Exhibit
10.7

     

    THE
ORCHARD ENTERPRISES, INC.

    


    Stock
Option Agreement

    (Amended
and Restated 2008 Stock Plan)

    


    THIS
STOCK OPTION AGREEMENT (this “Option Agreement”) is made as of [DATE], by and
between The Orchard Enterprises, Inc., a Delaware corporation (the
“Corporation”), and [NAME] (the “Optionee”).

    


    WHEREAS,
the Board of Directors of the Corporation (the “Board”) has duly adopted, and
the stockholders of the Corporation have approved, the Amended and Restated 2008
Stock Plan (the “Plan”), which Plan authorizes the Corporation under Section 5.1
thereof to grant stock options to eligible persons for the purchase of shares of
the Corporation’s Common Stock (the “Stock”); and

    


    WHEREAS,
the Compensation Committee of the Board has determined that it is desirable and
in the best interests of the Corporation and its stockholders to grant the
Optionee an option to purchase a certain number of shares of Stock as provided
in the Plan, in order to provide the Optionee with an incentive to advance the
interests of the Corporation, all according to the terms and conditions set
forth herein.

    


    NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein,
the parties hereby agree as follows:

    


    1.           Grant of Stock
Option.  Subject to the terms of the Plan, the Corporation
hereby grants to the Optionee the right and option (the “Option”) to purchase
from the Corporation, on the terms and subject to the conditions set forth in
this Option Agreement, [# OF SHARES] shares of Stock (the “Option
Shares”).  The date of grant of this Option is [DATE OF GRANT] (the
“Date of Grant”).  This Option shall not constitute an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”).

    


    2.           Terms of Plan.  The
Option granted pursuant to this Option Agreement is granted subject to the terms
and conditions set forth in the Plan, a copy of which has been delivered to the
Optionee.  All terms and conditions of the Plan, as may be amended
from time to time, are hereby incorporated into this Option Agreement by
reference and shall be deemed to be a part of this Option Agreement, without
regard to whether such terms and conditions are otherwise set forth in this
Option Agreement.  In the event that there is any inconsistency
between the provisions of this Option Agreement and of the Plan, the provisions
of the Plan shall govern.

    


    3.           Exercise Price.  As
required under Section 5.2 of the Plan, the exercise price for the shares of
Stock subject to the Option granted by this Option Agreement is $[PRICE] per
share, the Fair Market Value (as defined in the Plan) on the Date of Grant (the
“Exercise Price”).

    


    4.           Exercise of
Option.  Subject to the provisions of the Plan and subject to
the earlier expiration or termination of this Option in accordance with its
terms, the Option granted pursuant to this Option Agreement shall be exercisable
only as follows:


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    4.1.          Time of Exercise of
Option.  One-third (1/3) of the Option Shares shall vest on the
one (1) year anniversary of the Date of Grant, and
thereafter  one-twelfth (1/12) of the Option Shares shall vest
quarterly on each third (3rd) month
anniversary of the Date of Grant for the next twenty-four (24) months, such that
all Option Shares will be fully vested 36 months from the Date of Grant;
provided that the Optionee is employed by the Corporation on each such vesting
date.

     

    4.2.          Termination of
Option.  This Agreement and the Option granted hereby shall
terminate automatically and without further notice on the earliest of (i) 90
calendar days from the date that the Optionee ceases to be a full-time employee
of the Corporation for any reason other than death, (ii) one year after the
Optionee’s death, if such death occurs while the Optionee is an employee of the
Corporation, and (iii) seven (7) years from the Date of Grant.

     

    4.3.          Exercise Upon
Death.  All of the Shares shall become exercisable upon
Optionee’s death if the Optionee was an employee of the Corporation at the time
of Optionee’s death.

     

    4.4.          Method of Exercise of
Option.

     

    4.4.1.     To
the extent then exercisable, the Option may be exercised in whole or in part by
written notice to the Corporation in the form attached hereto as Exhibit A
stating the number of shares for which the Option is being exercised and
delivery to the Corporation of the aggregate Exercise Price for the Option
Shares covered by such exercise notice.  The date of such notice shall
be the exercise date. Payment equal to the aggregate Exercise Price of the
shares shall be payable in cash in the form of currency or check or other cash
equivalent acceptable to the Corporation. In no event shall the Option be
exercised for a fractional share.

