EXHIBIT 4.4
RESTATED RIGHTS AGREEMENT
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WORLDCOM, INC.
and
THE BANK OF NEW YORK
Rights Agent
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Dated as of June 7, 2001
Table of Contents
Page
Section 1. Certain Definitions............................................2
Section 2. Appointment of Rights Agent....................................6
Section 3. Issue of Right Certificates....................................6
Section 4. Form of Right Certificates.....................................8
Section 5. Countersignature and Registration..............................8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates.............................................9
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights......................................................9
Section 8. Cancellation and Destruction of Right Certificates............11
Section 9. Reservation and Availability of Shares of
Preferred Stock...............................................12
Section 10. Preferred Stock Record Date...................................12
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights..............................................13
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares.....................................................20
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earnings Power.............................................20
Section 14. Fractional Rights and Fractional Shares.......................22
Section 15. Rights of Action..............................................24
Section 16. Agreement of Right Holders....................................24
Section 17. Right Certificate Holder Not Deemed a Stockholder.............25
Section 18. Concerning the Rights Agent...................................25
Section 19. Merger or Consolidation or Change of Name of
Rights Agent..................................................25
Section 20. Duties of Rights Agent........................................26
Section 21. Change of Rights Agent........................................28
Section 22. Issuance of New Right Certificates............................28
Section 23. Redemption and Termination....................................29
Section 24. Exchange......................................................30
Section 25. Notice of Proposed Actions....................................31
Section 26. Notices.......................................................32
Section 27. Supplements and Amendments....................................32
Section 28. Successors....................................................33
Section 29. Benefits of This Agreement....................................33
Section 30. Severability..................................................33
Section 31. Governing Law.................................................33
Section 32. Counterparts..................................................33
Section 33. Descriptive Headings..........................................33
RESTATED RIGHTS AGREEMENT
This Agreement, dated as of June 7, 2001 is entered into between
WorldCom, Inc., a Georgia corporation (the "Company") and The Bank of New York
(the "Rights Agent", which term shall include any successor Rights Agent
hereunder).
W I T N E S S E T H
WHEREAS, the Company and the Rights Agent entered into a Rights
Agreement dated as of August 25, 1996, which was amended on May 22, 1997,
("Existing Rights Agreement");
WHEREAS, the Board of Directors of the Company has approved and
recommended to its shareholders a recapitalization proposal that would create
two new series of common stock (the "Recapitalization Proposal");
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend distribution of (i) one preferred share purchase right
("WorldCom Right"), representing the right to purchase one one-thousandth of a
share of Series 4 Junior Participating Preferred Stock having the rights,
powers and preferences set forth in the form of Articles of Amendment attached
hereto as Exhibit A, for each share of WorldCom Group Stock issued at the
Effective Date and (ii) one preferred share purchase right ("MCI Right",
together with the WorldCom Right, the "Rights"), representing the right to
purchase one one-thousandth of a share of Series 5 Junior Participating
Preferred Stock having the rights, powers and preferences set forth in the
form of Articles of Amendment attached hereto as Exhibit A, for each share of
MCI Group Stock issued at the Effective Date;
WHEREAS, the Board of Directors of the Company has further
authorized and directed the issuance of one Right with respect to each share
of Common Stock (as defined below) which shall be issued and become
outstanding between the Effective Date and the Distribution Date (as such term
is defined in Section 3 hereof);
WHEREAS, the Company desires to appoint the Rights Agent to act as
provided herein, and the Rights Agent is willing to so act; and
WHEREAS, in order to consummate the Recapitalization Proposal, the
Existing Rights Agreement shall be amended and restated as provided hereby and
as of the date hereof, the preferred share purchase right issued under the
Existing Rights Agreement shall be changed into the Rights issued under this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree that, as of the date
hereof, the Existing Rights Agreement shall be and hereby is amended and
restated in its entirety to read as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" means any Person (as hereinafter defined) who
or which, together with all Affiliates (as hereinafter defined) and Associates
(as hereinafter defined) of such Person, without the Prior Written Approval of
the Company (as hereinafter defined), shall be the Beneficial Owner (as
hereinafter defined) of securities of the Company constituting 15% or more of
the Voting Power (as hereinafter defined) of the Company or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of securities representing 15% or more of
the Voting Power of the Company, but shall not include (i) the Company, any
Subsidiary of the Company, any employee benefit plan or compensation
arrangement of the Company or any Subsidiary of the Company, or any entity
holding securities of the Company to the extent organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such employee benefit plan or compensation arrangement or
(ii) any Person who or which, together with all Affiliates and Associates of
such Person, inadvertently may become the Beneficial Owner of securities of
the Company representing 15% or more of the Voting Power of the Company or
otherwise becomes such a Beneficial Owner without a plan or intention to
acquire control of the Company, so long as such Person, individually or
together with the Affiliates and Associates of such Person, promptly enters
into, and deliver to the Company, an irrevocable commitment promptly to
divest, and thereafter promptly divests (without exercising or retaining any
power, including voting, with respect to such securities), sufficient
securities of the Company so that such Person, together with all Affiliates
and Associates of such Person, ceases to be the Beneficial Owner of 15% or
more of the Voting Power of the Company. Notwithstanding the foregoing, (x) no
Person shall become an "Acquiring Person" as the result of an acquisition of
voting securities of the Company by the Company which, by reducing the amount
of such securities outstanding, increases the proportionate voting power of
such securities beneficially owned by such Person to 15% or more of the Voting
Power; provided, however, that if a Person becomes the Beneficial Owner of
securities constituting 15% or more of the Voting Power by reason of purchases
by the Company and shall, after such purchases by the Company, become the
Beneficial Owner of any additional voting securities of the Company without
the Prior Written Approval of the Company, then such Person shall be deemed to
be an Acquiring Person; and (y) no Person shall become an "Acquiring Person"
as the result of a change in the current market price (as defined in Section
11(f) hereof) of either WorldCom Group Stock or MCI Group Stock that,
increases the proportionate voting power of such securities beneficially owned
by such Person to 15% or more of the Voting Power; provided, however, that if
a Person becomes the Beneficial Owner of securities constituting 15% or more
of the Voting Power by reason of a change in the current market price of
either WorldCom Group Stock or MCI Group Stock and shall, after such change in
the current market price, become the Beneficial Owner of any additional voting
securities of the Company without the Prior Written Approval of the Company,
then such Person shall be deemed to be an Acquiring Person.
(b) "Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
in effect on the date hereof.
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(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own", any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise, provided, however, that a
Person shall not be deemed the "Beneficial Owner" of securities tendered
pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for payment or exchange; or (B) the
right to vote pursuant to any agreement, arrangement or understanding,
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of any security under this clause (B) if the agreement,
arrangement or understanding to vote such security (1) arises solely from
a revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (2) is not
also then reportable by such person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for
the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy or consent as described in clause (B) of subparagraph (ii) of this
paragraph (c)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership
to the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, means the number
of such securities then issued and outstanding together with the number of
such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(d) "Board of Directors" means the Board of Directors of the Company
as constituted from time to time.
(e) "Business Day" means any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
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(f) "Close of business" on any given date means 5:00 P.M., Clinton,
Mississippi time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Clinton, Mississippi time, on the next
succeeding Business Day.
(g) "Common Stock", when used in reference to the Company, means
WorldCom Group Stock and/or MCI Group Stock as the context requires. "Common
Stock" when used with reference to any Person other than the Company means the
capital stock with the greatest Voting Power of such Person or the equity
securities or other equity interest having power to control or direct the
management of such Person or, if such Person is a Subsidiary (as hereinafter
defined) of another Person, of the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding such capital
stock, equity securities or equity interests.
(h) "Distribution Date" has the meaning set forth in Section 3
hereof.
(i) "Effective Date" means the date upon which the Recapitalization
Proposal is consummated.
(j) "Existing Common Stock" means Common Stock, par value $.01 per
share, of the Company issued and outstanding prior to the consummation of the
Recapitalization Proposal.
(k) "Expiration Date" has the meaning set forth in Section 7(a)
hereof.
(l) "Final Expiration Date" has the meaning set forth in Section
7(a) hereof.
(m) "Holder" has the meaning set out in the WorldCom Option
Agreement.
(n) "MCI Group Stock" means WorldCom, Inc.--MCI Group Common Stock,
a series of Common Stock having a par value of $.01 per share.
(o) "MCI Right" has the meaning set forth in the preamble to this
Agreement.
(p) "MCI Right Certificate" has the meaning set forth in Section
3(a) hereof.
(q) "Person" means any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of any
such entity.
(r) "Preferred Stock" means the Series 4 Preferred Stock and/or the
Series 5 Preferred Stock, as the context requires.
(s) "Prior Written Approval of the Company" means prior express
written consent of the Company to the actions in question, executed on behalf
of the Company by a duly authorized officer of the Company following express
approval by action of at least a majority of the members of the Board of
Directors then in office.
(t) "Purchase Price" means the Series 4 Purchase Price and/or the
Series 5 Purchase Price, as the context requires.
(u) "Redemption Price" has the meaning set forth in Section 23(a)
hereof.
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(v) "Right Certificates" has the meaning set forth in Section 3(a)
hereof.
(w) "Rights" has the meaning set forth in the preamble to this
Agreement.
(x) "Section 11(b) Event" has the meaning set forth in Section 11(b)
hereof.
(y) "Section 13 Event" means an event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(z) "Series 4 Preferred Stock" means the Series 4 Junior
Participating Preferred Stock, $.01 par value, of the Company having the
rights and preferences set forth in the form of Articles of Amendment attached
hereto as Exhibit A.
