AMENDMENT NO. 1 TO RIGHTS AGREEMENT
EXHIBIT
4.3
AMENDMENT
NO. 1 TO RIGHTS AGREEMENT
This
Amendment No. 1 to Rights Agreement (this “Amendment”) dated as of December 10,
2007, amends the Rights Agreement between Internet America, Inc., a Texas
corporation (the “Company”), and American Stock Transfer & Trust Company, a
New York company (the “Rights Agent”) dated August 9, 2004 (the “Agreement”).
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Agreement.
RECITALS
1.
Pursuant to the Agreement, the Board of Directors of the Company authorized
and
declared a dividend, and thereby directed the issuance, of a Right to purchase
one Common Share for and in respect of each Common Share outstanding, upon
the
occurrence of the events and subject to the conditions set forth in the
Agreement.
2.
One of
the events triggering the issuance of Common Shares to holders of Rights under
the Agreement is any Person becoming the Beneficial Owner of 15% or more of
the
Common Shares then outstanding, constituting such person an Acquiring Person
under the Agreement.
3.
The
Board of Directors has approved the sale of 4,000,000 shares of Common Stock
of
the Company, representing in excess of 15% of the outstanding shares of Company
Common Stock, to The Xxxxxx X. Mihayho Trust (the “Investor”) pursuant to the
terms and conditions set forth in the Securities Purchase Agreement dated as
of
December 10, 2007 between the Company and the Investor (the “Sale”), which Sale
would constitute the Investor an Acquiring Person and could result in the
issuance of Common Shares to holders of the Rights under the
Agreement.
4.
The
Board of Directors has determined that it would be in the best interests of
the
Company and its shareholders to exempt the Sale to the Investor from the
provisions of the Agreement, with the result that no Common Shares would be
issuable to the holders of Rights upon the Sale, and has additionally approved
the acquisition by the Investor of up to 25% of the outstanding Common Shares
without triggering the issuance of Common Shares upon the exercise of Rights
under the Agreement, so long as such acquisition is not made in connection
with
a tender or exchange offer.
5.
The
Company and the Rights Agent have agreed to enter into this Amendment to the
Agreement to accomplish the purposes set forth in the above recitals, and to
make such additional and consequent amendments as are set forth
herein.
AGREEMENT
Section
1. Acquiring
Person.
The
definition of Acquiring Person in Section 1(a) of the Agreement is hereby
amended to read as follows (added or amended language is
italicized):
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“(a)
“Acquiring Person” shall mean any Person (as such term is hereinafter defined)
who or which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as such
term
is hereinafter defined) of 15% or more of the Common Shares then outstanding,
but shall not include (i) the Company, (ii)
any
Subsidiary (as such term is hereinafter defined) of the Company, (iii) Xxxxxx
X. Xxxxxxx, together with his Affiliates and Associates (“Mihaylo”), to the
extent they are the Beneficial Owner of up to 25% of the Common Shares then
outstanding, (iv) any
employee benefit plan of the Company or of any Subsidiary of the Company or
(v)
any
Person holding Common Shares for or pursuant to the terms of any such plan
to
the extent, and only to the extent, of the Common Shares so held.
Notwithstanding the foregoing, no Person shall become an “Acquiring Person” as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person other
than Mihaylo
to
15%, or
increases the proportionate number of shares beneficially owned by Mihaylo
to
25%,
or more
of the Common Shares then outstanding; provided,
however,
that if
a Person other
than Mihaylo
becomes
the Beneficial Owner of 15%, or
Mihaylo becomes the Beneficial Owner of 25%,
or more
of the Common Shares then outstanding by reason of share acquisitions by the
Company and shall, after such share acquisitions by the Company, become the
Beneficial Owner of any additional Common Shares, then such Person shall be
deemed to be an “Acquiring Person”. Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith that a Person who would
otherwise be an “Acquiring Person”, as defined pursuant to the foregoing
provisions of this Section 1(a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so
that
such Person would no longer be an “Acquiring Person”, as defined pursuant to the
foregoing provisions of this Section 1(a), then such Person shall not be deemed
to be an “Acquiring Person” for any purposes of this Agreement.”
Section
2. Issue
of Right Certificates.
