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
2
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
3
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
4
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 (2 1 /
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
5
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
fe
|
