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EXHIBIT 4
WORLD ACCESS, INC.
CERTIFICATE OF DESIGNATION OF
CONVERTIBLE PREFERRED STOCK, SERIES D,
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
December 9, 1999 (the "Adoption Date") duly adopted the following resolution
creating a series of Preferred Stock designated as Convertible Preferred Stock,
Series D, 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 D (the "Preferred Stock"). The number of
shares initially constituting the Preferred Stock shall be 185,000, 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 and the Series C 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.
(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
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Series B Preferred Stock and the Series C 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.
Section 4. Certain Restrictions.
(a) Whenever the Corporation shall not have converted
shares of Preferred Stock at a time required by Sections 8 or 9, at such time
and thereafter until all conversion obligations provided in Sections 8 or 9 that
have come due shall have been satisfied or all necessary funds have been set
apart for payment, the Corporation shall not: (A) declare or pay dividends, or
make any other distributions, on any shares of Junior Stock or (B) declare or
pay dividends, or make any other distributions, on any shares of Parity Stock,
except dividends or distributions paid ratably on the Preferred Stock and all
Parity Stock on which dividends are payable or in arrears, in proportion to the
total amounts to which the holders of all shares of the Preferred Stock and such
Parity Stock are then entitled.
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(b) Whenever the Corporation shall not have converted
shares of Preferred Stock at a time required by Sections 8 or 9, at such time
and thereafter until all conversion obligations provided in Sections 8 or 9 that
have come due shall have been satisfied or all necessary funds have been set
apart for payment, the Corporation shall not redeem, purchase or otherwise
acquire for consideration any shares of Junior Stock or Parity Stock; provided,
however, that (A) the Corporation may accept shares of any Senior Stock, Parity
Stock or Junior Stock for conversion into Junior Stock and (B) the Corporation
may at any time redeem, purchase or otherwise acquire shares of any Parity Stock
pursuant to any mandatory redemption, put, sinking fund or other similar
obligation contained in such Parity Stock, pro rata with the Preferred Stock in
proportion to the total amount then required to be applied by the Corporation to
redeem, repurchase, convert, exchange or otherwise acquire shares of Preferred
Stock and shares of such Parity Stock.
(c) The Corporation shall not permit any Subsidiary of
the Corporation, or cause any other Person, to purchase or otherwise acquire for
consideration any shares of capital stock of the Corporation unless the
Corporation could, pursuant to Section 4(b), purchase such shares at such time
and in such manner.
Section 5. Redemption.
The Corporation shall not have any right to redeem any shares
of Preferred Stock.
Section 6. 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 7. 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
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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 8, 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.
(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 7.
Section 8. 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 8, 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 8(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 8(j). 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 8(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
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provisions of this Section 8. Subject to the following provisions of this
paragraph and of Section 8(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 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 9) 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
8(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 8(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 issue shares of Common Stock (or securities convertible into
or exchangeable for Common Stock, or any options, warrants or other rights to
acquire shares of Common Stock) for a consideration per share less than the
lower of the (A) Current Market Price per share of Common Stock or (B) Market
Price per share of Common Stock then in effect at the record
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date or issuance date, as the case may be (the "Date"), referred to in the
following sentence (treating the price per share of any security convertible or
exchangeable or exercisable into Common Stock as equal to (A) the sum of the
price for such security convertible, exchangeable or exercisable into Common
Stock plus any additional consideration payable (without regard to any
anti-dilution adjustments) upon the conversion, exchange or exercise of such
security into Common Stock divided by (B) the number of shares of Common Stock
initially underlying such convertible, exchangeable or exercisable security),
then, and in each such case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect on the day immediately prior
to the Date by a fraction (x) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding on the Date plus the number of
additional shares of Common Stock issued or to be issued (or the maximum number
into which such convertible or exchangeable securities initially may convert or
exchange or for which such options, warrants or other rights initially may be
exercised) and (y) the denominator of which shall be the sum of the number of
shares of Common Stock outstanding on the Date plus the number of shares of
Common Stock which the aggregate consideration for the total number of such
additional shares of Common Stock so issued or to be issued upon the conversion,
exchange or exercise of such convertible or exchangeable securities or options,
warrants or other rights (plus the aggregate amount of any additional
consideration initially payable upon such conversion, exchange or exercise of
such security) would purchase at the Current Market Price or the Market Price,
as applicable.
Such adjustment shall be made whenever such shares, securities, options,
warrants or other rights are issued, and shall become effective retroactively to
a date immediately following the close of business (1) in the case of issuance
to stockholders of the Corporation, as such, on the record date for the
determination of stockholders entitled to receive such shares, securities,
options, warrants or other rights and (2) in all other cases, on the date
("issuance date") of such issuance; provided that:
(A) the determination as to whether an
adjustment is required to be made pursuant to this Section 8(c)(ii) shall be
made upon the issuance of such shares or such convertible or exchangeable
securities, options, warrants or other rights;
(B) if any convertible or exchangeable
securities, options, warrants or other rights (or any portions thereof) which
shall have given rise to an adjustment pursuant to this Section 8(c)(ii) shall
have expired or terminated without the exercise thereof and/or if by reason of
the terms of such convertible or exchangeable securities, options, warrants or
other rights there shall have been an increase or increases, with the passage of
time or otherwise, in the price payable upon the exercise or conversion thereof,
then the Conversion Price hereunder shall be readjusted (but to no greater
extent than originally adjusted) on the basis of (x) eliminating from the
computation any additional shares of Common Stock corresponding to such
convertible or exchangeable securities, options, warrants or other
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rights as shall have expired or terminated, (y) treating the additional shares
of Common Stock, if any, actually issued or issuable pursuant to the previous
exercise of such convertible or exchangeable securities, options, warrants or
other rights as having been issued for the consideration actually received and
receivable therefor and (z) treating any of such convertible or exchangeable
securities, options, warrants or other rights which remain outstanding as being
subject to exercise or conversion on the basis of such exercise or conversion
price as shall be in effect at that time; and
(C) no adjustment in the Conversion
Price shall be made pursuant to this Section 8(c)(ii) as a result of any
issuance of securities by the Corporation in respect of which an adjustment to
the Conversion Price is made pursuant to Section 8(c)(i).
