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EXHIBIT 3.7
WORLD ACCESS, INC.
CERTIFICATE OF DESIGNATION OF
CONVERTIBLE PREFERRED STOCK, SERIES E,
SETTING FORTH THE POWERS, PREFERENCES, RIGHTS,
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS
OF SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the Delaware General Corporation Law, World
Access, Inc., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of
the Corporation by the Certificate of Incorporation of the Corporation (the
"Charter"), the Board of Directors of the Corporation on July 6, 2000 (the
"Adoption Date") duly adopted the following resolution creating a series of
Preferred Stock designated as Convertible Preferred Stock, Series E, and such
resolution has not been modified and is in full force and effect on the date
hereof:
RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Charter, a
series of the class of authorized Preferred Stock, par value $0.01 per share, of
the Corporation is hereby created and that the designation and number of shares
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:
Section 1. Designation and Number.
(a) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Section 10 below.
(b) The shares of such series shall be designated as Convertible
Preferred Stock, Series E (the "Preferred Stock"). The number of shares
initially constituting the Preferred Stock shall be 9,645 which number may be
decreased (but not increased) by the Board of Directors without a vote of
stockholders; provided, however, that such number may not be decreased below the
number of then outstanding shares of Preferred Stock.
(c) The Preferred Stock shall, with respect to dividend rights,
rank (i) pari passu with the Common Stock, Series C Preferred Stock, and Series
D Preferred Stock and (ii) junior to the Series A Preferred Stock, Series B
Preferred Stock and all other classes and series of Senior Stock now or
hereafter authorized.
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(d) The Preferred Stock shall, with respect to rights on
liquidation, dissolution and winding up, rank (i) prior to the Common Stock,
(ii) pari passu with the Series B Preferred Stock, Series C Preferred Stock and
the Series D Preferred Stock and (iii) junior to the Series A Preferred Stock
and all other classes and series of Senior Stock (other than the Series B
Preferred Stock) now or hereafter authorized.
Section 2. Dividends and Distributions.
(a) In the event that the Corporation shall declare a dividend or
make any other distribution (including, without limitation, in cash, in capital
stock (which shall include, without limitation, any options, warrants or other
rights to acquire capital stock) of the Corporation, whether or not pursuant to
a shareholder rights plan, "poison pill" or similar arrangement, or other
property or assets) to holders of Common Stock, then the Board of Directors
shall declare, and the holder of each share of Preferred Stock shall be entitled
to receive, a dividend or distribution in an amount equal to the amount of such
dividend or distribution received by a holder of the number of shares of Common
Stock for which such share of Preferred Stock is convertible on the record date
of such dividend or distribution. Any such amount shall be paid to the holders
of shares of Preferred Stock at the same time such dividend or distribution is
made to holders of Common Stock.
(b) The holders of shares of Preferred Stock shall not be entitled
to receive any dividends or other distributions except as provided herein.
Section 3. Voting Rights.
In addition to any voting rights provided by law, so long as the
Preferred Stock is outstanding, each share of Preferred Stock shall entitle the
holder thereof to vote, in person or by proxy, at a special or annual meeting of
stockholders, on all matters voted on by holders of Common Stock voting together
as a single class with other shares entitled to vote thereon. With respect to
any such vote, each share of Preferred Stock shall entitle the holder thereof to
cast that number of votes per share as is equal to the number of votes that such
holder would be entitled to cast had such holder converted his shares of
Preferred Stock into Common Stock on the record date for determining the
stockholders of the Corporation eligible to vote on any such matters. Holders of
shares of Preferred Stock shall have no voting rights other than those provided
in this Section 3.
Section 4. Redemption.
The Corporation shall not have any right to redeem any shares
of Preferred Stock.
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Section 5. Reacquired Shares.
Any shares of Preferred Stock converted, purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares of Preferred
Stock shall upon their cancellation become authorized but unissued shares of
preferred stock, par value $.01 per share, of the Corporation and, upon the
filing of an appropriate Certificate of Designation with the Secretary of State
of the State of Delaware, may be reissued as part of another series of preferred
stock, par value $.01 per share, of the Corporation subject to the conditions or
restrictions on issuance set forth therein, but in any event may not be reissued
as shares of Preferred Stock or other Parity Stock unless all shares of the
Preferred Stock issued on the Issue Date shall have already been converted.
