Exhibit 10.7
THE ORCHARD ENTERPRISES, INC.
Stock Option
Agreement
(Amended and Restated 2008 Stock
Plan)
THIS STOCK OPTION AGREEMENT (this “Option
Agreement”) is made as of [DATE], by and between The Orchard
Enterprises, Inc., a Delaware corporation (the
“Corporation”), and [NAME] (the
“Optionee”).
WHEREAS, the Board of Directors of the
Corporation (the “Board”) has duly adopted, and the
stockholders of the Corporation have approved, the Amended and
Restated 2008 Stock Plan (the “Plan”), which Plan
authorizes the Corporation under Section 5.1 thereof to grant stock
options to eligible persons for the purchase of shares of the
Corporation’s Common Stock (the “Stock”);
and
WHEREAS, the Compensation Committee of the Board
has determined that it is desirable and in the best interests of
the Corporation and its stockholders to grant the Optionee an
option to purchase a certain number of shares of Stock as provided
in the Plan, in order to provide the Optionee with an incentive to
advance the interests of the Corporation, all according to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual
promises and covenants contained herein, the parties hereby agree
as follows:
1.
Grant of Stock Option. Subject to the terms of
the Plan, the Corporation hereby grants to the Optionee the right
and option (the “Option”) to purchase from the
Corporation, on the terms and subject to the conditions set forth
in this Option Agreement, [# OF SHARES] shares of Stock (the
“Option Shares”). The date of grant of this
Option is [DATE OF GRANT] (the “Date of
Grant”). This Option shall not constitute an
incentive stock option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the
“Code”).
2.
Terms of Plan . The Option granted pursuant to
this Option Agreement is granted subject to the terms and
conditions set forth in the Plan, a copy of which has been
delivered to the Optionee. All terms and conditions of
the Plan, as may be amended from time to time, are hereby
incorporated into this Option Agreement by reference and shall be
deemed to be a part of this Option Agreement, without regard to
whether such terms and conditions are otherwise set forth in this
Option Agreement. In the event that there is any
inconsistency between the provisions of this Option Agreement and
of the Plan, the provisions of the Plan shall govern.
3.
Exercise Price . As required under Section 5.2 of
the Plan, the exercise price for the shares of Stock subject to the
Option granted by this Option Agreement is $[PRICE] per share, the
Fair Market Value (as defined in the Plan) on the Date of Grant
(the “Exercise Price”).
4.
Exercise of Option . Subject to the provisions of
the Plan and subject to the earlier expiration or termination of
this Option in accordance with its terms, the Option granted
pursuant to this Option Agreement shall be exercisable only as
follows:
4.1.
Time of Exercise of Option. One-third (1/3) of
the Option Shares shall vest on the one (1) year anniversary of the
Date of Grant, and thereafter one-twelfth (1/12) of the
Option Shares shall vest quarterly on each third (3
rd ) month anniversary of the Date of Grant for the
next twenty-four (24) months, such that all Option Shares will be
fully vested 36 months from the Date of Grant; provided that the
Optionee is employed by the Corporation on each such vesting
date.
4.2.
Termination of Option . This Agreement and the
Option granted hereby shall terminate automatically and without
further notice on the earliest of (i) 90 calendar days from the
date that the Optionee ceases to be a full-time employee of the
Corporation for any reason other than death, (ii) one year after
the Optionee’s death, if such death occurs while the Optionee
is an employee of the Corporation, and (iii) seven (7) years from
the Date of Grant.
4.3.
Exercise Upon Death . All of the Shares shall
become exercisable upon Optionee’s death if the Optionee was
an employee of the Corporation at the time of Optionee’s
death.
4.4.
Method of Exercise of Option .
4.4.1. To the
extent then exercisable, the Option may be exercised in whole or in
part by written notice to the Corporation in the form attached
hereto as Exhibit A stating the number of shares for which the
Option is being exercised and delivery to the Corporation of the
aggregate Exercise Price for the Option Shares covered by such
exercise notice. The date of such notice shall be the
exercise date. Payment equal to the aggregate Exercise Price of the
shares shall be payable in cash in the form of currency or check or
other cash equivalent acceptable to the Corporation. In no event
shall the Option be exercised for a fractional share.
4.4.2. In the case
of Optionee’s death, the Option may be exercised by the
executor or administrator of the Optionee’s estate or by any
person or persons who shall have acquired the Option directly from
the Optionee by bequest or inheritance.
4.4.3. As soon as
practicable upon the Corporation’s receipt of the
Optionee’s notice of exercise and payment, the Corporation
shall direct the due issuance of the shares so
purchased.
4.4.4. As a further
condition precedent to the exercise of this Option in whole or in
part, the Optionee shall comply with all regulations and the
requirements of any regulatory authority having control of, or
supervision over, the issuance of the shares of Stock and in
connection therewith shall execute any documents which the Board
shall in its sole discretion deem necessary or
advisable.
5.
Non-Transfera
