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EXHIBIT 99.7
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OPTION SETTLEMENT AGREEMENT
This Option Settlement Agreement (this "Agreement") is made and entered
into as of the 15th day of January, 1999, by and between Xxxxxxx X. Xxxxxx
("Claimant") and Internet America, Inc., a Texas corporation (the "Company").
W I T N E S S E T H :
WHEREAS, disputes and controversies have arisen between Claimant and
the Company concerning, among other things, certain options which Claimant and
other former employees (the "Former Employees") of the Company claim were
granted and remain in effect (the "Former Options"); and
WHEREAS, the Company disputes both the existence and enforceability of
the Former Options; and
WHEREAS, in order to settle all disputes and controversies between
Claimant and the Company and to avoid the expense and uncertainty of litigation,
the Company is agreeable not to contest certain of the Former Options and to
register certain Underlying Stock with respect to such recognized Former
Options, subject to the terms and conditions of this Agreement and other
agreements similar to this Agreement which are to be entered into by other
Former Claimants.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree to
settle their disputes on the following terms:
1. Agreement Regarding Former Options. Claimant represents and
warrants to the Company that Claimant is the legal and beneficial owner of any
rights relating to the option listed on Schedule I attached hereto ("Claimant's
Former Option"); and that beyond such rights Claimant has and will assert no
other rights or claims, directly or indirectly, oral or written, to acquire any
capital stock of the Company or any other security of the Company. The parties
hereby agree that the rights of Claimant under the Claimant's Former Option are
hereby modified, amended and changed to provide that Claimant may exercise the
Claimant's Former Options to purchase only an aggregate of 37,500 shares of
Common Stock (the "Exercisable Portion of the Option"), which purchase must be
during the exercise period and at the exercise price of $1.67 per share. The
parties expressly agree that the only portion of the Claimant's Former Option
that may be exercised is the Exercisable Portion of the Option, and that any
excess portion is forever and completely terminated, canceled and rescinded.
Claimant agrees to indemnify and hold harmless the Company for any claim
asserted by or through Claimant under Claimant's Former Option, other than the
Exercisable Portion of the Option.
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2. Registration of Underlying Stock. The Company hereby agrees to
use its best efforts to cause the registration under the Securities Act of 1933,
as amended, on Form S-8 or other appropriate form (the "Registration
Statement"), the Common Stock underlying the Exercisable Portion of the Option
("Claimant's Underlying Stock") as soon as possible after the date hereof.
Claimant agrees to provide all such information as may be necessary to assist
the Company in such efforts. The parties agree that if the Registration
Statement has not become effective by February 15, 1999, except by reason of
Claimant's failure to comply with the previous sentence, then this Agreement
shall become null and void and of no further force or effect. The Company agrees
that it will handle the exercise by Claimant of the Exercisable Portion of the
Option in substantially the same respect as it handles the exercise of stock
options by other holders of stock options of the Company.
3. Claimant Release. Claimant, on his own behalf and on behalf of
his attorneys, agents, successors, heirs, legal representatives and assigns
(collectively, the "Releasors") agrees to release and does hereby release,
acquit and forever discharge the Company and its officers, directors, agents,
employees and attorneys and the respective successors, heirs, legal
representatives and assigns of each of the foregoing (collectively, the
"Releasees") from, and extinguishes, any and all claims, demands, debts,
damages, costs, losses, expenses, commissions, actions, causes of action,
rights, liabilities, obligations and chooses in action of whatever nature or
type which any of the Releasors have, or may have, or which have been, or could
have been, or in the future otherwise might have been asserted, known and
unknown, in connection with actions or inactions of the Releasees or otherwise,
or any of them, occurring on or prior to the date hereof (collectively, the
"Claims"), except that in no event shall this paragraph operate to release from
any claims or liability resulting from a breach of the representations,
warranties, covenants and agreements of the Company contained in this Agreement
or the rights or obligations of Claimant under any of the following agreements:
(i) Stock Purchase Agreement, dated March 24, 1998, among the Xxxxxxx Family
Trust, the Xxxx X. Xxxxx Trust, Xxxxxxx X. Xxxxxx and First Extended, Inc., as
nominee; or (ii) Mutual Release Agreement, dated March 24, 1998, among First
Extended, Inc, the Company, Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxx, the Xxxxxxx Family
Trust and Xxxxxxx X. Xxxxxx.
Claimant further agrees that he will not xxx any of the Releasees by
asserting in any way the rights, claims, actions, accounts, demands, contracts,
debts, controversies, agreements, lawsuits, damages, liabilities and causes of
action released by this Agreement.
