Exhibit 10.3
AMENDED & RESTATED

EMPLOYMENT AGREEMENT
     This Amended and Restated Employment Agreement (this “Agreement”) is
entered into as of June 9, 2008 between The Orchard Enterprises, Inc., a
Delaware corporation (“The Orchard”), and Nathan Fong, a resident of 208
Melbourne Road, Great Neck, New York 11021 (the “Executive”), and amends and
restates the prior Employment Agreement between the parties dated as of
February 20, 2008 (the “Effective Date”). Recitals
     A. The Orchard desires to continue to employ the Executive in the position
of Chief Financial Officer for The Orchard.
     B. The Executive desires to be employed by The Orchard as its Chief
Financial Officer.
     C. The Orchard and the Executive desire to amend and restate the terms of
the prior employment agreement to allow for Executive’s 2008 incentive bonus to
be payable as determined under The Orchard’s management incentive bonus plan.
Agreement
     In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:
     1. Position and Duties. During the term of this Agreement, The Orchard will
employ Executive, and Executive will serve The Orchard as its Chief Financial
Officer, or such other position as assigned by the CEO. As such, Executive shall
have such responsibilities, duties and authority as reasonably accorded to and
expected of this position. Subject to the terms of Sections 7.5 and 8.4 hereof,
additional or different duties, titles or positions may from time to time be
assigned to or taken from Executive by the CEO of The Orchard. Executive will
report directly to the CEO. The Orchard will not materially change Executive’s
role as a critical executive in the finance function as relates to activities
including but not limited to managing finance function staff; managing
quarterly, annual and other relevant financial reporting to the SEC; overseeing
pro forma financial projections; and the like; although it is understood that
The Orchard may assign and re-assign different roles to its financial executives
including Executive, as well as vary titles, specific duties, reporting lines,
and the like.
     2. Performance of Duties. Executive will be based at and perform his duties
under this Agreement primarily at the New York, NY offices of The Orchard.
Executive hereby represents and warrants that he is free to enter into and fully
perform this Agreement and the agreements referred to herein without breach of
any agreement or contract to which he is a party or by which he is bound.
Executive hereby further represents and warrants that he has provided The
Orchard with copies of any employment, confidentiality, non-competition or
non-solicitation agreements currently binding upon him.
     3. Exclusive Service. Executive shall devote his full time and efforts
(from a business perspective) exclusively to this employment and apply all his
skills, effort and experience to the performance of his duties and advancing The
Orchard’s interests. Executive

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shall not be engaged in any other business activity pursued for salary, fees,
profit, gain or other pecuniary advantage if such activity interferes with
Executive’s duties and responsibilities hereunder. Executive will not engage in
any professional consulting activity nor serve on any corporate boards except
with the prior written approval of The Orchard’s CEO, and Executive will
otherwise refrain from engaging in any activities inconsistent or in conflict
with the performance of his duties hereunder. However, the foregoing limitations
shall not be construed as prohibiting Executive from making personal investments
in a passive form or manner that will not require his services in the operation
or affairs of the companies or enterprises in which such investments are made or
from engaging in charitable, civic or community activities that do not interfere
with his duties to The Orchard.
     4. Compliance with Policies. The Orchard has established policies,
procedures and practices, and Executive will comply with and be bound by all
such policies, procedures and practices from time to time in effect during
Executive’s employment to the extent The Orchard has informed Executive thereof.
Executive will be employed in a position of leadership within The Orchard and
will be expected to faithfully adhere to, execute and fulfill all corporate
policies established by The Orchard, now and in the future, in addition to
establishing systems for monitoring compliance with such policies by other
officers, employees and directors, particularly The Orchard’s Code of Business
Conduct.
     5. Confidential or Proprietary Information and Inventions.
               5.1 Company Information. Executive agrees at all times during the
term of his employment and thereafter, to hold in strictest confidence and not
to use, except for the benefit of The Orchard, or to disclose to any person,
firm or corporation (except within the scope of his employment) without written
authorization of the CEO of The Orchard, any Confidential Information of The
Orchard. Executive understands that “Confidential Information” means any The
Orchard financial or operating information, contents of music libraries, data
bases, technical data, trade secrets or know-how, including, but not limited to,
research, product plans, products and processes, services, customer lists,
channel partner lists, target acquisition lists and customers, channel partners
and target acquisitions (including, but not limited to, customers, channel
partners and target acquisitions of The Orchard on whom Executive called or with
whom Executive became acquainted during the term of his employment), market
data, software, inventions, music processing techniques, formulas, technology,
designs, drawings, engineering, hardware configuration information, marketing,
financial reports or other business information disclosed to Executive by The
Orchard or prepared by Executive during his employment by The Orchard, either
directly or indirectly, in writing, orally, by drawings, or by observation of
documents, technology or equipment. The Orchard and Executive acknowledge that
Confidential Information does not include any of the foregoing items which have
become publicly known and made generally available through no wrongful act of
Executive’s or of others who were under confidentiality obligations as to the
item or items involved.
               5.2 Third Party Information. Executive recognizes that The
Orchard has received and in the future will receive from third parties
(including, but not limited to, vendors, customers, channel partners and
acquisition targets) their confidential or proprietary information subject to a
duty on The Orchard part to maintain the confidentiality of such information and
to use it only for certain limited purposes. Executive agrees to hold all such
confidential or proprietary information in the strictest confidence and not to
disclose it to any person, firm or corporation or to use it except as necessary
in carrying out his work for DMGI consistent with The Orchard agreement with
such third party.
               5.3 No Prior Inventions. Executive represents that, as of the
Effective Date of this Agreement, other than musical composition and sound
recording copyrights, he has no inventions, original works of authorship,
developments, improvements or

