Exhibit 4.1


WAIVER AND FORBEARANCE AGREEMENT


This
WAIVER AND FORBEARANCE AGREEMENT (this “Agreement”) is entered into as
of August 3, 2007 by and among ARTISTdirect, Inc., a Delaware corporation,
its subsidiaries and affiliates (collectively with ARTISTdirect, Inc., the “Company”)
and the holders of the Company’s Convertible Subordinated Notes, dated July 28,
2005 (the “Subordinated Notes”), indicated on the signature pages hereto
(the “Subordinated Note Holders”).


RECITALS


A.            The Subordinated Notes were issued
under the Securities Purchase Agreement, dated July 28, 2005, by and among the
Company, the Subordinated Note Holders and the other parties thereto (the “SPA”).


B.            The Company is currently in default
and may trigger additional defaults under certain provisions of the
Subordinated Notes, the SPA and the other Transaction Documents (as defined in
the SPA), as such documents have been amended from time to time and which are
collectively referred to herein as the “Subordinated Financing Documents.”


C.            The Existing Subordinated Defaults
(as defined hereinafter) constitute “Events of Default” for purposes hereof
that entitle the Subordinated Note Holders to enforce certain rights and
remedies under the Subordinated Financing Documents.


D.            Among other thing, under Section
2(a) of the Subordinated Notes, the interest rate charged upon such notes
increases from four percent (4%) per annum (the “Standard Interest Rate”)
to twelve percent (12%) per annum (the “Default Interest Rate”) from an
after the occurrence of an Event of Default until such Event of Default has
been cured.


E.             The Company has requested, subject
to the conditions contained herein, that the Subordinated Note Holders waive
their right to charge the Default Interest Rate and forbear from the exercise
of their other rights and remedies relating to the Existing Subordinated
Defaults and any other additional Events of Default during the Waiver Period
(as hereinafter defined) to allow the Subordinated Note Holders to consider a
restructuring of the Company’s capital structure.


F.             Subject to the terms contained
herein, the Subordinated Note Holders are willing to agree to forbear from the
exercise of their rights and remedies relating to the Existing Subordinated
Defaults and any other additional Events of Default, including, without
limitation, the right to receive the Default Interest Rate, during the Waiver
Period.


AGREEMENT


For
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:


1.             Definitions.  Capitalized terms used herein but not defined
herein shall have the meanings ascribed to them in the SPA.  The following terms as used in this Agreement
shall have the meanings set forth below:



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“Existing
Subordinated Defaults” means the existing Subordinated Events of Default
described on Schedule 1 hereto, other Subordinated Events of
Default related thereto and those Subordinated Events of Default that currently
exist or may develop during the Waiver Period (as hereinafter defined) as a
consequence of the Company’s accounting treatment of its embedded derivatives.


“Waiver
Period” means the period commencing on July 16, 2007 and terminating August
31, 2007.


“Subordinated
Event of Default” means an Event of Default under the SPA, the Subordinated
Notes or any other Transaction Document.


2.             Waiver
of Right to Receive Default Interest Rate and Agreement to Forbear.


(a)           Subject to the conditions set forth
in Section 3 below, during the Waiver Period, and subject to the
terms hereof, the Subordinated Note Holders hereby agree to:


(i)            waive their right
to accrue interest on the principal balance under the Subordinated Notes at the
Default Interest Rate (interest upon which shall accrue, instead, at the
Standard Interest Rate during this period); and


(ii)           forbear from
exercising any of their other rights and remedies under the Subordinated
Financing Documents.


(b)           Nothing in this Section 2
shall be construed to be a waiver of or acquiescence to any Existing
Subordinated Defaults, and all such Existing Subordinated Defaults shall
continue in existence; provided, that the Subordinated Note Holders, as set
forth herein, agree to waive their right to charge the Default Interest Rate
during the Waiver Period and instead charge only the Standard Interest Right
and to forbear during the Waiver Period from exercising any of their rights and
remedies under the Subordinated Financing Documents.  The Subordinated Note Holders acknowledge the
limitations contained in the Subordination Agreement, dated July 28, 2005, by
and among the Company and the initial holders of the Permitted Senior
Indebtedness (as defined in the Subordinated Note).  The Subordinated Note Holders expressly
reserve all of their rights and remedies under the Subordinated Financing
Documents and under applicable law with respect to such Existing Subordinated
Defaults, except as expressly limited in this Agreement.


(c)           From and after expiration of the
Waiver Period, the Subordinated Note Holders shall have all the rights and
remedies available to them under the Subordinated Financing Documents,
applicable law and otherwise (including the right to charge interest at the
Default Interest Rate (if applicable) for the period following the Waiver
Period).



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3.             Conditions to Effectiveness.  The Subordinated Note Holders’ agreement to
waive and forbear during the Waiver Period shall be subject to the following
conditions being fully satisfied:


(a)           The
execution and delivery to the Company of a counterpart of this Agreement by
each Subordinated Note Holder and the Company.


