands.

ARTICLE II

EXCHANGE OF CERTIFICATES

Section 2.1 Exchange Fund . Prior to the Effective Time, Parent shall appoint a commercial bank or trust company to act as exchange agent hereunder for the purpose of exchanging Certificates for the Merger Consideration (the “ Exchange Agent ”). At or

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prior to the Effective Time, Parent shall deposit with the Exchange Agent, in trust for the benefit of holders of shares of Company Common Stock, an amount of cash representing the aggregate Merger Consideration payable pursuant to Section 1.14. Any cash deposited with the Exchange Agent shall hereinafter be referred to as the “ Exchange Fund .”

Section 2.2 Exchange Procedures . Promptly after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each holder of record, as of the Effective Time, of a Certificate ( i ) a letter of transmittal which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent, and which letter shall be in customary form and have such other provisions as Parent may reasonably specify, and ( ii ) instructions for effecting the surrender of such Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate to the Exchange Agent together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefor a check in the amount equal to the Merger Consideration that such holder has the right to receive pursuant to the provisions of Section 1.14 and this Article II. No interest will be paid or will accrue on any cash payable pursuant to Section 1.14. In the event of a transfer of ownership of Company Common Stock which is not registered in the transfer records of the Company, a check in the proper amount of any Merger Consideration pursuant to Section 1.14 may be issued with respect to such Company Common Stock, as the case may be, to such a transferee if the Certificate representing such shares of Company Common Stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid.

Section 2.3 No Further Ownership Rights in Company Common Stock . All Merger Consideration paid upon conversion of shares of Company Common Stock in accordance with the terms of Article I and this Article II shall be deemed to have been issued or paid in full satisfaction of all rights pertaining to such shares.

Section 2.4 Termination of Exchange Fund . Any portion of the Exchange Fund that remains undistributed to the holders of Certificates for six months after the Effective Time shall be delivered to Parent or otherwise on the instruction of Parent, and any holders of the Certificates who have not theretofore complied with this Article II shall thereafter look only to Parent for the Merger Consideration with respect to the shares of Company Common Stock formerly represented thereby to which such holders are entitled pursuant to Section 1.14. Any such portion of the Exchange Fund remaining unclaimed by holders of shares of Company Common Stock five years after the Effective Time (or such earlier date immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Entity) shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation free and clear of any claims or interest of any Person previously entitled thereto.

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Section 2.5 No Liability . None of Parent, Purchaser, the Company, the Surviving Corporation or the Exchange Agent shall be liable to any Person in respect of any Merger Consideration from the Exchange Fund delivered to a public official or Governmental Entity pursuant to any applicable abandoned property, escheat or similar Law.

Section 2.6 Investment of the Exchange Fund . The Exchange Agent shall invest any cash included in the Exchange Fund as directed by Parent on a daily basis; provided that no such gain or loss thereon shall affect the amounts payable to the stockholders of the Company pursuant to Article I or this Article II. Any interest and other income resulting from such investments shall promptly be paid to Parent.

Section 2.7 Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond in such reasonable amount as the Surviving Corporation may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall deliver in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration with respect to the shares of Company Common Stock formerly represented thereby.

Section 2.8 Withholding Rights . Each of the Surviving Corporation and Parent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock or any other equity rights in the Company such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code and the rules and regulations promulgated thereunder, or any provision of state, local or non-U.S. Law. To the extent that amounts are so withheld by the Surviving Corporation or Parent, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of shares of Company Common Stock or other equity rights in the Company in respect of which such deduction and withholding was made by the Surviving Corporation or Parent, as the case may be.

