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EXHIBIT 99.7
NON-QUALIFIED STOCK OPTION AGREEMENT
Agreement made this 5th day of April , 1996 by and between Internet
America, Inc. (the "Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (the "Optionee").
1. Definitions. For purposes of this Agreement:
(a) "Board" means the Board of Directors of the Company.
(b) "Business Services Division" is defined as the scope of
the Business Services Division as configured on the execution
date of this agreement.
(c) "Business Services Revenues" is defined as the sum of all
revenues as reported under generally accepted accounting
principles (GAAP") for any fiscal year ended June 30 ("Fiscal
Year").
(d) "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.
(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.
(i) "Total Revenues" means the sum of revenues reported under GAAP
for any Fiscal Year ended June 30 ("Fiscal Year")
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 is non-forfeitable and shall hereafter
be exercisable in whole or in part on APRIL 5, 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
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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.
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. Rights of the Company. In the event Optionee terminates his
employment with the Company for any reason, whether voluntary or involuntary, at
any time prior to April 5, 1998, Optionee agrees that the Company, upon notice
delivered to Optionee within Sixty (60) days of such termination, (I) may either
repurchase the Option at a price of $.10 per share which has vested under the
Option or (ii) repurchase the Shares, If the Option has been exercised by the
Optionee, at a price of $3.85 per share. The repurchase price contemplated by
this paragraph will be paid to Optionee within thirty (30) days of such notice
and the Option or Shares, as appropriate, will be canceled.
7. 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.
8. 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.
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 8.
(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
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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 8 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 8. If for
any reason a final decision of any court determines that the restrictions under
this Section 8 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 8 as will render such restrictions valid and enforceable.
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.
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(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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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Chief Executive Office
OPTIONEE
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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