     

    4.4.2.     In
the case of Optionee’s death, the Option may be exercised by the executor or
administrator of the Optionee’s estate or by any person or persons who shall
have acquired the Option directly from the Optionee by bequest or
inheritance.

     

    4.4.3.     As
soon as practicable upon the Corporation’s receipt of the Optionee’s notice of
exercise and payment, the Corporation shall direct the due issuance of the
shares so purchased.

     

    4.4.4.     As
a further condition precedent to the exercise of this Option in whole or in
part, the Optionee shall comply with all regulations and the requirements of any
regulatory authority having control of, or supervision over, the issuance of the
shares of Stock and in connection therewith shall execute any documents which
the Board shall in its sole discretion deem necessary or advisable.

    


    5.           Non-Transferability of
Options.  During the lifetime of an Optionee, only such
Optionee (or, in the event of legal incapacity or incompetency, the Optionee’s
guardian or legal representative) may exercise the Option.  No Option
shall be assignable or transferable by the Optionee to whom it is granted, other
than by will or the laws of intestacy.

    


    6.           Compliance with
Law.  The Corporation shall make reasonable efforts to comply
with all applicable federal and state securities laws; provided, however, that
notwithstanding any other provision of this Option Agreement, the Option shall
not be exercisable if the exercise thereof would result in a violation of any
such law.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    7.           Rights as
Stockholder.  Neither the Optionee nor any executor,
administrator, distributee or legatee of the Optionee’s estate shall be, or have
any of the rights or privileges of, a stockholder of the Corporation in respect
of any shares of Stock issuable hereunder unless and until such shares have been
fully paid and certificates representing such shares have been endorsed,
transferred and delivered, and the name of the Optionee (or of such personal
representative, administrator, distributee or legatee of the Optionee’s estate)
has been entered as the stockholder of record on the books of the
Corporation.

    


    8.           Tax
Withholding.  If the Corporation shall be required to withhold
any federal, state, local or foreign tax in connection with exercise of this
Option, it shall be a condition to such exercise that the Optionee pay or make
provision satisfactory to the Corporation for payment of all such
taxes.

    


    9.           Disclaimer of Rights. No provision in this
Option Agreement shall be construed to confer upon the Optionee the right to be
employed by the Corporation or any subsidiary, or to interfere in any way with
the right and authority of the Corporation or any subsidiary either to increase
or decrease the compensation of the Optionee at any time, or to terminate any
employment or other relationship between the Optionee and the Corporation or any
subsidiary.

    


    10.         Interpretation of this Option
Agreement.  All decisions and interpretations made by the Board
or the Compensation Committee thereof with regard to any question arising under
the Plan or this Option Agreement shall be binding and conclusive on the
Corporation and the Optionee and any other person entitled to exercise the
Option as provided for herein.

    


    11.         Compliance with Section 409A of the
Code.  To the extent applicable, it is intended that this
Agreement and the Plan comply with the provisions of Section 409A of the Code,
so that the income inclusion provisions of Section 409A(a)(1) do not apply to
Optionee.  This Agreement and the Plan shall be administered in a
manner consistent with this intent, and any provision that would cause the
Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no
force and effect until amended to comply with Section 409A of the Code (which
amendment may be retroactive to the extent permitted by Section 409A of the Code
and may be made by the Company without the consent of the
Optionee).

    


    12.         Governing Law; Exclusive
Venue.  This Option Agreement shall be governed in accordance
with the laws of the State of New York.  The parties hereto grant to
the U.S. District Court for the Southern District of New York, or the Supreme
Court of the State of New York, New York County, exclusive jurisdiction to hear
any disputes arising out of or relating to this Option Agreement; no action may
be instituted in any other venue.

    


    13.         Binding
Effect.  Subject to all restrictions provided for in this
Option Agreement, the Plan, and by applicable law relating to assignment and
transfer of this Option Agreement and the Option provided for herein, this
Option Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors and
assigns.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    14.         Notice.  Any notice
hereunder by the Optionee to the Corporation shall be in writing and shall be
deemed duly given if mailed or delivered to the Corporation at its principal
office, addressed to the attention of the Chief Financial Officer or if so
mailed or delivered to such other address as the Corporation may hereafter
designate by notice to the Optionee.  Any notice hereunder by the
Corporation to the Optionee shall be in writing and shall be deemed duly given
if mailed or delivered to the Optionee at the address specified below by the
Optionee for such purpose, or if so mailed or delivered to such other address as
the Optionee may hereafter designate by written notice given to the
Corporation.

