Exhibit
4.1


 


SECOND
AMENDMENT TO CONVERTIBLE SUBORDINATED NOTES


 


SECOND AMENDMENT TO CONVERTIBLE SUBORDINATED NOTES
(this “Amendment”) is made and entered into as of December 31,
2008, among ARTISTdirect, Inc., a Delaware corporation (the “Company”) and
the holders of the Company’s Subordinated Notes (as defined below) who have
executed this Amendment (the “Consenting Holders”), with reference to the
following facts:


 


A.            The
Company has issued to the holders thereof Convertible Subordinated Notes dated
as of July 28, 2005, in the original aggregate principal amount of
$30,000,000 (the “Subordinated Notes”).


 


B.            U.S.
Bank National Association, as Collateral Agent under the Note and Warrant
Purchase Agreement dated as of July 28, 2005 (the “Senior Financing Agreement”)
among the Company, the investors party thereto (the “Senior Lenders”) the
Company and the Senior Lenders have agreed to extinguish all obligations by the
Company under the Senior Financing Agreement and related documents (the “Senior
Debt Restructuring”), subject to and conditioned upon (a) the payment to
the Senior Lenders of $3,500,000; (b) the issuance to the Senior Lenders
of subordinated notes in the aggregate principal amount of $1,000,000; (c) the
issuance of 9,000,000 shares of the Company’s Common Stock; and (d) the
conversion of all of the Subordinated Notes as provided herein.


 


C.            Pursuant
to that certain First Amendment executed by a majority in interest of the
holders of the Subordinated Notes, the conversion price of the Subordinated Notes
has been reduced to $1.00 per share (the “Amended Conversion Rate”).


 


D.            The
Company and Consenting Holders representing a majority of the outstanding
aggregate principal amount of the Subordinated Notes desire that the
Subordinated Notes be further amended, as set forth herein, to provide for
the immediate conversion of the Subordinated Notes.


 


E.             The
Majority Holders have affirmatively voted by written consent without a meeting
on December     , 2008 to amend the Subordinated
Notes, in accordance with Section 17 thereof.


 


F.             In
connection with the issuance of the Subordinated Notes, the Company issued to
the holders thereof warrants to purchase the Common Stock of the Company (the “Warrants”).


 


NOW, THEREFORE, the Company and the Consenting Holders agree as
follows:


 


1.             Conversion.
Section 3 of each of the Subordinated Notes is hereby amended to read in
its entirety as follows:


 


                “Effective
upon and subject to the Senior Debt Restructuring, this Note is hereby
converted by dividing the Conversion Amount by the Amended Conversion
Rate.  As used herein, the Conversion
Amount means the sum of (A) the outstanding principal of this Note, (B) accrued
and unpaid Interest with respect to such Principal, (C) accrued and unpaid
Late Charges and (D) all amounts owed under the Registration Rights
Agreement.”


 

















 


                For
avoidance of doubt, upon such conversion of the Subordinated Notes, all
obligations of the Company under the Subordinated Notes, the Securities
Purchase Agreement and the Registration Rights Agreement together with any
other document executed thereunder shall be extinguished.


 


2.             Extinguishment
of Warrants.  Each of the Consenting
Holders agrees to cancel the Warrants issued to the Consenting Holders or their
predecessor in interest.


 


3.             Lock
Up.  Each Consenting Holder agrees to
not: (1) sell, transfer, assign, pledge or hypothecate any securities
issuable upon the conversion of the Subordinated Notes or any of the securities
issuable upon exercise of the Warrants (collectively the “Covered Securities”)
or (2) subject the Covered Securities to any hedging, short sale,
derivative, put, or call transactions that would result in the effective
economic disposition of the Covered Securities by any person during the period
beginning on effective date of the conversion and ending on the date that is 12
months after the effective date of the conversion.


 


[Signature
pages follow]


 

















 


IN WITNESS WHEREOF, the Company and Consenting Holders
have accepted and agreed to this Amendment, and have executed this Amendment as
of the day and year first above written.


 


	
  Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTISTdirect, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Dimitri
  Villard 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Dimitri
  Villard 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Interim
  CEO

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consenting Holders:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DKR
  Soundshore Oasis Holding Fund Ltd.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Mark Haddad

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Mark
  Haddad 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Vice
  President & Director 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Trilogy
  Capital Partners, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Robert S. Rein

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Robert
  S. Rein

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Vice
  Chairman

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Octavio
  Herrera

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Michael Rapp

  
	
   

  	
   

  	
  Michael
  Rapp

  



 


[Additional
signatures follow]


 

















 


[Signature page continued]


 


	
  Consenting Holders:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Broadband
  Capital Management LLC

  	
   

  	
  Longview
  Fund, L.P.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Philip
  Wagenheim 

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Philip
  Wagenheim 

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Vice
  Chairman

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
  Longview Equity Fund, L.P.

  	
   

  	
  Longview
  International Equity Fund, L.P. 

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Philip
  Wagenheim

  
	
  Randy Saaf

  	
   

  	
  Philip
  Wagenheim

  
	
   

  	
   

  	
   

  
	
  /s/ Karl Brenza

  	
   

  	
  /s/Jeffrey
  Meshel

  
	
  Karl Brenza

  	
   

  	
  Jeffrey
  Meshel

  
	
   

  	
   

  	
   

  
	
  /s/ Cliff
  Chapman

  	
   

  	
   

  
	
  Cliff
  Chapman