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EXHIBIT 4.4
CERTIFICATE OF DESIGNATION
OF THE
SERIES B PREFERRED STOCK
($.01 PAR VALUE)
OF
INTERNET AMERICA, INC.
Pursuant to Article 2.13 of the
TEXAS BUSINESS CORPORATION ACT
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The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted on May 15, 1996, by the Board of Directors (the "Board") of
Internet America, Inc., a Texas corporation (the "Company"), acting pursuant to
the provisions of Article 2.13 of the Texas Business Corporation Act. Such
resolution was duly adopted by all necessary action on the part of the Company.
WHEREAS, pursuant to resolutions adopted on May 15, 1996 by the Board
of Directors of the Company, the Board of Directors authorized a series of
preferred stock entitled "Series B Preferred Stock" and authorized the Company
to issue 300,000 shares of Series B Preferred Stock; and
WHEREAS, the Board of Directors is authorized within the limitations
and restrictions stated in the Articles of Incorporation of the Company, to fix
by resolution or resolutions the designation of each series of preferred stock,
$.01 par value of the Company (the "Preferred Stock") and the powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including, without limiting
the generality of the foregoing, such provisions as may be desired concerning
voting, dissolution or distribution of assets, conversion or exchange, and such
other subjects or matters as may be fixed by resolutions of the Board of
Directors under the Texas Business Corporation Act; and
WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the term of a series of Preferred
Stock and the number of shares constituting such series.
NOW, THEREFORE, BE IT RESOLVED, that pursuant to authority expressly
granted to and vested in the Board by provisions of the Articles of
Incorporation of the Company, as amended (the "Articles of Incorporation"), the
issuance of a series of Preferred Stock, par value $.01 per share, which shall
consist of 300,000 shares of Preferred Stock designated as Series B Preferred
Stock, be, and the same hereby is, authorized, and the Board hereby fixes the
designation, preferences, limitations, and relative rights, including voting
rights, of the shares of such series to
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the same extent that such designations, preferences, limitations, and relative
rights could be stated if fully set forth in the Articles of Incorporation, but
subject to and within the limitations set forth in the Articles of Incorporation
as follows:
1. DESIGNATION. The distinctive serial designation of the series of
Preferred Stock authorized by this resolution shall be "Series B Preferred
Stock" (the "Series B Preferred Stock"). The number of shares of Series B
Preferred Stock shall initially be 300,000, which number may from time to time
be increased or decreased (but not below the number then outstanding) by the
Board of Directors. Shares of Series B Preferred Stock which have been issued
and reacquired in any manner, including shares purchased or converted, shall be
retired.
2. RANK. The Series B Preferred Stock, with respect to rights on
liquidation, winding up and dissolution, shall rank senior to all classes and
series of the common stock, par value $.01 per share ("Common Stock") of the
Company and may rank senior to other classes of Preferred Stock now or hereafter
authorized, issued or outstanding (collectively, the "Junior Securities"). The
Series B Preferred Stock, with respect to rights on liquidation shall rank pari
passu with the previously issued Series A Preferred Stock. Notwithstanding the
preceding sentences, the Company reserves the right and may in its discretion,
issue other series of Preferred Stock of the Company with dividend rights and
rights on liquidation, winding up and dissolution, pari passu with the Series B
Preferred Stock.
3. DIVIDENDS. The Series B Preferred Stock shall have no specified
dividend rate and the holders of the shares of Series B Preferred Stock shall be
entitled to receive dividends (i) pari passu with the holders of Common Stock
and the Series A Preferred Stock as though the shares of Series B Preferred
Stock had been converted into shares of Common Stock, and (ii) when, as and if
otherwise declared by the Board of Directors, out of funds legally available
therefor.
4. LIQUIDATION PREFERENCES. (a) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company, then, before any distribution or payment shall be made to the holders
of any Junior Securities, including the Common Stock, the holders of the shares
of Series B Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Company available for distribution to its stockholders an
amount in cash equal to the purchase price for each share of Series B Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Company available for distribution to its stockholders an amount in cash equal
to the purchase price for each share of Series B Preferred Stock outstanding
(which amount is hereinafter referred to as the "liquidation preference"). The
liquidation preference payments payable to the holders of Series B Preferred
Stock shall be made pari passu with the holders of Series A Preferred Stock
based on the aggregate purchase price for the shares of the Series A Preferred
Stock and Series B Preferred Stock, respectively, held by each such holder. If
the assets of the Company are not sufficient to pay in full the liquidation
preference payments payable to the holders of all outstanding shares of the
Series B Preferred Stock (plus holders of any shares of Preferred Stock holding
rights on liquidation, winding up and dissolution pari passu with the Series B
Preferred Stock, including the Series A Preferred Stock), then the holders of
all such Preferred
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Shares shall share ratably in any distribution of assets in accordance with the
proportionate amount which would be payable on such distribution if the amounts
to which the holders of outstanding shares of Series B Preferred Stock are
entitled were paid in full.
