CONFORMED COPY
CONSENT dated as of March 13, 2000 (this
"Consent"), in respect of the Guarantee and
Collateral Agreement (the "Security Agreement") dated
as of January 21, 2000, made by CDnow, Inc. (the
"Borrower") and the other parties identified therein,
in favor of Time Warner Inc., as Security Agent (in
such capacity, the "Security Agent") for Time Warner
Inc. ("Time Warner") and Sony Music Entertainment
Inc. (together with "Time Warner", the "Lenders")
under the Convertible Loan Agreement dated as of July
12, 1999, among the Borrower and the Lenders (the
"Convertible Loan Agreement").
WHEREAS the Borrower and the Lenders have entered
into the Convertible Loan Agreement;
WHEREAS, in connection with the Convertible Loan Agreement the
Borrower and the other parties identified therein have made the Security
Agreement in favor of the Security Agent;
WHEREAS the Borrower has requested that the Lenders and the
Security Agent (i) consent to the sale of all shares of common stock of, and all
warrants to acquire shares of common stock of, Liquid Audio, Inc. (the "Shares")
to a third party that is not a subsidiary of, or in any way affiliated with, the
Borrower (the "Sale") for a purchase price that is equal to the fair market
value of such shares or warrants, as the case may be, and (ii) release from the
lien created pursuant to the Security Agreement all of the Shares that are sold
in a Sale;
WHEREAS the Lenders and the Security Agent are willing to
grant such consent on the terms, and subject to the conditions, and to the
extent set forth in, this Consent.
NOW, THEREFORE, in consideration of the premises, mutual
promises, representations, warranties and covenants contained in this Consent,
the parties hereto hereby agree:
SECTION 1. Consent and Release. (a) Each of the Lenders and
the Security Agent hereby consents to the Sale of the Shares on the terms, and
subject to the conditions, set forth in this Consent.
(b) Each of the Lenders hereby releases, and hereby authorizes
the Security Agent to execute any and all further documents necessary or
desirable to evidence the release, from the lien created pursuant to the
Security Agreement any and all Shares that are sold in a Sale, effective upon
consummation of such Sale.
SECTION 2. Representations and Warranties. To induce the other
parties to this Consent to enter into this Consent, the Borrower hereby
represents and warrants to each of the Lenders and the Security Agent that (i)
the Borrower has all requisite power and authority to execute and deliver this
Consent, (ii) the execution and delivery by the Borrower of this Consent have
been duly authorized by all necessary action on the part of the Borrower, (iii)
the Borrower has duly executed and delivered this Consent, and, assuming the due
authorization, execution and delivery by each person other than the Borrower
party hereto, this Consent constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms and (iv) the representations
and warranties set forth in the Section 4 of the Convertible Loan Agreement are
true and correct in all material respects on and as of the date of this Consent
with the same effect as though made on and as of the date hereof, except to the
extent such representations and warranties expressly relate to an earlier date.
SECTION 3. Conditions. On the date on which any Sale of Shares
is consummated, (i) the representations and warranties set forth in the Section
4 of the Convertible Loan Agreement shall be true and correct in all material
respects on and as of such date with the same effect as though made on and as of
such date, except to the extent such representations and warranties expressly
relate to an earlier date and (ii) no Default (as defined in the Convertible
Loan Agreement) or Event of Default (as defined in the Convertible Loan
Agreement) shall have occurred or be continuing.
SECTION 4. Effectiveness of Consent. This Consent shall become
effective as of the date first written above when the Security Agent shall have
received counterparts of this Consent that, when taken together, bear the
signatures of the Borrower, the Security Agent and the Lenders.
SECTION 5. Governing Law, Submission to Jurisdiction. (a) THIS
CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF
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NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS
OF LAW).
(b) Any legal action or proceeding with respect to this
Consent and any action for enforcement of any judgment in respect hereof may be
brought in the courts of the State of New York in New York County or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Consent, the Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any thereof. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Borrower at its
address set forth in Section 10.3 of the Convertible Loan Agreement. The
Borrower hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Consent brought in the courts referred
to above and hereby further irrevocably waives and agrees not to plead or claim
in any such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum. Nothing herein shall affect the right
of the Lenders or any holder of a Note (as defined in the Convertible Loan
Agreement) or the Security Agent to serve process in any other manner permitted
by law or to commence legal proceedings or otherwise proceed against the
Borrower in any other jurisdiction.
SECTION 6. Counterparts. This Consent may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
SECTION 7. Headings Descriptive. The headings of the several
Sections of this Consent are inserted for convenience only and shall not in any
way affect the meaning or construction of any provision of this Consent.
SECTION 8. Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE BORROWER, EACH LENDER AND THE SECURITY AGENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
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CONSENT OR ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER OR
THEREUNDER.
SECTION 8. Full Force and Effect. Except as expressly set
forth in this Consent, this Consent shall not by implication or otherwise limit,
impair, constitute a waiver of, or otherwise affect the rights and remedies of
the Lenders, the Security Agent or the Borrower under the Convertible Loan
Agreement, the Security Agreement or any other Loan Document (as defined in the
Convertible Loan Agreement), and shall not alter, modify, amend or in any way
affect any of the terms, conditions, obligations, covenants or agreements
contained in the Convertible Loan Agreement, the Security Agreement or any other
Loan Document, all of which are ratified and affirmed in all respects and shall
continue in full force and effect. Nothing contained in this Consent shall be
deemed to entitle the Borrower to a consent to, or a waiver, amendment,
modification or other change of, any of the terms, conditions, obligations,
covenants or agreements contained in the Convertible Loan Agreement, the
Security Agreement or any other Loan Document in similar or different
circumstances. This Consent shall constitute a "Loan Document" for all purposes
of the Convertible Loan Agreement and the other Loan Documents.
IN WITNESS WHEREOF, each of the parties hereto have duly
executed this Consent, all as of the date first written above.
CDNOW, INC.,
by /s/ Xxxxx Xxxx
-------------------------
Name: Xxxxx Xxxx
Title: President and
Chief Executive
Officer
SONY MUSIC ENTERTAINMENT INC.,
by /s/ Xxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice
President and
General Counsel
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TIME WARNER INC., as Lender
and Security Agent,
by /s/ Xxxxxxx X. Xxxx
-------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President and
Deputy General
Counsel
