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EXHIBIT E
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
Jack T. Smith (the "Optionee") as of December 9, 1998. 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 Two Thousand Five
Hundred (22,500) shares of the Company's Common Stock, par value $0.01 per
share, at a price of $13.00 per share. The Option is granted as of the date
hereof (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 is fully exercisable on the Date of Grant.
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.
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.
NONQUALIFIED STOCK OPTION AGREEMENT -- PAGE 1
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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 a 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.
10. 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.
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Executed as of the date first written above.
INTERNET AMERICA, INC.
/s/ MICHAEL T. MAPLES
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Michael T. Maples, President and
Chief Executive Officer
OPTIONEE:
/s/ JACK T. SMITH
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Jack T. Smith
NONQUALIFIED STOCK OPTION AGREEMENT -- PAGE 3