(aa) "Series 5 Preferred Stock" means the Series 5 Junior
Participating Preferred Stock, $.01 par value, of the Company having the
rights and preferences set forth in the form of Articles of Amendment attached
hereto as Exhibit A.
(bb) "Series 4 Purchase Price" has the meaning in Section 7(b)
hereof.
(cc) "Series 5 Purchase Price" has the meaning in Section 7(b)
hereof.
(dd) "Stock Acquisition Date" means the earlier of (i) the first
date of public announcement by the Company or an Acquiring Person that a
Person has become an Acquiring Person, or (ii) the date on which the Company
first has notice, direct or indirect, or otherwise determines that a Person
has become an Acquiring Person.
(ee) "Subsidiary" means, with respect to any Person, any other
Person of which securities or other ownership interests having ordinary Voting
Power, in the absence of contingencies, to elect a majority of the board of
directors (or other persons performing similar functions) of such other Person
are at the time directly or indirectly owned by such Person or one or more of
such Person's Subsidiaries, except that "Subsidiary" when used with reference
to the Company shall mean any Person of which either a majority of the Voting
Power of the voting equity securities or a majority of the equity interests is
owned, directly or indirectly, by the Company.
(ff) "Voting Power" means the voting power of all securities of a
Person then outstanding generally entitled to vote for the election of
directors of the Person (or, where appropriate, for the election of persons
performing similar functions).
(gg) "WorldCom Group Stock" means WorldCom, Inc.--WorldCom Group
Common Stock, a series of Common Stock having a par value of $.01 per share.
(hh) "WorldCom Right" has the meaning set forth in the preamble to
this Agreement.
(ii) "WorldCom Right Certificate" has the meaning set forth in
Section 3(a) hereof.
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Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution
Date also be the holders of Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. The Company shall promptly send written notice to the
Rights Agent of any such appointment. In the event the Company appoints one or
more Co-Rights Agents, the respective duties of the Rights Agents and any
Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the close of business on the tenth
Business Day after the Stock Acquisition Date or (ii) the close of business on
the tenth Business Day (or such later date as may be determined by action of
the Board of Directors but in no event later than the tenth Business Day after
such time as any Person becomes an Acquiring Person) after the date that a
tender or exchange offer by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan or compensation arrangement of the
Company or of any Subsidiary of the Company, or any entity holding securities
of the Company to the extent organized, appointed or established by the
Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan or compensation arrangement) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, without the Prior Written Approval of the
Company, which tender or exchange offer would result in any Person becoming
the Beneficial Owner of Voting Power aggregating 15% or more of the
outstanding Voting Power (including any such date which is after the date of
this Agreement and prior to the issuance of the Rights; the earlier of such
dates being herein referred to as the "Distribution Date"), (y) each WorldCom
Right and each MCI Right will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates representing shares of
WorldCom Group Stock and MCI Group Stock, respectively, registered in the
names of the holders of WorldCom Group Stock and MCI Group Stock,
respectively, (which certificates for WorldCom Group Stock and MCI Group Stock
shall be deemed also to be WorldCom Right Certificates and MCI Rights
Certificates, respectively) and not by separate Right Certificates, as more
fully set forth below, and (z) the WorldCom Rights (and the right to receive
certificates therefor) will be transferable only in connection with the
transfer of the underlying shares of WorldCom Group Stock and the MCI Rights
(and the right to receive certificates therefor) will be transferable only in
connection with the transfer of the underlying shares of MCI Group Stock, as
more fully set forth below. As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date, the
Company shall prepare and execute, and the Rights Agent shall countersign and
send, by first-class, insured, postage prepaid mail, to each record holder of
Common Stock 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 B hereto (the "WorldCom
Right Certificate"), evidencing one WorldCom Right for each share of WorldCom
Group Stock so held, subject to adjustment as provided herein, and a right
certificate, in substantially the form of Exhibit C hereto (the "MCI Right
Certificate", together with the WorldCom Right Certificate, the "Right
Certificates"), evidencing one MCI Right for each share of MCI Group Stock so
held,
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subject to adjustment as provided herein. As of and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the Rights will be evidenced by such
certificates for the Common Stock registered in the names of the holders of
the Common Stock and the registered holders of the Common Stock shall also be
registered holders of the associated Rights. Until the Distribution Date (or
the earlier redemption, expiration or termination of the Rights), the
surrender for transfer of any of the certificates for the Common Stock
outstanding in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with the Common Stock represented by
such certificate.
(c) Certificates for the Common Stock issued prior to the earlier of
the Distribution Date or the redemption, expiration or termination of the
Rights shall be deemed also to be certificates for Rights and shall have
impressed, printed or written on, or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Restated
Rights Agreement dated as of June 7, 2001 between
WorldCom, Inc. (the "Company") and The Bank of New York
(the "Rights Agreement"), as it may from time to time be
supplemented or amended, the terms of which are
incorporated herein by reference and a copy of which is
on file at the principal executive offices of the
Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may expire or may be
redeemed, exchanged or be evidenced by separate
certificates and no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without
charge promptly after receipt of a written request
therefor. Under certain circumstances, Rights issued to
or held by Acquiring Persons or their Affiliates or
Associates (as defined in the Rights Agreement) and any
subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), the Rights associated with Common Stock
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any of such certificates shall also
constitute the transfer of the Rights associated with Common Stock represented
by such certificates.
In the event that the Company purchases or acquires any Common Stock
prior to the Distribution Date, any Rights associated with such Common Stock
shall be deemed cancelled and retired so that the Company shall not be
entitled to exercise any Rights associated with shares of Common Stock which
are no longer outstanding.
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Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof) shall be in
substantially the same form as Exhibit B hereto for the WorldCom Rights and
Exhibit C hereto for the MCI Rights and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law, rule or regulation or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
customary usage. Subject to the provisions of Section 11 and Section 22
hereof, the Right Certificates, whenever issued, shall be dated as of the
Effective Date, and on their face shall entitle the holders thereof to
purchase such number of one one-thousandths of a share of Preferred Stock as
shall be set forth therein at the price per one one-thousandth of a share as
set forth therein, but the number and identity of such shares and the Purchase
Price shall be and remain subject to adjustment as provided in Sections 11, 13
and 22 hereof.
(b) Any Right Certificate issued pursuant to Section 3(a) hereof
that represents Rights beneficially owned by an Acquiring Person or any
Associate or Affiliate thereof and any Right Certificate issued at any time
upon the transfer of any Rights to an Acquiring Person or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate, and any Right Certificate issued pursuant to Section 6 hereof,
Section 11 hereof or Section 22 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate were
issued to a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person. This
Right Certificate and the Rights represented hereby are
void in the circumstances specified in Section 7(e) of
the Rights Agreement.
The failure to print the foregoing legend on any such Right
Certificate or any defect therein shall not affect in any manner whatsoever
the application or interpretation of the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be countersigned manually or by
facsimile signature by the Rights Agent or the registrar or co-registrar for
the Common Stock (the "Registrar") and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company whose manual or
facsimile signature is affixed to the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent or the
Registrar and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent or the Registrar,
issued and delivered with the same force
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and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed
on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company
to sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its stockholder services office or such other office
designated for such purpose, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses
of the respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates, the certificate
number of each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the Expiration Date (as such term is defined in Section 7(a) hereof), any
Right Certificate or Right Certificates may be transferred, split up, combined
or exchanged for another Right Certificate or Right Certificates, entitling
the registered holder to purchase a like number of shares of Preferred Stock
as the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
stockholder services office of the Rights Agent or such office designated for
such purpose. Thereupon, the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the stockholder services office of the
Rights Agent or such office designated for such purpose, together with payment
of the applicable Purchase Price for each one one-thousandth of a share of
Series 4 Preferred Stock, in
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the case of a WorldCom Right, and one one-thousandth of a share of Series 5
Preferred Stock, in the case of a MCI Right, as to which the Rights are
exercised, at or prior to the close of business on the Expiration Date. The
"Expiration Date", as used in this Agreement, shall be the earliest of (i) the
Final Expiration Date (as defined below), (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof, or (iii) the time at which the
Rights are exchanged as provided in Section 24 hereof. The "Final Expiration
Date," as used in this Agreement, shall be September 6, 2001. The Final
Expiration Date of this Agreement shall not be extended beyond September 6,
2001, unless such extension has been approved by the affirmative vote of the
holders of a majority of the votes entitled to be cast with respect thereto by
all voting groups entitled to vote thereon, voting as a single class, at a
meeting at which a quorum of such shareholders is represented.
(b) The purchase price ("Series 4 Purchase Price") for each one
one-thousandth of a share of Series 4 Preferred Stock pursuant to the exercise
of a WorldCom Right shall initially be equal to $160.00 multiplied by a
fraction, the numerator of which is the opening price of WorldCom Group Stock
on the first day such stock is traded after the consummation of the
Recapitalization Proposal and the denominator of which is the closing price of
Existing Common Stock on the last day of trading prior to the consummation of
the Recapitalization Proposal. The purchase price ("Series 5 Purchase Price")
for each one one-thousandth of a share of Series 5 Preferred Stock pursuant to
the exercise of a MCI Right shall initially be equal to the difference between
$160.00 and the Series 4 Purchase Price. The Purchase Price shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) below. The opening price shall be the first sale price,
regular way, or in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported by
the National Association of Securities Dealers, Inc. Automated Quotation
System ("Nasdaq") National Market System. The closing price shall be the last
sale price, regular way, or in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported by the Nasdaq National Market System.