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trade secrets which were made by him prior to his employment with The Orchard,
which relate to The Orchard’s business, operations, digitization processes,
music library or research and development.
               5.4 Future Inventions. The Orchard shall own all right, title and
interest (including patent rights, copyrights, trade secret rights, mask work
rights, sui generis database rights and all other intellectual and industrial
property rights of any sort) to any and all inventions (whether or not
patentable), works of authorship, mask works, designs, know-how, ideas and
information made or conceived or reduced to practice, in the whole or in part,
by Executive during the term of his employment with The Orchard to and only to
the fullest extent allowed by applicable law; provided, however, the foregoing
shall only apply to any of the foregoing that are directly related to the
business of The Orchard (collectively referred to herein as “ Inventions ”).
Executive agrees that he will promptly make full written disclosure to The
Orchard, will hold in trust for the sole right and benefit of The Orchard, and
hereby assign to The Orchard or its designee, all his right, title, and interest
in and to any and all Inventions. To the extent allowed by law, this section
includes all right of paternity, integrity, disclosure and withdrawal and any
other rights that may be known as or referred to as “moral rights” or the like.
To the extent Executive retains any such moral rights under applicable law,
Executive hereby ratifies and consents to any action that may be taken with
respect to such moral rights by or authorized by The Orchard and agrees not to
assert any moral rights with respect thereto. Executive will confirm any such
ratifications, consents and agreements from time to time as requested by The
Orchard.
               5.5 Maintenance of Records. Executive agrees to keep and maintain
adequate and current written records of all Inventions made by him (solely or
jointly with others) during the term of his employment with The Orchard. The
records will be in the form of notes, sketches, drawings and any other format
that may be specified by The Orchard. The records will be available to and
remain the sole property of The Orchard at all times.
               5.6 Patent and Copyright Registrations. Executive agrees to
assist The Orchard, or its designee, at The Orchard’s expense, in every proper
way to secure The Orchard’s rights in any Inventions and any copyrights,
patents, mask work rights or other intellectual property rights relating thereto
in any and all countries, including the disclosure to The Orchard of all
pertinent information and data with respect thereto, the execution of all
applications, specifications, oaths, assignments and all other instruments which
The Orchard shall reasonably deem necessary in order to apply for and obtain
such rights and in order to assign and convey to The Orchard, its successors,
assigns and nominees the sole and exclusive rights, title and interest in and to
such Inventions, and any copyrights, patents, mask work rights or other
intellectual property rights relating thereto. Executive further agrees that his
obligation to execute or cause to be executed, when it is in his power to do so,
any such instrument or papers shall continue after the termination of this
Agreement. If Executive is unable because of his mental or physical incapacity
or for any other reason to secure his signature to apply for or to pursue any
application for any United States or foreign patents or copyright registrations
covering Inventions or original works of authorship assigned to The Orchard as
above, then Executive hereby irrevocably designates and appoints The Orchard and
its duly authorized officers and agents as his agent and attorney in fact, to
act for and in his behalf and stead to execute and file any such applications
and to do all other lawfully permitted acts to further the processing and
issuance of letters patent or copyright registrations thereon with the same
legal force and effect as if executed by Executive.
     6. Compensation and Benefits.
               6.1 Base Salary. Beginning on the Effective Date, The Orchard
shall pay Executive a base salary of two hundred and twenty five thousand
dollars ($225,000) per

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year, adjusted as provided herein (the “Base Salary”), payable as earned in
accordance with The Orchard’s customary payroll practice. On at least an annual
basis, the Compensation Committee of the Board of Directors will review
Executive’s performance and consider an increase to the then current Base Salary
as it deems warranted by individual and corporate performance, market conditions
and other factors. No reductions will be made to Executive’s Base Salary unless
it is part of a company-wide expense reduction plan authorized by the Board of
Directors of The Orchard, applying ratably to the base salaries of all senior
executives and to the fees earned by Directors; provided, however, that in no
event may Executive’s Base Salary be reduced by more than fifteen percent (15%)
at any one time or in the aggregate over any twenty-four (24) month period
without his consent.
               6.2 Additional Benefits. Executive will be eligible to
participate in The Orchard’s employee benefit plans of general application to
The Orchard’s senior executives in effect from time to time, as amended,
including without limitation, those plans covering pension and profit sharing,
executive perquisites, stock purchases, and, beginning as of March 1, 2008,
those plans covering life, health, and dental insurance in accordance with the
rules established for individual participation in any such plan and applicable
law. Once Executive is eligible for health and dental insurance coverage
hereunder, Executive’s spouse and dependents shall also be eligible for such
coverage in accordance with the terms of The Orchard’s policies and plans and
the contracts with third party providers. In addition, beginning on the
Effective Date, Executive will receive such other benefits, including holidays
and sick leave, as The Orchard generally provides to its senior executives.
               6.3 Incentive Bonus Plan. For 2008 and all subsequent years
during the Term, subject to the terms of The Orchard’s management incentive
bonus plan, as amended from time to time (the “Bonus Plan”), Executive will be
eligible to earn cash bonuses on an annual basis, payable as determined under
the Bonus Plan, but not until such time as the Compensation Committee of the
Board of Directors of The Orchard determines the targets, milestones,
performance objectives and measurement criteria to be met each fiscal year and
approves the payment of specific cash bonuses after the end of each fiscal year
based upon the objective calculations and discretionary judgments as called for
in the Bonus Plan. For 2008, Executive’s target bonus under and subject to the
Bonus Plan will be $75,000. Any such 2008 discretionary bonus, if earned, will
be payable within two and one half (21/2) months following the year in which it
vests or is no longer subject to a substantial risk of forfeiture.
               6.4 Expenses. Executive shall prepare and submit timely expense
reports and The Orchard will reimburse Executive for all reasonable and
necessary travel and other expenses incurred by Executive in connection with The
Orchard’s business, provided that such expenses are in accordance with The
Orchard’s applicable expense reporting and reimbursement policy and are properly
documented and accounted for in accordance with the requirements of the Internal
Revenue Service.
               6.5 Vacation. Executive will be entitled to paid vacation as set
forth in The Orchard’s policies and/or employee manual (as they may be
applicable to The Orchard’s executive officers and key employees), as approved
by the Board of Directors.
               6.6 Equity Incentive Awards. On the Effective Date, Executive
will receive options to purchase 33,333 shares of The Orchard’s Common Stock
(“Common Stock”) and 33,333 restricted shares of Common Stock, with such options
and shares being granted and awarded pursuant to and under the terms and
conditions of The Orchard’s Amended and Restated 2005 Stock Plan (the “Stock
Plan”). Such stock options and shares of restricted Common Stock shall vest
33.3% after the first twelve months and then quarterly in eight (8 equal
installments of 8.33%) such that they will be fully vested thirty six
(36) months from the Effective Date; except that in the event of a Termination
Without Cause under Section 7.4 below

