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EXHIBIT 99.13
NON-QUALIFIED STOCK OPTION AGREEMENT
Agreement made effective as of the 24th day of March, 1998 by and between
INTERNET AMERICA, INC. (the "Company") and XXXXX X. XXXXX (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 15,000
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: 3,750 on Xxxxx 00, 0000
(xx) Second Installment: 3,750 on Xxxxx 00, 0000
(xxx) Third Installment: 3,750 on March 24, 2001
(iv) Fourth Installment: 3,750 on March 24, 2002
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
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.
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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. 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.
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,
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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.
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
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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.
e. Termination of Employment or Service. Unless otherwise provided
in the Agreement evidencing the Option, an option shall terminate on or
following an Optionee's termination of employment with the Company and its
Subsidiaries or service as a director of the Company and its Subsidiaries
as follows:
(i) If an Optionee's employment terminates for any reason other
than death, Disability or Cause, the Optionee may at any time
within three (3) months after his or her termination of
employment or service as a director, exercise an option to the
extent, and only to the extent, that the Option or portion
thereof was exercisable at the date of such termination;
(ii) In the event the Optionee's employment or service as a
director terminates as a result of Disability, the Optionee
may at any time within one (1) year after such termination
exercise such Option to the extent, and only to the extent,
the Option or portion thereof was exercisable at the date of
such termination;
(iii) If an Optionee's employment or service as a director
terminates for Cause, the Option shall terminate immediately
and no rights thereunder may be exercised;
(iv) If an Optionee dies while an employee of the Company or any
Subsidiary or within three(3) months after termination as
described in clause (1) of this Section 10(e), the Option may
be exercised any time within one (1) year after the Optionee's
death by the person or persons to whom such rights under the
Option pass by will or by the laws of descent and
distribution; provided, however, that an option may be
exercised to the extent, and only to the extent, that the
Option or portion thereof was exercisable on the date of death
or earlier termination.
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/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
Chief Executive Officer
OPTIONEE
/s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx
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