THE ORCHARD ENTERPRISES, INC. RESTRICTED STOCK AWARD AGREEMENT
Exhibit
10.6
This
Restricted Stock Award Agreement (this “Agreement”) is made as of [DATE], by and
between The Orchard Enterprises, Inc., a Delaware corporation (the “Company”),
and [NAME] (“Executive”).
In
consideration of the mutual covenants and representations set forth below, the
Company and Executive agree as follows:
1. Award of
Shares. Subject to the terms and conditions of this Agreement
and pursuant to the Company’s Amended and Restated 2008 Stock Plan (the “Plan”),
the Company hereby awards to Executive [# OF SHARES] shares of the Company’s
Common Stock (the “Shares”).
2. Terms of Plan. The
Shares granted pursuant to this Agreement are granted subject to the terms and
conditions set forth in the Plan, a copy of which has been delivered to
Executive. All terms and conditions of the Plan, as may be amended from time to
time, are hereby incorporated into this Agreement by reference and shall be
deemed to be a part of this Agreement, without regard to whether such terms and
conditions are otherwise set forth in this Agreement. In the event that there is
any inconsistency between the provisions of this Agreement and of the Plan, the
provisions of the Plan shall govern.
3. Stock
Certificate. The Company will issue, as promptly as
practicable after the date hereof, a stock certificate, registered in the name
of Executive, reflecting the Shares, subject to retention in escrow as provided
in Section 7.
4. Purchase Option.
A. Except
as provided in Section 5, in the event Executive ceases to be an employee (a
“Service Provider”) of the Company for any or no reason, including, without
limitation, by reason of Executive’s disability as defined in Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended (the “Code”), the Company
shall, upon the date of such termination (as reasonably fixed by the Company),
have an irrevocable, exclusive option to purchase (the “Purchase Option”) any
Shares which have not yet been released from the Purchase Option (the
“Unreleased Shares”), at a price per share equal to the lesser of (x) the Fair
Market Value (as defined in the Plan) of the Shares at the time the Purchase
Option is exercised or (y) $0.01 (the “Purchase Price”). The Company
may exercise its Purchase Option as to any or all of the Unreleased Shares at
any time following Executive’s termination; provided, however, that without
requirement of further action on the part of either party hereto, the Company’s
Purchase Option shall be deemed to have been automatically exercised as to all
Unreleased Shares at 5:00 p.m. EST on the date that is 60 days following the
date of Executive’s termination, unless the Company declines in writing to
exercise its Purchase Option prior to such time.
B. If
the Company decides not to exercise its Purchase Option, it shall notify
Executive within 60 days of Executive’s termination, in which event the Purchase
Option shall terminate. If the Company decides to exercise its
Purchase Option, within 90 days from Executive’s termination as a Service
Provider, the Company shall deliver payment to Executive, with a copy to the
Escrow Agent (as defined in Section 7 hereof), by any of the following
methods, in the Company’s sole discretion: (i) delivering to Executive a
check in the amount of the aggregate Purchase Price, (ii) canceling an
amount of Executive’s indebtedness to the Company equal to the aggregate
Purchase Price, or (iii) any combination of (i) and (ii) such that the
combined payment and cancellation of indebtedness equals such aggregate Purchase
Price. Upon delivery of the payment of the aggregate Purchase Price
in any of the ways described above, the Company shall become the legal and
beneficial owner of the Unreleased Shares being purchased and all related rights
and interests therein, and the Company shall have the right to retain and
transfer to its own name the number of Unreleased Shares being purchased by the
Company. In the event that Executive’s continuous status as a Service
Provider terminates, and the Company neither notifies Executive within 60 days
thereafter of the Company’s decision not to exercise its Purchase Option, nor
delivers payment of the Purchase Price to Executive within 90 days thereafter,
then the sole remedy of Executive thereafter shall be to receive the Purchase
Price from the Company in the manner set forth above, and in no case shall
Executive have any claim of ownership as to any of the Unreleased
Shares.
C. In
the event that the Company’s Purchase Option is exercised, whether automatically
in the manner provided for above or pursuant to written notice, then upon and
following such exercise, the only remaining right of Executive under this
Agreement shall be the right to receive the Purchase Price, and Executive have
no right whatsoever to receive the Unreleased Shares. In the event
that the Company’s Purchase Option is terminated, then upon and following such
termination, the only remaining right of Executive under this Agreement shall be
the right to receive the Unreleased Shares, and Executive shall have no right
whatsoever to receive the Purchase Price.
5. Release of Shares From Purchase
Option; Vesting.
