-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Uo1mfSnbb+qTpLArqle63LkfhCDSoDXkIMYlwG/MIA1aATOE3j8IHrfnyk6WmuIF /G04lcZX/RlixOjwtf95Sw== 0001005477-99-004659.txt : 19991018 0001005477-99-004659.hdr.sgml : 19991018 ACCESSION NUMBER: 0001005477-99-004659 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19991008 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CDBEAT COM INC CENTRAL INDEX KEY: 0001076682 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL- COMPUTER & PRERECORDED TAPE STORES [5735] IRS NUMBER: 061529524 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-56967 FILM NUMBER: 99725846 BUSINESS ADDRESS: STREET 1: BEDFORD TOWERS STREET 2: 444 BEDFORD STREET SUITE 8 CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 2036029994 MAIL ADDRESS: STREET 1: BEDFORD TOWERS STREET 2: 444 BEDFORD STREET SUITE 8 CITY: STAMFORD STATE: CT ZIP: 06901 FORMER COMPANY: FORMER CONFORMED NAME: SMD GROUP INC DATE OF NAME CHANGE: 19990113 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ATLANTIS EQUITIES INC CENTRAL INDEX KEY: 0001071293 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 113080809 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 750 LEXINGTON AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2127505858 MAIL ADDRESS: STREET 1: 750 LEXINGTON AVE CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 CDBEAT.COM, INC. ----------------------------------------------------------------- (Name of Issuer) Common Stock ($.001 par value) ----------------------------------------------------------------- (Title of Class of Securities) 784495103 -------------- (CUSIP Number) Kenneth Koch, Esq. Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue, New York, NY 10176 ----------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 23, 1999 ----------------------------------------------------------------- (Date of event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box: |_| Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. - --------- 1 Name of Reporting Person Atlantis Equities, Inc. S.S. or I.R.S. Identification No. of Above Person -------------------------------------------------------------------------- 2 Check the Appropriate Box if (a) |_| a Member of a Group (b) |X| -------------------------------------------------------------------------- 3 SEC Use Only -------------------------------------------------------------------------- 4 Source of Funds WC -------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) |_| -------------------------------------------------------------------------- 6 Citizenship or Place of Organization New York -------------------------------------------------------------------------- 7 Sole Voting Power An indeterminate number of shares equal to 80% of outstanding shares and outstanding options at the time of exercise. -------------------------------------------------------- Number of Shares 8 Shared Voting Power 0 Beneficially Owned by Reporting Person -------------------------------------------------------- With 9 Sole Dispositive An indeterminate number of shares Power equal to 80% of outstanding shares and outstanding options at the time of exercise. -------------------------------------------------------- 10 Shared Dispositive 0 Power ------------------------------------------------------------------------- 11 Aggregate Amount Beneficially An indeterminate number of shares Owned By Each Reporting Person equal to 80% of outstanding shares and outstanding options at the time of exercise. ------------------------------------------------------------------------- 12 Check box if the aggregate Amount in Row (11) Excludes Certain Shares |_| ------------------------------------------------------------------------- 13 Percent of Class Represented Amount in Row (11) 80% -------------------------------------------------------------------------- 14 Type of Reporting Person CO - 2 - Item 1. Security and Issuer. The title of the class of equity securities to which this statement relates is the common stock, $.001 per share par value (the "Common Stock"), of CDbeat.com, Inc., a Delaware corporation F/K/A SMD Group, Inc. (the "Company"). The principal executive offices of the Company are located at 444 Bedford Street, Stamford, Connecticut 06901. Item 2. Identity and Background. (a) The name of the person filing (the "Filing Person") this Schedule is Atlantis Equities, Inc. ("Atlantis"). Nancy J. Ellin ("Ellin") is the sole stockholder of Atlantis. (b) The business address of the Filing Person and Ellin is c/o Atlantis Equities, Inc., 750 Lexington Avenue, New York, New York 10022. (c) Ellin is the sole stockholder, officer and director of Atlantis, a merchant banking firm. (d) Neither the Filing Person nor Ellin have been convicted during the past five years in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) Neither the Filing Person nor Ellin have been, during the last five years, a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and has not and is not subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Ellin is a citizen of the United States and Atlantis is a New York corporation. Item 3. Source and Amount of Funds or Other Consideration. The source of funds used for any exercise of the Warrant will be working capital. The source of funds for the $50,000 loan made to the Company as described in Item 6 was working capital of Cakewalk LLC ("Cakewalk"). If Cakewalk had not funded such loan, Atlantis would have used its working capital. Item 4. Purpose of Transaction. The purpose of the purchase by Atlantis of the warrant to purchase Common Stock of the Company, dated September 23, 1999 (the "Warrant"), was to have a substantial ownership position in a public entity which, among other things, could be used as an acquisition vehicle. Except as provided herein and in Item 6, the Filing Persons have no plans or proposals which would relate to or would result in: (a) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; - 3 - (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company; (c) a sale or transfer of a material amount of assets of the Company; (d) any change in the present board of directors or management of the Company; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company's business or corporate structure; (g) changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be delisted from a national securities exchange or cease to be authorized to be quoted on an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Act of 1933; or (j) any action similar to those enumerated above. The Filing Person intends to evaluate its investment in the securities of the Company and may, from time to time, acquire additional such securities or dispose of such securities. The consummation of the contemplated acquisition described in Item 6 would result in changes of the type contemplated by (a), (b), (d), (e), and (g) above. See also Item 6. Item 5. Interest in Securities of the Issuer. (a) The terms of the Warrant entitle Atlantis to purchase from the Company (a) 80% of the fully diluted Common Stock of the Company as constituted on September 23, 1999 after giving effect to the exercise of the Warrant, except for options to purchase 190,516 shares of the Common Stock at $2.50 per share (the "Outstanding Options"), and (b) options exercisable for a number of shares of Common Stock representing 80% of the total of such shares and the shares of Common Stock underlying the Outstanding Options. The Warrant is exercisable, in whole or in part, during the period commencing on September 23, 1999 and ending on September 29, 1999, provided however, that if the Company receives a $50,000 loan from Atlantis, its registered assignee ("Holder") or a source arranged by the aforementioned on or before September 29, 1999 such exercise period shall be extended to October 30, 1999 and provided further, that if the Company enters into an agreement for merger or acquisition (the "Acquisition") on or prior to October 30, 1999, the period during which the Warrant may be exercised shall be extended to the earlier of the closing or termination of the Acquisition, and provided, further, that if the Company has not closed a merger or acquisition by October 30, 1999, the Warrant shall expire unless the - 4 - Company receives, by November 1, 1999, an additional $50,000 loan from Holder or a source arranged by the Holder. The exercise price of the Warrant is an aggregate of $1,000,000. (b) An indeterminate amount of shares equal to 80% of outstanding shares and outstanding options at the time of exercise (c) During the 60 days preceding the filing of this report, the only transaction involving Common Stock was the acquisition of the Warrant described above. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. The terms of the Warrant are described above. Subsequent to the acquisition of the Warrant by Atlantis, Atlantis introduced to the Company an entity, Cakewalk LLC ("Cakewalk"), which Atlantis proposed as a potential acquisition candidate. In connection with a letter of intent entered into between the Company and Cakewalk on September 28, 1999 contemplating the acquisition of Cakewalk in a transaction in which the stockholders of Cakewalk would receive approximately 50% of the equity of the Company, Cakewalk loaned $50,000 to the Company which by the terms of the Warrant extended the exercise period of the Warrant to October 30, 1999. The letter of intent contemplates changes to the capital structure and management of the Company. A copy of the letter of intent is attached as an exhibit to this report and is incorporated herein by reference. The execution of a definitive acquisition agreement between Cakewalk and the Company would extend the Warrant until the closing of the acquisition provided the Company receives an additional $50,000 loan prior to November 1, 1999. Item 7. Materials to be Filed as Exhibits. 1. Warrant Agreement dated September 23, 1999 between the Company and Atlantis Equities, Inc. 2. Letter of Intent dated September 28, 1999 between the Company and Cakewalk LLC. - 5 - SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, correct and complete. Dated: October 8, 1999 ATLANTIS EQUITIES, INC., By: /s/ Nancy J. Ellin ---------------------------- Nancy J. Ellin, President - 6 - EX-1 2 WARRANT AGREEMENT THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS OF ANY STATE (THE "ACTS") AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. No. W-1 Date: September 23, 1999 WARRANT TO PURCHASE COMMON STOCK OF CDBEAT.COM, INC. This certifies that, for value received, Atlantis Equities, Inc., a Delaware corporation, or its registered assignee ("Holder"), is entitled, subject to the terms set forth below, to purchase from CDBEAT.COM, INC. (the "Company"), a Delaware corporation (a) 7,819,092 shares (the "shares") of the Common Stock of the Company ("Common Stock"), representing 80% of the fully diluted Common Stock of the Company as constituted on the date hereof after giving effect to the exercise of this Warrant (the "Warrant Issue Date"), except for options to purchase 190,516 shares of Common Stock at $2.50 per share (the "Outstanding Options"), and (b) options (the "Options") exercisable for 762,064 shares of Common Stock at $2.50 per share and expiring December 31, 2000, representing 80% of the shares of Common Stock underlying the Outstanding Options, with the Notice of Exercise attached hereto duly exercised, and simultaneous payment therefor in lawful money of the United States, at the Exercise Price as set forth in Section 2 below. The number, character and Exercise Price of such shares of Common Stock are subject to adjustment as provided below. 