Exhibit 2.1
WORLDCOM, INC.
$60,000,000
Floating Rate Notes due 2002
UNDERWRITING AGREEMENT
May 31, 2000
WorldCom, Inc., a Georgia corporation (the "Company"), proposes to sell
to the underwriter named in the Terms Agreement dated the date hereof and
relating hereto (the "Underwriters"), for whom you (the "Managers") are acting
as representatives, the principal amount of its securities identified in such
Terms Agreement (the "Securities" or the "Offered Securities"), to be issued
under an indenture (the "Indenture") dated as of May 15, 2000 between the
Company and Chase Manhattan Trust Company, National Association, as trustee (the
"Trustee"). To the extent there are no additional Underwriters listed in the
Terms Agreement other than you, the term Managers as used herein shall mean you,
as Underwriters, and the terms Managers and Underwriters shall mean either the
singular or plural as the context requires.
The term "you" or "your" as used herein, unless the context otherwise
requires, shall mean such of the parties to whom this Underwriting Agreement is
addressed as are named in the applicable Terms Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations thereunder (herein referred to
collectively as the "Act"), registration statement (File No. 333-34578) on Form
S-3, including a prospectus relating to the Securities, and has filed or
proposes to file with the Commission a prospectus supplement or supplements
specifically relating to the Offered Securities pursuant to Rule 424 under the
Act in the form furnished by the Company to the Managers or, to the extent not
completed at the time of execution of the Terms Agreement, in such form as the
Company and the Managers shall have agreed to at such time. The term
"Registration Statement" means the registration statement, as amended to the
date of the Terms Agreement. The term "Basic Prospectus" means the prospectus
included in the Registration Statement. The term "Prospectus" means the Basic
Prospectus together with the prospectus supplement (other than a preliminary
prospectus supplement) specifically relating to the Offered
Securities in the form first used to confirm sales of the Offered Securities.
The term preliminary prospectus means a preliminary prospectus supplement
specifically relating to the Offered Securities, together with the Basic
Prospectus. As used herein, the terms "Registration Statement," "Basic
Prospectus," "Prospectus" and "preliminary prospectus" shall include, in each
case, the material, if any, incorporated by reference therein.
The Company and the Underwriters agree as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in the Prospectus complied or will comply when so
filed in all material respects with the Exchange Act and the applicable rules
and regulations of the Commission thereunder, (ii) each part of the Registration
Statement, when such part became effective, did not contain, and each such part,
as amended or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (iii) the
Registration Statement and the Prospectus comply, and, as amended or
supplemented, if applicable, will comply in all material respects with the Act
and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and
the applicable rules and regulations of the Commission thereunder and (iv) the
Prospectus does not contain and, as amended or supplemented, if applicable, will
not, as of the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the Company makes no representations or warranties as to (A) the
information contained in or omitted from the Registration Statement, or the
Prospectus (or any supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Managers specifically for use in connection with the
preparation of the Registration Statement or the Prospectus (or any supplement
thereto) or (B) to that part of the Registration Statement that constitutes the
Statement of
2
Eligibility and Qualification (Form T-1) under the Trust Indenture Act.
(c) No action has been taken and no statute, rule, regulation or order
has been enacted, adopted or issued by any governmental agency or body that
prevents the issuance of the Offered Securities, suspends the effectiveness of
the Registration Statement, prevents or suspends the use of any preliminary
prospectus, or suspends the sale of the Offered Securities in any jurisdiction
referred to in Section 4(f) below; PROVIDED, HOWEVER, that to the extent this
representation relates to state securities or "blue sky" laws and laws of
jurisdictions other than the United States and its political subdivisions, it
shall be limited to the knowledge of the Company. No injunction, restraining
order or order of any nature by a Federal or state court of competent
jurisdiction has been issued and served on the Company or any of the
Subsidiaries (as defined in Section l(e) below) with respect to the Company or
any of the Subsidiaries that would prevent or suspend the issuance or sale of
the Offered Securities, the effectiveness of the Registration Statement, or the
use of any preliminary prospectus in any jurisdiction referred to in Section
4(f) below.