Section
3(a) of the Agreement is hereby amended to read as follows (added or amended
language is italicized):
“(a)
Until the earlier (the earlier of such dates being herein referred to as the
“Distribution Date”) of (i) the Close of Business on the tenth Business Day
after the Shares Acquisition Date or (ii)
the
Close of Business on the tenth Business Day after the date of the commencement
by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or
any
entity holding Common Shares for or pursuant to the terms of any such plan
to
the extent such entity is so acting with the approval or consent of the Company)
of, or of the first public announcement of the intention of any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan
of
the Company or of any Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan to the extent such entity
is so acting with the approval or consent of the Company) to commence, a tender
or exchange offer the consummation of which would result in any Person
other
than Mihaylo
becoming
the Beneficial Owner of 15% or more of the Common Shares then outstanding,
or
Mihaylo becoming the Beneficial Owner of 23% or more of the Common Shares then
outstanding,
including any such date that is after the date of this Agreement and prior
to
the issuance of the Rights, (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also
be
deemed to be Right Certificates) and not by separate Right Certificates, and
(y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company shall promptly notify in writing the Rights
Agent
of the occurrence thereof and, if the Rights Agent is not then also the transfer
agent and registrar for the Common Shares, provide the Rights Agent with the
names and addresses of all record holders of Common Shares (together with all
other necessary information), and, if such notification is given orally, the
Company shall confirm the same in writing on or prior to the Business Day next
following (until such notice is received by the Rights Agent, the Rights Agent
may presume conclusively for all purposes that the Distribution Date has not
occurred), the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent
will, if requested, send), by first-class, insured, postage prepaid mail, to
each record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit
A
hereto
(a “Right Certificate”), evidencing one Right for each Common Share so held. As
of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.”
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Section
3. Rights
Certificates. Section
3(c) of the Agreement is hereby amended to read as follows (added or
amended language is italicized):
“(c)
Certificates for Common Shares that become outstanding (including, without
limitation, reacquired Common Shares referred to in the last sentence of this
paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend or such similar legend as the Company may deem appropriate and as is
not
inconsistent with the provisions of this Agreement:
This
certificate also evidences and entitles the holder hereof to certain rights
as
set forth in a Rights Agreement between Internet America, Inc. and American
Stock Transfer & Trust Company, dated as of August 9, 2004 (the “Rights
Agreement”), as
amended,
the
terms of which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of Internet America, Inc. Under
certain circumstances, as set forth in the Rights Agreement, the Rights
described therein will be evidenced by separate certificates and will no longer
be evidenced by this certificate. Internet America, Inc. will mail to the holder
of this certificate a copy of the Rights Agreement, as
amended,
without
charge after receipt of a written request therefor. As described in the Rights
Agreement, Rights issued to any Person who becomes an Acquiring Person (as
those
terms are defined in the Rights Agreement) shall become null and
void.
With
respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented
by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with
such
Common Shares shall be deemed canceled and retired so that the Company shall
not
be entitled to exercise any Rights associated with the Common Shares which
are
no longer outstanding.”
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Section
4. Number
of Shares or Number of Rights.
Section
11(a)(ii) of the Agreement is hereby amended to read as follows (added or
amended language is italicized):
“(ii)
Subject to Sections 23 and 24 of this Agreement, in the event any Person shall
become an Acquiring Person, proper provision shall be made so that each holder
of a Right shall thereafter have a right to receive, upon exercise thereof
in
accordance with Section 7 hereof at a price equal to the then current Purchase
Price multiplied by the number of Common Shares for which a Right is then
exercisable, in accordance with the terms of this Agreement, such number of
Common Shares as shall equal the result obtained by (A) multiplying the then
current Purchase Price by the number of Common Shares for which a Right is
then
exercisable and dividing that product by (B) 50% of the then current per share
market price of the Company’s Common Shares (determined pursuant to Section
11(d) hereof) on the date such Person became an Acquiring Person.
Notwithstanding
the foregoing or anything in this Agreement to the contrary, from and after
the
time any Person becomes an Acquiring Person, any Rights that are or were
acquired or beneficially owned by such Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall be null and void without any further
action by the Company, the Rights Agent, the Acquiring Person or any other
Person, and any holder of such Rights shall thereafter have no rights whatsoever
with respect to such Rights, whether under this Agreement (including the right
to exercise such Rights under any provision of this Agreement) or otherwise.
No
Right Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be null and void
pursuant to the preceding sentence or by any Associate or Affiliate thereof;
no
Right Certificate shall be issued at any time upon the transfer of any Rights
to
an Acquiring Person whose Rights would be null and void pursuant to the
preceding sentence or to any Associate or Affiliate thereof or to any nominee
of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be null and void pursuant
to
the preceding sentence shall be canceled.”