(iii) 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 8(c)(i)) or rights or warrants to
subscribe for or purchase securities of the Corporation (excluding those
referred to in Section 8(c)(ii) or those in respect of which an adjustment in
the Conversion Price is made pursuant to Section 8(c)(i) or (ii)), 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.
(iv) In case the Corporation, at any time or from
time to time, shall take any action affecting its Common Stock similar to or
having an effect similar to any of the actions described in any of Section
8(c)(i) through Section 8(c)(iii), inclusive, or Section 8(g) (but not including
any action described in any such Section) and the Board of Directors of the
Corporation in good faith determines that it would be equitable in the
circumstances to decrease the Conversion Price as a result of such action, then,
and in each such case, the Conversion Price shall be decreased in such manner
and at such time as the Board of Directors of the Corporation in good faith
determines would be equitable in the circumstances (such determination to be
evidenced in a resolution, a certified copy of which shall be mailed to the
holders of the Preferred Stock).
(v) Notwithstanding anything herein to the
contrary, no adjustment under this Section 8(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
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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.
(vi) Notwithstanding anything herein to the
contrary, no adjustment under this Section 8(c) shall be made upon (A) the grant
of not more than 2,000,000 options to employees or directors of the Corporation
pursuant to benefit plans approved by the Board of Directors of the Corporation
or upon the issuance of shares of Common Stock upon exercise of such options,
(B) the issuance of any Common Stock (or securities convertible into or
exchangeable for capital stock or options, warrants or other rights to acquire
capital stock) in exchange for professional or other services rendered to the
Corporation up to a maximum of 500,000 shares of Common Stock per annum, but no
more than 1,000,000 shares of Common Stock in the aggregate, (C) the issuance of
any Common Stock pursuant to this Certificate, or (D) the sale of Common Stock
by the Corporation in an underwritten public offering.
(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 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 of any capital reorganization or
reclassification or other change of outstanding shares of Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value), or in case of any consolidation
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or merger of the Corporation with or into another Person (other than a
consolidation or merger in which the Corporation is the resulting or surviving
Person and which does not result in any reclassification or change of
outstanding Common Stock) (any of the foregoing, a "Transaction"), the
Corporation, or such successor Person, as the case may be, shall execute and
deliver to each holder of Preferred Stock at least ten (10) Business Days prior
to effecting any of the foregoing Transactions a certificate that the holder of
each share of Preferred Stock then outstanding shall have the right thereafter
to convert such share of Preferred Stock into the kind and amount of shares of
stock or other securities (of the Corporation or another issuer) or property or
cash receivable upon such Transaction by a holder of the number of shares of
Common Stock into which such share of Preferred Stock could have been converted
immediately prior to such Transaction. Such certificate shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 8. If, in the case of any such
Transaction, the stock, other securities, cash or property receivable thereupon
by a holder of Common Stock includes shares of stock or other securities of a
Person other than the successor Person and other than the Corporation, which
controls or is controlled by the successor Person or which, in connection with
such Transaction, issues stock, securities, other property or cash to holders of
Common Stock, then such certificate also shall be executed by such Person, and
such Person shall, in such certificate, specifically acknowledge the obligations
of such successor Person and acknowledge its obligations to issue such stock,
securities, other property or cash to the holders of Preferred Stock upon
conversion of the shares of Preferred Stock as provided above. The provisions of
this Section 8(g) and any equivalent thereof in any such certificate similarly
shall apply to successive Transactions.
(h) 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,
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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.
(i) The Corporation shall at all times reserve and keep
available for issuance upon the conversion of the Preferred Stock pursuant to
Section 8(a) or 9(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 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.
(j) The issuance or delivery of certificates for Common
Stock upon the conversion of shares of Preferred Stock pursuant to Section 8(a)
or 9(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 9. Mandatory Conversion.
(a) If for sixty (60) 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 sixty (60) day period (the "Sixty 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 8(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 Sixty 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 8(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 8(c),
and (y) in the event that (A) the Three Year
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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 8(c),
and (B) the Nasdaq Composite Index ("IXIC") as of the close of business on the
Three Year Conversion Date is seventy percent (70%) 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%). Notwithstanding the foregoing, in no event,
shall the Three Year Conversion Price be greater than the Conversion Price,
subject to adjustment pursuant to Section 8(c), on the Three Year Conversion
Date.
(c) Within thirty (30) Business Days of the Sixty 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 9. Such conversion shall be deemed to have been made immediately
prior to the close of business on the Sixty 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 9(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 Sixty 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 10. 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
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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 capital
stock of the Corporation into which such stock is reclassified or reconstituted.
"Conversion Price" shall mean $18.00, subject to adjustments
as set forth in Section 8(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 twenty (20) 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 which event Fair Market Value shall be determined by
such investment banking firm.
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"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.
"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.
Section 11. 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 10 day of February, 2000.
WORLD ACCESS, INC.
By: /s/ John D. Phillips
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John D. Phillips
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