<PAGE> 1
As filed with the Securities and Exchange Commission on October 1, 1999
Registration No. 333-85919
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
-----------------------
POST-EFFECTIVE AMENDMENT NO 1 ON FORM S-8 TO
REGISTRATION STATEMENT ON FORM S-4
UNDER THE SECURITIES ACT OF 1933
-----------------------
MCI WORLDCOM, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1521612
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 CLINTON CENTER DRIVE
CLINTON, MISSISSIPPI 39056
(Address, including zip code,
of registrant's principal executive offices)
SKYTEL COMMUNICATIONS, INC. SECTION 401(k) EMPLOYEE RETIREMENT PLAN
MCI WORLDCOM/SKYTEL COMMUNICATIONS, INC. 1990 EXECUTIVE INCENTIVE PLAN
MCI WORLDCOM/SKYTEL COMMUNICATIONS, INC. 1988 EXECUTIVE INCENTIVE PLAN
MCI WORLDCOM/SKYTEL COMMUNICATIONS, INC. LONG-TERM MANAGEMENT INCENTIVE PLAN
================================================================================
(Full title of the plan(s))
P. BRUCE BORGHARDT, ESQ.
MCI 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)
------------------------------
This Post-Effective Amendment on Form S-8 to Registration Statement
on Form S-4 (this "Registration Statement") covers 830,000 shares of Common
Stock, par value $0.01, and associated preferred stock purchase rights of the
Registrant originally registered on Registration Statement No. 333-85919 on Form
S-4 (the "S-4 Registration Statement") to which this is an amendment. The
registration fees in respect to the securities registered hereby were paid at
the time of the original filing of the S-4 Registration Statement. In addition,
pursuant to Rule 416(c) under the Securities Act of 1933, as amended (the
"Securities Act"), this Registration Statement also covers an indeterminate
amount of interests to be offered or sold pursuant to the above-referenced
Plans. This Registration Statement also covers such additional shares as may be
issuable pursuant to antidilution provisions.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") by MCI WORLDCOM, Inc. ("MCI WorldCom" or the
"Company") (formerly Resurgens Communications Group, Inc.) under File No.
000-11258 (formerly File No. 1-10415, in the case of Resurgens) or by SkyTel
Communications, Inc. ("SkyTel") under File No. 0-17316 with respect to the
SkyTel Section 401(k) Employee Retirement Plan (the "SkyTel 401(k) Plan") (and
together with the MCI WorldCom/SkyTel 1990 Executive Incentive Plan, the MCI
WorldCom/SkyTel 1988 Executive Incentive Plan and the MCI WorldCom/SkyTel Long-
Term Management Incentive Plan, the "Plans") pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act") are incorporated herein by
reference and shall be deemed to be a part hereof.
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (the "MCI WorldCom 1998 Form 10-K");
2. The Company's Quarterly Report on Form 10-Q for the quarterly
periods ended March 31, 1999 and June 30, 1999;
3. MCI WorldCom's Current Report on Form 8-K/A dated August 26, 1996
(filed December 19, 1997), Form 8-K/A-3 dated November 9, 1997
(filed May 28, 1998) and Form 8-K dated July 12, 1999 (filed July
12, 1999)
4. The description of the Company'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 the Company'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 the
Company's Special Meeting of Shareholders held on December 20,
1996, under the following captions: "Description of WorldCom
Capital Stock" and "Comparative Rights of Shareholders" and the
descriptions contained in the Company's Proxy Statement dated
April 23, 1999 under the following captions: "Approval of
Amendment to Second Amended and Restated Articles of
Incorporation, as Amended, To Increase Authorized Shares of Common
Stock" and " Future Proposals of Security Holders.
5. The description of the Company's Preferred Stock Purchase Rights
contained in the Company's Registration Statement on Form 8-A
dated August 26, 1996, as updated by the Company's Current Report
on Form 8-K dated May 22, 1997 (filed June 6, 1997); and
6. The description of the Company's Series B Convertible Preferred
Stock contained in the Company's Registration Statement on Form
8-A dated November 13, 1996.
7. The description of the Company's Series C $2.25 Cumulative
Convertible Exchangeable Preferred Stock contained in the
Company's Registration Statement on Form 8-A dated August 26,
1999.
All documents filed by MCI WorldCom or the Plans with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, as amended,
subsequent to the date hereof and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and into the
respective prospectus for the Plans and to be a part hereof and thereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated herein and therein by reference, shall
be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein and therein or in any
other subsequently filed document incorporated or deemed to be incorporated by
reference, which statement is also incorporated herein and therein 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 Registration Statement or the prospectus.
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ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 14-2-202(b)(4) of the Georgia Business Corporation Code (the
"Georgia Code") provides that 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 Georgia Code. Section
14-2-202(b)(4) also does not eliminate or limit the rights of the Company 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 the Company's Second Amended and
Restated Articles of Incorporation, as amended, are similar in all substantive
respects to those contained in Section 14-2-202(b)(4) of the Georgia Code as
outlined above. Article Ten further provides that the liability of directors of
the Company shall be limited to the fullest extent permitted by amendments to
Georgia law.
Sections 14-2-850 to 14-2-859, inclusive, of the Georgia Code govern
the indemnification of directors, officers, employees, and agents. Section
14-2-851 of the Georgia Code permits indemnification of a director of the
Company 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 and whether formal or informal (including,
subject to certain limitations, civil actions brought as derivative actions by
or in the right of the Company) in which he or she is made a party by reason of
being a director of the Company and of directors who, at the request of the
Company, 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.
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 Georgia
Code, 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 disinterested directors; (ii) a duly designated committee
of disinterested directors; (iii)
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duly selected special legal counsel; or (iv) a vote of the shareholders,
excluding shares owned by or voted under the control of directors who do not
qualify as disinterested directors.
Section 14-2-856 of the Georgia Code provides that 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 Georgia Code, 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 Georgia Code 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 the Company,
are entitled to mandatory indemnification against reasonable expenses incurred
in connection therewith.
The Georgia Code 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
the Company, (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 Georgia Code, or (4) for any transaction in which the director obtained
an improper personal benefit.
Section 14-2-857 of the Georgia Code provides that an officer of the
Company (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,
subject to the same limitations as described above. In addition, the Company
may, as provided by either the Company's Second Amended and Restated Articles of
Incorporation, as amended, the Company's Restated Bylaws, general or specific
actions by its board of directors, or by 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 the Company's Restated
Bylaws and Article Twelve of the Company's Second Amended and Restated Articles
of Incorporation, as amended, are consistent with the foregoing provisions of
the Georgia Code. However, the Company's Second Amended and Restated Articles of
Incorporation, as amended, prohibit indemnification of a director who did not
believe in good faith that his or her actions were in, or not opposed to, the
Company's best interests, or to have improperly received a personal benefit, or
in the case of a criminal proceeding, if such director had reasonable cause to
believe his or her conduct was unlawful, or in the case of a proceeding by or in
the right of the Company, in which such director was adjudged liable to the
Company, unless a court shall determine that the director is fairly and
reasonably entitled to indemnification in view of all the circumstances. The
Company's Restated Bylaws extend the indemnification available to officers under
the Georgia Code to employees and agents.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Reference is made to the Exhibit Index.
4
<PAGE> 5
ITEM 9. 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
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the 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 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 the registration
statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or
Form S-8, and 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 offerings 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 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the 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 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 payment by the registrant or expenses incurred or
paid by a director, officer, or
5
<PAGE> 6
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.
6
<PAGE> 7
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
the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Clinton, State of Mississippi on October 1, 1999.
MCI WORLDCOM, INC.
By: /s/ Scott D. Sullivan
-------------------------------------
Scott D. Sullivan
Chief Financial Officer
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/ Clifford L. Alexander, Jr.* Director October 1, 1999
- ----------------------------------------------------
Clifford L. Alexander, Jr.