(b)           All representations and warranties
set forth in this Agreement shall be true and correct as of the date hereof in
all material respects.


4.             Termination.  The Subordinated Note Holders’ agreement to
so waive and forbear shall automatically terminate, without further act or
instrument, upon the occurrence of any of the following events:


(a)           Bankruptcy.


(i)            The Company or any of its
subsidiaries pursuant to or under or within the meaning of any Bankruptcy Code:


(1)           commences a voluntary
case or proceeding;


(2)           consents to the entry of an order for
relief against it in an involuntary case or proceeding;


(3)           consents to the
appointment of a Custodian of it or for all or substantially all of its
property; or


(4)           makes a general
assignment for the benefit of its creditors; or


(ii)           A court of
competent jurisdiction enters an order or decree under any Bankruptcy Code
that:


(1)           is for relief
against the Company or any of its Subsidiaries in an involuntary case or
proceeding;


(2)           appoints a Custodian
of the Company or any of its subsidiaries for all or substantially all of their
properties taken as a whole; or


(3)           orders the
liquidation of the Company or any of its subsidiaries; and in each case the
order or decree remains unstayed and in effect for 60 days.


(b)           The Company fails to timely perform
any of the other material covenants, agreements and obligations set forth in
this Agreement.



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5.             Representations and Warranties.  In consideration of the agreement of the
Subordinated Note Holders to waive and forbear from the exercise of their
rights and remedies as set forth in this Agreement, the Company hereby
represents and warrants to the Subordinated Note Holders as of the date hereof
that:


(a)           The Company has full power, authority
and legal right to enter into this Agreement.


(b)           This Agreement constitutes the legal,
valid and binding obligation of the Company and is enforceable against the
Company in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditors’ rights and subject to general equitable
principles.


6.             Amendments.  This Agreement may be amended after the date
hereof only by a written amendment, fully executed and delivered by the
parties.


7.             Subordinated Financing Documents
Still in Force.  Notwithstanding
anything to the contrary in this Agreement, the Subordinated Financing
Documents are in full force and effect in accordance with their respective
terms, remain valid and binding obligations of the Company, and are hereby
reaffirmed and ratified by the parties. 
The Subordinated Financing Documents shall remain unmodified unless and
until otherwise expressly modified in accordance with the terms of the
respective Subordinated Financing Document.


8.             Voluntary Agreement.  Each party to this Agreement represents and
warrants to each other party that it is represented by legal counsel of its
choice, that it has consulted with counsel regarding this Agreement, that it is
fully aware of the terms contained herein and that it has voluntarily and
without coercion or duress of any kind entered into this Agreement.


9.             Effect on and Ratification of
the Subordinated Financing Documents. 
The Company acknowledges, confirms and agrees (without limiting or
modifying the provisions of the Subordinated Financing Documents or the rights
and remedies otherwise available to the Subordinated Note Holders) that the
Subordinated Note Holders: (a) have not made any representations, promises
or agreements, and shall have no obligation, to extend the Waiver Period, or
otherwise to grant the Company any extension, delay, deferral or other
indulgence (other than those contemplated by this Agreement), and
(b) after expiration of the Waiver Period, may proceed immediately to
enforce all rights and remedies available to them under the Subordinated
Financing Documents for collection, foreclosure or otherwise (except as
provided for in this Agreement).


10.           Miscellaneous.


(a)           Counterparts.  This Agreement may be signed in multiple
counterparts, each of which shall constitute an original and all of which,
taken together, shall constitute one and the same instrument.  One or more counterparts of this Agreement
may be delivered by facsimile, with the intention that they shall have the same
effect as an original counterpart thereof and shall be binding on the person
delivering the same.



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(b)           Governing Law; Jurisdiction; Jury
Trial.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
by registered or certified mail, return receipt requested to such party at the
address for such notices to it under the SPA and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law.  EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


[SIGNATURE
PAGE FOLLOWS]



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IN
WITNESS WHEREOF, each of the parties hereto has caused this Waiver and
Forbearance Agreement to be duly executed and delivered by its duly authorized
officer as of the date first above written.


	
  

  	
  ARTISTDIRECT, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Robert Weingarten

  
	
   

  	
  Name:

  	
   

  	
  Robert Weingarten

  
	
   

  	
  Title:

  	
   

  	
  Chief Financial Officer

  



 


	
  

  	
  DKR SOUNDSHORE OASIS HOLDING FUND, LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Barbara Burger

  
	
   

  	
  Name:

  	
   

  	
  Barbara Burger

  
	
   

  	
  Title:

  	
   

  	
  Authorized Signatory of DKR Oasis Management Co.,
  LP, its investment manager

  



 


	
  

  	
  CCM MASTER QUALIFIED FUND, LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Clint D. Coghill

  
	
   

  	
  Name:

  	
   

  	
  Clint D. Coghill

  
	
   

  	
  Title:

  	
   

