EXHIBIT 4.2
ARTICLES OF AMENDMENT
TO THE SECOND
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
WORLDCOM, INC.
1.
The name of the Corporation is WorldCom, Inc.
2.
Effective the date hereof, Section A of Article Four of the Second Amended
and Restated Articles of Incorporation of the Corporation, as amended, is hereby
amended by deleting the text thereof and substituting therefor the text of the
amendment attached hereto as Exhibit A.
3.
All other provisions of the Second Amended and Restated Articles of
Incorporation, as previously amended, shall remain in full force and effect.
4.
The provisions of Section A of Article Four of the Second Amended and
Restated Articles of Incorporation, as amended, were duly approved by the
shareholders of the Corporation in accordance with the provisions of Section
14-2-1003 of the Georgia Business Corporation Code on the 7th day of June, 2001.
5.
The provisions of Section A of Article Four of the Second Amended and
Restated Articles of Incorporation, as amended, were duly adopted and authorized
by the Board of Directors of the Corporation on October 31, 2000.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed by its duly authorized officer, this 7th day of June,
2001.
WORLDCOM, INC.
By: /s/ Bernard J. Ebbers
---------------------
Name: Bernard J. Ebbers
Title: President
EXHIBIT A
(A) Common Stock. There shall be two series of common stock created,
having the number of shares and the voting powers, preferences, designations,
rights, qualifications, limitations or restrictions set forth below:
(i) WorldCom Stock. One series of common stock of the Corporation is
hereby created and designated as "WorldCom, Inc.--WorldCom Group Common
Stock" ("WorldCom Stock") consisting of 4.85 billion shares.
(ii) MCI Stock. One series of common stock of the Corporation is
hereby created and designated as "WorldCom, Inc.--MCI Group Common Stock"
("MCI Stock") consisting of 150 million shares.
(iii) Upon the date on which this Section A of Article 4 shall
become effective, and without any further action on the part of the
Corporation or its stockholders, each share of the Corporation's common
stock, par value $0.01 per share, that is issued and outstanding shall be
changed into one share of WorldCom Stock and 1/25 (0.04) of a share of MCI
Stock.
(iv) For the purpose of making "lawful and adequate provision" to
implement the existing right of the holders of the Company's Series B
Convertible Preferred Stock to acquire and receive upon the conversion of
the Series B Convertible Preferred Stock such shares of stock issuable
with respect to or in exchange for each outstanding share of the Company's
"Common Stock" (as such term is defined in Exhibit B to these Second
Amended and Restated Articles of Incorporation) as would have been
received upon conversion of the Series B Convertible Preferred Stock at
the "Conversion Rate" (as such term is defined in Section 5(a) of said
Exhibit B) then in effect, all references to a share of "Common Stock" of
the Company in Section 5 and Section 7 of Exhibit B shall be deemed, from
and after the date on which this Section A of Article 4 shall become
effective, to refer to one share of WorldCom Stock and 0.04 of a share of
MCI Stock (or such other number and designation of shares as may then be
applicable following lawful adjustment pursuant to Section 6 of Exhibit
B).
Section 1. Distributions and Share Dividends. Subject to the prior
and superior or other rights of the holders of the preferred stock or any other
shares of the Corporation and subject to the limitations provided for below in
this Section 1, distributions and share dividends may be declared and paid upon
either series of common stock, as the board of directors may determine and with
the effect provided for in these Second Amended and Restated Articles of
Incorporation.
(A) Distributions on WorldCom Stock. Distributions on WorldCom Stock
may be declared and paid only out of the lesser of:
(i) the funds legally available for that purpose; and
(ii) the WorldCom Group Available Distribution Amount.
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(B) Distributions on MCI Stock. Distributions on MCI Stock may be
declared and paid only out of the lesser of:
(i) the funds legally available for that purpose; and
(ii) the MCI Group Available Distribution Amount.
(C) Additional Limitations on Distributions and Share Dividends. The
board of directors may declare and pay share dividends of WorldCom Stock and MCI
Stock (or distributions of Convertible Securities convertible into or
exchangeable or exercisable for shares of WorldCom Stock or MCI Stock) or
distributions of assets (including securities) or properties attributed to the
WorldCom Group or the MCI Group on shares of common stock only as follows or as
permitted by Section 4:
(i) on shares of WorldCom Stock-share dividends of WorldCom Stock
(or distributions of Convertible Securities convertible into or
exchangeable or exercisable for shares of WorldCom Stock) or distributions
of assets (including securities) or properties attributed to the WorldCom
Group;
(ii) on shares of MCI Stock-share dividends of MCI Stock (or
distributions of Convertible Securities convertible into or exchangeable
or exercisable for shares of MCI Stock) or distributions of assets
(including securities) or properties attributed to the MCI Group.
(iii) on shares of MCI Stock-share dividends of WorldCom Stock (or
distributions of Convertible Securities convertible into or exchangeable
or exercisable for shares of WorldCom Stock), but only if (x) the MCI
Group is a Holder Group holding an Inter-Group Interest in the WorldCom
Group and (y) the sum of:
(1) the number of shares of WorldCom Stock to be so issued (or
the number of such shares that would be issuable upon conversion,
exchange or exercise of any Convertible Securities to be so issued);
and
(2) the number of shares of WorldCom Stock that are issuable
upon conversion, exchange or exercise of any Convertible Securities
then outstanding that are attributed as a liability to, or an equity
interest in, the MCI Group
is less than or equal to the Number of Shares Issuable with Respect to the
Inter-Group Interest in the WorldCom Group held by the MCI Group;
(iv) on shares of WorldCom Stock-share dividends of MCI Stock (or
distributions of Convertible Securities convertible into or exchangeable
or exercisable for shares of MCI Stock), but only if (x) the WorldCom
Group is a Holder Group holding an Inter-Group Interest in the MCI Group
and (y) the sum of:
(1) the number of shares of MCI Stock to be so issued (or the
number of such shares that would be issuable upon conversion,
exchange or exercise of any Convertible Securities to be so issued);
and
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(2) the number of shares of MCI Stock that are issuable upon
conversion, exchange or exercise of any Convertible Securities then
outstanding that are attributed as a liability to, or an equity
interest in, the WorldCom Group
is less than or equal to the Number of Shares issuable with Respect to the
Inter-Group Interest in the MCI Group held by the WorldCom Group;
(v) on shares of MCI Stock-distributions of assets (including
securities) or properties attributed as an asset to the WorldCom Group,
but only if the number or amount of such assets (including securities) or
properties to be so paid is less than or equal to the product of:
(1) the number or amount of such assets (including securities)
or properties to be paid concurrently to holders of outstanding
WorldCom Stock; and
(2) a fraction (which may be greater than one), the numerator
of which is equal to the Number of Shares Issuable with Respect to
the Inter-Group Interest in the WorldCom Group held by the MCI Group
and the denominator of which is equal to the number of outstanding
shares of WorldCom Stock, in each case, on the record date for such
distribution; and
(vi) on shares of WorldCom Stock-distributions of assets (including
securities) or properties attributed as an asset to the MCI Group, but
only if the number or amount of such assets (including securities) or
properties to be so paid is less than or equal to the product of:
(1) the number or amount of such assets (including securities)
or properties to be paid concurrently to holders of outstanding MCI
Stock; and
(2) a fraction (which may be greater than one), the numerator
of which is equal to the Number of Shares Issuable with Respect to
the Inter-Group Interest in the MCI Group held by the WorldCom Group
and the denominator of which is equal to the number of outstanding
shares of MCI Stock, in each case, on the record date for such
distribution.
For purposes of this Section l(C), any outstanding Convertible
Securities that are convertible into or exchangeable or exercisable for any
other Convertible Securities which are themselves convertible into or
exchangeable or exercisable for any series of common stock (or other Convertible
Securities that are so convertible, exchangeable or exercisable) shall be deemed
to have been converted, exchanged or exercised in full for such Convertible
Securities.
(D) Discrimination Between Series of Common Stock. The board of
directors, subject to the provisions of this Section 1, may at any time declare
and pay distributions and share dividends exclusively on WorldCom Stock or
exclusively on MCI Stock, in equal or unequal amounts, notwithstanding the
relationship between the Available Distribution Amount with respect to either
Group, the amount of distributions and share dividends previously declared or
paid on either series, the respective voting or liquidation rights of either
series or other factor.
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Section 2. Voting Rights.
(A) General. Except as otherwise provided by law, by the terms of
any outstanding preferred stock or by any provision in these Second Amended and
Restated Articles of Incorporation allocating the power to vote on a specified
matter to other shareholders or in a different manner, the common stock shall
together have unlimited voting rights. Both series of common stock shall vote on
all matters together as a single voting group, except as otherwise provided by
law or by any provision in these Second Amended and Restated Articles of
Incorporation.
(B) Number of Votes for Each Series of Common Stock. On each matter
to be voted on by the holders of each series of common stock voting together as
a single voting group, the number of votes per share of each series shall be as
follows:
(i) each outstanding share of WorldCom Stock shall have one vote;
and
(ii) each outstanding share of MCI Stock shall have a number of
votes (including a fraction of one vote) equal to the quotient, rounded to
the nearest 1/10,000 (.0001), of (1) the average Market Value of one share
of MCI Stock during the 20-Trading Day period ending on the tenth Trading
Day prior to the record date for determining the shareholders entitled to
vote, divided by (2) the average Market Value of one share of WorldCom
Stock during such 20-Trading Day period.
Notwithstanding the foregoing provisions of this Section 2(B), if shares of only
one series of common stock are outstanding on the record date for determining
the holders of common stock entitled to vote on any matter, then each share of
that series shall be entitled to one vote and, if either series of common stock
is entitled to vote as a separate voting group with respect to any matter, each
share of that series shall, for the purpose of such vote, be entitled to one
vote on such matter.
Section 3. Liquidation Rights.
(A) General. In the event of any voluntary or involuntary
dissolution of the Corporation, after payment or provision for payment of the
debts and other liabilities of the Corporation and after making provision for
any outstanding preferred stock and any other shares prior and superior to
common stock as to payments upon dissolution (regardless of the Group to which
such shares are attributed), the holders of WorldCom Stock and MCI Stock shall
be entitled to receive the net assets of the Corporation remaining for
distribution to holders of the common stock (regardless of the Group to which
such assets are then attributed) in an amount determined on a per share basis in
proportion to the liquidation units per share of such series.
For purposes of this Section 3, neither (x) the voluntary sale,
lease, exchange or other disposition of all or substantially all of the property
or assets of the Corporation; (y) a merger of the Corporation or a share
exchange by the Corporation with one or more other corporations (whether or not
the Corporation is the corporation surviving such merger or the acquiring
company in such share exchange); nor (z) any transaction or event pursuant to
Section 4 shall be deemed a voluntary or involuntary dissolution of the
Corporation.