/s/ James C. Allen* Director October 1, 1999
- ----------------------------------------------------
James C. Allen
/s/ Judith Areen* Director October 1, 1999
- ----------------------------------------------------
Judith Areen
/s/ Carl J. Aycock* Director October 1, 1999
- ----------------------------------------------------
Carl J. Aycock
/s/ Max E. Bobbitt* Director October 1, 1999
- ----------------------------------------------------
Max E. Bobbitt
/s/ Bernard J. Ebbers* Director, President and October 1, 1999
- ---------------------------------------------------- Chief Executive Officer
Bernard J. Ebbers (Principal Executive Officer)
/s/ Francesco Galesi* Director October 1, 1999
- ----------------------------------------------------
Francesco Galesi
/s/ Stiles A. Kellett, Jr.* Director October 1, 1999
- ----------------------------------------------------
Stiles A. Kellett, Jr.
/s/ Gordon S. Macklin* Director October 1, 1999
- ----------------------------------------------------
Gordon S. Macklin
/s/ John A. Porter* Director October 1, 1999
- ----------------------------------------------------
John A. Porter
</TABLE>
<PAGE> 8
<TABLE>
<S> <C> <C>
/s/ Timothy F. Price* Director October 1, 1999
- ----------------------------------------------------
Timothy F. Price
/s/ Bert C. Roberts, Jr.* Chairman of the Board October 1, 1999
- ----------------------------------------------------
Bert C. Roberts, Jr.
/s/ John W. Sidgmore* Director October 1, 1999
- ----------------------------------------------------
John W. Sidgmore
/s/ Scott D. Sullivan Director and Chief Financial October 1, 1999
- ----------------------------------------------------
Scott D. Sullivan Officer (Principal Financial
Officer and Principal
Accounting Officer)
/s/ Lawrence C. Tucker* Director October 1, 1999
- ----------------------------------------------------
Lawrence C. Tucker
/s/ Juan Villalonga* Director October 1, 1999
- ----------------------------------------------------
Juan Villalonga
* By: /s/ Scott D. Sullivan
-------------------------------------------
Scott D. Sullivan
Attorney-in-fact
</TABLE>
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the plan administrator, SkyTel Communications, Inc., has duly caused this
Registration Statement to be signed on behalf of the Plan by the undersigned,
thereunto duly authorized, in the City of Jackson, State of Mississippi, on this
1st day of October, 1999.
SkyTel Communications, Inc.
Section 401(k) Employee Retirement Plan
By: SkyTel Communications, Inc.,
As Plan Administrator
By: /s/ Leonard G. Kriss
-------------------------------------------
Name: Leonard G. Kriss
-------------------------------------------
Title: Senior Vice President & General Counsel
-------------------------------------------
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
4.1 Second Amended and Restated Articles of Incorporation of MCI WORLDCOM, Inc. (including
preferred stock designations) as amended as of October 1, 1999
4.2 Restated Bylaws of MCI WORLDCOM, Inc. (incorporated herein by reference to Exhibit 3.2
to the Company's Current Report on Form 8-K dated September 14, 1998) (filed September
29, 1998)) (File No. 0-11258)
4.3 Rights Agreement dated as of August 25, 1996 between the Company 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 on Form 8 K/A filed August
31, 1996) filed by the Company with the Securities and Exchange Commission on August 26,
1996 (as amended on Form 8 K/A filed on August 31, 1996) (File No. 0-11258))
4.4 Amendment No. 1 to Rights Agreement dated as of May 22, 1997 by and between MCI
WORLDCOM, Inc. and The Bank of New York, as Rights Agreement (incorporated herein by
reference to Exhibit 4.2 of the Company's Current Report on Form 8-K dated May 22, 1997
(filed June 5, 1997))
5.1 Opinion of P. Bruce Borghardt as to the legality of the securities to be issued under
the stock option Plans
23.1 Consent of Arthur Andersen LLP
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of KPMG LLP
23.4 Consent of Arthur Andersen LLP
23.5 Consent of P. Bruce Borghardt (included in Exhibit 5.1)
24.1* Power of Attorney (included in Signature Page to the original Registration Statement)
</TABLE>
The Registrant has submitted the SkyTel 401(k) Plan (as defined in Item
3 of Part II above) and any amendment thereto to the Internal Revenue
Service ("IRS") in a timely manner and has made or will make all
changes required by the IRS in order to qualify such plan.
- --------------
* Previously filed.
<PAGE> 1
EXHIBIT 4.1
ARTICLES OF AMENDMENT TO THE SECOND AMENDED AND
RESTATED ARTICLES OF INCORPORATION OF MCI WORLDCOM, INC.
1.
The name of the corporation is MCI WORLDCOM, Inc. (the "Corporation").
2.
Effective the date hereof, the Corporation's Second Amended and
Restated Articles of Incorporation, as amended, is further amended to add a new
Article Seven A to read in its entirety as follows:
SEVEN A
A series of the class of authorized preferred stock, par value $.01
per share, of the Corporation is hereby created having the designation and
number of shares thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations and restrictions thereof, as are set forth
on Exhibit D.
3.
All other provisions of the Second Amended and Restated Articles of
Incorporation, as previously amended, shall remain in full force and effect.
4.
The foregoing amendment was approved and duly adopted by the Board of
Directors of the Corporation on September 9, 1999, in accordance with the
provisions of Sections 14-2-602 and 14-2-1002 of the Georgia Business
Corporation Code. Shareholder action was not required.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed by its duly authorized officer this 1st day of
October, 1999.
MCI WORLDCOM, INC.
By: /s/ BERNARD J. EBBERS
---------------------------------
Bernard J. Ebbers, President
<PAGE> 2
ARTICLES OF AMENDMENT TO THE SECOND AMENDED AND
RESTATED ARTICLES OF INCORPORATION OF MCI WORLDCOM, INC.
1.
The name of the corporation is MCI WORLDCOM, Inc. (the "Corporation").
2.
Effective the date hereof, Section A of Article Four of the
Corporation's Second Amended and Restated Articles of Incorporation is amended,
in its entirety, to read as follows:
A. Common Stock. The authorized voting common stock of the
Corporation is five billion (5,000,000,000) shares, par value $.01 per
share.
3.
Effective the date hereof, Section 1 of Exhibit C of the
Second Amended and Restated Articles of Incorporation is amended, in its
entirety, to read as follows:
Section 1. Designation and Amount.
There shall be a series of the Preferred Stock which shall be
designated as the "Series 3 Junior Participating Preferred Stock," par value
$.01 per share, and the number of shares constituting such series shall be
5,000,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
shares of Series 3 Junior Participating Preferred Stock to a number less than
that of the shares then outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Company.
4.
All other provisions of the Second Amended and Restated
Articles of Incorporation, as previously amended, shall remain in full force and
effect.
5.
The amendment in Article 2, above, was duly approved by the
shareholders of the Corporation in accordance with the provisions of Section
14-2-1003 of the Georgia business Corporation Code and adopted on May 20, 1999.
6.
The amendment in Article 3, above, was approved and adopted by
the Board of Directors of the Corporation in accordance with the provisions of
Section 14-2-1002 of the Georgia Business Corporation Code. Shareholder action
was not required.
<PAGE> 3
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be executed by its duly authorized officer this 20th day of May,
1999.
MCI WORLDCOM, INC.
By: /s/ Bernard J. Ebbers
-------------------------------
Bernard J. Ebbers, President
<PAGE> 4
ARTICLES OF AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF WORLDCOM, INC.
1.
The name of the corporation is "WorldCom, Inc. (the "Corporation").
2.
Effective the date hereof, Article One of the Corporation's
Second Amended and Restated Articles of Incorporation is amended, in its
entirety, to read as follows:
ONE
The name of this corporation is MCI WORLDCOM, Inc. This
corporation is referred to hereinafter as the "Corporation."
3.
All other provisions of the Second Amended and Restated
Articles of Incorporation shall remain in full force and effect.
4.
The foregoing amendment was approved and adopted by the Board
of Directors of the Corporation in accordance with the provisions of Section
14-2-1002 of the Georgia Business Corporation Code. Shareholder action was no
required.
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be executed by its duly authorized officer this 14th day of
September, 1998.
WORLDCOM, INC.