Section 6. Liquidation, Dissolution or Winding Up.
(a) If the Corporation shall commence a voluntary case under the
United States bankruptcy laws or any applicable bankruptcy, insolvency or
similar law of any other country, or consent to the entry of an order for relief
in an involuntary case under any such law or to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its property, or make
an assignment for the benefit of its creditors, or admit in writing its
inability to pay its debts generally as they become due, or if a decree or order
for relief in respect of the Corporation shall be entered by a court having
jurisdiction in the premises in an involuntary case under the United States
bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any
other country, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and on account of any such event the Corporation shall liquidate,
dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve
or wind up, no distribution shall be made:
(i) to the holders of shares of Junior Stock unless,
prior thereto, the holders of shares of Preferred Stock, subject to Section 7,
shall have received the Liquidation Preference with respect to each share, or
(ii) to the holders of shares of Parity Stock, except
distributions made ratably on the Preferred Stock and all other Parity Stock in
proportion to the total amounts to which the holders of all shares of the
Preferred Stock and other Parity Stock are entitled upon such liquidation,
dissolution or winding up.
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(b) Neither the consolidation or merger of the
Corporation with or into any other Person nor the sale or other distribution to
another Person of all or substantially all the assets, property or business of
the Corporation shall be deemed to be a liquidation, dissolution or winding up
of the Corporation for purposes of this Section 6.
Section 7. Voluntary Conversion.
(a) Any holder of Preferred Stock shall have the right,
at its option, at any time and from time to time, to convert, subject to the
terms and provisions of this Section 7, any or all of such holder's shares of
Preferred Stock into such number of fully paid and non-assessable shares of
Common Stock as is equal, subject to Section 7(f), to the product of the number
of shares of Preferred Stock being so converted multiplied by the quotient of
(i) the Liquidation Preference divided by (ii) the Conversion Price (as defined
below) then in effect. Such conversion right shall be exercised by the surrender
of the shares to be converted to the Corporation at any time during usual
business hours at its principal place of business to be maintained by it,
accompanied by written notice that the holder elects to convert such Shares and
(if so required by the Corporation) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Corporation duly executed by the
holder or its duly authorized legal representative and transfer tax stamps or
funds therefor, if required pursuant to Section 7(i). All shares of Preferred
Stock surrendered for conversion shall be delivered to the Corporation for
cancellation and canceled by it and no shares of Preferred Stock shall be issued
in lieu thereof.
(b) As promptly as practicable after the surrender, as
herein provided, of any shares of Preferred Stock for conversion pursuant to
Section 7(a), the Corporation shall deliver to or upon the written order of the
holder of such shares so surrendered a certificate or certificates representing
the number of fully paid and non-assessable shares of Common Stock into which
such shares of Preferred Stock have been converted in accordance with the
provisions of this Section 7. Subject to the following provisions of this
paragraph and of Section 7(c), such conversion shall be deemed to have been made
immediately prior to the close of business on the date that such shares of
Preferred Stock shall have been surrendered in satisfactory form for conversion,
and the converting holder of shares of
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Preferred Stock shall be treated for all purposes as having become the record
holder of such Common Stock at such time, and such conversion shall be at the
Conversion Price in effect at such time; provided, however, that no surrender
shall be effective to constitute the converting holder of shares of Preferred
Stock as the record holder of such Common Stock while the share transfer books
of the Corporation shall be closed (but not for any period in excess of five (5)
days), but such surrender shall be effective to constitute the converting holder
of shares of Preferred Stock as the record holder thereof for all purposes
immediately prior to the close of business on the next succeeding day on which
such share transfer books are open, and such conversion shall be deemed to have
been made at, and shall be made at the Conversion Price in effect at, such time
on such next succeeding day.
