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EXHIBIT 99.4
NON-QUALIFIED STOCK OPTION AGREEMENT
Agreement made effective as of the 23rd day of January, 1997 by and between
INTERNET AMERICA, INC. (the "Company") and XXXXX XXXXXXXXXXX (the "Optionee").
1. Definitions. For purposes of this Agreement:
a. "Board" means the Board of Directors of the Company.
b. "Change in Capitalization" means any increase or reduction
in the number of Shares, or any change (including, but not limited to,
a change in value) in the Shares or exchange of Shares for a different
number or kind of Shares or other securities of the Company, by reason
of a reclassification, recapitalization, merger, consolidation,
reorganization, stock dividend, stock split or reverse stock split,
combination or exchange of shares or other similar events.
c. "Change in Control" shall be deemed to have occurred when
the first of the following events occurs:
(i) when the Company acquires actual knowledge that
any person or group (as such terms are used in
Sections 13(d) and 14(d) (2) of the Exchange Act),
other than an employee benefit plan established or
maintained by the Company or any of its
subsidiaries or the current largest stockholder,
is or becomes the beneficial owner (as defined
under rule 13d-3 of the Exchange Act) directly or
indirectly, or securities of the Company
representing 30 percent or more of the combined
voting power of the Company's directors;
(ii) upon the approval by the Company's stockholders of
(A) a merger or consolidation of the Company with
or into another Corporation (other than a merger
or consolidation in which the Company is the
surviving corporation and which does not result in
any capital reorganization or reclassification or
other change in the Company's the outstanding
shares of common stock), (B) a sale of disposition
of all or substantially all of the Company's
assets of (C) a plan of liquidation of dissolution
of the Company; or
(iii) if, at any time, two-thirds of the members of the
Board are not "Continuing Directors". For this
purpose " Continuing Directors" shall mean the
members of the Board of Directors as of September
30, 1995, and any individual who becomes a member
of the Board thereafter if his or her election or
nomination for election as a director was approved
by a vote of at least two-third of the Continuing
Directors then in office.
d. "Code" means the Internal Revenue Code of 1986, as amended.
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e. "Company" means Internet America, Inc., a Texas corporation.
f. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
g. "Fair Market Value" on any date means the closing price of
Shares on such date on the principal national securities exchange on
which Shares are listed or admitted to trading, the arithmetic mean of
the per Share closing bid priced and per Share closing asked price on
such date as quoted on the National Association of Securities Dealers
Automated Quotation System or such then market in which such prices
are regularly quoted, or, if there have been no published bid or asked
quotations with respect to Shares on such date, the Fair Market Value
shall be the value established by the Board in good faith and in
accordance with Section 422 of the Code.
h. "Shares" means the common stock, par value $.01 per share,
of the Company.
2. Grant of Option. The Company hereby grants to the Optionee, for
valuable consideration, receipt of which is hereby acknowledged, a Non-Qualified
Stock Option ("Option") to purchase from the Company an aggregate of 5,000
Shares at a purchase price (the "Option Price") of $3.75 per share.
3. Exercise Period. The Option shall become non-forfeitable according to
the following schedule and shall hereafter be exercisable in whole or in part:
(i) First Installment: 500 on June 10, 1997;
(ii) Second Installment: 1,500 on June 10, 1998;
(iii) Third Installment: 1,500 on June 10, 1999; and
(iv) Fourth Installment: 1,500 on June 10, 2000.
The Option may be exercised only with respect to full Shares and may
not be exercised after the close of business on the day (the "Termination Date")
preceding the tenth anniversary of the date hereof. The Option shall have no
effect after the Termination Date.
