Exhibit 10.2

 

REDEMPTION AGREEMENT

 

This Redemption Agreement, dated as of September 3, 2003 (this “Agreement”), is
by and among William O. Hunt (“Hunt” or the “Seller”) and Internet America,
Inc., a Texas corporation (the “Purchaser” or the “Company”).

 

WHEREAS, Hunt and the Company, are parties to that certain Letter of Credit
Security Commitment Agreement, dated as of September 18, 2001, as amended
pursuant to that certain amendment thereto dated April 23, 2003 (the “Letter of
Credit Agreement”), pursuant to which, among other things, and in accordance
with Section 2.3 thereof, Hunt and his assigns may elect to purchase 9,428,571
shares of Common Stock (the “Option Shares”) from the Company at a purchase
price of $0.35 per share (the “Option”); and

 

WHEREAS, Hunt desires to transfer and assign to Purchaser the Option, and
Purchaser desires to acquire and redeem the Option and such other rights on the
terms and subject to the conditions set forth herein; and

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1 DEFINED TERMS. The following terms, as used herein, shall have the following
meanings:

 

“Affiliate” means, as to a Person, any other Person controlling, controlled by,
or under common control with such first Person. As used in this definition, the
term “control” means the power, directly or indirectly, to vote more than ten
percent (10%) of the outstanding voting equity of an entity, or the right,
directly or indirectly, to designate a majority of the directors of a Person (in
the case of a corporation) or the Persons exercising similar functions (in the
case of an unincorporated Person). All officers and directors of a Person shall
be Affiliates of such Person.

 

“Agreement” has the meaning set forth in the first paragraph of this Agreement.

 

“Business Day” means any day other than a Saturday, Sunday, or other day on
which federally chartered commercial banks in Dallas, Texas, are authorized by
law to close.

 

“Claims” means all claims, demands, lawsuits, proceedings, losses, assessments,
fines, penalties, administrative orders, obligations, costs, expenses,
liabilities and damages, including interest, penalties and reasonable attorneys’
fees and costs of investigation asserted against or incurred by Purchaser.

 

“Common Stock” means the Company’s Common Stock.

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“Company” has the meaning set forth in the recitals of this Agreement.

 

“Contractual Rights” means all of the rights of the Holder (as defined in the
Letter of Credit Agreement) that are set forth in Section 2.3, Article VI,
Article IX, Article XI, Article XII and Article XIII of the Letter of Credit
Agreement, as well as all of the rights of the Holder set forth in or otherwise
evidenced by the Registration Rights Agreement, the Security Agreement and the
Financing Statements.

 

“Hunt” has the meaning set forth in the first paragraph of this Agreement.

 

“Law” or “Laws” means any and all applicable statutes, laws, ordinances,
proclamations, regulations, published requirements, orders, decrees, and rules
of any foreign, federal, state, or local government, political subdivision, or
governmental or regulatory authority, agency, board, bureau, commission,
instrumentality, or court or quasi-governmental authority, including, without
limitation, those covering environmental, tax, energy, safety, health,
transportation, bribery, record keeping, zoning, discrimination, antitrust, and
wage and hour matters, and in each case as amended and in effect from time to
time.

 

“Letter of Credit Agreement” has the meaning set forth in the recitals of this
Agreement.

 

“Lien” means any lien, pledge, claim, charge, security interest, mortgage, or
encumbrance of any nature whatsoever.

 

“Option” has the meaning set forth in the recitals of this Agreement.

 

“Person” means a corporation, an association, a partnership, a limited liability
company, an organization, a business, any other entity, an individual, a
government or political subdivision thereof, or a government agency.

 

“Purchaser” has the meaning set forth in the first paragraph of this Agreement.

 

“Purchaser’s Representatives” means Purchaser and its respective officers,
directors, employees, agents, attorneys and Affiliates.

 

“Schedule” means a schedule accompanying this Agreement. The Schedules shall
correspond to the numbered sections of this Agreement to which each Schedule
relates. An item disclosed in a particular Schedule shall be deemed disclosed
under the Schedule to which it is contained only.

 

“SEC” means the Securities and Exchange Commission.