(d) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as set forth in the
Prospectus, neither the Company nor any of the Subsidiaries has incurred any
liabilities or obligations, direct or contingent, which are material to the
Company and the Subsidiaries taken as a whole, nor entered into any material
transaction not in the ordinary course of business, and there has not been,
singularly or in the aggregate, any material adverse change, in the properties,
business, results of operations, financial condition, affairs or business
prospects of the Company and its Subsidiaries taken as a whole (a "Material
Adverse Change"). Without limiting the foregoing, neither the Company nor any of
its Subsidiaries has sustained since the date of the latest audited financial
statements included, or incorporated by reference, in the Prospectus any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
set forth in the Prospectus, there has not been any material change in the
capital stock or long-term debt of the Company or any of the Subsidiaries.
(e) The Company and each of its Significant Subsidiaries (as defined in
Rule 1-02(a) of Regulation S-X promulgated under
3
the Act) (individually a "Subsidiary" and collectively, the "Subsidiaries")(i)
has been duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of organization, (ii) has the
requisite corporate power and authority to carry on its business as it is
currently being conducted and as described in the Prospectus, and to own, lease
and operate its properties and (iii) is duly qualified and is authorized to do
business and is in good standing in each jurisdiction where the operation,
ownership or leasing of property or the conduct of its business requires such
qualification, except where any failure to be so qualified would not, singularly
or when aggregated with failures to be qualified elsewhere, have a material
adverse effect on the properties, business, results of operations, financial
condition, affairs or business prospects of the Company and its Subsidiaries
taken as a whole (a "Material Adverse Effect"). The Company has the requisite
power and authority to authorize the offering of the Offered Securities to be
sold by it, to execute, deliver and perform this Underwriting Agreement and to
issue, sell and deliver the Offered Securities to be sold by it.
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and are fully paid and nonassessable. All of
the issued and outstanding shares of capital stock of each Subsidiary have been
duly and validly authorized and issued, are fully paid and non-assessable and
(except as set forth or contemplated in the Prospectus) are owned, directly or
through subsidiaries, by the Company, free and clear of any liens, claims or
encumbrances ("Liens"). There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or Liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of any Subsidiary, except as set forth or
contemplated in the Prospectus.
(g) The Company has all requisite corporate power and authority to
execute, issue and deliver the Offered Securities and to execute and deliver the
Indenture and to incur and perform its obligations provided for therein.
(h) This Underwriting Agreement has been duly authorized and validly
executed and delivered by the Company.
(i) The Indenture has been duly qualified under the Trust Indenture Act
and has been duly authorized, executed and delivered by the Company, and
constitutes the valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy,
4
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity.
(j) The Offered Securities have been duly authorized, and, when
executed by the Company and authenticated by the Trustee in accordance with the
terms of the Indenture, and delivered to and duly paid for by the Underwriters
in accordance with the terms of this Underwriting Agreement and the Terms
Agreement, will be entitled to the benefits of the Indenture and will conform in
all material respects to the description thereof in the Prospectus and will
constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with the terms hereof, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general principles of equity.
(k) The execution and delivery of this Underwriting Agreement, the
issuance and sale of the Offered Securities, the performance by the Company of
this Underwriting Agreement and the Indenture, and the consummation of the other
transactions herein contemplated will not (i) conflict with or result in a
breach or violation of any of the respective charters or by-laws of the Company
or any of the Subsidiaries or (ii) after giving effect to the waivers and
consents obtained on or prior to the date hereof, if any, conflict with or
result in a breach or violation of any term or provision of, constitute a
default or cause an acceleration of any obligation under, or result in the
imposition or creation of (or the obligation to create or impose) a Lien with
respect to, any bond, note, debenture or other evidence of indebtedness or any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which it or any of them is
bound, or to which any properties of the Company or any of the Subsidiaries is
subject, or (iii) contravene any order of any court or governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries or any of
their properties, or violate or conflict with any statute, rule or regulation or
administrative or court decree applicable to the Company or any of the
Subsidiaries, or any of their respective properties. No authorization, approval
or consent or order of, or filing, registration or qualification with, any court
or governmental body or agency is required in connection with the transactions
contemplated by this Underwriting Agreement, except as may be required by and
made with or obtained from the National Association of Securities Dealers, Inc.
(the "NASD") or state securities or "blue sky" laws or regulations or have been
obtained and made under the Act.
5
(l) There is no action, suit or proceeding before or by any court,
arbitrator or governmental official, agency or body, domestic or foreign,
pending against or affecting the Company or any of the Subsidiaries, or any of
their respective properties, that is required to be disclosed in the Prospectus
and is not so disclosed, or that, if determined adversely, is reasonably
expected to affect adversely the issuance of the Offered Securities or in any
manner draw into question the validity of this Underwriting Agreement or the
Offered Securities or to result, singularly or when aggregated with other
pending actions and actions known to be threatened, in a Material Adverse
Effect, or that is reasonably expected to materially and adversely affect the
consummation of the transactions contemplated hereby, and to the best of the
Company's knowledge, no such proceedings are contemplated or threatened. No
contract or document of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement is not so described or filed.