Section 2.9 Further Assurances . After the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of the Company or Purchaser, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company or Purchaser, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

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Section 2.10 Stock Transfer Books . The stock transfer books of the Company shall be closed immediately upon the Effective Time and there shall be no further registration of transfers of shares of Company Common Stock on the records of the Company. From and after the Effective Time, any Certificates presented to the Exchange Agent or Parent for any reason shall be converted into the right to receive the Merger Consideration with respect to the shares of Company Common Stock formerly represented thereby.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as otherwise disclosed to Parent in a letter (the “ Company Disclosure Letter ”) delivered to it by the Company prior to the execution of this Agreement (with specific reference to the section and subsection of the representations and warranties in this Article III to which the information in such letter relates), the Company represents and warrants to Parent and Purchaser as follows:

Section 3.1 Organization . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted. The Company delivered or has made available to Parent and Purchaser true, correct and complete copies of the certificate of incorporation, the by-laws, all minute books and all other organizational documents of the Company, as amended and in effect on the date of this Agreement. The Company is duly qualified or licensed to own, lease and operate its properties and to carry on its business as now being conducted in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

Section 3.2 Subsidiaries .

(a) Section 3.2(a) of the Company Disclosure Letter sets forth the name of each Company Subsidiary, its capitalization, and the state or jurisdiction of its organization. Each Company Subsidiary is a corporation, limited liability company or partnership, as the case may be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as the case may be, and has all requisite corporate, limited liability company or partnership power and

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authority, as the case may be, to own, lease and operate its properties and assets and to carry on its business as now being conducted. The Company has made available to Parent true, correct and complete copies of the certificate of incorporation, the by-laws, all minute books and all other organizational documents of each Company Subsidiary, as amended and in effect on the date of this Agreement.

(b) The Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock or other equity interests of each of the Company Subsidiaries, free and clear of any Liens, except as set forth in Section 3.2(b) of the Company Disclosure Letter. All of such shares and other equity interests so owned by the Company are validly issued, fully paid and nonassessable (and no such shares have been issued in violation of any preemptive or similar rights).

(c) Except as set forth in Section 3.2(c) of the Company Disclosure Letter, the Company does not own of record or beneficially (within the meaning of Rule 13d-3 of the Exchange Act), directly or indirectly, any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, any equity or similar interest in any other Person.

Section 3.3 Capitalization .

(a) As of the date hereof, the authorized capital stock of the Company consists solely of 40,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.01 per share (“ Company Preferred Stock ”). As of the close of business on the date of this Agreement, ( i ) 24,372,609 shares of Company Common Stock were issued and outstanding, 50,000 of which are unvested and subject to risk of forfeiture under the terms of an award of Company Restricted Stock, ( ii ) 968,985 Company Restricted Stock Units were issued and outstanding, 896,961 of which are unvested and subject to risk of forfeiture under the terms of awards of Company Restricted Stock Units, ( iii ) no shares of Company Preferred Stock were issued or outstanding, ( iv ) no shares of Company Common Stock were held in treasury by the Company, ( v ) 2,026,971 shares of Company Common Stock were reserved for issuance pursuant to Company Stock Options, ( vi ) 968,985 shares of Company Common Stock were reserved for issuance pursuant to Company Restricted Stock Units, and ( vii ) 384,333 shares of Company Common Stock were reserved for issuance pursuant to the Warrants. Section 3.3(a) of the Company Disclosure Letter contains a true and complete schedule as of the date of this Agreement setting forth (as applicable) the holder, number, exercise or reference price, number of shares for which it is exercisable, vesting date and expiration date, in each case of ( i ) each outstanding Company Stock Option, ( ii ) each outstanding Company Restricted Stock Unit, ( iii ) each outstanding award of Company Restricted Stock and ( iv ) each outstanding Warrant. Except as set forth above, no shares of capital stock of the Company are issued, reserved for issuance or outstanding. All issued and outstanding shares of Company Common Stock and Company Preferred Stock

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are and all shares of Company Common Stock which may be issued pursuant to the exercise of a Company Stock Option or upon the vesting of a Company Restricted Stock Unit will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and nonassessable

