EX-2(b)
Amendement Agreement
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AMENDMENT AGREEMENT
AMENDMENT AGREEMENT (the "Agreement"), dated as of November 16, 1999
by and among ATLANTIS EQUITIES, INC., a New York corporation ("Atlantis"), DYLAN
LLC, a Delaware limited liability company ("Dylan"), CDBEAT.COM, INC., a
Delaware corporation ("CDBeat"), CAKEWALK LLC, a Delaware limited liability
company ("Cakewalk") and 32 RECORDS LLC, a Delaware limited liability company
("32 Records").
W I T N E S S E T H:
WHEREAS, Atlantis is the holder of a stock purchase warrant, dated
September 23, 1999 (the "Atlantis Warrant"), issued by CDBeat, pursuant to which
Atlantis has the right to purchase (i) eighty (80%) percent of the issued and
outstanding voting shares of the common stock, par value $.001 per share (the
"CDBeat Stock"), of CDBeat, and (ii) options exercisable for 762,064 shares of
CDBeat Stock; and
WHEREAS, Cakewalk has entered into that certain contribution
agreement, dated as of October 29, 1999, with CDBeat (the "Contribution
Agreement"), pursuant to which Cakewalk has agreed to contribute and assign to
CDBeat substantially all of the assets of Cakewalk in exchange for 90% of the
CDBeat stock in a transaction intended to qualify under ss. 351 of the Internal
Revenue Code of 1986, as amended (the "Code");
WHEREAS, Dylan, an affiliate of Atlantis, has entered into that
certain subscription agreement, dated as of October 29, 1999, with Cakewalk (the
"Dylan Subscription Agreement"), pursuant to which Dylan has subscribed for a
membership interest in Cakewalk;
WHEREAS, in lieu of CDBeat directly acquiring the Assets of Cakewalk
and assuming substantially all of its Liabilities, CDBeat wishes to have 32
Records, a limited liability company wholly owned by CDBeat, acquire such Assets
and assume such Liabilities;
WHEREAS, Cakewalk and Dylan desire to cancel the Subscription
Agreement and terminate their respective rights and obligations thereunder; and
WHEREAS, Atlantis desires to transfer the portion of the Atlantis
Warrant, as amended (as set forth in Section 1, hereto) to Dylan, and Dylan
desires to exercise such portion;
WHEREAS, Atlantis desires to exercise the balance of the Atlantis
Warrant, as amended; and
WHEREAS, Cakewalk, 32 Records, Atlantis and Dylan agree that the
acquisition of CDBeat Stock in exchange for the Assets of Cakewalk pursuant to
the terms and conditions of the Contribution Agreement, as amended hereby, shall
occur simultaneously at the Closing and immediately after such Closing,
Cakewalk, Atlantis and Dylan will own in the aggregate approximately 89.20%
percent of the CDBeat Stock;
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NOW, THEREFORE, in consideration of the premises and the respective
mutual agreements, covenants, representations and warranties herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the parties agree as follows:
1. Amendment and Exercise of Atlantis Warrant. Concurrently with the closing of
the transactions contemplated by the Contribution Agreement (the "Closing"), the
Atlantis Warrant will be amended and split into two warrants, one of which will
be assigned to Dylan and will require Dylan to pay to CDBeat $900,000 for
7,037,183 shares of CDBeat Stock issuable upon exercise of such warrant (the
"Dylan Stock"), and the other of which will be retained by Atlantis and will
require Atlantis to pay to CDBeat $100,000 to acquire 781,909 shares of CDBeat
Stock (the "Atlantis Stock") and 762,064 options from CDBeat which shall be
exercisable at $2.50 each until December 31, 2000 (the "Options"). At the
Closing, CDBeat shall deliver to Dylan certificates representing the Dylan Stock
and shall deliver to Atlantis certificates representing the Atlantis Stock.
2. Cancellation of Subscription Agreement. The Subscription Agreement is
hereby terminated and shall be of no further force and effect.
3. Modification of Contribution Agreement. The Contribution Agreement is
hereby modified as follows:
(a) The text of the second recital shall be deleted and replaced with the
following: "Cakewalk desires to contribute and assign to 32 Records LLC, a
wholly owned limited liability company of CDBeat ("32 Records"), and 32 Records
desires to acquire from Cakewalk, substantially all of the assets and
liabilities relating to the Business in exchange for the issuance to Cakewalk of
approximately 46% of the issued and outstanding voting shares of the common
stock, par value $.001, of CDBeat (the "CDBeat Stock") in a transaction, which
in conjunction with the concurrent acquisition of CDBeat Stock by Dylan and
Atlantis is, intended to qualify under ss. 351 of the Code, upon and subject to
the terms and conditions hereinafter set forth".