/s/ Bernard J. Ebbers
-----------------------------------
Bernard J. Ebbers, President
<PAGE> 5
SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
WORLDCOM, INC.
ONE
The name of this corporation is WORLDCOM, INC. This
corporation is referred to hereinafter as the "Corporation."
TWO
The Corporation shall have perpetual duration.
THREE
The Corporation has been organized as a corporation for profit
pursuant to the Georgia Business Corporation Code, for the purpose of engaging
in any lawful activities whatsoever.
FOUR
A. Common Stock. The authorized voting common stock of the Corporation
is two billion five hundred million (2,500,000,000) shares, par value $.01 per
share.
B. Preferred Stock. The authorized preferred stock of the Corporation
is fifty million (50,000,000) shares, par value $.01 per share. The Corporation,
acting by its board of directors, without action by the shareholders, may, from
time to time by resolution and upon the filing of such certificate or articles
of amendment as may be required by the Georgia Business Corporation Code as then
in effect, authorize the issuance of shares of preferred stock in one or more
series, determine the preferences, limitations and relative rights of the class
or of any series within the class, and designate the number of shares within
that series.
FIVE
A series of the class of authorized preferred stock, par value
$.01 per share, of the Corporation is hereby created having the designation and
number of shares thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations and restrictions thereof, as are set forth
on Exhibit A.
SIX
A series of the class of authorized preferred stock, par value
$.01 per share, of the Corporation is hereby created having the designation and
number of shares thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations and restrictions thereof, as are set forth
on Exhibit B.
SEVEN
A series of the class of authorized preferred stock, par value
$.01 per share, of the Corporation is hereby created having the designation and
number of shares thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations and restrictions thereof, as are set forth
on Exhibit C.
<PAGE> 6
EIGHT
Subject to the provisions of Article THIRTEEN, each share of
common stock of the Corporation shall have unlimited voting rights and shall be
entitled to receive the net assets of the Corporation upon dissolution, except
as expressly provided herein. The preferred stock of the Corporation shall have
such voting rights as are set forth in Exhibits A, B or C hereto or in the
certificate or articles of amendment filed to authorize the issuance of shares
of preferred stock in one of more series and as are provided by law.
NINE
Shareholders shall not have the preemptive right to acquire
unissued shares of the Corporation.
TEN
No director of the Corporation shall be liable to the
Corporation or to its shareholders for monetary damages for breach of duty of
care or other duty as a director, except for liability (i) for any
appropriation, in violation of his duties, of any business opportunity of the
Corporation; (ii) for acts or omissions which involve intentional misconduct or
a knowing violation of the law; (iii) for the types of liability set forth in
section 14-2-832 of the Revised Georgia Business Corporation Code; or (iv) for
any transaction from which the director received an improper personal benefit.
If the Georgia Business Corporation Code is amended to authorize corporate
action further limiting the personal liability of directors, then the liability
of a director of the Corporation shall be limited to the fullest extent
permitted by the Georgia Business Corporation Code, as so amended. Any repeal or
modification of the foregoing paragraph by the shareholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing immediately prior to the time of such repeal or
modification.
ELEVEN
(a) In addition to the requirements of the provisions of any
series of preferred stock which may be outstanding, and whether or not a vote of
the shareholders is otherwise required, the affirmative vote of the holders of
not less than seventy percent (70%) of the Voting Stock shall be required for
the approval or authorization of any Business Transaction with a Related Person,
or any Business Transaction in which a Related Person has an interest (other
than only a proportionate interest as a shareholder of the corporation);
provided, however, that the seventy percent (70%) voting requirement shall not
be applicable if (i) the Business Transaction is Duly Approved by the Continuing
Directors, or (ii) all of the following conditions are satisfied:
(i) the aggregate amount of cash and the fair market
value of the property, securities or other consideration to be received
per share (on the date of effectiveness of such Business Transaction)
by holders of capital stock of the corporation (other than such Related
Person) in connection with such Business Transaction is at least equal
in value to such Related Person's Highest Stock Price;
(ii) the consideration to be received by holders of
capital stock of the Corporation in connection with such Business
Transaction is in (a) cash, or (b) if the majority of the shares of any
particular class or series of stock of the Corporation as to which the
Related Person is the Beneficial Owner shall have been acquired for a
consideration in a form other than cash, in the same form of
Consideration used by the Related Person to acquire the largest number
of shares of such class or series of stock;
(iii) after such Related Person has become a Related
Person and prior to the consummation of such Business Transaction, such
Related Person shall not have become the Beneficial Owner of any
additional shares of capital stock of the Corporation or securities
convertible into capital stock of the Corporation, except (i) as a part
of the transaction which resulted in such Related Person becoming a
Related Person or (ii) as a result of a pro rata stock dividend or
stock split;
(iv) prior to the consummation of such Business
Transaction, such Related Person shall not have, directly or
indirectly, except as Duly Approved by the Continuing Directors (i)
received the benefit (other than only a proportionate benefit as a
shareholder of the corporation) of any loans, advances, guarantees,
pledges or other financial assistance or tax credits or tax advantages
provided by the Corporation or any of its subsidiaries, (ii) caused any
material change in the Corporation's business or equity capital
structure, including, without limitation, the issuance of shares of
capital stock of the Corporation, or
<PAGE> 7
other securities convertible into or exercisable for such shares, or
(iii) caused the Corporation to fail to declare and pay at the regular
date therefor quarterly cash dividends on the outstanding capital stock
of the Corporation entitled to receive dividends, on a per share basis
at least equal to the cash dividends being paid thereon by the
corporation immediately prior to the date on which the Related Person
became a Related Person; and
(v) a proxy or information statement describing the
proposed Business Transaction and complying with the requirements of
the Securities Exchange Act of 1934, as amended (the "Act"), and the
rules and regulations thereunder (or any subsequent provisions
replacing the Act or such rules or regulations) shall be mailed to
shareholders of the Corporation at least thirty (30) days prior to the
consummation of such Business Transaction (whether or not such proxy or
information statement is required to be mailed pursuant to the Act and
such rules and regulations or subsequent provisions).
(b) For the purpose of this Article ELEVEN:
(i) The term "Affiliate", used to indicate a
relationship to a specified person, shall 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.
(ii) The term "Associate", used to indicate a
relationship with a specified person, shall 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 who has
the same home as such specified person or who is a director or officer
of the corporation 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 the corporation or any wholly-owned subsidiary
of the corporation), partnership or other entity which is an Affiliate
of such Specified person.
(iii) The term "Beneficial Owner" shall be defined by
reference to Rule 13d-3 under the Act as in effect on September 15,
1993; provided, however, that any individual, corporation, partnership,
group, association or other person or entity which has the right to
acquire any capital stock of the corporation having voting power at any
time in the future, whether such right is contingent or absolute,
pursuant to any agreement, arrangement or understanding or upon
exercise of conversion rights, warrants or options, or otherwise, shall
be deemed the Beneficial Owner of such capital stock.
(iv) The term "Business Transaction" shall mean: (A)
any merger, share exchange or consolidation involving the Corporation
or a subsidiary of the Corporation; (B) any sale, lease, exchange,
transfer or other disposition (in one transaction or a series of
related transactions), including, without limitation, a mortgage,
pledge or any other security device of all or any Substantial Part of
the assets either of the Corporation or of a subsidiary of the
Corporation; (C) any sale, lease, exchange, transfer or other
disposition (in one transaction or a series of related transactions) of
all or any Substantial Part of the assets of any entity to the
Corporation or a subsidiary of the Corporation; (D) the issuance, sale,
exchange, transfer or other disposition (in one transaction or a series
of related transactions) by the Corporation or a subsidiary of the
Corporation of any securities of the Corporation or any subsidiary of
the Corporation in exchange for cash, securities or other property, or
a combination thereof, having an aggregate fair market value of $15
million or more; (E) any merger, share exchange or consolidation of the
Corporation with any of its subsidiaries or any similar transaction in
which the Corporation is not the survivor and the charter or
certificate or articles of incorporation of the consolidated or
surviving Corporation do not contain provisions substantially similar
to those in this Article ELEVEN; (F) any recapitalization or
reorganization of the Corporation or any reclassification of the
securities of the Corporation (including, without limitation, any
reverse stock split) or other transaction that would have the effect of
increasing the voting power of a Related Person or reducing the number
of shares of each class of voting securities outstanding; (G) any
liquidation, spin-off, split-off, split-up or dissolution of the
Corporation; and (H) any agreement, contract or other arrangement
providing for any of the transactions described in this definition of
Business Transaction or having a similar purpose or effect.