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or Termination for Good Reason under Section 7.5 below, the vesting of the
foregoing stock options and shares of restricted Common Stock shall be
accelerated by six (6) months. The stock options will expire on the seventh
anniversary of the Effective Date.
     7. Term and Termination. This Agreement will commence on the Effective Date
and will continue until the earlier of three (3) years after the Effective Date
or when terminated pursuant to any one of the following:
               7.1 Death. The death of Executive shall immediately terminate
this Agreement.
               7.2 Disability. If, as a result of Disability, as determined by
The Orchard, Executive shall have been absent from his full-time duties
hereunder or unable to materially fulfill his full-time duties (as determined by
The Orchard) hereunder for three (3) consecutive months, then thirty (30) days
after receiving written notice (which notice may occur on or after the end of
such three (3) month period), The Orchard may terminate Executive’s employment
hereunder provided Executive is unable to resume his full-time duties at the
conclusion of such notice period. Also, Executive may initiate termination of
his employment under this Section 7.2 if as a result of Disability his health
should become impaired to an extent that makes the continued performance of his
duties hereunder hazardous to his physical or mental health, provided that
Executive shall have furnished The Orchard with a written statement from a
qualified doctor to such effect and provided, further, that, at The Orchard’s
request made within ten (10) days from the date of receipt of such written
statement, Executive shall submit on a timely basis to an examination by a
qualified doctor selected by The Orchard who is acceptable to Executive or
Executive’s doctor (such acceptability will not be unreasonably withheld) and
such doctor shall have concurred with the conclusion of Executive’s doctor. For
purposes of this Agreement, “Disability” means the Executive is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months. In
order to receive Disability benefits, Executive must cooperate with The Orchard
in making such Disability determination, including providing such medical
evidence as may reasonably be requested by The Orchard or submission to a
medical examination(s) by a qualified doctor(s) selected by The Orchard.
Executive must comply with any such requests within ten (10) days.
               7.3 For Cause. The Orchard may terminate Executive’s employment
under this Agreement for “cause,” which shall be defined herein as follows:
(a) Executive’s material breach of this Agreement; (b) Executive’s negligence or
insubordination in the performance or nonperformance (continuing for ten
(10) days after receipt of written notice from The Orchard of the need to cure)
of any of Executive’s assigned duties and responsibilities hereunder;
(c) Executive’s dishonesty, fraud, misrepresentation or misconduct with respect
to the business and affairs of The Orchard; (d) Executive’s violation of a
material provision of The Orchard’s Code of Business Conduct or other written
corporate policy; (e) Executive’s violation of any federal, state or local law
or regulation applicable to The Orchard’s business; (f) Executive’s conviction
of any felony crime; (g) Executive entering a plea of nolo contendere to a
felony crime or any other crime involving any act of moral turpitude;
(h) Executive’s misuse, misappropriation or embezzlement of funds or property
belonging to The Orchard or any of its subsidiaries and affiliates; or
(i) alcohol abuse or drug abuse by Executive which adversely affects the
performance of his assigned duties and responsibilities hereunder or compromises
the integrity and reputation of The Orchard, its employees or its services (any
of the foregoing, “Termination for Cause”).
               7.4 Without Cause. This Agreement may be terminated by The
Orchard thirty (30) days after the effective date of a written notice sent to
Executive stating that

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DMGI is terminating his employment, without cause, which notice can be given by
The Orchard at any time after the Effective Date at The Orchard’s sole
discretion, for any reason or for no reason (“Termination Without Cause”).
               7.5 For Good Reason. Executive may elect to terminate his
employment with The Orchard on the effective date of a written notice sent to
The Orchard from Executive stating that he is terminating employment for “good
reason,” which shall be defined herein as follows: (a) Executive’s level of
compensation (including Base Salary, fringe benefits and participation in
non-discretionary bonus programs under which awards are payable pursuant to
objective financial or performance standards) is reduced without his consent;
provided, however, that a reduction of Executive’s compensation in accordance
with Section 6.1 will not constitute “good reason”; (b) Executive is required to
relocate his principal office of employment with The Orchard outside of New
York, NY without his consent; (c) The Orchard materially changes Executive’s
role as a critical executive in the finance function as referenced and subject
to the terms of the last sentence of Section 1 above; or (d) a breach by The
Orchard of any material provision of this Agreement which remains uncorrected
for thirty (30) days following written notice by Executive of such breach
(“Termination for Good Reason”).
               7.6 Voluntary. This Agreement may be terminated by Executive on
the effective date of a written notice sent to The Orchard from Executive
stating that Executive is electing to terminate his employment with The Orchard
without “good reason” as defined in Section 7.5 hereof (“ Voluntary Termination
”).
     8. Effect of Termination.
               8.1 Termination as a Result of Death. In the event of any
termination of this Agreement pursuant to Section 7.1 hereof, no severance
compensation is due to Executive’s estate; provided, however, that The Orchard
will continue to pay accrued but unpaid salary, accrued vacation and any other
accrued but unpaid benefits and unreimbursed expenses through the last day of
the month in which Executive’s death occurs.
               8.2 Termination as a Result of Disability. In the event of any
termination of this Agreement pursuant to Section 7.2 hereof, The Orchard shall
continue to pay Executive his Base Salary under Section 6.1 hereof at
Executive’s then-current salary and maintain his benefits under Section 6.2
hereof (i) through the remaining term of this Agreement which ends on the third
anniversary of the Effective Date, or (ii) for six (6) months, whichever period
is shorter. In the event of a disability termination pursuant to Section 7.2
hereof, Executive will not be eligible to receive any ongoing benefits
subsequent to the effective date of termination, other than continued
participation in any applicable The Orchard disability plan, nor will there be
any proration of any potential annual incentive bonus under Section 6.3 hereof
for the fiscal year in which such termination occurs; provided, however, that
The Orchard will continue to pay accrued but unpaid salary, accrued vacation and
any other accrued but unpaid benefits and unreimbursed expenses through the last
day of the month in which Executive’s termination occurs.
               8.3 Termination for Cause or Voluntary Termination. In the event
of any termination of this Agreement pursuant to Sections 7.3 or 7.6 hereof, The
Orchard shall pay Executive the compensation and benefits otherwise payable to
Executive under Section 6 hereof through the date of termination, except that
there will be no proration of any potential annual incentive bonus under
Section 6.3 hereof for the fiscal year in which such termination occurs.
               8.4 Termination Without Cause or for Good Reason. In the event of
any termination of this Agreement pursuant to Sections 7.4 or 7.5 hereof:

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          (a) The Orchard shall continue to pay Executive his Base Salary under
Section 6.1 hereof at Executive’s then-current salary and maintain his benefits
under Section 6.2 hereof (i) through the remaining term of this Agreement which
ends on the third anniversary of the Effective Date, or (ii) for six (6) months,
whichever period is shorter. If such benefits contemplated under Section 6.2
hereof cannot be maintained under the provisions and eligibility of the specific
plans (see Section 8.6 below), then The Orchard shall pay during the
post-termination period the cash equivalent of the company’s cost of benefits
under any such company plan;
          (b) The Orchard will pay unreimbursed expenses and accrued vacation
through the date of termination pursuant to Sections 6.4 and 6.5 of this
Agreement;
          (c) For the fiscal year of termination, The Orchard shall pay the pro
rata portion of the annual incentive bonus otherwise due to Executive pursuant
to Section 6.3 hereof, such pro rata bonus amount to be determined at the sole
discretion of the Compensation Committee of the Board of Directors based upon
the targets, milestones, performance objectives and measurement criteria
established for the fiscal year and The Orchard’s and Executive’s, as the case
may be, actual performance against such targets, milestones, performance
objectives and measurement criteria. Notwithstanding the forgoing, in the event
of termination of this Agreement pursuant to Section 7.5, this subsection
(c) will not be applicable unless The Orchard determines, in its reasonable
judgment, that the Executive’s termination meets the requirements for Good
Reason as set forth in Section 7.5.
          (d) The vesting of the Restricted Stock Award Agreement and the Stock
Option Agreement that Executive enters into with The Orchard for the equity
incentive awards set forth in Section 6.6 hereof shall, in the event of a
termination of employment pursuant to Sections 7.4 or 7.5 hereof, be accelerated
by six (6) months pursuant to the next to last sentence of Section 6.6.
Notwithstanding the forgoing, in the event of termination of this Agreement
pursuant to Section 7.5, this subsection (d) will not be applicable unless The
Orchard determines, in its reasonable judgment, that the Executive’s termination
meets the requirements for Good Reason as set forth in Section 7.5.
          (e) In all cases, post-termination payments to Executive will be
reduced for applicable withholding taxes and will be payable on The Orchard’s
normal payroll dates or bonus payment dates during the periods; provided,
however, that if the total amount of the benefits available to Executive under
this Section 8.4, either alone or together with other payments which Executive
has the right to receive from The Orchard, would constitute a “parachute
payment” as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the “ Code ”), then The Orchard shall pay to Executive at the time of
termination an additional amount such that the net amount retained by Executive,
after deduction of the excise tax imposed by Section 4999 of the Code and any
federal, state and local income tax and excise tax imposed on such additional
amount, shall be equal to the amount payable to the Executive under this
Section 8.4 as originally determined prior to the deduction of the excise tax.
All such amounts payable by The Orchard shall be paid within thirty (30) days of
the Executive’s separation from service except as provided in Section 8.4(d). In
the event of any termination of this Agreement pursuant to Sections 7.4 or 7.5,
Executive shall have no duty or obligation whatsoever to seek similar or
substitute employment or otherwise mitigate his damages.
          (f) If upon termination Executive is a “specified employee” within the
meaning of Code section 409A(a)(2)(B)(i) and the regulations promulgated
thereunder, then the payments under Sections 8.4(a) and (c) will not begin
sooner than the date that is six (6) months following the date of termination.
In the event of a delay in payment provided under this Section 8.4(d), The
Orchard shall, on the first day of the seventh month following such termination,
pay Executive in a lump sum all amounts that would have been paid under
Section 8.4(a) and (c)