(b) The text of the third recital shall be deleted and replaced with the
following: "Atlantis Equities, Inc., a Delaware corporation ("Atlantis"), is the
holder of a stock purchase warrant, dated September 23, 1999 (the "Atlantis
Warrant"), issued by CDBeat.com, Inc., a Delaware corporation ("CDBeat"),
pursuant to which Atlantis has the right to purchase (i) eighty (80%) percent of
the issued and outstanding voting shares of the common stock, par value $.001
per share (the "CDBeat Stock"), of CDBeat, and (ii) options exercisable for
762,064 shares of CDBeat Stock";
(c) The words "including, without limitation, the moneys received by Cakewalk
from Dylan under the Dylan Subscription Agreement" contained in Section 1.1 (a)
(ix) shall be deleted;
(d) The first paragraph of Section 1.1 (a) shall be amended to read: "Subject to
Section 1.1(b) hereof and to the other terms and conditions of this Agreement,
at the Closing (as hereinafter defined), Cakewalk will contribute, assign,
transfer and convey to 32 Records, free and clear of all Liens (other than
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Permitted Liens), and 32 Records shall acquire from Cakewalk, all of the
tangible and intangible assets used, held for use or useful in the Business
(collectively, the "Assets") including:";
(e) Section 1.1(a)(ii) is deleted in its entirety;
(f) Section 1.1(b) shall be modified to add the following after the words
"including, without limitation": "all of the capital stock of Cakewalk
Productions, Inc. and Cakewalk Productions II, Inc., each of which is in the
process of being dissolved";
(g) The first paragraph of Section 1.2 (a) shall be amended to read: "At the
Closing, 32 Records shall assume all liabilities and obligations (including
contingent liabilities and obligations) of Cakewalk pertaining to or arising out
of the ownership of the Assets and the operation of the Business, whether
incurred or existing on or prior to the Closing Date or arising thereafter,
including, but not limited to:";
(h) Section 1.2 (a)(vii) is deleted in its entirety;
(i) The text of Section 1.2 (b) shall be deleted in its entirety and replaced
with the following: "Notwithstanding the provisions of Section 1.2(a), except as
set forth in (vii), above, 32 Records shall not assume, and Cakewalk shall
retain, any income Tax Liability of Cakewalk, nor shall 32 Records assume or
guaranty any liability or obligation of Cakewalk BRE LLC.";
(j) The text of Section 1.3 shall be deleted in its entirety and replaced with
the following: "In consideration for the contribution, assignment, transfer and
conveyance by Cakewalk to 32 Records of the Assets, at the Closing, CDBeat shall
issue to Cakewalk 8,307,785 shares of CDBeat Stock, being such number of shares
of CDBeat Stock as shall equal, after giving effect to such issuance, the
conversion of CDBeat's outstanding shares of Preferred Stock and the
cancellation of certain other shares all as hereinafter described, approximately
46% of the issued and outstanding common stock of CDBeat.";
(k) Section 3.3 shall be modified to add the following: "32 Records is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.";
(l) The second and third sentences of Section 3.5 shall be deleted in their
entirety and replaced with the following: "As of the date hereof, the issued and
outstanding capital stock of CDBeat consists of (A) 4,504,197 shares of Common
Stock, and (B) 50,000 shares of "Series C" Preferred Stock. There are currently
no shares of "Series A" Preferred Stock or "Series B" Preferred Stock issued and
outstanding.";
(m) The text of Section 5.1(c) is deleted in its entirety and shall be replaced
with the following: "Exercise of Atlantis Warrant. Concurrently with the
Closing, in connection with the exercise by Dylan of a portion of the Atlantis
Warrant, Dylan shall have paid $900,000 to CDBeat and shall have received
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7,037,183 shares of CDBeat Stock, and in connection with the exercise by
Atlantis of a portion of the Atlantis Warrant, Atlantis shall have paid $100,000
and received 781,909 shares of CDBeat Stock and 762,064 options from CDBeat
exercisable at $2.50 each until December 31, 2000.";
(n) Section 5.3 (d) (v) is deleted in its entirety and shall be replaced with
the following: "Such instruments of conveyance as may be needed to convey the
Assets from Cakewalk to 32 Records"; and
(o) The reference to the definition of the "Dylan Subscription Agreement"
contained in Section 8.1 (b) shall be deleted in its entirety.
4. Post-Closing Capitalization of CDBeat. The parties agree that after giving
effect to the transactions contemplated by the Amendment Agreement as amended
hereby, CDBeat's outstanding shares of Common Stock, options and warrants shall
be held as reflected on Schedule A hereto with such schedule also reflecting the
shares of Common Stock currently planned to be reserved for senior management of
CDBeat.