A. So
long as Executive’s continuous status as a Service Provider has not yet
terminated in each such instance,
(i) one-third (1/3) of the Shares shall be released from the Purchase Option on
the date one year following the date this Agreement is made, and thereafter (ii)
one-twelfth (1/12) of the Shares shall be released from the Purchase Option on
each third (3rd) month anniversary of the date of this Agreement for the next
twenty-four (24) months.
B. Notwithstanding
the foregoing, in the event that Executive’s continuous status as a Service
Provider is terminated by reason of Executive’s death, the remaining Unreleased
Shares shall be released from the Purchase Option immediately.
C. The
Shares that have been released from the Company’s Purchase Option shall be
delivered to Executive at Executive’s request.
6. Restrictions on
Transfer.
A. Executive
understands and agrees that the Company shall cause the legend set forth below
to be placed upon any certificate(s) evidencing ownership of the
Shares:
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THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AND A PURCHASE OPTION HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET
FORTH IN THE RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND
PURCHASE OPTION ARE BINDING ON TRANSFEREES OF THESE SHARES.
B. Stop-Transfer
Notices. Executive agrees that to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
C. Refusal to
Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
D. Lock-Up
Period. Executive hereby agrees that Executive shall not sell,
offer, pledge, contract to sell, grant any option or contract to purchase,
purchase any option or contract to sell, grant any right or warrant to purchase,
lend or otherwise transfer or encumber, directly or indirectly, any Shares or
other securities of the Company, nor shall Executive enter into any swap,
hedging or other arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of any Shares or other securities of
the Company, during the 180-day period (or such other shorter period as may be
requested in writing by the managing underwriter and agreed to in writing by the
Company) following the effective date of the first registration statement of the
Company filed under the Securities Act that includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
E.
Unreleased
Shares. No Unreleased Shares subject to the Purchase Option
contained in Section 4 of this Agreement, nor any beneficial interest in
such Shares, shall be sold, gifted, transferred, encumbered or otherwise
disposed of in any way (whether by operation of law or otherwise) by the
Executive.
7. Escrow.
A. As
security for the faithful performance of this Agreement, Executive agrees that
the Shares together with a stock power in the form of Exhibit A attached to this
Agreement, executed by Executive (with the date and number of Shares left
blank), shall be retained by the Company or its designee (the “Escrow
Agent”). These documents shall be held by the Escrow Agent pursuant
to the Joint Escrow Instructions of the Company and Executive set forth in
Exhibit B attached to this Agreement, which instructions are incorporated into
this Agreement by this reference, and which instructions shall also be delivered
to the Escrow Agent after the date hereof.
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B. Subject
to the terms hereof, Executive shall have all the rights of a stockholder with
respect to such Shares while they are held in escrow, including without
limitation, the right to vote the Shares. If, from time to time
during the term of the Company’s Purchase Option, there is (i) any stock
dividend, stock split or other change in the Shares, or (ii) any dividend of
cash or other property on the Shares, any and all new, substituted or additional
securities or cash or other consideration to which Executive is entitled by
reason of Executive’s ownership of the Shares shall immediately become subject
to this escrow, deposited with the Escrow Agent and included thereafter as
“Shares” for purposes of this Agreement and the Company’s Purchase
Option.
8. Tax
Consequences. Executive has reviewed with Executive’s own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this
Agreement. Executive is relying solely on such advisors and not on
any statements or representations of the Company or any of its
agents. Executive understands that Executive (and not the Company)
shall be responsible for any tax liability that may arise as a result of the
transactions contemplated by this Agreement. Executive understands
that Section 83 of the Code, taxes as ordinary income the difference
between the purchase price for the Shares and the Fair Market Value of the
Shares as of the date any restrictions on the Shares lapse. In this
context, “restriction” includes the right of the Company to buy back the Shares
pursuant to the Purchase Option. Executive understands that Executive
may elect to be taxed at the time the Shares are purchased rather than when and
as the Purchase Option expires by filing an election under Section 83(b) of
the Code with the IRS within 30 days from the date of purchase.
9. General
Provisions.
A. Choice of Law; Exclusive
Jurisdiction. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, 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 Agreement; no action may be instituted in any other
venue.
B. Integration. This
Agreement and the Plan represent the entire agreement between the parties with
respect to the purchase of the Shares by Executive and supersedes and replaces
any and all prior written or oral agreements regarding the subject matter of
this Agreement and the Plan including, but not limited to, any representations
made during any interviews, relocation discussions or negotiations whether
written or oral.