<PAGE> 8
(v) The term "Continuing Director" shall mean a
director who either was a member of the Board of Directors of the
Corporation on September 15, 1993, or who became a director of the
Corporation subsequent to such date and whose election or nomination
for election by the Corporation's shareholders was Duly Approved by the
Continuing Directors then on the Board, either by a specific vote or by
approval of the proxy statement issued by the Corporation on behalf of
the Board of Directors in which such person is named as nominee for
director; provided, however, that in no event shall a director be
considered a "Continuing Director" if such director is a Related Person
and the Business Transaction to be voted upon is with such Related
Person or is one in which such Related Person has an interest (other
than only a proportionate interest as a shareholder of the
Corporation).
(vi) The term "Duly Approved by the Continuing
Directors" shall mean an action approved by the vote of at least a
majority of the Continuing Directors then on the Board; provided,
however, that if the votes of such Continuing Directors in favor of
such action would be insufficient to constitute an act of the Board of
Directors (if a vote by the entire Board of Directors were to have been
taken), then such term shall mean an action approved by the unanimous
vote of the Continuing Directors so long as there are at least three
(3) Continuing Directors on the Board of Directors at the time of such
unanimous vote.
(vii) The term "Fair Market Value", in the case of
stock, means the highest closing sale price during the 30-day period
immediately preceding the date in question of a share of such stock on
the Composite Tape for New York Stock Exchange-Listed Stocks, or, if
such stock is not on such Exchange, on the principal United States
securities exchange registered under the Act on which such stock is
listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock
during the 30-day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotations System or
any system then in use, or if no such quotations are available, the
fair market value on the date in question of a share of such stock as
determined by a majority of the Continuing Directors in good faith.
(viii) The term "Highest Stock Purchase Price" shall
mean the greatest of the following:
(A) the highest amount of consideration paid
by a Related Person for a share of capital stock of the
Corporation (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) in the transaction which
resulted in such Related Person becoming a Related Person or
within two years prior to the first public announcement of the
Business Transaction (the "Announcement Date"), whichever is
higher; provided, however, that the Highest Stock Purchase
Price calculated under this subsection (A) shall be
appropriately adjusted to reflect the occurrence of any
reclassification, recapitalization, stock-split, reverse
stock-split or other similar corporate readjustment in the
number of outstanding shares of capital stock of the
Corporation between the last date upon which such Related
Person paid the Highest Stock Purchase Price up to the
effective date of the merger, share exchange or consolidation
or the date of distribution to shareholders of the Corporation
of the proceeds from the sale of substantially all of the
assets of the Corporation referred to in subparagraph (i) of
Section (a)(ii) of this Article ELEVEN;
(B) the Fair Market Value per share of the
respective classes and series of stock of the Corporation on
the Announcement Date;
(C) the Fair Market Value per share of the
respective classes and series of stock of the Corporation on
the date that the Related Person becomes a Related Person;
(D) if applicable, the Fair Market Value per
share determined pursuant to subsection (b)(viii)(B) or (C) of
this Article ELEVEN, whichever is higher, multiplied by the
ratio of (i) the highest price per share (including any
brokerage commissions, transfer taxes or soliciting dealers'
fees and adjusted for any subsequent stock dividends, splits,
combinations, recapitalizations, reclassifications or other
such reorganizations) paid to acquire any shares of such
<PAGE> 9
respective classes and series Beneficially Owned by the
Related Person within the two years prior to the Announcement
Date, to (ii) the Fair Market Value per share (adjusted for
any subsequent stock dividends, splits, combinations,
recapitalizations, reclassifications or other such
reorganizations) of shares of such respective classes and
series on the first day in the two-year period ending on the
Announcement Date on which such shares Beneficially Owned by
the Related Person were acquired; or
(E) the amount per share of any preferential
payment to which holders of shares of such respective classes
and series are entitled in the event of a liquidation,
dissolution or winding up of the Corporation.
(ix) The term "Preferred Stock" shall mean each class
or series of capital stock which may from time to time be authorized in
or by these Second Amended and Restated Articles of Incorporation (as
amended from time to time) which is not designated as "Common Stock."
(x) The phrase "property, securities or other
consideration to be received", for the purpose of subparagraph (i) of
Section (a)(ii) of this Article ELEVEN and in the event of a merger in
which the corporation is the surviving corporation, shall include,
without limitation, common stock of the Corporation retained by its
shareholders (other than such Related Person).
(xi) The term "Related Person" shall mean and include
(A) any individual, corporation, partnership, group, association or
other person or entity which, together with its Affiliates and
Associates, is the Beneficial Owner of not less than ten percent (10%)
of the voting power of the issued and outstanding capital stock of the
Corporation entitled to vote or was the Beneficial Owner of not less
than ten percent (10%) of the voting power of the issued and
outstanding capital stock of the Corporation entitled to vote (x) at
the time the definitive agreement providing for the Business
Transaction (including any amendment thereof) was entered into, (y) at
the time a resolution approving the Business Transaction was adopted by
the Board of Directors of the Corporation, or (z) as of the record date
for the determination of shareholders entitled to notice of and to vote
on or consent to the Business Transaction, and (B) any Affiliate or
Associate of any such individual, Corporation, partnership, group,
association or other person or entity; provided, however, and
notwithstanding any thing in the foregoing to the contrary, that the
term "Related Person" shall not include the Corporation, a more than
90% owned subsidiary of the Corporation, any employee stock ownership
or other employee benefit plan of either the Corporation or any more
than 90% owned subsidiary of the Corporation, or any trustee of or
fiduciary with respect to any such plan when acting in such capacity.
(xii) The term "Substantial Part" shall mean more
than twenty percent (20%) of the total assets of the entity in
question, as reflected on the most recent consolidated balance sheet of
such entity existing at the time the shareholders of the Corporation
would be required to approve or authorize the Business Transaction
involving the assets constituting any such Substantial Part.
(xiii) The term "Voting Stock" shall mean all
outstanding shares of capital stock of the Corporation whose holders
are present at a meeting of shareholders, in person or by proxy, and
which entitle their holders to vote generally in the election of
directors, and considered for the purpose of this Article ELEVEN as one
class.
(c) For the purpose of this Article ELEVEN, so long as
Continuing Directors constitute at least two-thirds (2/3) of the entire Board of
Directors or the Corporation, the Board of Directors shall have the power to
make a good faith determination, on the basis of information known to them, of
(i) the number of shares of Voting Stock of which any person is the Beneficial
Owner, (ii) whether a person is a Related Person or is an Affiliate or Associate
of another, (iii) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in the definition of
Beneficial Owner herein, (iv) whether the assets subject to any Business
Transaction constitute a Substantial Part, (v) whether any Business Transaction
is with a Related Person or is one in which a Related Person has an interest
(other than only a proportionate interest as a shareholder of the corporation),
(vi) whether a Related Person has, directly or indirectly, received the benefits
or caused any of the changes referred to in subparagraph (iv) of clause (ii) of
Section (a) of this Article ELEVEN, (vii) the fair market value of any
<PAGE> 10
consideration to be received in a Business Transaction and (viii) such other
matters with respect to which a determination is required under this Article
ELEVEN; and such determination by the Board of Directors shall be conclusive and
binding for all purposes of this Article ELEVEN.
(d) Nothing contained in this Article ELEVEN shall be
construed to relieve any Related Person of any fiduciary obligation imposed by
law.
(e) The fact that any Business Transaction complies with the
provisions of Section (a) of this Article ELEVEN shall not be construed to
impose any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Transaction or
recommend its adoption of approval to the shareholders of the corporation.
