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As Filed with the Securities and Exchange Commission on January 29, 1998
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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WORLDCOM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
GEORGIA 58-1521612
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) ------------------------------------------------------- Identification
515 EAST AMITE STREET No.)
JACKSON, MISSISSIPPI 39201-2702
(601) 360-8600
(Address, including zip code, and telephone number,
including area code of, registrant's principal
executive office)
-------------------------------------------------------
</TABLE>
P. BRUCE BORGHARDT, ESQ.
GENERAL COUNSEL - CORPORATE DEVELOPMENT
WORLDCOM, INC.
10777 SUNSET OFFICE DRIVE, SUITE 330
ST. LOUIS, MISSOURI 63127
(314) 909-4100
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------------------------------------
Approximate date of commencement of proposed sale to public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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====================================================================================================
TITLE OF EACH AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE(2) FEE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock and
associated preferred
stock purchase rights(1) 595,700(2)(3) $32.625(2) $19,434,712(2) $5734(2)
====================================================================================================
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(1) Common stock includes associated rights (the "Rights") to purchase
shares of the Registrant's Series 3 Junior Participating Preferred
Stock, par value $.01 per share. Until the occurrence of certain
prescribed events, none of which has occurred, the rights are not
exercisable, are evidenced by the certificates representing the Common
Stock, and will be transferred along with and only with the Common
Stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the average of the high and low prices
of Common Stock on January 22, 1998, as reported on The Nasdaq National
Market.
(3) This Registration Statement also covers such additional shares of
Common Stock as may be issuable pursuant to anti-dilution provisions.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JANUARY 29, 1998
PRELIMINARY PROSPECTUS
A MAXIMUM OF 595,700 SHARES OF
WORLDCOM, INC.
COMMON STOCK
------------------------------------------------
This Prospectus relates to a maximum of 595,700 shares (the "Shares")
of common stock, par value $.01, of WorldCom, Inc. (the "WorldCom Common
Stock"), a Georgia corporation ("WorldCom" or the "Company"), which will be
issued by WorldCom upon exercise of certain warrants (the "Warrants"), which
are described in "Description of Warrants." The Warrants, which were initially
issued by Brooks Fiber Properties, Inc., a Delaware corporation ("BFP"), and
exercisable for shares of common stock of BFP (the "BFP Common Stock"), will
become exercisable for shares of WorldCom Common Stock upon the consummation of
the merger of BV Acquisition, Inc., a wholly-owned subsidiary of WorldCom
("Acquisition Subsidiary"), with and into BFP (the "BFP Merger"), pursuant to
the Amended and Restated Agreement and Plan of Merger (the "BFP Merger
Agreement"), dated as of October 1, 1997, by and among BFP, WorldCom, and
Acquisition Subsidiary.
WorldCom may receive between $6.14 and $16.78 per share in connection
with the exercise of the various Warrants. If all such Warrants are exercised,
WorldCom would receive $6,724,167 in aggregate proceeds. All expenses incurred
in connection with this offering are being borne by WorldCom. See "Description
of Warrants."
The WorldCom Common Stock is traded on The Nasdaq National Market
under the symbol "WCOM." The last reported sale price of the WorldCom Common
Stock as reported on The Nasdaq National Market on January 28, 1998, was
$34 1/4 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY INVESTORS.
------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is [________________________], 1998.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INCORPORATION OF DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . 2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . 11
INFORMATION REGARDING WORLDCOM . . . . . . . . . . . . . . . . . . . . 11
DESCRIPTION OF WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . 14
DESCRIPTION OF WORLDCOM CAPITAL STOCK . . . . . . . . . . . . . . . . . 16
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . 25
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
NO PERSON HAS BEEN AUTHORIZED BY WORLDCOM TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY WORLDCOM. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER
THAN THE SHARES OF WORLDCOM COMMON STOCK TO WHICH IT RELATES OR AN OFFER OR
SOLICITATION TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
DISTRIBUTION OF THE SECURITIES OFFERED HEREBY SHALL, UNDER ANY CIRCUMSTANCES,
IMPLY OR CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
WORLDCOM OR IN THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE HEREIN
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
WorldCom is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by WorldCom may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices located at Northeast Regional Office, Seven World
Trade Center, Suite 1300, New York, New York 10048 and Midwest Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials can also be obtained from the Public Reference Section
of the Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site that contains
reports, proxy and information statements and other materials that are filed
through the Commission's Electronic Data Gathering, Analysis and Retrieval
("EDGAR") system. This Web site can be accessed at http://www.sec.gov. In
addition, material filed by WorldCom can be inspected at the offices of the
National Association of Securities Dealers, Inc. (the "NASD"), at 1735 K
Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by WorldCom under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Shares offered hereby. As permitted by
the rules and regulations of the Commission, this Prospectus omits certain
information contained or incorporated by reference in the Registration
Statement. Reference is made to the Registration Statement for further
information with respect to WorldCom and the WorldCom Common Stock. Statements
contained in this Prospectus as to the contents of any contract or other
document filed as an exhibit to the Registration Statement are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the
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Registration Statement. Each such statement is qualified in its entirety by
such reference. For further information, reference is hereby made to the
Registration Statement.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Commission by WorldCom (formerly
Resurgens Communications Group, Inc. ("Resurgens")) under File No. 0-11258
(formerly File No. 1-10415) pursuant to the Exchange Act are incorporated
herein by reference:
(1) WorldCom's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "WorldCom 1996 Form 10-K");
(2) WorldCom's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;
(3) WorldCom's Current Reports on Form 8-K dated August 25, 1996
(filed August 26, 1996, and as amended on Forms 8-K/A filed November
4, 1996, November 20, 1996, and December 19, 1997), December 31, 1996
(filed January 15, 1997), March 18, 1997 (filed March 24, 1997), March
26, 1997 (filed April 2, 1997), May 22, 1997 (filed June 6, 1997),
June 30, 1997 (filed July 7, 1997), August 5, 1997 (filed August 5,
1997), August 8, 1997 (filed August 11, 1997), August 22, 1997 (filed
August 25, 1997), August 28, 1997 (filed September 10, 1997),
September 7, 1997 (filed September 17, 1997), October 1, 1997 (filed
October 2, 1997), October 3, 1997 (filed October 3, 1997), October 9,
1997 (filed October 10, 1997), October 10, 1997 (filed October 14,
1997), October 14, 1997 (filed October 14, 1997), October 15, 1997
(filed October 16, 1997), October 16, 1997 (filed October 17, 1997),
October 23, 1997 (filed October 23, 1997), October 31, 1997 (filed
November 3, 1997), and November 9, 1997 (filed November 12, 1997, and
as amended on Forms 8-K/A-1 filed January 27, 1998 (the "January 1998
Form 8-K") and on Form 8-K/A-2 filed on January 28, 1998);
(4) the description of WorldCom's (formerly Resurgens') Common Stock
as contained in Item 1 of Resurgens' Registration Statement on Form
8-A dated December 12, 1989, as updated by the descriptions contained
in WorldCom's Registration Statement on Form S-4 (File No. 333-16015),
as declared effective by the Commission on November 14, 1996, which
includes the Joint Proxy Statement/Prospectus dated November 14, 1996
with respect to WorldCom's Special Meeting of Shareholders held on
December 20, 1996, under the following captions: "Description of
WorldCom Capital Stock" and "Comparative Rights of Shareholders";
(5) the description of WorldCom's Preferred Stock Purchase Rights
contained in WorldCom's Registration Statement on Form 8-A dated
August 26, 1996, as updated by WorldCom's Current Report on Form 8-K
dated May 22, 1997 (filed June 6, 1997); and
(6) the descriptions of the WorldCom Series A 8% Cumulative
Convertible Preferred Stock (the "WorldCom Series A Preferred Stock"),
the WorldCom Series B Convertible Preferred Stock (the "WorldCom
Series B Preferred Stock") and the WorldCom Depositary Shares (the
"WorldCom Depositary Shares") contained in WorldCom's Registration
Statements on Form 8-A dated November 13, 1996.
All documents filed by WorldCom with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of any securities offered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. See "Available Information."
Any statement contained herein, or in a document incorporated or deemed to be
incorporated herein by reference, shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document incorporated or deemed to be
incorporated herein by reference, which statement is also incorporated
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herein by reference, modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS (EXCLUDING EXHIBITS
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE
INFORMATION INCORPORATED HEREIN) WILL BE PROVIDED BY FIRST CLASS MAIL WITHOUT
CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL
REQUEST BY SUCH PERSON AS FOLLOWS: WITH RESPECT TO WORLDCOM TO WORLDCOM, INC.,
515 EAST AMITE STREET, JACKSON, MISSISSIPPI 39201-2702, ATTENTION: STEPHANIE Q.
SCOTT, DIRECTOR OF FINANCIAL REPORTING (TELEPHONE: (601) 360-8600).
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The following statements are or may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"):
(i) certain statements, including possible or assumed future results of
operations of WorldCom, CompuServe Corporation ("Compuserve"), MCI
Communications Corporation ("MCI"), BFP, ANS Communications, Inc. ("ANS"), and
the combined companies contained in "Risk Factors" and "Information Regarding
WorldCom -- Recent Developments," including any forecasts, projections and
descriptions of anticipated cost savings or other synergies referred to
therein, and certain statements incorporated by reference from documents filed
with the Commission by WorldCom and MCI, including any statements contained
herein or therein regarding the development of possible or assumed future
results of operations of WorldCom's and MCI's businesses, the markets for
WorldCom's and MCI's services and products, anticipated capital expenditures,
regulatory developments, competition or the effects of the merger (the
"MCI/WorldCom Merger") of MCI with and into TC Investments Corp., a wholly
owned subsidiary of WorldCom ("Merger Sub"), the merger (the "CompuServe
Merger") of a wholly owned subsidiary of WorldCom with and into CompuServe, the
transactions (the "AOL Transaction") contemplated by the Purchase and Sale
Agreement (the "AOL Agreement") with America Online, Inc. ("AOL") or the merger
(the "BFP Merger") of a wholly owned acquisition subsidiary of WorldCom with
and into BFP;
(ii) any statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "intends" or similar expressions; and
(iii) other statements contained or incorporated by reference herein
regarding matters that are not historical facts.
Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements; factors that could cause actual results to differ
materially include, but are not limited to, those discussed under "Risk
Factors." Potential purchasers of WorldCom Common Stock are cautioned not to
place undue reliance on such statements, which speak only as of the date
thereof.
The independent public accountants have not examined or compiled the
accompanying forward-looking statements or any forecasts or other projections
referred to herein and, accordingly, do not provide any assurance with respect
to such statements.
The cautionary statements contained or referred to in this section should be
considered in connection with any subsequent written or oral forward-looking
statements that may be issued by WorldCom or persons acting on its behalf.
WorldCom does not undertake any obligation to release publicly any revisions to
such forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
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RISK FACTORS
Potential purchasers of WorldCom Common Stock pursuant to the exercise of the
Warrants should consider carefully all of the information contained in this
Prospectus, including the following factors:
RISKS RELATED TO THE MCI/WORLDCOM MERGER AND OTHER ACQUISITIONS
Uncertainties in Integrating the Acquired Companies and Achieving Cost Savings
WorldCom has entered into the MCI/WorldCom Merger Agreement (as defined
herein), the BFP Merger Agreement (as defined herein), the CompuServe Merger
Agreement and the AOL Agreement (as defined herein), in each case with the
expectation that the transactions will result in certain benefits, including,
without limitation, cost savings, operating efficiencies, revenue enhancements
and other synergies. See "Information Regarding WorldCom -- Recent
Developments." Achieving the benefits of the MCI/WorldCom Merger (which would
be significantly larger than previous acquisitions completed by WorldCom), the
BFP Merger, the CompuServe Merger and the AOL Transaction, will depend in part
upon the integration of the businesses of WorldCom together with MCI, BFP,
CompuServe and ANS, in an efficient manner, and there can be no assurance that
this will occur. The consolidation of operations will require substantial
attention from management. The diversion of management attention and any
difficulties encountered in the transition and integration processes could have
a material adverse effect on the revenues, levels of expenses and operating
results of the combined companies. There can be no assurance that the combined
companies will realize any of the anticipated benefits of the CompuServe
Merger, the MCI/WorldCom Merger, the BFP Merger or the AOL Transaction. For a
discussion of other factors and assumptions related to the synergy estimates,
"Item 5. Other Events - The MCI/WorldCom Merger - Effects of the MCI/WorldCom
Merger; Estimated Synergies" contained in the January 1998 Form 8-K
incorporated herein by reference.
Necessity of Receiving Governmental Approvals Prior to the MCI/WorldCom Merger;
Risks Associated with Failure to Obtain Approvals of Certain Governmental
Authorities
The consummation of the MCI/WorldCom Merger is conditioned upon the
expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Hart-Scott-Rodino Act"), and confirmation from the Commission of the European
Communities (the "European Commission") by way of a decision under Council
Regulation 4064/89 (the "Merger Control Regulation") that the MCI/WorldCom
Merger does not create or strengthen a dominant position as a result of which
competition would be significantly impeded in the European common market. In
addition, other filings with, notifications to and authorizations and approvals
of, various governmental agencies, both domestic and foreign, with respect to
the transactions contemplated by the MCI/WorldCom Merger Agreement, relating
primarily to the Federal Communications Commission (the "FCC"), and state
public utility or service commissions ("PUCs"), must be made and received prior
to consummation of the MCI/WorldCom Merger. There can be no assurance that such
authorizations, approvals or decisions will be granted, or, if granted will not
contain certain material conditions or restrictions, that an injunction will
not be issued before or after receipt of MCI and WorldCom shareholder approval
by a court of competent jurisdiction enjoining the consummation of the
MCI/WorldCom Merger or that a challenge to the MCI/WorldCom Merger on the
grounds that it is not compatible with the European common market will not be
made, or if a challenge is made, what the result will be.
Consummation of the MCI/WorldCom Merger is subject to additional approvals
from certain governmental authorities. If such approvals have not been received
at such time as all other material conditions to the MCI/WorldCom Merger have
been satisfied or waived, MCI and WorldCom may nonetheless determine to
consummate the MCI/WorldCom Merger. Although MCI and WorldCom are seeking such
approvals, it is uncertain whether such approvals will be timely received from,
among others, every jurisdiction in which MCI and WorldCom are authorized to do
business. If MCI and WorldCom determine to consummate the MCI/WorldCom Merger
without having received all such approvals, no assurance can be given that any
resulting loss of business would not have a material adverse effect on the
businesses, prospects, financial condition or results of operations of
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WorldCom and MCI on a combined basis. See "Item 5. Other Events -- The
MCI/WorldCom Merger -- Certain Regulatory Filings and Approvals" contained in
the January 1998 Form 8-K incorporated herein by reference.
The Effect of Stock Price Fluctuations
The relative stock prices of WorldCom Common Stock in the future may vary
significantly from the prices as of the date hereof. These variances may be due
to changes in the businesses, operations, results and prospects of WorldCom, as
well as MCI, BFP, CompuServe and ANS, market assessments of the likelihood that
the MCI/WorldCom Merger will be consummated and the timing thereof, the effect
of any conditions or restrictions imposed on or proposed with respect to any of
the combined companies by regulatory agencies in connection with or following
consummation of the CompuServe Merger, the MCI/WorldCom Merger, the BFP Merger
or the AOL Transaction, general market and economic conditions, and other
factors. In addition, the stock market generally has experienced significant
price and volume fluctuations. These market fluctuations could have a material
adverse effect on the market price or liquidity of WorldCom Common Stock.
RISKS RELATING TO THE BUSINESSES AND OPERATIONS OF THE COMBINED COMPANIES
Debt Service, Interest Rate Fluctuations, Other Restrictive Covenants and
Capital Spending
In connection with the MCI/WorldCom Merger, WorldCom has agreed to pay
British Telecommunications plc ("BT") $51.00 in cash without interest for each
share of Class A common stock ("MCI Class A Common Stock") of MCI it owns, or
approximately $7 billion in the aggregate. Additionally, WorldCom has paid BT
fees of $465 million. See "Information Regarding WorldCom -- Recent
Developments -- The MCI/WorldCom Merger." WorldCom expects to fund this
commitment through a combination of bank and bond financing and believes that
the indebtedness incurred in connection with WorldCom's proposed acquisitions
may have an effect on WorldCom's credit rating. Increases in interest rates on
WorldCom's debt would have an adverse effect upon WorldCom's reported net
income and cash flow. WorldCom believes that the combined operations of
WorldCom, MCI, CompuServe, ANS and BFP would generate sufficient cash flow to
service WorldCom's debt and capital requirements upon consummation of the
MCI/WorldCom Merger, the CompuServe Merger, the AOL Transaction and the BFP
Merger; however, economic downturns, increased interest rates and other adverse
developments, including factors beyond WorldCom's control, could impair its
ability to service its indebtedness. In addition, the cash flow required to
service WorldCom's debt may reduce its ability to fund internal growth,
additional acquisitions and capital improvements.
The development of the businesses of the combined companies (including MCI,
CompuServe, ANS and BFP) and the installation and expansion of their domestic
and international networks would continue to require significant capital
expenditures. Failure to have access to sufficient funds for capital
expenditures on acceptable terms or the failure to achieve capital expenditure
synergies may require the combined companies to delay or abandon some of their
plans, which could have a material adverse effect on the success of the
proposed mergers and the combined companies.
Acquisition Integration
A major portion of WorldCom's growth in recent years has resulted from
acquisitions, which involve certain operational and financial risks.
Operational risks include the possibility that an acquisition does not
ultimately provide the benefits originally anticipated by WorldCom's
management, while WorldCom continues to incur operating expenses to provide the
services formerly provided by the acquired company. Financial risks involve the
incurrence of indebtedness as a result of the acquisition and the consequent
need to service that indebtedness. In addition, the issuance of stock in
connection with acquisitions dilutes the voting power and may dilute the
economic interests of existing shareholders. In carrying out its acquisition
strategy, WorldCom attempts to minimize the risk of unexpected liabilities and
contingencies associated with acquired businesses through planning,
investigation and negotiation, but there can be no assurance that it will be
successful in doing so. Nor can there be any assurance that
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WorldCom will be successful in identifying attractive acquisition candidates or
completing additional acquisitions on favorable terms.
Risks of International Business
WorldCom and MCI derive substantial revenues from providing international
communications services to United States commercial and carrier customers. Such
operations are subject to certain risks such as changes in United States or
foreign government regulatory policies, disruption, suspension or termination
of operating agreements, carrier alliances and currency fluctuations. In
particular, WorldCom's and MCI's revenues and costs of sales are sensitive to
changes in international settlement rates and international traffic routing
patterns. The rates that WorldCom and MCI can charge their customers for
international services may decrease in the future due to the entry of new
carriers with substantial resources, aggressiveness on the part of new or
existing carriers, the widespread resale of international private lines to
provide switched voice services, the provision of international services via
non-traditional means including the Internet, the consummation of mergers,
joint ventures and alliances among large international carriers that facilitate
targeted pricing and cost reductions, and the rapid growth of international
circuit capacity due to the deployment of new undersea fiber optic cables and
new high capacity satellite systems in the Atlantic, Pacific and Indian Ocean
regions.
