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EXHIBIT 99.10
NON-QUALIFIED STOCK OPTION AGREEMENT
Agreement made effective as of the 20th day of April, 1999 by and between
Internet America, Inc. (the "Company") and XXXX X. 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 then outstanding shares of common stock),
(B) a sale or disposition of all or substantially all
of the Company's assets or (C) a plan of liquidation or
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.
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 75,000 Shares at
a purchase price (the "Option Price") of $25.00 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: 18,750 on April 20, 1999
(ii) Second Installment: 18,750 on April 20, 2000
(iii) Third Installment: 18,750 on April 20, 2001
(iv) Fourth Installment: 18,750 on April 20, 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
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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 Change in Control. Notwithstanding anything contained in this
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, and (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. 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.
d. 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 X. XXXXXX
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Xxxxxxx X. Xxxxxx
Chief Executive Officer
OPTIONEE
/s/ XXXX X. XXXXXX
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