(f) Notwithstanding any other provisions of these Second
Amended and Restated Articles of Incorporation or the Bylaws of the corporation
(and notwithstanding that a lesser percentage may be permitted by law), the
provisions of this Article ELEVEN may not be repealed or amended, directly or
indirectly in any respect, unless such action is approved by the affirmative
vote of the holders of not less than seventy percent (70%) of the Voting Stock.
TWELVE
The Corporation shall indemnify a director against reasonable
expenses and liability incurred by him, and shall advance expenses upon receipt
from the director of the written affirmation and repayment authorization
required by section 14-2-853 of the Georgia Business Corporation Code, provided,
however, that the Corporation shall not indemnify a director for any liability
incurred by a director if he failed to act in a manner he believed in good faith
to be in or not opposed to the best interests of the Corporation, or to have
improperly received a personal benefit or, in the case of any criminal
proceeding, if he had reasonable cause to believe his conduct was unlawful, or
in the case of a proceeding by or in the right of the Corporation, in which he
was adjudged liable to the Corporation, unless a court shall determine that the
director is fairly and reasonably entitled to indemnification in view of all the
circumstances, in which case the director shall be indemnified for reasonable
expenses incurred.
THIRTEEN
(a) For purposes of this Article THIRTEEN, the following terms
shall have the respective meanings specified below:
(i) "Act" shall have the meaning set forth in
paragraph (a)(ii)(v) of Article ELEVEN of these Second Amended and
Restated Articles of Incorporation.
(ii) "Beneficial Owner" shall have the meaning set
forth in paragraph (b)(iii) of Article ELEVEN of these Second Amended
and Restated Articles of Incorporation.
(iii) "Closing Price" of a share of stock on any day
means the highest closing sales price or bid quotation on the National
Association of Securities Dealers, Inc. Automated Quotation System
(including the National Market System) or any comparable system then in
use, or if the class or series in question is quoted on a United States
securities exchange registered under the Act, the reported closing
sales price or, in case no such sale takes place, the average of the
reported closing bid and asked price on such exchange, or, if no such
prices or quotations are available, the fair market value on the day in
question as determined by the Board of Directors in good faith.
(iv) "Communications Act" shall mean the
Communications Act of 1934, 47 U.S.C. SECTIONS 151 et seq., as amended.
(v) "Communications Laws" shall mean the
Communications Act and the regulations promulgated by the Federal
Communications Commission pursuant thereto, including any amendments
thereof or successor or replacement provisions thereto.
<PAGE> 11
(vi) "Fair Market Value" of a share of stock shall
mean the average Closing Price for such share for each of the
forty-five (45) most recent days during which shares of stock of such
class or series shall have been traded preceding the day on which
notice of redemption shall have been given pursuant to paragraph (iv)
of Section (e) of this Article THIRTEEN; provided, however, that if
shares of stock of such class or series are not traded on any
securities exchange or in the over-the-counter market, "Fair Market
Value" shall be determined by the Board of Directors in good faith; and
provided, further, however, that "Fair Market Value" as to any
stockholder who purchases any stock subject to redemption within one
hundred twenty (120) days prior to a Redemption Date shall not (unless
otherwise determined by the Board of Directors) exceed the purchase
price paid for such shares.
(vii) "Foreign Citizen" shall mean any of the
following:
(A) any alien;
(B) any foreign government;
(C) any representative of an alien or a
foreign government; or
(D) any corporation organized under the laws
of any country other than the United States; and
(E) any other Person falling within a class
of Persons identified from time to time in the Communications
Laws, including without limitation Section 310 of the
Communications Act, as being within a class of Persons whose
ownership of stock of a corporation holding station licenses
referenced in Title III of the Communications Act is limited
to a maximum percentage.
(viii) "Permitted Percentage" shall mean twenty
percent (20%), or such other percentage as may from time to time be
specified by the Communications Laws as the maximum percentage of
capital stock of a corporation holding licenses referenced in Section
310 of the Communications Act that may be owned by Foreign Citizens.
(ix) "Person" shall mean an individual, partnership,
corporation, trust or other entity.
(x) "Redemption Date" shall mean the date fixed by
the Board of Directors for the redemption of any shares of stock of the
Corporation pursuant to Section (e) of this Article THIRTEEN.
(xi) "Redemption Securities" shall mean any debt or
equity securities of the Corporation, any Subsidiary or any other
corporation, or any combination thereof, having such terms and
conditions as shall be approved by the Board of Directors and which,
together with any cash to be paid as part of the redemption price, in
the opinion of any nationally recognized investment banking firm
selected by the Board of Directors (which may be a firm which provides
other investment banking, brokerage or other services to the
Corporation), has a value, at the time notice of redemption is given
pursuant to paragraph (d) of Section 5 of this Article THIRTEEN, at
least equal to the Fair Market Value of the shares to be redeemed
pursuant to this Article THIRTEEN (assuming, in the case of Redemption
Securities to be publicly traded, such Redemption Securities were fully
distributed and subject only to normal trading activity).
(b) It is the policy of the Corporation that Foreign Citizens
should own of record or Beneficially Own, directly or indirectly, individually
or in the aggregate, no more than the Permitted Percentage of its from time to
time outstanding shares of capital stock. If at any time Foreign Citizens,
directly or indirectly, individually or in the aggregate, become the record
owners or the Beneficial Owners of more than the Permitted Percentage of the
capital stock of the Corporation, then the Corporation shall have the power to
take the actions prescribed in this Section (b) through Section (f) of this
Article THIRTEEN. The provisions of this Article THIRTEEN are intended to assure
that the Corporation remains in continuous compliance with the citizenship
requirements of the Communications Laws. Any amendments to the Communications
Laws relating to the citizenship of station license
<PAGE> 12
holders or their shareholders are deemed to be incorporated herein by reference.
To the extent necessary to enable the Corporation to submit any proof of direct
or indirect citizenship required by law or by contract with the United States
government (or any agency thereof), the Corporation may require the record
holders and the Beneficial Owners of capital stock to confirm their direct or
indirect citizenship status from time to time, and dividends payable with
respect to stock held by such record holder or owner by such Beneficial Owner
may, in the discretion of the Board of Directors, be withheld until confirmation
of such citizenship status is received. The Board of Directors is authorized to
take such actions or make such interpretations as it may deem necessary or
advisable in order to implement the policy set forth in this Section (b)
including, without limitation, causing any transfer, or attempted transfer, of
any shares of stock of the Corporation, the effect of which would be to cause
one or more Foreign Citizens to own of record or Beneficially Own more than the
Permitted Percentage of the Corporation's capital stock, to be ineffective as
against the Corporation, and not registering (or permitting its transfer agent
to register) such transfer or purported transfer on the stock transfer records
of the Corporation. In addition, neither the Corporation (even if the transfer
agent shall have recognized such transfer) nor its transfer agent shall be
required to recognize the transferee or purported transferee thereof as a
shareholder of the Corporation for any purpose whatsoever except to the extent
necessary to effect any remedy available to the Corporation under this Article
THIRTEEN. A citizenship certificate may be required from all transferees (and
from any recipient upon original issuance) of capital stock of the Corporation
and, if such transferee (or recipient) is acting as a fiduciary or nominee for a
record owner or a Beneficial Owner, such Beneficial Owner or record owner, and
registration of transfer (or original issuance) may be denied upon refusal to
furnish such certificate.
(a) If on any date (including any record date) the number of
shares of capital stock that is owned of record or Beneficially Owned, directly
or indirectly, by Foreign Citizens is in excess of the Permitted Percentage of
all outstanding capital stock of the Corporation (such number of shares herein
referred to as the "Excess Shares"), the Corporation shall identify a number of
shares owned of record or Beneficially Owned, directly or indirectly, by Foreign
Citizens equal to the number of Excess Shares. The determination of the
Corporation as to those shares that constitute the Excess Shares shall be
conclusive. Shares deemed to constitute such Excess Shares (so long as such
excess exists) shall not be accorded any voting rights and shall not be deemed
to be outstanding for purposes of determining the vote required on any matter
properly brought before the shareholders of the Corporation for a vote thereon.
