EXHIBIT 4.3
[FORM OF]
RESTATED RIGHTS AGREEMENT
------------------------
WORLDCOM, INC.
AND
THE BANK OF NEW YORK
RIGHTS AGENT
------------------------
DATED AS OF ____________ __, 2001
TABLE OF CONTENTS
PAGE
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SECTION 1. Certain Definitions......................................... 1
SECTION 2. Appointment of Rights Agent................................. 5
SECTION 3. Issue of Right Certificates................................. 5
SECTION 4. Form of Right Certificates.................................. 6
SECTION 5. Countersignature and Registration........................... 7
SECTION 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates................................................ 7
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights...................................................... 8
SECTION 8. Cancellation and Destruction of Right Certificates.......... 9
SECTION 9. Reservation and Availability of Shares of Preferred Stock... 10
SECTION 10. Preferred Stock Record Date................................. 10
SECTION 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights...................................................... 11
SECTION 12. Certificate of Adjusted Purchase Price or Number of
Shares...................................................... 17
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earnings Power.............................................. 17
SECTION 14. Fractional Rights and Fractional Shares..................... 19
SECTION 15. Rights of Action............................................ 20
SECTION 16. Agreement of Right Holders.................................. 20
SECTION 17. Right Certificate Holder Not Deemed a Stockholder........... 21
SECTION 18. Concerning the Rights Agent................................. 21
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent... 21
SECTION 20. Duties of Rights Agent...................................... 22
SECTION 21. Change of Rights Agent...................................... 23
SECTION 22. Issuance of New Right Certificates.......................... 24
SECTION 23. Redemption and Termination.................................. 24
SECTION 24. Exchange.................................................... 25
SECTION 25. Notice of Proposed Actions.................................. 26
SECTION 26. Notices..................................................... 26
SECTION 27. Supplements and Amendments.................................. 27
SECTION 28. Successors.................................................. 28
SECTION 29. Benefits of This Agreement.................................. 28
SECTION 30. Severability................................................ 28
SECTION 31. Governing Law............................................... 28
SECTION 32. Counterparts................................................ 28
SECTION 33. Descriptive Headings........................................ 28
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RESTATED RIGHTS AGREEMENT
This Agreement, dated as of , 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 cancelled in lieu of 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
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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.
(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
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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.
(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.
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(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.
(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, 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
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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 , 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.
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
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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 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
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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 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
8
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 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.
9
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 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.
10
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 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
11
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 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
12
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 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
13
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.
(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.
14
(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 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
15
thereafter issued may continue to express the Purchase Price and the number of
shares which were expressed in the initial Right Certificates issued hereunder.
(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 xxxx 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 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.
16
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 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
17
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" 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
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(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 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
19
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
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 (notwithstanding any
20
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 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.
21
(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 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.
22
(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.
(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
23
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 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
24
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 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.
25
(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.
(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
26
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.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
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
000 Xxxxxxx Xxxxxx, 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
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 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 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.
27
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.
28
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 --------------------------------------- By ---------------------------------------
Name: Name:
Title: Title:
Attest: THE BANK OF NEW YORK
By --------------------------------------- By ---------------------------------------
Name: Name:
Title: Title:
29
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.
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ARTICLES OF AMENDMENT 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.
The Amended and Restated Articles of Incorporation, as amended, are hereby
amended to provide for the establishment and designation of Series 4 Junior
Participating Preferred Stock and Series 5 Junior Participating Preferred Stock
and to fix and determine the relative rights and preferences thereof by adding
the following new Articles Fourteen and Fifteen and new Exhibits D and E:
"FOURTEEN
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 D."
EXHIBIT D
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 5,000,000. 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
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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 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
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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 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
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
A-4
(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 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.
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(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 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
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dividends, participate in distributions and to have the benefit of all other
rights of holders of Series 4 Junior Participating Preferred Stock."
"FIFTEEN
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."
"EXHIBIT E
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 [ ]. 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) 1/25of 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
A-7
or lesser number of shares of MCI Stock, then in each such case the amount
to which holders of shares of 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 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
A-8
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 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.
A-9
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 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
A-10
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 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.
(A) The shares of Series 5 Junior Participating Preferred Stock shall
not be redeemable.
(B) 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."
3.
The amendment to the Amended and Restated Articles of Incorporation, as
amended, as set forth in paragraph 2 hereinabove was duly adopted by the Board
of Directors of the Corporation on , 2001. Shareholders' approval was
not required pursuant to Section 14-2-1002 of the Georgia Business Corporation
Code.
A-11
IN WITNESS WHEREOF, WORLDCOM, INC. has caused its duly authorized officer to
execute these Articles of Amendment as of this day of , 2001.
WORLDCOM, INC.
By:
-----------------------------------------
Name:
Title:
A-12
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 , 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 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
------------------------
* The portion of the legend The portion of the legend in brackets shall be
inserted only if applicable.
B-1
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 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.
B-2
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 , 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 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.
------------------------
* The portion of the legend in brackets shall be inserted only if applicable.
C-1
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.
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-2
[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-3
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-4
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-5
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-6
