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EXHIBIT 10.7
PRIVATE BUSINESS, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made and entered into by and between
Private Business, Inc., a Tennessee corporation (the "CORPORATION"), and
______________ ___________________ (the "OPTIONEE"), effective ______________
(the "DATE OF GRANT").
1. Recitals. In consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, have
entered into this Agreement.
2. Grant of Option. The Corporation hereby grants to Optionee the
option (the "OPTION"), exercisable in whole or in part, to
purchase _________ shares of the Corporation's Common Stock (the
"STOCK") for an exercise price of ________________________
($______) per share, subject to the provisions of this Agreement.
3. Non-qualified Option Plan. This Option is granted as a
non-qualified stock option, and is not intended to qualify as an
incentive stock option, as that term is used in Section 422 of
the Internal Revenue Code of 1986, as amended.
4. Timing of Exercise. The Optionee may exercise this Option with
respect to the shares above at any time after _________________,
subject to termination provisions of this Agreement and the
change of control provisions in Section 11 below.
5. Termination of Option. This Option shall immediately cease on the
sooner of (i) the expiration of ten (10) years from the Date of
Grant with respect to any then unexercised portion hereof, or
(ii) the termination of the Optionee's employment by the
Corporation for any reason, provided that the Option shall be
exercisable after such termination of employment only to the
extent provided in Paragraph 8 below. If the Optionee is not an
employee of the Corporation, but is an employee of a subsidiary
or affiliate of the Corporation, references in this Agreement to
employment with the Corporation shall be deemed to refer to
employment with such subsidiary or affiliate of the Corporation.
Transfers of employment among the Corporation and its
subsidiaries and affiliates shall not be deemed to be termination
of employment.
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6. Manner of Exercise. This Option shall be exercised by the Optionee
(or other party entitled to exercise the Option under Paragraph 8
of this Agreement) by delivering written notice to the
Corporation stating the number of shares of Stock to be
purchased, the person or persons in whose name the shares are to
be registered and each such person's address and social security
number. Such notice shall not be effective unless the following
conditions are satisfied.
(a) Payment in Full. The notice must be accompanied by the full
purchase price for all shares so purchased. The purchase
price shall be payable (i) in cash (payment in currency or
by certified check, cashier's check or postal money order
shall be considered payment in cash); or (ii) in the form
of shares of Stock already owned by Optionee; or (iii) in
the form of unexercised portions of vested Options which
shall be valued at the difference between the current value
of the Stock as determined by the Corporation's Board of
Directors, and the Option price.
(b) Tax Withholding Requirements. The Corporation shall have
the right to require the Optionee to remit to the
Corporation an amount sufficient to satisfy any federal,
state and local withholding tax requirements prior to the
delivery of any such shares.
(c) Execution of a Stock Redemption Agreement. The Corporation
may require the Optionee to become a party to a Stock
Redemption Agreement substantially in the form of the Stock
Redemption Agreement attached hereto as Exhibit 1, and/or
to other shareholder or buy-sell agreements (any such
agreement being referred to herein as a "SHAREHOLDERS
AGREEMENT") upon and as a condition to exercise of the
Option.
(d) Execution of Investment Letter. The Corporation may, as a
condition to exercise of this Option, require the Optionee
to execute an agreement in form and substance satisfactory
to the Corporation in which the Optionee or such other
recipient of the shares represents that he or she is
purchasing the shares for investment purposes, and not with
a view to resale or distribution.
7. Nontransferability. Except as otherwise expressly provided herein,
this Option shall not be transferable by the Optionee otherwise
than by will or by the laws of descent and distribution, and this
Option is exercisable during Optionee's lifetime only by the
Optionee. The terms of the Option shall be
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binding on the executors, administrators, heirs and successors of
the Optionee.
8. Termination of Employment.
(a) Termination by Death. If the Optionee's employment by the
Corporation terminates by reason of death, then
notwithstanding the provisions of Paragraph 4 hereof, this
Option shall immediately become one hundred percent (100%)
vested and may thereafter be exercised by the legal
representative of the estate or by the legatee of the
Optionee under the will of the Optionee, for a period of
one year from the date of such death or until the
expiration of the stated term of the Option, whichever
period is the shorter.