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through such date if such six-month delay had not occurred; provided, further
that all such amounts payable by The Orchard under Section 8.4(c) shall be paid
by the end of the Executive’s taxable year next following the Executive’s
taxable year in which the Executive remits the related taxes or, in the case of
a tax audit or litigation addressing the existence or amount of a tax liability,
by the end of the Executive’s taxable year following the Executive’s taxable
year in which the taxes that are the subject of audit or litigation are remitted
to the taxing authority (or where as a result of such audit or litigation no
taxes are remitted, the end of the Executive’s taxable year following the
Executive’s taxable year in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the litigation).
          (g) Executive will only be deemed to have incurred a separation from
service under Sections 8.2, 8.4 (a) and 8.4 (c) if it is reasonably anticipated
that Executive will not provide significant services for The Orchard or an
affiliate following such termination (a “Separation from Service”). Whether a
termination of employment is considered a Separation from Service will be
determined in accordance with Internal Revenue Code Section 409A, and such
determination will be based upon the facts and circumstances surrounding the
termination of employment. While Executive is on military leave, sick leave, or
another bona fide leave of absence, the employment relationship is treated as
continuing intact if the period of leave does not exceed six months, or, if
longer, so long as Executive has a guaranteed right to return to employment
either by law or by contract.
          (h) As a condition of receiving any payments described under
Section 8.4, Executive agrees to execute, deliver and not to revoke (within the
time period permitted by applicable law) a general release of The Orchard and
its officers, directors, employees, and owners from any and all claims,
obligations and liabilities of any kind whatsoever arising from or in connection
with the Executive’s employment or termination of employment with The Orchard or
this Agreement (including without limitation civil rights claims), in such form
as requested by The Orchard (with the attached Exhibit A as an example of one
such form), it being understood that such release shall not apply to Executive’s
rights to any payments or benefits due under this Agreement or any employee
benefit plan or program in which the Executive is a participant, any rights
Executive may have to indemnification and to coverage under directors’ and
officers’ liability and similar insurance maintained by The Orchard.
               8.5 Termination as a Result of Expiration of Agreement. If this
Agreement is allowed to expire three (3) years from the Effective Date without
being renewed or otherwise extended, then all the specific rights and
obligations of the parties under this Agreement shall cease, including, without
limitation, Executive’s obligations under Section 9, and Executive shall become
an at-will employee of The Orchard subject to its human resources and other
corporate policies and its Employee Handbook in effect at such time.
               8.6 Rights under the Stock Plan and Benefit Plans. In the event
of termination and the requirement for any benefits to be provided under this
Section 8, except as otherwise expressly provided herein, Executive’s rights
hereunder and under the Stock Plan, which governs stock options and restricted
stock awards, and all other benefit plans of general application, including The
Orchard’s employee health and dental insurance coverage, shall be subject to and
determined in accordance with the provisions and eligibility of those plans, the
related award agreements and the provisions of applicable law.
     9. Covenant Not to Compete or Solicit.
               9.1 During the term of this Agreement and for a period of time
thereafter equal to the longer of (a) twelve (12) months and (b) the period
during which the Executive continues to be entitled to compensation or benefits
pursuant to Section 8 hereof (the

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“Non-Competition Period”), Executive shall not, other than on behalf of The
Orchard or any entity owned by or directly affiliated with The Orchard, directly
or indirectly, without the prior written consent of The Orchard: (i) engage in,
anywhere in the United States or the world in which The Orchard or any of its
affiliates and subsidiaries are conducting business (the “Restricted Area”),
whether as an employee, agent, consultant, advisor, independent contractor,
proprietor, partner, officer, director or otherwise, or have any ownership
interest in (except for ownership of two and one-half percent (2.5%) or less of
any publicly-held entity), or participate in or facilitate the financing,
operation, management or control of, any firm, partnership, corporation, entity
or business that engages or participates in, a Competing Business Purpose (as
defined below); or (ii) approach, contact or solicit clients or customers of The
Orchard or any of its affiliates and subsidiaries, including content owners and
channel outlets with which they have a relationship, in connection with a
Competing Business Purpose. For purposes of this Agreement, “Competing Business
Purpose” shall mean the acquisition of digital rights to Independently Owned
Content (as defined below) (whether by purchase, license or through digital
distribution arrangements), the processing of Independently Owned Content into
digital format for placement in online music, mobile or video stores and other
channel outlets, and the distribution of digital music and video content to
online music, mobile or video stores and other channel outlets for purchase by
consumers via electronic means such as transmissions, mobiletones and streaming.
Notwithstanding anything to the contrary herein, a Competing Business Purpose
shall not include the activities of any business unit or division of a major
record label group (as of the date hereof, Sony BMG, Universal Music Group,
Warner Music Group or EMI Recorded Music) or other entity, so long as the
activities of such business unit or division are not related to the acquisition,
processing or distribution of Independently Owned Content. For purposes hereof,
“Independently Owned Content” means music content not owned or controlled by one
of the four major record label groups and video content not owned or controlled
by a major movie or television studio (as of the date hereof, Paramount Motion
Pictures Group, Fox Filmed Entertainment, Sony Pictures Entertainment,
NBC/Universal, Warner Brothers Entertainment, and Buena Vista Motion Pictures
Group, together with the television production affiliates thereof).
          9.2 During the Non-Competition Period, Executive shall not, directly
or indirectly, either for himself or for any other person or entity, without the
prior written consent of The Orchard, solicit, encourage or take any other
action which is intended to induce or encourage, or has the effect of inducing
or encouraging, any employee of The Orchard or any of their affiliates or
subsidiaries to terminate his or her employment with The Orchard or such
affiliate or subsidiary, for any purpose.
          9.3 The covenants contained in Sections 9.1 and 9.2 hereof shall be
construed as a series of separate covenants, one for each country, province,
state, city or other political subdivision of the Restricted Area. Except for
geographic coverage, each such separate covenant shall be deemed identical in
terms to the covenant contained in Section 9.1 and Section 9.2, respectively.
If, in any judicial proceeding, a court refuses to enforce any of such separate
covenants (or any part thereof), then such unenforceable covenant (or such part)
shall be eliminated from this Agreement to the extent necessary to permit the
remaining separate covenants (or portions thereof) to be enforced. In the event
that the provisions of this Section 9 are deemed to exceed the time, geographic
or scope limitations permitted by applicable law, then such provisions shall be
reformed to the maximum time, geographic or scope limitations, as the case may
be, permitted by applicable laws.
          9.4 All of the covenants in this Section 9 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Executive against The Orchard,
whether predicated on this Agreement or

