INTERNET AMERICA, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (this "Agreement")
is entered into between INTERNET AMERICA, INC., a Texas
corporation (the "Company"), and XXXXXXX X. XXXX (the "Optionee")
as of August 12, 2002. In consideration of the mutual promises
and covenants made herein, the parties hereby agree as follows:
1. GRANT OF OPTION. Under the terms and conditions of the
Company's 1998 Nonqualified Stock Option Plan (the "Plan"), which
is incorporated herein by reference, the Company grants to the
Optionee an option (the "Option") to purchase from the Company
all or any part of a total of twenty thousand (20,000) shares of
the Company's Common Stock, par value $0.01 per share, at a price
of $0.34 per share. The Option is granted as of December 10 (the
"Date of Grant"). Any term used herein with an initial capital
letter and not defined herein shall have the meanings provided
for such term in the Plan.
2. CHARACTER OF OPTION. The Option is not an "incentive
stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
3. TERM. The Option will expire on the day prior to the
tenth anniversary of the Date of Grant or, in the event of the
Optionee's termination of service as an employee, director, or
advisor of the Company, on such earlier date as may be provided
in the Plan.
4. VESTING. Subject to any provisions of the Plan
concerning exercisability of options, the Option may be exercised
according to the following schedule:
Percentage
Exercisable Date Exercisable
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25% On the date of Grant
50% One year after the Date of Grant
75% Two years after the Date of Grant
100% Three years after the Date of Grant
The unexercised portion of the Option from one period may be
carried over to a subsequent period or periods, and the right of
the Optionee to exercise the Option as to such unexercised
portion shall continue for the entire term.
5. PROCEDURE FOR EXERCISE. Exercise of the Option or a
portion thereof shall be effected by the giving of written notice
to the Company by the Optionee in accordance with the Plan and
payment of the purchase price prescribed in Section 1 above for
the shares to be acquired pursuant to the exercise.
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6. PAYMENT OF PURCHASE PRICE. Payment of the purchase
price for any shares purchased pursuant to the Option shall be in
accordance with the provisions of the Plan.
7. TRANSFER OF OPTIONS. The Option may not be
transferred, except by will or the laws of descent and
distribution and, during the lifetime of the Optionee, may be
exercised only by the Optionee or by the Optionee's legally
authorized representative.
8. TERMINATION. The Option shall terminate on the earlier
of (i) the expiration date set forth in Section 3 above or, (ii)
in the event of the termination of the Optionee's service as an
employee, director, or advisor of the Company, the date provided
in the Plan.
9. ACCEPTANCE OF THE PLAN. The Option is granted subject
to all of the applicable terms and provisions of the Plan, and
such terms and provisions are incorporated by reference herein.
The Optionee hereby accepts and agrees to be bound by all the
terms and conditions of the Plan.
10. RETURN OF VALUE OF OPTION. The Optionee agrees to pay
to the Company in cash within five business days of written
demand therefore an amount equal to the excess of (A) the Fair
Market Value per share of Common Stock on the date of exercise of
all or part of this Option multiplied by the number of shares
purchased upon such exercise over (B) the aggregate price paid
for the shares of Common Stock in connection with such exercise
if (i) the Optionee ceases to be an employee of the Company or a
Subsidiary for any reason (whether voluntary or involuntary) and,
within one year after such termination of employment, either
Optionee or any of its affiliates, directly or indirectly, for
itself or on behalf of any other corporation, firm, partnership,
association or other entity (whether as an individual, agent,
servant, employee, employer, partner, member, officer, director,
shareholder, investor, principal, consultant or in any other
capacity) engages or participates in any business which engages
in any types of businesses being conducted, or proposed to be
conducted in the next twelve months, by the Company, in any State
in which the Company is, or is proposing in the following twelve
months to be, conducting its business (as determined by the Board
in its sole discretion and in good faith); or (ii) the Optionee
ceases to be an employee voluntarily (without the Company's prior
consent) or by reason of discharge for Cause and if the Optionee
exercises all or part of this Option within six months before or
after the date of such termination of employment. Amounts due
the Company pursuant to this section shall be payable in Dallas
County, Texas. If the Optionee fails to pay any amount as
required in this section and if the Company institutes litigation
to enforce or interpret its rights under this section, the
Optionee shall pay the Company for its reasonable attorneys'
fees, disbursements, and other costs incurred in enforcing or
interpreting the Optionee's obligation and shall pay interest on
the amount due the Company at a rate of eighteen percent per
annum (or, if lower, the highest rate of interest permitted by
law) from the date such amount became due until paid in full. As
used herein, an "affiliate" of Optionee means any person or
entity controlling, controlled by or under common control with
Optionee.
11. AMENDMENT. This Agreement may be amended by an
instrument in writing signed by both the Company and the
Optionee.
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12. MISCELLANEOUS. This Agreement will be construed and
enforced in accordance with the laws of the State of Texas and
will be binding upon and inure to the benefit of any successor or
assign of the Company and any executor, administrator, trustee,
guarantor, or other legal representative of the Optionee.
Executed as of the date first set forth above.
INTERNET AMERICA, INC.
By: /s/ XXXX X. XXXXX
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Xxxx X. Xxxxx
President and Chief Executive
Officer
OPTIONEE
/s/ XXXXXXX X. XXXX
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XXXXXXX X. XXXX
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Social Security Number of Optionee
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