1. Term of Warrant and Price of Warrant. This Warrant shall be exercisable, in whole or in part, during the period commencing on the date hereof and ending on September 29, 1999, provided, however, that if the Company receives a $50,000 loan from Holder or a source arranged by Holder on or before September 29, 1999 such exercise period shall be extended to October 30, 1999 and provided, further, that if the Company enters into an agreement for a merger or acquisition (the "Acquisition") on or prior to October 30, 1999, the period during which this Warrant may be exercised shall be extended to the earlier of the closing or termination of the Acquisition, and provided, further, that if the Company has not closed a merger or acquisition by October 30, 1999, the Warrant shall expire unless the Company receives, by November 1, 1999, an additional $50,000 loan from Holder or a source arranged by Holder. 2. Exercise Price and Number of Shares. 2.1 Exercise Price. The exercise price at which this Warrant may be exercised shall be an aggregate of $1,000,000 (the "Exercise Price"). 2.2 Number of Shares and Options. The number of shares of Common Stock which may be purchased pursuant to this Warrant shall equal 7,819,092, or 80% of the fully-diluted capital stock, except for the Outstanding Options, as adjusted from time to time pursuant to Section 11 hereof. The number of Options which shall be received upon exercise in full of this Warrant shall equal 762,064 and represent 80% of the total of the Outstanding Options which can be exercised at $2.50 each and shall expire on December 31, 2000 and shall otherwise be on the same terms as such Options. 3. Exercise of Warrant. (a) The purchase rights represented by this Warrant are exercisable by the Holder in whole or in part at any time during the term of this Warrant, or from time to time, by the surrender of this Warrant and the Exercise Form. (b) This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise, as provided above, and the person entitled to receive the shares of Common Stock and Options issuable upon such exercise shall be treated for all purposes as the holder of record of such shares and Options as of the close of business on such date. As promptly as practicable on or after such date, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of shares and Options issuable upon such exercise. In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of shares and Options for which this Warrant may then be exercised. (c) If this Warrant is exercised in part this Warrant must be exercised for a number of whole shares of the Common Stock. 4. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount. 5. Rights of Stockholders. The Holder shall not be entitled to vote or receive dividends or be deemed the holder of Common Stock, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until and to the extent the Warrant shall have been exercised as provided herein. 6. Transfer of Warrant. -2- 6.1 Exchange of Warrant Upon a Transfer. Upon delivery by the transferee of a written agreement to be bound by the terms of this Warrant and surrender of this Warrant for exchange, properly endorsed and transferred in accordance with this Section 6, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, of the number of shares issuable upon exercise hereof. 6.2 Restrictions on Transfer; Compliance with Securities Laws. (a) The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Common Stock and Options to be issued upon exercise hereof are being acquired solely for the Holder's own account and not as a nominee for any other party, and for investment and agrees to comply with the transfer restrictions contained in this Section 6.2. The Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Common Stock or Options to be issued upon exercise hereof ("Securities"), except under circumstances that will not result in a violation of applicable federal and state securities laws. Prior to offering, selling or otherwise disposing of the Securities, the holder hereof or thereof will give the Company a written notice describing the manner and circumstances of the transfer accompanied by, if requested by the Company, a written opinion of legal counsel satisfactory to the Company to the effect, as amended, that the proposed transfer may be effected without registration under the Securities Act of 1933 or any state blue sky law. Any Securities transferred in violation of applicable federal and state securities laws shall be void and not recognized by the Company. Any transferee of this Warrant or Shares shall execute an agreement agreeing to be bound by the terms of this Section 6. (b) All shares of Common Stock or Options issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws): "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE COMPANY, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT." 7. Registration Rights. -3- 7.1 Certain Definitions. As used in this Section 7, the following terms shall have the following respective meanings: "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Form S-1" shall mean Form S- I issued by the Commission or any substantially similar form then in effect. "Form S-2" shall mean Form S-2 issued by the Commission or any substantially