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otherwise, shall not constitute a defense to the enforcement by The Orchard of
such covenants. Because of the difficulty of measuring economic loss to DMGI as
a result of any breach of the covenants in this Section 9, and because of the
immediate and potentially irreparable damage that could be caused to The Orchard
for which it would have no other adequate remedy, Executive agrees that these
covenants may be enforced by The Orchard in the event of a breach by him, by
injunctions and/or restraining orders. It is further agreed by the parties that
the covenants in this Section 9 impose a reasonable restraint on Executive in
light of the activities and business of The Orchard on the date of execution of
this Agreement and the current plans and The Orchard Executive also acknowledges
that the limitations of time, geography and scope of activity agreed to in this
Agreement are reasonable because, among other things: (A)  The Orchard is
engaged in a highly competitive industry, (B) Executive has unique access to,
and will continue to have access to, the trade secrets and know-how of The
Orchard, including, without limitation, the plans and strategy (and, in
particular, the competitive strategy) of The Orchard, and (C) in the event
Executive’s employment with The Orchard is terminated, Executive should be able
to obtain suitable and satisfactory employment without violation of this
Agreement.
     10.  Return of DMGI Property. All records, documents, designs, patents,
business plans, financial information, manuals, correspondence, memoranda, data
bases, lists and other property delivered to or compiled by Executive by or on
behalf of The Orchard or its representatives, vendors, customers, channel
partners and acquisition targets which pertain to the business of The Orchard
shall be and remain the property of The Orchard and be subject at all times to
its discretion and control. Upon termination of Executive’s employment for any
reason, all such material which has been collected or accumulated by Executive
shall be delivered promptly to The Orchard without request by it.
     11. Miscellaneous.
               11.1 Arbitration. Executive and The Orchard agree that any
unresolved dispute, controversy or claim arising out of, or relating to, this
Agreement or any alleged breach hereof shall be settled exclusively by binding
arbitration, provided, however, that The Orchard and Executive retain their
right to, and shall not be prohibited, limited or in any other way restricted
from, seeking or obtaining equitable relief from a court having jurisdiction
over the parties. Any such arbitration proceedings shall be conducted in New
York, NY, in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at that time. The arbitrator(s) shall not have
the authority to add to, detract from or modify any provision hereof nor to
award punitive damages to any injured party. The arbitrator(s) shall have the
authority to order back pay, severance compensation, vesting of options or other
restricted equity awards (or cash compensation in lieu of vesting),
reimbursement of costs, including legal fees and other costs incurred to enforce
this Agreement or to defend against charges brought hereunder, and interest
thereon in the event the arbitrator(s) determines that The Orchard has breached
this Agreement. The arbitrator(s) shall have the authority to order
reimbursement of costs and any damages actually sustained by The Orchard,
including legal fees and other costs incurred to enforce this Agreement or to
defend against charges brought hereunder, and interest thereon in the event the
arbitrator(s) determines that Executive has breached this Agreement. A decision
by the arbitrator or a majority of the members of an arbitration panel (not to
exceed three (3) arbitrators) shall be final and binding, and judgment upon the
determination or award rendered by the arbitrator(s) may be entered in any court
having jurisdiction. The direct expense of any arbitration proceeding shall
initially be borne by The Orchard, but the arbitrator(s) shall have the
authority to reallocate such cost among the parties upon conclusion of the
proceedings.
               11.2 Severability. If any provision of this Agreement shall be
found by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the

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parties hereby waive such provision to the extent that it is found to be invalid
or unenforceable and to the extent that to do so would not deprive one of the
parties of the substantial benefit of its bargain. Such provision shall, to the
extent allowable by law and the preceding sentence, be modified by such
arbitrator or court so that it becomes enforceable and, as modified, shall be
enforced as any other provision hereof, all the other provisions continuing in
full force and effect.
               11.3 Remedies. The Orchard and Executive acknowledge that the
service to be provided by Executive is of a special, highly skilled,
extraordinary and intellectual character, which gives it peculiar value the loss
of which cannot be reasonably or adequately compensated in damages in an action
at law. Accordingly, Executive hereby consents and agrees that for any breach or
violation by Executive of any of the provisions of this Agreement including,
without limitation, Sections 3, 4, 5, 9 and 10 hereof, a restraining order
and/or injunction may be issued against Executive, in addition to any other
rights and remedies The Orchard may have, at law or equity, including without
limitation the recovery of money damages.
               11.4 No Waiver. The failure by either party at any time to
require performance or compliance by the other of any of its obligations or
agreements shall in no way affect the right to require such performance or
compliance at any time thereafter. The waiver by either party of a breach of any
provision hereof shall not be taken or held to be a waiver of any preceding or
succeeding breach of such provision or as a waiver of the provision itself. No
waiver of any kind shall be effective or binding, unless it is in writing and is
signed by the party against whom such waiver is sought to be enforced.
               11.5 Assignment. This Agreement and all rights hereunder are
personal to Executive and may not be transferred or assigned by Executive at any
time. The Orchard may assign its rights, together with its obligations
hereunder, to any parent, subsidiary, affiliate or successor, or in connection
with any sale, transfer or other disposition of all or substantially all of its
business and assets, provided, however, that any such assignee assumes The
Orchard’s obligations hereunder.
               11.6 Withholding. All sums payable to Executive hereunder shall
be reduced by all federal, state, local and other withholding and similar taxes
and payments required by applicable law or by The Orchard’s company policy and
practice.
               11.7 Entire Agreement. This Agreement constitutes the entire and
only agreement between the parties relating to employment of Executive with The
Orchard, and this Agreement supersedes and cancels any and all previous
contracts, arrangements or understandings with respect thereto, whether verbal
or in writing.
               11.8 Amendment. This Agreement may not be amended or modified,
except by an agreement in writing executed by both parties hereto and approved
by the Board of Directors of The Orchard or its Compensation Committee.
               11.9 Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and hand delivered, sent by
telecopier, sent by certified first class mail, postage pre-paid, or sent by
nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by
telecopier, five (5) days after mailing if sent by mail, and one (l) day after
dispatch if sent by express courier, to the following addresses, or such other
addresses as any party shall notify the other party:

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  If to The Orchard:   The Orchard Enterprises, Inc.
 