Risks of Overseas Business Operations
WorldCom and MCI derive substantial revenues from providing services to
customers in overseas locations, particularly the United Kingdom, Germany and
Mexico. Such operations are subject to certain risks such as changes in the
legal and regulatory policies of the foreign jurisdiction, local political and
economic developments, currency fluctuations, exchange controls, royalty and
tax increases, retroactive tax claims, expropriation, and import and export
regulations and other laws and policies of the United States affecting foreign
trade, investment and taxation. In addition, in the event of any dispute
arising from foreign operations, WorldCom and MCI may be subject to the
exclusive jurisdiction of foreign courts and may not be successful in
subjecting foreign persons or entities to the jurisdiction of the courts in the
United States. WorldCom and MCI may also be hindered or prevented from
enforcing their rights with respect to foreign governments because of the
doctrine of sovereign immunity. There can be no assurance that the laws,
regulations or administrative practices of foreign countries relating to
WorldCom or MCI's ability to do business in that country will not change. Any
such change could have a material adverse effect on the business and financial
condition of the combined companies.
Rapid Technological Change; Dependence upon Product Development
The telecommunications industry is subject to rapid and significant changes
in technology. While WorldCom does not believe that, for the foreseeable
future, these changes will either materially or adversely affect the continued
use of fiber optic cable or materially hinder its ability to acquire necessary
technologies, the effect of technological changes, including changes relating
to emerging wireline and wireless transmission and switching technologies, on
the businesses of the combined companies cannot be predicted.
The market for the data communications products and services of MCI, UUNET
Technologies, Inc., a wholly owned subsidiary of WorldCom ("UUNET"), CompuServe
and ANS, including Internet access and related products, is characterized by
rapidly changing technology, evolving industry standards, emerging competition
and frequent new product and service introductions. There can be no assurance
that the combined companies will successfully identify new product and service
opportunities and develop and bring new products and services to market in a
timely manner. The combined companies also will be at risk from fundamental
changes in the way data communications, including Internet access, services are
marketed and delivered. The combined companies' Internet service strategy
assumes that the Transmission Control Protocol/Internet Protocol, utilizing
fiber optic or copper-based telecommunications infrastructures, will continue
to be the primary protocol and transport infrastructure for Internet-related
services. Emerging transport alternatives include wireless cable modems and
satellite delivery of Internet information; alternative open protocol and
proprietary protocol standards have been or are being developed. WorldCom's
pursuit of necessary technological advances may require substantial time and
expense, and there can be
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no assurance that WorldCom will succeed in adapting its data communications
services business to alternate access devices, conduits and protocols.
Regulation Risks
WorldCom's and MCI's operating subsidiaries are subject to varying degrees of
federal, state, local and international regulation. In the United States,
WorldCom's and MCI's subsidiaries are most heavily regulated by the states,
especially for the provision of local exchange services. Each such subsidiary
must be separately certified in each state to offer local exchange and
intrastate long distance services. No state, however, subjects WorldCom or MCI
to price cap or rate of return regulation, nor is WorldCom or MCI currently
required to obtain FCC authorization for installation or operation of its
network facilities used for domestic services, other than licenses for specific
terrestrial microwave and satellite earth station facilities which utilize
radio frequency spectrum. FCC approval is required, however, for the
installation and operation of international facilities and services. WorldCom
and MCI are also subject to varying degrees of regulation in the foreign
jurisdictions in which they conduct business including authorization for the
installation and operation of network facilities. Although the trend in
federal, state, local and international regulation appears to favor increased
competition, no assurance can be given that changes in current or future
regulations adopted by the FCC, state or foreign regulators or legislative
initiatives in the United States and abroad would not have a material adverse
effect on WorldCom.
On February 8, 1996, President Clinton signed the Telecommunications Act of
1996 (the "Telecom Act"), which permits the Bell Operating Companies (the
"BOCs") to provide domestic and international long distance services to
customers located outside of the BOCs' home regions; permits a petitioning BOC
to provide domestic and international long distance service to customers within
its operating area on a state by state basis upon a finding by the FCC that a
petitioning BOC has satisfied certain criteria for opening up its local
exchange network to competition and that its provision of long distance
services would further the public interest; and removes existing barriers to
entry into local service markets. Additionally, there were significant changes
in: the manner in which carrier-to-carrier arrangements are regulated at the
federal and state level; procedures to revise universal service standards; and
penalties for unauthorized switching of customers. The FCC has instituted and,
in most instances completed, proceedings addressing the implementation of this
legislation.
In implementing the Telecom Act, the FCC established nationwide rules
designed to encourage new entrants to participate in the local services markets
through interconnection with the incumbent local exchange carriers ("ILECs"),
resale of ILECs' retail services, and use of individual and combinations of
unbundled network elements. These rules set the groundwork for the statutory
criteria governing BOC entry into the long distance market. Appeals of the FCC
order adopting those rules were consolidated before the United States Court of
Appeals for the Eighth Circuit (the "Eighth Circuit"). The Eighth Circuit found
constitutional challenges to certain practices implementing cost provisions of
the Telecom Act that were ordered by certain state PUCs to be premature, but
vacated significant portions of the FCC's nationwide pricing rules, and vacated
an FCC rule requiring that unbundled network elements be provided on a combined
basis. The Solicitor General, on behalf of the FCC, and certain other parties,
including WorldCom and MCI, sought certiorari in the United States Supreme
Court. Certain BOCs have also raised constitutional challenges to provisions
of the Telecom Act restricting BOC provision of long distance services,
manufacturing of telecommunications equipment, electronic publishing and alarm
monitoring services. On December 31, 1997, the United States District Court
for the Northern District of Texas ruled that these restrictions violate the
Bill of Attainder Clause of the U.S. Constitution. Currently, this decision
only applies to SBC Corporation ("SBC"), US WEST Communications Group ("US
WEST"), and Bell Atlantic Corporation ("Bell Atlantic"). AT&T Corp. ("AT&T"),
MCI, the U.S. Department of Justice and the FCC announced that they will appeal
the decision and have sought a stay of the ruling. WorldCom cannot predict
either the ultimate outcome of these or future challenges to the Telecom Act,
any related appeals of regulatory or court decisions, or the eventual effect on
its businesses or the industry in general.
The FCC has denied applications filed by Ameritech Corporation ("Ameritech"),
SBC and BellSouth Corporation ("BellSouth") seeking authority to provide
inter-local access transport area ("interLATA") long distance service in
Michigan, Oklahoma and South Carolina, respectively. SBC has appealed the FCC's
denial of its
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application to the Eighth Circuit. In its denial of an Ameritech application
and a BellSouth application, the FCC provided detailed guidance to applicants
regarding the obligations of the applicants, the format of future applications,
the content of future applications, and the review standards that it will apply
in evaluating any future applications. The National Association of Regulatory
Utility Commissioners and several state regulatory commissions have appealed
jurisdictional aspects of that Ameritech application denial to the Eighth
Circuit. WorldCom cannot predict either the outcome of these appeals, or the
BOCs' willingness to abide by these FCC guidelines, or the timing or outcome of
future applications submitted to the FCC. Additionally, the FCC is presently
considering BellSouth's application for authority to provide interLATA service
in Louisiana. Other BOCs have announced their intention to file applications at
the FCC for authority to provide interLATA services. WorldCom cannot predict
the outcome of these proceedings.
On May 7, 1997, the FCC announced that it will issue a series of orders that
will reform Universal Service Subsidy allocations and adopted various reforms
to the existing rate structure for interstate access services provided by the
ILECs that are designed to reduce access charges, over time, to more
economically efficient levels and rate structures. It also affirmed that
information service providers (including, among others, Internet service
providers ("ISPs")) should not be subject to existing access charges ("ISP
Exemption"). Petitions for reconsideration of, among other things, the access
service and ISP Exemption related actions were filed before the FCC and appeals
taken to various United States Courts of Appeals. On reconsideration, the FCC
in significant part affirmed the access charge and ISP Exemption actions, and
the court appeals have been consolidated before the Eighth Circuit. Also,
several state agencies have started proceedings to address the reallocation of
implicit subsidies contained in access rates and retail service rates to state
universal service funds. Access charges are a principal component of the
combined companies' telecommunication expense. Additionally, modification of
the ISP Exemption could have an adverse effect on the combined companies'
Internet-related services business. WorldCom cannot predict either the outcome
of these appeals or whether or not the result(s) will have a material impact
upon the consolidated financial position or results of operations of the
combined companies.
The FCC issued on December 24, 1996 a Notice of Inquiry to seek comment on
whether it should consider various actions relating to interstate information
services and the Internet. The FCC recognized that these services and recent
technological advances may be constrained by current regulatory practices that
have their foundations in traditional circuit switched telecommunications
services and technologies. Based upon this and other proceedings, the FCC may
permit telecommunications companies, BOCs or others to increase the scope or
reduce the cost of their Internet access services. WorldCom cannot predict the
effect that the Notice of Inquiry, the Telecom Act or any future legislation,
regulation or regulatory changes may have on the consolidated financial
position or results of operations of the combined companies.
In December 1996, the FCC adopted a new policy that makes it easier for
United States international carriers to obtain authority to route international
public switched voice traffic to and from the United States outside of the
traditional settlement rate and proportionate return regimes. In February 1997,
the United States entered into a World Trade Organization Agreement (the "WTO
Agreement") that should have the effect of liberalizing the provision of
switched voice telephone and other telecommunications services in scores of
foreign countries over the next several years. In June 1997, in order to comply
with United States commitments to the WTO Agreement, the FCC proposed to
implement new rules that would liberalize existing policies regarding (i) the
services that may be provided by foreign affiliated United States international
common carriers, including carriers controlled or more than 25 percent owned by
foreign carriers that have market power in their home markets, and (ii) the
provision of international switched voice services outside of the traditional
settlement rate and proportionate return regimes. The FCC voted on November 25,
1997 to adopt these new rules but has not yet established an effective date for
the rules.
In August 1997, the FCC adopted mandatory settlement rate benchmarks. These
benchmarks are intended to reduce the rates that U.S. carriers pay foreign
carriers, to terminate traffic in their home countries. The FCC will also
prohibit a United States carrier affiliated with a foreign carrier from
providing facilities-based service to the foreign carrier's home market until
and unless the foreign carrier has implemented a settlement rate within the
benchmark. The FCC also adopted new rules that will liberalize the provision of
switched services over private lines
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to World Trade Organization member countries, by allowing such services on
routes where 50% or more of United States billed traffic is being terminated in
the foreign country at or below the applicable settlement rate benchmark or
where the foreign country's rules concerning provision of international
switched services over private lines are deemed equivalent to United States
rules.
Although the FCC's new policies and implementation of the WTO Agreement may
result in lower costs to the combined companies, including MCI, to terminate
international traffic, there is a risk that the revenues that the combined
companies, including MCI, receive from inbound international traffic may
decrease to an even greater degree. The implementation of the WTO Agreement may
also make it easier for foreign carriers with market power in their home
markets to offer United States and foreign customers end-to-end services to the
disadvantage of the combined companies, which may continue to face substantial
obstacles in obtaining from foreign governments and foreign carriers the
authority and facilities to provide such end-to-end services. Further, many
foreign carriers have challenged, in court and at the FCC, the FCC's order
adopting mandatory settlement rate benchmarks. If the FCC's settlement rate
benchmark order were to be overturned, it would accelerate the full-fledged
entry of foreign carriers into the United States and make it far easier for
foreign carriers to route international traffic into the United States at low,
cost-based termination rates, while United States carriers would continue to
have little choice but to route international traffic into most foreign
countries at much higher, above cost, settlement rates.
Competition
Virtually every aspect of the telecommunications industry is extremely
competitive, and WorldCom expects that competition will intensify in the
future. The combined companies (including MCI, CompuServe, ANS and BFP) face
significant competition from carriers and other companies with greater market
share and financial resources. The combined companies compete domestically with
incumbent providers, which have historically dominated local
telecommunications, and with long distance carriers, for the provision of long
distance services. Sometimes the incumbent provider offers both local and long
distance services. The ILECs presently have numerous advantages as a result of
their historic monopoly control over local exchanges. A continuing trend toward
business combinations and alliances in the telecommunications industry may
create significant new competitors to the combined companies. Many of the
combined companies' existing and potential competitors have financial,
personnel and other resources significantly greater than those of the combined
companies. The combined companies also face competition from one or more
competitors in every area of their businesses, including competitive access
providers operating fiber optic networks, in some cases in conjunction with the
local cable television operator. AT&T and Sprint Corporation ("Sprint") have
indicated their intention to offer local telecommunications services in major
United States markets using their own facilities, including in AT&T's case, the
announced acquisition of the facilities and business of Teleport Communications
Group, Inc., or by resale of the local exchange carriers' or other providers'
services. In addition, the combined companies compete with equipment vendors
and installers and telecommunications management companies with respect to
certain portions of their businesses.
Overseas, the combined companies compete with incumbent providers, many of
which still have special regulatory status and the exclusive rights to provide
certain services, and virtually all of which have historically dominated their
local, domestic long distance and international services business. These
incumbent providers have numerous advantages, including existing facilities,
customer loyalty and substantial financial resources. The combined companies
also compete with other service providers, many of which are affiliated with
incumbent providers in other countries. Typically, the combined companies must
devote extensive resources to obtaining regulatory approvals necessary to
operate overseas, and then to obtaining access to and interconnection with the
incumbent's network on a non-discriminatory basis.
The combined companies may also be subject to additional competition due to
the development of new technologies and increased availability of domestic and
international transmission capacity. For example, even though fiber optic
networks, such as that of WorldCom, are now widely used for long distance
transmission, it is possible that the desirability of such networks could be
adversely affected by changing technology. The telecommunications industry is
in a period of rapid technological evolution, marked by the introduction of new
product and service offerings and increasing satellite and fiber optic
transmission capacity for services similar to
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those provided by the combined companies. WorldCom cannot predict which of many
possible future product and service offerings will be important to maintain its
competitive position or what expenditures will be required to develop and
provide such products and services.
Under the Telecom Act and ensuing federal and state regulatory initiatives,
barriers to local exchange competition are being removed. The introduction of
such competition, however, also establishes, in part, the predicate for the
BOCs to provide in-region interexchange long distance services, if the
constitutionality of the Telecom Act is upheld. The BOCs are currently allowed
to offer certain "incidental" long distance service in-region and to offer
out-of-region long distance services. Once the BOCs are allowed to offer
in-region long distance services, they could be in a position to offer single
source local and long distance service similar to that being offered by the
combined companies. WorldCom expects that the increased competition made
possible by regulatory reform will result in certain additional pricing and
margin pressures in the domestic telecommunications services business. Such of
the additional pressures as may result from BOC provision of in-region
interexchange long distance services may be accelerated if the ruling of the
United States District Court for the Northern District of Texas on the
constitutionality of the Telecom Act's restrictions is not stayed or is
ultimately upheld on appeal.
The combined companies will also compete in offering data communications
services, including Internet access and related services. This is also an
extremely competitive business. WorldCom expects that competition will continue
to intensify in the future. WorldCom believes that the ability of the combined
companies to compete successfully in this arena depends on a number of factors,
including: industry presence; the ability to execute a rapid expansion
strategy; the capacity, reliability and security of its network infrastructure;
ease of access to and navigation on the Internet; the pricing policies of its
competitors and suppliers; the timing of the introduction of new products and
services by the combined companies and their competitors; the combined
companies' ability to support industry standards; and industry and general
economic trends. The success of the combined companies will depend heavily upon
the combined companies' ability to provide high quality data communication
services, including Internet connectivity and value-added Internet services, at
competitive prices.
Major telecommunications companies have expanded their current services to
compete fully in offering data communication services, including Internet
services, and WorldCom expects additional telecommunications companies to
continue to compete in this arena. WorldCom believes that new competitors,
including large computer hardware, software, media and other technology and
telecommunications companies, will also offer data communications services,
resulting in even greater competition for the combined companies. Certain
companies, including AT&T, GTE Corporation ("GTE"), Intermedia Communications,
Inc., Teleport Communications Group and PSINet, Inc., have obtained or expanded
their Internet access products and services as a result of acquisitions and
strategic investments. Such acquisitions may permit the combined companies'
competitors to devote greater resources to the development and marketing of new
competitive products and services and the marketing of existing competitive
products and services. WorldCom expects these acquisitions and strategic
investments to increase, thus creating significant new competitors to the
combined companies.
As the combined companies continue to expand data communications operations
outside of the United States, the combined companies will be forced to compete
with and buy services from incumbent providers, many of which are
government-owned and/or still have special regulatory status and the exclusive
rights to provide certain essential services. The combined companies will also
encounter competition from companies whose operating styles are substantially
different from those that they usually encounter. For example, in Europe,
WorldCom's subsidiaries compete directly with: (1) telecommunications
companies, such as BT, Deutsche Telekom and others; (2) global
telecommunications alliances such as Global One (Deutsche Telekom AG, France
Telecom and Sprint) and others; and (3) other Internet access providers, such
as Demon Internet Limited. Foreign competitors may also possess a better
understanding of their local markets and may have better working relationships
with, or control of, local telecommunications companies. There can be no
assurance that the combined companies can obtain similar levels of local
knowledge, and failure to obtain that knowledge could place the combined
companies at a serious competitive disadvantage.
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Anti-Takeover Provisions
The WorldCom Second Amended and Restated Articles of Incorporation (the
"WorldCom Articles") contain provisions (a) requiring a 70% vote for approval
of certain business combinations with certain 10% shareholders unless approved
by a majority of the continuing members of the WorldCom Board of Directors or
unless certain minimum price, procedural and other requirements are met; (b)
restricting aggregate beneficial ownership of the capital stock of WorldCom by
foreign shareholders to 20% of the total outstanding capital stock, and
subjecting excess shares to redemption; and (c) authorizing WorldCom's Board of
Directors to issue preferred stock in one or more classes without any action on
the part of shareholders. In addition, WorldCom has entered into a Rights
Agreement between WorldCom and The Bank of New York, as Rights Agent (the
"Rights Agent"), dated as of August 25, 1996, as amended (the "WorldCom Rights
Agreement"), which would cause substantial dilution to a person or group that
attempts to acquire WorldCom on terms not approved by WorldCom's Board of
Directors. Further, the WorldCom Restated Bylaws (the "WorldCom Bylaws") (a)
contain requirements regarding advance notice of nomination of directors by
shareholders and (b) restrict the calling of special meetings by shareholders
to those owning shares representing not less than 40% of the votes to be cast.
