====================+===========================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
CDNOW, INC.
(Name of Issuer)
COMMON STOCK
NO PAR VALUE
(Title of Class of Securities)
-----------------------
125086
(CUSIP Number)
BERTELSMANN, INC.
BINC ACQUISITION CORP.
(Names of Persons Filing Statement)
Robert J. Sorrentino
Bertelsmann, Inc.
1540 Broadway
New York, NY 10036
Tel. No.: (212) 787-1130
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
July 19, 2000
(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 statement because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following: [ ]
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<PAGE>
SCHEDULE 13D
CUSIP No. 125086 Page 2 of 9 Pages
----------------- -----------------
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BERTELSMANN, INC.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
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3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DE
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NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH
----------------------------------------
8 SHARED VOTING POWER
5,920,050
----------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------
10 SHARED DISPOSITIVE POWER
5,920,050
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,920,050
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.0%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
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2
<PAGE>
SCHEDULE 13D
CUSIP No. 125086 Page 3 of 9 Pages
---------------- -----------------
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BINC ACQUISITION CORP.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
PA
--------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH ----------------------------------------
8 SHARED VOTING POWER
5,920,050
----------------------------------------
9 SOLE DISPOSITIVE POWER
----------------------------------------
10 SHARED DISPOSITIVE POWER
5,920,050
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,920,050
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.0%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
--------------------------------------------------------------------------------
3
<PAGE>
Item 1. Security and Issuer.
The class of equity securities to which this statement relates is the
common stock, no par value (the "Shares"), of CDnow, Inc., a Pennsylvania
corporation (the "Issuer"). The principal executive offices of the Issuer are
located at 1005 Virginia Drive, Ft. Washington, Pennsylvania 19034.
Item 2. Identity and Background.
(a)-(c) and (f)The names of the persons filing this statement are
Bertelsmann, Inc., a Delaware corporation ("Bertelsmann") and BINC Acquisition
Corp., a Pennsylvania corporation ("BINC"). Bertelsmann and BINC are
hereinafter sometimes referred to as the "Reporting Persons". Each of
Bertelsmann and BINC is a wholly- owned subsidiary of Bertelsmann AG,
corporation organized under the laws of the Federal Republic of Germany.
The address of the principal business and the principal office of
Bertelsmann is 1540 Broadway, New York, New York 10036. The name, business
address, present principal occupation or employment, and citizenship of each
director and executive officer of Bertelsmann is set forth on Schedule A.
Bertelsmann is the U.S. holding company for companies that are principally
engaged in the following sectors: book and magazine production and publishing;
printing; music and entertainment; TV, film and radio; and "new media".
The address of the principal business and the principal office of BINC is
1540 Broadway, New York, New York 10036. The name, business address, present
principal occupation or employment, and citizenship of each director and
executive officer of BINC is set forth on Schedule B. BINC is newly-formed
corporation organized for the purposes of consummating the offer and the merger
described in Item 4.
(d)-(e) During the last five years, none of the Reporting Persons nor, to
the best knowledge of any of the Reporting Persons, any of the persons set
forth on Schedule A or Schedule B was convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors). During the last five
years, none of the Reporting Persons nor, to the best knowledge of any of the
Reporting Persons, any of the persons set forth on Schedule A or Schedule B,
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, U.S. Federal or State
securities laws or finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Not applicable.
Item 4. Purpose of Transaction.
On July 19, 2000, Bertelsmann, BINC and the Issuer entered into an
Agreement and Plan of Merger (the "Merger Agreement"). The merger agreement
contemplates an acquisition of the Issuer by Bertelsmann (the "Acquisition") at
a price of $3.00 per share in cash, which will be effected by (i) a tender
offer (the "Offer") by BINC for all of the issued and outstanding Shares (other
than the Shares owned by Bertelsmann or one of its subsidiaries or held by the
Issuer as treasury stock), and (ii) a merger of BINC with and into the Issuer
(the "Merger"). The Merger Agreement is attached as Exhibit 1.
On July 19, 2000, Bertelsmann entered into a Shareholder Agreement with
Jason Olim, president and chief executive officer and a director of the Issuer,
and Matthew Olim, a director and Technical Lead of the Issuer (the "Shareholder
Agreement"). Pursuant to the Shareholder Agreement, on the terms set forth
therein, each of Jason Olim and Matthew Olim has agreed to tender and not
withdraw his Shares in the Offer and to vote his Shares in favor of the Merger
Agreement and the Merger at any meeting of the Issuer's shareholders called for
that purpose. In addition, each of Jason Olim and Matthew Olim has granted
Bertelsmann a proxy to vote his Shares in favor of the Merger Agreement and the
Merger. As of July 19, 2000, Jason Olim owned 2,960,025 Shares and Matthew Olim
4
<PAGE>
owned 2,960,025 Shares, representing collectively 18.0% of the then outstanding
Shares. The Shareholder Agreement is attached as Exhibit 2.