(b) Termination by Reason of Disability. If the Optionee's
employment by the Corporation terminates by reason of
Disability (as determined by the Corporation's Board of
Directors), then notwithstanding the provisions of
Paragraph 4 hereof, this Option shall immediately become
one hundred percent (100%) vested and may thereafter be
exercised by the Optionee for a period of one year from the
date of such termination of employment or until the
expiration of the stated term of the Option, whichever
period is the shorter; provided, however, that, if the
Optionee dies within such one-year period, the Option shall
thereafter be exercisable for a period of twelve months
from the date of such death or until the expiration of the
stated term of the Option, whichever period is shorter.
(c) Termination by Reason of Early or Normal Retirement. If the
Optionee's employment by the Corporation terminates by
reason of Normal or Early Retirement (defined below), this
Option may thereafter be exercised to the extent the Option
was exercisable at the time of such Retirement, for a
period of one year from the date of such termination of
employment or until the expiration of the stated term of
the Option, whichever period is shorter; provided, however,
that if the Optionee dies within such one-year period, the
Option shall thereafter be exercisable to the extent to
which it was exercisable at the time of death for a period
of twelve months from the date of such death or until the
expiration of the stated term of the Option, whichever
period is shorter. "EARLY RETIREMENT" means retirement,
with the express consent of the Corporation at or before
the time of such retirement, from active employment with
the Corporation or any subsidiary or affiliate prior to age
65, in accordance with any applicable early retirement
policy of the Corporation then in effect.
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"NORMAL RETIREMENT" means retirement from active employment
with the Corporation or any subsidiary or affiliate on or
after age 65.
(d) Other Termination; Violation of NonCompete. If the
Optionee's employment by the Corporation is terminated for
any reason other than death, Disability or Normal or Early
Retirement, this Option shall thereupon terminate, except
that this Option may be exercised by the Optionee, to the
extent otherwise then exercisable, for a period of three
months from the date of such termination of employment or
the expiration of the Option's terms (whichever period is
the shorter) if such termination is other than for cause as
determined by the Board of Directors of the Corporation.
The violation of any applicable noncompetition or
confidentiality agreements with the Corporation or any of
its subsidiaries or affiliates shall be deemed to result in
termination for cause for purposes of this Agreement and
shall result in the immediate cancellation of any
outstanding portion of this Option, whether or not the
Optionee is employed by the Corporation at the time of such
violation.
9. Restrictive Agreement; Legend. The Optionee understands and
acknowledges that the shares of Stock that may be purchased under
this Option have not been registered under the Securities Act of
1933, as amended (the "ACT"), or any state securities law and may
not be transferred except pursuant to an effective registration
statement under the Act and any such state securities law or
pursuant to an applicable exemption therefrom. Any stock
certificate or certificates representing shares may bear a legend
approved by the Board of Directors of the Corporation reflecting
such restrictions on transfer and any other applicable
restrictions on transfer, including any restrictions contained in
any applicable Shareholders Agreement.
10. Adjustment. In the event of any merger, reorganization,
consolidation, recapitalization, extraordinary cash dividend,
stock dividend, stock split or other change in corporate
structure affecting the Stock, the number of shares of Stock of
the Corporation subject to this Option and the exercise price per
share of such shares shall be appropriately adjusted by the
Corporation as may be determined by the Board of Directors in its
sole discretion.
11. Change of Control. Notwithstanding Section 4 above, this Option
will be fully vested immediately prior to a Change of Control of
the Company. A "Change in Control" shall be deemed to have
occurred if (i) the Company shall enter into an agreement to be
merged or consolidated with another corporation and as a result
of such merger or consolidation less than 75% of the
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outstanding voting securities of the surviving or resulting
corporation would be owned in the aggregate by the former
shareholders of the Company, as the same shall have existed
immediately prior to such merger or consolidation, (ii) the
Company shall enter into an agreement to sell all or
substantially all of its assets to another corporation which is
not a wholly-owned subsidiary, or (iii) a person, within the
meaning of Section 3(a)(9) or of Section 13(d)(3) (as in effect
on the date hereof) of the Securities and Exchange Act of 1934
("EXCHANGE ACT")), shall acquire more than 60% of the outstanding
voting securities of the Company (whether directly, indirectly,
beneficially or of record). For purposes hereof, ownership of
voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule
13d-3(d)(1)(i) (as in effect on the date hereof) pursuant to the
Exchange Act.
12. No Rights Until Exercise. The Optionee shall have no rights
hereunder as a shareholder with respect to any shares subject to
this Option until the date of the issuance of a stock certificate
to the Optionee for such shares upon due exercise of this Option.