These provisions, including the WorldCom Rights Agreement, may have an
"anti-takeover" effect. See "Description of WorldCom Capital Stock."
USE OF PROCEEDS
If the Warrants are exercised in full, WorldCom would receive
aggregate proceeds of $6,724,167. WorldCom will use the net proceeds for
general corporate purposes.
PLAN OF DISTRIBUTION
The Shares will be issued and sold upon the exercise of Warrants by
the Holders thereof. No underwriter, broker, salesperson or other person will
receive any commission or other compensation in connection with the sale of the
Shares offered hereby. The total number of Shares which may be sold hereunder
upon exercise of the Warrants will be 595,700, based on the estimated BFP
Exchange Ratio (as defined below). The Company will pay all expenses related
to this Prospectus (and the Registration Statement of which this Prospectus is
part), estimated to be approximately $20,000.
INFORMATION REGARDING WORLDCOM
The following briefly describes the businesses of WorldCom, as well as
information regarding the MCI/WorldCom Merger, the CompuServe Merger, the AOL
Transaction, and the BFP Merger. Additional information regarding WorldCom and
such proposed transactions is contained in its filings with the Commission
pursuant to the Exchange Act. See "Available Information" and "Incorporation of
Documents by Reference."
BUSINESS OF WORLDCOM
WorldCom is one of the largest telecommunications companies in the
United States, serving local, long distance, and Internet customers
domestically and internationally. WorldCom provides telecommunications
services to business, government, telecommunications companies and consumer
customers, through its network of fiber optic cables, digital microwave, and
fixed and transportable satellite earth stations.
WorldCom is one of the first major facilities-based telecommunications
companies with the capability to provide businesses with high quality local,
long distance, Internet, data and international communications services over
its global networks. With service to points throughout the nation and the
world, WorldCom provides telecommunications products and services including:
switched and dedicated long distance and local products, 800 services, calling
cards, domestic and international private lines, broadband data services, debit
cards, conference calling, advanced billing systems, enhanced fax and data
connections, high speed data communications, facilities management, local
access to long distance companies, local access to ATM-based backbone service,
and
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interconnection via Network Access Points to Internet Service Providers
("ISPs"). In addition, WorldCom's subsidiary, UUNET, is an international ISP.
WorldCom's principal executive offices are located at 515 East Amite
Street, Jackson, Mississippi 39201-2702, and its telephone number is (601)
360-8600.
RECENT DEVELOPMENTS
THE MCI/WORLDCOM MERGER. On October 1, 1997, WorldCom announced its
intention to commence an exchange offer to acquire all of the outstanding
shares of MCI common stock, par value $.10 per share ("MCI Common Stock"), for
$41.50 of WorldCom Common Stock, subject to adjustment in certain circumstances
as set forth in materials filed by WorldCom with the Commission (the "MCI
Offer"). On November 9, 1997, WorldCom entered into an Agreement and Plan of
Merger (the "MCI/WorldCom Merger Agreement") with MCI and a wholly-owned
acquisition subsidiary of WorldCom ("MCI Merger Sub"), providing for the merger
(the "MCI/WorldCom Merger") of MCI with and into MCI Merger Sub, with MCI
Merger Sub surviving as a wholly-owned subsidiary of WorldCom. As a result of
the MCI/WorldCom Merger, the separate corporate existence of MCI will cease,
and MCI Merger Sub (which will be renamed "MCI Communications Corporation")
will succeed to all the rights and be responsible for all the obligations of
MCI in accordance with the Delaware General Corporation Law. Subject to the
terms and conditions of the MCI/WorldCom Merger Agreement, each share of MCI
Common Stock outstanding immediately prior to the effective time of the
MCI/WorldCom Merger (the "MCI/WorldCom Effective Time") will be converted into
the right to receive that number of shares of WorldCom Common Stock equal to
the MCI Exchange Ratio (as defined below) (the "MCI Common Stock Merger
Consideration"), and each share of MCI Class A Common Stock, par value $.10 per
share outstanding immediately prior to the MCI/WorldCom Effective Time will be
converted into the right to receive $51.00 in cash, without interest thereon
(the "MCI Class A Common Stock Merger Consideration" and, collectively with the
MCI Common Stock Merger Consideration, the "MCI/WorldCom Merger
Consideration"). The "MCI Exchange Ratio" means the quotient (rounded to the
nearest 1/10,000) determined by dividing $51.00 by the average of the high and
low sales prices of WorldCom Common Stock (the "MCI/WorldCom Average Price") as
reported on The Nasdaq National Market on each of the 20 consecutive trading
days ending with the third trading day immediately preceding the MCI/WorldCom
Effective Time (the "MCI Measurement Period"); provided, however, that the MCI
Exchange Ratio will not be less than 1.2439 or greater than 1.7586. Cash will
be paid in lieu of the issuance of any fractional share of WorldCom Common
Stock in the MCI/WorldCom Merger.
Based on the number of shares MCI Common Stock outstanding as of January 20,
1998 and assumed MCI Exchange Ratios of 1.2439 and 1.7586, approximately
710,554,160 shares and 1,004,566,722 shares, respectively, of WorldCom Common
Stock would be issued in the MCI/WorldCom Merger. In addition, outstanding
options to purchase shares of MCI Common Stock would be converted in the MCI/
WorldCom Merger to options to acquire an aggregate of approximately 86,491,688
shares and 122,280,154 shares, respectively, of WorldCom Common Stock, and the
exercise price would be adjusted to reflect the MCI Exchange Ratio, so that, on
exercise, the holders would receive, in the aggregate, the same number of
shares of WorldCom Common Stock as they would have received had they exercised
prior to the MCI/WorldCom Merger, at the same exercise price.
The MCI/WorldCom Merger is subject to the approvals of the MCI stockholders
and the WorldCom shareholders as well as approvals from the FCC, the Department
of Justice and various state government bodies. In addition, the MCI/WorldCom
Merger is subject to review by the European Commission. WorldCom anticipates
that the MCI/WorldCom Merger will close in late spring or early summer of 1998.
Termination of the MCI/WorldCom Merger Agreement by MCI or WorldCom under
certain conditions, including the failure to receive the approval of MCI's
stockholders of the MCI/WorldCom Merger or the MCI/WorldCom Merger Agreement,
will require MCI to pay WorldCom $750 million as a termination fee and to
reimburse WorldCom the $450 million alternative transaction fee paid by
WorldCom to British
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Telecommunications plc ("BT"). Further, termination of the MCI/WorldCom Merger
Agreement by MCI or WorldCom under certain conditions, including the failure to
receive the approval of WorldCom's shareholders of the issuance of shares
pursuant to the MCI/WorldCom Agreement, will require WorldCom to pay MCI $1.635
billion as a termination fee.
Pursuant to an agreement (the "BT Agreement") among MCI, WorldCom and BT,
the prior merger agreement between BT and MCI (the "BT/MCI Merger Agreement")
was terminated, and WorldCom agreed to pay BT an alternative transaction fee of
$450 million and expenses of $15 million payable to BT in accordance with the
BT/MCI Merger Agreement. These fees were paid on November 12, 1997. WorldCom
also agreed to pay to BT an additional payment of $250 million in the event
that WorldCom is required to make the $1.635 billion payment to MCI in
accordance with the MCI/WorldCom Merger Agreement. In addition, pursuant to the
BT Agreement, BT agreed to vote (or cause to be voted) its shares of MCI Class
A Common Stock in favor of the MCI/WorldCom Merger Agreement, the adoption by
MCI of the MCI/WorldCom Merger Agreement and the approval of the other
transactions contemplated by the MCI/WorldCom Merger Agreement.
THE COMPUSERVE MERGER. On September 7, 1997, WorldCom entered into
the Agreement and Plan of Merger (the "CompuServe Merger Agreement") with H&R
Block, Inc. ("H&R Block"), H&R Block Group, Inc. ("Block Group"), CompuServe
and a wholly-owned acquisition subsidiary of the Company providing for the
CompuServe Merger. In the CompuServe Merger, each share of CompuServe common
stock ("CompuServe Common Stock") will be converted into a fraction of a share
of WorldCom Common Stock equal to the CompuServe exchange ratio (the
"CompuServe Exchange Ratio"), which will be determined as follows: (i) if the
average trading price (generally based on the average reported closing prices
for a specified twenty day period prior to closing) of a share of WorldCom
Common Stock is greater than or equal to $29.54, the CompuServe Exchange Ratio
will be 0.40625; (ii) if such average trading price is greater than or equal to
$24.00 but less than $29.54, the CompuServe Exchange Ratio will equal a
fraction determined by dividing $12.00 by such average trading price; and (iii)
if such average trading price is less than $24.00, the CompuServe Exchange
Ratio will be 0.5, provided that CompuServe has the right to terminate the
CompuServe Merger Agreement if such average trading price is less than $24.00.
Based on (i) the number of shares of CompuServe Common Stock outstanding as of
January 20, 1998 (assuming the conversion of CompuServe stock options into
WorldCom Common Stock) and (ii) assumed CompuServe Exchange Ratios of 0.40625
and 0.5, 38,293,901 shares and 47,130,956 shares, respectively, of WorldCom
Common Stock will be issued in the CompuServe Merger. Consummation of the
CompuServe Merger is subject to certain conditions, including the approval of
the stockholders of CompuServe. The applicable waiting period under the
Hart-Scott-Rodino Act has expired. The CompuServe Merger Agreement may be
terminated if the effective time has not occurred on or before March 1, 1998
and under certain other circumstances. Termination of the CompuServe Merger
Agreement by WorldCom or CompuServe under certain circumstances, including
failure to receive the approval of CompuServe's stockholders, will require one
party to make $15 million payment to the other party as a termination fee. H&R
Block and Block Group have agreed to vote all of the CompuServe shares directly
or indirectly owned by it (the "Block Shares," which, as of September 30, 1997,
represented approximately 80.1% of the outstanding CompuServe shares) in favor
of the CompuServe Merger, which number of shares is sufficient for such
approval. In addition, H&R Block and Block Group have irrevocably appointed
WorldCom or its nominee as proxy to vote the Block Shares at any stockholder
meeting or otherwise as described in the preceding sentence, and have granted
WorldCom an option to purchase the Block Shares under certain circumstances.
The closing of the CompuServe Merger, which will be accounted for as a
purchase, is expected to occur on or about January 31, 1998, provided that the
conditions to the CompuServe Merger are then fulfilled or waived.
THE AOL TRANSACTION. On September 7, 1997, WorldCom also entered into
a Purchase and Sale Agreement (the "AOL Agreement") with America Online, Inc.
("AOL"), under which WorldCom agreed to (a) transfer to AOL the online services
businesses of CompuServe and Spry, Inc., a CompuServe subsidiary ("Sprynet"),
which WorldCom will acquire as a result of the CompuServe Merger, and (b)
acquire all outstanding shares of ANS Communications, Inc. ("ANS"), a
wholly-owned subsidiary of AOL which provides Internet and other networking
services to AOL and other customers. In addition to the transfer of the online
services businesses of CompuServe and Sprynet, WorldCom will pay AOL $175
million in cash, subject to certain adjustments specified in the AOL Agreement.
The closing of the AOL Transaction is conditioned on, and is
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expected to occur immediately after, the closing of the CompuServe Merger. The
closing of the AOL Transaction, which will be accounted for as a purchase, is
subject to certain other conditions. The applicable waiting period under the
Hart-Scott-Rodino Act with respect to the AOL Transaction has expired.
THE BFP MERGER. WorldCom entered into an Amended and Restated
Agreement and Plan of Merger dated as of October 1, 1997 (the "BFP Merger
Agreement") with BFP and a wholly owned acquisition subsidiary of WorldCom,
providing for the BFP Merger. In the BFP Merger, each share of common stock,
par value $.01, of BFP (the "BFP Common Stock") will be converted into a
fraction of a share of WorldCom Common Stock equal to the BFP Exchange Ratio.
The "BFP Exchange Ratio" will be determined as follows: (i) if the average
trading price (generally based on the average reported closing prices for a
specified twenty-day period prior to closing) of a share of WorldCom Common
Stock is greater than or equal to $35.15, the BFP Exchange Ratio will equal
1.65; (ii) if such average trading price is greater than or equal to $31.35 but
less than $35.15, the BFP Exchange Ratio will equal a fraction determined by
dividing $58.00 by such average trading prices; and (iii) if such average
trading price is less than $31.35, the BFP Exchange Ratio will equal 1.85.
Based on (i) BFP Common Stock outstanding as of December 23, 1997 (including an
estimated 73,000 shares that will be issuable immediately prior to the
effective time of the BFP Merger pursuant to an employee stock purchase plan)
and (ii) assumed BFP Exchange Ratios of 1.65 and 1.85, approximately 64,729,280
shares and 72,575,253 shares, respectively, of WorldCom Common Stock will be
issued in the BFP Merger. In addition, outstanding warrants and options to
purchase shares of BFP Common Stock would be converted in the BFP Merger to
warrants and options to acquire an aggregate of approximately 4,634,777 shares
and 5,196,569 shares, respectively, of WorldCom Common Stock, and the exercise
price would be adjusted to reflect the BFP Exchange Ratio, so that, on
exercise, the holders would receive, in the aggregate, the same number of
shares of WorldCom Common Stock as if they had exercised prior to the BFP
Merger, at the same aggregate exercise price. The BFP Merger has been
structured to qualify as a pooling of interests. Consummation of the BFP Merger
is subject to the fulfillment of a number of conditions, including the
expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Act and the receipt of other required regulatory approvals
(which condition has been satisfied), and the absence of certain material
adverse changes. Consummation of the BFP Merger is also subject to the approval
and adoption of the BFP Merger Agreement by the stockholders of BFP. The BFP
Merger Agreement may be terminated if the effective time has not occurred on or
before March 31, 1998 and under certain other circumstances. Termination of the
BFP Merger Agreement by WorldCom or BFP under certain circumstances will
require one party to make a $40 million payment to the other party. Each of
BFP's directors has agreed to vote his or her beneficially owned shares of BFP
Common Stock in favor of the BFP Merger Agreement. The closing of the BFP
Merger is expected to occur on or about January 29, 1998, provided that the
conditions to the BFP Merger are then fulfilled or waived.
DESCRIPTION OF WARRANTS
The following summary, which describes certain material provisions of
the Warrants, does not purport to be complete and is subject in all respects
to, and is qualified in its entirety by, reference to such Warrants, copies of
the forms of which are filed as exhibits to this Registration Statement.
GENERAL. In connection with the BFP Merger, each share of the BFP
Common Stock will be converted into a number of shares of WorldCom Common Stock
equal to the BFP Exchange Ratio. Upon consummation of the BFP Merger, the
Warrants, which are exercisable for 322,000 shares of BFP Common Stock, will
become exercisable for WorldCom Common Stock and the holders thereof (the
"Holders") will be entitled to purchase, in the aggregate, 595,700 shares of
WorldCom Common Stock, based on the estimated BFP Exchange Ratio of 1.85. The
price at which a Holder of a Warrant may purchase a share of WorldCom Common
Stock (the "Purchase Price") and the number of shares of WorldCom Common Stock
issuable on exercise of the Warrants will be adjusted to reflect the BFP
Exchange Ratio, so that, on exercise of the Warrants, the Holders of the
Warrants will receive, in the aggregate, the same number of shares of WorldCom
Common Stock as if they had
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exercised their rights under the Warrants prior to the BFP Merger, at the same
aggregate exercise price. The Purchase Prices are subject to certain
adjustments, which are described below.
The Warrants were issued pursuant to two different forms of warrants.
One form of warrant is set forth in Exhibit 4.15 to this Registration Statement
and the Warrants issued pursuant to that form are referred to herein as the
"Series A Warrants." The other form of warrant is set forth in Exhibit 4.16 to
this Registration Statement and the Warrants issued pursuant to that form are
referred to herein as the "Series B Warrants." The Warrants are exercisable
for various periods ending between March 31, 1998 and December 21, 1999,
depending on the specific terms of the individual Warrants
ADJUSTMENT. The number of shares of WorldCom Common Stock issuable
upon the exercise of a Warrant and the Purchase Price thereof are subject to
adjustment from time to time upon the occurrence of certain events, including,
without limitation: (1) the subdivision, by any stock split, stock dividend,
recapitalization, or otherwise, of WorldCom's Common Stock into a greater number
of shares or the combination, by reverse stock split or otherwise, of WorldCom
Common Stock into a smaller number of shares; (2) any reorganization,
reclassification, consolidation, merger, sale of all or substantially all of
WorldCom's assets to another person, or other transaction that is affected in
such a manner that Holders of WorldCom Common Stock are entitled to receive,
either directly or upon subsequent liquidation, stock, securities, or assets
with respect to or in exchange for WorldCom Common Stock (an "Organic Change");
(3) the occurrence of certain other events, of the type contemplated by the
Warrant but not expressly provided for by its provisions. The Series B Warrants
require, in addition to the adjustments described in the preceding sentence,
that the Purchase Price must be adjusted if certain rights or options are
granted to purchase either WorldCom Common Stock or any stock convertible into
WorldCom Common Stock, in either case, below a specified price per share.
NOTICES. WorldCom is required to give written notice of any Purchase
Price adjustment to the Holders of the Warrants, setting forth in reasonable
detail and certifying the calculation of such adjustment. WorldCom is also
required to give written notice to the Holders of the Warrants at least 20 days
prior to the date on which WorldCom closes its books or takes a record (1) with
respect to any dividend or distribution upon WorldCom Common Stock, (2) with
respect to any pro rata subscription offer to Holders of WorldCom Common Stock,
and (3) for determining voting rights with respect to an Organic Change,
dissolution or liquidation, or the date on which any Organic Change will take
place.
PURCHASE RIGHTS. If at any time WorldCom grants, issues, or sells any
options, convertible securities, or rights to purchase stock, warrants,
securities, or other property (the "Purchase Rights") pro rata to each record
Holder of WorldCom Common Stock, in his, her, or its capacity as Holder of
record, then the Holder of a Warrant is entitled to acquire, in addition to the
shares of WorldCom Common Stock acquirable and receivable upon exercise of the
Warrant, and upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if such Holder had held
the number of shares of WorldCom Common Stock acquirable upon the exercise of
the Warrant immediately before the date on which a record is taken for grant,
issuance, or sale of Purchase Rights, or, if no record is taken, the date as of
which the record Holders are to be determined.