The Corporation shall (so long as such excess exists) withhold the payment of
dividends and the sharing in any other distribution (upon liquidation or
otherwise) in respect of the Excess Shares. At such time as the Permitted
Percentage is no longer exceeded, full voting rights shall be restored to any
shares previously deemed to be Excess Shares and any dividends or distribution
with respect thereto that have been withheld, without interest thereon, shall be
due and paid solely to the record holders of such shares at the time the
Permitted Percentage is no longer exceeded.
(b) Subject to the provisions of any resolution of the Board
of Directors creating any series of preferred stock or any other class of stock
which has a preference over common stock with regard to dividends or upon
liquidation, and subject to the procedures in the series of preferred stock of
the Corporation referenced in Articles FIVE, SIX and SEVEN hereof, the Excess
Shares shall be subject to redemption at any time by the Corporation by action
of the Board of Directors. The terms and conditions of such redemption shall be
as follows:
(i) the redemption price of the shares to be redeemed
pursuant to this Article THIRTEEN shall be equal to the Fair Market
Value of such shares or such other redemption price as required by
pertinent state or federal law pursuant to which the redemption is
required;
(ii) the redemption price of such shares may be paid
in cash, Redemption Securities or any combination thereof;
(iii) if less than all the Excess Shares are to be
redeemed, the shares to be redeemed shall be selected in such manner as
set forth in Section (c) of this Article THIRTEEN or as otherwise
determined by the Board of Directors;
(iv) at least thirty (30) days' written notice of the
Redemption Date shall be given to the record holders of the Excess
Shares selected to be redeemed (unless waived in writing by any such
holder) provided that the Redemption Date may be the date on which
written notice shall be given to record holders if the cash or
Redemption Securities necessary to effect the redemption shall have
been deposited in trust
<PAGE> 13
for the benefit of such record holders and subject to immediate
withdrawal by them upon surrender of the stock certificates for Excess
Shares to be redeemed;
(v) from and after the Redemption Date or such
earlier date as mandated by pertinent state or federal law, any and all
rights of whatever nature, which may be held by the record holder of
Excess Shares selected for redemption (including without limitation any
rights to vote or participate in dividends declared on stock of the
same class or series as such shares), shall cease and terminate and
they shall thenceforth be entitled only to receive the cash or
Redemption Securities payable upon redemption; and
(vi) such redemption shall be upon such other terms
and conditions as the Board of Directors shall determine.
(e) In determining the direct or indirect citizenship of
owners of record or Beneficial Owners or their transferees of its capital stock,
the Corporation may rely on the stock transfer records of the Corporation and
the citizenship certificates given by Beneficial Owners or owners of record or
their transferees or any recipients (in the case of original issuance) (in each
case whether such certificates have been given on their own behalf or on behalf
of others) to prove the citizenship of such owners of record, Beneficial Owners,
transferees or recipients of such capital stock. The determination of the direct
or indirect citizenship of owners of record, Beneficial Owners and their
transferees of such capital stock may also be subject to proof in such other way
or ways as the Corporation may deem reasonable. The Corporation may at any time
require proof of citizenship, in addition to the citizenship certificates, of
the record owner or Beneficial Owner or proposed transferees of shares of the
Corporation's capital stock, and the payment of dividends may be withheld, and
any application for transfer of ownership on the stock transfer records of the
Corporation may be refused, until such additional proof is submitted.
(f) Each provision of this Article THIRTEEN is intended to be
severable from every other provision. If any provision contained in this Article
THIRTEEN is held to be invalid, illegal or unenforceable, the validity, legality
or enforceability of any other provision of this Article THIRTEEN shall not be
affected, and this Article THIRTEEN shall be construed as if the provision held
to be invalid, illegal or unenforceable had never been contained therein.
********************************************************************************
The provisions of Article FOUR, Section A of these Second
Amended and Restated Articles of Incorporation were duly approved by the
shareholders of the Corporation in accordance with the provisions of Sections
14-2-1007 and 14-2-1003 of the Georgia Business Corporation Code on the 20th day
of December, 1996.
These Second Amended and Restated Articles of Incorporation
were duly adopted and authorized by the Board of Directors of the Company on
November 20, 1996.
<PAGE> 14
IN WITNESS WHEREOF, WORLDCOM, INC. has caused its duly
authorized officer to execute these Second Amended and Restated Articles of
Incorporation as of this 30th day of December, 1996.
WORLDCOM, INC.
By: /s/ Bernard J. Ebbers
--------------------------
Name: Bernard J. Ebbers
Title: President and Chief Executive
Officer
ATTEST:
/s/ Scott D. Sullivan
- -----------------------------
Name: Scott D. Sullivan
Title: Secretary
STATE OF MISSISSIPPI )
) SS.
CITY OF JACKSON )
I, Deborah A. Blackwell, a notary public, do hereby certify
that on this 30th day of December, 1996, personally appeared before me Bernard
J. Ebbers who, being by me first duly sworn, declared that he is the President
of WorldCom, Inc., that he signed the foregoing document as President of the
corporation, and that the statements therein contained are true.
[SEAL] /s/ Deborah A. Blackwell
-----------------------------
Notary Public
My Commission Expires:
10-4-97
<PAGE> 15
EXHIBIT A
Series A 8% Cumulative Convertible Preferred Stock
1. Designation. The designation of this Series shall be Series A 8%
Cumulative Convertible Preferred Stock. The number of shares of this Series
shall be 94,992. The liquidation value of shares of this Series shall be
$3,350.00 per share.
2. Dividends.
(a) The holders of shares of this Series shall be entitled
to receive, when, as and if declared by the Board of Directors of WorldCom, Inc.
(the "Company") out of funds legally available therefor, cumulative preferential
dividends from the issue date of such shares, at the rate per share of $268.00
per annum or $67.00 per quarter, and no more, payable quarterly for each share
of this Series, payable in arrears on each February 28, May 31, August 31 and
November 30, respectively (each such date being hereinafter referred to as a
"Dividend Payment Date") or, if any Dividend Payment Date is not a business day,
then the Dividend Payment Date shall be the next succeeding business day;
provided, however, that with respect to any dividend period during which a
redemption occurs, the Company may, at its option, declare accrued dividends to,
and pay such dividends on, the redemption date, in which case such dividends
would be payable on the redemption date in shares of the Common Stock of the
Company, par value $.01 per share (the "Common Stock"), to the holders of the
shares of this Series as of the record date for such dividend payment and such
accrued dividends would not be included in the calculation of the related Call
Price (as hereinafter defined). Each dividend on the shares of this Series shall
be payable to holders of record as they appear on the stock books of the Company
on such record dates as shall be fixed by the Board of Directors. The first
dividend payment of $67.00 shall be for the period from the date of issuance of
shares of this Series to and including February 27, 1997 and shall be payable on
February 28, 1997. Dividends (or amounts equal to accrued and unpaid dividends)
payable on the shares of this Series for any period other than a quarterly
dividend period shall be computed on the basis of a 360-day year of twelve
30-day months. At the election of the Board of Directors of the Company,
dividends may be paid in cash or in shares of Common Stock. In the event the
Board of Directors of the Company elects to pay a dividend in shares of Common
Stock, the number of shares of Common Stock to be issued on the Dividend Payment
Date will be determined by dividing the total dividend to be paid on each share
of this Series by 90% of the average of the average of the high and low sales
prices of the Common Stock as reported on the Nasdaq National Market for each of
the ten consecutive Trading Days (as hereinafter defined) immediately preceding
the fifth business day preceding the record date for such dividend.
Dividends on the shares of this Series shall accrue (whether or not
the Company has earnings, whether or not there are funds legally available for
the payment of such dividends and whether or not such dividends are declared) on
a daily basis from the previous Dividend Payment Date, except that the first
dividend shall accrue from the date of issuance of the shares of this Series.
Dividends accumulate to the extent they are not paid on the Dividend Payment
Date for the quarter for which they accrue ("Accumulated Unpaid Dividends").
Accumulated Unpaid Dividends shall not bear interest.