(b) There are no preemptive or similar rights on the part of any holder of any class of securities of the Company or any Company Subsidiary. Neither the Company nor any Company Subsidiary has outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company or any such Company Subsidiary on any matter submitted to stockholders or a separate class of holders of capital stock. Except as set forth above, there are not, as of the date of this Agreement, any options, warrants, restricted stock, restricted stock units, calls, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, contracts, arrangements or undertakings of any kind to which the Company or any Company Subsidiary is a party or by which any of them is bound ( i ) obligating the Company or any Company Subsidiary to issue, deliver, sell or transfer or repurchase, redeem or otherwise acquire, or cause to be issued, delivered, sold or transferred or repurchased, redeemed or otherwise acquired, any shares of the capital stock of the Company or any Company Subsidiary, any additional shares of capital stock of, or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of, or other equity interest in, the Company or any Company Subsidiary, ( ii ) obligating the Company or any Company Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, contract, arrangement or undertaking, ( iii ) obligating the Company or any Company Subsidiary pursuant to any right of first offer, right of first negotiation, right of first refusal, co-sale or similar provisions or ( iv ) giving any Person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights accruing to holders of capital stock of, or other equity interests in, the Company or any Company Subsidiary. As of the date of this Agreement, there are no outstanding contractual obligations of the Company or any of the Company Subsidiaries to sell, repurchase, redeem or otherwise acquire or to register any shares of capital stock of, or other equity interests in, the Company or any of the Company Subsidiaries. There are no proxies, voting trusts or other agreements or understandings to which the Company or any Company Subsidiary is a party or is bound with respect to the voting of the capital stock of, or other equity interests in, the Company or any Company Subsidiary. No Company Common Stock is held by any wholly owned Subsidiary of the Company.

Section 3.4 Authority for Agreements .

(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and, subject to the adoption of this Agreement and the approval of the Offer, the Merger and the

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Transactions contemplated hereby by the holders of a majority of the outstanding shares of Common Stock entitled to vote in accordance with the DGCL and the Company’s Constituent Documents (the “ Company Stockholder Approval ”), to consummate the Transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the Merger and the other Transactions contemplated hereby have been duly and validly authorized by all necessary corporate and shareholder action, and no other corporate proceedings on the part of the Company are necessary for it to authorize this Agreement or to consummate the Transactions contemplated hereby, except for the Company Stockholder Approval, to the extent required by the DGCL. This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by Parent and Purchaser, is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors rights and by general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).

(b) The Board of Directors of the Company, at a meeting duly called and held, duly and unanimously adopted resolutions ( i ) approving this Agreement and the Transactions (including the Offer and the Merger), ( ii ) determining that the terms of this Agreement, the Offer and the Merger and the other Transactions contemplated hereby are fair to and in the best interests of the Company and its stockholders, ( iii ) recommending that the Company’s stockholders accept the Offer, tender their Shares to Purchaser pursuant to the Offer and approve and adopt this Agreement if required to do so by the DGCL and ( iv ) declaring that the Offer, the Merger, the other Transactions and this Agreement are advisable.

Section 3.5 Takeover Statute, No Restrictions on the Transactions .

(a) Except as set forth in Section 3.5(a) of the Company Disclosure Letter, no state “fair price,” “moratorium,” “control share acquisition” or similar anti-takeover statute is applicable to the Offer, the Merger or the other Transactions.

(b) The Board of Directors of the Company and any Company Subsidiary has taken all necessary action to render any potentially applicable anti-takeover or similar statute, regulation or provision of the certificate of incorporation and the by-laws, or other organizational or constitutive document or governing instrument of the Company or any Company Subsidiary, inapplicable to this Agreement and the Transactions.

Section 3.6 Consents and Approvals; No Violations .

(a) The execution and delivery of this Agreement by the Company does not and the consummation by the Company of the Transactions contemplated hereby will not

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( i ) conflict with any provisions of the Company’s Constituent Documents or the certificate of incorporation or by-laws or any other organizational documents of any Company Subsidiary; ( ii ) other than as set forth in Section 3.6(a)(ii) of the Company Disclosure Letter, result (with the giving of notice or the lapse of time or both) in any violation or default or loss of a benefit under, or permit the acceleration or termination of any obligation under, any mortgage, indenture, lease, agreement or other instrument, permit concession, grant, franchise or license applicable to the Company; ( iii ) violate any Law or Order (assuming compliance with the matters set forth in Section 3.6(c)); ( iv ) result in the creation or imposition of any Lien upon any properties or assets of the Company or any Company Subsidiary; or ( v ) cause the suspension or revocation of any permit, license, governmental authorization, consent or approval necessary for the Company or any Company Subsidiary to conduct its business as currently conducted.