NO RIGHTS AS SHAREHOLDERS. Holders of Warrants are not entitled to
vote or receive dividends or be deemed the Holder of WorldCom Common Stock or
any other securities of WorldCom which may at any time be issuable on the
exercise thereof. The Warrants do not confer upon the Holders, as such, any of
the rights of a shareholder of WorldCom or any right (1) to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, (2) to give or withhold consent to any corporate action
(whether upon recapitalization, issue of stock, reclassification of stock,
change of par value, consolidation, merger, conveyance, or otherwise), or (3)
except as provided above, to receive notice of meetings or to receive dividends
of subscription rights or otherwise, until the Warrants have been exercised.
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METHOD OF EXERCISE. The Warrants may be exercised in whole, but not
in part, on or after the date of the Warrant by executing the Form of Election
to Purchase (the "Form"), which is attached to the Warrant, and returning the
executed Form to WorldCom. The issuance of certificates for shares of WorldCom
Common Stock upon exercise of a Warrant is to be made without charge to the
Holder of the Warrant for any issuance tax or other cost incurred by WorldCom
in connection with such exercise and related issuance. The Warrants may be paid
for either in cash or, at the option of the Warrant Holder, in shares of
WorldCom Common Stock having a market price on the date of exercise equal to
the aggregate Purchase Price of the shares of WorldCom Common Stock being
purchased upon exercise of the Warrant.
DESCRIPTION OF WORLDCOM CAPITAL STOCK
The following summary is a description of the material terms of WorldCom
capital stock, does not purport to be complete and is subject in all respects
to the applicable provisions of the Georgia Business Corporation Code (the
"GBCC"), the WorldCom Articles, the WorldCom Bylaws, the Deposit Agreement
(referred to below), and the WorldCom Rights Agreement. The WorldCom Articles,
the WorldCom Bylaws, the Deposit Agreement and the WorldCom Rights Agreement
are included in or incorporated by reference as exhibits to the Registration
Statement of which this Prospectus is a part.
The authorized capital stock of WorldCom consists of 2,500,000,000 shares of
common stock, par value $.01 per share, and 50,000,000 shares of preferred
stock, par value $.01 per share. As of January 20, 1998, there were 910,348,124
shares of WorldCom Common Stock, 94,992 shares of WorldCom Series A Preferred
Stock and 12,409,093 shares of WorldCom Series B Preferred Stock issued and
outstanding. All the shares of WorldCom Series A Preferred Stock are held by
The Bank of New York as Depositary for the holders of WorldCom Depositary
Shares.
COMMON STOCK
All of the outstanding shares of WorldCom Common Stock are fully paid and
nonassessable. Subject to the prior rights of the holders of preferred stock
which may be issued and outstanding, the holders of WorldCom Common Stock are
entitled to receive dividends as and when declared by the Board of Directors
out of funds legally available therefor, and, in the event of the dissolution
of WorldCom, to share ratably in all assets remaining after payment of
liabilities and satisfaction of the liquidation preferences of the holders of
WorldCom preferred stock, as provided in the WorldCom Articles. Each holder of
WorldCom Common Stock is entitled to one vote for each share held of record on
all matters presented to a vote at a shareholders' meeting, including the
election of directors. Holders of WorldCom Common Stock have no cumulative
voting rights or preemptive rights to purchase or subscribe for any stock or
other securities and there are no conversion rights or redemption or sinking
fund provisions with respect to such stock. Additional shares of authorized
WorldCom Common Stock may be issued without shareholder approval.
The transfer agent and registrar for the WorldCom Common Stock is The Bank of
New York, 101 Barclay Street -- 12W, New York, NY 10286.
PREFERRED STOCK
The authorized but unissued preferred stock of WorldCom is available for
issuance from time to time at the discretion of the WorldCom Board of Directors
without shareholder approval. The WorldCom Board of Directors has the authority
to prescribe for each series of preferred stock it establishes the number,
designation, preferences, limitations and relative rights of the shares of such
series, subject to applicable law and the provisions of any outstanding series
of preferred stock. The terms of any series of preferred stock including, but
not limited to, dividend rate, redemption price, liquidation rights, sinking
fund provisions, conversion rights and voting rights, and any corresponding
effect on other shareholders, will be dependent largely on factors existing at
the time of issuance. Such terms and effects could include restrictions on
dividends on the WorldCom Common Stock if dividends on the preferred stock are
in arrears, dilution of the voting power of other shareholders to the extent a
series of the
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preferred stock has voting rights, and reduction of amounts available on
liquidation as a result of any liquidation preference granted to any series of
preferred stock.
SERIES A PREFERRED STOCK
The following description of WorldCom Series A Preferred Stock and the rights
represented by the WorldCom Depositary Shares does not purport to be complete
and is subject to, and qualified in its entirety by, the provisions of the
WorldCom Articles. Each of the WorldCom Depositary Shares represents a one
one-hundredth interest in a share of WorldCom Series A Preferred Stock and
entitles the owner to such proportion of all the rights, preferences and
privileges of the shares of WorldCom Series A Preferred Stock represented
thereby. See "-- Depositary Shares" below.
Dividends
The holders of shares of WorldCom Series A Preferred Stock are entitled to
receive when, as and if declared by the Board of Directors out of funds legally
available therefor, cumulative preferential dividends from the issue date of
the WorldCom Series A Preferred Stock, accruing at the rate per share of
$268.00 per annum or $67.00 per quarter (equivalent to $2.68 per annum or $.67
per quarter for each WorldCom Depositary Share), payable quarterly in arrears.
Dividends are payable in cash or in shares of WorldCom Common Stock, at the
election of the WorldCom Board of Directors. WorldCom intends to pay dividends
in shares of WorldCom Common Stock on each dividend payment date to the extent
that it is unable to pay dividends in cash. If the dividends are paid in shares
of WorldCom Common Stock, the number of shares of WorldCom Common Stock to be
issued on each dividend payment date will be determined by dividing the total
dividend to be paid on each WorldCom Depositary Share by 90% of the average of
the high and low sales prices of the WorldCom Common Stock as reported by The
Nasdaq National Market or any national securities exchange upon which the
WorldCom Common Stock is then listed or included, for each of the ten
consecutive trading days immediately preceding the fifth business day preceding
the record date for such dividend.
Unless all accumulated dividends on the Series A Preferred Stock have been
paid, (i) no dividend (other than a dividend payable solely in shares of junior
stock (as defined in the WorldCom Articles)) may be paid on the WorldCom Common
Stock, (ii) no other distribution shall be made upon any shares of junior
stock, (iii) no shares of junior stock or any series of WorldCom preferred
stock shall be purchased, redeemed, or otherwise acquired for cash or other
property (excluding junior stock or the WorldCom Series B Preferred Stock) by
WorldCom or any of its subsidiaries, and (iv) no monies shall be paid into or
set apart or made available for a sinking or other like fund for the purchase,
redemption or other acquisition for value of any shares of junior stock by
WorldCom or any of its subsidiaries.
Mandatory Conversion of WorldCom Series A Preferred Stock
On May 31, 1999 (the "Mandatory Conversion Date"), subject to the optional
conversion rights referred to below, each outstanding share of WorldCom Series
A Preferred Stock (and the related WorldCom Depositary Shares) will convert
automatically into shares of WorldCom Common Stock at the Common Equivalent
Rate (as defined below) in effect on such date and the holder will also be
entitled to receive accrued and unpaid dividends thereon. The "Common
Equivalent Rate" is initially four hundred twenty (420) shares of WorldCom
Common Stock for each share of WorldCom Series A Preferred Stock (equivalent to
4.2 shares of WorldCom Common Stock for each WorldCom Depositary Share),
subject to adjustment for certain capital events.
Right to Redeem WorldCom Series A Preferred Stock
The WorldCom Series A Preferred Stock (and the related WorldCom Depositary
Shares) are not redeemable by WorldCom prior to May 31, 1998 (the "Initial
Redemption Date"). On or after the Initial Redemption Date and prior to the
Mandatory Conversion Date, WorldCom may redeem the WorldCom Series A Preferred
Stock (and thereby the WorldCom Depositary Shares), in whole or in part. Upon
any such redemption, the holder of record of shares of
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WorldCom Series A Preferred Stock will receive shares of WorldCom Common Stock
equal to the call price of the WorldCom Series A Preferred Stock in effect on
the date of redemption (the "Call Price") divided by the Current Market Price
(as defined in the WorldCom Articles) of the WorldCom Common Stock. The Call
Price of each WorldCom Series A Preferred Stock is (i) $3,417.00 ($34.170 per
WorldCom Depositary Share) on and after the Initial Redemption Date through
August 30, 1998, $3,400.25 ($34.003 per WorldCom Depositary Share) on and after
August 31, 1998 through November 29, 1998, $3,383.50 ($33.835 per WorldCom
Depositary Share) on and after November 30, 1998 through February 27, 1999,
$3,366.75 ($33.668 per WorldCom Depositary Share) on and after February 28,
1999 through April 29, 1999, and $3,350.00 ($33.500 per WorldCom Depositary
Share) on and after April 30, 1999 until the Mandatory Conversion Date, plus
(ii) all accrued and unpaid dividends thereon to the date fixed for redemption.
Conversion at Option of Holder
The WorldCom Series A Preferred Stock (and thereby the WorldCom Depositary
Shares) are convertible, in whole or in part, at the option of the holder
thereof, at any time prior to the Mandatory Conversion Date, into shares of
WorldCom Common Stock at a rate of 344.274 shares of WorldCom Common Stock for
each WorldCom Series A Preferred Stock (equivalent to 3.443 shares of WorldCom
Common Stock for each WorldCom Depositary Share and equivalent to a conversion
price of $9.73 per share of WorldCom Common Stock), subject to adjustment for
certain capital events (the "Optional Conversion Rate"). The right to convert
WorldCom Series A Preferred Stock called for redemption will terminate at the
close of business on the redemption date.
Adjustment for Consolidation or Merger
In the case of certain mergers, consolidations or other capital transactions,
certain customary provisions are required to be made relating to the terms of
conversion and redemption applicable to the WorldCom Series A Preferred Stock
in order to protect the interests of the holders thereof.
Liquidation Rights
In the event of the liquidation, dissolution, or winding up of the business
of WorldCom, the holders of WorldCom Series A Preferred Stock are entitled to
receive a liquidation preference for each share of WorldCom Series A Preferred
Stock in an amount equal to the greater of (i) the sum of (a) $3,350 and (b)
all accrued and unpaid dividends thereon to the date of liquidation,
dissolution or winding up and (ii) the value of the shares of WorldCom Common
Stock into which such shares of WorldCom Series A Preferred Stock are
convertible on the date of such liquidation, dissolution or winding up.
Voting Rights
Each share of WorldCom Series A Preferred Stock is entitled to ten votes per
share (equivalent to 0.1 of a vote for each WorldCom Depositary Share) with
respect to all matters voted on at a shareholders' meeting, including the
election of directors. The holders of the WorldCom Series A Preferred Stock and
the holders of WorldCom Common Stock will vote together as a single class,
unless otherwise provided by law or the WorldCom Articles. The approval of more
than two- thirds of the votes entitled to be cast by the holders of issued and
outstanding shares of WorldCom Series A Preferred Stock is required for any
amendment to the WorldCom Articles that materially adversely changes the
rights, preferences or privileges of the WorldCom Series A Preferred Stock. The
holders of the outstanding shares of WorldCom Series A Preferred Stock shall
also have the right, voting together with the holders of any other outstanding
shares of Voting Preferred Stock (as hereinafter defined) as a separate voting
group, to elect two members of the WorldCom Board of Directors at any time six
or more quarterly dividends on any shares of Voting Preferred Stock shall be in
arrears and unpaid, in whole or in part, whether or not declared and whether or
not any funds shall be or have been legally available for payment thereof. For
this purpose, "Voting Preferred Stock" shall mean the shares of WorldCom Series
A Preferred Stock and each other series of WorldCom Preferred Stock which shall
have substantially similar voting rights (including voting as one voting group
with other
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shares of Voting Preferred Stock) with respect to the election of directors
upon substantially similar arrearages of dividends.
SERIES B PREFERRED STOCK
The following description of WorldCom Series B Convertible Preferred Stock
does not purport to be complete and is subject to, and qualified in its
entirety by, the provisions of the WorldCom Articles.
Dividends
The holders of WorldCom Series B Preferred Stock are entitled to receive
when, as and if declared by the Board of Directors out of funds legally
available therefor, cumulative dividends from the issue date of the WorldCom
Series B Preferred Stock, accruing at the rate per share of $.0775 per annum,
payable when and as the WorldCom Board of Directors may determine, in cash,
before any dividends shall be set apart for or paid upon the WorldCom Common
Stock or any other stock ranking as to dividends junior to the WorldCom Series
B Preferred Stock in any year. Notwithstanding the foregoing, WorldCom may
declare, set apart and pay dividends on shares of the WorldCom Series A
Preferred Stock whether or not dividends have been declared, set apart or paid
on the shares of WorldCom Series B Preferred Stock. Dividends are only payable
in cash, except for payment of accrued but unpaid dividends upon conversion,
redemption or liquidation of the WorldCom Series B Preferred Stock, as the case
may be, as described below.
WorldCom is not permitted to set apart for or pay upon the WorldCom Common
Stock any Extraordinary Cash Dividend (as defined below) unless, at the same
time, WorldCom shall have set apart for or paid upon all shares of WorldCom
Series B Preferred Stock an amount of cash per share of WorldCom Series B
Preferred Stock equal to the Extraordinary Cash Dividend that would have been
paid in respect of such share if the holder of such share of WorldCom Series B
Preferred Stock had converted such share into shares of WorldCom Common Stock
immediately prior to the record date for such Extraordinary Cash Dividend. The
term "Extraordinary Cash Dividend" means, with respect to any cash dividend or
distribution paid on any date, the amount, if any, by which all cash dividends
and cash distributions on the WorldCom Common Stock paid during the consecutive
12-month period ending on and including such date exceeds, on a per share of
WorldCom Common Stock basis, 10% of the average daily closing price of the
WorldCom Common Stock over such 12-month period.
Conversion at Option of Holder
The shares of WorldCom Series B Preferred Stock are convertible, in whole or
in part, at the option of the holder thereof, at any time, unless previously
redeemed, into shares of WorldCom Common Stock at a rate of 0.0973912 shares of
WorldCom Common Stock for each share of WorldCom Series B Preferred Stock
(equivalent to an initial conversion price of $10.268 per share of WorldCom
Common Stock), subject to adjustment for certain capital events (the "Series B
Conversion Rate"), and the holder will also be entitled to receive accrued and
unpaid dividends payable in cash or, at the option of WorldCom, in shares of
WorldCom Common Stock, based on the Fair Market Value thereof (as defined in
the WorldCom Articles).
Adjustment for Consolidation or Merger
In the case of certain mergers, consolidations or other capital transactions,
certain customary provisions are required to be made relating to the terms of
conversion and redemption applicable to the WorldCom Series B Preferred Stock
in order to protect the interests of the holders thereof.
Right to Redeem WorldCom Series B Preferred Stock
The WorldCom Series B Preferred Stock is not redeemable by WorldCom prior to
September 30, 2001. Thereafter, WorldCom has the right to redeem the shares of
WorldCom Series B Preferred Stock, in whole or in part, at a redemption price
of $1.00 per share plus an amount equal to all accrued and unpaid dividends
thereon (the
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"Redemption Price"); provided, that all or any portion of the Redemption Price
may be paid in shares of WorldCom Common Stock as determined by the WorldCom
Board of Directors based on the Fair Market Value thereof (as defined in the
WorldCom Articles).
Liquidation Rights
In the event of the liquidation, dissolution, or winding up of the business
of WorldCom, the holders of WorldCom Series B Preferred Stock are entitled to
receive a liquidation preference for each share of WorldCom Series B Preferred
Stock in an amount equal to the sum of $1.00 plus all accrued and unpaid
dividends thereon to the date of liquidation, dissolution or winding up.
Voting Rights
Each share of WorldCom Series B Preferred Stock is entitled to one vote per
share with respect to all matters voted on at a shareholders' meeting,
including the election of directors. The holders of the WorldCom Series B
Preferred Stock and the holders of WorldCom Common Stock (and WorldCom Series A
Preferred Stock) will vote together as a single class, unless otherwise
provided by law or the WorldCom Articles. The approval of at least a majority
of the votes entitled to be cast by the holders of issued and outstanding
shares of WorldCom Series B Preferred Stock is required to adversely change the
rights, preferences or privileges of the WorldCom Series B Preferred Stock. For
this purpose, the authorization or issuance of any series of preferred stock
with preference or priority over, or being on a parity with the WorldCom Series
B Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of WorldCom shall not
be deemed to affect adversely the WorldCom Series B Preferred Stock. In case
WorldCom shall at any time prior to March 23, 1999 subdivide (whether by stock
dividend, stock split or otherwise) the outstanding shares of WorldCom Common
Stock into a greater number of shares (each a "Subdivision"), the voting rights
of each share of WorldCom Series B Preferred Stock will be adjusted to provide
that the percentage of the aggregate voting power of the WorldCom Common Stock
represented by the WorldCom Series B Preferred Stock shall be the same as such
percentage immediately prior to such Subdivision, with the holder of each share
of WorldCom Series B Preferred Stock being entitled to the number of votes
proportionate to such adjustment. Such adjustments made pursuant to a
Subdivision will become effective immediately after the effective date of the
Subdivision.
DEPOSITARY SHARES
Each WorldCom Depositary Share represents a one-hundredth interest in a share
of WorldCom Series A Preferred Stock deposited under the Deposit Agreement (the
"Deposit Agreement"), by and among WorldCom, The Bank of New York, as
Depositary (the "Depositary"), and the holders from time to time of Depositary
Receipts issued thereunder. Subject to the terms of the Deposit Agreement, each
owner of a WorldCom Depositary Share is entitled proportionately to all of the
rights and preferences of the shares of WorldCom Series A Preferred Stock
represented thereby (including dividend, voting, redemption and liquidation
rights) contained in the WorldCom Articles and summarized above under "--
Preferred Stock" and "-- Series A Preferred Stock."
The WorldCom Depositary Shares are evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). The following
description of the WorldCom Depositary Shares does not purport to be complete
and is subject to, and qualified in its entirety by, the provisions of the
Deposit Agreement.
Mandatory Conversion, or Call. As described under "-- Preferred Stock --
Series A Preferred Stock," the WorldCom Series A Preferred Stock is subject to
mandatory conversion into shares of WorldCom Common Stock on the Mandatory
Conversion Date, and to the right of WorldCom to call the WorldCom Series A
Preferred Stock, at WorldCom's option, for redemption on or after the Initial
Redemption Date and before the Mandatory Conversion Date. The WorldCom
Depositary Shares are subject to mandatory conversion or call upon
substantially the same terms and conditions as the WorldCom Series A Preferred
Stock, except that the number of shares of WorldCom Common Stock received upon
mandatory conversion or redemption of each WorldCom Depositary Share will be
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equal to the number of shares of WorldCom Common Stock received upon mandatory
conversion or redemption of each share of WorldCom Series A Preferred Stock
divided by one hundred.