  	
  Director

  



 



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  CLIFF CHAPMAN

  
	
   

  	
   

  
	
   

  	
  /s/ Cliff Chapman

  
	
   

  	
  Cliff Chapman

  



 


	
  

  	
  LONGVIEW FUND, LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Wayne H. Coleson

  
	
   

  	
  Name:

  	
   

  	
  Wayne H. Coleson

  
	
   

  	
  Title:

  	
   

  	
  Chief Investment Officer

  



 


	
  

  	
  LONGVIEW EQUITY FUND, LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Wayne H. Coleson

  
	
   

  	
  Name:

  	
   

  	
  Wayne H. Coleson

  
	
   

  	
  Title:

  	
   

  	
  Chief Investment Officer

  



 


	
  

  	
  LONGVIEW INTERNATIONAL EQUITY FUND, LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Wayne H. Coleson

  
	
   

  	
  Name:

  	
   

  	
  Wayne H. Coleson

  
	
   

  	
  Title:

  	
   

  	
  Chief Investment Officer

  



 



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  RANDY SAAF

  
	
   

  	
   

  
	
   

  	
  /s/ Randy Saaf

  
	
   

  	
  Randy Saaf

  



 


	
  

  	
  OCTAVIO HERRERA

  
	
   

  	
   

  
	
   

  	
  /s/ Octavio Herrera

  
	
   

  	
  Octavio Herrera

  



 


	
  

  	
  MICHAEL RAPP

  
	
   

  	
   

  
	
   

  	
  /s/ Michael Rapp

  
	
   

  	
  Michael Rapp

  



 


	
  

  	
  PHILIP WAGENHEIM

  
	
   

  	
   

  
	
   

  	
  /s/ Philip Wagenheim

  
	
   

  	
  Philip Wagenheim

  



 


	
  

  	
  KARL BRENZA

  
	
   

  	
   

  
	
   

  	
  /s/ Karl Brenza

  
	
   

  	
  Karl Brenza

  



 



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  JEFFREY MESHEL

  
	
   

  	
   

  
	
   

  	
  /s/ Jeffrey Meshel

  
	
   

  	
  Jeffrey Meshel

  



 



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Schedule 1


List of Existing Subordinated
Defaults


Listed
below are the current defaults with respect to each of the sections of the SPA
indicated below which have occurred and are continuing and known to the
Company.  The parties hereto acknowledge
that additional defaults may occur during the Waiver Period.  The parties further acknowledge that the
Company, by listing these defaults, is not admitting that such defaults
necessarily give rise to an Event of Default as that term is defined under the
Subordinated Financing Documents.


·                                          Section 4(c):  The Company did not timely file all reports
required to be filed with the SEC pursuant to the 1934 Act.


·                                          Section 4(n):  The Company has not held an annual meeting of
stockholders in accordance with the requirements of law.


Listed
below are the current defaults with respect to each of the sections of the
Registration Rights Agreement, dated July 28, 2005, by and among the Company,
the Subordinated Note Holders,  JLF
Partners I, LP, JLF Partners II, LP and JLF Offshore Fund, Ltd. (the “Registration
Rights Agreement”) indicated below which have occurred and are continuing
and known to the Company.  The parties
hereto acknowledge that additional defaults may occur during the Waiver
Period  . The parties further acknowledge
that the Company, by listing these defaults, is not admitting that such defaults
necessarily give rise to an Event of Default as that term is defined under the
Subordinated Financing Documents.


·                                          Section 2(f).  The Company triggered a Maintenance Failure
(as defined in the Registration Rights Agreement) and has not paid the Registration
Delay Payments (as defined in the Registration Rights Agreement) nor the
interest payments thereon.


·                                          Section 8(b).  The Company did not timely file all reports
required to be filed with the SEC pursuant to the 1934 Act.


Listed
below are the current of defaults with respect to each of the sections of the
Subordinated Notes indicated below which have occurred and are continuing and
known to the Company.  The parties hereto
acknowledge that additional defaults may occur during the Waiver Period.  The parties further acknowledge that the
Company, by listing these defaults, is not admitting that such defaults
necessarily give rise to an Event of Default as that term is defined under the
Subordinated Financing Documents.


·                                          Section 4(a)(i):  The Company has not maintained its
eligibility to use the registration statement filed with the SEC for the resale
of the Registrable Securities for a period of ten (10) consecutive Trading Days
or for more than an aggregate of thirty (30) Trading days in any three hundred
and sixty-five (365)-day period.



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·                                          Section
4(a)(vi):  The Company
has triggered a default of Indebtedness (as defined in the Subordinated Note)
with an unpaid principal amount in excess of $1,000,000 at the time of such
default.


·                                          Section 4(a)(x):  The Company has materially breached one or
more representations, warranties or covenants of the Transaction Documents and
such breach continued for a period of ten (10) consecutive Business Days.


·                                          Section 8(f):  The Company has violated certain financial
covenants contained in this section.



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