Document:

EX-10.8

 

EXHIBIT 10.8

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 Daniel Alan Pifer, 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, Sales Operations, 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.

     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

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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. 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

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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 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

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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

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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 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”).

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          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”).

          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

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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 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

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     “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 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

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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

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(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,
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

11

 

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
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

12

 

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
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.

13

 

          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:

	 	Daniel Alan Pifer
	 

	 	317 7th Avenue

	 

	 	Pelham, NY 10803

          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.

14

 

          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
	 	 	 	Daniel Pifer	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	 President & CEO	 	 	 	 	 	 

15

 

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.

16EX-10.9

 

EXHIBIT 10.9

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the first day of
February, 2007 (the “Effective Date”) by and between Stanley H. Schneider, a resident of New York,
New York (the “Executive”), and The Orchard Enterprises, Inc., a New York corporation (the
“Company”).

RECITALS

     The Company desires to employ the Executive and the Executive agrees to serve in the employ of
the Company, all on the terms and conditions hereinafter provided.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the receipt and sufficiency of which the parties hereby acknowledge, the parties hereby agree as
follows:

ARTICLE I

EMPLOYMENT

     1.1 Employment. The Company hereby employs the Executive and the Executive hereby
accepts employment by the Company upon the terms and conditions contained in this Agreement.

     1.2 Office and Duties. The Executive shall serve the Company as General Counsel, and
shall perform such executive duties as are customarily performed in such position and shall perform
such other duties and assume such other positions with the Company or any of its affiliates as may
be from time to time reasonably assigned to him by the Chief Executive Officer or his designee or
the Board of Directors as applicable of the Company or his, its or their designee (collectively the
“Board”).

     1.3 Commitment. Throughout the term of this Agreement, the Executive shall diligently
and faithfully devote his best full-time efforts to the performance of his duties hereunder in a
manner that will further the business and interests of the Company. Except as otherwise expressly
set forth in this Section 1.3, the Executive may not engage in any other business for his own
account or accept employment from or serve on the boards of directors of, or hold any other offices
or positions in, other companies or organizations without the prior written approval of the Board;
provided, however, that the Executive may make passive equity investments in other companies or
organizations subject to the terms of Section 2.1 and the Executive may engage in charitable, civic
or community activities that do not interfere with his duties to the Company.

     1.4 Term. The term of this Agreement shall commence on the Effective Date and shall
continue for a period of 24 months until January 31, 2009 (the “Initial Term Date”), unless earlier
terminated in accordance with Section 1.6. Thereafter the term of this Agreement may, upon the
mutual written agreement of the parties, be

 

 

extended year to year for additional 12 month periods until terminated in accordance with
Section 1.6. The period of time between the commencement and termination of this Agreement is
referred to herein as the “Term.”

     1.5 Compensation.

          (a) Salary. Effective as of the date hereof, and for the first 7 months of the
Agreement, the Company shall pay the Executive as compensation a base salary of $225,000 per year.
The Board shall review the Executive’s performance during the summer of 2007 and shall, upon the
finding of satisfactory performance, increase the Executive’s salary to $235,000 annually effective
September 1, 2007. The Executive will receive another performance review by the Board during the
summer of 2008, and will, upon finding of satisfactory performance, receive and increase in annual
base salary to at least $250,000. The Board shall have sole discretion to determine whether the
Executive performance merits any raise in the salary. The salary for each year shall be paid by
the Company in accordance with the regular payroll practices of the Company.

          (b) Discretionary Bonus. The Board shall review the Executive’s and the Company’s
performance annually, and shall have the sole discretion and authority to determine whether such
performance merits a discretionary bonus payable to the Executive. Such bonus shall be paid in
accordance with the procedures established by the Board.

          (c) Other Benefits and Perquisites. Effective as of the date hereof, and for the
remainder of the Term, the Executive shall be entitled to participate in any major medical health
plan (including dental family coverage) at the Company’s expense and receive such additional
benefits, if any, under any plan or arrangement made available from time to time to other senior
management executives by the Company in the sole discretion of the Chief Executive Officer or the
Board, subject to and on a basis consistent with the terms, conditions and overall administration
of any such plan or arrangement (each, a “Company Health Plan”); provided, that in lieu of
participating in any Company Health Plan, the Executive shall be entitled to procure his own
comparable health insurance or enroll in a comparable third party health plan and the Company shall
reimburse the Executive for the expense of obtaining such insurance or enrolling in such plan in an
amount not to exceed the greater of the premiums that would have been paid by the Company for
providing the Executive with such Company Health Plan or for participation in the Sony BMG COBRA
plan offered to the Executive.