Conversion at the Option of Holder. As described under "-- Preferred Stock --
Series A Preferred Stock," the WorldCom Series A Preferred Stock may be
converted, in whole or in part, into shares of WorldCom Common Stock at the
option of the holders of WorldCom Series A Preferred Stock at any time before
the Mandatory Conversion Date, unless previously redeemed. The WorldCom
Depositary Shares may, at the option of holders thereof, be converted into
shares of WorldCom Common Stock upon the same terms and conditions as the
WorldCom Series A Preferred Stock, except that the number of shares of WorldCom
Common Stock received upon conversion of each WorldCom Depositary Share will be
equal to the number of shares of WorldCom Common Stock received upon conversion
of each share of WorldCom Series A Preferred Stock divided by one hundred.
Voting of WorldCom Series A Preferred Stock. Each record holder of Depositary
Receipts on the record date (which will be the same date as the record date for
the WorldCom Series A Preferred Stock) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the number of
WorldCom Series A Preferred Stock represented by such holder's WorldCom
Depositary Shares. The Depositary will abstain from voting WorldCom Series A
Preferred Stock to the extent it does not receive specific written voting
instructions from the holders of Depositary Receipts representing such WorldCom
Series A Preferred Stock.
Termination of Deposit Agreement. The Deposit Agreement is subject to
termination by WorldCom, or, if the Depositary resigns and no successor
depositary is properly appointed and accepted, by the Depositary. If any
Depositary Receipts remain outstanding after the date of termination, the
Depositary thereafter will discontinue the transfer of Depositary Receipts,
will suspend the distribution of dividends to the holders thereof, and will not
give any further notices (other than notice of such termination) or perform any
further acts under the Deposit Agreement except as provided below and except
that the Depositary will continue (i) to collect dividends on the WorldCom
Series A Preferred Stock and any other distributions with respect thereto and
(ii) to deliver the WorldCom Series A Preferred Stock and any money and other
property represented by Depositary Shares upon surrender thereof by the holders
thereof. WorldCom does not intend to terminate the Deposit Agreement or to
permit the resignation of the Depositary without appointing a successor
depositary. In the event the Deposit Agreement is terminated, WorldCom has
agreed to use its best efforts to list the WorldCom Series A Preferred Stock on
The Nasdaq National Market.
WORLDCOM SERIES 3 PREFERRED STOCK
In connection with the issuance of the WorldCom Rights (as hereinafter
defined), the WorldCom Board of Directors has authorized 2,500,000 shares of
preferred stock to be issued as Series 3 Junior Participating Preferred Stock
(the "WorldCom Series 3 Preferred Stock"), a description of the terms of which
is set forth below under "-- Preferred Stock Purchase Rights."
PREFERRED STOCK PURCHASE RIGHTS
On August 25, 1996, WorldCom entered into the WorldCom Rights Agreement, and
the WorldCom Board of Directors authorized the issuance of one preferred share
purchase right (a "WorldCom Right") for each outstanding share of WorldCom
Common Stock outstanding as of September 6, 1996 and issued thereafter until
the Distribution Date, as defined in the WorldCom Rights Agreement (the
"WorldCom Distribution Date"). Each WorldCom Right entitles the registered
holder to purchase from WorldCom one one-thousandth of a share of Series 3
Preferred Stock at an initial price of $160.00 per one one-thousandth of such
share, subject to adjustment as described in the WorldCom Rights Agreement.
The WorldCom Rights will be evidenced by the WorldCom Common Stock until, and
a WorldCom Distribution Date will occur upon, the earlier of ten business days
following public disclosure or the date on which WorldCom first determines that
certain persons or groups (a "WorldCom Acquiring Person") have become the
beneficial owner of 15% or more of the outstanding shares of voting stock of
WorldCom (the "Stock Acquisition Date") or ten business days (or such later
date as may be determined by action of the WorldCom Board of Directors but not
later
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than the Stock Acquisition Date) following the commencement of a tender offer
or exchange offer that would result in certain persons or groups becoming a
WorldCom Acquiring Person. Pursuant to the WorldCom Rights Agreement, as
amended, the WorldCom Rights are not exercisable until the WorldCom
Distribution Date and will expire, if not previously exercised, on
September 6, 2001, unless such final expiration date is extended (subject to
shareholder approval) or unless the WorldCom Rights are earlier redeemed or
exchanged by WorldCom.
Upon the occurrence of a WorldCom Distribution Date, each holder of a
WorldCom Right, except for a WorldCom Acquiring Person, has the right to
acquire, upon exercise of the WorldCom Right, WorldCom Common Stock having a
value equal to two times the exercise price of the WorldCom Right. If a person
becomes a WorldCom Acquiring Person and (i) WorldCom is acquired in a merger or
other business combination transaction in which either WorldCom is not the
surviving corporation or WorldCom Common Stock is exchanged or changed, or (ii)
50% or more of WorldCom's assets or earnings power is sold in one or several
transactions, each holder of a WorldCom Right, except for a WorldCom Acquiring
Person, would acquire, upon exercise of the WorldCom Right, such number of
shares of the acquiring company's common stock as shall be equal to the result
obtained by multiplying the then current exercise price for a WorldCom Right by
the number one one- thousandths of a share of WorldCom Series 3 Preferred Stock
for which a WorldCom Right is then exercisable and dividing that product by 50%
of the then current market price per share of the common stock of the acquiring
company on the date of such merger or other business combination transaction.
If a person or group acquires more than 15% but less than 50% of the
outstanding WorldCom Common Stock, WorldCom can exchange each WorldCom Right,
except those held by such person or group, for one share of WorldCom Common
Stock.
The WorldCom Series 3 Preferred Stock will be nonredeemable and junior to any
other series of WorldCom preferred stock (unless otherwise provided in the
terms of such WorldCom preferred stock). Each share of WorldCom Series 3
Preferred Stock will have a preferential dividend in an amount equal to 1,000
times any dividend declared on each share of WorldCom Common Stock. In the
event of liquidation, the holders of the WorldCom Series 3 Preferred Stock will
receive a preferred liquidation payment equal to the greater of $1,000 or 1,000
times the payment made per share of WorldCom Common Stock. Each share of
WorldCom Series 3 Preferred Stock will have 1,000 votes, voting together with
the WorldCom Common Stock. In the event of any merger, consolidation or other
transaction in which shares of WorldCom Common Stock are converted or
exchanged, each share of WorldCom Series 3 Preferred Stock will be entitled to
receive 1,000 times the amount and type of consideration received per share of
WorldCom Common Stock. The rights of the WorldCom Series 3 Preferred Stock as
to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions.
At any time prior to the time a WorldCom Acquiring Person becomes such,
WorldCom may redeem the WorldCom Rights in whole, but not in part, at a price
of $.01 per WorldCom Right. The redemption of the WorldCom Rights may be made
effective at such time, on such basis and with such conditions as the WorldCom
Board of Directors, in its sole discretion, may establish. Immediately upon any
redemption of the WorldCom Rights, the right to exercise the WorldCom Rights
will terminate, and the only right of the holders of the WorldCom Rights will
be to receive the redemption price.
The terms of the WorldCom Rights may be amended by the WorldCom Board of
Directors without the consent of the holders of the WorldCom Rights, including
an amendment to lower certain thresholds described above to not less than the
greater of (i) any percentage greater than the largest percentage of the voting
power of all securities of WorldCom then known to WorldCom to be beneficially
owned by any person or group and (ii) 10%, except that from and after such time
as any person or group of affiliated or associated persons becomes a WorldCom
Acquiring Person no such amendment may adversely affect the interests of the
holders of the WorldCom Rights.
The WorldCom Rights have certain anti-takeover effects. The WorldCom Rights
will cause substantial dilution to a person or group that attempts to acquire
or merge with WorldCom in certain circumstances. Accordingly, the existence of
the WorldCom Rights may deter certain potential acquirors from making certain
takeover proposals or
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tender offers. The WorldCom Rights should not interfere with any merger or
other business combination approved by the WorldCom Board of Directors since
WorldCom may redeem the WorldCom Rights as described above.
CERTAIN CHARTER AND BYLAW PROVISIONS
ELECTION OF DIRECTORS. Under Georgia law, directors, unless their
terms are staggered pursuant to the corporation's articles of incorporation or
a bylaw adopted by the shareholders, are elected at each annual shareholder
meeting, and vacancies on the board of directors may be filled by the
shareholders or directors, unless the articles of incorporation or a bylaw
approved by the shareholders provides otherwise. The articles of incorporation
may authorize the election of certain directors by one or more classes or
series of shares. The articles of incorporation or the bylaws also may allow
the shareholders or the board of directors to fix or change the number of
directors. Currently, the WorldCom Bylaws provide that the number of members of
the WorldCom Board of Directors shall be fixed by the WorldCom Board of
Directors but shall not be less than three. Neither the WorldCom Articles nor
the WorldCom Bylaws provide for a staggered board of directors. Subject to
certain restrictions, nominations to the WorldCom Board of Directors may be
made by either the Board or shareholders if, in the case of nominations by
shareholders, notice thereof is delivered to WorldCom not later than 90 days
prior to the anniversary date of the immediately preceding annual meeting of
WorldCom shareholders. Under Georgia law, shareholders do not have cumulative
voting rights for the election of directors unless the articles of
incorporation so provide. The WorldCom Articles do not provide for cumulative
voting.
SPECIAL MEETINGS OF SHAREHOLDERS. Georgia law permits the board of
directors or any person authorized in the corporation's articles of
incorporation or bylaws to call special meetings of shareholders. Except in the
case of a corporation having 100 or fewer shareholders of record, a special
meeting may also be called by at least 25% or such greater or lesser percentage
of all the votes entitled to be cast on any issue proposed to be considered at
the special meeting as may be provided in the corporation's articles of
incorporation or bylaws. The WorldCom Bylaws provide that a special meeting may
be called by the WorldCom Board of Directors, the President of WorldCom or the
holders of not less than 40% of all the votes entitled to be cast on the issue
proposed to be considered at the proposed special meeting.
SPECIAL REDEMPTION PROVISIONS. Under the GBCC, a corporation may
acquire its own shares of capital stock, subject to the requirement that at all
times the corporation must have authorized: (i) at least one or more classes of
shares that together have unlimited voting rights; and (ii) at least one or
more classes of shares (which may be the same class or classes as those with
unlimited voting rights) that together are entitled to receive the net assets
of the corporation upon dissolution. In addition, a corporation's acquisition
of its own shares of capital stock is deemed a "distribution" under Georgia law
and, accordingly, is subject to the restrictions on distributions set forth in
the corporation's articles of incorporation and Section 14-2-640 of the GBCC.
The WorldCom Articles contain provisions permitting WorldCom to redeem shares
of its capital stock from certain foreign shareholders in order to enable it to
continue to hold certain common carrier radio licenses. These provisions are
intended to cause WorldCom to remain in compliance with the Communications Act
of 1934, as amended, and the regulations of the FCC promulgated thereunder.
Under these provisions, at such time as the percentage of capital stock owned
by foreign shareholders or certain affiliates thereof exceeds 20%, WorldCom has
the right to redeem the excess shares held by such persons at the fair market
value thereof. Following any determination that such excess shares exist, such
excess shares shall not be deemed outstanding for purposes of determining the
vote required on any matter brought to the attention of the shareholders of
WorldCom and such excess shares shall have no right to receive any dividends or
other distributions, including distributions in liquidation. If such shares are
traded on a national securities exchange or in the over-the-counter market,
such fair market value is the average closing price for the 45 trading days
immediately preceding the date of redemption. If such shares are not so traded,
such fair market value shall be established by the WorldCom Board of Directors.
In the event there is a foreign shareholder who acquired shares within 120 days
of the date of redemption, however, the redemption price shall not exceed the
price per share paid by such shareholder. At least 30 days' notice of
redemption must be given, and the redemption price may be paid in cash,
securities or any combination thereof.
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WorldCom may require confirmation of citizenship from any record or beneficial
owner of shares of its capital stock, and from any transferee thereof, as a
condition to the registration or transfer of those shares.
BUSINESS COMBINATION RESTRICTIONS. Under Georgia law, Georgia
corporations may adopt a provision in their bylaws requiring that Business
Combinations be approved by a special vote of the board of directors and/or the
shareholders unless certain fair pricing criteria are met. Georgia corporations
may also adopt a provision in their articles of incorporation or bylaws which
requires that Business Combinations with Interested Shareholders be approved by
a super- majority vote. These provisions, neither of which has been adopted by
WorldCom, are described below. Also described below is the business combination
restriction contained in the WorldCom Articles.
Georgia's fair price statute authorizes a corporation to adopt a bylaw
provision which requires special approval by the board of directors and/or
shareholders for Business Combinations unless certain fair price criteria are
met. Generally, for purposes of this statute, "Business Combinations" are
defined to include mergers, sales of 10% or more of the corporation's assets
out of the ordinary course of business, liquidations, and certain issuances of
securities, involving the corporation and any Interested Shareholder. For
purposes of this statute, an "Interested Shareholder" is defined as a person or
entity that is the beneficial owner of 10% or more of the voting power of the
corporation's voting stock, or a person or entity that is an affiliate of the
corporation and, at any time within the two-year period immediately prior to
the date in question, was the beneficial owner of 10% or more of the then
outstanding voting power of the corporation's voting stock. To satisfy
Georgia's fair price statute, a Business Combination with an Interested
Shareholder must meet one of three criteria: (i) the transaction must be
approved unanimously by the "Continuing Directors" (directors who served as
directors immediately prior to the date the Interested Shareholder first became
an Interested Shareholder and who are not affiliates or associates of the
Interested Shareholder or his affiliates), provided that the Continuing
Directors constitute at least three members of the board of directors at the
time of such approval; (ii) the transaction must be recommended by at least
two-thirds of the Continuing Directors and approved by a majority of the votes
entitled to be cast by holders of voting shares, excluding shares beneficially
owned by the Interested Shareholder who is, or whose affiliate is, a party to
the Business Combination; or (iii) the terms of the transaction must meet
statutory fair pricing criteria and certain other tests intended to assure that
all shareholders receive a fair price and equivalent consideration for their
shares regardless of when they sell to the acquiring party.
Georgia's business combination statute authorizes a "resident domestic
corporation" to adopt a bylaw provision which prohibits Business Combinations
with Interested Shareholders occurring within five years of the date a person
first becomes an Interested Shareholder, unless special approval of the
transaction is obtained. For purposes of this statute, Business Combination is
defined to include mergers, sales of 10% or more of the corporation's net
assets, and certain issuances of securities, all involving the corporation and
any Interested Shareholder. Interested Shareholder has the same definition as
under the Georgia fair price statute. With limited exceptions, any Business
Combination with an Interested Shareholder within five years of the date such
person first became an Interested Shareholder requires approval in one of three
ways: (i) prior to such person becoming an Interested Shareholder, the
corporation's board of directors must have approved the Business Combination or
the transaction which resulted in the shareholder becoming an Interested
Shareholder; (ii) the Interested Shareholder must acquire at least 90% of the
outstanding voting stock of the corporation (other than shares owned by
officers, directors and their affiliates and associates) in the same
transaction in which such person becomes an Interested Shareholder; or (iii)
subsequent to becoming an Interested Shareholder, such person acquires
additional shares resulting in ownership of at least 90% of the outstanding
shares (other than shares owned by officers, directors and their affiliates and
associates), and obtains the approval of the Business Combination by the
holders of a majority of the shares entitled to vote thereon, exclusive of
shares held beneficially by the Interested Shareholder and its affiliates (and
shares owned by officers, directors and their affiliates and associates).
The WorldCom Articles contain a provision that requires the approval by the
holders of at least 70% of the voting power of the outstanding shares of any
class of stock of WorldCom entitled to vote generally in the election of
directors as a condition for Business Transactions (defined below) involving
WorldCom and a Related Person (defined below) or in which a Related Person has
an interest, unless (a) the Business Transaction is approved by at least a
majority of WorldCom's Continuing Directors (defined below) then serving on the
Board of Directors, but if
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the votes of such Continuing Directors would have been insufficient to
constitute an act of the Board of Directors, then such transaction must have
been approved by the unanimous vote of such Continuing Directors so long as
there were at least three such Continuing Directors serving on the Board of
Directors at the time of such unanimous vote, provided that no such Continuing
Director is a Related Person who has an interest in the Business Transaction
(other than a proportionate interest as a shareholder of WorldCom), or (b)
certain minimum price and procedural requirements are met. A "Business
Transaction" is defined to mean: (i) any merger, share exchange or
consolidation involving WorldCom or any of its subsidiaries; (ii) any sale,
lease, exchange, transfer or other disposition by WorldCom or any of its
subsidiaries of more than 20% of its assets; (iii) any sale, lease, exchange,
transfer or disposition of more than 20% of the assets of an entity to WorldCom
or a subsidiary of WorldCom; (iv) the issuance, sale, exchange, transfer or
other disposition by WorldCom or a subsidiary of WorldCom of any securities of
WorldCom or any subsidiary in exchange for cash, securities or other properties
having an aggregate fair market value of $15.0 million or more; (v) any merger,
share exchange or consolidation between WorldCom and any subsidiary of WorldCom
in which WorldCom is not the survivor and the charter of the surviving
corporation does not contain provisions similar to this provision; (vi) any
recapitalization or reorganization of WorldCom or reclassification of its
securities which would have the effect of increasing the voting power of a
Related Person; (vii) any liquidation, spin off, split off, split up or
dissolution of WorldCom; and (viii) any agreement, contract or other
arrangement providing for any of the Business Transactions defined or having a
similar purpose or effect. A "Related Person" is defined to mean a beneficial
owner which, together with its Affiliates and Associates (defined below),
beneficially owns 10% or more of WorldCom's outstanding voting stock or who had
such level of beneficial ownership: (a) at the time of entering into the
definitive agreement providing for the Business Transaction; (b) at the time of
adoption by the Board of Directors of a resolution approving such transaction;
or (c) as of the record date for the determination of shareholders entitled to
vote on or consent to the Business Transaction. A "Continuing Director" is a
director of WorldCom who either was a member of the Board of Directors on
September 15, 1993, or who became a director of WorldCom subsequent to such
date and whose election, or nomination for election by the shareholders, was
approved by at least a majority of the Continuing Directors then on the Board
of Directors. If the votes of such Continuing Directors would have been
insufficient to constitute an act of the Board of Directors, then such election
or nomination must have been approved by the unanimous vote of the Continuing
Directors so long as there were at least three such Continuing Directors on the
Board of Directors at the time of such unanimous vote. An "Affiliate" is
defined to mean a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such specified person. An "Associate" is defined to mean: (a) any corporation,
partnership or other organization of which such specified person is an officer
or partner; (b) any trust or other estate in which such specified person has a
substantial beneficial interest or as to which such specified person serves as
trustee or in a similar fiduciary capacity; (c) any relative or spouse of such
specified person, or any relative of such spouse, who has the same home as such
specified person or who is a director or officer of WorldCom or any of its
subsidiaries; and (d) any person who is a director, officer or partner of such
specified person or of any corporation (other than WorldCom or any wholly owned
subsidiary of WorldCom), partnership or other entity which is an Affiliate of
such specified person.