13. Amendment. The Board of Directors of the Corporation may amend
the terms of this Option, but no such amendment shall impair the
rights of the Optionee hereunder without the Optionee's consent.
14. Binding Effect; Successors. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their
respective heirs, successors, personal representatives and
assigns; provided that nothing herein shall be construed as an
authorization or right for any party to assign his rights or
obligations hereunder.
15. Entire Agreement. The entire understanding among the parties is
set forth in this Agreement and this Agreement supersedes all
prior agreements, whether oral or written, among the parties
hereto.
16. Governing Law. This is a Tennessee contract and its terms and
provisions shall be governed by and construed in accordance with
the laws of the State of Tennessee.
17. Severability. If any term, covenant, condition or provision of
this Agreement or the application hereto to any person or
circumstance shall be determined to be invalid or unenforceable,
the remainder of this Agreement, or the application of such term,
covenant, condition or provision to persons or circumstances
other than those to which it is held invalid or unenforceable,
shall not be affected thereby; and each term, covenant, condition
and
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provision of this Agreement shall be valid and be enforced to
the fullest extent permitted by law.
18. Notices. Any notices required to be given hereunder shall be in
writing and shall be either delivered personally or mailed by
U.S. certified mail, return receipt requested, to the parties at
their respective last known addresses. Notices delivered
personally shall be deemed to be given upon delivery and notices
delivered by mail shall be deemed to be given three (3) days
after the mailing thereof.
19. Headings. The marginal notes used as headings for the various
paragraphs of this Agreement are used only as a matter of
convenience for reference, and are not to be construed as part of
this Agreement or to be used in determining the intent of the
parties hereto.
IN WITNESS WHEREOF, the parties have caused this Stock Option Agreement
to be duly executed on the dates indicated below, effective as of the Date of
Grant.
PRIVATE BUSINESS, INC.
By:
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Title:
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OPTIONEE:
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EXHIBIT 1
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT (the "Agreement") is made and entered
into on this _____ day of _____________, 199__, by and between _______________
______________________ ("Shareholder") and Private Business, Inc., a Tennessee
corporation (the "Corporation").
1. Recitals. The Shareholder is the owner of a portion of the
issued and outstanding stock of the Corporation, and it is
anticipated that the Shareholder may acquire additional shares of
the Corporation's stock in the future. The Shareholder and the
Corporation feel that it is in their best interests to impose
certain restrictions upon the transfer of the Corporation's stock
by the Shareholder (including the stock now owned by the
Shareholder and all additional stock acquired by the Shareholder
in the future) and to provide for the orderly disposition of the
Corporation's stock upon certain contingencies, and they have
therefore entered into this Agreement in consideration of the
mutual covenants contained herein.
2. General Restrictions on the Transfer of Stock. Except as
otherwise permitted by the terms of paragraphs 3 and 4 of this
Agreement, the Shareholder may not sell, offer to sell, pledge,
hypothecate, or otherwise transfer or encumber any shares of
stock of the Corporation now or hereafter owned by such
Shareholder without the prior written consent of the Corporation.
3. Restrictions on Transfers During Life. The Shareholder may not
transfer or encumber by any method whatsoever any or all of the
Shareholder's stock in the Corporation without first offering the
same in writing to the Corporation at a price computed in
accordance with paragraph 5 of this Agreement, which price shall
be determined as if the Shareholder's employment with the
Corporation had terminated on the date of the Shareholder's
written offer. If the Corporation accepts such an offer to
purchase stock, payment for such stock shall be made in
accordance with the provisions of paragraph 6 of this Agreement.
If this offer is not accepted by the Corporation within sixty
(60) days after the receipt of the written offer, the Shareholder
may transfer the Shareholder's stock to whomever the Shareholder
wishes, provided that such transfer must be at a price and on
terms which are not more favorable to the transferee than the
price and terms upon which the stock was offered to the
Corporation. If the Shareholder does not dispose of the offered
shares within ninety (90) days after the expiration of the
Shareholder's offer to the
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Corporation, then the Shareholder shall not thereafter transfer
or encumber such shares unless the Shareholder first recomplies
with the terms of this paragraph.
4. Option to Redeem Stock Upon Shareholder's Termination of
Employment. At such time as the Shareholder ceases to be an
employee of the Corporation, the Corporation shall have a period
of thirteen months following the termination of employment of the
Shareholder in which to elect to purchase all or any portion of
the stock of the Corporation owned by the Shareholder. Should the
Corporation elect to exercise said option, the closing of the
transaction shall take place as soon after the Shareholder's
termination of employment as is reasonably possible, and the
purchase will be at the same price and upon the same terms as are
provided for in paragraphs 5 and 6 of this Agreement.