          (d) Intentionally Omitted

          (e) Bonus Option, Profit Sharing Plan or Stock Option Plan. Effective as of the date
hereof and for the remainder of the Term, the Executive shall be entitled to participate in any
bonus option or profit sharing plan, if any, made available from time to time to other senior
management executives by the Company in the sole discretion of the Chief Executive Officer or the
Board, subject to and on a basis

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consistent with the terms, conditions and overall administration of any such arrangement or
plan

          (f) Vacations and Sick Leave. Effective as of the date hereof, and for the remainder
of the Term, the Executive shall be entitled to the maximum number of paid absence and leave days
(“PAL Days”) permitted under the Company’s PAL policy in effect from time to time (but not less
than an aggregate of four weeks paid vacation and/or sick days per year). Such PAL Days shall be
administered pursuant to the regular policies of the Company. PAL Days that are not used by the
Executive in any calendar year will not be carried forward except as expressly provided by the PAL
Day policy of the Company. The Executive shall not be entitled to any payment or other
compensation for any unused PAL Days as of the end of any calendar year or at the end of the Term.

          (g) Payment and Reimbursement of Expenses. Effective as of the date hereof, and for
the remainder of the Term, the Company shall pay or reimburse the Executive for all reasonable
travel, entertainment and other expenses incurred by the Executive in performing his obligations
under this Agreement; provided, that the Executive properly accounts therefore in accordance with
the regular expenses reimbursement policies of the Company. In addition, the Company shall
reimburse the Executive for the following professional expenses: (i) NYSBA dues, (ii) applicable
attorney registration fees, and (iii) pre-approved continuing legal education expenses; provided,
that the Executive properly accounts therefore in accordance with the regular expenses
reimbursement policies of the Company.

     1.6 Termination

          (a) Death or Disability. This Agreement shall immediately terminate upon the death of
the Executive. The Company may terminate this Agreement for Disability. A “Disability” shall
exist if a physician, selected in good faith by the Board and reasonably acceptable to Executive’s
family or legal guardian, reasonably determines that, because of ill health, physical or mental
disability, or any other medical reason beyond the Executive’s control, and notwithstanding
reasonable accommodations made by the Company, the Executive is unable to perform the essential
functions of the Executive’s position for a period of 90 or more consecutive days or an aggregate
of 180 or more days during any 12 month period during the Term.

          (b) Cause. The Company may terminate the Executive’s employment hereunder by written
notice given to the Executive for Cause or without Cause. Termination for “Cause” shall mean
termination because: (i) Executive has intentionally committed an act of dishonesty, embezzlement,
fraud or theft in his relations with the Company in such a manner as to cause material loss, damage
or injury to or otherwise to materially endanger the business, property, reputation or employees of
the Company, (ii) Executive has repeatedly abused alcohol or drugs in a manner materially adversely
affecting his job performance, (iii) Executive has been found guilty of or has plead nolo
contendere to the commission of a felony offense involving dishonesty; or (iv) Executive has caused
material loss, damage or injury to or otherwise

-3-

 

materially endangered the property, reputation or employees of the Company due to his act(s)
of gross negligence; (v) insubordination or other willful violation of a material oral directive or
a material written policy of the Company; or (vi) breach of any material provision of this
Agreement; provided, however, that the occurrence of item (v) or (vi) of this
Section 1.6(b) shall not constitute Cause unless the Board notifies the Executive thereof in
writing, specifying in reasonable detail the nature of such occurrence and stating that it is
grounds for Cause, and unless the Executive fails to cure such occurrence within 10 days after
notice is given under this Agreement. If the Board reasonably determines in good faith that the
Executive has failed to cure the conditions which are grounds for Cause under item (v) or (vi) of
this Section 1.6(b) within 10 days after such notice is given, the Board will provide the Executive
with notification of such determination and allow the Executive to respond and to defend himself
before the Board of Directors within a reasonable time (not to exceed 10 days) after such
notification. After which, the Board of Directors will make a reasonable and good faith
determination as to whether the Executive has cured the conditions which are grounds for Cause.