C. Notices. Any
notice, demand, offer, request or other communication required or permitted to
be given by either the Company or Executive pursuant to the terms of this
Agreement shall be in writing and shall be deemed effectively given the earlier
of (i) when received, (ii) when delivered personally, (iii) 1
business day after being delivered by facsimile (with receipt of appropriate
confirmation), (iv) 1 business day after being deposited with an overnight
courier service, or (v) 4 days after being deposited in the U.S. mail,
First Class with postage prepaid, and addressed to the parties at the addresses
provided to the Company (which the Company agrees to disclose to the other
parties upon request) or such other address as a party may request by notifying
the other in writing.
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D. Successors. This
Agreement shall be binding upon any successors or assigns of the
Company. Subject to the restrictions on transfer set forth in this
Agreement, this Agreement shall be binding upon Executive and her heirs,
executors, administrators, successors and assigns.
E. Assignment. The
rights granted to Executive under this Agreement are not assignable by Executive
under any circumstances.
F. Waiver. Either
party’s failure to enforce any provision of this Agreement shall not in any way
be construed as a waiver of any such provision, nor prevent that party from
thereafter enforcing any other provision of this Agreement. The
rights granted both parties hereunder are cumulative and shall not constitute a
waiver of either party’s right to assert any other legal remedy available to
it.
G. Further Documents. Executive
agrees upon request to execute any further documents or instruments necessary or
reasonably desirable in the view of the Company to carry out the purposes or
intent of this Agreement, including (but not limited to) Exhibits A and B of this
Agreement
H. Severability. Should
any provision of this Agreement be found to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable to the greatest extent permitted by law.
I. Rights as Stockholder.
Subject to the terms and conditions of this Agreement, Executive shall have all
of the rights of a stockholder of the Company with respect to the Shares from
and after the date that Executive delivers a fully executed copy of this
Agreement (including all exhibits and attachments thereto), and until such time
as Executive disposes of the Shares in accordance with this
Agreement. Upon such transfer, Executive shall have no further rights
as a holder of the Shares so purchased except (in the case of a transfer to the
Company) the right to receive payment for the Shares so purchased in accordance
with the provisions of this Agreement, and Executive shall forthwith cause the
certificate(s) evidencing the Shares so purchased to be surrendered to the
Company for transfer or cancellation.
J. Adjustment for Stock
Split. All references to the number of Shares and the purchase
price of the Shares in this Agreement shall be adjusted to reflect any stock
split, stock dividend or other change in the Shares which may be made after the
date of this Agreement.
K. Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
agreement. Facsimile copies of signed signature pages shall be
binding originals.
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The
parties represent that they have read this Agreement in its entirety, have had
an opportunity to obtain the advice of counsel prior to executing this Agreement
and fully understand this Agreement. Executive agrees to notify the
Company of any change in her address below.
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EXECUTIVE
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By:
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Signature
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Signature
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[NAME]
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Print
Name
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President & CEO
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Print
Title
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Address:
[ADDRESS]
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EXHIBIT
A
STOCK POWER AND
ASSIGNMENT
SEPARATE FROM
CERTIFICATE
FOR VALUE
RECEIVED and pursuant to that certain Restricted Stock Award Agreement dated as
of [DATE], the undersigned hereby sells, assigns and transfers
unto_________________________________, ______________(________) shares of Common
Stock of The Orchard Enterprises, Inc., a Delaware corporation, standing in the
undersigned’s name on the books of said corporation represented by certificate
number _______ delivered herewith, and does hereby irrevocably constitute and
appoint ______________________ as attorney-in-fact, with full power of
substitution, to transfer said stock on the books of said
corporation.
Dated:
_____________________
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(Signature)
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[NAME]
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(Please
Print Name)
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This
Assignment Separate From Certificate was executed in conjunction with the terms
of the Restricted Stock Award Agreement between the above assignor and the above
corporation, dated as of [DATE].
Instruction: Please do not fill in any blanks
other than the signature and name lines.
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EXHIBIT
B
JOINT ESCROW
INSTRUCTIONS
[DATE]
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Attn:
Chief Financial Officer
Dear
Sir:
As Escrow
Agent for both The Orchard Enterprises, Inc., a Delaware corporation (the
“Company”) and [NAME] (“Executive”), you are hereby authorized and directed to
hold the documents delivered to you pursuant to the terms of that certain
Restricted Stock Award Agreement (the “Agreement”), dated as of [DATE], to which
a copy of these Joint Escrow Instructions is attached, in accordance with the
following instructions:
1. In
the event that the Company and/or any assignee of the Company (referred to
collectively for convenience herein as the “Company”) exercises the Purchase
Option set forth in the Agreement, the Company shall give to Executive and you a
written notice specifying the number of shares of stock to be purchased, the
purchase price, and the time for a closing hereunder at the principal office of
the Company. Executive and the Company hereby irrevocably authorize
and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At
the closing, you are directed (a) to date the stock assignments necessary
for the transfer in question, (b) to fill in the number of shares being
transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company against the
simultaneous delivery to you of the purchase price (by check or such other form
of consideration mutually agreed to by the parties) for the number of shares of
stock being purchased pursuant to the exercise of the Purchase
Option.