On July 19, 2000, Bertelsmann and the Issuer entered into a Convertible
Loan Agreement (the "Convertible Loan Agreement"). Pursuant to the Convertible
Loan Agreement, Bertelsmann has agreed to make to the Issuer (i) a term loan in
an amount of up to approximately $30,000,000, and (ii) working capital loans in
an aggregate principal amount not to exceed $12,000,000. On the terms of the
Convertible Loan Agreement, loans made thereunder are convertible into Shares
at a conversion price of $1.50 per Share up to a maximum of 49% of the
outstanding Shares on a fully diluted basis. The Convertible Loan Agreement is
attached as Exhibit 3. Pursuant to a Guarantee and Collateral Agreement dated
July 19, 2000 between Bertelsmann, the Issuer and certain subsidiaries of the
Issuer (the "Guarantee and Collateral Agreement"), all obligations of the
Issuer under the Convertible Loan Agreement are secured by substantially all of
the assets of the Issuer and all of the Issuer's domestic subsidiaries and
guaranteed by all of the Issuer's domestic subsidiaries. The Guarantee and
Collateral Agreement is attached as Exhibit 4. The Issuer has granted
Bertelsmann three demand registrations and unlimited piggy-back registrations
with respect to the Shares issuable upon conversion of the Convertible Loan
Agreement pursuant to a Registration Rights Agreement, dated as of July 19,
2000, between Bertelsmann and the Issuer (the "Registration Rights Agreement").
The Registration Rights Agreement is attached as Exhibit 5.
Item 5. Interest in Securities of the Issuer.
(a)(i) Bertelsmann has acquired and, for the purpose of Rule 13d-3
promulgated
under the Exchange Act, beneficially owns 5,920,050 Shares, representing
approximately 18% of the outstanding Shares of the Issuer.
(a)(ii) BINC has acquired and, for purposes of Rule 13d-3 promulgated
under the Exchange Act, beneficially owns 5,920,050 Shares, representing
approximately 18% of the outstanding Shares of the Issuer.
Except as set forth in this Item 5(a) and in Item 5(c), neither of the
Reporting Persons, nor any other person controlling any Reporting Person nor,
to the best knowledge of any Reporting Person, any persons named in Schedule A
or Schedule B hereto, owns beneficially any Shares.
(b)(i) Bertelsmann has shared power to vote and dispose of 5,920,050
Shares.
(b)(ii) BINC has shared power to vote and dispose of 5,920,050 Shares.
(c) On June 27, 2000, Thomas D. Coiro, Vice President of Corporate
Benefits of Bertelsmann, purchased 200 Shares at a purchase price of $2 13/16
per Share in an open market transaction. Except for the 5,920,050 Shares
subject to the Shareholder Agreement described in Item 4 above and as described
in this Item 5(c), during the past sixty days, neither the Reporting Persons
nor, to the best knowledge of any of the Reporting Persons, any of the persons
set forth on Schedule A or Schedule B has effected any transactions in the
Shares.
(d) Inapplicable.
(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or Relation-ships with
Respect to Securities of the Issuer.
Except for the arrangements described in Item 4 above, to the best
knowledge of the Reporting Persons, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) between the persons
enumerated in Item 2, and any other person, with respect to any securities of
the Issuer, including, but not limited to, transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
(
5
<PAGE>
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Agreement and Plan of Merger dated as of July 19, 2000
between the Bertelsmann, BINC and the Issuer. *
Exhibit 2: Shareholder Agreement dated as of July 19, 2000, between
Bertelsmann and Jason Olim and Matthew Olim.*
Exhibit 3: Convertible Loan Agreement, dated as of July 19, 2000,
between Bertelsmann, as Lender, and the Issuer, as
Borrower.*
Exhibit 4: Guarantee and Collateral Agreement dated July 19, 2000
among the Issuer and certain of its Subsidiaries in favor
of Bertelsmann, as Security Agent.*
Exhibit 5: Registration Rights Agreement dated as of July 19, 2000,
between Bertelsmann and the Issuer.*
------------------
* Incorporated by reference to the Tender Offer Statement on
Schedule TO of Bertelsmann and BINC filed with the Commission on
July 26, 2000.
6
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: July 28, 2000
BERTELSMANN, INC.
By: /s/ Robert J. Sorrentino
------------------------------
Name: Robert J. Sorrentino
Title: President and CEO
BINC ACQUISITION CORP.
By: /s/ Robert J. Sorrentino
------------------------------
Name: Robert J. Sorrentino
Title: Director and President
7
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF BERTELSMANN, INC.
The name, business address, current principal occupation or employment
and five-year employment history of each director and executive officer of
Bertelsmann, Inc. and certain other information are set forth below. All
directors and officers listed below are citizens of Germany, unless otherwise
indicated. Directors are identified by an asterisk.
<TABLE>
<S> <C> <C>
Current-Principal-Occupation-or-Employment Period Served
Name and Business Address and Five-Year Employment History Age In Such Office(s)
-------------------------------- ------------------------------------------ ---- -----------------
Michael Dornemann * President and CEO, BMG Music 54 1987 to 1998
BMG Entertainment Chairman, BMG Music 1989 to date
1540 Broadway Director and Member of the Executive 1988 to date
New York, NY 10036 Committee of the Board of Directors,
Bertelsmann, Inc.
