Exhibit H
REDEMPTION AGREEMENT
This Redemption Agreement, dated as of September 3, 2003
(this "Agreement"), is by and among Xxxxxxx X. Xxxx ("Xxxx" or
the "Seller") and Internet America, Inc., a Texas corporation
(the "Purchaser" or the "Company").
WHEREAS, Xxxx 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, Xxxx 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, Xxxx 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.
-1-
"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.
"Xxxx" 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
Xxxx.
"Seller" has the meaning set forth in the first paragraph of
this Agreement.
"Transactions" means the transactions contemplated by this
Agreement.
-2-
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) Xxxx hereby sells, transfers and assigns to Purchaser the
Contractual Rights, free and clear of all Liens.
(b) Purchaser shall pay Xxxx by wire transfer the sum of
$150,000.
(c) The Company shall dismiss with prejudice the lawsuit against
Xxxx 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 Xxxx 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-
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. Xxxx 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 Xxxx in compliance with all applicable Laws and Xxxx'x
right to exercise the Option is fully enforceable by Xxxx as
against the Company. Xxxx'x 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-
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 Xxxx 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:
-5-
If to Sellers, to: Xxxxxxx X. Xxxx
00000 Xxxxx Xxxx Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
with a copy (which shall
not constitute notice) to: Xxxxxxx & Xxxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to Purchaser, to: Internet America, Inc.
One Dallas Centre
000 X. Xx. Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: CEO and Legal Department
Facsimile: (000) 000-0000
with a copy (which shall
not constitute notice) to: Fulbright & Xxxxxxxx,L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxx, Xx.
Facsimile: (000) 000-0000
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.
-6-
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.
-7-
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.]
-7-
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/ XXXX X. XXXXX
-----------------------------
Xxxx X. Xxxxx, President
SELLER:
/s/ XXXXXXX X. XXXX
--------------------------------
Xxxxxxx X. Xxxx
-8-