Reference is made to the full text of the WorldCom Articles and the WorldCom
Bylaws, which are incorporated by reference as exhibits to the Registration
Statement of which this Prospectus is a part. In addition, one of the effects
of the existence of unissued and unreserved WorldCom Common Stock and preferred
stock may be to enable the Board of Directors to issue shares to persons
friendly to current management, which could render more difficult or discourage
an attempt to obtain control of WorldCom by means of a merger, tender offer,
proxy contest or otherwise, and thereby protect the continuity of WorldCom's
management and possibly deprive the shareholders of opportunities to sell their
shares of WorldCom Common Stock at prices higher than the prevailing market
prices. Such additional shares also could be used to dilute the stock
ownership of persons seeking to obtain control of WorldCom.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences
associated with the exercise of the Warrants by Holders who acquire WorldCom
Common Stock as of the date hereof. Except where
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noted, this summary deals only with WorldCom Common Stock held as capital
assets held by United States Holders (as defined below) and does not deal with
special situations, such as those of dealers in securities or currencies,
financial institutions, life insurance companies, persons holding WorldCom
Common Stock or the Warrants as part of a hedging or conversion transaction or
a straddle or United States Holders whose "functional currency" is not the U.S.
dollar. Furthermore, the discussion below is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations,
rulings and judicial decisions thereunder as of the date hereof, and such
authorities may be repealed, revoked or modified so as to result in federal
income tax consequences different from those discussed below.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF WORLDCOM
COMMON STOCK PURSUANT TO THE EXERCISE OF A WARRANT SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES ARISING UNDER THE LAWS
OF ANY OTHER TAXING JURISDICTION.
This discussion only addresses the treatment of United States Holders,
including a citizen or resident of the United States, a corporation, a
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source.
SALE OR OTHER TAXABLE DISPOSITION OF WARRANTS
The sale or other taxable disposition of a Warrant will result in the
recognition of gain or loss to the United States Holder in an amount equal to
the difference between (a) the amount of cash and fair market value of property
received in exchange therefor and (b) the United States Holder's adjusted tax
basis in the Warrant. Assuming that, in connection with the BFP Merger, the
conversion of BFP warrants into the Warrants was a non-taxable transaction,
then the United States Holder's adjusted tax basis in a Warrant is the same as
the United States Holder's adjusted tax basis of the BFP warrant. If the
conversion, however, were determined to be a taxable exchange, then the United
States Holder's adjusted tax basis in the Warrant would be the fair market
value of a Warrant on the date of the conversion. Any gain or loss from the
sale or other disposition of a Warrant will be a capital gain or loss if the
Warrant is held as a capital asset with the meaning of Section 1221 of the
Code. Any such capital gain or loss will be a short-term, mid-term or long-term
capital gain depending on the length of time the United States Holder has owned
such Warrant. The tax consequences of such a sale or other taxable disposition
will be determined by the nature of the capital gain or loss.
Upon expiration of a Warrant, a United States Holder will recognize a
loss equal to such United States Holder's adjusted tax basis in the Warrant.
If the WorldCom Common Stock issuable upon exercise of the Warrant would have
been a capital asset of the United States Holder if acquired by the United
States Holder, such loss will be a capital loss.
EXERCISE OF WARRANT, COMMON STOCK DISPOSITION AND DIVIDENDS
As a general rule, no gain or loss will be recognized to a United
States Holder upon the exercise of a Warrant (except to the extent of cash, if
any, received in lieu of the issuance of fractional shares of WorldCom Common
Stock). The tax basis of a share of WorldCom Common Stock so acquired will be
equal to the sum of the United States Holder's adjusted tax basis in the
exercised Warrant and the exercise price, but the holding period of such share
will not include the holding period of the Warrant exercised. Instead, the
holding period of each share of WorldCom Common Stock acquired upon exercise of
a Warrant will commence upon the date of exercise. If any cash is received in
lieu of the issuance of fractional shares of WorldCom Common Stock, the United
States Holder will recognize gain or loss the amount and character of which
will be determined as if the United States Holder had received such fractional
shares and then immediately sold them for cash.
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Cash dividends paid with respect to shares of WorldCom Common Stock
will be included in the gross income of the United States Holder as ordinary
income to the extent paid out of the Company's current or accumulated earnings
and profits, as determined under the Code. Distributions that exceed the
earnings and profits of the Company are treated as a non-taxable return of
capital to the extent of the United States Holder's tax basis in such Common
Stock (reducing the United States Holder's remaining basis in such shares) and,
with respect to any distributions in excess of such basis, as taxable capital
gain.
Cash dividends generally are eligible for the dividends received
deduction allowed to corporations under the Code, subject to the restrictions
of Sections 246 and 1059 of the Code relating to limitations on the dividends
received deduction and extraordinary dividends, respectively. Corporate
Holders of WorldCom Common Stock should consult with their own tax advisors as
to the applicability of the dividends received deduction.
EXPERTS
The consolidated financial statements and schedule of WorldCom as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included in WorldCom's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, and are incorporated herein by reference, in reliance upon
the authority of such firm as experts in accounting and auditing in giving said
reports.
The consolidated financial statements and schedule of MFS as of
December 31, 1996 and for the period then ended (see Note 1 to the MFS
Consolidated Financial Statements), and for the year ended December 31, 1996,
included in WorldCom's Current Report on Form 8-K/A dated August 25, 1996
(filed December 19, 1997) and incorporated by reference into this registration
statement, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference, in reliance upon the authority of such firm
as experts in accounting and auditing in giving said reports.
The consolidated financial statements of MFS as of December 31, 1995
and 1994 and for each of the three and two years in the period ended December
31, 1995, included in WorldCom's Current Report on Form 8-K/A dated August 25,
1996 (filed November 4, 1996 and December 19, 1997) and incorporated by
reference into this registration statement, have been incorporated in reliance
on the reports of Coopers & Lybrand L.L.P., independent accountants, given upon
the authority of that firm as experts in accounting and auditing.
The consolidated financial statements of UUNET as of December 31, 1995
and 1994 and for each of the three years in the period ended December 31, 1995,
included in WorldCom's Current Report on Form 8-K/A dated August 25, 1996
(filed November 4, 1996) and incorporated by reference into this registration
statement, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements of MCI for the year ended
December 31, 1996 incorporated in this Prospectus by reference to WorldCom's
Current Report on Form 8-K/A-2 dated November 9, 1997 (filed January 28, 1998),
have been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses (other than underwriting
discounts and commissions), which other than the SEC registration fee are
estimates, payable by WorldCom in connection with the sale and distribution of
the shares registered hereby:
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . $5,734
Accounting fees and expenses . . . . $5,000
Legal Fees and expenses. . . . . . . $5,000
Miscellaneous expenses . . . . . . . $4,266
Total. . . . . . $20,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 14-2-202(b)(4) of the Georgia Business Corporation Code (the
"GBCC") provides that a corporation's articles of incorporation may include a
provision that eliminates or limits the personal liability of directors for
monetary damages to the corporation or its shareholders for any action taken,
or any failure to take any action, as a director, provided, however, that the
Section does not permit a corporation to eliminate or limit the liability of a
director for appropriating, in violation of his or her duties, any business
opportunity of the corporation, for acts or omissions including intentional
misconduct or a knowing violation of law, receiving from any transaction an
improper personal benefit, or voting for or assenting to an unlawful
distribution (whether as a dividend, stock repurchase or redemption, or
otherwise) as provided in Section 14-2-832 of the GBCC. Section
14-2-202(b)(4) also does not eliminate or limit the rights of WorldCom or any
shareholder to seek an injunction or other nonmonetary relief in the event of a
breach of a director's duty to the corporation and its shareholders.
Additionally, Section 14-2-202(b)(4) applies only to claims against a director
arising out of his or her role as a director, and does not relieve a director
from liability arising from his or her role as an officer or in any other
capacity.
The provisions of Article Ten of WorldCom's Second Amended and
Restated Articles of Incorporation are similar in all substantive respects to
those contained in Section 14-2-202(b)(4) of the GBCC as outlined above.
Article Ten further provides that the liability of directors of WorldCom shall
be limited to the fullest extent permitted by amendments to Georgia law.
Sections 14-2-850 to 14-2-859, inclusive, of the GBCC govern the
indemnification of directors, officers, employees, and agents. Section
14-2-851 of the GBCC permits indemnification of a director of WorldCom for
liability incurred by him or her in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including, subject to certain limitations, civil actions
brought as derivative actions by or in the right of WorldCom) in which he or
she is made a party by reason of being a director of WorldCom and of directors
who, at the request of WorldCom, act as directors, officers, partners,
trustees, employees or agents of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.
The Section permits indemnification if the director acted in good faith and
reasonably believed (a) in the case of conduct in his or her official capacity,
that such conduct was in the best interests of the corporation, (b) in all
other cases other than a criminal proceeding, that such conduct was at least
not opposed to the best interests of the corporation, and (c) in the case of a
criminal proceeding, that he or she had no reasonable cause to believe his or
her conduct was unlawful. If the required standard of conduct is met,
indemnification may include judgments, settlements, penalties, fines or
reasonable expenses (including attorneys' fees) incurred with respect to a
proceeding.
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A Georgia corporation may not indemnify a director under Section
14-2-851 (i) in connection with a proceeding by or in the right of the
corporation, except for reasonable expenses incurred by such director in
connection with the proceeding provided it is determined that such director met
the relevant standard of conduct set forth above, or (ii) in connection with
any proceeding with respect to conduct for which such director was adjudged
liable on the basis that he or she received an improper personal benefit.
Prior to indemnifying a director under Section 14-2-851 of the GBCC, a
determination must be made that the director has met the relevant standard of
conduct. Such determination must be made by: (i) a majority vote of a quorum
consisting of directors not at that time parties to the suit; (ii) a duly
designated committee of directors; (iii) duly selected special legal counsel;
or (iv) a vote of the shareholders, excluding shares owned by or voted under
the control of directors who are at the time parties to the suit.
A Georgia corporation may, before final disposition of a proceeding,
advance funds to pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding because he or she is a director,
provided that such director delivers to the corporation a written affirmation
of his or her good faith belief that he or she met the relevant standard of
conduct described in Section 14-2-851 of the GBCC, or that the proceeding
involves conduct for which such director's liability has been properly
eliminated by action of the corporation, and a written undertaking by the
director to repay any funds advanced if it is ultimately determined that such
director was not entitled to such indemnification. Section 14-2-852 of the
GBCC provides that directors who are successful with respect to any claim
brought against them, which claim is brought because they are or were directors
of WorldCom, are entitled to mandatory indemnification against reasonable
expenses incurred in connection therewith.
The GBCC also allows a Georgia corporation to indemnify directors made
a party to a proceeding without regard to the above-referenced limitations, if
authorized by the articles of incorporation or a bylaw, contract, or resolution
duly adopted by a vote of the shareholders of the corporation by a majority of
votes entitled to be cast, excluding shares owned or voted under the control of
the director or directors who are not disinterested, and to advance funds to
pay for or reimburse reasonable expenses incurred in the defense thereof,
subject to restrictions similar to the restrictions described in the preceding
paragraph; provided, however, that the corporation may not indemnify a director
adjudged liable (1) for any appropriation, in violation of his or her duties,
of any business opportunity of WorldCom, (2) for acts or omissions which
involve intentional misconduct or a knowing violation of law, (3) for unlawful
distributions under Section 14-2-832 of the GBCC, or (4) for any transaction in
which the director obtained an improper personal benefit.
Section 14-2-857 of the GBCC provides that an officer of WorldCom (but
not an employee or agent generally) who is not a director has the mandatory
right of indemnification granted to directors under Section 14-2-852, as
described above. In addition, WorldCom may, as provided by WorldCom's Second
Amended and Restated Articles of Incorporation, WorldCom's Bylaws, general or
specific actions by its board of directors or contract, indemnify and advance
expenses to an officer, employee or agent who is not a director to the extent
that such indemnification is consistent with public policy.
The indemnification provisions of Article X of WorldCom's Bylaws and
Article Eleven of WorldCom's Second Amended and Restated Articles of
Incorporation are consistent with the foregoing provisions of the GBCC.
However, WorldCom's Second Amended and Restated Articles of Incorporation
prohibit indemnification of a director who did not believe in good faith that
his or her actions were in, or not contrary to, WorldCom's best interests.
WorldCom's Bylaws extend the indemnification available to officers under the
GBCC to employees and agents.
WorldCom has agreed to indemnify the Selling Shareholder and each underwriter
thereof, including each person, if any, who controls the Selling Shareholder
against certain liabilities.
II-2
<PAGE> 32
ITEM 16. EXHIBITS
See Exhibit Index.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective amendment hereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a
II-3
<PAGE> 33
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Jackson, State of Mississippi, on the 29th day
of January, 1998.
WORLDCOM, INC.
By: /s/ SCOTT D. SULLIVAN
--------------------------
Scott D. Sullivan
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Bernard J. Ebbers, John W. Sidgmore, Scott D. Sullivan and Charles T. Cannada,
and each of them (with full power to each of them to act alone), his or her true
and lawful attorneys in fact and agents for him or her and on his or her behalf
and in his or her name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with exhibits and any and all other documents
filed with respect thereto, with the Securities and Exchange Commission (or any
other governmental or regulatory authority), granting unto said attorneys, and
each of them, full power and authority to do and to perform each and every act
and thing requisite and necessary to be done in and about the premises in order
to effectuate the same as fully to all intents and purposes as he or she might
or could do if personally present, hereby ratifying and confirming all that said
attorneys in fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Carl J. Aycock Director January 29, 1998
----------------------------------
Carl J. Aycock
/s/ Max E. Bobbitt Director January 29, 1998
----------------------------------
Max E. Bobbitt
Chairman, President and
Chief Executive Officer
/s/ Bernard J. Ebbers and Director (Principal January 29, 1998
---------------------------------- Executive Officer)
Bernard J. Ebbers
/s/ Francesco Galesi Director January 29, 1998
----------------------------------
Francesco Galesi
/s/ Richard R. Jaros Director January 29, 1998
----------------------------------
Richard R. Jaros
/s/ Stiles A. Kellett, Jr. Director January 29, 1998
------------------------------------------
Stiles A. Kellett, Jr.