similar form then in effect. "Form S-3" shall mean Form S-3 issued by the Commission or any substantially similar form then in effect. "Holder" shall mean the record owner or owners of Registrable Securities. "Material Adverse Event" shall mean an occurrence having a consequence that either (a) is materially adverse as to the business, properties, prospects or financial condition of the Company taken as a whole or (b) is reasonably foreseeable, has a reasonable likelihood of occurring and, if it were to occur, would materially adversely affect the business, properties, prospects or financial condition of the Company taken as a whole. The terms "Register" "Registered" and "Registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act ("Registration Statement"), and the declaration or ordering of the effectiveness of such Registration Statement. "Registrable Securities" shall mean all Common Stock not previously sold to the public and issued to the Holder pursuant to the exercise of this Warrant, or Common Stock issued or Options with respect to such shares pursuant to stock splits, stock dividends and similar distributions with respect to such shares, provided, however, that shares of Common Stock which are Registrable Securities shall cease to be Registrable Securities at such time, and for so long as, such shares are eligible for sale pursuant to Rule 144(k) under the Securities Act. "Registration Expenses" shall mean all expenses incurred by the Company in complying with Section 7(b) of this Agreement, including, without limitation, all federal and state registration, qualification and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration, but shall not include Selling Expenses. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. -4- 7.2 Piggyback Registration. 7.2.1 Notice of Piggyback Registration and Inclusion of Registrable Securities. Subject to the terms of this Agreement, in the event the Company decides to Register any of its Common Stock for cash (either for its own account or the account of a security holder), other than pursuant to (i) a Registration Statement which exclusively relates to the Registration of securities under an employee stock option, purchase, bonus or other benefit plan, or (ii) a Registration relating solely to a transaction under Rule 145 promulgated by the Commission, then at any time following an Initial Public Offering and for so long as the Holder holds Registrable Securities, the Company will: (1) promptly give the Holder written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable Blue Sky or other state securities laws) and (2) include in such Registration (and any related qualification under Blue Sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request delivered to the Company by the Holder within 10 days after delivery of such written notice from the Company. 7.2.2 Underwriting in Piggyback Registration. If the Registration of which the Company gives notice is a Registered public offering involving an underwriting, the Company shall so advise the Holder as a part of the written notice given pursuant to Subsection 7.2.1. In such event the right of the Holder to Registration shall be conditioned upon such underwriting and the inclusion of a Holder's Registrable Securities in such underwriting to the extent provided in this Section 7.2. The Holder shall, together with the Company, enter into an underwriting agreement with the Underwriter's Representative for such offering. The Holder shall have no right to participate in the selection of the underwriters for an offering pursuant to this Section. 7.2.3 Marketing, Limitation in Piggyback Registration. In the event the Underwriter's Representative advises the Company and the Holder engaged in a Registration under Subsection 7.2.1 in writing that market factors (including, without limitation, the aggregate number of shares of Common Stock requested to be Registered, the general condition of the market and the status of the persons proposing to sell securities pursuant to the Registration) require a limitation of the number of shares to be underwritten, the Underwriter's Representative (subject to the allocation priority set forth in clause (iii) below) may exclude some or all of the Registrable Securities from such Registration and underwriting. 7.2.4 Allocation of Shares in Piggyback Registration. In the event that the Underwriter's Representative limits the number of shares to be included in a Registration pursuant to Subsection 7.2.1, the Holder shall be entitled to include a portion of the Registrable Securities requested to be included in -5- such Registration pro rata (based on the number of shares requested to be included) with all other persons currently holding similar written piggyback registration rights requesting Registration. Unless all Registrable Securities and such other piggybacking shares requested to be included in such Registration are so included, no other securities may be included in the Registration Statement in addition to those securities being sold on behalf of the Company. 7.2.5 Withdrawal in Piggyback Registration. If the Holder disapproves of the terms of any such underwriting, it may elect to withdraw therefrom by written notice to the Company and the underwriter delivered at least seven days prior to the effective date of the Registration Statement. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such Registration. 