Exhibit 10.1
February 7, 2008
ARTISTdirect, Inc.
1601 Cloverfield Blvd., Suite 400
Santa Monica, CA 90404
Attention:
Mr. Neil McCarthy
Interim Chief Financial Officer
1.
THIS AGREEMENT (THE "AGREEMENT") CONFIRMS THE ENGAGEMENT (THE
"ENGAGEMENT") OF SALEM PARTNERS LLC ("SALEM PARTNERS") ON AN EXCLUSIVE BASIS
(EXCEPT AS DESCRIBED BELOW) AS FINANCIAL ADVISOR TO ARTISTDIRECT, INC.
("ARTISTDIRECT" OR THE "COMPANY") IN CONNECTION WITH A POTENTIAL M&A TRANSACTION
INVOLVING THE COMPANY.
THE PARTIES ACKNOWLEDGE THE COMPANY'S ENGAGEMENT OF
LIBRA SECURITIES, LLC IN CONNECTION WITH SUCH POTENTIAL M&A TRANSACTION AND
RESTRUCTURING TRANSACTION SHALL NOT BE CONSIDERED A BREACH OR VIOLATION OF THIS
AGREEMENT.
FOR PURPOSES OF THE AGREEMENT, THE TERM "M&A TRANSACTION" SHALL MEAN
WHETHER EFFECTED IN ONE TRANSACTION OR A SERIES OF TRANSACTIONS, ANY SALE,
MERGER, CONSOLIDATION, REORGANIZATION OR OTHER BUSINESS COMBINATION PURSUANT TO
WHICH ALL OR ANY PORTION OF ASSETS OWNED BY THE COMPANY ARE SOLD OR OTHERWISE
TRANSFERRED TO, OR COMBINED WITH, A THIRD PARTY OR ONE OR MORE THIRD PARTIES
FORMED BY OR AFFILIATED WITH SUCH THIRD PARTY (COLLECTIVELY, A "PURCHASER"),
INCLUDING, WITHOUT LIMITATION, ANY JOINT VENTURE.
FOR PURPOSES OF THE
AGREEMENT, THE TERM "RESTRUCTURING TRANSACTION" SHALL MEAN ANY RESTRUCTURING OF
THE MATERIAL TERMS OF THE SENIOR NOTES OF THE COMPANY AND/OR THE SUBORDINATED
CONVERTIBLE NOTES OF THE COMPANY.
THE PARTIES ACKNOWLEDGE THAT BY ENTERING INTO
THE AGREEMENT, THE COMPANY HAS NOT OBLIGATED ITSELF TO ENGAGE IN ANY TRANSACTION
AND THE COMPANY MAY ACCEPT OR REJECT ANY PROPOSED TRANSACTION IN THE COMPANY'S
SOLE DISCRETION.
2.
IN CONNECTION WITH THE ENGAGEMENT, SALEM PARTNERS SHALL PERFORM
THE FOLLOWING SERVICES WITH RESPECT TO A POTENTIAL TRANSACTION:
(A)
REVIEW SELECTED DOCUMENTS AND OTHER INFORMATION PROVIDED BY THE
COMPANY;
(B)
ASSIST IN STRUCTURING, PLANNING AND NEGOTIATING A TRANSACTION.
(C)
ADVISE THE COMPANY WITH RESPECT TO A POTENTIAL TRANSACTION;
(D)
COMPLETE AND DELIVER A FAIRNESS OPINION ("OPINION") REGARDING THE
M&A TRANSACTION OR RESTRUCTURING TRANSACTION TO THE BOARD OF DIRECTORS OF THE
COMPANY, IF REQUESTED BY THE BOARD OF DIRECTORS OF THE COMPANY.
3.
THE COMPANY AGREES TO PROVIDE SALEM PARTNERS WITH SUCH FINANCIAL
AND OTHER AVAILABLE INFORMATION CONCERNING THE COMPANY AS IS REASONABLY REQUIRED
FOR SALEM PARTNERS TO RENDER THE SERVICES PERFORMED OR TO BE PERFORMED
HEREUNDER.
IN PROVIDING ITS SERVICES HEREUNDER, SALEM PARTNERS WILL NOT ASSUME
ANY RESPONSIBILITY TO INDEPENDENTLY VERIFY THE ACCURACY OR COMPLETENESS OF
INFORMATION FURNISHED BY OR ON BEHALF OF THE COMPANY OR BY ANY RELEVANT THIRD
PARTIES BUT WILL RELY ON THE ACCURACY AND COMPLETENESS OF SUCH INFORMATION IN
ALL RESPECTS.
SALEM PARTNERS WILL NOT ASSUME RESPONSIBILITY TO PERFORM (OR BE
REQUIRED TO RETAIN ANY PERSONS TO PERFORM) ANY INDEPENDENT VALUATIONS OR
APPRAISALS OF THE COMPANY'S ASSETS.
IN ADDITION, SALEM PARTNERS (I) SHALL BE
ENTITLED TO ASSUME THAT ANY FORECASTS AND PROJECTIONS SUPPLIED TO SALEM PARTNERS
BY OR ON BEHALF OF THE COMPANY OR BY ANY RELEVANT THIRD PARTIES REPRESENT THE
BEST CURRENT JUDGMENTS OF THE COMPANY OR SUCH PERSONS, AS APPLICABLE, AS TO THE
FUTURE FINANCIAL PERFORMANCE OF THE ENTITIES INVOLVED, AND THAT SUCH FORECASTS
AND PROJECTIONS HAVE BEEN REASONABLY