              100 Park Avenue
 
      Second Floor
 
      New York, NY 10017
 
      Attention: Chairman of the Board of Directors
 
      Facsimile: (212) 201-9292
 
       
 
  With a copy to:   Reed Smith LLP
 
      599 Lexington Avenue
 
      New York, NY 10022
 
      Attention: David M. Grimes
 
                        Antone P. Manha, Jr.
 
      Facsimile: (212) 521-5450
 
       
 
  If to Executive:   Nathan Fong
 
      208 Melbourne Road
 
      Great Neck, New York 11021

               11.10 Binding Nature. This Agreement shall be binding upon, and
inure to the benefit of, the successors and personal representatives of the
respective parties hereto.
               11.11 Headings. The headings contained in this Agreement are for
reference purposes only and shall in no way affect the meaning or interpretation
of this Agreement. In this Agreement, the singular includes the plural, the
plural included the singular, the masculine gender includes both male and female
referents and the word “or” is used in the inclusive sense.
               11.12 Counterparts. This Agreement may be executed in two or more
counterparts, including by facsimile, each of which shall be deemed to be an
original but all of which, taken together, constitute one and the same
agreement.
               11.13 Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be construed in accordance with the laws
of the State of New York, without giving effect to the principles of conflict of
laws.
               11.14 Code Section 409A. The Company and Executive agree that
this Agreement and the rights granted to the Executive hereunder are intended to
meet the requirements of paragraphs (2), (3) and (4) of Section 409A(a)(1)(A) of
the Code. Accordingly, the parties agree that during the period ending on
December 31, 2008 (or such later date as set forth by the Internal Revenue
Service for good faith compliance with guidance relating to Section 409A of the
Code), the parties agree that they shall negotiate in good faith to revise any
provisions of this Agreement that might otherwise fail to meet the requirements
of paragraphs (2), (3) and (4) of Section 409A of Code; provided, however, that
nothing contained in this Section 11.14 shall be deemed to require the Company
to incur any material compensation expense in excess of that which would be
incurred by it in the absence of this Section 11.14.

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     IN WITNESS WHEREOF, The Orchard and Executive have executed this Agreement
as of the date first above written.

                 
 
  THE ORCHARD ENTERPRISES, INC.   EXECUTIVE    
 
               
By:
  /s/ Greg Scholl       /s/ Nathan Fong    
Name:
 
 
Greg Scholl      
 
Nathan Fong    
Title:
  President & CEO            

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Exhibit A- Form of Termination Agreement
Date:                     
Dear                     :
     As discussed with you, your last day of work and the effective termination
date of your employment with The Orchard Enterprises, Inc. (the “Company”),
is                     (“Termination Date”). This letter, when executed by both
parties, shall serve as a termination agreement (“Agreement”) between you and
the Company. Please review the terms set forth below.
1. Employee Benefits
     Please be aware that, pursuant to COBRA, you will be entitled to continue
certain health benefits as noted in Exhibit A, provided that you take the steps
described in the Exhibit.
2. Release
     By signing this Agreement, you release the Company from any known or
unknown claims that you may have against the Company.
     You are giving this release on behalf of yourself and your heirs, personal
representatives, assigns or any other person who could make a claim based upon
your employment relationship with the Company.
     The release applies to the Company and its past and present subsidiaries
and affiliates, as well as the past and present directors, officers, agents,
attorneys, employees, successors and assigns of any of them. These parties are
together called the “Released Parties” in this Agreement. The release also
includes any employee benefit plans or funds sponsored or administered by the
Company (except that it does not apply to claims for vested benefits, if any,
arising from Company-sponsored retirement plans).
     This is a general and complete release that applies to any claim, known or
unknown and waives any claim to further compensation or benefits. It includes
claims relating to your employment with and termination of employment with the
Company.
     This release specifically applies to claims under Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Americans with
Disabilities Act, the National Labor Relations Act, the Worker Adjustment and
Retraining Notification Act, the Employee Retirement Income Security Act, the
Family and Medical Leave Act, the Fair Labor Standards Act, the Age
Discrimination in Employment Act, the Older Worker’s Benefit Protection Act and
any collective bargaining agreement, any claims for attorneys fees, and any
claims arising under any and all other federal, state and local laws and under
federal or state common law, including claims in contract and tort. It does not
apply to any claim that arises after you sign this Agreement, and it does not
include claims that cannot be released as a matter of law.
     You acknowledge that this Agreement includes, without limitation, claims
that you do not know or suspect to exist in your favor at the time of execution
hereof and that this Agreement has been executed with the express intention of
extinguishing all known and unknown claims.
     You represent that you have not assigned or transferred, or purported to
assign or transfer, to any person or entity, any claim against any of the
Released Parties, or any portion thereof or interest therein.
     You agree to permanently withdraw with prejudice all claims, if any, you
have filed against any Released Party. You agree never to seek any damages based
on the claims released in this Agreement.