Notwithstanding
the foregoing or anything in this Agreement to the contrary, if as a result
of
any Person other than Mihaylo becoming an Acquiring Person, Mihaylo (or any
Associate or Affiliate of Mihaylo) acquires the right to
receive, upon
exercise of Rights in accordance with Section 7 hereof, Common Shares in
accordance with this Section 11(a)(ii) which will cause Mihaylo, together with
his Associates and Affiliates, to be the Beneficial Owner of more than 25%
of
the outstanding Common Shares, Mihaylo shall not be deemed an Acquiring Person
for purposes of this Agreement; provided,
however,
that if Mihaylo becomes the Beneficial Owner of 25% or more of the Common Shares
then outstanding by reason of the acquisition of the right to receive, upon
exercise of Rights in accordance with Section 7 hereof, Common Shares in
accordance with this Section 11(a)(ii) and shall, after such acquisition become
the Beneficial Owner of any additional Common Shares, then Mihaylo shall be
deemed to be an “Acquiring Person”.”
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Section
5. Form
of Right Certificate.
The
first full sentence of Exhibit A (Form of Right Certificate) to the Agreement
is
hereby amended to read as follows (added or amended language is
italicized):
“This
certifies that __________________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of August 9, 2004,
as
amended (the
“Rights Agreement”), between Internet America, Inc., a Texas corporation (the
“Company”), and American Stock Transfer & Trust Company, a New
York
company
(the “Rights Agent”), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to
the Close of Business (as defined in the Rights Agreement) on August 4, 2014,
at
the principal offices of the Rights Agent, or at the offices of its successor
as
Rights Agent, one share of Common Stock, par value $.01 per share (the “Common
Shares”), of the Company, at a purchase price of $7.00 per one Common Share (the
“Purchase Price”), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed.”
Section
6. Summary
of Right to Purchase Common Shares (Amendment No. 1).
The
first two full paragraphs of Exhibit B (Summary of Rights to Purchase Common
Shares) to the Agreement are hereby amended to read as follows (added or amended
language is italicized):
“On
August 4, 2004, the Board of Directors of Internet America, Inc. (the “Company”)
declared a dividend of one common stock, $.01 par value (the “Common Shares”)
purchase right (a “Right”) for each outstanding Common Share of the Company, and
authorized the issuance of one Right for each Common Share which shall become
outstanding between the Record Date and the earlier of the Distribution Date
(as
hereinafter defined) or the Final Expiration Date of the Rights (as hereinafter
defined). The dividend is payable on August 13, 2004 (the “Record Date”) to the
shareholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one additional
Common Share
at a
price of $7.00 per one Common Share (the “Purchase Price”), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement,
as
amended
(the
“Rights Agreement”) between the Company and American Stock Transfer & Trust
Company (the “Rights Agent”).
Until
the
earlier to occur of (i) ten business days following a public announcement that
a
person or group of affiliated or associated persons (an “Acquiring Person”) have
acquired beneficial ownership of 15% or more of the outstanding Common Shares
(unless
such person is Xxxxxx X. Xxxxxxx and his affiliates and associates, in which
case such threshold shall be 25% or more of the outstanding Common Shares)
and
(ii)
ten business days following the commencement of, or announcement of an intention
to make, a tender offer or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of 15% or more of such
outstanding Common Shares (unless
such person is Xxxxxx X. Xxxxxxx and his affiliates and associates, in which
case such threshold shall be 23% or more of the outstanding Common
Shares)
(the
earlier of such dates being called the “Distribution Date”), the Rights will be
evidenced, with respect to any Common Share certificate outstanding as of the
Record Date, by such Common Share certificate together with a copy of this
Summary of Rights attached thereto. The Rights Agreement provides that, until
the Distribution Date, the Rights will be transferred with and only with the
Common Shares.”
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Section
7. Summary
of Right to Purchase Common Shares (Amendment No. 2).
The
last full paragraph of Exhibit B (Summary of Rights to Purchase Common Shares)
to the Agreement is hereby amended to read as follows (added or amended language
is italicized):
“A
copy
of the Rights Agreement (as
originally adopted)
has been
filed with the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated August 10, 2004. A
copy of Amendment No. 1 to the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to Form 8-K dated December
[ ],
2007.
A copy
of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.”
Section
8. Binding
Agreement.
Except
as expressly amended hereby, the Agreement remains in full force and effect
as
of the date hereof.
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and attested, all as of the day and year first above written.
INTERNET
AMERICA, INC.
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By:
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/s/
Xxxxxxx X. Xxxxx, Xx.
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Xxxxxxx
X. Xxxxx, Xx., Chief Executive Officer
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AMERICAN
STOCK TRANSFER & TRUST COMPANY
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By:
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/s/
Xxxxxxx X. Xxxxxx
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Name:
Xxxxxxx X. Xxxxxx
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Title:
Vice President
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