Member of the Executive Board, 1985 to date
Bertelsmann AG
Siegfried Luther * Chief Financial Officer, Bertelsmann AG 55 1990 to date
Bertelsmann AG Director and Member of the Executive 1990 to date
Carl-Bertelsmann Str. 270 Committee of the Board of Directors,
33311 Gutersloh Germany Bertelsmann, Inc.
Chief Financial Officer, Bertelsmann, Inc. 1998 to date
Robert J. Sorrentino *1 Partner, Coopers & Lybrand 46 1994 to 1996
Bertelsmann, Inc. Vice President, Taxes, Bertelsmann, Inc. 1996 to 1997
1540 Broadway Executive Vice President and Chief 1997 to 1998
New York, NY 10036 Operating Officer, Bertelsmann, Inc.
President and CEO, Director and Member 1998 to date
of the Executive Committee of the Board
of Directors, Bertelsmann, Inc.
Aydin S. Caginalp *1 Partner, Walter Conston Alexander & 49 1984 to date
Walter Conston Alexander & Green, Green, P.C.
P.C. Director and Secretary, Bertelsmann, Inc. 1998 to date
90 Park Avenue
New York, NY 10016
Thomas Middelhoff * Member of the Executive Board, 47 1994 to 1998
Bertelsmann AG Bertelsmann AG
Carl-Bertelsmann Str. 270 President and CEO and Chairman of the 1998 to date
33311 Gutersloh Germany Board of Bertelsmann AG 1998 to date
Chairman of the Board, Bertelsmann, Inc.
--------
1 Citizen of the United States.
A-1
<PAGE>
Current-Principal-Occupation-or-Employment Period Served
Name and Business Address and Five-Year Employment History Age In Such Office(s)
-------------------------------- ------------------------------------------ ---- -----------------
Gerd Schulte-Hillen * Deputy Chairman of the Executive Board, 59 1987 to date
Bertelsmann AG Bertelsmann AG
Carl-Bertelsmann Str. 270 Director and Vice Chairman of the Board, 1991 to date
33311 Gutersloh Germany Bertelsmann, Inc.
K. Peter Blobel Executive Vice President and General 52 1995 to date
Bertelsmann AG Auditor, Bertelsmann AG 1998 to date
Carl-Bertelsmann Str. 270 Executive Vice President, Internal Audit,
33311 Gutersloh Germany Bertelsmann, Inc.
Jacqueline Chasey1 Vice President, Legal Affairs and Assistant 48 1994 to date
Bertelsmann, Inc. Secretary, Bertelsmann, Inc.
1540 Broadway
New York, NY 10036
Thomas Coiro1 Vice President, Corporate Benefits, 52 1993 to date
Bertelsmann, Inc. Bertelsmann, Inc.
1540 Broadway
New York, NY 10036
Gert Stuerzebecher Vice President, Corporate Management 41 1994 to 1999
Bertelsmann, Inc. Development, Bertelsmann AG
1540 Broadway Vice President, Corporate Management 1999 to date
New York, NY 10036 Development, Bertelsmann, Inc.
William Tung1 Vice President, Corporate Real Estate 50 1994 to date
Bertelsmann, Inc.
1540 Broadway
New York, NY 10036
Liz Young1 Director, Corporate Liaison and Research 40 1990 to 1997
Bertelsmann, Inc. Group, Mazda (North America), Inc.
1540 Broadway Executive Director, Marketing and 1997 to 1998
New York, NY 10036 Communications, CIBC Oppenheimer
Vice President, Corporate Communications, 1998 to date
Bertelsmann, Inc.
-------------------
1 Citizen of the United States.
</TABLE>
A-2
<PAGE>
SCHEDULE B
DIRECTORS AND EXECUTIVE OFFICERS OF BINC ACQUISITION CORP.
The name, business address, current principal occupation or employment and
five-year employment history of each director and executive officer of BINC
Acquisition Corp. and certain other information are set forth below. All
directors and officers listed below are citizens of the United States.
Directors are identified by an asterisk.
<TABLE>
Current-Principal-Occupation-or-Employment Period Served
Name and Business Address and Five-Year Employment History Age In Such Office(s)
-------------------------------- ------------------------------------------ ---- -----------------
<S> <C> <C> <C>
Jacqueline Chasey * Vice President, Legal Affairs and Assistant 48 1994 to date
Bertelsmann, Inc. Secretary, Bertelsmann, Inc.
1540 Broadway Director and Secretary, BINC Acquisition July 18, 2000 to date
New York, NY 10036 Corp.
Robert J. Sorrentino * Partner, Coopers & Lybrand 46 1994 to 1996
Bertelsmann, Inc. Vice President, Taxes, Bertelsmann, Inc. 1996 to 1997
1540 Broadway Executive Vice President and Chief 1997 to 1998
New York, NY 10036 Operating Officer, Bertelsmann, Inc.
President and CEO, Director and Member 1998 to date
of the Executive Committee of the Board
of Directors, Bertelsmann, Inc.
Director and President, BINC Acquisition July 18, 2000 to date
Corp.
</TABLE>
B-1