(c) Upon receipt of a Right Certificate, with the form of election
to purchase duly executed, accompanied by payment of the Purchase Price for
each one one-thousandth of a share of Preferred Stock to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder
of the Rights pursuant hereto in accordance with Section 9 hereof by certified
check, bank draft or money order payable to the order of the Company or the
Rights Agent, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) either (A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company will direct the depositary agent to comply with all such
requests, (ii) promptly after receipt of such certificates or depositary
receipts cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered
10
in such name or names as may be designated by such holder, (iii) when
appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iv) after receipt of any such cash, promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate, (v) when
appropriate, requisition from the Company the amount of cash or securities
issuable upon exercise of a Right pursuant to the adjustment provisions of
Section 11 or the exchange provisions of Section 24, and (vi) after receipt of
any such cash or securities, promptly deliver such cash or securities to or
upon the order of the registered holder of such Right Certificate, of any such
cash or securities.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, upon
the first occurrence of a Section 11(b) Event or a Section 13 Event, any
Rights that are or were at any time on or after the earlier of the Stock
Acquisition Date or the Distribution Date beneficially owned by an Acquiring
Person or any Associate or Affiliate of an Acquiring Person shall become void
with respect to the rights provided under Section 11(b), Section 13(a) and
Section 24 hereof and any holder of such Rights shall thereafter have no right
to exercise such Rights under the provisions of Section 11(b) and Section
13(a) hereof, or to receive any Common Stock in exchange therefor pursuant to
the provisions of Section 24 hereof.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless the certificate
contained in the appropriate form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise shall have
been properly completed and duly executed by the registered holder thereof and
the Company shall have been provided with such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
11
Section 9. Reservation and Availability of Shares of Preferred
Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient
to permit the exercise in full of all outstanding Rights and, after the
occurrence of a Section 11(b) Event or a Section 13 Event, shall so reserve
and keep available a sufficient number of shares of Preferred Stock, Common
Stock and/or other securities which may be required to permit the exercise in
full of the Rights pursuant to this Agreement.
(b) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock and/or
other securities delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or securities.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of an event which would establish
the Distribution Date, a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities
Act) until the Expiration Date The Company will also take such action as may
be appropriate under the "blue sky laws" of the various states.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Preferred Stock and/or other securities upon
the exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer involved in the
transfer or delivery of Right Certificates or the issuance or delivery of
certificates or depositary receipts for Preferred Stock and/or other
securities in a name other than that of the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, nor shall the Company
be required to issue or deliver any certificates or depositary receipts for
shares of Preferred Stock and/or other securities upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person (other than the
Company) in whose name any certificate for Series 4 Preferred Stock or Series
5 Preferred Stock (or other securities) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Stock (or other securities) represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock
(or other securities) transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
12
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or other securities) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Series 4 Purchase Price or the Series 5 Purchase Price, as the
case may be, the number and identity of shares covered by each WorldCom Right
or MCI Right, as the case may be, and the number of WorldCom Rights or MCI
Rights, as the case may be, outstanding are subject to adjustment from time to
time as provided in this Section 11.
(a) In the event the Company shall at any time after the date of
this Agreement (i) declare a dividend on the Series 4 Preferred Stock or
Series 5 Preferred Stock, as the case may be, payable in shares of Series 4
Preferred Stock or Series 5 Preferred Stock, as the case may be, (ii)
subdivide the outstanding Series 4 Preferred Stock or Series 5 Preferred
Stock, as the case may be, (iii) combine the outstanding Series 4 Preferred
Stock or Series 5 Preferred Stock, as the case may be, into a smaller number
of shares or (iv) issue any shares of its capital stock in a reclassification
of the Series 4 Preferred Stock or Series 5 Preferred Stock, as the case may
be (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11, the Series 4 Purchase Price
or Series 5 Purchase Price, as the case may be, in effect at the time of the
record date for such dividend or the time of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of capital stock, including Preferred Stock, issuable upon exercise of
a WorldCom Right or MCI Right, as the case may be, shall be proportionately
adjusted so that the holder of any WorldCom Right or MCI Right, as the case
may be, exercised after such time, upon payment of the aggregate consideration
such holder would have had to pay to exercise such WorldCom Right or MCI
Right, as the case may be, prior to such time, shall be entitled to receive
the aggregate number and kind of shares of capital stock, including Preferred
Stock, which, if such WorldCom Right or MCI Right, as the case may be, had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification.
(b) In the event any Person shall become an Acquiring Person
("Section 11(b) Event"), then proper provision shall be made so that each
holder of a Right, subject to Section 7(e) and Section 24 hereof and except as
provided below, shall after the later of the occurrence of such event and the
effective date of an appropriate registration statement pursuant to Section 9
hereof, have a right to receive, upon exercise thereof at the then current
Purchase Price, multiplied by the then number of one one-thousandths of a
share of Preferred Stock for which a Right is then exercisable, in accordance
with the terms of this Agreement, in lieu of shares of Preferred Stock, such
number of shares of WorldCom Group Stock or MCI Group Stock, as the case may
be, as shall equal the result obtained by (y) multiplying the then current
Series 4 Purchase Price or Series 5 Purchase Price, as the case may be, by the
then number of one one-thousandths of a share of Series 4 Preferred Stock or
Series 5 Preferred Stock, as the case may
13
be, for which a Right is then exercisable and dividing that product by (z) 50%
of the current market price per one share of WorldCom Group Stock or MCI Group
Stock, as the case may be (determined pursuant to Section 11(f) hereof on the
date of the occurrence of the Section 11(b) Event) (such number of shares
being referred to as the "number of Adjustment Shares").
(c) In the event that there shall not be sufficient shares of
WorldCom Group Stock or MCI Group Stock, as the case may be, issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing Section 11(b), and the Rights become
so exercisable, notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law and any agreements in effect
on the date hereof to which the Company is a party, each Right shall
thereafter represent the right to receive, upon exercise thereof at the then
current Series 4 Purchase Price or the Series 5 Purchase Price, as the case
may be, multiplied by the then number of one one-thousandths of a share of
Series 4 Preferred Stock or Series 5 Preferred Stock, as the case may be, for
which a Right is then exercisable, in accordance with the terms of this
Agreement, a number of shares, or units of shares, of (y) WorldCom Group Stock
or MCI Group Stock, as the case may be, and (z) preferred stock (or other
equity securities) of the Company, including, but not limited to Preferred
Stock, equal in the aggregate to the number of Adjustment Shares where the
Board of Directors shall have in good faith deemed such shares or units, other
than the shares of Common Stock, to have at least the same value and voting
rights as the Common Stock (a "common stock equivalent"); provided, however,
if there are unavailable sufficient shares (or fractions of shares) of
WorldCom Group Stock or MCI Group Stock, as the case may be, and/or common
stock equivalents, then the Company shall take all such action as may be
necessary to authorize additional shares of WorldCom Group Stock or MCI Group
Stock, as the case may be, or common stock equivalents for issuance upon
exercise of the Rights, including the calling of a meeting of stockholders;
and provided, further, that if the Company is unable to cause sufficient
shares of WorldCom Group Stock or MCI Group Stock, as the case may be, and/or
common stock equivalents to be available for issuance upon exercise in full of
the Rights, then the Company, to the extent necessary and permitted by
applicable law and any agreements or instruments in effect on the date thereof
to which it is a party, shall make provision to pay an amount in cash equal to
twice the Series 4 Purchase Price or Series 5 Purchase Price (as adjusted
pursuant to this Section 11), as the case may be, in lieu of issuing shares of
WorldCom Group Stock or MCI Group Stock, as the case may be, and/or common
stock equivalents. To the extent that the Company determines that some action
needs to be taken pursuant to this Section 11(c), the Board of Directors by
action of at least a majority of its members then in office may suspend the
exercisability of the Rights for a period of up to sixty (60) days following
the date on which the Section 11(b) Event shall have occurred, in order to
decide the appropriate form of distribution to be made pursuant to this
Section 11(c) and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended. The Board of
Directors may, but shall not be required to, establish procedures to allocate
the right to receive Common Stock and common stock equivalents upon exercise
of the Rights among holders of Rights, which such allocation may be, but is
not required to be, pro-rata.
(d) If the Company shall fix a record date for the issuance of
rights or warrants to all holders of Series 4 Preferred Stock or Series 5
Preferred Stock, as the case may be, entitling them (for a period expiring
within 90 calendar days after such record date) to subscribe for or
14
purchase Series 4 Preferred Stock or Series 5 Preferred Stock, as the case may
be (or securities having the same or more favorable rights, privileges and
preferences as the Series 4 Preferred Stock or Series 5 Preferred Stock, as
the case may be ("equivalent preferred stock")) or securities convertible into
Series 4 Preferred Stock or Series 5 Preferred Stock, as the case may be, or
equivalent preferred stock, at a price per share of Series 4 Preferred Stock
or Series 5 Preferred Stock, as the case may be, or per share of equivalent
preferred stock or having a conversion or exercise price per share, as the
case may be, less than the current market price (as defined in Section 11(f)
hereof) per share of Series 4 Preferred Stock or Series 5 Preferred Stock, as
the case may be, on such record date, the Series 4 Purchase Price or Series 5
Purchase Price, as the case may be, to be in effect after such record date
shall be determined by multiplying the Series 4 Purchase Price or Series 5
Purchase Price, as the case may be, in effect immediately prior to such date
by a fraction, the numerator of which shall be the number of shares of Series
4 Preferred Stock or Series 5 Preferred Stock, as the case may be, outstanding
on such record date plus the number of shares of Series 4 Preferred Stock or
Series 5 Preferred Stock, as the case may be, which the aggregate offering
price of the total number of shares of Series 4 Preferred Stock or Series 5
Preferred Stock, as the case may be, or equivalent preferred stock to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
the denominator of which shall be the number of shares of Series 4 Preferred
Stock or Series 5 Preferred Stock, as the case may be, outstanding on such
record date plus the number of additional shares of Series 4 Preferred Stock
or Series 5 Preferred Stock, as the case may be, and/or equivalent preferred
stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid in a consideration, part or all of which
shall be in a form other than cash, the value of such consideration shall be
as determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent.