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(B) Liquidation Units for Each Series of Common Stock. The
liquidation units per share of each series of common stock shall be as follows:
(i) each share of WorldCom Stock shall have one liquidation unit;
and
(ii) each share of MCI Stock shall have 1/25 of one liquidation
unit.
provided that, if the Corporation shall in any manner subdivide (by stock split,
reclassification or otherwise) or combine (by reverse stock split,
reclassification or otherwise) the outstanding shares of either series of common
stock, or declare and pay a share dividend of either series of common stock to
holders of such series, the per share liquidation units of the series of common
stock, as adjusted from time to time, shall be appropriately adjusted, as
determined by the board of directors, so as to avoid any dilution in the
aggregate, relative liquidation rights of the shares of either series of common
stock.
Section 4. Special Distributions on, and Conversion or Redemption
of, WorldCom Stock and MCI Stock.
(A) Special Distributions on, and Conversion or Redemption of,
WorldCom Stock if a Disposition of All or Substantially All Assets of the
WorldCom Group Occurs.
(i) In the event of the Disposition, in one transaction or a series
of related transactions (other than in one or a series of Excluded
Transactions), by the Corporation and/or its subsidiaries of all or
substantially all of the businesses, assets, properties and liabilities
attributed to the WorldCom Group, the Corporation shall, on or prior to
the 120th Trading Day after the Disposition Date, as determined by the
board of directors in its sole discretion:
(1) provided that there are funds legally available for the
purpose:
(a) subject to compliance with Section 1, pay to the
holders of the shares of WorldCom Stock a distribution pro
rata in accordance with the number of shares of WorldCom Stock
held by each such holder in cash and/or securities or other
property having a Fair Value as of the Disposition Date in the
aggregate equal to the product of:
(x) the Outstanding Interest Fraction with respect
to WorldCom Stock as of the record date for determining
holders entitled to receive such distribution; and
(y) the Fair Value as of the Disposition Date of
the Net Proceeds of such Disposition; or
(b) (I) subject to the last sentence of this Section
4(A)(i), if such Disposition involves all (not merely
substantially all) of the businesses, assets, properties and
liabilities attributed to the WorldCom Group, redeem or
exchange as of the Redemption Date, determined as provided by
Section 4(G)(iii)(2), all outstanding shares of WorldCom Stock
in
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exchange for, on a pro rata basis, cash and/or securities
(other than shares of a series of common stock) or other
property having a Fair Value as of the Disposition Date in the
aggregate equal to the product of:
(x) the Outstanding Interest Fraction with respect
to WorldCom Stock as of the record date for determining
holders entitled to receive such distribution; and
(y) the Fair Value of the Disposition Date of the
Net Proceeds of such Disposition; or
(II) subject to the last sentence of this Section
4(A)(i), if such Disposition involves substantially all (but
not all) of the businesses, assets, properties and liabilities
attributed to the WorldCom Group, redeem or exchange as of the
Redemption Date, determined as provided by Section
4(G)(iv)(2), the number of whole shares of WorldCom Stock
equal to the lesser of:
(x) the number of shares of WorldCom Stock
outstanding; and
(y) such number of shares of WorldCom Stock as
have in the aggregate an average Market Value during the
period of ten consecutive Trading Days beginning on the
51st Trading Day immediately succeeding the Disposition
Date closest to the product of:
(AA) the Outstanding Interest Fraction with
respect to WorldCom Stock as of the record date
for determining such shares selected for
redemption or exchange; and
(BB) the Fair Value as of the Disposition
Date of the Net Proceeds of such Disposition,
in exchange for, on a pro rata basis, cash and/or securities (other than shares
of a series of the Corporation's common stock) or other property having a Fair
Value as of the Disposition Date in the aggregate equal to such product; or
(2) declare that each outstanding share of MCI Stock shall be
converted as of the Conversion Date, determined as provided by Section
4(G)(v)(2), into a number of fully paid and nonassessable shares of
WorldCom Stock, equal to the ratio, rounded to the nearest 1/10,000
(.0001), of the average Market Value of one share of MCI Stock over the
period of ten consecutive Trading Days beginning on the 51st Trading Day
following the Disposition Date to the average Market Value of one share of
WorldCom Stock during such ten-Trading Day period.
Notwithstanding the foregoing provisions of this Section 4(A)(i), the
Corporation shall redeem or exchange shares of WorldCom Stock as provided by
Section 4(A)(i)(1)(b)(I) or (II) only if the
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amount to be paid in redemption or exchange of such stock is less than or equal
to the WorldCom Group Available Distribution Amount as of the Redemption Date.
(ii) For purposes of this Section 4(A):
(1) as of any date, "substantially all of the businesses,
assets, properties and liabilities" attributed to the WorldCom Group
shall mean a portion of such businesses, assets, properties and
liabilities that represents at least 80% of the Fair Value of the
businesses, assets, properties and liabilities attributed to the
WorldCom Group as of such date;
(2) in the case of a Disposition of the businesses, assets,
properties and liabilities attributed to the WorldCom Group in a
series of related transactions, such Disposition shall not be deemed
to have been consummated until the consummation of the last of such
transactions; and
(3) the board of directors may pay any distribution or
redemption price referred to in Section 4(A)(i)(1) in cash,
securities (other than shares of a series of the Corporation's
common stock) or other property, regardless of the form or nature of
the proceeds of the Disposition.
(iii) After the payment of any distribution or redemption
price with respect to the WorldCom Stock as provided for by Section
4(A)(i)(l), the board of directors may declare that each share of
WorldCom Stock remaining outstanding shall be converted as of a
Conversion Date, determined as provided by Section 4(G)(v)(2), into
a number of fully paid and nonassessable shares of MCI Stock equal
to the ratio, rounded to the nearest 1/10,000 (.0001), of the
average Market Value of one share of WorldCom Stock during the
period of 20 consecutive Trading Days ending on the fifth Trading
Day immediately preceding the date of the notice of such conversion
required by Section 4(G)(v) to the average Market Value of one share
of MCI Stock during such 20-Trading Day period.
(B) Special Distributions on, and Conversion and Redemption of, MCI
Stock If a Disposition of All or Substantially All Assets of the MCI Group
Occurs.
(i) In the event of the Disposition, in one transaction or a series
of related transactions (other than in one or a series of Excluded
Transactions), by the Corporation and/or its subsidiaries of all or
substantially all of the businesses, assets, properties and liabilities
attributed to the MCI Group, the Corporation shall, on or prior to the
120th Trading Day after the Disposition Date, as determined by the board
of directors in its sole discretion:
(1) provided that there are funds legally available for the
purpose:
(a) subject to compliance with Section 1, pay to the
holders of the shares of MCI Stock a distribution pro rata in
accordance with the number of shares of MCI Stock held by each
such holder, in
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cash and/or securities or other property having a Fair Value
as of the Disposition Date in the aggregate equal to the
product of:
(x) the Outstanding Interest Fraction with respect
to MCI Stock as of the record date for determining
holders entitled to receive such distribution; and
(y) the Fair Value as of the Disposition Date of
the Net Proceeds of such Disposition; or
(b) (I) subject to the last sentence of this Section
4(B)(i), if such Disposition involves all (not merely
substantially all) of the businesses, assets, properties and
liabilities attributed to the MCI Group, redeem or exchange as
of the Redemption Date, determined as provided by Section
4(G)(iii)(2), all outstanding shares of MCI Stock in exchange
for, on a pro rata basis, cash and/or securities (other than
shares of a series of common stock) or other property having a
Fair Value as of the Disposition Date in the aggregate equal
to the product of:
(x) the Outstanding Interest Fraction with respect
to MCI Stock as of such Redemption Date; and
(y) the Fair Value as of the Disposition Date of
the Net Proceeds of such Disposition; or
(II) subject to the last sentence of this Section
4(B)(i), if such Disposition involves substantially all (but
not all) of the businesses, assets, properties and liabilities
attributed to the MCI Group, redeem or exchange as of the
Redemption Date, determined as provided by Section
4(G)(iv)(2), the number of whole shares of MCI Stock equal to
the lesser of:
(x) the number of shares of MCI Stock outstanding;
and
(y) such number of MCI Stock as have in the
aggregate an average Market Value during the period of
ten consecutive Trading Days beginning on the 51st
Trading Day immediately succeeding the Disposition Date
closest to the product of:
(AA) the Outstanding Interest Fraction with
respect to MCI Stock as of the record date for
determining such shares selected for redemption or
exchange; and
(BB) the Fair Value as of the Disposition
Date of the Net Proceeds of such Disposition,
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in exchange for, on a pro rata basis, cash and/or securities (other than shares
of a series of the Corporation's common stock) or other property having a Fair
Value as of the Disposition Date in the aggregate equal to such product; or
(2) declare that each outstanding share of MCI Stock shall be
converted as of the Conversion Date, determined as provided by
Section 4(G)(v)(2), into a number of fully paid and nonassessable
shares of WorldCom Stock equal to 110% (if the disposition is
consummated within three years of the date of the Initial Issuance
Date or 100% thereafter), of the ratio, rounded to the nearest
1/10,000 (.0001), of the average Market Value of one share of MCI
Stock over the period of ten consecutive Trading Days beginning on
the 51st Trading Day following the Disposition Date to the average
Market Value of one share of WorldCom Stock during such ten-Trading
Day period.
Notwithstanding the foregoing provisions of this Section 4(B)(i), the
Corporation shall redeem or exchange shares of MCI Stock as provided by Section
4(B)(i)(1)(b)(I) or (II) only if the amount to be paid in redemption or exchange
of such stock is less than or equal to the MCI Group Available Distribution
Amount as of the Redemption Date.
(ii) For purposes of this Section 4(B):
(1) as of any date, "substantially all of the businesses,
assets, properties and liabilities" attributed to the MCI Group
shall mean a portion of such businesses, assets, properties and
liabilities that represents at least 80% of the Fair Value of the
businesses, assets, properties and liabilities attributed to the MCI
Group as of such date;
(2) in the case of a Disposition of the businesses, assets,
properties and liabilities attributed to the MCI Group in a series
of related transactions, such Disposition shall not be deemed to
have been consummated until the consummation of the last of such
transactions; and
(3) the board of directors may pay any distribution or
redemption price referred to in Section 4(B)(i)(1) in cash,
securities (other than shares of a series of the Corporation's
common stock) or other property, regardless of the form or nature of
the proceeds of the Disposition.
(C) Conversion of MCI Stock at Corporation's Option At Any Time or
if a Tax Event Occurs.
(i) The Board of Directors may at any time declare that each
outstanding share of MCI Stock shall be converted, as of the Conversion
Date, determined as provided by Section 4(G)(v)(2), into a number of fully
paid and nonassessable shares of WorldCom Stock, equal to the applicable
percentage set forth in the following sentence of the ratio, rounded to
the nearest 1/10,000 (.0001), of the average Market Value of one share of
MCI Stock over the period of 20 consecutive Trading Days ending on the
fifth Trading Day immediately preceding the date of the notice of
conversion required by Section 4(G)(v) to the average Market Value of one
share of WorldCom Stock during
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such 20-Trading Day period. The applicable percentage referred to in the
preceding sentence shall equal:
(1) prior to the third anniversary of the Initial Issuance
Date, 110%; and
(2) on or after the third anniversary of the Initial Issuance
Date, 100%.
