Exhibit
4.1


 


AMENDMENT
NO. 2 TO


FORBEARANCE AND CONSENT AGREEMENT


 


This
AMENDMENT No. 2 (the “Amendment”) to the FORBEARANCE AND CONSENT
AGREEMENT dated April 17, 2007, as amended pursuant to AMENDMENT No. 1 dated
June 25, 2007 (the “Agreement”), is entered into as of November 30, 2007
by and among ARTISTdirect, Inc., a Delaware corporation and its
subsidiaries and affiliates (collectively, the “Company”), U.S. Bank
National Association, as Collateral Agent under the Note and Warrant Purchase
Agreement (as defined below) (in such capacity, “Collateral Agent”) and
the senior lenders signatories hereto (“Initial Purchasers”).


Recitals


A.            Company, Initial Purchasers and
Collateral Agent are parties to that certain Note and Warrant Purchase
Agreement, dated as of July 28, 2005 (the “Senior Financing Agreement”),
among Company, the investors party thereto, as Initial Purchasers, and
Collateral Agent.  The Senior Financing Agreement, together with the other
Transaction Documents (as defined in the Senior Financing Agreement) as such
documents have been amended from time to time, are collectively referred to
herein as the “Senior Financing Documents”.


B.            Company is in default and may
trigger additional defaults under certain provisions of the Senior Financing
Documents and such defaults are expected to continue.


C.            The Existing Senior Defaults
constitute “Events of Default” for purposes hereof that entitle Collateral
Agent and Initial Purchasers to enforce their rights and remedies under the
Senior Financing Documents.  According to
Schedule I of the Agreement, one of the Events of Default was a failure of the
Company to maintain an effective registration statement covering the resale of
shares of common stock underlying the various securities issued by the Company
to each holder.  This Default was cured
on July 6, 2007, when the Company’s registration statement was declared
effective by the Securities and Exchange Commission.


D.            Company, Initial Purchasers and the
Collateral Agent have previously entered in the Agreement whereby, subject to
the conditions contained therein, Collateral Agent and Initial Purchasers
agreed to forbear from the exercise of their rights and remedies relating to
the Existing Senior Defaults and any other additional Events of Default through
July 31, 2007 for the purpose of affording a period of time for Company to
obtain funds to pay the obligations under the Senior Financing Documents or to
restructure its capital structure.


E.             Subject to the terms contained
herein, Collateral Agent and Initial Purchasers are willing to agree to
continue to forbear from the exercise of their rights and remedies relating to
the Existing Senior Defaults and any other additional Events of Default through
January 31, 2008.

















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 Agreement.


“Forbearance
Period.” means the period commencing on April 17, 2007 and ending on the
earliest to occur of the following:  (i) January 31, 2008; or
(ii) any material representation or warranty made by Company in the
Agreement proves to be materially false as of the date when made.


2.             Agreement to Forbear.


(a)         Subject to the conditions set forth in Section 3 below
and subject to the terms hereof and those set forth in the Agreement, during
the Forbearance Period, Collateral Agent and Initial Purchasers hereby agree to
forbear from exercising any of their rights and remedies under the Senior
Financing Documents existing during the Forbearance Period.


3.             Conditions to Effectiveness. 
The Initial Purchasers’ agreement to forbear for the Forbearance Period shall
be subject to the following conditions being fully satisfied:


(a)         The execution and delivery to Collateral Agent of a
counterpart of this Amendment by Collateral Agent, each Initial Purchaser and
Company.


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


(c)         Company agrees to pay to the Initial Purchasers on a pro
rata basis on or before November 30, 2007, the sum of Five Hundred Thousand
Dollars ($500,000) which shall be applied in full against the penalties and
interest on the penalties resulting from the Company’s Defaults under the
Senior Financing Documents.


4.             Miscellaneous.


(a)         This Amendment 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
Amendment 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.


(b)         Except to the extent expressly amended hereby, the Agreement
shall remain in full force and effect without amendment, impairment or
modification.  Each of Company, Initial Purchasers and Collateral Agent
respectively reaffirm their obligations under the Agreement as amended hereby.


 


2

















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


	
   

  	
  JMB CAPITAL PARTNERS,
  L.P., 

  
	
   

  	
  as an Initial Purchaser 

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  By: 

  	
   

  	
  /s/ Cyrus Hadidi 

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Cyrus Hadidi 

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Partner 

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  JMG CAPITAL PARTNERS,
  L.P., 

  
	
   

  	
  as an Initial Purchaser 

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  By: 

  	
   

  	
  /s/ Jonathan Glaser 

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Jonathan Glaser 

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Member Manager of the L.P.
  

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  JMG TRITON OFFSHORE FUND,
  LTD., 

  
	
   

  	
  as an Initial Purchaser 

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  By: 

  	
   

  	
  /s/ Jonathan Glaser 

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Jonathan Glaser 

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Member Manager of the
  Investment 

  
	
   

  	
   

  	
   

  	
   

  	
  Manager 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


 


3

















	
   

  	
  CCM MASTER QUALIFIED FUND,
  LTD, 

  
	
   

  	
  as an Initial Purchaser 

  
	
    

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  By: 

  	
   

  	
  /s/ Clint Coghill

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Clint Coghill 

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  President of Investment
  Manager, 

  
	
   

  	
   

  	
   

  	
   

  	
  Director of CCM Master
  Qualified 

  
	
   

  	
   

  	
   

  	
   

  	
  Fund, LTD 

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION, 

  
	
   

  	
  as Collateral Agent for
  Initial Purchasers 

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  By: 

  	
   

  	
  /s/ Brad E. Scarbrough

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Brad E. Scarbrough 

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Vice President 

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  ARTISTDIRECT, INC., 

  
	
   

  	
  a Delaware corporation 

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
   

  	
  By: 

  	
   

  	
  /s/ Neil McCarthy

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Neil McCarthy

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Interim Chief Financial
  Officer 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


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