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EXHIBIT 99.5
NON-QUALIFIED STOCK OPTION AGREEMENT
Agreement made effective as of the 1st day of December, 1995 by and between
INTERNET AMERICA, INC. (the "Company") and XXXX 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 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:
First Installment: With respect to 2,500 shares, on December 1, 1995
Second Installment: With respect to 2,500 shares, on April 1, 1996
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
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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 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, the Optionee shall not, in the continental United
States, directly or indirectly, own,
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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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9. 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.
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/ XXXX XXXXX
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Xxxx Xxxxx
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