5. Confirmation of Engagement. Concurrently with the Closing, CDBeat shall
assume all obligations of Cakewalk pursuant to the Engagement Letter dated as of
October 29, 1999 between Atlantis and Cakewalk.
6. Reaffirmation. Except as expressly modified herein, all other terms and
conditions contained in the Contribution Agreement are the same and shall remain
in full force and effect. Any capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Contribution Agreement.
7. Expenses. Cakewalk agrees to bear and pay for all of its own and Dylan's and
Atlantis's expenses in connection with the preparation, execution and delivery
of this Agreement and the Contemplated Transactions including the expenses
incurred by Atlantis and Dylan in connection with obtaining and amending the
Atlantis Warrant and preparing the related reports on Schedule 13D, Securities
and Exchange Commission Forms 3 and 4 and any amendments thereto.
8. Miscellaneous
(a) Captions. The section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(b) Cooperation. Subject to the terms and conditions herein provided, each of
the parties hereto shall use its diligent efforts to take, or cause to be taken,
such action, to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be done, all things
necessary, proper or advisable under the provisions of this Agreement and under
applicable law, to effectuate the purpose of this Agreement.
(c) Notices. (i) Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally by hand,
telecopied, or mailed, certified or registered, return receipt requested,
postage prepaid as follows:
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if to Atlantis or to Dylan, to:
Atlantis Equities, Inc.
750 Lexington Avenue, 23rd Floor
New York, NY 10022
Telecopier: (212) 750-6667
Attention: Nancy Ellin, President
with a copy to:
Squadron Ellenoff Plesent & Sheinfeld
551 Fifth Avenue
New York, NY 10176
Telecopier: (212) 697-6686
Attention: Kenneth R. Koch, Esq.
If to CDBeat or 32 Records, one copy to:
CDBeat.com, Inc.
Bedford Towers
444 Bedford Street, Suite 8S
Stamford, Connecticut
Telecopier: (203) 602-9995
Attn: Joel Arberman, President
with a copy to:
Squadron Ellenoff Plesent & Sheinfeld
551 Fifth Avenue
New York, NY 10176
Telecopier: (212) 697-6686
Attention: Kenneth R. Koch, Esq.
if to Cakewalk, to:
Cakewalk LLC
250 West 57th Street, Suite 620
New York, New York 10107
Attention: Robert Miller, President
Telecopier: (212) 265-1667
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with a copy to:
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022-7513
Telecopier: (212) 702-5941
Attention: Ivan W. Dreyer, Esq.
(ii) Each notice or other communication shall be deemed given (A) on the date of
delivery if delivered by messenger, overnight courier or other similar personal
delivery; (B) on the date of transmission, if transmitted by telecopier; or (C)
three days after the date of deposit in the mails, if mailed by certified or
registered mail, return receipt requested.
(iii) Any party, by notice given in accordance with this Section to the other
parties, may designate another address (or telecopier number) or person for
receipt of notices hereunder. Notices by a party may be given by counsel to such
party.
(d) Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed entirely within such state.
(e) Binding Effect. This Agreement and all of its provisions, rights and
obligations shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Nothing herein
express or implied is intended or shall be construed to confer upon or give
anyone other than the parties hereto and their respective successors and
permitted assigns any rights or benefits under of by reason of this Agreement.
(f) Counterparts. The Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original as against any party whose
signature appears thereon, and all of which shall together constitute one and
the same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as the signatories.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment
Agreement as of the date set forth above.
CAKEWALK LLC
By:
Name: Robert Miller
Title: President
ATLANTIS EQUITIES, INC
By:
Name: Nancy Ellin
Title: President
DYLAN LLC
By:
Name: Nancy Ellin
Title: President
CDBEAT.COM, INC.
By:
Name: Joel Arberman
Title: President
32 RECORDS LLC
By: CDBeat.com, Inc.
By:______________
Name:
Title:
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559897.9
CDBEAT.COM, INC.
SHARES
OUTSTANDING AS
NAME OF CLOSING WARRANTS OPTIONS TOTAL
CdBeat (including 1,954,773 ------ 190,516 2,145,289
Arberman, Eggers &
public)
Dylan/Atlantis 7,819,092 ------- 762,064 8,581,156
Cakewalk
Lazard Group 3,751,358 ------- ------- 3,751,358
Bank Boston 2,134,499 ------- ------- 2,134,499
R. Miller 1,554,731 ------- 1,955,750 3,510,481
J. Dorn 612,332 ------- ------- 612,332
Signet/MCG 254,865 ------- ------- 254,865
8,307,785
EFI ----------- 1,466,080 ------- 1,466,080
Cliff Berger ----------- ---------- 293,215 293,215
Total 18,081,650 1,466,080 3,201,545 22,749,275
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