(m) The firm of accountants that has certified or shall certify the
applicable consolidated financial statements and supporting schedules of the
Company filed or to be filed as part of the Registration Statement or the
Prospectus are independent public accountants with respect to the Company and
its subsidiaries, as required by the Act. The consolidated historical statements
and any pro forma information, together with related schedules and notes, if
any, included in the Registration Statement or the Prospectus comply as to form
in all material respects with the requirements of the Act. Such historical
financial statements fairly present the consolidated financial position of the
Company and its Subsidiaries at the respective dates indicated and the results
of their operations and their cash flows for the respective periods indicated,
in accordance with generally accepted accounting principles ("GAAP"), except as
otherwise expressly stated therein, as consistently applied throughout such
periods. Such pro forma information has been prepared on a basis consistent with
such historical financial statements, except for the pro forma adjustments
specified therein, and gives effect to assumptions made on a reasonable basis
and fairly presents and gives effect to the transactions described therein
pertaining to such pro forma information. The other financial and statistical
information and data included in the Prospectus and in the Registration
Statement, historical and pro forma, are, in all material respects, accurately
presented and prepared on a basis consistent with such financial statements and
the books and records of the Company.
(n) Each of the Company and the Subsidiaries has all certificates,
consents, exemptions, orders, permits, licenses,
6
authorizations, or other approvals (each, an "Authorization") of and from, and
has made all declarations and filings with, all Federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts and
other tribunals, necessary or required to own, lease, license and use its
properties and assets and to conduct its business in the manner described in the
Prospectus, except to the extent that the failure to obtain or file any such
Authorizations would not, singularly or in the aggregate, reasonably be expected
to have a Material Adverse Effect. All such Authorizations are in full force and
effect with respect to the Company and the Subsidiaries, and the Company and the
Subsidiaries are in compliance in all material respects with the terms and
conditions of all such Authorizations and with the rules and regulations of the
regulatory authorities and governing bodies having jurisdiction with respect
thereto.
(o) Except as disclosed in the Prospectus, no holder of any security of
the Company has or will have any right to require the registration of such
security by virtue of the filing of the Registration Statement or any
transactions contemplated by this Underwriting Agreement other than any such
right that has been expressly waived in writing. No holder of any of the
outstanding shares of capital stock of the Company or other person is entitled
to preemptive or other rights to subscribe for the Offered Securities.
(p) The Company has not (i) taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Offered Securities or (ii) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Offered Securities, or (iii) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
SECTION 2. DELIVERY AND PAYMENT. The several commitments of the
Underwriters to purchase, and the obligation of the Company to sell, Securities
pursuant to any Terms Agreement shall be deemed to have been made on the basis
of the representations and warranties herein contained and shall be subject to
the terms and conditions herein set forth.
Payment for the Offered Securities shall be made by the several
Underwriters of the Offered Securities through the Managers by a wire transfer
in Federal Funds or other same day funds at the time and place set forth in the
Terms Agreement, upon delivery to the Managers for the respective accounts of
the
7
several Underwriters of the Offered Securities registered in such names and in
such denominations as the Managers shall request not less than two full business
days prior to the date of delivery. The time and date of such payment and
delivery with respect to the Offered Securities are herein referred to as the
Closing Date.
SECTION 3. OFFERING BY UNDERWRITERS. The Company is advised by the
Managers that the Underwriters propose to make a public offering of their
respective portions of the Offered Securities as soon after this Underwriting
Agreement and the related Terms Agreement are entered into as in the Managers'
judgment is advisable. The terms of the public offering of the Offered
Securities are set forth in the Prospectus.
