EXHIBIT 10.1

 

SETTLEMENT AGREEMENT

 

This agreement (herein called “Settlement Agreement” or “Agreement”) is made on
the 22nd day of April, 2004, between plaintiff, Internet America, Inc., and
third party-defendant, William E. Ladin, Jr., and defendant, counterclaimant and
third party-plaintiff, Gary Corona. In this Agreement, “Corona” means Gary L.
Corona; “IA” means Internet America, Inc., a Texas corporation; and “Ladin”
means William E. Ladin; and “Lawsuit” means the cause of action originally
styled Internet America, Inc. v. Gary Corona, No. 04-00788-M in the 298th
Judicial District Court in Dallas County, Texas, and the counterclaims and
third-party claim filed therein by Corona against IA and Ladin.

 

I.

 

SETTLEMENT TERMS

 

The parties agree to settle the Lawsuit on the following terms and conditions:

 

1.01 Payments of Settlement Amount. On or before April 23, 2004, IA shall (i)
pay Corona the sum of seventy-five thousand dollars ($75,000.00) (the “Initial
Payment”), and (ii) deliver to Corona a non-assignable interest-free note in the
original principal amount of $137,500.00 in the form attached hereto as Exhibit
A (the “Note”), payable to “Gary Corona and The Majorie Law Firm, L.P.” Payment
of the Initial Payment as well as amounts due under the Note shall be made
pursuant to wire transfer to the client trust account of The Majorie Law Firm
L.P. in accordance with the following wiring instructions: Majorie Firm IOLTA
account # 0122333, Dallas National Bank, ABA # 111017911.

 

1.02 Releases of Corona. In addition to the settlement payment provided in
Section 1.01 and simultaneously with the execution and delivery of the Corona
Release Agreement (as defined below in Section 1.03), IA and Ladin shall each
execute and deliver to

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Corona a release agreement in the form attached hereto as Exhibit B (the “IA and
Ladin Release Agreement”) which will release Corona and the other “Released
Parties” therein described from any and all causes of action that were brought
or could have been brought by IA or Ladin in the Lawsuit as more fully set forth
in the IA and Ladin Release Agreement.

 

1.03 Release of IA and Ladin. Simultaneously with IA’s and Ladin’s execution and
delivery of the IA and Ladin Release Agreement, the Initial Payment and the
Note, Corona shall execute and deliver to IA and Ladin a release agreement in
the form attached hereto as Exhibit C (the “Corona Release Agreement” and
together with the IA and Ladin Release Agreements herein called the “Release
Agreements”) which will release IA, Ladin and the other “Released Parties”
therein described from any and all causes of actions that were brought or could
have been brought by Corona as counterclaims and/or cross actions in the Lawsuit
as more fully set forth in the Corona Release Agreement.

 

1.04 Entry of Agreed Judgment. Within three (3) business days following the
delivery of the Initial Payment and the Note provided for in Section 1.01
hereof, and the execution and delivery of the IA and Ladin Release, the Corona
Release, the Unanimous Consent and the Corona Resignation (as hereinafter
defined), counsel for IA and counsel for Corona shall jointly petition the Court
for the entry of the Agreed Judgment attached hereto as Exhibit D in cause
number 04-00788-M.

 

1.05 Appointment of Independent Director. Simultaneously with the execution of
the Release Agreement, the Initial Payment and the Note, Corona and Ladin shall
execute the unanimous written consent of directors (the “Consent”) in the form
attached hereto as Exhibit E appointing Messrs. Justin McClure and Troy LeMaile
Stovall, each nominated by an owner of 5%

 

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or more of IA’s outstanding common stock, to the Board of Directors of IA, each
of whom shall be “independent” pursuant to Rule 10A-3 of the Securities Exchange
Act of 1934, as amended.

 

1.06 Resignation of Corona. Immediately following the execution and delivery of
the Release Agreement, the Initial Payment and the Note, Corona shall execute
and deliver to IA a resignation from directorship of IA in the form attached
hereto as Exhibit F (the “Corona Resignation”) pursuant to which Corona will
resign from all positions that he currently holds at IA, including without
limitation as a director of IA.

 

1.07 Nondisparagement. Corona will not disclose, cause to be disclosed or allow
to be disclosed any negative, adverse or derogatory comments or information
about IA or Ladin or their respective past or present actions, the management of
IA, any product or service provided by IA or the future prospects of IA, unless
required by governmental law, rule, regulation, subpoena or court order. IA, and
its employees, directors, officers, agents and representatives, and Ladin will
not disclose, cause to be disclosed or allow to be disclosed any negative,
adverse or derogatory comments or information about Corona or his past or
present actions or the future prospects of Corona, unless required by
governmental law, rule, regulation, subpoena or court order.

