Exhibit 10.6
THE ORCHARD ENTERPRISES,
INC.
RESTRICTED STOCK AWARD
AGREEMENT
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:
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.
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