SECTION 4. AGREEMENTS. The Company agrees with the several
Underwriters, and in the case of paragraphs (g) and (h) of this Section 4, the
Underwriters agree with the Company:
(a) If not already effective, the Company will use its best efforts to
cause the Registration Statement, and any amendment thereof, to be declared
effective by the Commission. Prior to the termination of the offering of the
Offered Securities, the Company will not file any amendment of the Registration
Statement or supplement to the Prospectus without the prior consent of the
Managers, which consent shall not be unreasonably withheld. Subject to the
foregoing sentence, if filing of the Prospectus is required under Rule 424(b),
the Company will cause the Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Managers of such timely filing. The Company will promptly
advise the Managers (i) when the Registration Statement, and any amendment
thereto shall have become effective, (ii) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (iii) when, prior to termination of the offering of the
Offered Securities, any amendment to the Registration Statement shall have been
filed or become effective, (iv) of any request by the Commission for any
amendment of the Registration Statement or supplement to the Prospectus or for
any additional information, (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the Company
becoming aware of the institution or threatening of any proceeding for that
purpose and (vi) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Offered Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best
8
efforts to prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b) As soon as practicable, the Company will make generally available
to its security holders and to the Managers, an earnings statement or statements
of the Company and its Subsidiaries which will satisfy the provisions of Section
11(a) of the Act and Rule 158 under the Act.
(c) To furnish the Managers, without charge, two manually or facsimile
signed copies of the Registration Statement (including exhibits thereto and
documents incorporated therein by reference) and, during the period mentioned in
paragraph (e) below, as many copies of the Prospectus, any documents
incorporated therein by reference, and any supplements and amendments thereto as
the Managers may reasonably request. The Company agrees to timely file the
Prospectus pursuant to Rule 424 and to provide the Managers with evidence of
such filing. The terms "supplement" and "amendment" or "amend" as used in this
Underwriting Agreement shall include all documents subsequently filed by the
Company with the Commission pursuant to the Exchange Act that are deemed to be
incorporated by reference in the Prospectus.
(d) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish the Managers a copy of each such proposed amendment or
supplement and to file no such proposed amendment or supplement to which the
Managers reasonably objects in writing; PROVIDED that the foregoing shall not
apply to amendments or supplements that relate to securities registered under
the Registration Statement that are not Offered Securities.
(e) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Act or the rules
thereunder, the Company will promptly prepare and file with the Commission,
subject to the second sentence of paragraph (a) of this Section 4, an amendment
or supplement which will correct such statement or omission or effect such
compliance.
(f) The Company will cooperate with the Managers and counsel for the
Managers in connection with endeavoring to obtain qualification of the Offered
Securities for sale under the laws of such United States jurisdictions as the
Managers may designate
9
and such foreign jurisdictions as to which the Company and the Managers mutually
agree, will maintain such qualifications in effect so long as required for the
distribution of the Offered Securities, and will pay the fee of the NASD, if
any, in connection with its review of the offering; PROVIDED, HOWEVER, that the
Company shall not be required to file any GENERAL consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject.
(g) Each Underwriter agrees with the Company that it has not offered or
sold, and agrees not to offer or sell, any of the Securities, directly or
indirectly, in Canada or any other foreign jurisdiction in contravention of the
securities laws of Canada or any province or territory thereof or such foreign
jurisdiction, as the case may be, and, without limiting the generality of the
foregoing, represents that any offer of the Securities in Canada will be made
only pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer is made. Each Underwriter
further agrees to send to any dealer who purchases from it any of the Securities
a notice stating in substance that, by purchasing such Securities, such dealer
represents and agrees that it has not offered or sold, and will not offer or
sell, directly or indirectly, any of such Securities in Canada or to, or for the
benefit of, any resident of Canada in contravention of the securities laws of
Canada or any province or territory thereof and that any offer of Securities in
Canada will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made,
and that such dealer will deliver to any other dealer to whom it sells any of
the Securities a notice containing substantially the same statement as is
contained in this sentence.
(h) Whether or not the transactions contemplated herein are
consummated, the Underwriters agree with the Company that they will pay the
reasonable fees incurred in connection with the printing and distribution of the
preliminary prospectus and any Prospectus.
(i) During the period beginning on the date of this Underwriting
Agreement and continuing to and including the Closing Date or such other date as
may be specified in the Terms Agreement, not to offer, sell, contract to sell or
otherwise dispose of any securities of the Company that are similar to the
Offered Securities as to maturity (other than the Offered Securities) without
the prior written consent of the Managers.
10
The foregoing shall not restrict the Company from borrowings under new or
existing revolving credit agreements and lines of credit and issuances of
commercial paper or interest rate swaps.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase and pay for the Offered Securities
hereunder are subject to the following conditions:
(a) That, at the Closing Date, the Company shall have furnished to the
Managers an opinion of Xxxxx Xxxx LLP or other special counsel addressed to the
Managers and dated the Closing Date, in substantially the form previously
approved by the Managers.