(ii) If a Tax Event occurs, the board of directors may at any time
declare that each outstanding share of MCI Stock shall be converted, as of
the Conversion Date, determined as provided by Section 4(G)(v)(2), into a
number of fully paid and nonassessable shares of WorldCom Stock equal to
100% of the ratio, rounded to the nearest 1/10,000 (.0001), of the average
Market Value of one share of MCI Stock over the period of 20 consecutive
Trading Days ending on the fifth Trading Day immediately preceding the
date of the notice of conversion required by Section 4(G)(v) to the
average Market Value of one share of WorldCom Stock or Additional Group
Stock, as applicable, during such 20-Trading Day period.
(D) Redemption of WorldCom Stock for WorldCom Subsidiary Stock. At
any time at which all of the businesses, assets, properties and liabilities
attributed to the WorldCom Group (and no other businesses, assets, properties or
liabilities of the Corporation or any subsidiary thereof) are held directly or
indirectly by one or more wholly owned subsidiaries of the Corporation (each, a
"WorldCom Subsidiary"), the board of directors may, subject to the satisfaction
of such conditions that it determines are appropriate, provided that there are
funds legally available for the purpose:
(i) if neither Group holds an Inter-Group Interest in the other
Group, redeem or exchange all of the outstanding shares of WorldCom Stock,
on a Redemption Date of which notice is delivered in accordance with
Section 4(G)(vi), in exchange for all of the shares of common stock of
each WorldCom Subsidiary as will be outstanding immediately following such
exchange of shares; such shares of common stock of each WorldCom
Subsidiary shall be delivered to the holders of shares of WorldCom Stock
on the Redemption Date either directly or indirectly through the delivery
of shares of another WorldCom Subsidiary that owns directly or indirectly
all such shares, and shall be divided among the holders of WorldCom Stock
pro rata in accordance with the number of shares of WorldCom Stock held by
each such holder on such Redemption Date; each share of common stock of
such WorldCom Subsidiary shall be, upon such delivery, fully paid and
nonassessable;
(ii) if the MCI Group holds an Inter-Group Interest in the WorldCom
Group, redeem or exchange all of the outstanding shares of WorldCom Stock,
on a Redemption Date of which notice is delivered in accordance with
Section 4(G)(vi), in exchange for the number of shares of common stock of
each WorldCom Subsidiary equal to the product of:
(x) the Outstanding Interest Fraction with respect to WorldCom
Stock; and
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(y) the number of shares of common stock of such WorldCom
Subsidiary as will be outstanding immediately following such
exchange of shares;
such shares of common stock of each WorldCom Subsidiary shall be delivered to
the holders of shares of WorldCom Stock on the Redemption Date either directly
or indirectly through the delivery of shares of another WorldCom Subsidiary that
owns directly or indirectly all such shares, and shall be divided among the
holders of WorldCom Stock pro rata in accordance with the number of shares of
WorldCom Stock held by each such holder on such Redemption Date; each share of
common stock of such WorldCom Subsidiary shall be, upon such delivery, fully
paid and nonassessable; or
(iii) if the WorldCom Group holds an Inter-Group Interest in the MCI
Group, either:
(1) redeem or exchange all of the outstanding shares of
WorldCom Stock, on a Redemption Date of which notice is delivered in
accordance with Section 4(G)(vi), in exchange for:
(a) all of the shares of common stock of each WorldCom
Subsidiary as will be outstanding immediately following such
exchange of shares; and
(b) with respect to the MCI Group, a number of shares of
MCI Stock equal to the related Number of Shares Issuable with
Respect to the Inter-Group Interest in the MCI Group held by
the WorldCom Group;
such shares of common stock of each WorldCom Subsidiary shall be delivered to
the holders of shares of WorldCom Stock on the Redemption Date either directly
or indirectly through the delivery of shares of another WorldCom Subsidiary that
owns directly or indirectly all such shares, and the shares of common stock of
each WorldCom Subsidiary and the shares of MCI Stock equal to the related Number
of Shares Issuable with Respect to the Inter-Group Interest in the MCI Group
held by the WorldCom Group shall be divided among the holders of WorldCom Stock
pro rata in accordance with the number of shares of WorldCom Stock held by each
such holder on such Redemption Date; each share of common stock of each WorldCom
Subsidiary and share of MCI Stock in respect of such Number of Shares Issuable
with Respect to the Inter-Group Interest shall be, upon such delivery, fully
paid and nonassessable; or
(2) (a) redeem or exchange all of the outstanding shares of WorldCom
Stock as contemplated by clause (1)(a) above and (b) issue to one or more
of the WorldCom Subsidiaries a number of shares of MCI Stock equal to the
Number of Shares Issuable with Respect to the Inter-Group Interest in the
MCI Group held by the WorldCom Group.
(E) Redemption of MCI Stock for MCI Subsidiary Stock. At any time at
which all of the businesses, assets, properties and liabilities attributed to
the MCI Group (and no other businesses, assets, properties or liabilities of the
Corporation or any subsidiary thereof) are held directly or indirectly by one or
more wholly owned subsidiaries of the Corporation (each, a
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"MCI Subsidiary"), the Board of Directors may, subject to the satisfaction of
such conditions that it determines are appropriate, provided that there are
funds legally available for the purpose:
(i) if neither Group holds an Inter-Group Interest in the other
Group, redeem or exchange all of the outstanding shares of MCI Stock, on a
Redemption Date of which notice is delivered in accordance with Section
4(G)(vi), in exchange for all of the shares of common stock of each MCI
Subsidiary as will be outstanding immediately following such exchange of
shares; such shares of common stock of each MCI Subsidiary shall be
delivered to the holders of shares of MCI Stock on the Redemption Date
either directly or indirectly through the delivery of shares of another
MCI Subsidiary that owns directly or indirectly all such shares, and shall
be divided among the holders of MCI Stock pro rata in accordance with the
number of shares of MCI Stock held by each such holder on such Redemption
Date; each share of common stock of such MCI Subsidiary shall be, upon
such delivery, fully paid and nonassessable;
(ii) if the WorldCom Group holds an Inter-Group Interest in the MCI
Group, redeem or exchange all of the outstanding shares of MCI Stock, on a
Redemption Date of which notice is delivered in accordance with Section
4(G)(vi), in exchange for the number of shares of common stock of each MCI
Subsidiary equal to the product of:
(x) the Outstanding Interest Fraction with respect to MCI
Stock; and
(y) the number of shares of common stock of such MCI
Subsidiary as will be outstanding immediately following such
exchange of shares;
such shares of common stock of each MCI Subsidiary shall be delivered to the
holders of shares of MCI Stock on the Redemption Date either directly or
indirectly through the delivery of shares of another MCI Subsidiary that owns
directly or indirectly all such shares, and shall be divided among the holders
of MCI Stock pro rata in accordance with the number of shares of MCI Stock held
by each such holder on such Redemption Date; each share of common stock of such
MCI Subsidiary shall be, upon such delivery, fully paid and nonassessable; or
(iii) if the MCI Group holds an Inter-Group Interest in the WorldCom
Group, either:
(1) redeem or exchange all of the outstanding shares of MCI
Stock, on a Redemption Date of which notice is delivered in
accordance with Section 4(G)(vi), in exchange for:
(a) all of the shares of common stock of each MCI
Subsidiary as will be outstanding immediately following such
exchange of shares; and
(b) with respect to the WorldCom Group, a number of
shares of WorldCom Stock equal to the related Number of Shares
Issuable with Respect to the Inter-Group Interest in the
WorldCom Group held by the MCI Group;
13
such shares of common stock of each MCI Subsidiary shall be delivered to the
holders of shares of MCI Stock on the Redemption Date either directly or
indirectly through the delivery of shares of another MCI Subsidiary that owns
directly or indirectly all such shares, and the shares of common stock of each
MCI Subsidiary and the shares of common stock of each series equal to the
related Number of Shares Issuable with Respect to the Inter-Group Interest in
the WorldCom Group held by the MCI Group shall be divided among the holders of
MCI Stock pro rata in accordance with the number of shares of MCI Stock held by
each such holder on such Redemption Date; each share of common stock of each MCI
Subsidiary and share of common stock in respect of such Number of Shares
Issuable with Respect to the Inter-Group Interest shall be, upon such delivery,
fully paid and nonassessable; or
(2) (a) redeem or exchange all of the outstanding shares of
MCI Stock as contemplated by clause (1)(a) above and (b) issue to
one or more of the MCI Subsidiaries a number of shares of WorldCom
Stock equal to the Number of Shares Issuable with Respect to the
Inter-Group Interest in the WorldCom Group held by the MCI Group.
(F) Treatment of Convertible Securities. After any Redemption Date
or Conversion Date on which all outstanding shares of either WorldCom Stock or
MCI Stock are redeemed or converted, any share of any series of common stock of
the Corporation that is to be issued on exchange, conversion or exercise of any
Convertible Securities shall, immediately upon such exchange, conversion or
exercise and without any notice from or to, or any other action on the part of,
the Corporation or its board of directors or the holder of such Convertible
Security:
(i) in the event the shares of such series of common stock
outstanding on such Redemption Date were redeemed pursuant to Section
4(A)(i)(1)(b)(I), Section 4(B)(i)(1)(b)(I), Section 4(D) or Section 4(E),
be redeemed, to the extent of funds legally available therefor, for $.01
per share in cash for each share of such series of common stock that
otherwise would be issued upon such exchange, conversion or exercise; or
(ii) in the event the shares of such series of common stock
outstanding on such Conversion Date were converted into shares of another
series of common stock pursuant to Section 4(A)(i)(2), Section 4(A)(iii),
Section 4(B)(i)(2) or Section 4(C), be converted into the amount of cash
and/or the number of shares of the kind of capital stock and/or other
securities or property of the Corporation that shares of such series of
common stock would have received had such shares been converted and
outstanding on such Conversion Date.
The provisions of the immediately preceding sentence of this Section 4 shall not
apply to the extent that other adjustments or alternative provisions in respect
of such conversion, exchange or redemption of a series of common stock are
otherwise made or applied pursuant to the provisions of such Convertible
Securities.
(G) Notice and Other Provisions. (i) Not later than the 45th Trading
Day following the Disposition Date referred to in Section 4(A)(i) (in the case
of WorldCom Stock) or
14
Section 4(B)(i) (in the case of MCI Stock), the Corporation shall announce
publicly by press release:
(1) the Net Proceeds of such Disposition;
(2) the number of shares outstanding of the series of common stock
relating to the Group subject to such Disposition;
(3) the number of shares of such series of common stock into or for
which Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof; and
(4) if applicable for the Group subject to such Disposition, the
Outstanding Interest Fraction for the series of common stock relating to
such Group on the date of such notice.