/s/ David C. McCourt Director January 29, 1998
----------------------------------
David C. McCourt
</TABLE>
II-5
<PAGE> 35
<TABLE>
<S> <C> <C>
/s/ John A. Porter Director January 29, 1998
----------------------------------
John A. Porter
Vice Chairman of the
Board, Chief Operations
/s/ John W. Sidgmore Officer and Director January 29, 1998
----------------------------------
John W. Sidgmore
Chief Financial Officer
and Director (Principal
/s/ Scott D. Sullivan Financial Officer and January 29, 1998
---------------------------------- Principal Accounting
Scott D. Sullivan Officer)
/s/ Lawrence C. Tucker Director January 29, 1998
----------------------------------
Lawrence C. Tucker
</TABLE>
II-6
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
2.1 Amended and Restated Agreement and Plan of Merger by and among WorldCom, Inc. ("WorldCom"), BV Acquisition,
Inc. and Brooks Fiber Properties, Inc. ("BFP"), dated as of October 1, 1997 (incorporated herein by reference
to Exhibit 2.1 to BFP's Current Report on Form 8-K dated October 1, 1997 (filed October 6, 1997)(File 0-
28036))*
2.2 Purchase and Sale Agreement by and among America Online, Inc., ANS Communications, Inc. and WorldCom dated as
of September 7, 1997 (incorporated herein by reference to Exhibit 2.4 to WorldCom's Current Report on Form 8-K
dated September 7, 1997 (filed September 17, 1997) (File 0-11258))*
2.3 Agreement and Plan of Merger by and among WorldCom, TC Investments Corp. and MCI Communications Corporation
dated as of November 9, 1997 (incorporated herein by reference to Exhibit 2.1 to WorldCom's Current Report on
Form 8-K dated November 9, 1997 (filed November 12, 1997) (File 0-11258))*
2.4 Agreement by and among British Telecommunications plc, MCI Communications Corporation and WorldCom dated as of
November 9, 1997 (incorporated herein by reference to Exhibit 99.1 to WorldCom's Current Report on Form 8-K
dated November 9, 1997 (filed November 12, 1997) (File 0-11258))*
2.5 Agreement and Plan of Merger by and among WorldCom, H&R Block, Inc., H&R Block Group, Inc., CompuServe
Corporation and Walnut Acquisition Company L.L.C., dated as of September 7, 1997 (incorporated herein by
reference to Exhibit 2.1 to WorldCom's Current Report on Form 8-K dated September 7, 1997 (filed September 17,
1997) (File 0-11258))*
2.6 Stockholders Agreement by and among H&R Block, Inc., H&R Block Group, Inc., and WorldCom dated as of September
7, 1997 (incorporated herein by reference to Exhibit 2.2 to WorldCom's Current Report on Form 8-K dated
September 7, 1997 (filed September 17, 1997) (File 0-11258))*
2.7 Standstill Agreement by and among H&R Block, Inc., H&R Block Group, Inc. and WorldCom, dated as of September 7,
1997 (incorporated herein by reference to Exhibit 2.3 to WorldCom's Current Report on Form 8-K dated September
7, 1997 (filed September 17, 1997) (File 0-11258))*
4.1 Second Amended and Restated Articles of Incorporation of WorldCom (including preferred stock designations) as
of December 31, 1996 (incorporated herein by reference to Exhibit 3.1 to WorldCom's Current Report on Form
8-K, dated December 31, 1996 (File No. 0-11258))
4.2 Restated Bylaws of WorldCom (incorporated herein by reference to Exhibit 4.2 to WorldCom's Annual Report on
Form 10-K filed by WorldCom (File No. 0-11258) for the year ended December 31, 1996)
4.3 Deposit Agreement between WorldCom, The Bank of New York and the holders from to time of the Depositary Shares
representing 1/100 of a share of WorldCom Series A Preferred Stock (the
</TABLE>
II-7
<PAGE> 37
<TABLE>
<S> <C>
"WorldCom Depositary Shares") (incorporated herein by reference to Exhibit 4.5 to WorldCom's Registration
Statement on Form S-4 (File No. 333-16015))
4.4 Form of certificate representing WorldCom Depositary Shares (attached as Exhibit A to the Deposit Agreement
filed as Exhibit 4.3 hereto)
4.5 Rights Agreement dated as of August 25, 1996 between WorldCom and The Bank of New York, which includes the form
of Certificate of Designations, setting forth the terms of the Series 3 Junior Participating Preferred Stock,
par value $.01 per share, as Exhibit A, the form of Rights Certificate as Exhibit B and the Summary of
Preferred Stock Purchase Rights as Exhibit C (incorporated herein by reference to Exhibit 4 to the Current
Report on Form 8-K dated August 26, 1996 (as amended) filed by WorldCom with the Securities and Exchange
Commission on August 26, 1996 (File No. 0-11258)
4.6 Amendment No. 1 To Rights Agreement dated as of May 22, 1997 by and between WorldCom and The Bank of New York,
as Rights Agent (incorporated herein by reference to Exhibit 4.2 to WorldCom's Current Report on Form 8-K dated
May 22, 1997 (filed June 6, 1997) (File No. 0-11258))
4.7 Form of 7.55% Senior Note due 2004 (incorporated herein by reference to Exhibit 4.1 to WorldCom's Current
Report on Form 8-K dated March 26, 1997 (File No. 0-11258))
4.8 Form of 7.75% Senior Note due 2007 (incorporated herein by reference to Exhibit 4.2 to WorldCom's Current
Report on Form 8-K dated March 26, 1997 (File No. 0-11258))
4.9 Form of 7.75% Senior Note due 2027 (incorporated herein by reference to Exhibit 4.3 to WorldCom's Current
Report on Form 8-K dated March 26, 1997 (File No. 0-11258))
4.10 Senior Indenture dated March 1, 1997 by and between WorldCom, Inc. and Mellon Bank, N.A., as trustee
(incorporated herein by reference to Exhibit 4.6 to WorldCom's Form 10-Q for the period ended March 31, 1997
(File No. 0-11258))
4.11 Form of First Supplemental Indenture of WorldCom to Mellon Bank, N.A. relating to 9-3/8% Notes Due 2004 and 8-
7/8% Senior Notes Due 2006 (including form of 9-3/8% Senior Note Due 2004 attached as Exhibit A thereto and
form of 8-7/8% Senior Note Due 2006 attached as Exhibit B thereto) (incorporated herein by reference to Exhibit
4.9 to WorldCom's Registration Statement on Form S-4 (Registration No. 333-27345))
4.12 Facility A Revolving Credit Agreement among WorldCom, Inc., NationsBank of Texas, N.A. (Managing Agent and
Administrative Agent), Bank of America NT & SA, Bank of Montreal, The Bank of New York, The Bank of Nova
Scotia, Bank of Tokyo-Mitsubishi Trust Company, Barclays Bank PLC, Canadian Imperial Bank of Commerce, The
Chase Manhattan Bank, Citibank, N.A., Credit Lyonnais New York Branch, First Union National Bank, Fleet
National Bank, The Industrial Bank of Japan, Limited, Atlanta Agency, Morgan Guaranty Trust Company of New
York, Royal Bank of Canada, and Toronto Dominion (Texas), Inc. (Agents) and the Lenders named therein (Facility
A Lenders), dated as of July 3, 1997. (Incorporated herein by reference to Exhibit 10.1 to WorldCom's Current
Report on Form 8-K dated June 30, 1997 (File No. 0-11258))
4.13 Facility B Revolving Credit and Term Loan Agreement among WorldCom, Inc., NationsBank of Texas, N.A. (Managing
Agent and Administrative Agent), Bank of America NT & SA, Bank of Montreal, The Bank of New York, The Bank of
Nova Scotia, Bank of Tokyo-Mitsubishi Trust Company, Barclays Bank PLC, Canadian Imperial Bank of Commerce, The
Chase Manhattan
</TABLE>
II-8
<PAGE> 38
<TABLE>
<S> <C>
Bank, Citibank, N.A., Credit Lyonnais New York Branch, First Union National Bank, Fleet National Bank, The
Industrial Bank of Japan, Limited, Atlanta Agency, Morgan Guaranty Trust Company of New York, Royal Bank of
Canada, and Toronto Dominion (Texas), Inc. (Agents) and the Lenders named therein (Facility B Lenders), dated
as of July 3, 1997. (Incorporated herein by reference to Exhibit 10.2 to WorldCom's Current Report on Form 8-K
dated June 30, 1997 (File No. 0-11258))
4.15 Form of Series A Warrant
4.16 Form of Series B Warrant
5.1 Validity Opinion of WorldCom Counsel
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Coopers & Lybrand LLP
23.4 Consent of Arthur Andersen LLP
23.5 Consent of Price Waterhouse LLP**
23.6 Consent of WorldCom Counsel (included in Exhibit 5.1)
24.1 Power of Attorney(included in signature page)
- ----------------
</TABLE>
* The Registrant hereby agrees to furnish supplementally to the Commission a
copy of any omitted schedules to such Agreement upon the Commission's request.
** To be filed by amendment
II-9
<PAGE> 1
EXHIBIT 4.15: Form Series A Warrant
NEITHER THIS WARRANT NOR THE SHARES OF SERIES A PREFERRED STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES ACT, AND NEITHER THIS WARRANT NOR THE
SHARES OF SERIES A PREFERRED STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT CAN
BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO THE REGISTRATION PROVISIONS OF SUCH
ACTS OR AN EXEMPTION THEREFROM.
THE SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE, AND TRANSFER OF THIS WARRANT AND THE
SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE, TRANSFER AND VOTING OF THE SHARES OF
SERIES A PREFERRED STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO
THE TERMS AND CONDITIONS OF AN AGREEMENT AND PLAN OF MERGER DATED DECEMBER 19,
1995 AMONG THE COMPANY AND BROOKS TELECOMMUNICATIONS CORPORATION, COPIES OF
WHICH MAY BE OBTAINED UPON REQUEST FROM THE SECRETARY OF THE COMPANY.
_______________ Warrants
VOID AFTER ____________, ____
BROOKS FIBER PROPERTIES, INC.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received _______________________, or
registered assigns, is the owner of the number of Warrants set forth above,
each of which entitles the owner thereof to purchase, upon presentation and
surrender of this Warrant Certificate with the Form of Election to Purchase
attached hereto duly executed at any time prior to 4:00 P.M. (St. Louis time)
on ____________, ____, at the principal executive offices of Brooks Fiber
Properties, Inc., a Delaware corporation (the "Company"), one fully paid and
nonassessable share of the $.01 par value Series A Voting Convertible Preferred
Stock of the Company ("Series A Preferred Stock") at the following purchase
price per share ("Purchase Price"):
<TABLE>
<CAPTION>
Purchase Price
Per Share* If Exercised
--------------- ------------
<S> <C>
$220.00 Prior to [November 10, 1996];
$290.00 thereafter but prior
to [November 10, 1997];
$380.00 After [November 10, 1997].
</TABLE>
1
<PAGE> 2
* Purchase price to be adjusted to reflect the 20 for 1 Stock Split.
The Warrants evidenced by this Warrant Certificate may be exercised in whole
but not in part.
The number of Warrants evidenced by this Warrant Certificate (and the
number of shares of Series A Preferred Stock which may be purchased upon
exercise thereof) set forth above, and each of the Purchase Prices set forth
above, are the number and Purchase Prices as of December 31, 1995, based on the
shares of Series A Preferred Stock as constituted at such date. In order to
prevent dilution of the exercise rights granted under this Warrant, each of the
Purchase Prices set forth above and the number of shares of Series A Preferred
Stock which may be purchased upon exercise of this Warrant shall be subject to
adjustment from time to time as follows:
(i) Subdivision or Combination of Series A Preferred Stock. If
and whenever on or after the original date of issuance of this Warrant the
Company (A) subdivides (by any stock split, stock dividend, recapitalization or
otherwise) its outstanding shares of Series A Preferred Stock into a greater
number of shares, the Purchase Prices set forth above in effect immediately
prior to such subdivision shall be proportionately reduced, or (B) combines (by
reverse stock split or otherwise) its outstanding shares of Series A Preferred
Stock into a smaller number of shares, the Purchase Prices set forth above in
effect immediately prior to such combination shall be proportionately
increased. Whenever the Purchase Prices set forth above are adjusted, the
holder of this Warrant shall thereafter be entitled to purchase at the new
Purchase Prices the number of shares of Series A Preferred Stock obtained by
multiplying the Purchase Prices in effect immediately prior to such adjustment
by the number of shares of Series A Preferred Stock purchasable pursuant hereto
immediately prior to such adjustment and dividing the product thereof by the
new Purchase Prices.
(ii) Reorganization, Reclassification, Consolidation, Merger or
Sale. Any reorganization, reclassification, consolidation, merger, sale of all
or substantially all of the Company's assets to another person or other
transaction which is affected in such a manner that holders of Series A
Preferred Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Series A Preferred Stock is referred to herein as an "Organic Change". Prior
to the consummation of any Organic Change, the Company shall make appropriate
provision to insure that the holder of this Warrant shall thereafter have the
right to acquire and receive, in lieu of or in addition to (as the case may be)
the shares of Series A Preferred Stock immediately theretofore acquirable and
receivable upon the exercise of this Warrant, such shares of stock, securities
or assets as such holder would have received in connection with such Organic
Change if the holder of this Warrant had exercised this Warrant immediately
prior to such Organic Change. In each such case, the Company shall also make
appropriate provision to insure that the adjustment provisions of this Warrant
shall thereafter continue to apply (including, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing
entity is other than the Company, an immediate adjustment of the Purchase Price
to the value for the Series A Preferred Stock reflected by the terms of such
consolidation, merger or sale, and a corresponding immediate adjustment in the
number of shares of Series A Preferred Stock acquirable and receivable upon
exercise of this Warrant, if the value so reflected is less than the Purchase
Price in effect immediately prior to such consolidation, merger or sale). The
Company shall not effect any consolidation, merger or sale unless, prior to the
consummation thereof, the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets assumes by written instrument the obligation to deliver to the holder of
this Warrant such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to acquire.
2
<PAGE> 3
(iii) Certain Events. If any event occurs of the type
contemplated by the adjustment provisions of this Warrant but not expressly
provided for by such provisions, then the Company's board of directors shall
make an appropriate adjustment in the Purchase Prices set forth above so as to
protect the rights of the holder of this Warrant; provided that no such
adjustment shall increase the Purchase Prices set forth above as otherwise
determined pursuant hereto or decrease the number of shares of Series A
Preferred Stock issuable upon exercise of this Warrant.
(iv) Notices. Immediately upon any adjustment of the Purchase
Price, the Company shall give written notice thereof to the holder of this
Warrant, setting forth in reasonable detail and certifying the calculation of
such adjustment. The Company shall also give written notice to the holder of
this Warrant at least 20 days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or distribution upon
the Series A Preferred Stock or upon its $0.01 par value Voting Common Stock
("Common Stock"), (B) with respect to any pro rata subscription offer to
holders of the Series A Preferred Stock or the Common Stock or (C) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation, and the date on which any Organic Change shall take place.
(v) Purchase Rights. If at any time the Company grants, issues
or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property (the "Purchase Rights") pro rata to each
record holder of the Series A Preferred Stock or the Common Stock, in its
capacity as such record holder, then the holder of this Warrant shall
thereafter be entitled to acquire, in addition to the shares of Series A
Preferred Stock acquirable and receivable upon exercise of this Warrant (and
the shares of Common Stock issuable upon conversion thereof), and upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which
such holder could have acquired if such holder had held the number of shares of
Series A Preferred Stock acquirable upon exercise of this Warrant (or the
shares of Common Stock issuable upon conversion thereof) immediately before the
date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the
record holders of the Series A Preferred Stock or the Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
The Company covenants that it will at all times reserve and keep
available out of its authorized Series A Preferred Stock and Common Stock,
solely for the purpose of issuance upon exercise of this Warrant and conversion
of the shares of Series A Preferred Stock issuable upon exercise of this
Warrant, such number of shares of Series A Preferred Stock and Common Stock as
shall from time to time be issuable upon the exercise of this Warrant and
conversion of the shares of Series A Preferred Stock issuable upon exercise of
this Warrant; and if at any time the number of authorized but unissued and
issued but not outstanding shares of the Series A Preferred Stock and Common
Stock, on a fully diluted basis, shall not be sufficient to effect the exercise
of this Warrant at the Purchase Price then in effect and conversion of the
shares of Series A Preferred Stock issuable upon exercise of this Warrant, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued or issued but not
outstanding shares of the Series A Preferred Stock and Common Stock to such
number of shares as shall be sufficient for such purpose. The Company
covenants that all shares of Series A Preferred Stock and Common Stock which
shall be so issuable, when issued upon exercise of this Warrant or conversion
of such Series A Preferred Stock, shall be duly and validly issued, fully-paid
and non-assessable.
The issuance of certificates for shares of the Series A Preferred
Stock upon the exercise of this Warrant shall be made without charge to the
holder hereof for any issuance tax in respect of the issuance of such
certificates or other cost incurred by the Company in connection with such
exercise and the related issuance of shares of Series A Preferred Stock.
3
<PAGE> 4
No holder of this Warrant Certificate shall be entitled to vote or
receive dividends or be deemed the holder of Series A Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action (whether upon any recapitalization,
issue of stock, reclassification of stock, change of par value, consolidation,
merger, conveyance, or otherwise), or except as provided above, to receive
notice of meetings, or to receive dividends of subscription rights or
otherwise, until the Warrant or Warrants evidenced by this Warrant Certificate
shall have been exercised.
Every holder of this Warrant Certificate by accepting the same
consents and agrees with the Company that:
(a) This Warrant Certificate is transferable only on the registry
books of the Company if surrendered at the principal office of the
Company, duly endorsed, or accompanied by a proper instrument of
transfer; and
(b) The Company may deem and treat the person in whose name this
Warrant Certificate is registered as the absolute owner thereof and of
the Warrants evidenced hereby (notwithstanding any notations of
ownership or writing on this Warrant Certificate made by anyone other
than the Company) for all purposes whatsoever, and the Company shall
not be affected by any notice to the contrary.
All notices, demands and other communications provided for hereunder
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, one business day after being sent to the recipient
by reputable express courier service (charges prepaid) or three business days
after being mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be delivered or sent (i) to the Company at its principal
executive offices and (ii) to the holder of this Warrant at its address as it
appears on the Company's records (or such other address as may be indicated by
the holder of this Warrant upon written notice to the Company).
THIS WARRANT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
SUBSTANTIVE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CONFLICTS OF
LAWS PRINCIPLES.
4
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and issued by its duly authorized officer as of ____________, ____.
BROOKS FIBER PROPERTIES, INC.
By:
-----------------------------------
Vice Chairman
ATTEST:
- -----------------------------------
Secretary
5
<PAGE> 6
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED IF HOLDER DESIRES TO EXERCISE THIS WARRANT CERTIFICATE.)
To Brooks Fiber Properties, Inc.
The undersigned hereby irrevocably elects to exercise the Warrants
represented by this Warrant Certificate to purchase the shares of Series A
Preferred Stock issuable upon the exercise of such Warrants and requests that
certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
Dated: _______________________________, 199_____
__________________________________________________
Signature
(SIGNATURE MUST CONFORM IN ALL RESPECTS TO NAME OF
HOLDER AS SPECIFIED ON THE FACE OF THIS WARRANT
CERTIFICATE)
<PAGE> 7
FORM OF ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER DESIRES TO TRANSFER
THIS WARRANT CERTIFICATE.)
FOR VALUE RECEIVED ___________ hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
____________________________________ this Warrant Certificate, together with
all right, title and interest therein, and does hereby irrevocably constitute
and appoint ________________________________________________________ Attorney,
to transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ______________________________, 199____
__________________________________________________
Signature
(SIGNATURE MUST CORRESPOND IN ALL RESPECTS TO THE
NAME OF HOLDER AS SPECIFIED ON THE FACE OF THIS
WARRANT CERTIFICATE).
<PAGE> 1
EXHIBIT 4.16: Form Series B Warrant
[LANGUAGE IN BRACKETS IS CONTAINED IN SOME, BUT NOT ALL, OF THE WARRANTS]
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES ACT, AND NEITHER THIS WARRANT NOR THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT CAN BE SOLD OR TRANSFERRED EXCEPT
PURSUANT TO THE REGISTRATION PROVISIONS OF SUCH ACTS OR AN EXEMPTION THEREFROM.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER CONTAINED IN A CERTAIN
_______________ AGREEMENT BY AND AMONG THE COMPANY AND THE PURCHASER HEREOF, A
COPY OF WHICH IS AVAILABLE AT THE PRINCIPAL OFFICES OF THE COMPANY.
THIS WARRANT CERTIFICATE IS ISSUED PURSUANT TO SECTION ______ OF THE
___________ AGREEMENT BETWEEN __________ AND THE COMPANY DATED
_________________ IN SUBSTITUTION FOR _____ WARRANTS TO PURCHASE SHARES OF BTC
COMMON STOCK FOR $____ PER SHARE.
______ Warrants
VOID AFTER _______________
BROOKS FIBER PROPERTIES, INC.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received ____________ or registered
assigns, is the owner of the number of Warrants set forth above, each of which
entitles the owner thereof to purchase at any time prior to 4:00 P.M. (St.
Louis time) on ___________, at the principal executive offices of Brooks Fiber
Properties, Inc., a Delaware corporation (the "Company"), one fully paid and
nonassessable share of the Voting Common Stock, $.01 par value ("Common Stock")
of the Company at the purchase price of $____ per share ("Purchase Price") upon
presentation and surrender of this Warrant Certificate with the Form of
Election to Purchase attached hereto duly executed [, together with payment to
the Company of the Purchase Price.]. Payment may be made either in cash, or,
at the option of the holder of this Warrant, in shares of Common Stock having a
Market Price on date of exercise equal to the aggregate Purchase Price of the
shares of Common Stock being purchased upon
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<PAGE> 2
exercise hereof. The Warrants evidenced by this Warrant Certificate may be
exercised in whole but not in part. No fractional shares of Common Stock will
be issued upon exercise of the Warrants evidenced hereby. [As soon as
practicable after exercise of this Warrant (but in any event within five
business days thereafter) the Company shall deliver to the Person of Persons
specified in the Election to Purchase a certificate or certificates
representing the number of shares of Common Stock issuable upon exercise of
this Warrant in such name or names and such denomination or denominations as
the holder of this Warrant shall specify in the Election to Purchase.]