4. Exercise of an Option. The exercise of an Option shall be made only by
a written notice delivered in person or by mail to the Secretary of the Company
at the Company's principal executive office, specifying the number of Shares to
be purchased and accompanied by payment therefor. The purchase price for any
Shares purchased pursuant to the exercise of an Option shall be paid in full
upon such exercise by delivery of cash or personal check in amount of purchase
price. The written notice may provide instructions from the Optionee to the
Company that upon receipt of the purchase price in cash from the Optionee's
broker or dealer, designated as such on the written notice, in payment for any
Shares purchased pursuant to the exercise of an Option, the Company shall issue
such Shares directly to the broker or dealer. If requested by the Board, the
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Optionee shall deliver this Agreement to the Secretary of the Company who shall
endorse thereon a notation of such exercise and return such Agreement to the
Optionee. No fractional Shares (or cash in lieu thereof) shall be issued upon
exercise of an Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
5. Rights of Optionee. The Optionee shall not be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the Company
shall have issued and delivered the Shares to the Optionee and (iii) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares.
6. Adjustment Upon Changes in Capitalization.
a. Subject to Section 7, in the event of a Change in
Capitalization, the number and class of Shares or other stock or
securities which are subject to the Option, and the purchase price
therefor, if applicable, shall be appropriately and equitably
adjusted.
b. If, by reason of a Change in Capitalization, the Optionee
shall be entitled to exercise an Option with respect to new,
additional or different shares of stock or securities, such new,
additional or different shares shall thereupon be subject to all of
the conditions which were applicable to the Shares subject to the
Option, as the case may be, prior to such Change in Capitalization.
7. Effect of Certain Transactions. In the event of (i) the liquidation or
dissolution of the Company or (ii) a merger or consolidation of the Company (a
"Transaction"), the Option issued hereunder shall continue in effect in
accordance with its terms and the Optionee shall be entitled to receive in
respect of each Share subject to any outstanding Option, upon exercise of any
Option, the same number and kind of stock, securities, cash, property, or other
consideration that each holder of a Share was entitled to receive in the
Transaction in respect of a Share. In the event that, after a Transaction, there
occurs any Change in Capitalization with respect to the shares of a surviving or
resulting corporation, then adjustments similar to, and subject to the same
conditions as, those in Section 6 hereof shall be made by the Board.
8. Effect of Change in Control.
a. Notwithstanding anything contained in the Plan or an
Agreement to the contrary, in the event of a Change in Control, all
Options outstanding on the date of such Change in Control shall become
immediately and fully exercisable.
9. Effect of Certain Transactions.
a. Notwithstanding anything to the contrary or in the
Agreement, the Optionee shall forfeit 100% of the Options granted
pursuant to this Agreement, whether or not vested, if the Optionee
breaches the provisions of subsections (b) or (d) of this Section 9.
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b. During the period that the Optionee is employed by the
Company or any affiliate of the Company (the "Service Term") and for a
period of one year thereafter, the Optionee shall not, in the
continental United States, directly or indirectly, own, manage,
operate, join, control, be employed by, or participate in the
ownership, management, operation or control of or be connected in any
manner, including but not limited to holding the positions of
shareholder, director, officer, consultant, independent contractor,
employee, partner, or investor, with any Competing Enterprise. For
purposes of this Section, the term "Competing Enterprise" shall mean
any person, corporation, partnership or other entity engaged in the
operation of an internet service provider. The prohibition of this
Section 9 shall not be deemed to prevent Optionee from owning 2% or
less of any class of equity securities registered under Section 12 of
the Exchange Act. During the Service Term and for a period of one year
thereafter, the Optionee shall not interfere with the Company's
relationship with, or endeavor to entice away from the Company, any
person who at any time during the Service Term was an employee or
customer of the Company or otherwise had a material business
relationship with the Company.
c. The necessity for protection of the Company and its
affiliates against the Optionee's competition, as well as the nature
and scope of such protection, has been carefully considered by the
parties hereto in light of the uniqueness of the Optionee's talent and
his importance to the Company. Accordingly, the Optionee agrees that,
in addition to any other relief to which the Company may be entitled,
the Company shall be entitled to seek and obtain injunctive relief
(without the requirement of any bond) from a court of competent
jurisdiction for the purpose of restraining the Optionee from any
actual or threatened breach of the covenant contained in this Section
9. If for any reason a final decision of any court determines that the
restrictions under this Section 9 are not reasonable or that
consideration therefor is inadequate, such restrictions shall be
interpreted, modified or rewritten by such court to include as much of
the duration, scope and geographic area identified in this Section 9
as will render such restrictions valid and enforceable.