Not earlier than the 61st Trading Day and not later than the 65th Trading Day
following the Disposition Date, the Corporation shall announce publicly by press
release which of the actions specified in Section 4(A)(i) or Section 4(B)(i), as
the case may be, it has irrevocably determined to take in respect of such
Disposition.
(ii) If the Corporation determines to pay a distribution pursuant to
Section 4(A)(i)(1)(a) (in the case of WorldCom Stock) or Section
4(B)(i)(1)(a) (in the case of MCI Stock), the Corporation shall, not later
than the 65th Trading Day following the Disposition Date, cause notice to
be given to each holder of shares of the series of common stock relating
to the Group subject to such Disposition and to each holder of Convertible
Securities that are convertible into or exchangeable or exercisable for
shares of such series of common stock (unless alternate provision for such
notice to the holders of such Convertible Securities is made pursuant to
the terms of such Convertible Securities), setting forth:
(1) the record date for determining holders entitled to
receive such distribution, which shall be not earlier than the tenth
Trading Day and not later than the 20th Trading Day following the
date of such notice;
(2) the anticipated payment date of such distribution (which
shall not be more than 120 Trading Days following the Disposition
Date);
(3) the type of property to be paid as such distribution in
respect of the outstanding shares of such series of common stock;
(4) the Net Proceeds of such Disposition;
(5) if applicable for the Group subject to such Disposition,
the Outstanding Interest Fraction for the series of common stock
relating to such Group on the date of such notice;
15
(6) the number of outstanding shares of such series of common
stock and the number of shares of such series of common stock into
or for which outstanding Convertible Securities are then
convertible, exchangeable or exercisable and the conversion,
exchange or exercise price thereof; and
(7) in the case of notice to be given to holders of
Convertible Securities, a statement to the effect that a holder of
such Convertible Securities shall be entitled to receive such
distribution only if such holder properly converts, exchanges or
exercises such Convertible Securities on or prior to the record date
referred to in clause (1) of this sentence.
(iii) If the Corporation determines to undertake a redemption
pursuant to Section 4(A)(i)(1)(b)(I) (in the case of WorldCom Stock) or
Section 4(B)(i)(1)(b)(I) (in the case of MCI Stock), the Corporation
shall, not earlier than the 45th Trading Day and not later than the 35th
Trading Day prior to the Redemption Date, cause notice to be given to each
holder of shares of the series of common stock relating to the Group
subject to the Disposition referred to in such Section and to each holder
of Convertible Securities convertible into or exchangeable or exercisable
for shares of such series of common stock (unless alternate provision for
such notice to the holders of such Convertible Securities is made pursuant
to the terms of such Convertible Securities), setting forth:
(1) a statement that all shares of such series of common stock
outstanding on the Redemption Date shall be redeemed;
(2) the Redemption Date (which shall not be more than 120
Trading Days following the Disposition Date);
(3) the type of property in which the redemption price for the
shares of such series of common stock to be redeemed is to be paid;
(4) the Net Proceeds of such Disposition;
(5) if applicable for the Group subject to such Disposition,
the Outstanding Interest Fraction for the series of common stock
relating to such Group on the date of such notice;
(6) the place or places where certificates for shares of such
series of common stock, properly endorsed or assigned for transfer
(unless the Corporation shall waive such requirement), are to be
surrendered for delivery of cash and/or securities or other
property;
(7) the number of outstanding shares of such series of common
stock and the number of shares of such series of common stock into
or for which outstanding Convertible Securities are then
convertible, exchangeable or exercisable and the conversion,
exchange or exercise price thereof;
(8) in the case of notice to be given to holders of
Convertible Securities, a statement to the effect that a holder of
such Convertible Securities shall be
16
entitled to participate in such redemption only if such holder
properly converts, exchanges or exercises such Convertible
Securities on or prior to the Redemption Date referred to in clause
(1) of this sentence and a statement as to what, if anything, such
holder will be entitled to receive pursuant to the terms of such
Convertible Securities or, if applicable, this Section 4 if such
holder thereafter converts, exchanges or exercises such Convertible
Securities; and
(9) a statement to the effect that, except as otherwise
provided by Section 4(G)(x), distributions on shares of such series
of common stock shall cease to be paid as of such Redemption Date.
(iv) If the Corporation determines to undertake a
redemption pursuant to Section 4(A)(i)(1)(b)(II) (in the case
of WorldCom Stock) or Section 4(B)(i)(1)(b)(II) (in the case
of MCI Stock), the Corporation shall, not later than the 65th
Trading Day following the Disposition Date referred to in such
Section, cause notice to be given to each holder of shares of
the series of common stock relating to the Group subject to
such Disposition and to each holder of Convertible Securities
that are convertible into or exchangeable or exercisable for
shares of such series of common stock (unless alternate
provision for such notice to the holders of such Convertible
Securities is made pursuant to the terms of such Convertible
Securities) setting forth:
(1) a date not earlier than the tenth Trading Day
and not later than the 20th Trading Day following the
date of such notice on which shares of such series of
common stock shall be selected for redemption;
(2) the anticipated Redemption Date (which shall
not be more than 120 Trading Days following the
Disposition Date);
(3) the type of property in which the redemption
price for the shares of such series of common stock to
be redeemed is to be paid;
(4) the Net Proceeds of such Disposition;
(5) if applicable for the Group subject to such
Disposition, the Outstanding Interest Fraction for the
series of common stock relating to such Group on the
date of such notice;
(6) the number of outstanding shares of such
series of common stock and the number of shares of such
series of common stock into or for which outstanding
Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange
or exercise price thereof;
(7) in the case of notice to be given to holders
of Convertible Securities, a statement to the effect
that a holder of such Convertible Securities shall be
eligible to participate in such selection for redemption
only if such holder properly converts, exchanges or
exercises such Convertible Securities on or prior to the
record date referred to in clause (1) of this sentence,
and a statement as to what, if anything, such holder
will be entitled to receive pursuant to the terms of
17
such Convertible Securities or, if applicable, this
Section 4 if such holder thereafter converts, exchanges
or exercises such Convertible Securities; and
(8) a statement that the Corporation will not be
required to register a transfer of any shares of such
series of common stock for a period of 15 Trading Days
next preceding the date referred to in clause (1) of
this sentence.
Promptly following the date referred to in clause (1) of the preceding sentence,
the Corporation shall cause a notice to be given to each holder of record of
shares of such series of common stock to be redeemed setting forth:
(1) the number of shares of such series of common
stock held by such holder to be redeemed;
(2) a statement that such shares of such series of
common stock shall be redeemed;
(3) the Redemption Date;
(4) the kind and per share amount of cash and/or
securities or other property to be received by such
holder with respect to each share of such series of
common stock to be redeemed, including details as to the
calculation thereof;
(5) the place or places where certificates for
shares of such series of common stock, properly endorsed
or assigned for transfer (unless the Corporation shall
waive such requirement), are to be surrendered for
delivery of such cash and/or securities or other
property;
(6) if applicable, a statement to the effect that
the shares being redeemed may no longer be transferred
on the transfer books of the Corporation after the
Redemption Date; and
(7) a statement to the effect that, subject to
Section 4(G)(x), dividends on such shares of such series
of common stock shall cease to be paid as of the
Redemption Date.
(v) If the Corporation determines to convert WorldCom Stock or MCI
Stock into the other series of common stock pursuant to Section 4(A)(iii)
(in the case of WorldCom Stock) or Section 4(A)(i)(2), Section 4(B)(i)(2),
Section 4(B)(iii) or Section 4(C) (in the case of MCI Stock), the
Corporation shall, not earlier than the 45th Trading Day and not later
than the 35th Trading Day prior to the Conversion Date, cause notice to be
given to each holder of shares of the series of common stock to be so
converted and to each holder of Convertible Securities that are
convertible into or exchangeable or exercisable for shares of such series
of common stock (unless alternate provision for such notice to the holders
of such Convertible Securities is made pursuant to the terms of such
Convertible Securities) setting forth:
18
(1) a statement that all outstanding shares of such series of
common stock shall be converted;
(2) the Conversion Date (which, in the case of a conversion
after a Disposition, shall not be more than 120 Trading Days
following the Disposition Date);
(3) the number of shares of the series of common stock to be
received with respect to each share of such series of common stock,
including details as to the calculation thereof;
(4) the place or places where certificates for shares of such
series of common stock, properly endorsed or assigned for transfer
(unless the Corporation shall waive such requirement), are to be
surrendered for delivery of certificates for shares of such series
of common stock;
(5) the number of outstanding shares of such series of common
stock and the number of shares of such series of common stock into
or for which outstanding Convertible Securities are then
convertible, exchangeable or exercisable and the conversion,
exchange or exercise price thereof;
(6) a statement to the effect that, subject to Section
4(G)(x), dividends on shares of such series of common stock shall
cease to be paid as of such Conversion Date; and
(7) in the case of notice to holders of such Convertible
Securities, a statement to the effect that a holder of such
Convertible Securities shall be entitled to receive shares of such
series of common stock upon such conversion only if such holder
properly converts, exchanges or exercises such Convertible
Securities on or prior to such Conversion Date and a statement as to
what, if anything, such holder will be entitled to receive pursuant
to the terms of such Convertible Securities or, if applicable, this
Section 4 if such holder thereafter converts, exchanges or exercises
such Convertible Securities.