(b) Except for the Company Stockholder Approval or as set forth in Section 3.6(b) of the Company Disclosure Letter, no consent or approval of any other Person (other than any Governmental Entity) is required to be obtained by the Company for the execution, delivery or performance of this Agreement by the Company and the performance by the Company of its obligations hereunder and the consummation by the Company of the Transactions contemplated hereby.

(c) No consent, approval, order or authorization of, or declaration, registration of filing with, or notice to any Governmental Entity is required to be made or obtained by the Company or any Company Subsidiary in connection with the execution or delivery of this Agreement by the Company or the consummation by the Company of the Transactions contemplated hereby, except for ( i ) compliance by the Company with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and such foreign antitrust and competition law requirements described in Section 3.7(c)(i) of the Company Disclosure Letter; ( ii ) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL, and ( iii ) the filings with the SEC of ( A ) if Company Stockholder Approval is required by the DGCL, the Proxy Statement in accordance with Regulation 14A promulgated under the Exchange Act and ( B ) such reports under and such other compliance with the Exchange Act and the Securities Act and the rules and regulations thereunder as may be required in connection with this Agreement and the Transactions contemplated hereby.

Section 3.7 SEC Reports; Company Financial Statements; Company Data .

(a) The Company and each Company Subsidiary has filed or furnished all reports, schedules, forms, statements and other documents required to be filed by it with or furnished by it to the SEC since January 1, 2005 (the “ Company SEC Documents ”). As of its respective date, each Company SEC Document, including any financial statements or schedules included therein or incorporated by reference therein, complied when filed or furnished and as amended in all material respects with the requirements of

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the Exchange Act or the Securities Act and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Documents, and did not, and any Company SEC Documents filed with the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or incorporated by reference therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Section 3.7(a) of the Company Disclosure Letter sets forth ( i ) each foreign jurisdiction where the Company or any Company Subsidiary is required to file any forms, reports, schedules, statements or other documents with any foreign Governmental Entity that performs a similar function to that of the SEC or any securities exchange or quotation service, ( ii ) the types of forms, reports, schedules, statements and other documents that the Company or any Company Subsidiary is required to file in each such foreign jurisdiction and ( iii ) the status of each such required filing as of the date hereof.

(b) The Company has delivered to Parent and Purchaser, in the form filed with the SEC, if applicable, complete and correct copies of the Company Financial Statements, including any amendments thereto and all exhibits. The Company Financial Statements have been derived from the accounting books and records of the Company and the Company Subsidiaries and have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods presented. The consolidated balance sheets included in the Company Financial Statements present fairly in all material respects the financial position of the Company and the Company Subsidiaries as at the respective dates thereof, and the consolidated statements of operations, consolidated statements of stockholders’ equity, and consolidated statements of cash flows included in such Company Financial Statements present fairly in all material respects the results of operations, stockholders’ equity and cash flows of the Company and the Company Subsidiaries for the respective periods indicated.

(c) Section 3.7(c) of the Company Disclosure Letter sets forth the number of Subscribers and the number of Non-Subscriber Customers of the Company and the Company Subsidiaries as of September 30, 2007 and December 31, 2007.

Section 3.8 Proxy Statement . None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in the Proxy Statement will, at the date mailed to stockholders of the Company and at the time of the Special Meeting, contain any untrue statement of a fact or omit to state any fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Proxy Statement will comply as to form in all respects with the Exchange Act and the rules and regulations thereunder.

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Section 3.9 Absence of Certain Changes . Except for liabilities incurred in connection with this Agreement or the Transactions contemplated hereby, since September 30, 2007 ( i ) the Company and the Company Subsidiaries have conducted their respective businesses only in the ordinary course consistent with past practice; ( ii ) through the date hereof, there has not been any declaration, setting aside or payment of any dividend or other distribution in cash, stock or property in respect of the Company’s capital stock; ( iii ) there has not been any action taken by the Company or any Company Subsidiary prior to the date of this Agreement that, if taken during the period from the date of this Agreement through the Effective Time, would constitute a breach of Section 5.1; and ( iv ) except as required by GAAP, there has not been any change by the Company in accounting principles, practices or methods. Since September 30, 2007, there have not been any changes, circumstances or events (or, with respect to changes, circumstances or events existing prior to September 30, 2007, any worsening thereof) that, individually and in the aggregate, have had or would reasonably be expected to result in a Company Material Adverse Effect.