Shares of Series 4 Preferred Stock or Series 5 Preferred Stock, as the case
may be, owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Series 4 Purchase Price or
Series 5 Purchase Price, as the case may be, shall be adjusted to be the
Series 4 Purchase Price or Series 5 Purchase Price, as the case may be, which
would then be in effect if such record date had not been fixed.
(e) If the Company shall fix a record date for the making of a
distribution to all holders of Series 4 Preferred Stock or Series 5 Preferred
Stock, as the case may be, (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness, cash (other than a
regular periodic cash dividend out of earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), the Series 4 Purchase Price or Series 5
Purchase Price, as the case may be, to be in effect after such record date
shall be determined by multiplying the Series 4 Purchase Price or Series 5
Purchase Price, as the case may be, in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current market price
(as defined in Section 11(f) hereof) for one share of Series 4 Preferred Stock
or Series 5 Preferred Stock, as the case may be, on such record date less the
fair market value (as determined in good faith by a majority of the Board of
Directors, whose determination shall be described in a
15
statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such convertible
securities, subscription rights or warrants applicable to one share of Series
4 Preferred Stock or Series 5 Preferred Stock, as the case may be, and the
denominator of which shall be such current market price for one share of
Series 4 Preferred Stock or Series 5 Preferred Stock, as the case may be. Such
adjustments shall be made successively whenever such a record date is fixed;
and in the event that such distribution is not so made, the Series 4 Purchase
Price or Series 5 Purchase Price, as the case may be, shall again be adjusted
to be the Series 4 Purchase Price or Series 5 Purchase Price, as the case may
be, which would then be in effect if such record date had not been fixed.
(f) (i) For the purpose of any computation hereunder, the "current
market price" of any security (a "Security" for purposes of this Section
11(f)(i)) on any date shall be deemed to be the average of the daily closing
prices per share of such Security for the 30 consecutive Trading Days (as
hereinafter defined) immediately prior to such date; provided, however, that
in the event that the current market price per share of such Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in shares
of such Security or securities convertible into shares of such Security or (B)
any subdivision, combination or reclassification of such Security, and prior
to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution or the record date for such subdivision, combination
or reclassification, then, and in each such case, the "current market price"
shall be appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading
on any national securities exchange, as reported by the Nasdaq National Market
System, or if the Security is not listed or admitted to trading on any
national securities exchange or included in the Nasdaq National Market System,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by a majority of the Board of
Directors. If on any such date no market maker is making a market in the
Security, the fair value of such Security on such date as determined in good
faith by a majority of the Board of Directors shall be used. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange a day on which the Nasdaq National
Market System is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities exchange or
included in the Nasdaq National Market System, a Business Day. If the Security
is not publicly held or not so listed or traded, "current market price" shall
mean the fair value as determined in good faith by a majority of the Board of
Directors, whose determination shall be described in a statement filed with
the Rights Agent.
16
(ii) For the purpose of any computation hereunder, the "current
market price" per share (or one one-thousandth of a share) of Preferred
Stock shall be determined in the same manner as set forth above for the
Common Stock in clause (i) of this Section 11(f) (other than the last
sentence thereof). If the current market price per share (or one
one-thousandth of a share) of Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of this Section
11(f), the "current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 1,000 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the current market price per
share of the WorldCom Group Stock or MCI Group Stock, as the case may be,
and the "current market price" per one one-thousandth of a share of
Series 4 Preferred Stock or Series 5 Preferred Stock, as the case may be,
shall be equal to the current market price per share of the WorldCom
Group Stock or MCI Group Stock, as the case may be, (as appropriately
adjusted). If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share
shall mean the fair value per share as determined in good faith by the
Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(g) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(g) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth
of a share, as the case may be. Notwithstanding the first sentence of this
Section 11(g), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction
which mandates such adjustment or (ii) the Expiration Date.
(h) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a) or (b) hereof, the holder of any Right shall be
entitled to receive upon exercise of such Right any shares of capital stock of
the Company other than shares of Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in Section
11(a) through (e) hereof, inclusive, and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the shares of Preferred Stock shall apply on
like terms to any such other shares.
(i) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of
a share of Preferred Stock or other capital stock of the Company purchasable
from time to time hereunder upon exercise of the Rights, all subject to
further adjustment of the Purchase Price.
(j) Unless the Company shall have exercised its election as provided
in Section 11(k) hereof, upon each adjustment of the Series 4 Purchase Price
or Series 5 Purchase Price, as the case may be, as a result of the
calculations made in Section 11(d) and (e) hereof, each Right
17
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-thousandths of a share of Series 4 Preferred Stock or
Series 5 Preferred Stock (calculated to the nearest hundred-thousandth), as
the case may be, obtained by (i) multiplying (A) the number of one
one-thousandths of a share of Series 4 Preferred Stock or Series 5 Preferred
Stock covered by a WorldCom Right or MCI Right, as the case may be,
immediately prior to the adjustment by (B) the Series 4 Purchase Price or
Series 5 Purchase Price, as the case may be, in effect immediately prior to
such adjustment of the Series 4 Purchase Price or Series 5 Purchase Price, as
the case may be, and (ii) dividing the product so obtained by the Series 4
Purchase Price or Series 5 Purchase Price, as the case may be, in effect
immediately after such adjustment of the Series 4 Purchase Price or Series 5
Purchase Price, as the case may be.
(k) The Company may elect on or after the date of any adjustment of
the Series 4 Purchase Price or Series 5 Purchase Price, as the case may be, to
adjust the number of WorldCom Rights or MCI Rights, as the case may be, in
substitution for any adjustment in the number of shares of Series 4 Preferred
Stock or Series 5 Preferred Stock, as the case may be, purchasable upon the
exercise of a WorldCom Right or MCI Right, as the case may be. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred
Stock for which such Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest
hundred-thousandth) obtained by dividing the Series 4 Purchase Price or the
Series 5 Purchase Price, as the case may be, in effect immediately prior to
adjustment of the Series 4 Purchase Price or Series 5 Purchase Price, as the
case may be, by the Series 4 Purchase Price or Series 5 Purchase Price, as the
case may be, in effect immediately after adjustment of the Series 4 Purchase
Price or Series 5 Purchase Price, as the case may be. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date
of the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(k), the Company
shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(l) Irrespective of any adjustment or change in the Purchase Price
or the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of shares which were expressed in
the initial Right Certificates issued hereunder.
18
(m) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of Common
Stock or other securities and below one one-thousandth of the then par value,
if any, of the Preferred Stock, issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of such Preferred Stock, Common Stock or
other securities at such adjusted Purchase Price. If upon any exercise of the
Rights, a holder is to receive a combination of Common Stock and common stock
equivalents, a portion of the consideration paid upon such exercise, equal to
at least the then par value of a share of Common Stock of the Company, shall
be allocated as the payment for each share of Common Stock of the Company so
received.
(n) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due ▇▇▇▇ or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(o) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
Preferred Stock at less than the then current market price, (iii) issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred
Stock, shall not be taxable to such stockholders.
(p) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the WorldCom Group Stock or MCI Group Stock, as the case may be,
payable in shares of WorldCom Group Stock or MCI Group Stock, as the case may
be, or (ii) effect a subdivision, combination or consolidation of the WorldCom
Group Stock or MCI Group Stock, as the case may be, (by reclassification or
otherwise than by payment of dividends in shares of WorldCom Group Stock or
MCI Group Stock, as the case may be,) into a greater or lesser number of
shares of WorldCom Group Stock or MCI Group Stock, as the case may be, then in
any such case (y) the number of one one-thousandths of a share of Series 4
Preferred Stock or Series 5 Preferred Stock, as the case may be, purchasable
after such event upon proper exercise of each Right shall be determined by
multiplying the number of one one-thousandths of a share of Series 4 Preferred
Stock or Series 5 Preferred Stock, as the case may be, so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of shares of WorldCom Group Stock or MCI
19
Group Stock, as the case may be, outstanding immediately before such event and
the denominator of which is the number of shares of WorldCom Group Stock or
MCI Group Stock, as the case may be, outstanding immediately after such event,
and (z) each share of WorldCom Group Stock or MCI Group Stock, as the case may
be, outstanding immediately after such event shall have issued with respect to
it that number of Rights which each share of WorldCom Group Stock or MCI Group
Stock, as the case may be, outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(p)
shall be made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.
(q) The Company covenants and agrees that it shall not, at any time
after the Distribution Date and so long as the Rights have not been redeemed
pursuant to Section 23 hereof or exchanged pursuant to Section 24 hereof, (i)
consolidate with, (ii) merge with or into, or (iii) sell or transfer, in one
or more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, if at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(r) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Sections 23 and 24
hereof, take any action the purpose or effect of which is to diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 or 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such certificate
and (c) include a brief summary thereof in a mailing to each holder of a
WorldCom Right Certificate or MCI Right Certificate in accordance with Section
26 hereof, or prior to the Distribution Date, disclose a brief summary in a
filing under the Securities Exchange Act of 1934, as amended. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustments therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earnings Power.
