Exhibit 4.7


 


AMENDMENT NO. 1


AND WAIVER


TO CONVERTIBLE SUBORDINATED NOTE


 


THIS AMENDMENT NO. 1 AND WAIVER (“Amendment and Waiver”) is made and entered into as of this 7th
day of April, 2006, by and among ARTISTdirect, Inc., a Delaware corporation
(the “Company”), and DKR SoundShore Oasis
Holding Fund, Ltd. (“Buyer”). Capitalized
terms used herein and undefined shall have the meanings set forth in the Securities
Purchase Agreement (defined in the Recitals below).


 


RECITALS:


 


WHEREAS, reference is made to that certain
Securities Purchase Agreement dated as of July 28, 2005 by and between the
Company and the Buyers (the “Securities Purchase
Agreement”);


 


WHEREAS, pursuant to the terms of the Securities
Purchase Agreement, the Company issued a convertible subordinated note on July
28, 2005 to each of the Buyers (collectively, the “Subordinated
Notes”);


 


WHEREAS, the parties wish to amend Sections 8(f)(i),
8(f)(iii), 8(f)(iv) and 8(f)(v) of the Subordinated Notes;


 


WHEREAS, Section 17 of the Subordinated Notes permits
any provision of the Subordinated Notes to be amended upon the written consent
of the holder or holders representing at least a majority of the principal
amount of the Subordinated Notes outstanding;


 


WHEREAS, pursuant to the terms of the Subordinated
Notes, any amendment of a provision of the Subordinated Notes by the holder or
holders representing at least a majority of the principal amount of the Subordinated
Notes outstanding shall be binding on all of the other Buyers; and


 


WHEREAS, the Buyer holds $6,880,000 of the principal
amount of the Subordinated Notes outstanding.


 


NOW, THEREFORE, in consideration of the foregoing recitals
and the mutual agreement herein contained and for other good and valuable
consideration, the parties hereto agree as follows:


 


1.             AMENDMENT.


 


(a)           Section 8(f)(i)
of the Subordinated Notes shall be amended and restated in its entirety as
follows:


 


“Minimum Working Capital. The Company will not permit its
Consolidated Working Capital, calculated as of the last day of any fiscal
quarter ending after the Closing Date, to be less than $750,000. For purposes
of this Section 8(f)(i) only, the calculation of Consolidated Working Capital shall
exclude any warrant liability or change therein and any effect on the financial
statements of the Company resulting from or otherwise related to (i) the
Omnibus Amendment dated as of the date hereof involving the Warrants, (ii) the
repricing of the warrants on the date hereof that were issued by the Company on
July 28, 2005 pursuant to the Note and Warrant Purchase Agreement and to Libra
FE, LP and (iii) any related amendment to or waiver dated as of the date hereof
involving the Securities Purchase Agreement,


 


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the
Note and Warrant Purchase Agreement, any transaction document related thereto,
or the registration rights agreement with Libra FE, LP.”


 


(b)           Section 8(f)(iii)
of the Subordinated Notes shall be amended and restated in its entirety as
follows:


 


“Minimum Leverage Ratio. The Company will not permit its
Consolidated Leverage Ratio, calculated as of the end of any fiscal quarter
ending after the Closing Date, to exceed (x) 3.00 for fiscal quarters ending on
or before December 31, 2005, (y) 2.75 for fiscal quarters ending on or after
March 31, 2006, and on or before December 31, 2006, or (z) 2.50 for fiscal
quarters ending on or after March 31, 2007.  For purposes of this Section 8(f)(iii)
only, the calculation of Consolidated Leverage Ratio shall exclude any warrant
liability or change therein and any effect on the financial statements of the
Company resulting from or otherwise related to (i) the Omnibus Amendment dated
as of the date hereof involving the Warrants, (ii) the repricing of the
warrants on the date hereof that were issued by the Company on July 28, 2005
pursuant to the Note and Warrant Purchase Agreement and to Libra FE, LP and
(iii) any related amendment to or waiver dated as of the date hereof involving
the Securities Purchase Agreement, the Note and Warrant Purchase Agreement, any
transaction document related thereto, or the registration rights agreement with
Libra FE, LP.”


