EXHIBIT 10.2
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
This Amendment No. 1 (the "Amendment") is entered into by and among
each of CD NOW, INC., a Pennsylvania corporation (including its successors and
assigns, the "Company"), KEYSTONE VENTURE IV, L.P., a Pennsylvania limited
partnership (including its successors and assigns, "Purchaser"), XXXXX AND
XXXXXXX XXXX (the "Controlling Persons"), GROTECH PARTNERS IV, L.P., a Maryland
limited partnership (including its successors and assigns, "Grotech"), ABS
EMPLOYEES' VENTURE FUND LIMITED PARTNERSHIP, a Maryland limited partnership
(including its successors and assigns, "ABS") (Purchaser, Grotech and ABS
collectively referred to hereinafter as the "Purchasers") with respect to that
certain Stock Purchase Agreement dated as of July 15, 1997, among the Company,
the Purchaser and the Controlling Persons (the "Stock Purchase Agreement").
Capitalized terms not otherwise defined herein shall have the respective
meanings specified for such terms in the Stock Purchase Agreement.
RECITAL
In conjunction with the sale of the Series B Shares to Grotech and
ABS, each of the Company, the Purchaser and the Controlling Persons desire to
amend the Stock Purchase Agreement as set forth below and to acknowledge that
Grotech and ABS are parties to the Stock Purchase Agreement, as amended hereby.
NOW THEREFORE, in consideration of the foregoing and good and valuable
consideration, and intending to be legally bound, each of the Purchasers, the
Company and the Controlling Persons agree as follow:
1. Section 4.15 of the Stock Purchase Agreement is hereby deleted
and replaced in its entirety with the following new Section 4.15:
SECTION 4.15 Investors' Rights Agreement. The Company,
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the Purchasers and each Securityholder (as defined in the Investors' Rights
Agreement) shall have entered into the Investors' Rights Agreement in the
form attached hereto as Exhibit C.
2. Article 5 of the Stock Purchase Agreement is hereby amended by
adding, immediately following Section 5.17, the following new Sections 5.18 and
5.19:
SECTION 5.18 Grotech Warrant. The Company shall have
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issued to Grotech the Warrant in the form attached as Exhibit E hereto.
SECTION 5.19 Certificate of Incorporation. The Restated
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Articles, as amended through August 4, 1997, pursuant to the Amendment in
the form attached as Schedule 5.19 hereto, shall be in full force and
effect without
further amendment or modification thereto, and Purchasers shall have
received evidence of the filing thereof. The Restated Articles shall
provide that the authorized number of the directors of the Company shall be
eight (8), two (2) of whom shall only have the right to a one-half vote and
six (6) of whom shall have the right to a whole vote for all matters to be
voted upon by the directors. The Restated Articles shall further provide
that all Subchapters of Article 25 of the Pennsylvania Business Corporation
Law shall not be applicable to the Company.
3. Section 5.12 and Section 6.8 of the Stock Purchase Agreement are
hereby deleted and replaced in their entirety with the following new Sections
5.12 and 6.8 of the Stock Purchase Agreement.
SECTION 5.12 No Adverse Change. No Material Adverse Effect shall
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have occurred since December 31, 1996, as determined by each Additional
Purchaser. Each Additional Purchaser shall have received a Certificate
from the President and the Chief Financial Officer or Controller of the
Company dated the Subsequent Closing Date on which the Company is selling
Series B Shares to such Additional Purchasers, to the effect of the
foregoing sentence.
SECTION 6.8 Prohibited Sales. The Company covenants that except
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as otherwise consented to in writing by the holder of the Series A Shares,
which consent shall not be unreasonably withheld, (a) it shall only sell
Series B Shares pursuant to the terms of this Agreement, as amended, the
Investor Rights Agreement referred to above, and the other Transaction
Documents, (b) it shall not extend to any purchaser of Series B Shares any
rights or terms which are greater than or preferential to the rights and
terms of the Series B Shares set forth in this Agreement, the Investor
Rights Agreement, the Company's Restated Articles, as amended through
August 4, 1997, and the other Transaction Documents, and (c) shall not
enter into any contract or agreement with any purchaser of Series B Shares
other than the Transaction Documents, which shall include the Warrant for
Grotech.
4. Section 6.1 of the Stock Purchase Agreement is hereby amended by
adding the following subparagraph (d):
(d) The Company hereby covenants and agrees that it will
deliver the reports described below to the current members of Board of
Directors of the Company separately elected by the holders of a majority of
the Series A Shares and a majority of the Series B Shares issued and
outstanding at any time, or to such other person affiliated respectively
with Purchaser and Grotech as each such member may designate by written
notice to the Company:
As soon as practical after the end of each month and in any event
within thirty (30) days thereafter, a consolidated, unaudited balance sheet
of the
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Company and its subsidiaries, if any, as at the end of such month and
consolidated statements of income, expenses and cash flows of the Company
and its subsidiaries, if any, for each month and for the current fiscal
year of the Company to date, all subject to normal year-end audit
adjustments, prepared in reasonable detail in accordance with generally
accepted accounting principles consistently applied and certified by the
principal financial or accounting officer of the Company, together with a
comparison of such statements to the corresponding periods of the prior
fiscal year and to the Company's operating plan then in effect and approved
by its Board of Directors.
5. The parties to this Amendment acknowledge and agree that by
execution of this Amendment, Grotech and ABS shall be parties to the Stock
Purchase Agreement as amended hereby.
6. All other provisions of the Stock Purchase Agreement shall not be
affected by this Amendment and shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of August __, 1997.
ATTEST: [CORPORATE SEAL] CD NOW, INC.
By: By: /s/ Xxxxx Xxxx
------------------------ Title:President
Title:
WITNESS:
/s/ Xxxxx Xxxx
--------------------------- Xxxxx Xxxx
WITNESS:
/s/ Xxxxxxx Xxxx
--------------------------- Xxxxxxx Xxxx
KEYSTONE VENTURE IV, L.P.
By: Keystone Venture IV Mgmt. Co., the G.P.
of Keystone Venture IV, L.P.
By: KVM IV MCGP, Inc., the G.P. of
Keystone Venture IV Mgmt. Co.
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Vice President
[Signatures continue on next page]
[Signatures continued from previous page]
GROTECH PARTNERS IV, L.P.
By: Grotech Capital Group IV, LLC, its
General Partner
By: /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx, Managing Director
ABS EMPLOYEES' VENTURE FUND
LIMITED PARTNERSHIP
By: Alex. Xxxxx Investments, Inc., its
General Partner
By: /s/ Mayo X. Xxxxxxxx, III
Mayo X. Xxxxxxxx, III, President