(vi) If the Corporation determines to redeem shares of WorldCom
Stock pursuant to Section 4(D) or MCI Stock pursuant to Section 4(E), the
Corporation shall, not earlier than the 35th Trading Day and not later
than the 45th Trading Day prior to the Redemption Date, cause notice to be
given to each holder of shares of such series of common stock to be
redeemed and to each holder of Convertible Securities that are convertible
into or exchangeable or exercisable for shares of such series of common
stock (unless alternate provision for such notice to the holders of such
Convertible Securities is made pursuant to the terms of such Convertible
Securities), setting forth:
(1) a statement that all shares of such series of common stock
outstanding on the Redemption Date shall be redeemed in exchange for
shares of common stock of each WorldCom Subsidiary or MCI
Subsidiary, as applicable (and, if such redemption is pursuant to
Section 4(D)(iii)(1) or Section 4(D)(iv)(l) (in the case of WorldCom
Stock) or pursuant to Section 4(E)(iii)(1) or Section
19
4(E)(iv)(l) (in the case of MCI Stock), shares of the series of
common stock specified in such Sections);
(2) if such redemption is conditioned upon the satisfaction of
one or more conditions on or prior to the Redemption Date, a
description of such conditions and whether such conditions may be
waived by the Corporation or another Person;
(3) the Redemption Date;
(4) if applicable for the series of common stock subject to
such redemption, the Outstanding Interest Fraction for such series
of common stock on the date of such notice;
(5) the place or places where certificates for shares of the
series of common stock to be redeemed, properly endorsed or assigned
for transfer (unless the Corporation shall waive such requirement),
are to be surrendered for delivery of certificates for shares of
common stock of each WorldCom Subsidiary or MCI Subsidiary, as
applicable (and, if such redemption is pursuant to Section
4(D)(iii)(1) or Section 4(D)(iv)(1) (in the case of WorldCom Stock)
or pursuant to Section 4(E)(iii)(1) or Section 4(E)(iv)(1) (in the
case of MCI Stock), shares of the series of common stock specified
in such Sections);
(6) a statement to the effect that, subject to Section
4(G)(x), dividends on shares of such series of common stock shall
cease to be paid as of such Redemption Date;
(7) the number of outstanding shares of such series of common
stock and the number of shares of such series of common stock into
or for which outstanding Convertible Securities are then
convertible, exchangeable or exercisable and the conversion,
exchange or exercise price thereof; and
(8) in the case of notice to holders of Convertible
Securities, a statement to the effect that a holder of Convertible
Securities shall be entitled to receive shares of common stock of
each WorldCom Subsidiary or MCI Subsidiary, as applicable (and, if
such redemption is pursuant to Section 4(D)(iii)(1) or Section
4(D)(iv)(1) (in the case of a redemption of WorldCom Stock) or
pursuant to Section 4(E)(iii)(1) or Section 4(E)(iv)(1) (in the case
of a redemption of MCI Stock), shares of the series of common stock
specified in such Sections), upon redemption only if such holder
properly converts, exchanges or exercises such Convertible
Securities on or prior to the Redemption Date and a statement as to
what, if anything, such holder will be entitled to receive pursuant
to the terms of such Convertible Securities or, if applicable, this
Section 4, if such holder thereafter converts, exchanges or
exercises such Convertible Securities.
(vii) Any notice required to be given each holder of shares of
common stock or Convertible Securities pursuant to this Section 4(G) shall
be sent by first-class mail, postage prepaid, to each such holder at such
holder's address as the same appears on the
20
transfer books of the Corporation or the Corporation's transfer agent or
registrar on the record date fixed for such notice. Neither the failure to
mail any notice required by this Section 4(G) to any particular holder of
the common stock or of Convertible Securities nor any defect therein shall
affect the sufficiency thereof with respect to any other holder of
outstanding shares of the common stock or of Convertible Securities or the
validity of any such redemption or conversion.
(viii) If less than all of the outstanding shares of either series
of common stock are to be redeemed pursuant to Section 4(A)(i)(1)(b)(II)
(in the case of WorldCom Stock) or Section 4(B)(i)(1)(b)(Il) (in the case
of MCI Stock), the shares to be redeemed by the Corporation shall be
selected from among the holders of shares of such series of common stock
outstanding at the close of business on the record date for such
redemption on a pro rata basis among all such holders or by lot or by such
other method as may be determined by the Board of Directors to be
equitable.
(ix) The Corporation shall not be required to issue or deliver
fractional shares of any capital stock or of any other securities to any
holder of either series of common stock upon any dividend or other
distribution, redemption or conversion pursuant to this Section 4. If more
than one share of a series of common stock shall be held at the same time
by the same holder, the Corporation may aggregate the number of shares of
any capital stock that shall be issuable or any other securities or
property that shall be distributable in respect of such series to such
holder upon any dividend or other distribution, redemption or conversion
(including any fractional shares). If there are fractional shares of any
capital stock or of any other securities remaining to be issued or
distributed to the holders of any series of common stock, the Corporation
shall, if such fractional shares are not issued or distributed to the
holder, pay cash in respect of such fractional shares in an amount equal
to the Fair Value thereof (without interest).
(x) No adjustments in respect of dividends shall be made upon the
redemption or conversion of shares of either series of common stock;
provided, however, that if the Redemption Date or Conversion Date, as the
case may be, with respect to shares of either series of common stock shall
be subsequent to the record date for the payment of a dividend or other
distribution thereon or with respect thereto, the holders of such series
of common stock at the close of business on such record date shall be
entitled to receive the dividend or other distribution payable on or with
respect to such shares on the date set for payment of such dividend or
other distribution, in each case without interest, notwithstanding the
subsequent conversion or redemption of such shares.
(xi) Before any holder of shares of either series of common stock
shall be entitled to receive any cash payment and/or certificates or
instruments representing shares of any capital stock and/or other
securities or property to be distributed to such holder with respect to
such series of common stock pursuant to this Section 4, such holder shall
surrender at such place as the Corporation shall specify certificates for
such shares of the common stock, properly endorsed or assigned for
transfer (unless the Corporation shall waive such requirement). The
Corporation shall as soon as practicable after receipt of certificates
representing such shares of the common stock deliver to the person for
whose account such shares of the common stock were so surrendered, or to
such person's
21
nominee or nominees, the cash and/or the certificates or instruments
representing the number of whole shares of the kind of capital stock
and/or other securities or property to which such person shall be entitled
as aforesaid, together with any payment in respect of fractional shares
contemplated by Section 4(G)(ix), in each case without interest. If less
than all of the shares of either series of common stock represented by any
one certificate are to be redeemed, the Corporation shall issue and
deliver a new certificate for the shares of such series of common stock
not redeemed.
(xii) From and after any applicable Redemption Date or Conversion
Date, as the case may be, all rights of a holder of shares of either
series of common stock that were converted or redeemed shall cease except
for the right, upon surrender of the certificates representing such shares
of the common stock as required by Section 4(G)(xi), to receive the
certificates representing shares of the kind and amount of capital stock
and/or other securities or property for which such shares were redeemed or
converted, together with any payment in respect of fractional shares
contemplated by Section 4(G)(ix) and rights to dividends as provided in
Section 4(G)(x), in each case without interest. No holder of a certificate
that immediately prior to the applicable Redemption Date or Conversion
Date represented shares of a series of common stock shall be entitled to
receive any dividend or other distribution or interest payment with
respect to shares of any kind of capital stock or other security or
instrument for which such series of common stock was redeemed or converted
until the surrender as required by this Section 4 of such certificate in
exchange for a certificate or certificates or instrument or instruments
representing such capital stock or other security. Upon such surrender,
there shall be paid to the holder the amount of any dividends or other
distributions (without interest) which theretofore became payable on any
class or series of capital stock of the Corporation as of a record date
after the Conversion Date, but that were not paid by reason of the
foregoing, with respect to the number of whole shares of the kind of
capital stock represented by the certificate or certificates issued upon
such surrender. From and after a Redemption Date or Conversion Date, the
Corporation shall be entitled, however, to treat the certificates for a
series of common stock that have not yet been surrendered for conversion
as evidencing the ownership of the number of whole shares of the kind or
kinds of capital stock of the Corporation for which the shares of such
series of common stock represented by such certificates shall have been
converted, notwithstanding the failure to surrender such certificates.
(xiii) The Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the
issuance or delivery of any shares of capital stock and/or other
securities upon redemption or conversion of shares of any series of common
stock pursuant to this Section 4. The Corporation shall not, however, be
required to pay any tax that may be payable in respect of any transfer
involved in the issuance or delivery of any shares of capital stock and/or
other securities in a name other than that in which the shares of such
series of common stock so redeemed or converted were registered, and no
such issuance or delivery shall be made unless the person requesting such
issuance or delivery has paid to the Corporation the amount of any such
tax or has established to the satisfaction of the Corporation that such
tax has been paid.
22
(xiv) The board of directors may establish such rules and
requirements to facilitate the effectuation of the transactions
contemplated by this Section 4 as the Board of Directors shall determine
to be appropriate.
Section 5. Inter-Group Interest and Related Transfers Between and
Among Groups.
(A) Changes in Inter-Group Interest. The Number of Shares Issuable
with Respect to the Inter-Group Interest in any Issuer Group held by any Holder
Group shall from time to time be:
(i) adjusted, if before such adjustment such number is greater than
zero, as determined by the board of directors to be appropriate to reflect
equitably any subdivision (by stock split or otherwise) or combination (by
reverse stock split or otherwise) of the series of common stock related to
such Issuer Group;
(ii) decreased (but to not less than zero), if before such
adjustment such number is greater than zero, by action of the board of
directors by:
(1) such the number of shares of the series of common stock
related to such Issuer Group issued or sold by the Corporation that,
immediately prior to such issuance or sale, was included in the
Number of Shares Issuable with Respect to the Inter-Group Interest
in such Issuer Group held by such Holder Group;
(2) the number of shares of such series of common stock issued
upon the conversion, exchange or exercise of any Convertible
Securities that, immediately prior to the issuance or sale of such
Convertible Securities, were included in the Number of Shares
Issuable with Respect to the Inter-Group Interest in such Issuer
Group held by such Holder Group;
(3) the number of shares of such series of common stock issued
by the Corporation as a share dividend or in connection with any
reclassification or exchange of shares, including an exchange offer,
to holders of the series of common stock related to such Holder
Group;
(4) the number of shares of such series of common stock issued
upon the conversion, exchange or exercise of any Convertible
Securities issued by the Corporation as a distribution or in
connection with any reclassification or exchange of shares,
including an exchange offer, to holders of the series of common
stock related to such Holder Group;
(5) the number of shares (rounded, if necessary, to the
nearest whole number) of such series of common stock equal to the
product of (x) the number of shares of such series of common stock
redeemed or exchanged pursuant to Section 4(A)(i)(l)(b)(I) or (II)
or Section 4(B)(i)(1)(b)(I) or (II) and (y) a fraction (which may be
greater than one), the numerator of which is the Number of Shares
Issuable with Respect to the Inter-Group Interest in such Issuer
Group held by
23
such Holder Group, and the denominator of which is the number of
shares of series of common stock outstanding, in each case, on the
record date for determining such shares selected for such redemption
or exchange; and
(6) the number of shares (rounded, if necessary, to the
nearest whole number) of such series of common stock equal to the
quotient of (x) the aggregate Fair Value as of the date of transfer
of (i) businesses, assets (including cash) or properties transferred
from such Issuer Group to such Holder Group or (ii) liabilities
transferred from such Holder Group to such Issuer Group, in either
case, for the purpose of reducing the Number of Shares Issuable with
Respect to the Inter-Group Interest in such Issuer Group held by
such Holder Group, divided by (y) the average Market Value of one
share of the series of common stock related to such Issuer Group
during the period of 20 consecutive Trading Days ending on the date
of such contribution or transfer,
(iii) increased by action of the Board of Directors by:
(1) the number of outstanding shares of the series of common
stock related to such Issuer Group repurchased by the Corporation
for consideration that was attributed as an asset as provided by
Section 7(O) or 7(CC) to such Holder Group;
(2) the number of shares of such series of common stock equal
to the product of (x) the quotient of (i) the number of shares of
such series of common stock issued by the Corporation as a share
dividend or in connection with any reclassification to holders of
such series of common stock divided by (ii) the number of shares of
such series of common stock outstanding on the record date for such
share dividend or reclassification and (y) the Number of Shares
Issuable with Respect to the Inter-Group Interest in such Issuer
Group on such record date;
(3) the number of shares of such series of common stock into
or for which Convertible Securities attributed as a liability to, or
equity interest in, such Issuer Group are deemed converted,
exchanged or exercised by such Holder Group pursuant to Section
5(C); and
(4) the number of shares (rounded to the nearest whole number)
of such series of common stock equal to the quotient of (x) the
aggregate Fair Value as of the date of (i) contribution of
businesses, assets (including cash) or properties transferred from
such Holder Group to such Issuer Group or (ii) transfer of
liabilities from such Issuer Group to such Holder Group, in
consideration of an increase in the Number of Shares Issuable with
Respect to the Inter-Group Interest in such Issuer Group held by
such Holder Group, divided by (y) the average Market Value of one
share of the series of common stock related to such Issuer Group
during the period of 20 consecutive Trading Days ending on the date
of such contribution or transfer;
24
(iv) increased or decreased under such other circumstances as the
board of directors determines appropriate to reflect the economic
substance of any other event or circumstance; provided that, in each case,
the adjustment shall be made in a manner that is fair and equitable to
holders of common stock and intended to reflect the relative economic
interest in one Group held by the other Group.