    


    15.         Severability.  If
any provision of this Option Agreement is held illegal or invalid for any reason
by a court of competent jurisdiction, the illegality or invalidity shall not
affect the remaining provisions hereof, and this Option Agreement shall be
construed and administered as if the illegal or invalid provision had not been
included.

    


    16.         Entire Agreement;
Waiver.  This Option Agreement and the Plan together constitute
the entire agreement and supersedes all prior understandings and agreements,
written or oral, of the parties hereto with respect to the subject matter
hereof.  Except for amendments to the Plan incorporated into this
Option Agreement by reference pursuant to Section 2 above, neither this Option
Agreement nor any term hereof may be amended, waived, discharged or terminated
except by a written instrument signed by the Corporation and the Optionee;
provided, however, that the Corporation unilaterally may waive any provision
hereof in writing to the extent that such waiver does not adversely affect the
interests of the Optionee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.

     

    17.         Counterparts.  This
Option Agreement may be executed in any number of counterparts, including by
facsimile, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

    


    IN
WITNESS WHEREOF, the parties hereto have duly executed this Option Agreement as
of the day and year first above written.

    


    
      
        	
                THE
      ORCHARD ENTERPRISES, INC.

              	 
      	
                OPTIONEE:

              
	 
      	 
      	 
      	 
      
	
                By:

              	 
      	 
      	 
      
	 
      	
                Name:
      Greg Scholl

              	 
      	
                Name:  [NAME]

              
	 
      	
                Title:
      President & CEO

              	 
      	 
      
	 
      	 
      	 
      	
                Address
      for Notice:

              
	 
      	 
      	 
      	
                [ADDRESS]

              


      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
A

    (To
Stock Option Agreement)

    


    Stock
Option Exercise Notice

    


    
      
        	
                The
      Orchard Enterprises, Inc.

              	 
      
	
                23
      East 4th
      Street, 3rd
      Floor

              	 
      
	
                New
      York, New York 10003

              	 
      
	
                Attention:
      Chief Financial Officer

              	 
      
	
                Facsimile:
      (212) 201-9292

              	
                Date:____________________________

              


      

    

     

    The
undersigned hereby irrevocably elects to exercise the within Option to purchase
vested shares of Common Stock (the “Option Shares”) of The Orchard Enterprises,
Inc., a Delaware corporation (the “Corporation”).  The undersigned
elects to purchase the Option Shares as follows:

    


    
      	
              1.

            	
              Exercise
      of Option (fill in both blanks)

            


    

    


    
      
        Number of Shares
                     ____________________________________________

      

    

    


    Exercise
Price Per
Share            ____________________________________________        

     

    
      	
              2.

            	
              Method
      of Payment (check one)

            


    

    


    
      	
              ________

            	
              I
      am enclosing a check in the amount of the aggregate Exercise Price and
      taxes, if applicable

            


    

    


    
      	
              

                ________

              

            	
              A
      wire transfer for the aggregate Exercise Price and taxes, if applicable,
      will be sent to the Corporation by my broker _____ OR from my bank
      _____

            


    

    


    (In the
case of nonqualified stock options, contact the Corporation’s stock
administrator to determine the amount of any taxes due.)

    


    
      	
              3.

            	
              Exercise
      and Holding (complete if
applicable)

            


    

    


    
      	
              

                ________

              

            	
              I
      will be exercising and holding the Option Shares.  Please have
      the certificate representing the Option Shares delivered to me (or my
      designee, as stated below) at the following
  address:

            


    

    


    
      Address:
_____________________________________________________________

       

                     _____________________________________________________________

    

    


    
      	
              4.

            	
              Simultaneous
      Exercise and Sale (complete if
applicable)

            


    

    


    
      	
              

                ________

              

            	
              I
      will be exercising and selling the Option Shares.  Please have
      the certificate representing the Option Shares delivered to my broker at
      the following address:

            


    

    


    
      
        
          Address:
_____________________________________________________________

           

                         _____________________________________________________________

        

      

       

      
        
          
            
              
                	
                        Signature:
      ______________________________________________

                      
	 
	
                        Print
      Name:
  _____________________________________________

                      


              

            

          

        

        
          	 
	
                  Social
      Security Number:
  ___________________________________