d. The Optionee shall not intentionally disclose or reveal to
an unauthorized person, during the Service Term or for a two year
period thereafter, any information relating to the confidential
affairs of the company or any of its affiliates, including but not
limited to technical information, business and marketing plans,
strategies, customer information, other information concerning the
Company's products, promotions, development, financing, expansion
plans, business policies and practices, and other forms of information
considered by the Company to be confidential and in the nature of
trade secrets. The Optionee shall hold as property of the Company and
its affiliates all memoranda, books, papers, letters and other data,
and all copies thereof or therefrom, which are in any way
substantially related to the business of the company or its
affiliates, whether made by him or otherwise coming into his
possession and, on a prior written demand of the Company made within
two years after the end of the Service Term, shall deliver the same to
the company.
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10. General Rules
a. The obligation of the Company to sell or deliver Shares with
respect to the Options granted shall be subject to all applicable
laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Board.
b. The Company shall have the right to deduct from any
distribution of cash to Optionee, an amount equal to the federal,
state and local income taxes and other amounts as may be required by
law to be withheld (the "Withholding Taxes") with respect to any
Option. If Optionee is entitled to receive Shares upon exercise of an
Option, the Optionee shall pay the Withholding Taxes to the Company
prior to the issuance, or release from escrow, of such Shares. In
satisfaction of the Withholding Taxes to the Company, the Optionee may
make a written election (the "Tax Election"), which may be accepted or
rejected in the discretion of the Board, to have withheld a portion of
the Shares issuable to him or her upon exercise of the Option having
an aggregate Fair Market Value, on the date preceding the date of
exercise, equal to the Withholding Taxes, provided that in respect of
an Optionee who may be subject to liability under Section 16(b) of the
Exchange Act either (i)(A) the Optionee makes the Tax Election at
least six (6) months after the date the Option was granted, (B) the
Option is exercised during the ten day period beginning on the third
business day and ending on the twelfth business day following the
release for publication of the Company's quarterly or annual
statements of earnings (a "Window Period") and (C the Tax Election is
made during the Window Period in which the Option is exercised prior
to such Window Period and subsequent to the immediately preceding
Window Period or (ii)(A) the Tax Election is made at least six (6)
months prior to the date the Option is exercised prior to the
expiration of six (6) months following an election to revoke the Tax
Election. Notwithstanding the foregoing, the Board may, by the
adoption or rules or otherwise, (i) modify the provisions in the
preceding sentence or impose such other restrictions or limitations on
Tax Elections as may be necessary to ensure that the Tax Elections
will be exempt transactions under Section 16(b) of the Exchange Act,
an (ii) permit Tax Elections to be made at such other times and
subject to such other conditions as the Board determines will
constitute exempt transactions under Section 16b of the Exchange Act.
c. If Optionee makes a disposition, within the meaning of
Section 424(c)of the Code and regulations promulgated thereunder, of
any Share or Shares issued to such Optionee pursuant to the exercise
of an Option within the two-year period commencing on the day after
the date of the grant or within the one-year period commencing on the
day after the date of transfer of such Share or Shares to the Optionee
pursuant to such exercise, the Optionee shall, within ten (10) days of
such disposition, notify the Company thereof, by delivery of written
notice to the Company at its principal executive office, and
immediately deliver to the Company the amount of Withholding Taxes.
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d. No Option granted hereunder shall be transferable by the
Optionee to whom granted otherwise than by will or the laws of descent
and distribution, and an Option may be exercised during the lifetime
of such Optionee only by the Optionee or his or her guardian or legal
representative. The terms of such an Option shall be final, binding
and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
and the Optionee has hereunto set his hand, as of the day and year first above
written.
INTERNET AMERICA, INC.
/s/ XXXXXX X. XXXXXXX, XX.
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Xxxxxx X. Xxxxxxx, Xx.
Chief Executive Officer
OPTIONEE
/s/ XXXXXX X. XXXXXXXXXXX
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Xxxxxx X. Xxxxxxxxxxx
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