(B) Reattribution Upon Certain Distributions.
(i) If the Corporation shall make a distribution with respect to
shares of either series of common stock (payable in consideration other
than securities of the Corporation), effective on the payment date of such
distribution, the Holder Group holding an Inter-Group Interest in the
Issuer Group in respect of which such distribution has been paid shall be
attributed as an asset an amount of assets or properties, previously
attributed to such Issuer Group, of the same kind as were paid in such
distribution, as have a Fair Value on the record date for such
distribution equal to the product of:
(1) the Fair Value on such record date of the aggregate
distribution to holders of shares of such series of common stock;
and
(2) a fraction (which may be greater than one), the numerator
of which is equal to the Number of Shares Issuable with Respect to
the Inter-Group Interest in such Issuer Group held by such Holder
Group and the denominator of which is equal to the number of
outstanding shares of the series of common stock related to such
Issuer Group, in each case, on the record date for such
distribution.
(ii) If the Corporation shall make a distribution with respect to
shares of either series of common stock payable in securities of the
Corporation that are attributed to the related Issuer Group as a liability
of, or an equity interest in, such Issuer Group, the Holder Group holding
an Inter-Group Interest in such Issuer Group shall be attributed as assets
the number or amount of such securities equivalent to such liability or
equity interest that is equal to the product of:
(x) the number or amount of securities so distributed to
holders of outstanding shares of the series of common stock
related to such Issuer Group; and
(y) a fraction (which may be greater than one), the
numerator of which is equal to the Number of Shares Issuable
with Respect to the Inter-Group Interest in such Issuer Group
held by such Holder Group and the denominator of which is
equal to the number of outstanding shares of the series of
common stock related to such Issuer Group, in each case, on
the record date for such dividend or other distribution;
and, to the extent interest is or distributions are paid on the securities so
distributed, the Holder Group shall be attributed at the time of such payment a
corresponding ratable amount of the kind of assets paid as such interest or
distributions as would have been paid in respect of such securities so deemed to
be held by such Holder Group if such securities were outstanding.
25
(C) Deemed Conversion of Certain Convertible Securities Held by the
Holder Group. To the extent Convertible Securities are paid as a distribution to
the holders of either series of common stock, the Corporation may (in addition
to making an adjustment pursuant to Section 5(B)(ii)) when at any time such
Convertible Securities are convertible into or exchangeable or exercisable for
shares of such series of common stock, treat such Convertible Securities as
converted, exchanged or exercised for purposes of determining the increase in
the Number of Shares Issuable with Respect to the Inter-Group Interest in such
Issuer Group pursuant to Section 5(A)(iii)(3), and must do so to the extent such
Convertible Securities are mandatorily converted, exchanged or exercised (and to
the extent the terms of such Convertible Securities require payment of
consideration for such conversion, exchange or exercise, such Holder Group shall
then no longer be attributed as an asset an amount of the kind of assets or
properties required to be paid as such consideration for the amount of
Convertible Securities deemed converted, exchanged or exercised (and such Issuer
Group shall be attributed such assets or properties)), in which case, from and
after such time, the shares of common stock into or for which such Convertible
Securities were so considered converted, exchanged or exercised shall be deemed
held by such Holder Group and such Convertible Securities shall no longer be
deemed to be held by such Holder Group. A statement setting forth the election
to effectuate any such deemed conversion, exchange or exercise of Convertible
Securities and the assets or properties, if any, to be attributed to the other
Group in consideration of such conversion, exchange or exercise shall be filed
in the records of the actions of the board of directors and, upon such filing,
such deemed conversion, exchange or exercise shall be effectuated.
(D) Permitted Inter-Group Interests. Either Group may hold an
Inter-Group Interest in the other Group; provided that neither Group may hold an
Inter-Group Interest in the other Group if, immediately after the creation of
such Inter-Group Interest, the Groups would hold Inter-Group Interests in each
other.
Section 6. Application of the Provisions of Section A of Article 4.
(A) Certain Determinations by the Board of Directors. The board of
directors shall make such determinations with respect to (a) the businesses,
assets, properties and liabilities to be attributed to the WorldCom Group and
the MCI Group, (b) the application of the provisions of these Second Amended and
Restated Articles of Incorporation to transactions to be engaged in by the
Corporation and (c) the voting powers, preferences, designations, rights,
qualifications, limitations or restrictions of either series of common stock or
of the holders thereof, as may be or become necessary or appropriate to the
exercise of, or to give effect to, such voting powers, preferences,
designations, rights, qualifications, limitations or restrictions, including,
without limiting the foregoing, the determinations referred to in this Section
6. A record of any such determination shall be filed with the records of the
actions of the board of directors.
(i) Upon any acquisition by the Corporation or its subsidiaries of
any businesses, assets or properties, or any assumption of liabilities,
outside of the ordinary course of business of either Group, the board of
directors shall determine whether such businesses, assets, properties and
liabilities (or an interest therein) shall be for the benefit of the
WorldCom Group or the MCI Group or both and, accordingly, shall be
attributed to such Group or Groups, in accordance with Section 7(O) or
7(CC), as the case may be.
26
(ii) Upon any issuance of shares of any series of common stock at a
time when the Number of Shares Issuable with Respect to the Inter-Group
Interest in the Issuer Group related to such series is greater than zero,
the Board of Directors shall determine, based on the use of the proceeds
of such issuance and any other relevant factors, whether all or any part
of the shares of such series so issued shall reduce such Number of Shares
Issuable with Respect to the Inter-Group Interest.
(iii) Upon any issuance by the Corporation or any subsidiary thereof
of any Convertible Securities that are convertible into or exchangeable or
exercisable for shares of either series of common stock, if at the time
such Convertible Securities are issued the Number of Shares Issuable with
Respect to the Inter-Group Interest in the Issuer Group related to such
series is greater than zero, the board of directors shall determine, based
on the use of the proceeds of such issuance and any other relevant
factors, whether, upon conversion, exchange or exercise thereof, the
issuance of shares of such series of common stock pursuant thereto shall,
in whole or in part, reduce such Number of Shares Issuable with Respect to
the Inter-Group Interest.
(iv) Upon any issuance of any shares of preferred stock (or stock
other than common stock) of any series, the board of directors shall
attribute, based on the use of proceeds of such issuance of shares of
preferred stock (or stock other than common stock) in the business of
either Group and any other relevant factors, the shares so issued entirely
to the WorldCom Group, entirely to the MCI Group, or partly to both
Groups, in such proportion as the Board of Directors shall determine.
(v) Upon any redemption or repurchase by the Corporation or any
subsidiary thereof of shares of preferred stock (or stock other than
common stock) of any class or series or of other securities or debt
obligations of the Corporation, the board of directors shall determine,
based on the property used to redeem or purchase such shares, other
securities or debt obligations, which, if any, of such shares, other
securities or debt obligations redeemed or repurchased shall be attributed
to the WorldCom Group, to the MCI Group, or both, and, accordingly, how
many of the shares of such series or class of preferred stock (or stock
other than common stock) or of such other securities, or how much of such
debt obligations, that remain outstanding, if any, are thereafter
attributed to each Group.
(vi) Upon any transfer to either Group of businesses, assets,
properties or liabilities attributed to either Group to the other Group,
the consideration therefor to be attributed to the transferring Group in
exchange therefor, including, without limitation, cash, securities or
other property of such other Group or, if permitted by Section 5(D), a
decrease or an increase in the Number of Shares of Shares Issuable with
Respect to the Inter-Group Interest in such other Group, as described in
Section 5(A)(ii)(6) or Section 5(A)(iii)(4).
(B) Certain Determinations Not Required. Notwithstanding the
foregoing provisions of this Section 6 or any other provision in these Second
Amended and Restated Articles of Incorporation, at any time when there are not
outstanding more than one series of
27
common stock (or Convertible Securities convertible into or exchangeable or
exercisable for more than one series of common stock), the Corporation need not:
(i) attribute any of the businesses, assets, properties or
liabilities of the Corporation or any of its subsidiaries to the WorldCom
Group or the MCI Group; or
(ii) make any determination required in connection therewith, nor
shall the board of directors be required to make any of the determinations
otherwise required by this Section A of Article 4,
and in such circumstances the holders of the shares of WorldCom Stock and MCI
Stock outstanding, as the case may be, shall (unless otherwise specifically
provided in these Second Amended and Restated Articles of Incorporation) be
entitled to all the voting powers, preferences, designations, rights,
qualifications, limitations or restrictions of common stock of the Corporation.
(C) Board Determinations Binding. Any determinations made in good
faith by the board of directors of the Corporation under any provision of this
Section 6 or otherwise in furtherance of the application of this Article 4A
shall be final and binding on all shareholders.
Section 7. Certain Definitions and Rules of Interpretation. As used
in this Section A of Article 4, the following terms shall have the following
meanings (with terms defined in the singular having comparable meaning when used
in the plural and vice versa), unless the context otherwise requires. For
purposes of this Section A of Article 4, the WorldCom Stock, when issued, shall
be considered issued in respect of or related to the WorldCom Group, and the MCI
Stock, when issued, shall be considered issued in respect of or related to the
MCI Group. As used in this Section 7, a "contribution" or "transfer" of
businesses, assets, properties or liabilities from one Group to the other shall
refer to the reattribution of such businesses, assets, properties or liabilities
from the contributing or transferring Group to the other Group and correlative
phrases shall have correlative meanings.
(A) "Available Distribution Amount" shall mean, as the context
requires, a reference to the WorldCom Group Available Distribution Amount and
MCI Group Available Distribution Amount.