7.3 Demand Registration. Subject to Section 7.5.3 below, if, the Company shall receive a written request (specifying that it is being made pursuant to this Section 7(c)) from persons holding more than fifty percent (50%) of the Registrable Securities that the Company file a registration statement or similar document under the Securities Act, then the Company shall promptly notify in writing all other Holders holding Registrable Securities of such request and shall use its best efforts to cause all Registrable Securities that Holders have requested be so registered within 20 days after written notice from the Company of the proposed registration to be registered under the Securities Act. Notwithstanding the foregoing, if the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in good faith judgment of the Company's Board of Directors it would be seriously detrimental to the Company or its shareholders for a registration statement to be filed in the near future, then the Company's obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed four (4) months; provided, however, that the Company shall not obtain such a deferral more than once in any 12-month period. The Company shall be obligated to effect only two registrations pursuant to this Section 7.3. 7.4 Form S-3 Registration Rights. In the event the Company is eligible to register securities on Form S-3 and receives from Holders holding more than 50 percent (50%) of the Registrable Securities a written request that the Company effect a registration statement on Form S-3 for an offering of Registrable Securities covering the registration of not less than 50 percent (50%) of the Registrable Securities held by all -6- holders of Registrable Securities, the expected aggregate price to the public of which exceeds $1,000,000, net of any underwriting discounts and commissions, then the Company will promptly give written notice of the proposed Form S-3 registration to all Holders of Registrable Securities and will, as soon as practicable, use its best efforts to effect registration of the Registrable Securities on Form S-3, together with all or such portion of the Registrable Securities of any holder joining in such request as are specified in a written request delivered to the Company within 20 days after written notice from the Company of the proposed registration. These rights are in addition to, and not in lieu of, the rights granted under Sections 7.2 and 7.3 hereof. 7.5 Obligations of the Company and Holders. 7.5.1 Obligations of the Company. Whenever required under Section 7.3 or Section 7.4 to use its best efforts to the effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: 7.5.1.1 Prepare and file with the Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become and remain effective until the contemplated distribution is over. 7.5.1.2 Prepare and file with the Commission, in a timely manner, such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. 7.5.1.3 Furnish to the Holders and deliver as directed such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. 7.5.1.4 Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the distribution of the securities covered by the registration statement, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, and further provided that (anything in this Agreement to the contrary notwithstanding with respect to the bearing of expenses) if any jurisdiction in which the securities shall be qualified shall require that expenses incurred in connection with the qualification of the -7- securities in that jurisdiction be borne by selling shareholders, then such expenses shall be payable by selling shareholder pro rata, to the extent required by such jurisdiction. 7.5.2 Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 7.3 or Section 7.4 that the Holders shall furnish to the Company such information regarding them, the Registrable Securities held by them, and the intended method of disposition of such securities as the Company shall reasonably request and as shall be required in connection with the action to be taken by the Company. 7.5.3 Underwriting Requirements. In connection with any offering involving an underwriting of shares pursuant to Sections 7.2, 7.3 or 7.4 hereof the Company shall not be required to include any of the Holders' Registrable Securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it. If the managing underwriter or underwriters of such public offering advise the Company that, in their opinion, the amount of the Registrable Securities to be included in any such offering pursuant to the request of the Holders would adversely affect the success of such offering, the Company will include in such offering on behalf of such Holders, the amount of Registrable Securities equal to the total amount which, in the opinion of such managing underwriter or underwriters, can be sold without such adverse effect, and such Registrable Securities shall be allocated on a pro-rata basis among the Holders of the Registrable Securities requested to be included in such offering. 7.5.4 Delay of Registration. No Holder shall have any right to take any action to restrain, enjoin, or otherwise delay any registration as the result of any controversy that might arise with respect to the interpretation or implementation of Section 7.3 or Section 7.4. 7.5.5 Expenses of Registration. All Registration Expenses incurred in connection with all Registrations pursuant to Sections 7.2, 7.3 and 7.4 shall be borne by the Company, except the Holder shall bear the underwriting discounts or commissions relating to Registrable Securities sold by such Holder. 7.5.6 Registration Procedures. The Company will keep the Holder advised as to the initiation and completion of such Registration. At its expense the Company will use its best efforts to keep such Registration effective (a) until the registering Holder has completed the distribution described in the Registration Statement relating thereto or (b) until the Holder can register their Registrable Securities under Rule 144(k) of the Securities Act, whichever first occurs. -8- 7.6 Indemnification. 