 

“Security Agreement” means that certain Security Agreement, dated as of
September 18, 2001, by and among the Company and Hunt.

 

“Seller” has the meaning set forth in the first paragraph of this Agreement.

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“Transactions” means the transactions contemplated by this Agreement.

 

1.2 INTERPRETATION. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:

 

(a) the terms defined in Section 1.1 and elsewhere in this Agreement include the
plural as well as the singular;

 

(b) all references to “Articles” and “Sections” shall be to Articles and
Sections of this Agreement unless otherwise clearly indicated otherwise; and

 

(c) the words “herein,” “hereof,” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.

 

ARTICLE II

THE TRANSACTIONS

 

2.1 DESCRIPTION OF THE TRANSACTIONS. Concurrently with the execution and
delivery of this Agreement and subject to the terms and conditions hereof:

 

(a) Hunt hereby sells, transfers and assigns to Purchaser the Contractual
Rights, free and clear of all Liens.

 

(b) Purchaser shall pay Hunt by wire transfer the sum of $150,000.

 

(c) The Company shall dismiss with prejudice the lawsuit against Hunt filed
August 29, 2003, in the 44th Judicial District Court, Dallas County, Texas, by
submitting to such court a Notice of Nonsuit with Prejudice and proposed Order
for Dismissal with Prejudice in substantially the forms set forth as Exhibits A
and B hereto, respectively. The Company and Hunt shall further execute mutual
releases in the form as set forth as Exhibit C hereto.

 

2.2 FURTHER ASSURANCES. The parties shall, concurrently herewith and from time
to time hereafter at the request of another party and without further
consideration, execute and deliver or cause to be executed and delivered to the
other party such further instruments of transfer, assignment and conveyance, and
shall take or cause to be taken such other action as reasonably requested, as
may be necessary to effectively transfer to Purchaser the Contractual Rights,
and to implement and carry into effect the Transactions.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Purchaser as follows:

 

3.1 POWER; AUTHORIZATION. Seller has all requisite power and authority to
execute and deliver this Agreement, to perform fully his obligations hereunder,
and to consummate the

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Transactions. The execution and delivery by Seller of this Agreement, and the
consummation of the Transactions, have been duly authorized by all requisite
action of Seller. Seller has duly executed and delivered this Agreement. This
Agreement is a legal, valid and binding obligation of Seller, enforceable
against it in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting generally the enforcement of creditors’ rights and by general
principles of equity.

 

3.2 NO CONFLICTS. The execution, delivery and performance by Seller of this
Agreement, and the consummation of the Transactions, do not and will not
conflict with or result in a violation of or under (with or without the giving
of notice or the lapse of time or both) (a) any Law applicable to a Seller or
any of its respective properties or assets, or (b) any contract, agreement or
other instrument applicable to a Seller or any of its respective properties or
assets, including without limitation the Contractual Rights.

 

3.3 LITIGATION. Other than the lawsuit filed on August 29, 2003 by the Company,
there is no action, claim, suit or proceeding pending, or to any Seller’s
knowledge threatened, by or against or affecting Seller in connection with or
relating to the Transactions or any action taken or to be taken in connection
herewith or the consummation of the Transactions.

 

3.4 BROKERS. All negotiations relating to this Agreement, and the Transactions,
have been carried on without the participation of any Person acting on behalf of
Seller or his Affiliates in such manner as to give rise to any valid claim
against Purchaser for any brokerage or finder’s commission, fee or similar
compensation upon consummation of the Transactions.

 

3.5 OWNERSHIP, VALID ISSUANCE, TRANSFERABILITY AND ENFORCEABILITY;
CAPITALIZATION. Hunt is the sole valid holder of any and all rights and interest
as the “Holder” under the Letter of Credit Agreement and the Registration Rights
Agreement (as such term is defined in each of such agreements), including,
without limitation, the holder of the sole right to exercise the Option and to
exercise the rights of a “Holder” under the Registration Rights Agreement, and
such rights and interest were granted to Hunt in compliance with all applicable
Laws and Hunt’s right to exercise the Option is fully enforceable by Hunt as
against the Company. Hunt’s rights and interest as the “Holder” under the Letter
of Credit Agreement, include, without limitation, the right to exercise the
Option.