(B) "Conversion Date" shall mean the date fixed by the board of
directors as the effective date for the conversion of shares of WorldCom Stock
into shares of MCI Stock or shares of MCI Stock into shares of WorldCom Stock,
as shall be set forth in the notice to holders of shares of the series of common
stock subject to such conversion and to holders of any Convertible Securities
that are convertible into or exchangeable or exercisable for shares of the
series of common stock subject to such conversion requirements pursuant to
Section 4(G)(v).
(C) "Convertible Securities" shall mean, at any time, any securities
of the Corporation or of any subsidiary thereof (other than shares of common
stock), including warrants and options, outstanding at such time that by their
terms are convertible into or exchangeable or exercisable for or evidence the
right to acquire any shares of any series of common stock, whether convertible,
exchangeable or exercisable at such time or a later time or only upon the
28
occurrence of certain events, but in respect of antidilution provisions of such
securities only upon the effectiveness thereof.
(D) "Disposition" shall mean a sale, conveyance, assignment or other
disposition (whether by merger, share exchange, sale or contribution of assets
or stock or otherwise) of businesses, assets (including stock, other securities
and goodwill), properties or liabilities.
(E) "Disposition Date," with respect to the WorldCom Group or the
MCI Group, shall mean the date of consummation of the Disposition of such Group
referred to in Section 4(A)(i) or Section 4(C)(i), as applicable.
(F) "Distribution" shall mean a direct or indirect transfer of money
or other property (except its own shares or rights to acquire its own shares) or
incurrence of indebtedness by the Corporation to or for the benefit of its
shareholders in respect of any of its shares. A distribution may be in the form
of: (i) a declaration or payment of a dividend; (ii) a purchase, redemption, or
other acquisition of shares; (iii) a distribution of indebtedness, or otherwise;
provided that for purposes of this Section A of Article 4 a distribution shall
not include (x) payments made pursuant to Section 3 or (y) for purposes of
Section l(C)(v) and I(C)(vi), a repurchase of shares of common stock.
(G) "Excluded Transaction" shall mean, with respect to the WorldCom
Group or the MCI Group, as applicable:
(i) the Disposition by the Corporation of all or substantially all
of its businesses, assets, properties and liabilities in one transaction
or a series of related transactions in connection with the dissolution of
the Corporation and the distribution of assets to shareholders as referred
to in Section 3;
(ii) the Disposition of the businesses, assets, properties and
liabilities of such Group as contemplated by Section 4(D) or 4(E) or
otherwise (x) to all holders of shares of the series of common stock
related to such Group, divided among such holders on a pro rata basis in
accordance with the number of shares of common stock of such series
outstanding or (y) if the Number of Shares Issuable with Respect to the
Inter-Group Interest in such Group is greater than zero, to all holders of
shares of the series of common stock related to such Group and the
Corporation or subsidiaries thereof, divided among such holders and the
Corporation or subsidiaries thereof on a pro rata basis in accordance with
the number of shares of common stock of such series outstanding and the
Number of Shares Issuable with Respect to the Inter-Group Interest in such
Group;
(iii) the Disposition to any person or entity controlled (as
determined by the board of directors) by the Corporation;
(iv) the Disposition in connection with a Related Business
Transaction in respect of such Group; or
(v) a Disposition conditioned upon the approval of the holders of
common stock related to such Group, voting as a separate voting group.
29
(H) "Fair Value" shall mean:
(i) in the case of equity securities or debt securities of a class
or series that has previously been Publicly Traded for a period of at
least 15 months, the Market Value thereof (if such Market Value, as so
defined, can be determined);
(ii) in the case of an equity security or debt security that has not
been Publicly Traded for at least 15 months or the Market Value of which
cannot be determined, the fair value per share of stock or per other unit
of such security, on a fully distributed basis, as determined by an
independent investment banking firm experienced in the valuation of
securities selected in good faith by the board of directors, or, if no
such investment banking firm is, as determined in the good faith judgment
of the board of directors, available to make such determination, in good
faith by the board of directors;
(iii) in the case of cash denominated in U.S. dollars, the face
amount thereof and in the case of cash denominated in other than U.S.
dollars, the face amount thereof converted into U.S. dollars at the rate
published in The Wall Street Journal on the date for the determination of
Fair Value or, if not so published, at such rate as shall be determined in
good faith by the board of directors based upon such information as the
board of directors shall in good faith determine to be appropriate; and
(iv) in the case of property other than securities or cash, the
"Fair Value" thereof shall be determined in good faith by the board of
directors based upon such appraisals, valuation reports or opinions of
such experts as the board of directors shall in good faith determine to be
appropriate.
Any such determination of Fair Value shall be described in a statement filed
with the records of the actions of the board of directors.
(I) "Group" shall mean, as of any date, the WorldCom Group or the
MCI Group.
(J) "Holder Group" shall mean any Group which holds or, as a result
of the issuance of Convertible Securities, may hold an Inter-Group Interest in
the other Group.
(K) "Initial Issuance Date" shall mean the date of first issuance of
WorldCom Stock and MCI Stock.
(L) "Inter-Group Interest" shall mean, as of any date, the Number of
Shares Issuable with Respect to the Inter-Group Interest in either Issuer Group
that are held or permitted to be held, as applicable, as of such date by the
other Holder Group.
(M) "Issuer Group" shall mean any Group in which the other Group
holds or, as a result of the issuance of Convertible Securities, may hold an
Inter-Group Interest.
(N) "Market Value" shall mean, with respect to a share of any class
or series of capital stock of the Corporation on any day,
30
(i) average of the high and low reported sales prices of a share of
such class or series on such Trading Day, as reported on the Nasdaq
National Market; or
(ii) in case no such reported sale takes place on such Trading Day,
the average of the reported closing bid and asked prices regular way of a
share of such class or series on such Trading Day, as reported on the
Nasdaq National Market; or
(iii) if the shares of such class or series are not listed or
admitted to trading on the Nasdaq National Market on such Trading Day, on
the principal national securities exchange in the United States on which
the shares of such class or series are listed or admitted to trading; or
(iv) if the shares of such class or series are not listed or
admitted to trading on any national securities exchange or quoted on the
Nasdaq National Market on such Trading Day, the average of the closing bid
and asked prices of a share of such class or series in the
over-the-counter market on such Trading Day, as furnished by any New York
Stock Exchange member firm selected from time to time by the Corporation;
or
(v) if such closing bid and asked prices are not made available by
any such Nasdaq National Market broker/dealer on such Trading Day, the
Fair Value of a share of such class or series as set forth in clause (ii)
of the definition of Fair Value;
provided that, for purposes of determining the market value of a share of any
class or series of capital stock for any period:
(x) the "Market Value" of a share of capital stock on any day
prior to any "ex-dividend" date or any similar date occurring during
such period for any dividend or distribution (other than any
dividend or distribution contemplated by clause (y)(2) of this
sentence) paid or to be paid with respect to such capital stock
shall be reduced by the Fair Value of the per share amount of such
dividend or distribution; and
(y) the "Market Value" of any share of capital stock on any
day prior to:
(1) the effective date of any subdivision (by stock
split or otherwise) or combination (by reverse stock split or
otherwise) of outstanding shares of such class or series of
capital stock occurring during such period; or
(2) any "ex-dividend" date or any similar date occurring
during such period for any dividend or distribution with
respect to such capital stock to be made in shares of such
class or series of capital stock or Convertible Securities
that are convertible, exchangeable or exercisable for such
class or series of capital stock;
shall be appropriately adjusted, as determined by the board of directors, to
reflect such subdivision, combination, dividend or distribution.
31
(O) "MCI Group" shall mean, as of any date:
(i) the interest of the Corporation and any of its subsidiaries on
such date in all of the businesses, assets, properties and liabilities
reflected in the combined financial statements of the MCI Group as of
September 30, 2000, which were publicly filed by the Corporation with the
Securities and Exchange Commission in Registration Statement on Form S-4,
as amended (File No. 333-52920);
(ii) the interest of the Corporation or any of its subsidiaries in
any business, asset or property acquired and any liabilities assumed by
the Corporation or any of its subsidiaries and attributed to the MCI
Group, as determined by the board of directors as contemplated by Section
6(A);
(iii) all businesses, assets, properties and liabilities transferred
to the MCI Group from the WorldCom Group (other than in a transaction
pursuant to clause (v) or (vi) of this Section 7(O)) pursuant to
transactions in the ordinary course of business of the MCI Group and the
WorldCom Group or otherwise as the board of directors may have directed as
permitted by these Second Amended and Restated Articles of Incorporation;
(iv) a proportionate undivided interest in each and every business,
asset, property and liability attributed to the WorldCom Group equal to
the Inter-Group Interest in the WorldCom Group held by the MCI Group as of
such date;
(v) all businesses, assets, properties and liabilities transferred
to the MCI Group from the WorldCom Group in connection with an increase in
the Inter-Group Interest in the MCI Group held by the WorldCom Group;
(vi) all businesses, assets, properties and liabilities transferred
to the MCI Group from the WorldCom Group in connection with a decrease in
the Inter-Group Interest in the WorldCom Group held by the MCI Group;
(vii) any assets (including securities) or properties attributed to
the MCI Group pursuant to Section 5(B) or Section 5(C); and
(viii) all net income and net losses arising in respect of the
foregoing and proceeds of the Disposition thereof;
provided that from and after any transfer of any businesses, assets, properties
or liabilities from the MCI Group to the WorldCom Group as permitted by these
Second Amended and Restated Articles of Incorporation, the MCI Group shall no
longer include such businesses, assets, properties or liabilities so contributed
or transferred (other than as reflected, to the extent applicable, in respect of
such a transfer by the Inter-Group Interest in the WorldCom Group held by the
MCI Group).
(P) "MCI Group Available Distribution Amount" shall mean, on any
date the product of:
(i) the Outstanding Interest Fraction with respect to MCI Stock; and
32
(ii) the lesser of:
(x) any amount in excess of the minimum amount necessary to
pay debts attributed to the MCI Group as they become due in the
usual course of business; and
(y) the total assets attributed to the MCI Group, less the sum
of its total liabilities plus (unless these Second Amended and
Restated Articles of Incorporation provide otherwise) the amount
that would be needed, if the Corporation were to be dissolved at the
time of the distribution, to satisfy the preferential rights upon
dissolution of shares of stock attributed to the MCI Group superior
to the MCI Stock.
Notwithstanding the foregoing provisions of this Section 7(P), and consistent
with Section 6(B), at any time when there are not outstanding both:
(i) one or more shares of MCI Stock or Convertible Securities
convertible into or exchangeable or exercisable for MCI Stock; and
(ii) one or more shares of WorldCom Stock or Convertible Securities
convertible into or exchangeable or exercisable for WorldCom Stock,
the "Available Distribution Amount," on any calculation date during such time
period, with respect to the MCI Stock or the WorldCom Stock (depending on which
of such series of common stock or Convertible Securities convertible into or
exchangeable or exercisable for such series of common stock is outstanding),
shall mean the amount available for the payment of dividends on such common
stock in accordance with law.