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     In consideration for signing this agreement, you will be paid severance
equal to ___ months of pay at your current salary.
3. Employee Covenants
You acknowledge that you will remain bound by any confidentiality, nondisclosure
or non-competition agreements you have with the Company. Any such agreements are
incorporated herein by reference. Without limitation of anything contained in
such agreements, at all times hereafter, you will hold in strictest confidence
and will not disclose, use, lecture upon or publish any of the Company’s
Proprietary Information (defined below), unless an officer of the Company
expressly authorizes such in writing. “Proprietary Information” shall mean any
and all confidential and/or proprietary knowledge, data or information of the
Company, its parents, subsidiaries, affiliated entities, customers and
suppliers, including but not limited to information relating to Company’s record
label clients and on-line customers, business plans and strategies, products,
processes, know-how, designs, formulas, methods, developmental or experimental
work, improvements, discoveries, inventions, ideas, source and object codes,
data, programs, other works of authorship, and plans for research and
development.
You acknowledge and agree that solely by reason of your employment by the
Company, you have come into contact with the Company’s record label clients,
on-line customers, distributors, suppliers and employees and have had access to
Confidential and Proprietary Information regarding the Company’s clients,
customers, distributors and suppliers. Consequently, you covenant and agree that
for a period of one (1) year after the date of execution of this Agreement, you
will not, directly or indirectly, individually or on behalf of others, solicit a
client, customer, distributor, supplier or employee of the Company (except on
behalf of the Company).
     You agree never to use or disclose any Company information or trade secrets
concerning the operations, future plans or business methods of the Company.
     You agree not to criticize the Company or any of its officers, directors,
employees, shareholders, affiliates or agents. The Company also agrees that none
of its officers or directors will criticize you.
     You agree that the terms of this Agreement are confidential and shall not
be disclosed to any third party, with the exception of your attorneys or
financial advisors, or as required by law or in order to enforce the terms of
this Agreement. In the event that you are ordered to disclose information
regarding this Agreement to a court, you agree to give the Company prompt notice
of such court order so that the Company can take appropriate action.
     You agree that the Company would be irreparably harmed by any actual or
threatened violation of the Employee Covenants described in this section, and
that the Company will be entitled to an injunction prohibiting you from
committing such violation.
4. Tender Back
     You agree that in the event of any breach of this Agreement, including but
not limited to, your bringing any claim against any Released Party, you will
immediately repay all or any portion of the payments made to you hereunder, and
the Company will have no obligation to make any further payments to you under
this Agreement, provided, however, that these provisions do not apply to any
claims brought pursuant to the Age Discrimination in Employment Act or the Older
Workers Benefit Protection Act, or other claims for which tender back may be
prohibited under applicable law.
5. Expenses
     The Company will reimburse you for all reasonable business expenses
incurred through the Termination Date upon proper presentation of supporting
documentation, provided that appropriate expense reports have been submitted no
later than one (1) weeks following the Termination Date.
6. Company Property
     You agree that all Company property, including but not limited to credit
cards, keys, documents, software,

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computer data, records, or any other materials, will be returned without
destruction or other damage no later than the Termination Date.
7. Non-Admission
     You agree that this Agreement is not an admission of guilt or wrongdoing by
the Released Parties, and acknowledge that the Released Parties do not believe
or admit that any of them has done anything wrong.
8. Full Disclosure
     You acknowledge that you have disclosed to the Company any information you
have concerning any conduct involving the Company that you have reason to
believe may be unlawful or involve any false claims to the United States or any
other government having jurisdiction over the Company. You promise to cooperate
fully and voluntarily in any investigation the Company undertakes into matters
occurring during your employment with the Company, and you agree not to disclose
to anyone who is not assisting the Company with the investigation, other than
your attorney, the fact of or the subject matter of the investigation, except as
required by law. You will accommodate your schedule to cooperate with the
Company and promptly provide such information. You acknowledge that nothing in
this Agreement prevents you from cooperating with any U.S. government
investigation.
10. Revocation of Agreement
     You understand that you may revoke this Agreement in writing within seven
(7) days after you sign it, and the Agreement shall not become effective or
enforceable until the end of the seven-day period. To be effective, before the
end of the seven-day period, you must deliver, or fax and mail, your written
revocation to the Company, to the attention of the first Company representative
signing this Agreement using the contact information listed below the
representative’s signature. If you revoke this Agreement, the Company shall have
no obligations under this Agreement.
11. Arbitration
     You and the Company agree to resolve any claims we may have with each other
or that you have with any other released party (Arbitrable Dispute) through
final and binding arbitration in accordance with the rules of the American
Arbitration Association. This arbitration agreement applies first to any
disputes about the validity, interpretation or effect of this Agreement or
alleged violations of it. If it is finally determined by an arbitrator or the
Courts that the Agreement is unenforceable, any claim against the Company,
including claims of discrimination under federal, state or local law, must also
be arbitrated. Arbitration shall be the exclusive remedy for any Arbitrable
Dispute and any arbitration will take place at the office of the American
Arbitration Association closest to your place of work for the Company. This
section does not limit the Company’s right to seek and obtain an injunction
pursuant to Paragraph 4.
12. Fee-Shifting
     In the event of litigation or arbitration concerning the subject matter of
this Agreement, the prevailing party shall be entitled to recover all costs
incurred by it, including such party’s reasonable attorneys’ fees and reasonable
compensation for the services of its internal personnel, provided however that
this provision shall not apply to any claims brought pursuant to the Age
Discrimination in Employment Act or the Older Workers Benefit Protection Act.
13. Other Important Provisions
     This is the entire agreement between you and the Company. This Agreement
may not be modified in any manner except in writing signed by both you and an
authorized Company official. You acknowledge that the Company has made no
representations or promises to you other than those in this Agreement. If any
provision in this Agreement is found to be unenforceable, all other provisions
will remain fully enforceable.
     This Agreement binds your heirs, administrators, personal representatives,
executors, successors and assigns, and will apply to the benefit of all Released
Parties and their respective heirs, administrators, personal

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representatives, executors, successors and assigns.
     This Agreement shall be construed as a whole according to its fair meaning.
It shall not be construed strictly for or against you or any released party.
This Agreement shall be governed by the statutes and common law of the State of
New York.

                  By:           Greg Scholl       President & CEO
The Orchard
100 Park Ave., 2nd Fl.
NY, NY 10017
1-212-201-9280     

ACKNOWLEDGMENT
     I have read this Agreement consisting of five pages (exclusive of
attachments), I understand its contents, and I willingly, voluntarily and
knowingly accept and agree to the terms and conditions of this Agreement. I
acknowledge that I was advised to consult with an attorney prior to executing
this Agreement.

         
 
 
 
                                                   [Date]    

“EXHIBIT A”
** CONTINUATION HEALTH CARE COVERAGE RIGHTS UNDER COBRA**
Introduction
               (a) The right to COBRA continuation coverage was created by a
federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
COBRA continuation coverage can become available to you and to other members of
your family who are covered under the Plan when you would otherwise lose your
group health coverage. This notice generally explains COBRA continuation
coverage, when it may become available to you and your family, and what you need
to do to protect the right to receive it. This notice gives only a summary of
your COBRA continuation coverage rights. For more information about your rights
and obligations under the Plan and under federal law, you should either review
the Plan’s Summary Plan Description or get a copy of the Plan Document from the
Plan Administrator.
The Plan Administrator is Jeff Nimerofsky, The Orchard Enterprises, Inc., 100
Park Avenue, 2nd floor, New York, NY 10017.
The Plan Administrator is responsible for administering COBRA continuation
coverage.
          11.14.2 What is continuation coverage?