5. Purchase Price. The purchase price per share of any shares of
stock of the Corporation purchased under the terms of this
Agreement shall be determined as follows:
a. Termination of Employment for Reasons Other Than Cause. If
the Shareholder's employment with the Corporation terminates
for reasons other than cause (as hereinafter defined), then
the purchase price per share of the stock purchased shall be
the greater of (i) the Shareholder's cost of such shares, or
(ii) the following applicable percentage of the per share
value of the Corporation's stock as valued from time to time
by the Corporation's Board of Directors:
Shareholder's Years
of Employment Applicable Percentage
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Less than 10 70%
More than 10, less than 11 75%
More than 11, less than 12 80%
More than 12, less than 13 85%
More than 13, less than 14 90%
More than 14, less than 15 95%
More than 15 100%
b. Termination of Employment for Cause. If the Shareholder's
employment with the Corporation terminates for cause (as
hereinafter defined), then the purchase price of the stock
purchased shall be _____________ percent (_____%) of the
amount that would otherwise be payable under subparagraph
5(a) above.
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c. Definition of Cause. For the purposes of this Agreement
"cause" shall mean conduct determined by the Board of
Directors of the Corporation to be detrimental to the best
interests of the Corporation. The violation of any
applicable noncompetition or confidentiality agreements with
the Corporation or any of its subsidiaries or affiliates
shall be deemed to result in termination for cause for
purposes of this Agreement, whether or not the Shareholder
is employed by the Corporation at the time of such
violation.
6. Matter of Payment. When the Corporation purchases stock in
accordance with the terms of this Agreement, payment for such
stock shall be made as follows:
a. Downpayment. ________________ percent (_____%) of the
purchase price of the shares being purchased shall be paid
in cash at the closing.
b. Payment of Remaining Balance. The remaining balance of the
purchase price shall be payable in sixty equal, consecutive
monthly installments of principal and interest, with the
first payment being due on the first day of the month
following the month in which the closing occurs, and
subsequent payments being due on the same day of each
succeeding month thereafter until the note is paid in full.
The payments shall be equal in amount and shall contain both
principal and interest computed on the unpaid balance at the
annual rate in effect under section 7520 of the Internal
Revenue Code of 1986, as amended, during the month in which
the closing occurs; provided, however, that in no event
shall such rate exceed the maximum contract rate of interest
permitted under applicable law. The obligation to make such
deferred payments shall be evidenced by an unsecured
promissory note executed by the Corporation's duly
authorized officer substantially in the form of the note
attached hereto as Exhibit A. The Corporation shall have the
right to prepay such note in whole or in part at any time
without penalty.
7. Method of Transfer. At the time of the closing of any sale
pursuant to the terms of this Agreement, the Shareholder (or the
Shareholder's estate) shall surrender to the Corporation for
cancellation certificates representing the Shareholder's shares,
duly endorsed in blank, or accompanied by a duly executed stock
power, in each case in proper form for transfer. The Shareholder
(or the Shareholder's estate) shall also deliver a representation
dated as of the date of the sale to the effect that the delivery
of such shares
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of common stock will transfer good title to such shares, free and
clear of all liens, charges, security interests, pledges or other
encumbrances.
8. Endorsement of Stock Certificates. Upon the execution of this
Agreement, all certificates of stock owned by the Shareholder
shall be surrendered to the Corporation and endorsed as follows:
"THIS CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH
THE PROVISIONS OF A CERTAIN AGREEMENT DATED THE ______ DAY
OF ______________________, 199__, BETWEEN THE CORPORATION AND
__________________, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE CORPORATION."
9. Effect of Noncompliance. Any attempt to transfer or encumber
shares of stock in the Corporation without complying with the
terms of this Agreement shall be void and of no force or effect
whatsoever. In the event that any party to this Agreement
defaults in the performance of their obligations hereunder, then
in any such event the non-defaulting party shall have the right
to enforce this Agreement through a suit for specific performance
or otherwise (including the right to obtain an injunction against
the defaulting party). Nothing herein contained, however, shall
be construed as prohibiting the non-defaulting party from
pursuing any other remedies available at law or in equity for
such breach or threatened breach. In the event it becomes
necessary for any party to employ an attorney to enforce the
provisions of this Agreement, the defaulting party shall be
liable for reasonable attorneys' fees, court costs and expenses
so incurred by the non-defaulting party.
