EXHIBIT 10.7
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
     This Employment Agreement (this “Agreement”) is entered into on
February 28, 2008 (the “Effective Date”), between The Orchard Enterprises, Inc.
(formerly known as Digital Music Group, Inc.), a Delaware corporation (“The
Orchard”), and Bradley Peter Navin, a resident of New York (the “Executive”).
This Agreement is intended to supersede the Employment Agreement between
Executive and Digital Music Group, Inc. dated as of December 10, 2007.
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 Vice President,
Global Licensing & Sales, 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.
     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 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.

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     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’s 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 The Orchard consistent with The Orchard’s 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 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.

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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 one hundred and sixty thousand dollars ($160,000)
per 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 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

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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
2007, Executive shall be entitled to receive a discretionary cash bonus in an
amount and in accordance with the parameters set forth on Schedule A attached
hereto. Any such 2007 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 5,000 shares of The Orchard’s Common Stock (“Common
Stock”) and 16,667 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 “The Orchard 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 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.
Notwithstanding the forgoing, the Common Stock Options and awards issued under
the December 10, 2007 Agreement shall remain in effect on the terms and
conditions established under the Stock Option Agreement and Restricted Stock
Option Agreement except subject to the same six (6)-month acceleration provision
provided hereinabove.
     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

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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 and irreparable breach of this Agreement;
(b) Executive’s gross negligence or willful insubordination in the performance
or intentional 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 willful
dishonesty, fraud, misrepresentation or misconduct with respect to the business
and affairs of The Orchard which adversely affects the operations, reputation or
business prospects of The Orchard; (d) Executive’s willful, reckless or grossly
negligent violation of a material provision of The Orchard’s Code of Business
Conduct or other written corporate policy; (e) Executive’s willful or reckless
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 any crime involving any act
of moral turpitude; or (h) chronic alcohol abuse or chronic drug abuse by
Executive (“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 The Orchard 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; or (c) 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”).

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          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:
     (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

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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 Executive and The Orchard mutually determine 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 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 Executive and The Orchard mutually determine
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) 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

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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, except that any non-compete and non-solicitation provisions shall conform
to Section 9 below), 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 Orchard’s 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 Orchard’s 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) six (6) months and (b) the period during
which the Executive continues to be entitled to compensation or benefits
pursuant to Section 8 hereof (the “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.

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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 SonyBMG, 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 otherwise, shall not constitute a
defense to the enforcement by The Orchard of such covenants. Because of the
difficulty of measuring economic loss to The Orchard 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 terminated, Executive should be able to obtain
suitable and satisfactory employment without violation of this Agreement.
     10. Return of The Orchard 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

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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 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

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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 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 (1) day after
dispatch if sent by express courier, to the following addresses, or such other
addresses as any party shall notify the other party:

     
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:
  Bradley Peter Navin
 
  205 West 88th Street, Apartment 2C
 
  New York, NY 10024

          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.

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

          THE ORCHARD ENTERPRISES, INC.   EXECUTIVE  
By:
       
 
        Name: Greg Scholl   Bradley Navin Title: President & CEO    

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Schedule A
Bonus Amount: For the year ending December 31, 2007, Executive is eligible to
receive a bonus of up to $30,000 (the “Target Bonus”) based on the following
parameters and performance criteria:
     1. Gross Revenue: If the Orchard has gross revenues for 2007 of (a)
$26,000,000 or more, the Executive is entitled to a bonus equal 33 1/3% of his
Target Bonus, (b) $22,000,000 or less, the Executive is not entitled to any
bonus with respect to the Orchard’s gross revenues and (c) more than $22,000,000
but less than $26,000,000, the Executive is entitled to a pro rata portion of 33
1/3% of his Target Bonus;
     2. Gross Margin: If the Orchard achieves a gross margin for 2007 equal to
(a) 25% or greater, the Executive is entitled to a bonus equal 33 1/3% of his
Target Bonus, (b) 23% or less, the Executive is not entitled to any bonus with
respect to the Orchard’s gross margin and (c) greater than 23% but less than
25%, the Executive is entitled to a pro rata portion of 33 1/3% of his Target
Bonus; and
     3. Discretionary Component: The discretionary component is to be determined
solely by the CEO of The Orchard and may be any amount up to 33 1/3% of the
Executive’s Target Bonus.

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