          (c) Good Reason. The Executive may terminate his employment hereunder by written
notice given to the Company for Good Reason or without Good Reason. For purposes of this
Agreement, “Good Reason” shall mean any material breach of this Agreement by the Company, including
without limitation: (i) any reduction in the Executive’s Base Salary; (ii) the Company requires the
Executive to be based at an office or location other than the principal office of the Company
located within a 50 mile radius of New York, New York, except for travel reasonably required in the
performance of the Executive’s responsibilities; or (iii) the Company requests the Executive’s
resignation other than for Cause; provided, however, that a material breach of this Agreement by
the Company shall not constitute Good Reason unless the Executive notifies the Company in writing
of the breach, specifying in reasonable detail the nature of the breach and stating that such
breach is grounds for Good Reason, and unless the Company fails to cure such breach within 10 days
after such notice is sent or given under this Agreement.

          (d) Date of Termination. Except as otherwise specifically and expressly provided in
this Agreement, “Date of Termination” shall mean the actual effective date of any termination of
this Agreement. If the Company terminates the Executive for Cause or the Executive terminates for
Good Reason, the Date of Termination shall be the close of business on the day that is the tenth
business day after written notice is given in accordance with Section 1.6(b) or Section 1.6(c), as
applicable, unless cured by the Company or cured or successfully defended by the Executive, as
applicable. If the Agreement is terminated because of the Executive’s death, the Date of
Termination shall be the date of the Executive’s death. If the Company terminates for Disability
or without Cause, the Date of Termination shall be the close of business on the day that is the
ninetieth day after written notice is received by the Executive in accordance with Section 1.6(a)
or Section 1.6(b), as applicable. If the Executive terminates without Good Reason, the Date of
Termination shall be the close of business on the day that is the tenth business day after written
notice is received

-4-

 

by the Company in accordance with Section 1.6(c), unless the Company, in its sole discretion,
elects an earlier Date of Termination within such 10-day period.

     1.7 Compensation During Disability or Upon Termination.

          (a) During Disability. During any period that the Executive fails to perform his
duties hereunder because of ill health, physical or mental disability, or any other reason beyond
his control, he shall continue to receive his Salary and benefits pursuant to Section 1.4 until
the Date of Termination.

          (b) Termination for Disability. If the Company shall terminate the Executive’s
employment for Disability, the Company’s obligation to pay the Executive’s Salary and benefits
pursuant to Section 1.4 shall terminate, except that the Company shall pay and provide the
Executive accrued but unpaid Salary and benefits pursuant to Section 1.4 through the Date of
Termination.

          (c) Death of Executive. If the Executive dies prior to the expiration of the Term,
then the Executive’s employment and other rights and obligations under this Agreement shall
automatically terminate and all Salary and benefits to which the Executive is or would have been
entitled pursuant to Section 1.4 shall terminate as of the Date of Termination.

          (d) Termination For Cause or Without Good Reason. If the Company shall terminate the
Executive’s employment for Cause or if the Executive shall terminate his employment without Good
Reason, then the Company’s obligation to pay the Executive’s Salary and benefits pursuant to
Section 1.4 shall terminate on the Date of Termination and the Company shall pay the Executive his
accrued but unpaid Salary and benefits pursuant to Section 1.4 through the Date of Termination.

          (e) Termination Without Cause or For Good Reason. If at any time during the Term, the
Company shall terminate the Executive’s employment without Cause or if the Executive shall
terminate his employment for Good Reason, then the Company shall pay to the Executive as severance
pay the following amounts:

     (i) his then unpaid Salary, in accordance with the regular payroll practices
of the Company, through the Date of Termination at the rate in effect as of the
Date of Termination; and

     (ii) after the Termination Date, the Executive shall continue to receive his
Salary, in accordance with the regular payroll practices of the Company, at the
rate in effect as of the Date of Termination for the period from the Date of
Termination through the Initial Term Date.