3. Executive
irrevocably authorizes the Company to deposit with you any certificates
evidencing shares of stock to be held by you hereunder and any additions and
substitutions to said shares as defined in the Agreement. Executive
does hereby irrevocably constitute and appoint you as her attorney-in-fact and
agent for the term of this escrow to execute with respect to such securities all
documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated. Subject to the
provisions of this paragraph 3, Executive shall exercise all rights and
privileges of a stockholder of the Company while the stock is held by
you.
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4. Upon
written request of Executive, unless the Purchase Option has been exercised, you
will deliver to Executive a certificate or certificates representing so many
shares of stock as are not then subject to the Purchase Option.
5. If
at the time of termination of this escrow you should have in your possession any
documents, securities, or other property belonging to Executive, you shall
deliver all of same to Executive and shall be discharged of all further
obligations hereunder.
6. Your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.
7. You
shall be obligated only for the performance of such duties as are specifically
set forth herein and may rely and shall be protected in relying or refraining
from acting on any instrument reasonably believed by you to be genuine and to
have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Executive while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. The
Company and Executive hereby jointly and severally expressly agree to indemnify
and hold harmless you and your designees against any and all claims, losses,
liabilities, damages, deficiencies, costs and expenses, including reasonable
attorneys’ fees and expenses of investigation and defense incurred or suffered
by you and your designees, directly or indirectly, as a result of any of your
actions or omissions or those of your designees while acting in good faith and
in the exercise of your judgment under the Agreement, these Joint Escrow
Instructions, exhibits hereto or written instructions from the Company or
Executive hereunder.
9. You
are hereby expressly authorized to disregard any and all warnings given by any
of the parties hereto or by any other person or corporation, excepting only
orders or process of courts of law, and are hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
10. You
shall not be liable in any respect on account of the identity, authorities or
rights of the parties executing or delivering or purporting to execute or
deliver the Agreement or any documents or papers deposited or called for
hereunder.
11. You
shall not be liable for the outlawing of any rights under the Statute of
Limitations with respect to these Joint Escrow Instructions or any documents
deposited with you.
12. You
shall be entitled to employ such legal counsel and other experts as you may deem
necessary properly to advise you in connection with your obligations hereunder,
may rely upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Company shall reimburse you for any such
disbursements.
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13. Your
responsibilities as Escrow Agent hereunder shall terminate if you shall resign
by written notice to each party. In the event of any such
termination, the Company shall appoint a successor Escrow Agent.
14. You
are expressly authorized to delegate your duties as Escrow Agent hereunder to
any law firm, accounting firm, transfer agent or other responsible party, which
delegation, if any, shall survive your resignation as Escrow Agent.
15. If
you reasonably require other or further instruments in connection with these
Joint Escrow Instructions or obligations in respect hereto, the necessary
parties hereto shall join in furnishing such instruments.
16. It
is understood and agreed that should any dispute arise with respect to the
delivery and/or ownership or right of possession of the securities held by you
hereunder, you are authorized and directed to retain in your possession without
liability to anyone all or any part of said securities until such disputes shall
have been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of a court of competent jurisdiction after
the time for appeal has expired and no appeal has been perfected, but you shall
be under no duty whatsoever to institute or defend any such
proceedings.
17. Any
notice required or permitted hereunder shall be given in writing and shall be
deemed effectively given upon personal delivery or 4 days following deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by
written notice to each of the other parties hereto.
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COMPANY:
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Attention:
Chief Executive Officer
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EXECUTIVE:
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[NAME]
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[INSERT
ADDRESS]
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ESCROW
AGENT:
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Attention: Chief
Financial Officer
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18. By
signing these Joint Escrow Instructions, you become a party hereto only for the
purpose of said Joint Escrow Instructions; you do not become a party to the
Agreement.
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19. This
instrument shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and permitted assigns.
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Very
truly yours,
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a
Delaware corporation
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By:
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▇▇▇▇ ▇▇▇▇▇▇
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Title:
President & CEO
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EXECUTIVE:
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[NAME]
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ESCROW
AGENT:
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a
Delaware corporation
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By:
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Title:
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EVP
& CFO
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