(b) That the representations and warranties of the Company in this
Underwriting Agreement are true and correct in all material respects on the
Closing Date with the same effect as if made on the Closing Date and the Company
shall have complied in all material respects with all the agreements and
satisfied in all material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date.
(c) That no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened.
(d) That subsequent to the execution and delivery of this Underwriting
Agreement and prior to the Closing Date, there shall not have occurred any
downgrading, nor shall any notice have been given to the Company of (A) any
intended or potential downgrading or (B) any review or possible change that does
not indicate the direction of a possible change, in the rating accorded any of
the Company's securities by either of Standard & Poor's Ratings Group or Xxxxx'x
Investors Service, Inc.
(e) Since the date of the most recent financial statements included in
the Prospectus, there has been no Material Adverse Change, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus.
(f) That, at the Closing Date, there shall not have been any change, or
any development involving a prospective change, in or affecting the business or
properties of the Company and the Subsidiaries the effect of which is, in the
judgment of the Managers, so material and adverse as to make it impractical or
inadvisable to proceed with the public offering or the delivery
11
of the Securities as contemplated by the Registration Statement and the
Prospectus.
(g) That, at the Closing Date, the Company shall have furnished to the
Managers a certificate of the Company, signed by the Chairman of the Board or
the President and the principal financial or accounting officer of the Company,
each in his official capacity as an officer of the Company and not as an
individual, dated the Closing Date, to the effect of subparagraphs (b) through
(e) of this Section 5.
(h) That the Company shall have delivered to the Managers and its
counsel such documents as they may reasonably request relating to the issuance
and sale of the Offered Securities or otherwise related to the matters
contemplated hereby.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this
Underwriting Agreement, or if any of the opinions and certificates mentioned
above or elsewhere in this Underwriting Agreement shall not be in all material
respects reasonably satisfactory in form and substance to the Managers and its
counsel, this Underwriting Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, each Closing Date by the
Managers. Notice of such cancellation shall be given to the Company in writing
or by telephone or telegraph confirmed in writing.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the
Offered Securities provided for herein is not consummated for any reason (other
than a breach by any Underwriter of its obligations hereunder or a termination
pursuant to Section 9 hereof), the Company will reimburse the Underwriters
severally, upon demand, for all reasonable out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Offered
Securities. If the sale of the Offered Securities provided for herein is
consummated or such sale is not consummated due to a breach by any Underwriter
of its obligations hereunder or because of a termination pursuant to Section 9
hereof, the Underwriters will be responsible for all out-of-pocket expenses that
shall have been incurred by them in connection with the purchase and sale of the
Offered Securities.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person who controls any Underwriter within the meaning of the Act
against any and all losses, claims,
12
expenses, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, expenses, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any Basic Prospectus or any preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage
liability or action; PROVIDED, HOWEVER, (i) the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through the Managers specifically for use in connection with the
preparation thereof, and (ii) such indemnity with respect to any Basic
Prospectus or preliminary prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Offered
Securities which are the subject thereof if such person did not receive a copy
of the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) at or prior to the confirmation
of the sale of such Offered Securities to such person in any case where such
delivery is required by the Act and the untrue statement or omission of a
material fact contained in such Basic Prospectus or preliminary prospectus was
corrected in the Prospectus (as so amended or supplemented). This indemnity
agreement is in addition to any liability which the Company may otherwise have.
(b) Each of the Underwriters severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of the Act, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with reference to written information
furnished to the Company by or on behalf of such Underwriter through the
Managers specifically for use in the preparation of the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to any
liability which
13
any Underwriter may otherwise have. The Company acknowledges that the statements
set forth in the last paragraph of the cover page regarding delivery of the
Securities and under the heading "Underwriting" in any Preliminary Prospectus
and the Prospectus constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in any Preliminary Prospectus
or the Prospectus, and the Managers confirm that such statements are accurate
and complete.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to appoint counsel satisfactory to such
indemnified party to represent the indemnified party in such action (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); PROVIDED, HOWEVER, that if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to defend such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
appoint counsel to defend such action and approval by the indemnified party of
such counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (plus any local counsel), approved by the Managers in the case
of paragraph (a) of this Section 7, representing the indemnified parties under
such paragraph (a) who are parties to such action), (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the action or
14
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party; and except that, if
clause (i) or (iii) is applicable, such liability shall be only in respect of
the counsel referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) or (b)
of this Section 7 is due in accordance with its terms but is for any reason held
by a court to be unavailable, the Company and the Underwriters severally agree
to contribute to the aggregate losses, claims, expenses, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively, the "Losses") to which the
Company and one or more of the Underwriters may be subject (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the offering of
the Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, demands or liabilities as well as any other relevant equitable
considerations. For the purposes of this Paragraph 7(d), the relative benefits
received by the Company on the one hand and each Underwriter on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by such Underwriter, in each
case as set forth on the cover page of the final Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Company and the Underwriters agree that it
would not be just and equitable if contribution
15
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above. For
purposes of this Section 7, each person who controls an Underwriter within the
meaning of either the Act or the Exchange Act and each director, officer,
employee and agent of an Underwriter shall have the same rights to contribution
as such Underwriter, and each person who controls the Company within the meaning
of either the Act or the Exchange Act, each officer of the Company who shall
have signed the Registration Statement and each director of the Company shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d). The Underwriters'
obligations in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this paragraph
(d), notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this paragraph (d).