(b) No dividend whatsoever shall be declared or paid upon,
or any sum set apart for the payment of dividends upon, any shares of this
Series or Parity Stock (as hereinafter defined) for any dividend period unless
all dividends for all past dividend periods have been declared and paid upon, or
declared and a sufficient sum set apart for the payment of such dividends upon,
all shares of this Series and Parity Stock outstanding other than the Exchange
Preferred (as hereinafter defined).
(c) Unless full cumulative dividends on all outstanding
shares of this Series and (to the extent that the amount thereof shall have
become determinable) any outstanding shares of Parity Stock due for all past
dividend periods shall have been declared and paid, or declared and a sufficient
sum for the payment thereof set apart, then, subject to the rights of holders of
shares of previously issued series of Preferred Stock: (i) no dividend (other
than a dividend payable solely in Junior Stock (as hereinafter defined)) shall
be declared or paid upon, or any sum set apart for the payment of dividends
upon, any shares of Junior Stock; (ii) no other distribution shall be made upon
any shares of Junior Stock; (iii) no shares of Junior Stock or any other series
of Preferred Stock shall be purchased, redeemed or otherwise acquired for cash
or other property of the Company (excluding shares of Junior Stock or Exchange
Preferred) by the Company or by any Subsidiary; and (iv) no monies shall be paid
into or set
<PAGE> 16
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 the
Company or any Subsidiary.
(d) Any dividend payment made on shares of this Series
shall be distributed pro rata to the holders entitled thereto and be credited
first against the earliest accrued but unpaid dividend due with respect to
shares of this Series.
3. Voting Rights.
(a) The holders of shares of this Series shall have the
right with the holders of Common Stock to vote in the election of directors of
the Company and upon each other matter coming before any meeting of the
shareholders of the Company on the basis of ten votes for each such share held.
The holders of shares of this Series and the holders of Common Stock shall vote
together as a single class except as otherwise set forth herein or as otherwise
provided by law or by the Second Amended and Restated Articles of Incorporation
of the Company.
(b) The approval of more than two-thirds of the votes
entitled to be cast by the holders of the outstanding shares of this Series
(voting separately as a class), shall be required for the adoption of any
amendment to the Second Amended and Restated Articles of Incorporation that
materially adversely changes the rights, preferences or privileges of the shares
of this Series.
(c) The holders of the outstanding shares of this Series
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 Board of Directors of the
Company 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 this Series and each other series of Preferred Stock which
shall have substantially similar voting rights (including voting as one voting
group with other shares of Voting Preferred Stock) with respect to the election
of directors upon substantially similar arrearages of dividends. In such event,
the number of Directors of the Company shall be increased by two, and, unless a
regular meeting of the shareholders of the Company is to be held within 60 days
thereof for the purpose of electing Directors, within 30 days thereafter, the
Company shall call a special meeting of the holders of the outstanding shares of
Voting Preferred Stock for the purpose of electing such Directors to take place
at the time specified in the notice of the meeting, to be not more than 60 days
after such holders become so entitled to elect two Directors and not less than
10 days nor more than 50 days after the date on which such notice is mailed. If
such special meeting shall not have been so called by the Company, or such
regular meeting shall not be so held, a special meeting may be called for such
purpose at the expense of the Company by the holders of not less than 10% of the
outstanding shares of any series of Voting Preferred Stock; and notice of any
such special meeting shall be given by the person or persons calling the same to
the holders of the outstanding shares of the Voting Preferred Stock by
first-class mail, postage prepaid, at their last address as shall appear on the
stock transfer records of the Company. At any such special meeting the holders
of the outstanding shares of Voting Preferred Stock (voting separately as a
class with each share having one vote) shall elect two members of the Board of
Directors of the Company. If a regular meeting of the shareholders of the
Company for the purpose of electing Directors is to be held within 60 days after
the time the holders of the outstanding shares of Voting Preferred Stock become
so entitled to elect two Directors, then the holders of the outstanding shares
of Voting Preferred Stock shall be given notice thereof in the same manner as
other shareholders of the Company entitled to vote thereat; and at such regular
meeting, the holders of the outstanding shares of Voting Preferred Stock (voting
separately as a class with each share having one vote) shall elect two members
of the Board of Directors. The right of the holders of the Voting Preferred
Stock (voting separately as a class) to elect two members of the Board of
Directors of the Company shall continue until such time as no dividends on any
outstanding shares of Voting Preferred Stock are in arrears and unpaid, in whole
or in part, at which time (i) the voting power of the holders of the outstanding
shares of Voting Preferred Stock so to elect two Directors shall cease, but
always subject to the same provisions of this subparagraph (c) for the vesting
of such voting power upon the occurrence of each and every like arrearage of
dividends, and (ii) the term of office of each member of the Board of Directors
who was elected pursuant to this subparagraph (c) shall automatically expire.
<PAGE> 17
4. Redemptions and Conversions.
(a) Mandatory Conversion. On May 31, 1999 (the "Mandatory
Conversion Date"), each outstanding share of this Series shall convert
automatically (the "Mandatory Conversion") into shares of Common Stock at the
Common Equivalent Rate (as hereinafter defined) in effect on the Mandatory
Conversion Date and the right to receive, out of funds legally available
therefor, an amount equal to all accrued and unpaid dividends on such share of
this Series to the Mandatory Conversion Date, whether or not declared (payable
in cash or in shares of Common Stock on the same basis as that used to determine
dividends), subject to the right of the Company to redeem the shares of this
Series on or after the Initial Redemption Date (as hereinafter defined) and
prior to the Mandatory Conversion Date, as described below, and subject to the
conversion of the shares of this Series at the option of the holder at any time
prior to the Mandatory Conversion Date. Notwithstanding the forgoing, if the
Mandatory Conversion Date occurs after a record date for a quarterly dividend
and before the corresponding Dividend Payment Date, such dividend shall be paid,
out of funds legally available therefor, on the Dividend Payment Date rather
than on the Mandatory Conversion Date. The Common Equivalent Rate is initially
four-hundred and twenty shares of Common Stock for each share of this Series.
Dividends on the shares of this Series shall cease to accrue and such shares
shall cease to be outstanding on the Mandatory Conversion Date. The Company
shall make such arrangements as it deems appropriate for the issuance of
certificates representing shares of Common Stock and for the payment (in cash or
in shares of Common Stock, at the election of the Board of Directors of the
Company) in respect of such accrued and unpaid dividends, if any, or cash in
lieu of fractional shares, if any, in exchange for and contingent upon surrender
of certificates representing the shares of this Series, provided that the
Company shall give the holders of the shares of this Series such notice of any
such actions as the Company deems appropriate and upon such surrender such
holders shall be entitled to receive such dividends declared and paid on such
shares of Common Stock subsequent to the Mandatory Conversion Date. Amounts
payable in cash in respect of the shares of this series or in respect of such
shares of Common Stock shall not bear interest.
(b) Redemption by the Company.
(i) Right to Redeem. Shares of this Series are not
redeemable by the Company prior to May 31, 1998 (the "Initial Redemption Date").
At any time and from time to time on or after the Initial Redemption Date and
prior to the Mandatory Conversion Date, the Company shall have the right to
redeem, in whole or in part, the outstanding shares of this Series. Upon any
such redemption, the Company shall deliver to the holders of shares of this
Series, in accordance with the provisions of these Articles of Amendment in
exchange for each share so redeemed, a number of shares of Common Stock equal to
(A) the Call Price (as hereinafter defined) in effect on the date of redemption,
divided by (B) the Current Market Price (as hereinafter defined) of the Common
Stock determined as of the date which is one trading day prior to the public
announcement of the redemption. The Call Price of each share of this Series is
an amount equal to the sum of (X) $3,417.00 on and after the Initial Redemption
Date through August 30, 1998, $3,400.25 on and after August 31, 1998 through
November 29, 1998, $3,383.50 on and after November 30, 1998 through February 27,
1999, $3,366.75 on and after February 28, 1999 through April 29, 1999 and
$3,350.00 on and after April 30, 1999 until the Mandatory Conversion Date plus
(Y) all accrued and unpaid dividends thereon to the date fixed for redemption.