 


(c)           Section 8(f)(iv) of the Subordinated Notes
shall be amended and restated in its entirety as follows:


 


“Minimum EBITDA. The Company will not permit its Consolidated
EBITDA for any fiscal quarter (calculated for the Test Period ending on the
last day of such fiscal quarter; provided that for the Test Period ending on
September 30, 2005, Consolidated EBITDA shall be (x) Consolidated EBITDA for
the three-fiscal-quarter period ending on September 30, 2005 times (y) 4/3) to
be less than (x) $5,000,000 for fiscal quarters ending on or before December
31, 2005, (y) $4,500,000 for fiscal quarters ending on or after March 31, 2006,
and on or before December 31, 2006, or (z) $4,000,000 for fiscal quarters
ending on or after March 31, 2007.  For purposes of this Section 8(f)(iv)
only, the calculation of Consolidated EBITDA shall exclude any warrant
liability or change therein and any effect on the financial statements of the
Company resulting from or otherwise related to (i) the Omnibus Amendment dated
as of the date hereof involving the Warrants, (ii) the repricing of the
warrants on the date hereof that were issued by the Company on July 28, 2005
pursuant to the Note and Warrant Purchase Agreement and to Libra FE, LP and
(iii) any related amendment to or waiver dated as of the date hereof involving
the Securities Purchase Agreement, the Note and Warrant Purchase Agreement, any
transaction document related thereto, or the registration rights agreement with
Libra FE, LP.”


 


(d)           Section 8(f)(v)
of the Subordinated Notes shall be amended and restated in its entirety as
follows:


 


“Minimum Fixed Charge Coverage Ratio. The Company will not
permit its Consolidated Fixed Charge Coverage Ratio for any fiscal quarter to
be less than (x) 1.20 for fiscal quarters ending on or before December 31,
2005, or (y) 1.25 for fiscal quarters ending on or after March 31, 2006. 
For purposes of this Section 8(f)(iv) only, the calculation of Consolidated
Fixed Charge Coverage Ratio shall exclude any warrant liability or change
therein and any effect on the financial statements of the Company resulting
from or otherwise related to (i) the Omnibus Amendment dated as of the date
hereof involving the Warrants, (ii) the repricing of the warrants on the date
hereof that were issued by the Company on July 28, 2005 pursuant to the Note
and Warrant Purchase Agreement and to Libra FE, LP and (iii) any related
amendment to or waiver dated as of the date hereof involving the Securities
Purchase Agreement,


 


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the
Note and Warrant Purchase Agreement, any transaction document related thereto,
or the registration rights agreement with Libra FE, LP.”


 


2.             WAIVER.
The Buyers agree to forever waive any Event of Default under the Notes
that such Buyers are aware of that may have been triggered prior to the date
hereof due to a breach of the negative covenant contained in Sections 8(f)(i), 8(f)(iii),
8(f)(iv) or 8(f)(v) of the Subordinated Notes resulting from any accrual of
warrant liability.


 


3.             CONFLICTS. Except as
expressly set forth in this Amendment and Waiver, the terms and provisions of
the Subordinated Notes shall continue unmodified and in full force and effect. In
the event of any conflict between this Amendment and Waiver and the Subordinated
Notes, this Amendment and Waiver shall control.


 


4.             GOVERNING
LAW. This Amendment and Waiver shall be governed and construed under the
laws of the State of New York, and shall be binding on and shall inure to the
benefit of the parties and their respective successors and permitted assigns.


 


5.             COUNTERPARTS. This Amendment
and Waiver may be executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute one instrument.


 


[Remainder of page left blank intentionally.]


 


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IN WITNESS WHEREOF, the parties hereto have executed this Amendment and
Waiver as of the date first set forth above.


 


 


	
  COMPANY:

  
	
   

  
	
  ARTISTdirect, Inc.

  
	
   

  
	
  By:

  	
  /s/ Robert N.
  Weingarten

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Robert N.
  Weingarten

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
  BUYER:

  
	
   

  
	
  DKR SoundShore Oasis Holding Fund, Ltd.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Barbara
  Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Barbara Burger

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Director

  	
   

  
				



 


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