 

ARTICLE IV

INDEMNIFICATION

 

4.1 INDEMNIFICATION BY SELLER. Seller shall defend, indemnify, and hold
Purchaser and the Purchaser’s Representatives harmless from, against and in
respect of any and all Claims, which arise or result from or relate to:

 

(a) the untruth, breach, or failure of any representation or warranty made by
Sellers under or contained in this Agreement or in any other document executed
and delivered in connection with this Agreement; or

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(b) the breach by Seller of or failure of Seller to perform any of his
covenants, commitments, agreements or obligations under or contained in this
Agreement or in any other document executed and delivered in connection with
this Agreement.

 

4.2 INDEMNIFICATION BY PURCHASER. Purchaser shall defend, indemnify and hold
Seller and his heirs, successors, assigns, agents and Affiliates, harmless from,
against and in respect of any and all Claims, which arise or result from or
relate to:

 

(a) the breach by Purchaser of or failure of Purchaser to perform any of its
covenants, commitments, agreements or obligations under or contained in this
Agreement or any other document executed and delivered in connection with this
Agreement; or

 

(b) any Claim by or on behalf of the Company or its shareholders against Seller
or his Affiliates based on any theory of recovery arising from or related to the
Transactions hereby.

 

The obligations of Purchaser to indemnify Sellers under this Section shall
include the obligation to defend any action subject hereto, including the fees
of counsel to Sellers, even if separate counsel is required because of conflicts
of interest. The obligations of Purchaser under this Section shall survive the
closing of this Agreement.

 

4.3 NEGLIGENCE OF INDEMNITEE. THE RIGHTS OF A PARTY TO INDEMNIFICATION HEREUNDER
SHALL NOT BE AFFECTED BY THE NEGLIGENCE OF ANY OTHER PARTY OR THEIR
REPRESENTATIVES.

 

4.4 AFFIRMATION OF INDEMNITY AGREEMENT ETC. Purchaser hereby acknowledges that
the Indemnity Agreement dated September 22, 1995 executed between Hunt and the
Purchaser, as well as Purchaser’s bylaws and resolutions (including without
limitation the resolutions of the Board of Directors dated August 15, 2001)
remain effective in accordance with their respective terms.

 

ARTICLE V

MISCELLANEOUS

 

5.1 COOPERATION; RELATIONSHIP OF THE PARTIES. Seller hereby agrees to cooperate
with Purchaser in all manners reasonably requested by Purchaser to effect the
consummation of the Transactions and the intent of the parties as expressed in
this Agreement.

 

5.2 NATURE OF STATEMENTS; SURVIVAL. All statements of fact contained in any
documents delivered by or on behalf of any party pursuant or in connection with
the Transactions shall be deemed representations and warranties of such party.
Notwithstanding any investigation heretofore or hereafter made by or on behalf
of any of the parties to this Agreement, the representations and warranties
contained in this Agreement and in any other document executed and delivered in
connection with this Agreement shall survive the consummation of the
Transactions for a period of 12 months.

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5.3 NOTICES. All notices, requests, consents, directions, and other instruments
and communications required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been duly given if delivered
personally, if sent by third party courier or overnight delivery service, if
mailed first-class, postage prepaid, registered or certified mail, or if sent by
telecopy, telecommunication or other similar form of communication (with receipt
confirmed), as follows:

 

If to Sellers, to:

  William O. Hunt     17604 Woods Edge Drive     Dallas, Texas 75287    
Facsimile: (972) 931-4032

 

with a copy (which shall not constitute notice) to:

  Andrews & Kurth, L.L.P.     1717 Main Street, Suite 3700     Dallas, Texas
75201     Attn: Ronald L. Brown     Facsimile: (214) 659-4819

 

If to Purchaser, to:

  Internet America, Inc.     One Dallas Centre     350 N. St. Paul, Suite 3000  
  Dallas, Texas 75201     Attn: CEO and Legal Department     Facsimile: (214)
861-2663

 

with a copy (which shall not constitute notice) to:

  Fulbright & Jaworski,L.L.P.     1301 McKinney, Suite 5100     Houston, Texas
77010-3034     Attn: Robert F. Gray, Jr.     Facsimile: (713) 651-5246

 

or to such other address and to the attention of such other person(s) or
officer(s) as any party may designate by written notice. Any notice mailed shall
be deemed to have been given and received on the third Business Day following
the day of mailing.