7.6.1 Company's Indemnification of the Holder. The Company will indemnify the Holder, and each of its directors, officers, stockholders, partners or other beneficial owners, and each person controlling the Holder, with respect to which Registration, qualification or compliance of Registrable Securities has been effected pursuant to this Warrant, and each underwriter, if any, and each person who controls any underwriter against all claims, losses, damages or liabilities, including reasonable legal fees and expenses (or actions in respect thereof) to the extent such claims, losses, damages or liabilities arise out of or are based upon any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus or other document (including any related Registration Statement) incident to any such Registration, qualification or compliance, or are based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act applicable to the Company and relating to action or inaction required of the Company in connection with any such Registration, qualification or compliance; and the Company will reimburse the Holder, each of its directors, officers, stockholders, partners or other beneficial owners, each such underwriter and each person who controls the Holder or underwriter for any legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action; provided, however, that the indemnity contained in this Subsection 7.6 shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if settlement is effected without the consent of the Company (which consent shall not unreasonably be withheld); and provided, further, that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based upon any untrue statement or omission based upon written information furnished to the Company by the Holder, underwriter or controlling person and stated to be for use in connection with the offering of securities of the Company. 7.6.2 The Holder's Indemnification of Company. The Holder will, if Registrable Securities held by the Holder are included in the securities as to which such Registration, qualification or compliance is being effected pursuant to this Warrant, indemnify the Company, each of its directors and officers, each legal counsel and independent accountant of the Company, each underwriter, if any, of the Company's securities covered by such a Registration Statement, and each person who controls the Company or such underwriter within the meaning of the Securities Act against all claims, losses, damages and liabilities, including legal fees and expenses (or actions in respect thereof), arising out of or based upon any untrue statement (or alleged untrue statement) of a material fact contained in any such Registration Statement, -9- prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Holder of any rule or regulation promulgated under the Securities Act applicable to the Holder and relating to action or inaction required of the Holder in connection with any such Registration, qualification or compliance; and will reimburse the Company, such directors, officers, partners, persons, law and accounting firms, underwriters or control persons for any legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by the Holder and stated to be specifically for use in connection with the offering of securities of the Company; provided, however, that the Holders' liability under this Section 7(f)(2) shall not exceed the Holder's proceeds from the offering of securities made in connection with such Registration. 7.6.3 Indemnification Procedure. Promptly after receipt by an indemnified party under this Section 7.6 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7.6, notify the indemnifying party in writing of the commencement thereof and generally summarize such action. The indemnifying party shall have the right to participate in and to assume the defense of such claim; provided, however, that the indemnifying party shall be entitled to select counsel for the defense of such claim with the approval of any parties entitled to indemnification, which approval shall not be unreasonably withheld; provided further, however, that if either party reasonably determines that there may be a conflict between the position of the Company and the Holders in conducting the defense of such action, suit or proceeding by reason of recognized claims for indemnity under this Section 7.6, then counsel for such party shall be entitled to conduct the defense to the extent reasonably determined by such counsel to be necessary to protect the interest of such party. The failure to notify an indemnifying party promptly of the commencement of any such action, if prejudicial to the ability of the indemnifying party to defend such action, shall relieve such indemnifying party, to the extent so prejudiced, of any liability to the indemnified party under this Section 7.6, but the omission so to notify the indemnifying party will not relieve such party of any liability that such party may have to any indemnified party otherwise other than under this Section 7.6. 