(a) In the event that, directly or indirectly, following the
Distribution Date, (x) the Company shall consolidate with, or merge with and
into, any other Person, (y) any Person shall consolidate with or merge with
and into the Company, and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the
Company shall sell, or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its
20
Subsidiaries (taken as a whole) to any other Person other than to the Company
or one or more of its wholly-owned Subsidiaries, then, and in each such case,
proper provision shall be made so that (i) each holder of a Right, subject to
Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price multiplied by the then
number of one one-thousandths of a share of Preferred Stock for which a Right
is then exercisable (or if a Section 11(b) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such one
one-thousandths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(b) Event by the Purchase Price in
effect immediately prior to such first occurrence) in accordance with the
terms of this Agreement, in lieu of Preferred Stock, such number of shares of
freely tradeable Common Stock of the Principal Party (as hereinafter defined),
free and clear of liens, rights of call or first refusal, encumbrances or
other adverse claims, as shall be equal to the result obtained by (A)
multiplying the then current Series 4 Purchase Price or the Series 5 Purchase
Price, as the case may be, by the number of one one-thousandths of a share of
Series 4 Preferred Stock or Series 5 Preferred Stock for which a Right is then
exercisable (or if a Section 11(b) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such one
one-thousandths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(b) Event by the Purchase Price in
effect immediately prior to such first occurrence), and dividing that product
by (B) 50% of the current market price per share of the Common Stock of such
Principal Party (determined in the manner described in Section 11(f) hereof)
on the date of consummation of such consolidation, merger, sale or transfer;
(ii) the Principal Party shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof, except for the
provisions of 11(b), shall apply to such Principal Party; and (iv) such
Principal Party shall take such steps (including, but not limited to, the
authorization and reservation of a sufficient number of shares of its Common
Stock to permit exercise of all outstanding Rights in accordance with this
Section 13(a)) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a) hereof, the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person, including the Company, that is the other party to the
merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; provided, however, that in
any case described in clause (i) or (ii) in this Section 13(b), (x) if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section
12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary or Affiliate of another Person, "Principal Party"
21
shall refer to such other Person; (y) in case such Person is a
Subsidiary, directly or indirectly, or Affiliate of more than one Person,
the Common Stocks of all of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer
of the Common Stock having the greatest aggregate market value, and (z)
in case such Person is, or is owned directly or indirectly by, a
partnership or joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in
(x) and (y) above shall apply to each of the chains of ownership having
an interest in such joint venture as if such party were a "Subsidiary" of
both or all of such joint venturers and the Principal Parties in each
such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to
the total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
shares of its authorized Common Stock which have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and each Principal Party
and each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon
as practicable after the date of any consolidation, merger, sale or transfer
of assets mentioned in paragraph (a) of this Section 13, the Principal Party
will:
(i) prepare and file a registration statement under the Securities
Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, will use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the
Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the "blue sky
laws" of such jurisdictions as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10
under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(b) Event, the Rights which have not theretofore been exercised
shall thereafter also become exercisable in the manner described in Section
13(a) hereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall
22
be paid to the registered holders of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For
the purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the principal national
securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national securities
exchange, as reported by the Nasdaq National Market System or, if the Rights
are not listed or admitted to trading on any national securities exchange or
included in the Nasdaq National Market System, the last quoted price, or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by a
majority of the Board of Directors. If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by a majority of the Board of Directors shall be
used.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they
are entitled as beneficial owners of the shares of Preferred Stock represented
by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share of Preferred
Stock, the Company may pay to the registered holders of Right Certificates at
the time such Right Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of one
one-thousandths of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-thousandth of a share of Preferred
Stock shall be one one-thousandth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(f)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to receive common
stock equivalents (other than Preferred Stock) or other securities upon the
exercise of a Right, the Company shall not be required to issue fractions of
shares or units of such common stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of such
23
common stock equivalents or other securities. In lieu of fractional shares or
units of such common stock equivalents or other securities, the Company may
pay to the registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same fraction
of the current market value of a share or unit of such common stock equivalent
or other securities. For purposes of this Section 14(c), the current market
value shall be determined in the manner set forth in Section 11(f) hereof for
the Trading Day immediately prior to the date of such exercise and, if such
common stock equivalent is not traded, each such common stock equivalent shall
have the value of one one-thousandth of a share of Preferred Stock.
(d) Except as otherwise expressly provided in this Section 14, the
holder of a Right by the acceptance of the Right expressly waives his right to
receive any fractional Rights or any fractional share upon exercise of Rights.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, except for rights of action given to the Rights Agent under
Section 18 or Section 20 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and in
this Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement. Holders of Rights shall
be entitled to recover the reasonable costs and expenses, including attorneys'
fees, incurred by them in any action to enforce the provisions of this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the stockholder services office of the Rights Agent or such office designated
for such purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock Certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby
24
(notwithstanding any notations of ownership or writing on the Right
Certificate or the associated Common Stock Certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock, Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Preferred Stock, Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such
25
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the Board,
the President or any Vice President and by the Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify
the same, but all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof
26
by the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Sections 11 or 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice to the Rights Agent of any such adjustment); nor shall it
by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any shares of Preferred Stock or other securities will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer,
employee, agent or representative of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and
freely as though it were not the Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
27
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1, clause 2
and/or, in the case of the certificate attached to the form of election to
purchase, clause 3 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting
with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Stock and Preferred Stock by registered or certified mail, and to the holders
of the Right Certificates by first-class mail or, prior to the Distribution
Date, through any filing made by the Company pursuant to the Securities
Exchange Act of 1934, as amended. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate or the Rights Agent may
apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or of any state, in good standing, having an
office in the States of New York or Mississippi, which is authorized under
such laws to exercise corporate trust or stock transfer powers and is subject
to supervision or examination by federal or state authority and which has at
the time of its appointment as Rights Agent a combined capital and surplus of
at least $25,000,000, or (b) an affiliate of a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates or, prior to the
Distribution Date, through any filing made by the Company pursuant to the
Securities Exchange Act of 1934, as amended. Failure to give any notice
provided for this Section 21, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by a majority of the Board of Directors then in
office to reflect any adjustment or change in the Purchase Price
28
and the number or kind or class of shares of stock or other securities or
property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the redemption, exchange or
expiration of the Rights, the Company (a) shall with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee benefit plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Right Certificates shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificates would be issued, and
(ii) no Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination.
(a) A majority of the Board of Directors then in office of the
Company may, at its option, at any time prior to the earlier of (i) the close
of business on the Stock Acquisition Date or (ii) the close of business on the
Final Expiration Date, elect to redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, as appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of the Rights by the
Board of Directors may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole discretion may
establish.
(b) Immediately upon the action of a majority of the Board of
Directors then in office electing to redeem the Rights, evidence of which
shall be promptly filed with the Rights Agent, or, when appropriate,
immediately upon the time or satisfaction of such conditions as the Board of
Directors may have established, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public disclosure of any such redemption;
provided, however, that the failure to give, or any defect in, any such
disclosure shall not affect the validity of such redemption. Within 10 days
after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of the
then outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent
for the Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the
Redemption Price will be made.
(c) Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically
29
set forth in this Section 23, Section 24 hereof and other than in connection
with the purchase of Common Stock prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for shares
of Common Stock at an exchange ratio of one share of WorldCom Group Stock per
WorldCom Right and one share of MCI Group Stock per MCI Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan or compensation arrangement of the Company or any such
Subsidiary, or any entity holding securities of the Company to the extent
organized, appointed or established by the Company or any such Subsidiary for
or pursuant to the terms of any such employee benefit plan or compensation
arrangement), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Voting Power of the
Company.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of WorldCom Group
Stock or MCI Group Stock, as the case may be, equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company
promptly shall give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or equivalent preferred stock, as such
term is defined in Section 11(d) hereof) for Common Stock exchangeable for
Rights, at the initial rate of one one-thousandth of a share of Preferred
Stock (or equivalent preferred stock) for each share of WorldCom Group Stock
or MCI Group Stock, as the case may be, as appropriately adjusted to reflect
adjustments in the voting rights of the Preferred Stock pursuant to the terms
thereof, so that the fraction of a share of Preferred Stock delivered in lieu
of each share of WorldCom Group Stock or MCI Group Stock, as the case may be,
shall have the same voting rights as one share of WorldCom Group Stock or MCI
Group Stock, as the case may be.
30
(d) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock (or equivalent preferred stock) issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Common Stock
or Preferred Stock (or equivalent preferred stock) for issuance upon exchange
of the Rights.
(e) The Company shall not be required to issue fractions of Common
Stock or to distribute certificates which evidence fractional shares of Common
Stock. In lieu of such fractional shares of Common Stock, the Company shall
pay to the registered holders of the Right Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable an amount
in cash equal to the same fraction of the current market value of a whole
share of WorldCom Group Stock or MCI Group Stock, as the case may be. For the
purposes of this paragraph (e), the current market value of a whole share of
Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section 11(f)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24.
Section 25. Notice of Proposed Actions.