 

5.4 ASSIGNMENT. No party to this Agreement may sell, transfer, assign, pledge,
or hypothecate his or its rights, interests, or obligations under this Agreement
without the prior written consent of the other parties hereto.

 

5.5 SUCCESSORS. This Agreement shall inure to the benefit of, be binding upon,
and be enforceable by the parties hereto and their respective successors, heirs
and permitted assigns.

 

5.6 ENTIRE AGREEMENT; MODIFICATION. This Agreement and the Exhibits and
Schedules hereto and the other documents executed and delivered in connection
with this Agreement constitute the entire agreement and understanding between
the parties relating to the

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subject matter hereof and thereof and supersede all prior representations,
endorsements, premises, agreements, memoranda, communications, negotiations,
discussions, understandings, and arrangements, whether oral, written, or
inferred, between the parties relating to the subject matter hereof. This
Agreement may not be modified, amended, rescinded, canceled, altered or
supplemented, in whole or in part, except upon the execution and delivery of a
written instrument executed by the parties hereto.

 

5.7 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in all respects in accordance with the laws of the State of Texas
without regard to the conflicts of laws principles thereof. The parties agree
that any litigation directly or indirectly relating to this Agreement must be
brought before and determined by a court of competent jurisdiction within Dallas
County, Texas, and the parties hereby agree to waive any rights to object to,
and hereby agree to submit to, the jurisdiction of such courts.

 

5.8 WAIVER. The waiver of any breach of any term or condition of this Agreement
shall not be deemed to constitute the waiver of any other breach of the same or
any other term or condition.

 

5.9 SEVERABILITY. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future Laws effective during the term
hereof, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof shall remain
in full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid, or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.

 

5.10 NO THIRD PARTY BENEFICIARIES. Except to the extent a third party is
expressly given rights herein, any agreement contained, expressed or implied in
this Agreement shall be only for the benefit of the parties hereto and their
respective legal representatives, successors, heirs and permitted assigns and
such agreements shall not inure to the benefit of the obligees of any
indebtedness of any party hereto, it being the intention of the parties hereto
that no person or entity shall be deemed a third party beneficiary of this
Agreement, except to the extent a third party is expressly given rights herein.

 

5.11 REMEDIES. In addition to the rights and remedies of the parties
specifically provided for herein, each party hereto shall have such other
remedies as shall be available under applicable law or in equity for the other
party’s breach or failure to perform any of his or its representations,
warranties, covenants, agreements, or obligations under or contained in this
Agreement or in any other document executed and delivered in connection with
this Agreement.

 

5.12 HEADINGS. The headings of the Articles, Sections, and subsections of this
Agreement have been inserted for convenience of reference only and shall in no
way restrict or otherwise modify any of the terms or provisions hereof or affect
in any way the meaning or interpretation of this Agreement.

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5.13 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute but one and the same instrument. Facsimile transmission of any signed
original document and/or retransmission of any signed facsimile transmission
will be deemed the same as delivery of an original. At the request of any party,
the parties will confirm facsimile transmission by signing a duplicate original
document.

 

5.14 CONFIDENTIALITY. Each party agrees to maintain the confidentiality of the
terms of this Agreement, except as disclosure thereof may be required by
applicable laws or governmental, SRO or stock exchange rules or regulations.

 

5.15 TAX TREATMENT. Each party agrees to treat the Transactions hereby as a
redemption of the Contractual Rights.

 

[The next following page is a signature page.]

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date first written above.

 

PURCHASER:

 

INTERNET AMERICA, INC.

 

By: /s/ JACK T. SMITH

Jack T. Smith, President

 

SELLER:

 

/s/ WILLIAM O. HUNT

William O. Hunt