If the Executive terminates his employment for Good Reason based upon a reduction by the Company of
the Executive’s Salary below the Base Salary, then for purposes of this Subsection 1.7(e), the
Executive’s Salary as of the Date of Termination shall be deemed to be the Executive’s Salary
immediately prior to such reduction.

-5-

 

If at the time the Company terminates the Executive’s employment without Cause or the Executive
terminates his employment for Good Reason, the Company has in effect a welfare benefit plan that
provides health care benefits for the Company’s participating employees and their dependants (the
“Health Care Coverage”), then the Executive shall have the right under the “COBRA” provisions of
federal law to elect to continue the Health Care Coverage, and, if the Executive so elects, (1) the
Company shall provide the Executive and his eligible dependents with continued Health Care Coverage
for the period from the Date of Termination through the last day of the month that the Company is
obligated to continue the Executive’s Salary pursuant to this Subsection 1.7(e) and (2) the Company
shall pay 100% of the cost of such Health Care Coverage during this period. At the end of such
period, the Executive and his eligible dependents may continue the Health Care Coverage, at their
sole expense, to the extent (if any) and in the manner provided by the “COBRA” provisions of
federal law. For purposes of determining the maximum period of continued Health Care Coverage
under “COBRA,” the date of the qualifying event shall be the Date of Termination.

ARTICLE II

RESTRICTIVE COVENANTS

     2.1 Non-Competition. Except as otherwise expressly set forth in Section 1.3, during
the Term and for a period of 24 months after the Date of Termination (the “Restriction Period”),
regardless of the date, cause or manner of termination, the Executive shall not, in any manner,
directly or indirectly, without the prior written consent of the Company:

     (a) become an officer, employee, director, agent, representative or consultant of
another Person (as defined below);

     (b) have a proprietary interest in another Person; or

     (c) engage in any business as an individual on the Executive’s own account or as an
independent contractor, consultant, partner or joint venture, that competes with the
Company with regard to the Company Business (as defined below) in the following territories
(collectively, the “Territory”):

     (i) New York County, New York or anywhere within a 100 mile radius of New York
County, New York;

     (ii) the State of New York,

     (iii) any state other than the State of New York in which the Company does
business and in which Executive worked for the Company; and

     (iv) any foreign country in which the Company does business;

-6-

 

provided, however, that nothing contained herein shall be interpreted to limit the Executive’s
right or ability to engage in any business or enterprise engaged in any aspect of the music or
entertainment industry other than the Company Business; provided, further, that notwithstanding the
foregoing, the Executive shall be free, without such written consent of the Company, to purchase or
hold as an investment up to 5% of the outstanding stock or other securities of any corporation that
has its securities publicly traded on any nationally recognized securities exchange or
over-the-counter market. For purposes of this Agreement, “Company Business” shall mean the
business of buying, licensing, acquiring in any manner, selling, distributing, marketing, promoting
and otherwise exploiting, by any means, music sound recordings, masters, music publishing rights,
and any other business or operations actually being performed by the Company on the Termination
Date. For purposes of this Agreement, the term “Person” shall mean an individual, corporation,
limited liability company, limited partnership, general partnership, joint stock company or
association, joint venture, association, company, trust, bank, trust company, land trust, common
law trust, business trust or other entity and any government and agency and political sub-division
thereof.

     2.2 Non-solicitation of Employees. During the Term and the Restriction Period, the
Executive shall not in any manner, directly or indirectly, as an individual on his own account or
as an independent contractor, consultant, partner or joint venturer, or as an employee,
representative or agent of another Person, or as an officer, director, owner or shareholder of such
other Person, or otherwise (a) solicit, induce or encourage or attempt to solicit, induce or
encourage, any employee of the Company to leave the Company, (b) hire any employee of the Company
or (c) otherwise interfere with the Company’s employment relationship with any employee. The word
“employee” in this Section 2.2 means any person who is or was employed by the Company or any of its
affiliates at the time of, or within 180 days prior to, such solicitation, inducement,
encouragement, hiring or interference.