(a) In case the Company shall propose at any time after the
Distribution Date (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Stock or to make any other distribution to the
holders of its Preferred Stock (other than a regular periodic cash dividend
out of earnings or retained earnings of the Company), or (ii) to offer to the
holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any
other class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), or
(iv) to effect any consolidation or merger into or with, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sales or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, or (v) to effect the liquidation, dissolution or winding
up of the Company, or (vi) to declare or pay any dividend on the Common Stock
payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Stock and/or Preferred
Stock, if any such date is to be fixed. Such notice shall be so given in the
case of any action covered by clauses (i) or (ii) above at least ten days
prior to the record date for determining holders of the Preferred Stock for
purposes of such action, and in the case of any such other action, at least
ten days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
31
(b) In case a Section 11(b) Event shall occur, then the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence
of such event, which shall specify the event and the consequences of the event
to holders of Rights under Section 11(b) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
WorldCom, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Right Certificates in order (a) to cure any ambiguity, (b) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (c) to shorten or lengthen any
time period hereunder, (d) increase or decrease the Purchase Price, or (e) to
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable which shall not adversely affect the interests
of the holders of Right Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, however, that from
and after such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended in any manner which would adversely affect the interests
of the holders of Rights; provided further that this Agreement may not be
supplemented or amended to lengthen pursuant to clause (c) of this sentence,
(A) the time period relating to the time when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other time period
unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of the Rights;
provided further that the Company shall have the right to make any changes
unilaterally necessary to facilitate the appointment of a successor Rights
Agent, which such changes shall be set forth in a writing by
32
the Company or by the Company and such successor Rights Agent. Without
limiting the foregoing, the Company may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement to lower the
thresholds set forth in Sections 1(a) and 3(a) hereof from 15% to not less
than the greater of (i) any percentage greater than the largest percentage of
the Voting Power of the Company then known by the Company to be beneficially
owned by any Person (other than the Company, any Subsidiary of the Company, or
any employee benefit plan or compensation arrangement of the Company or any
Subsidiary of the Company, and any entity holding securities of the Company to
the extent organized, appointed or established by the Company or any such
Subsidiary for or pursuant to the terms of any such employee benefit plan or
compensation arrangement) together with all Affiliates or Associates of such
Person and (ii) 10%. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. It is the intent of the parties hereto to enforce the remainder
of the terms, provisions, covenants and restrictions of this Agreement to the
maximum extent permitted by law.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Georgia and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State, provided, however that the rights and
obligations of the Rights Agent shall be governed by the laws of the State of
New York.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
Attest: WORLDCOM, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------ ---------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President- Title: Chief Financial Officer
Financial Reporting
Attest: THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------ ---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President Title: Vice President
34
EXHIBIT A
WORLDCOM, INC.
FORM OF ARTICLES OF AMENDMENT DESIGNATING THE RIGHTS OF
SERIES 4 JUNIOR PARTICIPATING PREFERRED STOCK
And
SERIES 5 JUNIOR PARTICIPATING PREFERRED STOCK
RESOLUTIONS OF THE BOARD OF DIRECTORS OF
WORLDCOM, INC. ESTABLISHING AND DESIGNATING
A SERIES OF PREFERRED STOCK AND FIXING AND
DETERMINING THE RELATIVE RIGHTS AND PREFERENCES THEREOF
WHEREAS, pursuant to the provisions of Section 14-2-602 of the
Georgia Business Corporation Code and the authority expressly granted to and
vested in the Board of Directors of the Company by Article Four of the Amended
and Restated Articles of Incorporation, as amended, of the Company, the
Company is authorized to issue its Series 4 Junior Participating Preferred
Stock and its Series 5 Junior Participating Preferred Stock;
WHEREAS, the designations, preferences, limitations and relative,
participating, optional or other special rights of the Series 4 Junior
Participating Preferred Stock and Series 5 Junior Participating Preferred
Stock, and the qualifications, limitations or restrictions thereof, are set
out in the form of Articles of Amendment of the Company submitted to this
meeting;
NOW, THEREFORE, BE IT RESOLVED, that subject to the execution of the
Rights Agreement by the parties thereto the Articles of Amendment of the
Company, in substantially the form submitted to this meeting (and, by this
resolution, ordered annexed to the minutes of this meeting), authorizing and
setting forth the rights and preferences of the Series 4 Junior Participating
Preferred Stock and Series 5 Junior Participating Preferred Stock, are hereby
approved and adopted, and that the appropriate officers of the Company be, and
they hereby are, authorized and directed for and on behalf of the Company to
complete, execute and file such Articles of Amendment with the Secretary of
State of Georgia, and to do and perform any and all other necessary and proper
acts incident thereto.
A-1
ARTICLES OF AMENDMENT
TO THE SECOND
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
WORLDCOM, INC.
Pursuant to the provisions of Section 14-2-602 of the Georgia
Business Corporation Code, the undersigned, on behalf of WorldCom, Inc. (the
"Corporation"), hereby submits the following information:
1.
The name of the Corporation is WorldCom, Inc.
2.
Effective the date hereof, the Corporation's Second Amended and
Restated Articles of Incorporation, as amended, is further amended to add a
new Article Seven B and a new Article Seven C to read in their entirety as
follows:
"SEVEN B
A series of the class of authorized preferred stock, par value $.01
per share, of the Corporation is hereby created having 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, as are set forth
on Exhibit E."
"SEVEN C
A series of the class of authorized preferred stock, par value $.01
per share, of the Corporation is hereby created having 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, as are set forth
on Exhibit F."
3.
The foregoing amendment to the Second Amended and Restated Articles
of Incorporation, as amended, was duly adopted and authorized by the Board of
Directors of the Corporation on June 7, 2001. Shareholders' approval was not
required pursuant to Section 14-2-1002 of the Georgia Business Corporation
Code.
A-2
IN WITNESS WHEREOF, the Corporation has caused its duly authorized
officer to execute these Articles of Amendment as of this 7th day of June,
2001.
WORLDCOM, INC.
By
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
A-3
EXHIBIT E
Series 4 Junior Participating Preferred Stock
Section 1. Designation and Amount.
There shall be a series of the Preferred Stock which shall be
designated as the "Series 4 Junior Participating Preferred Stock," par value
$.01 per share, and the number of shares constituting such series shall be
4,850,000. Such number of shares may be increased or decreased by resolution
of the Board of Directors; provided, that no decrease shall reduce the number
of shares of Series 4 Junior Participating Preferred Stock to a number less
than that of the shares then outstanding plus the number of shares issuable
upon exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of preferred stock of the Company ranking prior and superior to the
Series 4 Junior Participating Preferred Stock with respect to dividends,
the holders of shares of Series 4 Junior Participating Preferred Stock,
in preference to the holders of shares of WorldCom, Inc.--WorldCom Group
Common Stock, par value $.01 per share, of the Company (the "WorldCom
Stock"), WorldCom, Inc.--MCI Group Common Stock, par value $.01 per
share, of the Company ("MCI Stock"; together with the WorldCom Stock, the
"Common Stock") and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on
any regular quarterly dividend payment date as shall be established by
the Board of Directors (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of
a share of Series 4 Junior Participating Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (i)
$10.00 or (ii) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends,
and 1,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend payable
in shares of WorldCom Stock or a subdivision of the outstanding shares of
WorldCom Stock (by reclassification or otherwise), declared on the
WorldCom Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series 4 Junior
Participating Preferred Stock. In the event the Company shall at any time
after the date upon which the recapitalization proposal providing for the
exchange of each outstanding share of the Company's common stock, par
value $.01 per share, for (x) one share of WorldCom Stock and (y) 1/25 of
a share of MCI Stock is consummated (the "Effective Date") declare or pay
any dividend on the WorldCom Stock payable in shares of WorldCom Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of WorldCom Stock (by reclassification or otherwise
than by payment of a dividend in shares of WorldCom Stock) into a greater
or lesser number of shares of WorldCom Stock, then in each such case the
amount to which holders of shares of Series 4 Junior
A-4
Participating Preferred Stock were entitled immediately prior to such
event under clause (ii) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of WorldCom Stock outstanding immediately after such
event and the denominator of which is the number of shares of WorldCom
Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series 4 Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the WorldCom
Stock (other than a dividend payable in shares of WorldCom Stock);
provided that, in the event no dividend or distribution shall have been
declared on the WorldCom Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $10.00 per share on the Series 4 Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series 4 Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of holders
of shares of Series 4 Junior Participating Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of
Series 4 Junior Participating Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may, in
accordance with applicable law, fix a record date for the determination
of holders of shares of Series 4 Junior Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than such number of days
prior to the date fixed for the payment thereof as may be allowed by
applicable law.
Section 3. Voting Rights.
The holders of shares of Series 4 Junior Participating Preferred
Stock shall have the following voting rights:
(A) Each share of Series 4 Junior Participating Preferred Stock
shall entitle the holder thereof to 1,000 votes on all matters submitted
to a vote of the stockholders of the Company. In the event the Company
shall at any time after the Effective Date declare or pay any dividend on
the WorldCom Stock payable in shares of WorldCom Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
WorldCom Stock (by reclassification or otherwise than by payment of a
dividend in shares of WorldCom Stock) into a greater or lesser number of
shares of WorldCom
A-5
Stock, then in each such case the number of votes to which holders of
shares of Series 4 Junior Participating Preferred Stock were entitled
immediately prior to such event under the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which
is the number of shares of WorldCom Stock outstanding immediately after
such event and the denominator of which is the number of shares of
WorldCom Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Company's Amended
and Restated Articles of Incorporation, as amended, or by law, the
holders of shares of Series 4 Junior Participating Preferred Stock, the
holders of Series 5 Junior Participating Preferred Stock, the holders of
shares of WorldCom Stock, the holders of MCI Stock, and the holders of
shares of any other capital stock of the Company having general voting
rights, shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
(C) Except as otherwise set forth herein or in the Company's Amended
and Restated Articles of Incorporation, as amended, and except as
otherwise provided by law, holders of Series 4 Junior Participating
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of WorldCom Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series 4
Junior Participating Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series 4 Junior
Participating Preferred Stock outstanding shall have been paid in full,
the Company shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series 4 Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series 4 Junior Participating Preferred Stock, except dividends
paid ratably on the Series 4 Junior Participating Preferred Stock
and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) except as permitted in Section 4(A)(iv) below, redeem or
purchase or otherwise acquire for consideration shares of any stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series 4 Junior Participating
Preferred Stock, provided that the Company may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in
A-6
exchange for shares of any stock of the Company ranking junior
(either as to dividends or upon dissolution, liquidation or winding
up) to the Series 4 Junior Participating Preferred Stock; and
(iv) purchase or otherwise acquire for consideration any shares
of Series 4 Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series 4 Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of
the Company unless the Company could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares.
