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EXHIBIT 99.13
NON-QUALIFIED STOCK OPTION AGREEMENT
Agreement made effective as of the 27th day of October, 1996 by and between
INTERNET AMERICA, INC. (the "Company") and XXXXX XXXXXX (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.
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d. "Code" means the Internal Revenue Code of 1986, as amended.
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 10,000 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: 1,000 on April 29, 1997;
(ii) Second Installment: 3,000 on April 29, 1998;
(iii) Third Installment: 3,000 on April 29, 1999; and
(iv) Fourth Installment: 3,000 on April 29, 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
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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.
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
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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, 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 ("ISP"), but shall exclude any
division or affiliate of an ISP not engaged in the operation of an ISP. 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
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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.
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
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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 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/ XXXXX XXXXXX
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