 

1.08 Indemnification and Related Matters. IA agrees that all rights to
indemnification existing in favor of Corona as provided by law and/or in IA’s
charter or bylaws in effect on the date hereof or pursuant to any written
agreement for indemnification shall survive and shall continue in full force and
effect and without modification adverse to Corona for a period of not less than
six months after the expiration of the statue of limitations applicable to the
claim which gave rise to the indemnification matter; provided, however, nothing
hereon shall allow Corona to seek attorneys fees arising out of the Lawsuit from
the Company or any insurance carrier of the Company. Until the later of a merger
or acquisition transaction in which IA is not the survivor or

 

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such time as Ladin (or his estate in the event of his death) is no longer
covered by director and officer liability insurance as a director or former
director, IA shall continue in effect director and officer liability insurance
for the benefit of Corona in such amounts, and with such deductibles, retained
amounts, coverages and exclusions as IA shall provide for its own directors and
officers during such period.

 

1.09 COBRA. To the extent available by applicable law, including but not limited
to Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of
Title I of the Employee Retirement Income Security Act of 1974, Corona shall be
entitled to purchase, at the cost IA charges other similarly situated
individuals who elect COBRA coverage, any health, dental, vision or life
insurance coverage for Corona and his dependents to which Corona is entitled
under such law. Corona’s entitlement under this paragraph shall apply only to
those coverages that IA has in effect from time to time for active employees,
and only for the period(s) required by applicable law. If Corona elects
continuation coverage pursuant to his rights under this paragraph, all
applicable premiums must be paid by Corona and will not be paid by IA, and such
premiums shall be paid by Corona directly to the insurance provider.

 

1.10 Representations of Parties. Each party to this Settlement Agreement
represents to the other parties the following: (1) before executing this
Agreement, each party read this Agreement and all Exhibits to this Agreement
carefully and became fully informed of the terms, contents, conditions and
effect of this Agreement; (2) this document expresses the entire agreement
between the parties concerning all Claims (as defined in the Release
Agreements); (3) no promise or representation of any kind has been made to any
party except as is expressly stated in this Settlement Agreement; (4) each party
relied solely on its, his, or her own judgment and the advice of its, his, or
her own counsel in negotiating and executing this Settlement

 

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Agreement; (5) no actions are required of any party to this Settlement Agreement
except as are set forth in this Agreement; (6) each party is legally competent
to execute this Settlement Agreement and intends this Agreement to be a binding
contract, enforceable in accordance with its terms; and (7) each party has
executed this Settlement Agreement freely and of its or his own accord.

 

II.

 

GENERAL PROVISIONS

 

2.01 Effective Date. This Settlement Agreement shall take effect and become
binding on each of the parties as of the date of execution.

 

2.02 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute but one and the same agreement.

 

2.03 Governing Law. The Settlement Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.

 

2.04 No Waiver. No amendment, modification, or waiver of any terms of this
Settlement Agreement shall be valid unless in writing and signed by all parties
to this Settlement Agreement. No waiver of any term of this Settlement Agreement
shall be deemed a waiver of any subsequent breach or default.

 

2.05 Survival of Agreements and Representations. All agreements and
representations made by the parties in this Settlement Agreement shall survive
the payment of the settlement amounts provided for in Section 1.01, the
execution and delivery of Release Agreements provided for in Sections 1.02 and
1.03, and the entry of the agreed judgment provided for in Section 1.04. This
Settlement Agreement and the Release Agreements shall be binding on and inure to
the benefit of IA, Ladin and Corona and all heirs, legal representatives,
executors, administrators, successors, and assigns of IA, Ladin and of Corona.

 

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2.06 Preparation of Agreement. This Settlement Agreement has been prepared by
the joint efforts of the parties and their attorneys.

 

2.07 Further Assurances. Each party to this Settlement Agreement covenants and
agrees with the other parties to provide full and complete cooperation and
assistance to each of the other parties to this Agreement as is necessary to
carry out and consummate the settlement contemplated by this Agreement and to
enable each party to obtain the benefits contemplated by this Agreement.

 

2.08 Shares and Options Owned by Corona. Nothing contained herein shall affect
Corona’s ownership or title to all common stock and/or options issued to him by
the Company; provided, however, any options, held by Corona will continue to be
governed by the terms and conditions of the stock option plans and agreements
under which they were issued.

 

2.09 Entire Agreement. This Settlement Agreement, including the Exhibits hereto,
embodies the entire agreement and understanding between the IA, Ladin and Corona
with respect to all Claims as described in the Release Agreements and supersedes
all prior agreements, discussions, correspondence, and understandings relating
to such Claims.

 

EXECUTED this 22nd day April, 2004.

 

 

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Gary L. Corona, Individually

INTERNET AMERICA, INC.

By

 

 

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William E. Ladin, President & CEO

 

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William E. Ladin, Individually

 

 

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