Redemption Agreement dated September 3, 2003




 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. 








 “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. 








 “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 








 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 








 (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. 








 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 








 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. 








 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