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Federal law requires that most group health plans (including this Plan) give
employees and their families the opportunity to continue their health care
coverage when there is a “qualifying event” that would result in a loss of
coverage under an employer’s plan. Depending on the type of qualifying event,
“qualified beneficiaries” can include the employee covered under the group
health plan, a covered employee’s spouse, and dependent children of the covered
employee.
Continuation coverage is the same coverage that the Plan gives to other
participants or beneficiaries under the Plan who are not receiving continuation
coverage. Each qualified beneficiary who elects continuation coverage will have
the same rights under the Plan as other participants or beneficiaries covered
under the Plan. Specific information describing continuation coverage can be
found in the Plan’s summary plan description (SPD), which can be obtained from
Jeff Nimerofsky, The Orchard Enterprises, Inc., 100 Park Avenue, 2nd floor, New
York, NY 10017.
How long will continuation coverage last?
In the case of a loss of coverage due to end of employment or reduction in hours
of employment, coverage may be continued for up to 18 months. However, this
coverage may be extended for a limited time due to disability or another
qualifying event.
In the case of losses of coverage due to an employee’s death, divorce or legal
separation, the employee’s enrollment in Medicare or a dependent child ceasing
to be a dependent under the terms of the plan, coverage may be continued for up
to 36 months.
Continuation coverage will be terminated before the end of the maximum period if
any required premium is not paid on time, if a qualified beneficiary becomes
covered under another group health plan that does not impose any pre-existing
condition exclusion for a pre-existing condition of the qualified beneficiary,
if a covered employee enrolls in Medicare, or if the employer ceases to provide
any group health plan for its employees. Continuation coverage may also be
terminated for any reason the Plan would terminate coverage of a participant or
beneficiary not receiving continuation coverage (such as fraud).
     11.14.3 How can you elect continuation coverage?
Each qualified beneficiary listed on page one of this notice has an independent
right to elect continuation coverage. For example, both the employee and the
employee’s spouse may elect continuation coverage, or only one of them. Parents
may elect to continue coverage on behalf of their dependent children only. A
qualified beneficiary must elect coverage by the date specified on the Election
Form. Failure to do so will result in loss of the right to elect continuation
coverage under the Plan. A qualified beneficiary may change a prior rejection of
continuation coverage any time until that date.
In considering whether to elect continuation coverage, you should take into
account that a failure to continue your group health coverage will affect your
future rights under federal law. First, you can lose the right to avoid having
pre-existing condition exclusions applied to you by other group health plans if
you have more than a 63-day gap in health coverage, and election of continuation
coverage may help you not have such a gap. Second, you will lose the guaranteed
right to purchase individual health insurance policies that do not impose such
pre-existing condition exclusions if you do not get continuation coverage for
the maximum time available to you. Finally, you should take into account that
you have special enrollment rights under federal law. You have the right to
request special enrollment in another group health plan for which you are
otherwise eligible (such as a plan sponsored by your spouse’s employer)

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within 30 days after your group health coverage ends because of the qualifying
event listed above. You will also have the same special enrollment right at the
end of continuation coverage if you get continuation coverage for the maximum
time available to you.
          11.14.4 How much does continuation coverage cost?
Generally, each qualified beneficiary may be required to pay the entire cost of
continuation coverage. The amount a qualified beneficiary may be required to pay
may not exceed 102 percent of the cost to the group health plan (including both
employer and employee contributions) for coverage of a similarly situated plan
participant or beneficiary who is not receiving continuation coverage (or, in
the case of an extension of continuation coverage due to a disability,
150 percent).
          11.14.5 When and how must payment for continuation coverage be made?
First payment for continuation coverage
If you elect continuation coverage, you do not have to send any payment for
continuation coverage with the Election Form. However, you must make your first
payment for continuation coverage within 45 days after the date of your
election. (This is the date the Election Notice is post-marked, if mailed.) If
you do not make your first payment for continuation coverage within that
45 days, you will lose all continuation coverage rights under the Plan.
Your first payment must cover the cost of continuation coverage from the time
your coverage under the Plan would have otherwise terminated up to the time you
make the first payment. You are responsible for making sure that the amount of
your first payment is enough to cover this entire period. You may contact Jeff
Nimerofsky, the Plan Administrator, to confirm the correct amount of your first
payment.
Periodic payments for continuation coverage
After you make your first payment for continuation coverage, you will be
required to pay for continuation coverage for each subsequent month of coverage.
Under the Plan, these periodic payments for continuation coverage are due on the
first of the month. If you make a periodic payment on or before its due date,
your coverage under the Plan will continue for that coverage period without any
break. The Plan will not send periodic notices of payments due for these
coverage periods.
Keep Your Plan Informed of Address Changes
In order to protect your family’s rights, you should keep the Plan Administrator
informed of any changes in the addresses of family members. You should also keep
a copy, for your records, of any notices you send to the Plan Administrator.
          11.14.6 For More Information
This notice does not fully describe continuation coverage or other rights under
the Plan. More information about continuation coverage and your rights under the
Plan is available in your summary plan description or from the Plan
Administrator. You can get a copy of your summary plan description from: Jeff

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Nimerofsky, The Orchard Enterprises, Inc., 100 Park Avenue, 2nd floor, New York,
NY 10017, tel: 212-201-9280.
For more information about your rights under ERISA, including COBRA, the Health
Insurance Portability and Accountability Act (HIPAA), and other laws affecting
group health plans, contact the U.S. Department of Labor’s Employee Benefits
Security Administration (EBSA) in your area or visit the EBSA web site at
www.dol.gov/ebsa.
Plan Contact Information

         
Aetna Member Services—Medical
    888.802.3862  
Aetna Member Services—Dental
    877.238.6200  
VSP
    www.vsp.com  
 
The Orchard
       
100 Park Avenue, 2nd floor
       
New York, NY 10017
       
Attn: Jeff Nimerofsky
       

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Date:
               (a) HEALTH INSURANCE TERMINATION
               (b)
Dear                     :
Please complete the attached, “Election Form” in order to continue your health
care coverage under COBRA. If you do not elect to continue your health care
coverage by completing the enclosed “Election Form” and returning it to us, your
coverage under the Plan will end due to the termination of your employment.
Each of the following persons is entitled to elect to continue health care
coverage under the Plan:
-Employee:
-Spouse (or former spouse of employee):
-Dependent children:
You [and/or, as appropriate, your spouse, and dependent children] are entitled
to continue your health care coverage for up to thirty-six (36) months. In order
to maintain your current level of Medical Coverage, your monthly continuation
coverage will cost:
$                     (medical, dental and vision for yourself only/and
spouse/and family).
Important — To elect continuation coverage you MUST complete the enclosed
“Election Form” and return it to us. You may mail it to the address shown on the
Election Form. The completed Election Form must be post-marked by
                    . If you do not submit a completed Election Form by this
date, you will lose your right to elect continuation coverage.
               (a) COBRA Continuation Coverage Election Form
(This page is to be completed and returned if COBRA coverage is requested.)
                    
                    
                    
Important: This form must be completed and returned by mail, post-marked no
later than                     . Send completed form to:
The Orchard Enterprises, Inc.
100 Park Avenue, 2nd floor
New York, NY 10017
Attn: Jeff Nimerofsky

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I (We) elect to continue our medical coverage in The Orchard Enterprises, Inc.
health insurance plan (the Plan) as indicated below:

              Full Legal Name   Date of Birth   Relationship to Employee  
Social Security No.    
 
           
 
           
 
           
 
           
 
           
 
           
 
           
 
           

         
 
Signature
 
 
Date    
 
       
 
Print Name
 
 
Relationship to individual(s) listed above    
 
       
 
       
 
       
 
       
 
       
 
Print Address
 
 
Telephone number    
 
       
 
Email address
       

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