SECTION 8. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters
shall fail to purchase and pay for any of the Offered Securities agreed to be
purchased by such Underwriter or Underwriters hereunder, and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Underwriting Agreement, the remaining Underwriters shall
be obligated severally to take up and pay for (in the respective proportions
which the amount of Offered Securities each remaining Underwriter has agreed to
purchase bears to the aggregate amount of Offered Securities all the remaining
Underwriters have agreed to purchase) the Offered Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase; PROVIDED,
HOWEVER, that in the event that the aggregate amount of Offered Securities which
the defaulting Under-writer or Underwriters agreed but failed to purchase shall
exceed 10% of the aggregate amount of Offered Securities the Underwriters agreed
to purchase, the remaining underwriters shall have the right to purchase all,
but shall not be under any obligation to purchase any, of the Offered
Securities, and if such non-defaulting Underwriters do not purchase all the
Offered Securities, this Underwriting Agreement will terminate without liability
to any non-defaulting Underwriter or the Company. In the event of a default by
any Underwriter as set forth in this Section 8, the Closing Date shall be
postponed for such period, not exceeding seven days, as
16
the Managers shall determine. Nothing contained in this Underwriting Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the
Company and any non-defaulting Underwriter for damages occasioned by its default
hereunder.
SECTION 9. TERMINATION. This Underwriting Agreement shall be subject to
termination in the absolute discretion of the Managers, by notice given to the
Company prior to a Closing Date if prior to such time (i) trading in the Offered
Securities or in the Common Stock of the Company, par value $.01 (the "Common
Stock"), shall have been suspended by the Commission or the National Association
of Securities Dealers Automated Quotation National Market System or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange (other
than minimum prices in effect on the date hereof), (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities, (iii)
there shall have occurred any outbreak or material escalation of hostilities or
other calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in the judgment of the Managers,
impracticable to market the Offered Securities, or (iv) there shall have been
any decrease in the rating of any of the Company's debt securities or preferred
stock by any "Nationally Recognized Statistical Rating Organization" (as defined
for purposes of Rule 436(g) under the Act) or any written or public notice given
of any intended or potential decrease in any such rating or of a possible change
in any such rating that does not indicate the direction of the possible change.
SECTION 10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Underwriting Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company or any
of the officers, directors or controlling persons referred to in Section 7
hereof, and will survive delivery of and payment for the Offered Securities. The
provisions of Sections 6 and 7 hereof shall survive the termination or
cancellation of this Underwriting Agreement.
SECTION 11. NOTICES. All communications here-under will be in writing
and effective only on receipt, and, if sent to the Managers, will be mailed,
delivered or sent by facsimile and confirmed to them, at the address indicated
in the Terms Agreement; or, if sent to the Company, will be mailed, delivered or
sent by facsimile and confirmed to it at 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxxxxx 00000, to the attention of the Chief Financial Officer.
17
SECTION 12. SUCCESSORS. This Underwriting Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred to in
Section 7 hereof, and no other person will have any right or obligation
hereunder.
SECTION 13. APPLICABLE LAW. This Underwriting Agreement will be
governed by and construed in accordance with the substantive laws of the State
of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
WORLDCOM, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
18
The foregoing Agreement is hereby
confirmed and accepted as of the date
first specified above.
XXXXXXX XXXXX XXXXXX INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: First Vice President
Acting on behalf of themselves as
Managers and Underwriters and on
behalf of the other several Underwriters,
if any, named in the Terms Agreement
relating to theforegoing Agreement.
19