7.6.4 Subsequent Transferees. The provisions of this Section 7.6 applicable to the Holder shall apply with equal force and effect to each subsequent transferee to whom any of the Registrable Securities are transferred with the consent of the Company. -10- 7.7 Current Public Information. At all times after the Company has filed a Registration Statement pursuant to the Securities Act, the Company will file all reports required under the Securities Act or the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, and will take such further action as may be reasonably required to enable any Holder of "restricted securities" (as defined in Rule 144 adopted by the Commission under the Securities Act) to sell such securities pursuant to Rule 144, as amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. 8. Reservation of Stock. The Company covenants that during the term that this Warrant is exercisable, the Company will not issue or sell any Common Stock or any options, warrants or other securities exercisable or exchangeable for, or convertible into, Common Stock and will all of its current remaining authorized and unissued Common Stock for purposes of this Agreement. The Company also covenants and agrees that it shall use its best efforts to cause a sufficient number of shares to be available to provide for the issuance of Common Stock upon the exercise of this Warrant and the Options and, from time to time, will take all steps necessary to amend its Certificate of Incorporation (the "Certificate") to provide sufficient reserves of shares of Common Stock issuable upon the exercise of the Warrant and the Options. The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant and the Options, upon exercise of the rights represented by this Warrant and the Options and payment of the Exercise Price of this Warrant and the Options, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein), and will be validly issued, fully paid and nonassessable. 9. Notices. Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted pursuant to Section 11 hereof, the Company shall issue a certificate signed by its Chief Financial Officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and number of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be mailed (by first-class mail, postage prepaid) to the Holder of this Warrant. 10. Amendments. (a) Any term of this Warrant may be amended with the written consent of the Company and the Holder. Any amendment effected in accordance with this Section 10 shall be binding upon the Holder, each future Holder and the Company. (b) No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision. -11- 11. Adjustments. The number of shares purchasable hereunder is subject to adjustment so that at all times up to the termination of the exercise period it shall equal 80% of all shares of the Company's capital stock outstanding or which could become outstanding upon the exercise, conversion or exchange of any commitment or security directly or indirectly exercisable or exchangeable for or convertible into capital stock of the Company (including this Warrant) except for the Outstanding Options. In addition, the number of shares of Common Stock underlying the Options shall be adjusted so that at all times during the exercise period such shares shall represent 80% of the number of shares of Common Stock issuable upon the exercise of such Options and the Outstanding Options. Upon any such adjustment, the Exercise Price shall be adjusted so that the aggregate exercise price of $1,000,000 is allocated over the total number of shares then purchasable. 11.1 No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 11 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holders of this Warrant against impairment. 12. Notice of Acquisition. The Company shall give Holder at least five business days prior written notice of the closing of the Acquisition and of its execution of an agreement as to an Acquisition. 13. Entire Understanding. This letter sets forth the entire understanding of the parties relating to the subject matter hereof, and supersedes and cancels the prior Warrant issued on September 22, 1999. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officers thereunto duly authorized. Dated: September 23, 1999 CDBEAT.COM, INC. By:___________________________________ Name: Title: ATLANTIS EQUITIES, INC. By:___________________________________ Name: Title: -12- EXERCISE FORM TO: CDBEAT.COM, INC. 444 Bedford Street Stamford, Connecticut 06901 Attention: President (1) The undersigned hereby elects to purchase _______ shares of Common Stock and _______ Options of CDBEAT.COM, INC. pursuant to the terms of the attached Warrant and tenders herewith payment of the purchase price for such securities in full. (2) In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares of Common Stock and Options are being acquired solely for the account of the undersigned and not as a nominee for any other party, and for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock or Options except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws. (3) Please issue a certificate or certificates representing said shares of Common Stock and Options in the name of the undersigned or in such other name as is specified below: ________________________________________ (Name) ________________________________________ (Signature) (4) Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below: ________________________________________ (Name) ________________________________________ (Date) (Signature) -13- EX-2 3 LETTER OF INTENT Cakewalk LLC 250 W. 57 St., Suite 620 New York, N.Y. 10107 September 28, 1999 Mr. Joel Arberman, President CDbeat.com, Inc. 444 Bedford Street Suite 8s Stamford, Ct. 06901 Re: Letter of Intent Dear Joel: The purpose of this letter is to set forth in writing our mutual intent to consummate a merger between CDbeat.com, Inc. ("CDbeat") and Cakewalk LLC ("Cakewalk") on the terms and conditions set forth herein. Cakewalk desires to use its status as one