(b) For the purposes of this paragraph 4, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with any other
corporation shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of the Company, unless such voluntary sale,
conveyance, exchange, transfer, consolidation or merger shall be in connection
with a plan of liquidation, dissolution or winding up of the Company.
5. CONVERSION. (a) Each share of the Series B Preferred Stock shall
be convertible at any time and from time to time into one share of the Company's
Common Stock (the "Common Stock Equivalent"). Each share of the Series B
Preferred Stock shall automatically be converted, without further action by the
Company, into one fully paid and nonassessable share of the Company's Common
Stock on the date thirty (30) days after the "successful completion" of a public
offering of shares of Common Stock of the Company pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (or such registration
statement shall have otherwise become effective). For purposes of this
subsection, "successful completion" shall mean that the receipt by the Company
of gross proceeds from such public offering of at least $5,000,000 where the per
share price of the Common Stock offered therein was at least $7.50 per share.
(b) In order to exercise the conversion privilege, a holder of the
Series B Preferred Stock shall surrender the certificate(s) evidencing the
shares, duly endorsed or assigned to the Company or in blank, at the Company's
principal executive offices accompanied by written notice to the Company that
the holder elects to convert the Series B Preferred Stock. Upon the receipt by
the Company of the conversion election notice as contemplated in the previous
sentence (the "Conversion Date"), such election shall be binding on the electing
holder of the Series B Preferred Stock and all such holder's shares, without any
other action on the part of the holder thereof, shall be deemed automatically
converted into an equal number of fully paid and nonassessable shares of the
Common Stock, and at such time the rights of the holder in the Series B
Preferred Stock shall cease, and the holder shall be entitled to receive the
Common Stock issuable upon conversion and shall be treated for all purposes as
the record holder of such Common Stock at such time. As promptly as practicable
on or after the Conversion Date, the Company shall issue and deliver to the
holder a certificate or certificates for the number of shares of Common Stock
issuable upon conversion. In the event of a successful completion of a public
offering of shares as contemplated in paragraph 5(a), the Company shall issue
and deliver to the holder a certificate or certificates for the number of shares
of Common Stock issuable upon such conversion upon receipt by the Company from
the holder the certificate(s) evidencing the shares of Series B Preferred Stock
so converted, duly endorsed or assigned to the Company or in blank. On the date
set for automatic conversion as contemplated in paragraph 5(a), the rights of
the holder in the Series B Preferred Stock shall cease
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and such holder shall be treated for all purposes as the record holder of such
Common Stock at such time.
(c) The conversion rate of the Series B Preferred Stock is subject to
adjustment from time to time upon the occurrence of the events enumerated in
this paragraph 5(c). For purposes of this paragraph 5(c), "Common Stock" means
shares now or hereafter authorized of any class of common stock of the Company
and any other stock of the Company, however designated, that has the right
(subject to any prior rights of any class or series of Preferred Stock) to
participate in any distribution of the assets or earnings of the Company without
limit as to per share amount. If the Company:
(1) subdivides, combines or reclassifies its outstanding shares of
Common Stock; or
(2) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock or any other series of stock
convertible into Common Stock;
then the number of shares of Common Stock comprising the Common Stock Equivalent
shall be proportionately adjusted to reflect such action so that the total
number of shares comprising the Common Stock Equivalent shall be equal to that
number of shares that would have been owned immediately following such action if
the conversion election had been exercised immediately prior to such actions.
Any fractional shares resulting from any such adjustment shall be eliminated and
the number of shares of Common Stock to be issued shall be rounded up to the
nearest whole share. The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
6. VOTING RIGHTS. In addition to any other rights provided in the
Company's Bylaws or by law to the Series B Preferred Stock voting as a class,
each share of Series B Preferred Stock shall entitle the holder thereof to one
vote per share and such holders shall be entitled to vote on all matters as to
which holders of Common Stock shall be entitled to vote, in the same manner and
with the same effect as such holders of Common Stock, voting together with the
holders of Common Stock, Series A Preferred Stock and Series B Preferred Stock
as one class.
IN WITNESS WHEREOF, the undersigned have caused this Certificate to be
made under the seal of the Company and signed by Robert J. Maynard and attested
by John Nanni this 20th day of May, 1996.
/s/ Robert J. Maynard
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Robert J. Maynard, President
[SEAL]
/s/ John Nanni
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John Nanni, Secretary