(c) The Conversion Price (and the price at which a share of Common
Stock is valued pursuant to Section 8) shall be subject to adjustment as
follows:
(i) In case the Corporation shall at any time or from
time to time (A) pay a dividend or make a distribution on the outstanding shares
of Common Stock in capital stock (which, for purposes of this Section 7(c) shall
include, without limitation, any options, warrants or other rights to acquire
capital stock) of the Corporation, (B) subdivide the outstanding shares of
Common Stock into a larger number of shares, (C) combine the outstanding shares
of Common Stock into a smaller number of shares, (D) issue any shares of its
capital stock in a reclassification of the Common Stock or (E) pay a dividend or
make a distribution on the outstanding shares of Common Stock in securities of
the Corporation pursuant to a shareholder rights plan, "poison pill" or similar
arrangement, then, and in each such case, the Conversion Price in effect
immediately prior to such event shall be adjusted (and any other appropriate
actions shall be taken by the Corporation) so that the holder of any share of
Preferred Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock or other securities of the
Corporation that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such share
of Preferred Stock been converted immediately prior to the occurrence of such
event. An adjustment made pursuant to this Section 7(c)(i) shall become
effective retroactively (A) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution or (B) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such corporate
action becomes effective.
(ii) In case the Corporation shall at any time or from
time to time distribute to all holders of shares of its Common Stock (including
any such distribution made in connection with a consolidation or merger in which
the Corporation is the resulting or surviving corporation and the Common Stock
is not changed or exchanged) cash, evidences of indebtedness of the Corporation
or another issuer, securities of the Corporation or another issuer or other
assets (excluding dividends payable in shares of Common Stock for which
adjustment is made under Section 7(c)(i)) or rights or warrants to subscribe for
or purchase securities of the Corporation
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(excluding those in respect of which an adjustment in the Conversion Price is
made pursuant to Section 7(c)(i)), then, and in each such case, the Conversion
Price then in effect shall be adjusted by dividing the Conversion Price in
effect immediately prior to the date of such distribution by a fraction (x) the
numerator of which shall be the Market Price of the Common Stock on the record
date referred to below and (y) the denominator of which shall be such Market
Price of the Common Stock less the then Fair Market Value (as determined by the
Board of Directors of the Corporation) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such subscription
rights or warrants applicable to one share of Common Stock (but such denominator
not to be less than one). Such adjustment shall be made whenever any such
distribution is made and shall become effective retroactively to a date
immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.
(iii) Notwithstanding anything herein to the contrary, no
adjustment under this Section 7(c) need be made to the Conversion Price unless
such adjustment would require an increase or decrease of at least $0.05 in the
Conversion Price then in effect. Any lesser adjustment shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least $0.05 in such
Conversion Price. Any adjustment to the Conversion Price carried forward and not
theretofore made shall be made immediately prior to the conversion of any shares
of Preferred Stock pursuant hereto.
(d) If the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the Conversion Price then in
effect shall be required by reason of the taking of such record.
(e) Upon any increase or decrease in the Conversion Price, then,
and in each such case, the Corporation promptly shall deliver to each registered
holder of Preferred Stock a certificate, signed by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Corporation, setting forth in reasonable detail
the event requiring the adjustment and the method by which such adjustment was
calculated and specifying the increased or decreased Conversion Price then in
effect following such adjustment.
(f) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of any shares of Preferred Stock. If more
than one share of Preferred Stock shall
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be surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Preferred Stock so surrendered. If
the conversion of any share or shares of Preferred Stock results in a fraction,
an amount equal to such fraction multiplied by the Market Price of the Common
Stock on the Business Day preceding the day of conversion shall be paid to such
holder in cash by the Corporation.
(g) In case at any time or from time to time:
(i) the Corporation shall declare a dividend (or any
other distribution) on its Common Stock;
(ii) the Corporation shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or purchase
any shares of stock of any class or of any other rights or warrants;
(iii) there shall be any reclassification of the Common
Stock, or any consolidation or merger to which the Corporation is a party and
for which approval of any shareholders of the Corporation is required, or any
sale or other disposition of all or substantially all of the assets of the
Corporation; or
(iv) there shall be any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then the Corporation shall mail to each holder of shares of Preferred Stock at
such holder's address as it appears on the transfer books of the Corporation, as
promptly as possible but in any event at least ten (10) days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights
or warrants or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution or
rights are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up
is expected to become effective. Such notice also shall specify the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for shares of stock or other securities or property
or cash deliverable upon such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up.