Section 3.10 Litigation . Except as set forth in Section 3.10 of the Company Disclosure Letter or as set forth in footnote 10 to the financial statements contained in the Company’s Form 10-Q for the quarter ending September 30, 2007 (other than the first paragraph under the caption “Contingencies”), ( i ) there is no suit, action, proceeding, claim, review or investigation (whether at law or in equity, before or by any Governmental Entity or before any arbitrator) pending, affecting or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary, or their respective properties or rights and ( ii ) no Order of any Governmental Entity or arbitrator is outstanding against the Company or any Company Subsidiary.

Section 3.11 Compliance with Laws .

(a) Each of the Company and the Company Subsidiaries is and, since September 30, 2007 has been, in compliance in all material respects with all applicable Laws (including Laws relating to sensitive payments), and, to the knowledge of the Company, is not under investigation with respect to and has not been threatened to be charged with or given notice of any material violation of any Law.

(b) Without limitation, the Company, the Company Subsidiaries and the principal executive officer and the principal financial officer of the Company have complied in all material respects with ( i ) the applicable provisions of the Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated under such Act (the “ Sarbanes-Oxley Act ”), ( ii ) the applicable provisions of the Exchange Act, and ( iii ) the applicable listing and corporate governance rules and regulations of Nasdaq. The principal executive officer and the principal financial officer of the Company have made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with respect to each Company SEC Document filed by the Company. For purposes of the

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preceding sentence, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act. Except as permitted by the Exchange Act, including Sections 13(k)(2) and (3), since the enactment of the Sarbanes-Oxley Act, neither the Company nor any of its Affiliates has directly or indirectly extended or maintained credit, arranged for the extension of credit, renewed an extension of credit or materially modified an extension of credit in the form of personal loans to any executive officer or director (or equivalent thereof) of the Company or any Company Subsidiaries. The Company has delivered to Parent and Purchaser copies of all certifications, sub-certifications, minutes of meetings and other supporting documentation relating to the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act, and to the Company’s knowledge, no complaints or allegations have been made, which, if true, would conflict with or otherwise prevent such certifications from being made.

(c) The Company has ( i ) implemented disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to the Company is made known to the management of the Company by others within those entities, and ( ii ) has disclosed, based on its most recent evaluation, to the Company’s outside auditors and the audit committee of the Board of Directors of the Company ( A ) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial data, and ( B ) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. Other than as described in Part I, Item 4 of the Company’s Form 10-Q for the quarter ending September 30, 2007, the Company has made no disclosures to the Company’s outside auditors or audit committee relating to the matters referred to in clauses (ii)(A) and ( B ) above.

(d) The Company has delivered to Parent copies of any written notifications it has received of a ( i ) “reportable condition” or ( ii ) “material weakness” in the Company’s internal controls. For purposes of this Agreement, the terms “ reportable condition ” and “ material weakness ” shall have the meanings assigned to them in the Statements of Auditing Standards No. 60, as in effect on the date hereof. The Company has delivered to Parent and Purchaser copies of all management letters and internal control letters delivered in connection with Section 404 of the Sarbanes-Oxley Act. Section 3.11(d) of the Company Disclosure Letter describes all services provided since July 31, 2002 to the Company or any Company subsidiaries by Ernst & Young LLP or any of its Affiliates.

Section 3.12 Absence of Undisclosed Liabilities . The Company and the Company Subsidiaries do not have any liabilities or obligations, known or unknown, contingent or otherwise, except ( a ) liabilities and obligations in the respective amounts reflected on or reserved against in the Company’s consolidated balance sheet of September 30, 2007 included in the Company Financial Statements, ( b ) liabilities and

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obligations incurred in the ordinary course of business consistent with past practice since the date of such balance sheet that would not be prohibited by this Agreement and that, in the aggregate, would not reasonably be expected to be materially adverse to the Company and the Company Subsidiaries, taken as a whole, and ( c ) other liabilities and obligations that, individually or in the aggregate, would not reasonably be expected to materially adversely affect the ability of the Company to perform its obligations under this Agreement or to consummate the Transactions contemplated by this Agreement.