     2.3 Non-solicitation of Customers. During the Term and the Restriction Period, the
Executive shall not in any manner, directly or indirectly, as an individual on his own account or
as an independent contractor, consultant, partner or joint venturer, or as an employee,
representative or agent of another Person, or as an officer, director, owner or shareholder of such
other Person, or otherwise, solicit, call upon or otherwise contact any customer of the Company for
the purpose of accepting, and shall not accept from any such customer, any order for any products
or services substantially the same as or similar to products sold or services provided by the
Company to any such customer within the 180 day period prior to the date of any such solicitation,
call, contact or acceptance.

     2.4 Non-interference with Contract. During the Term and the Restriction Period, other
than in connection with, for the benefit of, or in furtherance of the Company Business, the
Executive shall not in any manner, directly or indirectly, as an individual on his own account or
as an independent contractor, consultant, partner or joint venturer, or as an employee,
representative or agent of another Person, or as an officer, director, owner or shareholder of
such other Person, or otherwise, solicit, encourage or induce, or attempt to solicit, encourage or
induce, any vendor, supplier or

-7-

 

other third party with whom the Company is doing business or has a contract as of the Date of
Termination, to terminate such vendor’s, supplier’s or other third party’s business relationship or
contract with the Company.

     2.5 Confidentiality. The Executive recognizes that, by virtue of the Executive’s
employment with the Company, the Executive will have access to Confidential Information (as defined
below) relating to the Company’s business. The Executive agrees that such Confidential Information
is a valuable asset, and if it were to be known or used by others engaged in a similar business, it
would be harmful and detrimental to the Company’s interests. Accordingly, except as may be
required or appropriate for the performance of the Executive’s duties in the normal course of
business, or unless specifically authorized in writing by the Board, the Executive shall not use or
disclose, either during or after the Term, any Confidential Information, except for any
Confidential Information required to be disclosed by law or to comply with a request by a court or
governmental authority (pursuant to a subpoena or otherwise), but only if the Executive promptly
notifies the Company of the required or requested disclosure so the Company may seek a protective
order to prevent disclosure of such Confidential Information.

For purposes of this Agreement, “Confidential Information” shall mean any and all information
relating to the business, finances, customers, clients and operations of the Company, whether
obtained by or furnished to the Executive before or after the date hereof, and regardless of the
manner in which it is obtained or furnished. Confidential Information does not include, however,
information which: (a) is or becomes generally available to the public other than as a result of an
impermissible disclosure by the Executive; (b) was known by or made available on a non-confidential
basis to the Executive prior to his employment with the Company, or (c) becomes available to the
Executive on a non-confidential basis from a Person other than the Executive who is not known by
the Executive to be bound by a confidentiality agreement with or other obligation of secrecy to the
Company.

     2.6 Breach of Restrictive Covenants. The period of time during which the Executive is
prohibited from engaging in business practices pursuant to the restrictive covenants set forth in
Sections 2.1 through 2.4 shall be extended by the length of time during which the Executive is in
breach of any such covenant.

     2.7 Condition Precedent. The restrictive covenants set forth in Sections 2.1 through
2.5 are essential elements of this Agreement, and, but for the Executive’s agreement to comply with
such covenants, the Company would not have entered into this Agreement. Such covenants are for the
benefit of the Company and may be enforced by the Company and by any Person succeeding to the
business of the Company pursuant to a merger or purchase of all or substantially all the assets or
outstanding voting stock of the Company. Such covenants by the Executive shall be construed as
agreements independent of any other provision contained in this Agreement, and the existence of any
claim or cause of action of the Executive against the Company, whether predicated on this Agreement
or otherwise, shall not constitute a defense to the enforcement by the Company of such covenants.

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     2.8 Injunctive Relief. The Executive acknowledges that the services to be rendered by
Employee under this Agreement are extraordinary and unique and are vital to the success of the
Company, and that damages at law shall be an insufficient remedy in the event that the Executive
violates or threatens to violate any of the terms of Sections 2.1 through 2.5, and the Company
shall be entitled, upon application to a court of competent jurisdiction, to obtain injunctive
relief (including temporary restraining orders) to enforce any or all of the provisions of said
sections, without being required to show any actual damage or to post an injunction bond or other
security. The foregoing injunctive relief shall be in addition to any other rights and remedies
available under applicable laws.