10. Covenants by Shareholder Regarding Corporation's Status as S
Corporation. The Shareholder agrees that so long as the
Corporation has not voluntarily revoked its election to be an S
corporation for federal income tax purposes, the Shareholder will
not take any actions that would cause a termination of the
Corporation's election to be an S corporation. Any actions by the
Shareholder in violation of this covenant shall be null and void.
11. Binding Effect; Successors. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their
respective heirs, successors, personal representatives and
assigns; provided that nothing herein shall be construed as an
authorization or right for any party to assign his rights or
obligations hereunder.
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12. Entire Agreement. The entire understanding among the parties is
set forth in this Agreement and this Agreement supersedes all
prior agreements, whether oral or written, among the parties
hereto.
13. Governing Law. This is a Tennessee contract and its terms and
provisions shall be governed by and construed in accordance with
the laws of the State of Tennessee.
14. Severability. If any term, covenant, condition or provision of
this Agreement or the application thereto to any person or
circumstance shall be determined to be invalid or unenforceable,
the remainder of this Agreement, or the application of such term,
covenant, condition or provision to persons or circumstances
other than those to which it is held invalid or unenforceable,
shall not be affected thereby; and each term, covenant, condition
and provision of this Agreement shall be valid and be enforced to
the fullest extent permitted by law.
15. Notices. Any notices required to be given hereunder shall be in
writing and shall be either delivered personally or mailed by
U.S. certified mail, return receipt requested, to the parties at
their respective last known addresses. Notices delivered
personally shall be deemed to be given upon delivery and notices
delivered by mail shall be deemed to be given three (3) days
after the mailing thereof.
16. Amendments. This Agreement may be amended at any time only by the
written consent of all of the parties who are then bound by the
terms hereof.
17. Headings. The marginal notes used as headings for the various
paragraphs of this Agreement are used only as a matter of
convenience for reference, and are not to be construed as part of
this Agreement or to be used in determining the intent of the
parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
PRIVATE BUSINESS, INC.
By:
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Its:
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SHAREHOLDER
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STATE OF TENNESSEE )
COUNTY OF ______________)
Personally appeared before me, ________________________, a Notary
Public, _______________________, with whom I am personally acquainted, and who
acknowledged that __he executed the within instrument for the purposes therein
contained.
WITNESS my hand, at office, this _____ day of ______________, 199__.
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Notary Public
My Commission Expires:
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STATE OF TENNESSEE )
COUNTY OF_______________)
Personally appeared before me, ________________________, a Notary
Public, _______________________, with whom I am personally acquainted, and who
acknowledged that __he executed the within instrument for the purposes therein
contained, and who further acknowledged that __he is the
___________________________ of Private Business, Inc., a Tennessee corporation,
and is authorized by the corporation to execute this instrument on behalf of the
corporation.
WITNESS my hand, at office, this _____ day of ______________, 199__.
---------------------------------
Notary Public
My Commission Expires:
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EXHIBIT A
PROMISSORY NOTE
$ ___________________ Nashville, Tennessee ________________, _____
FOR VALUE RECEIVED, Private Business, Inc., a Tennessee corporation
("Maker"), promises to pay to the order of ______________________________
("Payee") the principal sum of ____________________________________________
($____________), together with interest on the unpaid balance at the rate of
_______ percent (_____%) per annum. Interest and principal shall be payable in
sixty (60) equal, successive monthly installments of ___________________
_______________________ ($____________), with the first such installment being
due on ____________________, and subsequent installments being due on the same
day of each succeeding month thereafter until the indebtedness evidenced by this
note is paid in full.
It is agreed that if any installment is not paid when due, this note
may be declared due and payable in full unless payment of such installment is
made within ten (10) days after notice of such failure to pay has been given to
the Maker by the Payee. The Payee may waive any default before or after the same
has been declared and may restore this note to full force and effect without
impairing the right to declare this note due for a subsequent default, this
right being a continuing one.
This note may be prepaid in whole or in part at any time without
penalty, and if prepaid in part, then the remaining installments shall be
reduced appropriately so that the remaining unpaid balance will be paid in equal
quarterly payments containing both principal and interest.
Demand, notice, presentment and protest are waived.
In the event this note is placed in the hands of an attorney for
collection, the Maker and any endorsers hereof agree to pay a reasonable
attorney's fee and all court and other costs.
PRIVATE BUSINESS, INC.
By:
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Its:
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