Section 3.13 Taxes .

(a) The Company and each Company Subsidiary have ( i ) duly and timely filed with the appropriate Taxing Authorities all Tax Returns required to be filed by them in respect of any Taxes, which Tax Returns were true, correct and complete in all material respects, ( ii ) duly and timely paid or remitted in full or withheld all Taxes that are due and payable by them, whether or not such Taxes were shown as due on any Tax Returns, ( iii ) established reserves in accordance with GAAP for the payment or remittance of all material Taxes for all periods or portions thereof ending through the date hereof, and ( iv ) complied in all material respects with all laws applicable to the payment, remittance and withholding of Taxes and have timely withheld and paid over to the respective proper Taxing Authorities all amounts required to be so withheld and paid over.

(b) There ( i ) is no deficiency, claim, audit, suit, proceeding, request for information or investigation now pending, outstanding or, to the knowledge of the Company, threatened against or with respect to the Company or any Company Subsidiary in respect of any Taxes or Tax Returns, and ( ii ) are no requests for rulings or determinations in respect of any Taxes or Tax Returns pending between the Company or any Company Subsidiary and any authority responsible for such Taxes or Tax Returns.

(c) The federal income Tax Returns of the Company and the Company Subsidiaries have never been examined by the Internal Revenue Service (or the applicable statutes of limitation for the assessment of federal income Taxes for such periods have expired) for any period, and no material deficiencies were asserted as a result of such or any other examinations that have not been resolved and fully paid. Neither the Company nor any of the Company Subsidiaries has granted any requests, agreements, consents or waivers to extend the statutory period of limitations applicable to the assessment of any Taxes with respect to any Tax Returns of the Company or any of the Company Subsidiaries.

(d) No claim has been made and, to the knowledge of the Company, no claim has been threatened by a Taxing Authority in a jurisdiction where the Company or a Company Subsidiary, as the case may be, does not file Tax Returns in respect of a particular type of Tax or pay or remit such type of Tax that the Company or a Company Subsidiary is required to file such Tax Returns or pay or remit such type of Tax.

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(e) The Merger will not trigger any income or gain to the Company or any Company Subsidiary for federal income tax purposes ( i ) that was previously deferred pursuant to the regulations issued under Section 1502 of the Code or ( ii ) under Section 355(e) of the Code in respect of a distribution by the Company or any Company Subsidiary occurring prior to the Closing.

(f) None of the Company or any of the Company Subsidiaries has been a member of any affiliated group within the meaning of Section 1504(a) of the Code, or any similar affiliated or consolidated group for tax purposes under state, local or foreign law (other than a group the common parent of which is the Company), or has any liability for the Taxes of any Person (other than the Company and the Company Subsidiaries) under Treasury Regulations Section 1.1502-6 or any similar provision of state, local or foreign law, as a transferee or successor, by contract or otherwise.

(g) There are no material adjustments under Section 481 of the Code (or similar or analogous provision of state, local or foreign law) for income tax purposes applicable to or required to be made by the Company or any of the Company Subsidiaries.

(h) The Company is not, and has not been during the five-year period ending on the date hereof, a “United States real property holding corporation” as defined in Section 897(c)(2) of the Code.

(i) There are no Liens on any of the assets or properties of the Company or any Company Subsidiary that arose in connection with any failure (or alleged failure) to pay or remit any Tax.

(j) Neither the Company nor any Company Subsidiary has participated in a “listed transaction” within the meaning of Treasury Regulations §1.6011-4(c)(3)(i)(A) or failed to report any “reportable transaction.”

(k) Except as set forth in Section 3.13(k) of the Company Disclosure Letter, the Company is not currently subject to any limitation on the use of net operating losses, capital losses or other tax attributes pursuant to section 382 or 383 of the Code.

Section 3.14 Title to Properties; Absence of Liens .

(a) Section 3.14(a) of the Company Disclosure Letter sets forth a true and complete list of all real property owned by the Company or any Company Subsidiary, and includes the address of the property and the current book value of the property (the “ Owned Real Property ”)