Any shares of Series 4 Junior Participating Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof. The Company
shall cause all such shares upon their cancellation to be authorized but
unissued shares of Preferred Stock which may be reissued as part of a new
series of Preferred Stock, subject to the conditions and restrictions on
issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock of the Company ranking prior and superior to the
Series 4 Junior Participating Preferred Stock with respect to
liquidation, upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Company, no distribution shall be made (i) to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series 4 Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Series 4 Junior Participating Preferred Stock shall have
received the greater of (a) $1,000.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment and (b) an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount to be distributed to the
holders of shares of WorldCom Stock (the "Series 4 Liquidation
Preference") and (ii) to the holders of shares of stock ranking on a
parity upon liquidation, dissolution or winding up with the Series 4
Preferred Stock, except distributions made ratably on the Series 4
Preferred Stock and all such parity stock in proportion to the total
amounts which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. Following the payment of the full
amount of the Series 4 Liquidation Preference, no additional
distributions shall be
A-7
made to the holders of shares of Series 4 Junior Participating Preferred
Stock, unless, prior thereto, the holders of shares of WorldCom Stock
shall have received an amount per share (the "Common Adjustment") equal
to the quotient obtained by dividing (x) the Series 4 Liquidation
Preference by (y) 1,000 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock dividends, and
subdivisions, combinations and consolidations with respect to the
WorldCom Stock) (such number in clause (y) being referred to as the
"Adjustment Number"). Following the payment of the full amount of the
Series 4 Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Series 4 Junior Participating Preferred Stock
and WorldCom Stock, respectively, holders of Series 4 Junior
Participating Preferred Stock and holders of shares of WorldCom Stock
shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with
respect to such Series 4 Junior Participating Preferred Stock and
WorldCom Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets available to permit
payment in full of the Series 4 Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series 4 Junior Participating Preferred
Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective
liquidation preferences. In the event there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of WorldCom
Stock.
(C) In the event the Company shall at any time after the Effective
Date declare or pay any dividend on WorldCom Stock payable in shares of
WorldCom Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of WorldCom Stock (by reclassification or
otherwise than by payment of a dividend in shares of WorldCom Stock) into
a greater or lesser number of shares of WorldCom Stock, then in each such
case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of WorldCom Stock outstanding
immediately after such event and the denominator of which is the number
of shares of WorldCom Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc.
In case the Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of WorldCom Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series 4 Junior Participating
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set
forth) equal to 1,000 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of WorldCom Stock is changed or exchanged. In the event
the Company shall at any time after the Effective Date declare or pay any
dividend on WorldCom Stock payable in shares of WorldCom Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
WorldCom Stock (by
A-8
reclassification or otherwise than by payment of a dividend in shares of
WorldCom Stock) into a greater or lesser number of shares of WorldCom Stock,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series 4 Junior Participating
Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of WorldCom Stock outstanding
immediately after such event and the denominator of which is the number of
shares of WorldCom Stock that are outstanding immediately prior to such event.
Section 8. Redemption.
The shares of Series 4 Junior Participating Preferred Stock shall
not be redeemable.
Section 9. Ranking.
Series 4 Junior Participating Preferred Stock shall rank on parity
with the Series 5 Junior Participating Preferred Stock and junior to all other
series of the Company's Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
Section 10. Fractional Shares.
Series 4 Junior Participating Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series 4 Junior Participating Preferred Stock.
A-9
EXHIBIT F
Series 5 Junior Participating Preferred Stock
Section 1. Designation and Amount.
There shall be a series of the Preferred Stock which shall be
designated as the "Series 5 Junior Participating Preferred Stock," par value
$.01 per share, and the number of shares constituting such series shall be
150,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
shares of Series 5 Junior Participating Preferred Stock to a number less than
that of the shares then outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of preferred stock of the Company ranking prior and superior to the
Series 5 Junior Participating Preferred Stock with respect to dividends,
the holders of shares of Series 5 Junior Participating Preferred Stock,
in preference to the holders of shares of WorldCom, Inc.--WorldCom Group
Common Stock, par value $.01 per share, of the Company (the "WorldCom
Stock"), WorldCom, Inc.--MCI Group Common Stock, par value $.01 per
share, of the Company ("MCI Stock"; together with the WorldCom Stock, the
"Common Stock") and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on
any regular quarterly dividend payment date as shall be established by
the Board of Directors (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of
a share of Series 5 Junior Participating Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (i)
$10.00 or (ii) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends,
and 1,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend payable
in shares of MCI Stock or a subdivision of the outstanding shares of MCI
Stock (by reclassification or otherwise), declared on the MCI Stock since
the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series 5 Junior
Participating Preferred Stock. In the event the Company shall at any time
after the date upon which the recapitalization proposal providing for the
exchange of each outstanding share of the Company's common stock, par
value $.01 per share, for (x) one share of WorldCom Stock and (y) 1/25 of
a share of MCI Stock is consummated (the "Effective Date") declare or pay
any dividend on the MCI Stock payable in shares of MCI Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
MCI Stock (by reclassification or otherwise than by payment of a dividend
in shares of MCI Stock) into a greater or lesser number of shares of MCI
Stock, then in each such case the amount to which holders of shares of
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Series 5 Junior Participating Preferred Stock were entitled immediately
prior to such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which
is the number of shares of MCI Stock outstanding immediately after such
event and the denominator of which is the number of shares of MCI Stock
that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series 5 Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the MCI Stock
(other than a dividend payable in shares of MCI Stock); provided that, in
the event no dividend or distribution shall have been declared on the MCI
Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $10.00
per share on the Series 5 Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series 5 Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of holders
of shares of Series 5 Junior Participating Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of
Series 5 Junior Participating Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may, in
accordance with applicable law, fix a record date for the determination
of holders of shares of Series 5 Junior Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than such number of days
prior to the date fixed for the payment thereof as may be allowed by
applicable law.
Section 3. Voting Rights.
The holders of shares of Series 5 Junior Participating Preferred
Stock shall have the following voting rights:
(A) Each share of Series 5 Junior Participating Preferred Stock
shall entitle the holder thereof to 1,000 votes on all matters upon which
the holders of the MCI Stock of the Company are entitled to vote. In the
event the Company shall at any time after the Effective Date declare or
pay any dividend on the MCI Stock payable in shares of MCI Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of MCI Stock (by reclassification or otherwise than by payment of
a dividend in shares of WorldCom Stock) into a greater or lesser number
of shares of MCI Stock, then in each
A-11
such case the number of votes to which holders of shares of Series 5
Junior Participating Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares
of MCI Stock outstanding immediately after such event and the denominator
of which is the number of shares of MCI Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in the Company's Amended
and Restated Articles of Incorporation, as amended, or by law, the
holders of shares of Series 5 Junior Participating Preferred Stock, the
holders of Series 4 Junior Participating Preferred Stock, the holders of
shares of WorldCom Stock, the holders of MCI Stock, and the holders of
shares of any other capital stock of the Company having general voting
rights, shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
(C) Except as otherwise set forth herein or in the Company's Amended
and Restated Articles of Incorporation, as amended, and except as
otherwise provided by law, holders of Series 5 Junior Participating
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of MCI Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series 5
Junior Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series 5 Junior Participating Preferred
Stock outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series 5 Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series 5 Junior Participating Preferred Stock, except dividends
paid ratably on the Series 5 Junior Participating Preferred Stock
and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) except as permitted in Section 4(A)(iv) below, redeem or
purchase or otherwise acquire for consideration shares of any stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series 5 Junior Participating
Preferred Stock, provided that the Company may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in
A-12
exchange for shares of any stock of the Company ranking junior
(either as to dividends or upon dissolution, liquidation or winding
up) to the Series 5 Junior Participating Preferred Stock; and
(iv) purchase or otherwise acquire for consideration any shares
of Series 5 Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series 5 Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of
the Company unless the Company could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares.