The number of Warrants evidenced by this Warrant Certificate (and the
number of shares of Common Stock which may be purchased upon exercise thereof)
set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of January 2, 1996, based on the shares of Common Stock of
the Company as constituted at such date. In order to prevent dilution of the
exercise rights granted under this Warrant, the Purchase Price shall be subject
to adjustment from time to time as follows:
(i) If and whenever on or after the original date of issuance of
this Warrant, the Company issues or sells, or in accordance with subparagraphs
(A) or (B) of paragraph (ii) below is deemed to have issued or sold, any shares
of its Common Stock for a consideration per share less than $12.50 per share,
then forthwith upon such issue or sale the Purchase Price shall be reduced to
the Purchase Price determined by dividing (A) the sum of (I) the product
derived by multiplying the Purchase Price in effect immediately prior to such
issue or sale times the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale, plus (II) the consideration, if any,
received by the Company upon such issue or sale, by (B) the number of shares of
Common Stock Deemed Outstanding immediately after such issue or sale; provided
that there shall be no adjustment in the Purchase Price as a result of any
issuance or sale (or deemed issuance or sale) of (1) up to an aggregate of
4,220,320 shares of Common Stock to employees of the Company and its
Subsidiaries pursuant to stock option plans and stock ownership plans approved
by the Company's board of directors, (2) 16,517,980 shares of Common Stock
issuable upon conversion of shares of Preferred Stock outstanding on the date
hereof, (3) 192,340 shares of Common Stock issuable pursuant to 9,617 Series A-
2 Preferred Stock Purchase Warrants outstanding on the date hereof, (4)
1,631,940 shares of Common Stock issuable pursuant to 81,597 Series A-1
Preferred Stock Purchase Warrants issuable pursuant to the Merger Agreement and
(5) 814,520 shares of Common Stock issuable pursuant to Common Stock Purchase
Warrants issuable pursuant to the Merger Agreement (as such number of shares in
clauses (1) through (5) and such price of $12.50 per share may be
proportionately adjusted for subsequent stock splits, combinations and
dividends affecting the Common Stock). Whenever the Purchase Price is
adjusted, the holder of this Warrant shall thereafter be entitled to purchase
at the new Purchase Price the number of shares of Common Stock obtained by
multiplying the Purchase Price in effect immediately prior to such adjustment
by the number of shares of Common Stock purchasable pursuant hereto immediately
prior to such adjustment and dividing the product thereof by the new Purchase
Price. As used herein, the term "Common Stock Deemed Outstanding" means, at
any given time, the number of shares of Common Stock actually outstanding at
such time, plus the number of shares of Common Stock deemed to be outstanding
pursuant to subparagraphs (A) and (B) of paragraph (ii) below.
(ii) For purposes of determining the adjusted Purchase Price, the
following shall be applicable:
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<PAGE> 3
(A) Issuance of Rights or Options. If [and whenever on or
after the original date of issuance of this Warrant] the Company in any manner
grants any rights or options to subscribe for or to purchase Common Stock or
any stock or other securities convertible into or exchangeable for Common Stock
(such rights or options being herein called "Options" and such convertible or
exchangeable stock or securities being herein called "Convertible Securities")
and the price per share for which Common Stock is issuable upon the exercise of
such Options or upon conversion or exchange of such Convertible Securities is
less than $12.50 per share, then the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities shall be deemed to
be outstanding and to have been issued and sold by the Company at the time of
the granting of such Options for such price per share. For purposes of this
paragraph, the "price per share for which Common Stock is issuable" shall be
determined by dividing (I) the total amount, if any, received or receivable by
the Company as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Company upon
exercise of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (II) the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further adjustment
of the Purchase Price shall be made when Convertible Securities are actually
issued upon the exercise of such Options or when Common Stock is actually
issued upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(B) Issuance of Convertible Securities. If [and whenever on
or after the original date of issuance of this Warrant] the Company in any
manner issues or sells any Convertible Securities and the price per share for
which Common Stock is issuable upon such conversion or exchange of such
Convertible Securities is less than $12.50 per share, then the maximum number
of shares of Common Stock issuable upon conversion or exchange of such
Convertible Securities shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such
Convertible Securities for such price per share. For the purposes of this
paragraph, the "price per share for which Common Stock is issuable" shall be
determined by dividing (I) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof, by (II) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment of the
Purchase Price shall be made when Common Stock is actually issued upon the
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustments of the Purchase Price had been or are to be made pursuant to
other provisions hereof, no further adjustment of the Purchase Price shall be
made by reason of such issue or sale.
(C) Change in Option Price or Conversion Rate. If the
exercise price provided for in any Options, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock change at any time, the Purchase Price in effect
at the time of
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<PAGE> 4
such change shall be readjusted to the Purchase Price which would have been in
effect at such time had such Options or Convertible Securities provided for
such changed exercise price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold;
provided that if such adjustment would result in an increase of the Purchase
Price then in effect, such adjustment shall not be effective until 30 days
after written notice thereof has been given by the Company to the holder of
this Warrant.
(D) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right
to convert or exchange any Convertible Security without the exercise of any
such Option or right, the Purchase Price then in effect hereunder shall be
adjusted to the Purchase Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Security, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that if such expiration or termination would result in an
increase in the Purchase Price then in effect, such increase shall not be
effective until 30 days after written notice thereof has been given to the
holder of this Warrant.
(E) Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount received by the Company therefor. In case any
Common Stock, Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for consideration other than cash, the amount of the
consideration other than cash received by the Company shall be the fair value
of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company shall be the
Market Price thereof as of the date of receipt. If any Common Stock, Options
or Convertible Securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the surviving
corporation, the amount of consideration therefor shall be deemed to be the
fair value of such portion of the net assets and business of the nonsurviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash and securities shall be determined by a majority of the Company's board of
directors (including two-thirds of its Outside Directors). As used herein,
the term "Market Price" of any security means the average of the closing sales
prices of such security on all securities exchanges on which such security may
at the time be listed, or, if there has been no sale on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security
is not quoted in the NASDAQ System, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by
the National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which "Market Price" is being determined and the 20 consecutive
business days prior to such day. If at any time such security is not listed on
any securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the "Market Price" shall be the fair value thereof determined jointly
by [the Board of Directors of] the Company and the holder of this Warrant. If
such parties are unable to reach agreement within a reasonable period of time,
such fair value shall be determined by an independent appraiser experienced in
valuing securities jointly selected by the Company and the holder of this
Warrant. The determination of such
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<PAGE> 5
appraiser shall be final and binding upon the parties, and the Company shall
pay the fees and expenses of such appraiser.
(F) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Option by the parties thereto, the Option shall be deemed to
have been issued for a consideration of $.01.
(G) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary of the Company, and the
disposition of any shares so owned or held shall be considered an issue or sale
of Common Stock.
(H) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (a) to receive a
dividend or other distribution payable in Common Stock, Options or Convertible
Securities or (b) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or upon the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(I) Subdivision or Combination of Common Stock. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) its outstanding shares of Common Stock into a
greater number of shares, the Purchase Price in effect immediately prior to
such subdivision, and the price of $12.50 per share in clauses (A) and (B)
above, shall be proportionately reduced, and if the Company at any time
combines (by reverse stock split or otherwise) its outstanding shares of Common
Stock into a smaller number of shares, the Purchase Price in effect immediately
prior to such combination, and the price of $12.50 per share in clauses (A) and
(B) above, shall be proportionately increased.
(J) Reorganization, Reclassification, Consolidation, Merger
or Sale. Any reorganization, reclassification, consolidation, merger, sale of
all or substantially all of the Company's assets to another Person or other
transaction which is affected in such a manner that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is
referred to herein as an "Organic Change". Prior to the consummation of any
Organic Change, the Company shall make appropriate provision to insure that the
holder of this Warrant shall thereafter have the right to acquire and receive,
in lieu of or in addition to (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the exercise of this
Warrant, such shares of stock, securities or assets as such holder would have
received in connection with such Organic Change if the holder of this Warrant
had exercised this Warrant immediately prior to such Organic Change. In each
such case, the Company shall also make appropriate provision to insure that the
adjustment provisions of this Warrant shall thereafter continue to apply
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Purchase Price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of
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<PAGE> 6
Common Stock acquirable and receivable upon exercise of this Warrant, if the
value so reflected is less than the Purchase Price in effect immediately prior
to such consolidation, merger or sale). The Company shall not effect any
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets assumes by
written instrument the obligation to deliver to the holder of this Warrant such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
(K) Certain Events. If any event occurs of the type
contemplated by the adjustment provisions of this Warrant but not expressly
provided for by such provisions (including, without limitation, the granting of
stock appreciation rights, phantom stock rights or other rights with equity
features), then the Company's board of directors shall make an appropriate
adjustment in the Purchase Price so as to protect the rights of the holder of
this Warrant; provided that no such adjustment shall increase the Purchase
Price as otherwise determined pursuant hereto or decrease the number of shares
of Common Stock issuable upon exercise of this Warrant.
(L) Notices. Immediately upon any adjustment of the Purchase
Price, the Company shall give written notice thereof to the holder of this
Warrant, setting forth in reasonable detail and certifying the calculation of
such adjustment. The Company shall also give written notice to the holder of
this Warrant at least 20 days prior to the date on which the Company closes its
books or takes a record (I) with respect to any dividend or distribution upon
the Common Stock, (II) with respect to any pro rata subscription offer to
holders of the Common Stock or (III) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation, and the date on
which any Organic Change shall take place.
(M) Purchase Rights. If at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property (the "Purchase Rights") pro rata
to each record holder of the Common Stock, in its capacity as such record
holder, then the holder of this Warrant shall thereafter be entitled to
acquire, in addition to the shares of Common Stock acquirable and receivable
upon exercise of this Warrant, and upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such holder could have acquired if
such holder had held the number of shares of Common Stock acquirable upon
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of this Warrant, such number of shares of Common Stock
as shall from time to time be issuable upon the exercise of this Warrant; and
if at any time the number of authorized but unissued and issued but not
outstanding shares of the Common Stock, on a fully diluted basis, shall not be
sufficient to effect the exercise of this Warrant at the Purchase Price then in
effect, the Company will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued or issued but
not outstanding shares of the Common Stock to such number of shares as shall be
sufficient for such purpose. The Company covenants that all shares of Common
Stock which shall be so issuable, when issued upon conversion of this Warrant,
shall be duly and validly issued, fully-paid and non-assessable.
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<PAGE> 7
[Upon receipt of evidence reasonably satisfactory to the Company (an
affidavit of the original registered holder of this Warrant shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation
of this Warrant certificate, and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity reasonably satisfactory to the
Company (the agreement of indemnity of the original registered holder of this
Warrant shall be satisfactory), or, in the case of any such mutilation, upon
surrender of the mutilated Warrant certificate, the Company (at its expense)
shall execute and deliver in lieu of this Warrant certificate a new Warrant
certificate of like kind representing the same number of Warrants represented
by the lost, stolen, destroyed or mutilated Warrant certificate and dated the
date thereof.]
The issuance of certificates for shares of the Common Stock upon the
exercise of this Warrant shall be made without charge to the holder hereof for
any issuance tax in respect of the issuance of such certificates or other cost
incurred by the Company in connection with such exercise and the related
issuance of shares of Common Stock.
No holder of this Warrant Certificate shall be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise), or except as provided above, to receive notice of
meetings, or to receive dividends of subscription rights or otherwise, until
the Warrant or Warrants evidenced by this Warrant Certificate shall have been
exercised.
Every holder of this Warrant Certificate by accepting the same
consents and agrees with the Company that:
(a) The Warrant Certificates are transferable only on the
registry books of the Company if surrendered at the principal office
of the Company or its transfer agent, duly endorsed, or accompanied by
a proper instrument of transfer; and
(b) The Company may deem and treat the person in whose name the
Warrant Certificate is registered as the absolute owner thereof and of
the Warrants evidenced thereby (notwithstanding any notations of
ownership or writing on the Warrant Certificates made by anyone other
than the Company) for all purposes whatsoever, and the Company shall
not be affected by any notice to the contrary.
All notices, demands and other communications provided for hereunder
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, one Business Day after being sent to the recipient
by reputable express courier service (charges prepaid) or three Business Days
after being mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be delivered or sent (i) to the Company at its principal
executive offices and (ii) to the holder of this Warrant at its
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<PAGE> 8
address as it appears on the Company's records (or such other address as may be
indicated by the holder of this Warrant upon written notice to the Company).
THIS WARRANT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
SUBSTANTIVE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CONFLICTS OF
LAWS PRINCIPLES.
Any legal action or proceeding with respect to this Warrant may be
brought in the courts of the City of St. Louis, State of Missouri, or of the
United States of America for the Eastern District of Missouri in St. Louis,
Missouri, and, by execution and issuance or acceptance of this Warrant, the
Company and the holder of this Warrant hereby accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Company and the holder of this Warrant further
irrevocably consents to the service of process out of any of the aforementioned
courts in any action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the Company at its principal
executive offices and to the holder of this Warrant at its address as it
appears on the Company's records (or such other address as may be indicated by
the holder of this Warrant upon written notice to the Company), such service to
become effective seven days after such mailing. Nothing herein shall affect
the right of the Company or the holder of this Warrant to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed in any other jurisdiction. The Company and the holder of this Warrant
further hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Warrant brought in the courts
referred to above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
This Warrant is issued pursuant to the terms of a __________
Agreement, dated as of ______________ (the "Purchase Agreement"), between BTC
and the holder of this Warrant, and the [holder/Purchaser] of this Warrant is
entitled to the benefits thereof. Initially capitalized terms which are not
otherwise defined herein are used herein as defined in the Purchase Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and issued by its duly authorized officer as of ________________.
BROOKS FIBER PROPERTIES, INC.
By:_______________________________________________
James C. Allen
Vice Chairman and Chief Executive Officer
ATTEST:
_____________________________________
John P. Denneen, Secretary
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<PAGE> 9
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED IF HOLDER DESIRES TO EXERCISE THE WARRANT CERTIFICATE.)
To Brooks Fiber Properties, Inc.:
The undersigned hereby irrevocably elects to exercise the 55,540
Warrants represented by this Warrant Certificate to purchase the shares of
Common Stock issuable upon the exercise of such Warrants and requests that
certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
Dated: __________________, 19______
__________________________________________________
Signature
(SIGNATURE MUST CONFORM IN ALL RESPECTS TO NAME OF
HOLDER AS SPECIFIED ON THE FACE OF THIS WARRANT
CERTIFICATE)
<PAGE> 10
FORM OF ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER DESIRES TO
TRANSFER THE WARRANT CERTIFICATE.)
FOR VALUE RECEIVED ___________________________________________________________
hereby sells, assigns and transfers unto ___________________________________
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ____________________, 19_____
__________________________________________________
Signature
(SIGNATURE MUST CORRESPOND IN ALL RESPECTS TO THE
NAME OF HOLDER AS SPECIFIED ON THE FACE OF THIS
WARRANT CERTIFICATE).
<PAGE> 1
EXHIBIT 5.1
January 28, 1998
Board of Directors of
WorldCom, Inc.
515 East Amite Street
Jackson, Mississippi 39201
Ladies and Gentlemen:
I am General Counsel of WorldCom, Inc., a Georgia corporation (the
"Company" or "WorldCom"), and have reviewed a Registration Statement on Form
S-3, including the related Prospectus (the "Registration Statement"), which the
Company proposes to file with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), relating
to the proposed public offering and sale of 595,700 shares (the "Shares") of
Common Stock, par value $.01, of the Company that may be issued to the holders
of the warrants described therein (the "Warrants"). The Form S-3 is being filed
by WorldCom in connection with the Amended and Restated Agreement and Plan of
Merger by and among WorldCom, Brooks Fiber Properties, Inc. and BV Acquisition,
Inc. dated as of October 1, 1997, as described more particularly in the
Prospectus constituting part of the Registration Statement. Capitalized terms
used herein and not otherwise defined have the meanings assigned to them in the
Prospectus referred to above.
In connection herewith, I or members of my staff have examined and
relied without investigation as to matters of fact upon the Registration
Statement, the Second Amended and Restated Articles of Incorporation and Bylaws
of the Company, certificates of public officials, certificates and statements
of officers of the Company, and such other corporate records, documents,
certificates and instruments as I have deemed necessary or appropriate to enable
me to render the opinions expressed herein. I have assumed the genuineness of
all signatures on all documents examined by me, the authenticity of all
documents submitted to me as originals, and the conformity to authentic
originals of all documents submitted to me as certified or photostatic copies. I
have also assumed the due authorization, execution and delivery of all
documents.
Subject to the effectiveness of the Registration Statement under the
Act, I am of the opinion that:
1. The Company is a corporation validly existing under the laws
of the State of Georgia; and
2. Upon exercise of the Warrants in accordance with the terms,
then the Shares will be legally issued, fully paid and
nonassessable.
This opinion is not rendered with respect to any laws other than the laws of
the State of Georgia.
<PAGE> 2
I hereby consent to the filing of this opinion as Exhibit 5.1 to the
aforesaid Registration Statement on Form S-3. I also consent to your filing
copies of this opinion as an exhibit to the Registration Statement with
agencies of such states as you deem necessary in the course of complying with
the laws of such states regarding the offering and sale of the Shares. In
giving this consent, I do not admit that I am in the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Commission.
Very truly yours,
/s/ William E. Anderson
-----------------------------------
William E. Anderson
General Counsel
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3, to be filed on or around
January 29, 1998, of our report dated February 26, 1997, included in WorldCom,
Inc.'s Form 10-K for the year ended December 31, 1996 and to all references to
our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Jackson, Mississippi,
January 26, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3, to be filed on or around
January 29, 1998, of our reports dated February 20, 1997, on the Consolidated
Financial Statements of MFS Communications Company, Inc. included in WorldCom,
Inc.'s Current Report on Form 8-K dated August 25, 1996, as amended by Form
8-K/A filed on December 19, 1997, and to all references to our Firm included in
this registration statement.
ARTHUR ANDERSEN LLP
Omaha, Nebraska,
January 26, 1998.
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 (File No. 333-_____) of WorldCom, Inc. of our reports dated February
14, 1996, on our audits of the consolidated financial statements of MFS
Communications Company, Inc. as of December 31, 1995 and 1994 and for each of
the three and two years in the period ended December 31, 1995 which reports are
included in WorldCom Inc.'s Current Report on Form 8-K/A dated August 25, 1996
(as amended on November 4, 1996 and December 19, 1997). We also consent to the
reference to our Firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Omaha, Nebraska
January 26, 1998
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3, to be filed on or around
January 29, 1998, of our report dated January 31, 1996, on the Consolidated
Financial Statements of UUNET Technologies, Inc. included in WorldCom, Inc.'s
Current Report on Form 8-K dated August 25, 1996, as amended by Form 8-K/A filed
on November 4, 1996, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Washington, D.C.,
January 26, 1998