(Q) "Net Proceeds" shall mean, as of any date with respect to any
Disposition of any of the businesses, assets, properties and liabilities
attributed to either the WorldCom Group or the MCI Group, an amount, if any,
equal to what remains of the gross proceeds of such Disposition after payment
of, or reasonable provision is made as determined by the board of directors for:
(i) any taxes the Corporation estimates will be payable by the
Corporation (or which the Corporation estimates would have been payable
but for the utilization of tax benefits attributable to the other Group)
in respect of such Disposition or in respect of any resulting dividend or
redemption pursuant to Section 4(A)(i)(l)(a), Section 4(A)(i)(1)(b),
Section 4(B)(i)(1)(a) or Section 4(B)(i)(l)(b);
(ii) any transaction costs, including, without limitation, any
legal, investment banking and accounting fees and expenses; and
(iii) any liabilities (contingent or otherwise) of or attributed to
such Group, including, without limitation, any liabilities for deferred
taxes or any indemnity or guarantee obligations of the Corporation
incurred in connection with the Disposition or otherwise, and any
liabilities for future purchase price adjustments and any preferential
33
amounts plus any accumulated and unpaid dividends in respect of the
preferred stock attributed to such Group.
For purposes of this definition, any businesses, properties and assets
attributed to the Group, the businesses, assets, properties and liabilities of
which are subject to such Disposition, remaining after such Disposition shall
constitute "reasonable provision" for such amount of taxes, costs and
liabilities (contingent or otherwise) as the Board of Directors determines can
be expected to be supported by such businesses, properties and assets.
(R) "Number of Shares Issuable with Respect to the Inter-Group
Interest" shall mean with respect to any Issuer Group, a number of shares of the
series of common stock related to such Issuer Group that are deemed to be held
by a Holder Group. The Number of Shares Issuable with Respect to the Inter-Group
Interest with respect to the WorldCom Stock and MCI Stock shall initially each
be zero and in each case shall be adjusted, increased or decreased from time to
time pursuant to Section 5.
(S) "Outstanding Interest Fraction" shall mean, as of any date with
respect to WorldCom Stock or MCI Stock, the fraction (which may simplify to
1/1), the numerator of which shall be the number of outstanding shares of such
series of common stock on such date and the denominator of which shall be the
sum of the number of outstanding shares of such series of common stock on such
date and the Number of Shares Issuable with Respect to the Inter-Group Interest
in the Group related to such series of common stock on such date. A statement
setting forth the Outstanding Interest Fraction for any series of common stock
as of the record date for the payment of any distribution or share dividend on
any series of common stock shall be filed by the secretary of the Corporation in
the records of the actions of the board of directors not later than ten days
after such date.
(T) "Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization, government or agency or political
subdivision thereof, or other entity, whether acting in an individual, fiduciary
or other capacity.
(U) "Publicly Traded" shall mean, with respect to any security:
(i) registered under Section 12 of the Securities Exchange Act of
1934, as amended (or any successor provision of law); and
(ii) listed for trading on the New York Stock Exchange or the
American Stock Exchange (or any national securities exchange registered
under Section 7 of the Securities Exchange Act of 1934, as amended (or any
successor provision of law), that is the successor to either such
exchange) or quoted in the Nasdaq National Market (or any successor market
system).
(V) "Redemption Date" shall mean the date fixed by the board of
directors as the effective date for a redemption of shares of any series of
common stock, as set forth in a notice to holders thereof required pursuant to
Section 4(G)(iii), Section 4(G)(iv) or Section 4(G)(vi).
34
(W) "Related Business Transaction" shall mean any Disposition of all
or substantially all of the businesses, assets, properties and liabilities
attributed to the WorldCom Group or the MCI Group, as the case may be, in a
transaction or series of related transactions that result in the Corporation,
one or more of its Subsidiaries or the holders of common stock receiving in
consideration of such businesses, assets, properties and liabilities primarily
equity securities (including, without limitation, capital stock, debt securities
convertible into or exchangeable for equity securities or interests in a general
or limited partnership or limited liability company, without regard to the
voting power or other management or governance rights associated therewith) of
any entity which:
(i) acquires such assets or properties or succeeds (by merger,
formation of a joint venture or otherwise) to the business conducted with
such assets or properties or controls such acquiror or successor; and
(ii) the board of directors determines is primarily engaged or
proposes to engage primarily in one or more businesses similar or
complementary to the businesses conducted by such Group prior to such
Disposition.
(X) "Share dividend" shall have the meaning contained in the Georgia
Business Corporation Code, as in effect on the Initial Issuance Date.
(Y) "Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company or partnership 50% or more of whose
outstanding voting securities or membership or partnership interests, as the
case may be, are, directly or indirectly, owned by such Person.
(Z) "Substantially all of the businesses, assets, properties and
liabilities" shall have the meaning specified in Section 4(A)(ii) or Section
4(B)(ii), as applicable.
(AA) "Tax Event" shall mean receipt by the Corporation of an opinion
of its tax counsel to the effect that, as a result of any amendment to,
clarification of, or change or proposed change in, the laws (or any
interpretation or application of the laws) of the United States or any political
subdivision or taxing authority thereof or therein (including, but not limited
to, the enactment of any legislation, the publication of any judicial or
regulatory decision, determination or pronouncement or any announced proposed
change in law by an applicable legislative committee or the chair thereof),
regardless of whether such amendment, clarification, change or proposed change
is issued to or in connection with a proceeding involving the Corporation, the
WorldCom Group or the MCI Group and whether or not subject to appeal, there is
more than an insubstantial risk that:
(i) for tax purposes, any issuance of WorldCom Stock or MCI Stock
would be treated as a sale or other taxable disposition by the Corporation
or any of its subsidiaries of any of the assets, operations or relevant
subsidiaries to which the WorldCom Stock or MCI Stock relates;
(ii) the issuance or existence of WorldCom Stock or MCI Stock would
subject the Corporation, its subsidiaries or affiliates, or any of their
respective successors or shareholders to the imposition of tax or to other
adverse tax consequences; or
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(iii) for tax purposes, either WorldCom Stock or MCI Stock is not
or, at any time in the future will not be, treated solely as common stock
of the Corporation.
For purposes of rendering such opinion, tax counsel shall assume that any
legislative or administrative proposals will be adopted or enacted as proposed.
(BB) "Trading Day" shall mean each weekday other than any day on
which the relevant series of common stock is not traded on any national
securities exchange or quoted on the Nasdaq National Market or otherwise in the
over-the-counter market.
(CC) "WorldCom Group" shall mean, as of any date:
(i) the interest of the Corporation and any of its subsidiaries on
such date in all of the businesses, assets, properties and liabilities of
the Corporation and any of its subsidiaries (and any successor companies),
other than any businesses, assets, properties and liabilities attributed
in accordance with these Second Amended and Restated Articles of
Incorporation to the MCI Group pursuant to Section 7(O)(i);
(ii) the interest of the Corporation or any of its subsidiaries in
any business, asset or property acquired and any liabilities assumed by
the Corporation or any of its subsidiaries and attributed to the WorldCom
Group, as determined by the board of directors as contemplated by Section
6(A);
(iii) all businesses, assets, properties and liabilities transferred
to the WorldCom Group from the MCI Group (other than in a transaction
pursuant to clause (v) and (vi) of this Section 7(CC)) pursuant to
transactions in the ordinary course of business of the WorldCom Group and
the MCI Group or otherwise as the board of directors may have directed as
permitted by these Second Amended and Restated Articles of Incorporation;
(iv) a proportionate undivided interest in each and every business,
asset, property and liability attributed to the MCI Group equal to the
Inter-Group Interest in the MCI Group held by the WorldCom Group as of
such date;
(v) all businesses, assets, properties and liabilities transferred
to the WorldCom Group from the MCI Group in connection with an increase in
the Inter-Group Interest in the WorldCom Group held by the MCI Group;
(vi) all businesses, assets, properties and liabilities transferred
to the WorldCom Group from the MCI Group in connection with a decrease in
the Inter-Group Interest in the MCI Group held by the WorldCom Group;
(vii) any assets (including securities) or properties attributed to
the WorldCom Group pursuant to Section 5(B) or Section 5(C); and
(viii) all net income and net losses arising in respect of the
foregoing and proceeds of the Disposition thereof;
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provided that from and after any transfer of any businesses, assets, properties
or liabilities from the WorldCom Group to the MCI Group as permitted by these
Second Amended and Restated Articles of Incorporation, the WorldCom Group shall
no longer include such businesses, assets, properties or liabilities so
contributed or transferred (other than as reflected, to the extent applicable,
in respect of such a transfer by the Inter-Group Interest in the MCI Group held
by the WorldCom Group).
(DD) "WorldCom Group Available Distribution Amount" shall mean, on
any date, the product of:
(i) the Outstanding Interest Fraction with respect to WorldCom
Stock; and
(ii) the lesser of:
(x) any amount in excess of the minimum amount necessary
for the WorldCom Group to pay debts attributed to the WorldCom
Group as they become due in the usual course of business; and
(y) the total assets attributed to the WorldCom Group,
less the sum of its total liabilities plus (unless these
Second Amended and Restated Articles of Incorporation provide
otherwise) the amount that would be needed if the Corporation
were to be dissolved at the time of the distribution, to
satisfy the preferential rights upon dissolution of shares of
stock attributed to the WorldCom Group superior to the
WorldCom Stock.
Notwithstanding the foregoing provisions of this Section 7(DD), and consistent
with Section 6(B), at any time when there are not outstanding both:
(i) one or more shares of WorldCom Stock or Convertible Securities
convertible into or exchangeable or exercisable for WorldCom Stock; and
(ii) one or more shares of MCI Stock or Convertible Series
convertible into or exchangeable or exercisable for MCI Stock,
the "Available Distribution Amount," on any calculation date during such time
period, with respect to the WorldCom Stock or the MCI Stock (depending on which
of such series of common stock or Convertible Securities convertible into or
exchangeable or exercisable for such series of common stock is outstanding),
shall mean the amount available for the payment of dividends on such common
stock in accordance with law.
Section 8. Severability of Provisions. If any term of any provision
with respect to voting powers, preferences, designations, rights,
qualifications, limitations or restrictions of the WorldCom Stock or the MCI
Stock set forth in this Section A of Article 4 (as it may be amended from time
to time) is invalid, unlawful or incapable of being enforced by reason of any
rule of law or public policy, all other terms and provisions with respect to
voting powers, preferences, designations, rights, qualifications, limitations or
restrictions of the WorldCom Stock or the MCI Stock set forth in this Section A
of Article 4 (as it may be amended from time to time) which can be given effect
without the invalid, unlawful or unenforceable voting powers,
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preferences, designations, rights, qualifications, limitations or restrictions
of such series shall, nevertheless, remain in full force and effect, and no term
of such series of common stock herein set forth shall be deemed dependent upon
any other terms with respect to such voting powers, preferences, designations,
rights, qualifications, limitations or restrictions of the WorldCom Stock or the
MCI Stock unless so expressed herein.
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