4. Company Release. The Company, on its own behalf and on behalf of
its officers, directors, attorneys, agents, successors and assigns
(collectively, the "Company Releasors") agrees to release and does hereby
release, acquit and forever discharge Claimant and his agents and attorneys and
the respective successors, heirs, legal representatives and assigns of each of
the foregoing (collectively, the "Company Releasees") from, and extinguishes,
any and all claims, demands, debts, damages, costs, losses, expenses,
commissions, actions, causes of action, rights, liabilities, obligations and
chooses in action of whatever nature or type which any of the Company Releasors
have, or may have, or which have been, or could have been, or in the future
otherwise might have been asserted, known and unknown, in connection with
actions or inactions of the Company Releasees or otherwise, or any of them,
occurring on or prior to the date hereof (collectively, the "Company Claims"),
except that in no event shall this paragraph operate to release
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xxxx any claims or liability resulting from a breach of the representations,
warranties, covenants and agreements of Claimant contained in this Agreement or
the rights or obligations of the parties under any of the following agreements:
(i) Stock Purchase Agreement, dated March 24, 1998, among the Xxxxxxx Family
Trust, the Xxxx X. Xxxxx Trust, Xxxxxxx X. Xxxxxx and First Extended, Inc., as
nominee; or (ii) Mutual Release Agreement, dated March 24, 1998, among First
Extended, Inc, the Company, Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxx, the Xxxxxxx Family
Trust and Xxxxxxx X. Xxxxxx.
The Company further agrees that it will not xxx any of the Company
Releasees, by asserting in any way the rights, claims, actions, accounts,
demands, contracts, debts, controversies, agreements, lawsuits, damages,
liabilities and causes of action released by this Agreement.
5. Representations and Warranties of Claimant. Claimant hereby
represents and warrants that the following are true and correct as of the date
hereof: (a) Claimant has the power and authority to execute, deliver and perform
his obligations under this Agreement, and this Agreement constitutes the valid
and binding obligation of Claimant enforceable against him in accordance with
the terms hereof; (b) none of the Releasors have assigned, sold, conveyed or
otherwise transferred all or any portion of the Claims; and (c) Claimant has
consulted or has had sufficient opportunity to discuss with any person,
including an attorney of his choice, all provisions of this Agreement, that he
has carefully read and fully understands all the provisions of this Agreement,
that he is competent to execute this Agreement, and that he is voluntarily
entering into this Agreement of his own free will and accord, without reliance
upon any statement or representation of any person or parties released, or their
representatives, concerning the nature and extent of the damages and/or legal
liability therefor.
6. Representations and Warranties of the Company. The Company hereby
represents and warrants that the following are true and correct as of the date
hereof: (a) the Company is a corporation validly existing and in good standing
under the laws of the State of Texas; and (b) the Company has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement, and the execution, delivery and performance by it of this Agreement
has been duly authorized by all necessary action, and this Agreement constitutes
the valid and binding obligation of the Company, enforceable against it in
accordance with the terms hereof.
7. Amendment and Assignment. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by the parties hereto.
This Agreement shall extend to and be binding upon each of the parties and their
respective heirs, successors, assigns, legal representatives and any corporation
or other entity into or with which any party hereto may merge or consolidate.
Notwithstanding the above, neither this Agreement nor any right created hereby
shall be assignable to any party hereto.
8. Notice. Any notice or communication must be in writing and given
by depositing the same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person or by facsimile. Any such notice
or communication shall be deemed received, if not earlier received, on the third
business day following the date on which it is mailed, or on the day on which it
is hand delivered or delivered by facsimile, as the case may be.
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9. Entire Agreement. This Agreement contains the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.
10. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, such
provisions shall be deemed severable and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provisions did not
comprise a part hereof unless the loss of such provision causes this Agreement
to fail of its essential purpose; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom except as
aforesaid. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, the parties agree to meet to determine in good faith, or will ask the
court to determine, a provision as similar in its terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid and
enforceable and such provision so determined shall then be added as part of this
Agreement.
11. Governing Law. This Agreement and the rights and obligations of
the parties hereto, shall be governed, construed and enforced in accordance with
the laws of the State of Texas.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
INTERNET AMERICA, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx,
President
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Schedule I
Number of shares originally
underlying Claimant's
Option Date Former Option (1) Exercise Price
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10/27/96 27,350 $7.50
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(1) This number is prior to reflecting the Company's previous 2.25 for 1.00
stock split.