(h) The Corporation shall at all times reserve and keep available
for issuance upon the conversion of the Preferred Stock pursuant to Section 7(a)
or 8(a), such number of its authorized but unissued shares of Common Stock as
will from time to time be sufficient to permit the conversion of all outstanding
shares of Preferred Stock, and shall take all action required to increase the
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authorized number of shares of Common Stock if at any time there shall be
insufficient authorized but unissued shares of Common Stock to permit such
reservation or to permit the conversion of all outstanding shares of Preferred
Stock.
(i) The issuance or delivery of certificates for Common Stock upon
the conversion of shares of Preferred Stock pursuant to Section 7(a) or 8(a)
shall be made without charge to the converting holder of shares of Preferred
Stock for such certificates or for any tax in respect of the issuance or
delivery of such certificates or the securities represented thereby, and such
certificates shall be issued or delivered in the respective names of the holders
of the shares of Preferred Stock converted.
Section 8. Mandatory Conversion.
(a) If for ten (10) consecutive Trading Days the Market Price of
the Common Stock for each day of such period exceeds the Conversion Price in
effect on each such Trading Day, then on the Business Day next succeeding such
ten (10) day period (the "Ten Day Conversion Date"), the outstanding shares of
Preferred Stock shall automatically be converted into such number of fully paid
and non-assessable shares of Common Stock as is equal, subject to Section 7(f),
to the product of the number of shares of Preferred Stock being so converted
multiplied by the quotient of (i) the Liquidation Preference divided by (ii) the
Conversion Price in effect on the Ten Day Conversion Date.
(b) Any shares of Preferred Stock that have not been converted
into shares of Common Stock pursuant to the terms of this Certificate of
Designation on that date which is three (3) years following the Issue Date (the
"Three Year Conversion Date") shall automatically be converted into such number
of fully paid and non-assessable shares of Common Stock as is equal, subject to
Section 7(f), to the number of shares of Preferred Stock being so converted
multiplied by the quotient of (i) the Liquidation Preference divided by (ii) the
Current Market Price in effect on the Three Year Conversion Date (the "Three
Year Conversion Price"). Notwithstanding the foregoing, (x) the Three Year
Conversion Price shall in no event be less than $11.50, subject to adjustment on
the same basis as the Conversion Price pursuant to Section 7(c), and (y) in the
event that (A) the Three Year Conversion Price is less than the Market Price on
the Issue Date, subject to adjustment on the same basis as the Conversion Price
pursuant to Section 7(c), and (B) the NASDAQ Composite Index ("IXIC") as of the
close of business on the Three Year Conversion Date is eighty-five percent (85%)
or less than the IXIC as of the close of business on the Issue Date (the
difference between one hundred percent (100%) and such percentage is hereinafter
referred to as the "Market Correction Percentage"), then the Three Year
Conversion Price shall be increased by a percentage equal to that portion of the
Market Correction Percentage in excess of fifteen percent (15%).
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Notwithstanding the foregoing, in no event, shall the Three Year Conversion
Price be greater than the Conversion Price, subject to adjustment pursuant to
Section 7(c), on the Three Year Conversion Date.
(c) Within thirty (30) Business Days of the Ten Day Conversion
Date or the Three Year Conversion Date, as applicable, the Corporation shall
deliver to each holder of Preferred Stock being converted (i) an officer's
certificate attesting to the satisfaction of the condition precedent to
mandatory conversion and (ii) a certificate or certificates representing the
number of fully paid and non-assessable shares of Common Stock into which such
shares of Preferred Stock have been converted in accordance with this Section 8.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the Ten Day Conversion Date or the Three Year Conversion Date, as
applicable, and the converting holder of shares of Preferred Stock shall be
treated for all purposes as having become the record holder of such Common Stock
at such time.
(d) Notice of any conversion of shares of Preferred Stock pursuant
to Section 8(b) shall be mailed at least ten (10), but not more than sixty (60),
days prior to the date fixed for conversion to each holder of shares of
Preferred Stock to be converted, at such holder's address as it appears on the
transfer books of the Corporation.
(e) Notwithstanding that any certificates for such shares shall
not have been surrendered for cancellation, from and after the Ten Day
Conversion Date or the Three Year Conversion Date, as applicable, (i) the shares
represented thereby shall no longer be deemed outstanding and (ii) all rights of
the holders of shares of Preferred Stock to be converted shall cease and
terminate, excepting only the right to receive the shares of Common Stock and
dividends.
Section 9. Definitions.