     2.9 Disclosure of Works and Inventions/Assignment of Patents. The Executive shall
disclose promptly to the Company or its nominee any and all works, inventions, discoveries and
improvements authored, conceived or made by the Executive during the Term and related to the
Company Business and hereby assigns and agrees to assign all his interest therein to the Company or
its nominee. Whenever requested to do so by the Company, the Executive shall execute any and all
applications, assignments or other instruments which the Company shall deem necessary to apply for
and obtain Letters Patent or Copyrights of the United States or any foreign country or to otherwise
protect the Company’s interest therein. Such obligations shall continue beyond the termination of
employment with respect to such works, inventions, discoveries and improvements authored, conceived
or made by the Executive during the Term, and shall be binding upon the Executive’s assigns,
executors, administrators and other legal representatives.

ARTICLE III

MISCELLANEOUS

     3.1 Notices. All notices, requests, demands and other communications required or
permitted under this Agreement and the transactions contemplated herein shall be in writing or
electronically and shall be deemed to have been duly sent, given, made and received when personally
delivered, or when sent by confirmed telecopy or other electronic means or one business day after
deposit with a nationally recognized overnight courier, specifying next day delivery, with written
verification of receipt, addressed as set forth below:

If to the Executive:

Stanley H. Schneider

1 Dante Street

Larchmont, New York 10538

Fax: (914) 833-3864

Phone: (914) 833-3680

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If to the Company:

Joel Schoenfeld

Dimensional Associates

1091 Boston Post Road

Rye, New York 10580

Fax: (914) 921-4305

Phone: (914) 921-4197

Phone: (212) 201-9292

E-mail: joel@dimensionalassociates.com

With a copy to:

David M. Grimes

Reed Smith, LLP

599 Lexington Avenue, 28th Floor

New York, New York 10022

Phone: (212) 549-0240

Fax:      (212) 521-5450

Email: dgrimes@reedsmith.com

Any party may alter the address to which communications or copies are to be sent by giving notice
of such change of address in conformity with the provisions of this section for the giving of
notice, which shall be effective only upon receipt.

     3.2 Severability. The provisions of this Agreement are independent of and severable
from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue
of the fact that for any reason any other or others of them may be invalid or unenforceable in
whole or in part. If any provision of this Agreement is held to be unenforceable for any reason,
it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties
to the extent possible.

     3.3 Entire Agreement; Amendment. This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions, express or implied, oral
or written, except as herein contained. This Agreement may not be modified or amended other than
by an agreement in writing executed by the parties hereto.

     3.4 Waiver. Neither the failure nor any delay on the part of either party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence.

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     3.5 Interpretation. The parties hereto acknowledge and agree that (i) each party and
each party’s counsel have reviewed and negotiated the terms and provisions of this Agreement and
have contributed to its revision, (ii) the rule of construction to the effect that any ambiguities
are resolved against the drafting party shall not be employed in the interpretation of this
Agreement, and (iii) the terms and provisions of this Agreement shall be construed fairly as to all
parties hereto and not in favor of or against any party regardless of which party was generally
responsible for the preparation of this Agreement.

     3.6 Headings. The headings of paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of the provisions of this
Agreement.

     3.7 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to principles of conflict of laws.

     3.8 Survival. The covenants and agreements of the parties set forth in Section 1.6,
Article II and Article III are of a continuing nature and shall survive the expiration, termination
or cancellation of this Agreement, regardless of the reason therefore and in a manner consistent
with the applicable section.

     3.9 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective heirs, personal representatives,
successors and assigns, including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the activities or assets of the Company.
The Company shall require and cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all or substantially all, of the business or assets of the Company,
by written agreement in form and substance satisfactory to the Executive, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.

     3.10 Forum Selection. Any litigation based hereon or arising out of, under or in
connection with this Agreement, shall be brought and maintained exclusively in the courts of New
York County, New York.

     3.11 Counterparts. This Agreement may be executed in counterparts and multiple
originals, each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the Company has caused this EMPLOYMENT AGREEMENT to be executed by its
duly authorized representative, and the Executive has signed this Agreement, all as of the day and
year first above written.

	 	 	 	 	 
	 	THE ORCHARD ENTERPRISES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 

	 	 

Stanley H. Schneider
	 	 

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