EXHIBIT 4.1


 


FIRST
AMENDMENT TO CONVERTIBLE SUBORDINATE NOTE


 


FIRST
AMENDMENT TO CONVERTIBLE SUBORDINATED NOTE (this “Amendment”) made and
entered into as of December 16, 2008, by ARTISTdirect, Inc., a
Delaware corporation (the “Company”) in favor of the Holders, with
reference to the following facts:


 


A.            The Company is
indebted to Holders as evidenced by the Convertible Subordinated Notes dated as
of July 28, 2005, of the Company in favor of the Holders in the original
aggregate principal amount of $30,000,000 (the “Original Notes”), to
which this Amendment is attached.


 


B.            The Company and
Holders of a majority of the now outstanding aggregate principal amount of
$16,880,000 (the “Majority Holders”) desire that the Original Notes
be amended, as set forth herein, to reflect an adjustment to the Conversion
Price.


 


C.            The Company and the
Majority Holders desire that the Original Note issued to CCM Master Qualified
Fund Ltd. and subsequently assigned to Trilogy Capital Partners, Inc. be
amended to waive the 60-day period referred to under the Original Note.


 


D.            The Company and the
Majority Holders desire that the Original Notes held by each of Randy Saaf and
Octavio Herrera be amended to allow Messrs. Saaf and Herrera to adjust the
Maximum Percentage by written notice to the Company.


 


E.             The Majority Holders
have affirmatively voted by written consent without a meeting on December 16, 2008 to amend the
Original Notes, in accordance with Section 17 thereof.


 


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


 


1.             Conversion Price.
Section 3(b)(ii) of the Original Note is hereby amended as of the
date of this Amendment to read in its entirety as follows:


 


(ii) “CONVERSION
PRICE” means, as of any Conversion Date (as defined below) or other date of determination,
and subject to adjustment as provided herein, $1.00.


 


2.             Waiver of 60-day
Waiting Period.  Section 3(d) of
the Original Note held by Trilogy Capital Partners, Inc. is hereby amended
as of the date of this Amendment by deleting the last sentence and replacing it
with the following:


 


“Notwithstanding anything
herein to the contrary, the Holder may increase or decrease the Maximum
Percentage to any other percentage (“MAXIMUM PERCENTAGE ADJUSTMENT”) by written
notice to the Company, and the Maximum Percentage Adjustment shall take effect
immediately upon receipt by the Company of such written notice.”


 


3.             Adjustment of
Maximum Percentage.   Section 3(d) of
the Original Notes held by each of Randy Saaf and Octavio Herrera is hereby
amended as of the date of this Amendment by adding the following sentence:


 


“Notwithstanding
anything herein to the contrary, the Holder may increase or decrease the
Maximum Percentage to any other percentage (“MAXIMUM PERCENTAGE ADJUSTMENT”) by
written notice to the Company, and the Maximum Percentage Adjustment shall take
effect immediately upon receipt by the Company of such written notice.”


 

















 


3. Other
Changes.  Each reference in the
Original Notes, or in any other loan document referring to the Original Notes,
to “this Note,” “hereunder,” “herein,” “hereof” or words of like import
referring to the Original Notes shall hereafter mean and be a reference to the
Original Notes as amended by this Amendment.


 


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


 


 


	
  Company:

  	
   

  	
  Majority Holders:

  
	
   

  	
   

  	
   

  
	
  ARTISTdirect, Inc.

  	
   

  	
  Trilogy Capital Partners, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ DIMITRI VILLARD

  	
   

  	
  By:

  	
    /s/ ROBERT REIN

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
    Dimitri Villard

  	
   

  	
  Name:

  	
    Robert Rein

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
    Interim Chief Executive Officer

  	
   

  	
  Its:

  	
    Vice Chairman

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   /s/ Randy Saaf

  
	
   

  	
   

  	
   

  	
  RANDY SAAF

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   /s/ Octavio Herrera

  
	
   

  	
   

  	
   

  	
  OCTAVIO HERRERA