Exhibit 4.2
SUBORDINATED PROMISSORY
NOTE
ARTISTdirect, Inc., a Delaware
corporation (the “Company”), for value received, hereby
promises to pay to (“Holder”) the principal sum of
($ ),
pursuant to the terms of this subordinated promissory note (this
“Subordinated Promissory Note”).
1.
Installment Payment Date . On January 30, 2014 (the
“Maturity Date”) the outstanding principal balance of
this Subordinated Promissory Note, together with interest accrued
but unpaid thereon shall be paid in full.
2.
Interest. Interest shall accrue from January 30,
2009 on the unpaid principal amount at a simple rate without
compounding equal to six percent (6.0%) per annum.
3.
Subordination . The Company agrees, and the Holder of
this Subordinated Promissory Note by its acceptance hereof likewise
agrees, that the payment of Subordinated Indebtedness (as
hereinafter defined) shall be made only in accordance with this
Section 3. As used herein, “Senior
Indebtedness” shall mean all indebtedness of the Company for
money borrowed including, without limitation, all principal and
interest (including such interest as may accrue after the
initiation of bankruptcy proceedings) thereon, and all premiums,
fees and expenses owing by the Company in respect of Senior
Indebtedness. As used herein, “Subordinated
Indebtedness” shall mean all principal and interest on this
Subordinated Note and the subordinated notes of even date herewith
by and between the Company and each of
.
3.1.
Liquidation, etc . In the event of any distribution of
the assets of the Company upon any dissolution, winding up,
liquidation or reorganization of the Company (whether in
bankruptcy, insolvency or receivership proceedings), or upon any
assignment for the benefit of creditors, or upon any other
marshaling of the assets and liabilities of the Company for the
benefit of any creditor or creditors, or otherwise (a
“Liquidation”):
(a)
all Senior Indebtedness shall first be paid in full before any
payment or distribution of any character, whether in cash,
securities or other property, shall be made in respect of the
Subordinated Indebtedness;
(b)
any payment or distribution of any character, whether in cash,
securities or other property, which (except for the terms of this
Section 3.1) would be payable or deliverable in respect of the
Subordinated Indebtedness shall be paid or delivered directly to
the holders of Senior Indebtedness to the extent necessary to pay
all Senior Indebtedness in full after giving effect to any
concurrent payment or distribution in respect of such Senior
Indebtedness; and
(c)
if, notwithstanding the foregoing terms of this Section 3.1,
any payment or distribution of any character, whether in cash,
securities or other property, shall be received in a Liquidation by
the Holders of the Subordinated Indebtedness before all Senior
Indebtedness shall have been paid in full as aforesaid, such
payment or distribution shall be held in trust for the benefit of,
and shall be paid or delivered to, the holders of Senior
Indebtedness (as provided in Sections 3.3 and 3.4) to the extent
necessary to pay all Senior Indebtedness in full after giving
effect to any concurrent payment or distribution in respect of such
Senior Indebtedness, provided , however , that such
amounts paid to the holders of Senior Indebtedness shall not be
deemed to discharge the Subordinated Indebtedness.
Upon any payment or distribution of
the character referred to in this Section 3.1, the Holders of
Subordinated Indebtedness shall be entitled to rely upon a
certificate of any liquidating trustee, receiver, agent or other
person making such payment or distribution for the purpose of
determining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed in respect thereof, and
all other facts pertinent thereto and to this
Section 3.
3.2.
Standback . The Company shall not make any payment or
prepayment in respect of Subordinated Indebtedness, if, at the time
and after immediately giving effect to the payment or prepayment of
such amount, there shall exist a default or an event of default
with respect to the Senior Indebtedness under which the same is
outstanding, permitting (or which will, with the passage of time or
notice or both, permit) the holder or holders thereof (or any
representative on behalf of such holder or holders) to accelerate
the maturity or demand immediate payment thereof (a “Senior
Default”), and the Holder of Subordinated Indebtedness shall
not accept, ask, demand or sue for any payment in respect of
Subordinated Indebtedness, if the Holder is aware that, at the time
or after immediately giving effect to the payment of such amount,
there shall exist a Senior Default, unless and until all Senior
Indebtedness is paid in full or such Senior Default shall have been
cured or waived by the holders of the Senior Indebtedness. As
long as the Senior Indebtedness is outstanding, the Holders of
Subordinated Indebtedness shall not, without the prior written
consent of holders of Senior Indebtedness sufficient to bind all
holders of Senior Indebtedness, commence, or join with any other
creditor in commencing any proceeding referred to in paragraphs
(iii) or (v) of Section 4(a).
3.3.
Payments in Respect of Senior Indebtedness . For the
purposes of Section 3.1, (i) Senior Indebtedness shall
not be deemed to have been paid in full unless and until the
holders thereof shall have received cash or, if so approved by
holders of the Senior Indebtedness sufficient to bind all holders
of Senior Indebtedness and at the sole option of the Company,
marketable securities taken at their then market value, or both,
equal to the full amount of such Senior Indebtedness at the time
outstanding, and (ii) any payment or distribution required to
be pa
