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
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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 NEW YORK (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
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(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 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
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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
TIME WARNER INC., as Lender
and Security Agent,
by /s/ Xxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President and
Deputy General
Counsel