For the purposes of this Certificate of Designation of Preferred Stock,
the following terms shall have the meanings indicated:
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia are authorized or
required by law or executive order to close.
"Common Stock" shall mean and include the Common Stock, par
value $.01 per share, of the Corporation and each other class of capital stock
of the Corporation that does not have a preference over any other class of
capital stock of the Corporation as to dividends or upon liquidation,
dissolution or winding up of the Corporation and, in each case, shall include
any other class of
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capital stock of the Corporation into which such stock is reclassified or
reconstituted.
"Conversion Price" shall mean $21.75, subject to adjustments as set
forth in Section 7(c).
"Current Market Price" per share shall mean, on any date specified
herein for the determination thereof, (a) the average daily Market Price of the
Common Stock for those days during the period of ten (10) days, ending on such
date, which are Trading Days, and (b) if the Common Stock is not then listed or
admitted to trading on any national securities exchange or quoted in the
over-the-counter market, the Market Price on such date.
"Fair Market Value" shall mean the amount which a willing buyer, under
no compulsion to buy, would pay a willing seller, under no compulsion to sell,
in an arm's-length transaction.
"Issue Date" shall mean the original date of issuance of shares of
Preferred Stock to the holders pursuant to the Purchase Agreement.
"Junior Stock" shall mean any capital stock of the corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Preferred Stock including, without limitation, the Common Stock.
"Liquidation Preference" with respect to a share of Preferred Stock
shall mean $1,000.00.
"Market Price" shall mean, per share of Common Stock on any date
specified herein: (a) the closing price per share of the Common Stock on such
date published in The Wall Street Journal, or if no such closing price on such
date is published in The Wall Street Journal, the average of the closing bid and
asked prices on such date as officially reported on the principal national
securities exchange on which the Common Stock is then listed or admitted to
trading; (b) if the Common Stock is not then listed or admitted to trading on
any national securities exchange but is designated as a national market system
security, the last trading price of the Common Stock on such date; or (c) if
there shall have been no trading on such date or if the Common Stock is not so
designated, the average of the reported closing bid and asked prices of the
Common Stock on such date as shown by NASDAQ and reported by any member firm of
the NYSE, selected by the Corporation. If neither (a), (b) or (c) is applicable,
Market Price shall mean the Fair Market Value per share determined in good faith
by the Board of Directors of the Corporation unless holders of at least
fifty-one percent (51%) of the outstanding shares of Preferred Stock request
that the Corporation obtain an opinion of a nationally recognized investment
banking firm chosen by such holders and the Corporation (at the Corporation's
expense), in
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which event Fair Market Value shall be determined by such investment banking
firm.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations System.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parity Stock" shall mean any capital stock of the Corporation,
including the Preferred Stock, ranking on a par (both as to dividends and upon
liquidation, dissolution or winding up) with the Preferred Stock.
"Person" shall mean any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind, and shall include any
successor (by merger) of such entity.
"Preferred Stock" shall have the meaning set forth in Section 1(b)
hereof.
"Senior Stock" shall mean any capital stock of the Corporation ranking
senior to the Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), including, without limitation, the 4.25% Cumulative
Senior Perpetual Convertible Preferred Stock, Series A.
"Series A Preferred Stock" shall mean the 4.25% Cumulative Senior
Perpetual Convertible Preferred Stock, Series A, of the Corporation.
"Series B Preferred Stock" shall mean the 4.25% Cumulative Junior
Convertible Preferred Stock, Series B, of the Corporation.
"Series C Preferred Stock" shall mean the Convertible Preferred Stock,
Series C, of the Corporation.
"Series D Preferred Stock" shall mean the Convertible Preferred Stock,
Series D, of the Corporation.
"Subsidiary" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Trading Days" shall mean a day on which the national securities
exchanges are open for trading.
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Section 10. Modification or Amendment.
Except as specifically set forth herein, modifications or amendments to
this Certificate of Designation may be made by the Corporation with the consent
of the holders of more than 50% of the outstanding shares of Preferred Stock.
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IN WITNESS WHEREOF, World Access, Inc. has caused this Certificate to
be duly executed in its corporate name on this 6th day of July, 2000.
WORLD ACCESS, INC.
By: /s/ John D. Phillips
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Name: John D. Phillips
Title: Chief Executive Officer