Any shares of Series 5 Junior Participating Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof. The Company
shall cause all such shares upon their cancellation to be authorized but
unissued shares of Preferred Stock which may be reissued as part of a new
series of Preferred Stock, subject to the conditions and restrictions on
issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock of the Company ranking prior and superior to the
Series 5 Junior Participating Preferred Stock with respect to
liquidation, upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Company, no distribution shall be made to (i) the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series 5 Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Series 5 Junior Participating Preferred Stock shall have
received the greater of (a) $1,000.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment and (b) an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount to be distributed per share to
holders of shares of MCI Stock (the "Series 5 Liquidation Preference")
and (ii) to the holders of shares of stock ranking on a parity upon
liquidation, dissolution or winding up with the Series 5 Preferred Stock,
except distributions made ratably on the Series 5 Preferred Stock and all
such parity stock in proportion to the total amounts to which holders of
all such shares are entitled upon such liquidation, dissolution or
winding up. Following the payment of the full amount of the Series 5
Liquidation Preference, no additional distributions shall be
A-13
made to the holders of shares of Series 5 Junior Participating Preferred
Stock, unless, prior thereto, the holders of shares of MCI Stock shall
have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (x) the Series 5 Liquidation Preference by
(y) 1,000 (as appropriately adjusted as set forth in subparagraph C below
to reflect such events as stock dividends, and subdivisions, combinations
and consolidations with respect to the MCI Stock) (such number in clause
(y) being referred to as the "Adjustment Number"). Following the payment
of the full amount of the Series 5 Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series 5 Junior
Participating Preferred Stock and MCI Stock, respectively, holders of
Series 5 Junior Participating Preferred Stock and holders of shares of
MCI Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number
to 1 with respect to such Series 5 Junior Participating Preferred Stock
and MCI Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets available to permit
payment in full of the Series 5 Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series 5 Junior Participating Preferred
Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective
liquidation preferences. In the event there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of MCI
Stock.
(C) In the event the Company shall at any time after the Effective
Date declare or pay any dividend on MCI Stock payable in shares of MCI
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of MCI Stock (by reclassification or otherwise than by
payment of a dividend in shares of MCI Stock) into a greater or lesser
number of shares of MCI Stock, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which
is the number of shares of MCI Stock outstanding immediately after such
event and the denominator of which is the number of shares of MCI Stock
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc.
In case the Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of MCI Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series 5 Junior Participating
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set
forth) equal to 1,000 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of MCI Stock is changed or exchanged. In the event the
Company shall at any time after the Effective Date declare or pay any dividend
on MCI Stock payable in shares of MCI Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of MCI Stock (by
reclassification or otherwise than by payment of a dividend in shares of MCI
Stock) into a greater or lesser number of shares of MCI
A-14
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series 5 Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of shares of MCI Stock
outstanding immediately after such event and the denominator of which is the
number of shares of MCI Stock that are outstanding immediately prior to such
event.
Section 8. Redemption; Conversion.
The shares of Series 5 Junior Participating Preferred Stock shall
not be redeemable.
In the event of any conversion of MCI Stock into WorldCom Stock
pursuant to Section 4(C) of the Certificate of Incorporation, the Series 5
Junior Participating Preferred Stock shall be converted into the Series 4
Junior Participating Preferred Stock in the same manner, and at the same
conversion ratio, as the conversion of the MCI Stock.
Section 9. Ranking.
Series 5 Junior Participating Preferred Stock shall rank on parity
with the Series 4 Junior Participating Preferred Stock and junior to all other
series of the Company's Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
Section 10. Fractional Shares.
Series 5 Junior Participating Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series 5 Junior Participating Preferred Stock."
A-15
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- _________ ____ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE. AT THE
OPTION OF THE COMPANY, THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT OR EXCHANGE FOR
WORLDCOM GROUP STOCK, UNDER THE CIRCUMSTANCES
AND ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
[THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE
WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING
PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY ARE VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.]*
Right Certificate
WORLDCOM, INC.
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 June 7, 2001 (the "Rights Agreement") between
WorldCom, Inc., a Georgia corporation (the "Company"), and The Bank of New
York (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 5:00 p.m. Clinton, Mississippi time on the Expiration Date, as that term is
defined in the Rights Agreement, at the stockholder services office (or such
office designated for such purpose) of the Rights Agent, or its successor as
Rights Agent, one one-thousandth of a fully paid, nonassessable share of the
Series 4 Junior Participating Preferred Stock, par value $.01 per share
("Preferred Stock"), of the Company, at a purchase price equal to $160.00
multiplied by a fraction, the numerator of which is the opening price of the
Company's WorldCom Group Common Stock, par value $.01 per share ("WorldCom
Group Stock") on the first day such stock is traded after the consummation of
the Recapitalization Proposal (as defined in the Rights Agreement) and the
denominator of which is the closing price of the Existing Common Stock (as
defined in the Rights Agreement) on the last day of trading prior to the
consummation of the Recapitalization Proposal per one one-thousandth of a
share (the "Purchase Price") upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The
----------------
* The portion of the legend in brackets shall be inserted only if applicable.
B-1
number of Rights evidenced by this Right Certificate (and the number of shares
which may be purchased upon exercise of each Right) and the Purchase Price set
forth above are the number and Purchase Price as of ______________________
based on the shares of Preferred Stock of the Company as constituted at such
date.
The Purchase Price and the number of shares of Preferred Stock which
may be purchased upon the exercise of each of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the
happening of certain events as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the Company and the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the stockholder services office (or such office designated
for such purpose) of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at
a redemption price of $.01 per Right on or prior to the Stock Acquisition Date
(as defined in the Rights Agreement). In addition, subject to the provisions
of the Rights Agreement, each Right evidenced by this Certificate may be
exchanged by the Company at its option for one share of WorldCom Group Stock
following the Stock Acquisition Date and prior to the time an Acquiring
Person, as that term is defined in the Rights Agreement, owns 50% or more of
the Voting Power, as that term is defined in the Rights Agreement, of the
Company.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts). In
lieu of fractions of a share, a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions
B-2
affecting stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Right Certificate shall have been exercised as provided in
the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of __________ ____, _____.
Attest: WORLDCOM, INC.
By: By:
-------------------------- ----------------------------
Name: Name:
Title: Title:
Countersigned:
THE BANK OF NEW YORK
By:
--------------------------
Authorized signature
B-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________________ hereby sells,
assigns and transfers unto _________________________________________
(Please print name and address of transferee)
---------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________
Attorney to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:__________
--------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
B-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ______________
----------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To WorldCom, Inc.:
The undersigned hereby irrevocably elects to exercise
_____________________ Rights represented by this Right Certificate to purchase
the shares of Preferred Stock issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of:
Name: ____________________________________________
Address: ____________________________________________
____________________________________________
Social security
or taxpayer identification
number: _______________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Name: ____________________________________________
Address: ____________________________________________
____________________________________________
Social security
or taxpayer identification
number: _______________________________
Dated: ________________
----------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant
in the Securities Transfer Agent Medallion Program, the New York Stock
Exchange Medallion Signature Program or the Stock Exchange Medallion Program.
B-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________
---------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment
or Election to Purchase will not be honored as described in Section 7(e) of
the Rights Agreement.
B-7
EXHIBIT C
[Form of Right Certificate]
Certificate No. R- _________ ____ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE. AT THE
OPTION OF THE COMPANY, THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT OR EXCHANGE FOR MCI
GROUP STOCK, UNDER THE CIRCUMSTANCES AND ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED
TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON.
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY ARE VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Right Certificate
WORLDCOM, INC.
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 June 7, 2001 (the "Rights Agreement") between
WorldCom, Inc., a Georgia corporation (the "Company"), and The Bank of New
York (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 5:00 p.m. Clinton, Mississippi time on the Expiration Date, as that term is
defined in the Rights Agreement, at the stockholder services office (or such
office designated for such purpose) of the Rights Agent, or its successor as
Rights Agent, one one-thousandth of a fully paid, nonassessable share of the
Series 5 Junior Participating Preferred Stock, par value $.01 per share
("Preferred Stock"), of the Company, at a purchase price equal to the
difference between $160.00 and the Series 4 Purchase Price (as defined in the
Rights Agreement) per one one-thousandth of a share (the "Purchase Price")
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of shares which may be purchased upon
exercise of each Right) and the Purchase Price set forth above are the number
and Purchase Price as of
--------------------
* The portion of the legend in brackets shall be inserted only if applicable.
C-1
______________________ based on the shares of Preferred Stock of the Company
as constituted at such date.
The Purchase Price and the number of shares of Preferred Stock which
may be purchased upon the exercise of each of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the
happening of certain events as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the Company and the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the stockholder services office (or such office designated
for such purpose) of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at
a redemption price of $.01 per Right on or prior to the Stock Acquisition Date
(as defined in the Rights Agreement). In addition, subject to the provisions
of the Rights Agreement, each Right evidenced by this Certificate may be
exchanged by the Company at its option for one share of the Company's MCI
Group Common Stock, par value $.01 per share, following the Stock Acquisition
Date and prior to the time an Acquiring Person, as that term is defined in the
Rights Agreement, owns 50% or more of the Voting Power, as that term is
defined in the Rights Agreement, of the Company.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts). In
lieu of fractions of a share, a cash payment will be made, as provided in the
Rights Agreement.
C-2
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of __________ ____, _____.
Attest: WORLDCOM, INC.
By: By:
-------------------------- ----------------------------
Name: Name:
Title: Title:
Countersigned:
THE BANK OF NEW YORK
By:
--------------------------
Authorized signature
C-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________________ hereby sells,
assigns and transfers unto ___________________________________
(Please print name and address of transferee)
---------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________
Attorney to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:__________
----------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
C-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ______________
----------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
C-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To WorldCom, Inc.:
The undersigned hereby irrevocably elects to exercise
_____________________ Rights represented by this Right Certificate to purchase
the shares of Preferred Stock issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of:
Name: ____________________________________________
Address: ____________________________________________
____________________________________________
Social security
or taxpayer identification
number: _______________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Name: ____________________________________________
Address: ____________________________________________
____________________________________________
Social security
or taxpayer identification
number: _______________________________
Dated: ________________
----------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
C-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________
---------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment
or Election to Purchase will not be honored as described in Section 7(e) of
the Rights Agreement.
C-7