of the country's leading independent record labels, together with its premier roster of shareholders/investors including senior members of Lazard Freres, BankBoston and Prudential Insurance, as a platform for effectuating a content-oriented, niche-oriented consolidation/rollup within the independent segment of the record business under a parent public holding company structure. An important component of Cakewalk's strategy is the incorporation of a distinctive and effective Internet strategy in order to take advantage of existing and new methods of distributing music content. Cakewalk's game plan therefore is to incorporate a dual content and technology strategy. CDbeat owns proprietary disc/digital recognition software that allows users who are listening to music on their computer simultaneously to access various artist and genre-related Internet sites and other information. CDbeat's software also has the ability to deliver music via the Internet by means of digital download, custom CDs and related technologies. CDbeat's shares are quoted on the NASDAQ Bulletin Board under the symbol CDBT. In view of the foregoing, Cakewalk and CDbeat agree as follows: 1. CDbeat and Cakewalk will merge in a manner to be determined which shall be tax-free to the investors in Cakewalk. CDbeat will maintain its public company status, and the parties agree to make any required filings with the Securities and Exchange Commission including, without limitation, the filing required by the provisions of Section 14(f) of the Securities Exchange Act of 1934, as amended (the "14(f) Notice"), in order to effectuate the merger. 2. After the merger, the surviving company in the merger ("Newco") will immediately change its name to such new name as its new board of directors shall select. 3. Newco will be managed by Robert Miller as President and Chief Executive Officer, together with such other officers, including a chief operating officer and a chief financial officer, as shall be selected by Mr. Miller with the consent of the Newco board of directors. Joel Arberman will become Newco's Internet Officer. 4. The initial Newco board of directors will consist of the following seven members plus one observer: Joel Arberman Adam Blumenkranz Robert Ellin Peter Ezersky Jonathan Foster David Goddard Robert Miller (Chairman) Thomas Cyrana (observer) 5. Newco will also have an Advisory Board consisting of various music and technology luminaries. 6. Upon the closing of the merger, each company's equity owners will own 9,773,865 Newco common shares, constituting 50% each of the post-merger common shares, substantially as follows: CDbeat Common Shares ------ ------------- Public shareholders 561,600 Consultants 42,597 Bryan Eggers 178,026 Joel Arberman 1,172,550 Atlantis Equities 7,819,092 --------- Total 9,773,865 Cakewalk Common Shares -------- ------------- Lazard Freres group 3,751,209 BankBoston 2,138,751 Robert Miller 1,540,821 Prudential/EFI 1,471,829 Joel Dorn 620,928 Signet/MCG 250,327 --------- Total 9,773,865 7. In addition to the foregoing shares, upon the closing of the merger the following additional option shares will be outstanding: CDbeat Options ($2.50/sh. exp. 12/31/00) ------ ------- Director/Employees 33,280 Consultants 113,486 Shareholders 43,750 Atlantis Equities 762,064 ------- Total 952,580 8. In addition, Newco will issue 2,932,159 management stock options, at an exercise price per share to be agreed upon prior to closing; 1,955,750 of such options will be issued to Robert Miller, with the balance reserved to other officers of Newco and to be awarded by the Newco board of directors. 9. Cakewalk's record label, 32 Records, will continue to be managed by Joel Dorn (Music Director), Michael Weiner (General Manager) and Fran Saporito (Controller). 10. CDbeat represents that Joel Arberman and Atlantis Equities, Inc., who together beneficially own in excess of 90% of CDbeat's existing shares, have committed to vote their shares in favor of the merger. Cakewalk represents that the Investor Representatives from Lazard Freres and BankBoston, as well as Prudential Insurance/EFI, have preliminarily approved the merger. All major shareholders of Newco will agree to a one-year lockup on their post-merger shares. 11. The parties intend that the merger close as soon as practicable, and have agreed upon November 1, 1999 as the intended closing date. The parties agree to work expeditiously towards completing due diligence and the drafting of a definitive merger agreement, which the parties intend to execute on or before October 15, 1999. Thereafter, CDbeat will give the required 14(f) Notice. 12. CDbeat has prepared the attached press release regarding the transaction covered hereby, which Cakewalk consents to. 13. This letter of intent shall not create any legally binding obligations, and the contemplated merger shall be subject to the following conditions, among other things: - Approval of Cakewalk's Supervisory Board and CDbeat's board of directors - Satisfactory mutual legal and financial due diligence - All necessary approvals - Completion of the merger on a tax-free basis to Cakewalk's owners - Execution of definitive documentation, including representations and warranties, covenants, conditions and other customary terms 14. Each party will bear its own expenses, and will cooperate to provide access to all records and corporate documents. Please indicate your agreement to the foregoing by signing a copy of this letter. Sincerely, Robert Miller President & CEO ACCEPTED AND AGREED TO: CDbeat.com, Inc. By:_______________________ Joel Arberman President & CEO -----END PRIVACY-ENHANCED MESSAGE-----