Notwithstanding the forgoing, if the date fixed for redemption occurs after a
record date for a quarterly dividend and prior to the corresponding Dividend
Payment Date, such dividend shall be paid, out of funds legally available
therefor, on the Dividend Payment Date and the Call Price shall not include the
amount of the dividend to be so paid. Dividends on the shares of this Series
shall cease to accrue and such shares shall cease to be outstanding on the date
fixed for redemption. A public announcement of any call for redemption shall be
made prior to the mailing of the notice of such call to holders of shares of
this Series as described below. If fewer than all the outstanding shares of this
Series are to be redeemed, shares to be redeemed shall be selected by the
Company from outstanding shares of this Series not previously redeemed by lot or
pro rata (as nearly as may be practicable) or by any other method determined by
the Board of Directors of the Company in its sole discretion to be fair and
proper.
(ii) Current Market Price. As used in this subparagraph
(b), the term "Current Market Price" per share of the Common Stock on any date
of determination means the lesser of (X) the average of the average of the high
and low sales prices of the Common Stock as reported on the Nasdaq National
Market or any national securities exchange upon which the Common Stock is then
listed, for each of the ten consecutive Trading Dates ending on and including
such date of determination and (Y) the Closing Price (as hereinafter defined) of
the Common Stock for such date of determination; provided, however, that, with
respect to any redemption of shares of
<PAGE> 18
this Series, if any event that results in an adjustment of the Common Equivalent
Rate occurs during the period beginning on the first day of such ten-day period
and ending on the applicable redemption date, the Current Market Price as
determined pursuant to the foregoing shall be appropriately adjusted to reflect
the occurrence of such event.
(iii) Notice of Redemption. The Company shall provide
notice of any redemption of the shares of this Series to holders of record of
the shares of this Series to be called for redemption not less than 15 nor more
than 60 days prior to the date fixed for such redemption. Such notice shall be
provided by mailing notice of such redemption first class postage prepaid, to
each holder of record of shares of this Series to be redeemed, at such holder's
address as it appears on the stock register of the Company; provided, however,
that neither failure to give such notice nor any defect therein shall affect the
validity of the proceeding for the redemption of any shares of this Series to be
redeemed.
Each such notice shall state, as appropriate, the following and may
contain such other information as the Company deems advisable:
(A) the redemption date;
(B) that all outstanding shares of this Series are to be
redeemed or, in the case of a call for redemption of
fewer than all outstanding shares of this Series, the
number of such shares held by such holder to be
redeemed;
(C) the Call Price, the number of shares of Common Stock
deliverable upon redemption of each share of this
Series to be redeemed and the Current Market Price
used to calculate such number of shares of Common
Stock;
(D) the place or places where certificates for such shares
are to be surrendered for redemption; and
(E) that dividends on the shares of this Series to be
redeemed shall cease to accrue on such redemption date
(except as otherwise provided herein).
(iv) Deposit of Shares and Funds. The Company's obligation
to deliver shares of Common Stock and provide funds upon redemption in
accordance with this paragraph 4 shall be deemed fulfilled if, on or before a
redemption date, the Company shall irrevocably deposit, with a bank or trust
company, or an affiliate of a bank or trust company, having an office or agency
in New York City and having a capital and surplus of at least $50,000,000, or
shall set aside or make other reasonable provision for the issuance of, such
number of shares of Common Stock as are required to be delivered by the Company
pursuant to this paragraph 4 upon the occurrence of the related redemption (and
for the payment of cash in lieu of the issuance of fractional share amounts and
accrued and unpaid dividends payable in cash, if any, on the shares to be
redeemed as and to the extent provided by this paragraph 4). Any interest
accrued on such funds shall be paid to the Company from time to time. Any shares
of Common Stock or funds so deposited and unclaimed at the end of two years from
such redemption date shall be repaid and released to the Company, after which
the holder or holders of such shares of this Series so called for redemption
shall look only to the Company for delivery of such shares of Common Stock or
funds.
(v) Surrender of Certificates; Status. Each holder of
shares of this Series to be redeemed shall surrender the certificates evidencing
such shares (properly endorsed or assigned for transfer, if the Board of
Directors of the Company shall so require and the notice shall so state) to the
Company at the place designated in the notice of such redemption and shall
thereupon be entitled to receive certificates evidencing shares of Common Stock
and to receive any funds or shares of Common Stock payable pursuant to this
paragraph (4) following such surrender and following the date of such
redemption. In case fewer than all the shares represented by any such
surrendered certificate are called for redemption, a new certificate shall be
issued at the expense of the Company representing the unredeemed shares. If such
notice of redemption shall have been given, and if on the date fixed for
redemption shares of Common Stock and funds necessary for the redemption shall
have been irrevocably either set aside by the Company separate and apart from
its other funds or assets in trust for the account of the holders of the shares
to be redeemed or converted (and so as to be and continue to be available
therefor) or deposited with a bank or a trust company or an affiliate thereof as
provided herein or the Company shall have made other
<PAGE> 19
reasonable provision therefor, then, notwithstanding that the certificates
evidencing any shares of this Series so called for redemption or subject to
conversion shall not have been surrendered, the shares represented thereby so
called for redemption shall be deemed no longer outstanding, dividends with
respect to the shares so called for redemption shall cease to accrue on the date
fixed for redemption (except that holders of shares of this Series at the close
of business on a record date for any payment of dividends shall be entitled to
receive the dividend payable on such shares on the corresponding Dividend
Payment Date notwithstanding the redemption of such shares following such record
date and prior to such Dividend Payment Date) and all rights with respect to the
shares so called for redemption shall forthwith after such date cease and
terminate, except for the rights of the holders to receive the shares of Common
Stock and funds, if any, payable pursuant to this paragraph (4) without interest
upon surrender of their certificates therefor. Holders of shares of this Series
that are redeemed shall not be entitled to receive dividends declared and paid
on such shares of Common Stock, and such shares of Common Stock shall not be
entitled to vote, until such shares of Common Stock are issued upon the
surrender of the certificates representing such shares of this Series and upon
such surrender such holders shall be entitled to receive such dividends declared
and paid on such shares of Common Stock subsequent to such redemption date.
(c) Conversion at Option of Holder. Shares of this Series
are convertible, in whole or in part, at the option of the holder thereof, at
any time prior to the Mandatory Conversion Date, unless previously redeemed,
into shares of Common Stock at a rate of 344.274 shares of Common Stock for each
share of this Series (the "Optional Conversion Rate") (equivalent to a
conversion price of $9.73 per share of Common Stock). The right to convert
shares of this Series called for redemption shall terminate at the close of
business on the redemption date.
Conversion of shares of this Series may be effected by delivering
certificates evidencing such shares, together with written notice of conversion
and a proper assignment of such certificates to the Company or in blank, to the
office or agency to be maintained by the Company for that purpose (and, if
applicable, payment by the Company of an amount, out of funds legally available
therefor (in cash or in shares of Common Stock, at the election of the Company),
equal to the dividend payable on such shares), and otherwise in accordance with
conversion procedures established by the Company. Each conversion shall be
deemed to have been effected immediately prior to the close of business on the
date on which the foregoing requirements shall have been satisfied. The
conversion shall be at the Optional Conversion Rate in effect at such time and
on such date.
Holders of shares of this Series at the close of business on a record
date for any payment of dividends shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares following such record date and
prior to such Dividend Payment Date. The Company shall make no other payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
of this Series or for dividends or distributions on the shares of Common Stock
issued upon such conversion.
(d) Common Equivalent Rate and Optional Conversion Rate
Adjustments. The Common Equivalent Rate and the Optional Conversion Rate also
shall be subject to adjustment from time to time as provided below in this
paragraph.
(i) If the Company shall:
(A) pay a dividend or make a distribution with respect to
its Common Stock in shares of such stock,
(B) subdivide or split its outstanding shares of Common
Stock into a greater number of shares,
(C) combine its outstanding shares of Common Stock into a
smaller number of shares, or
(D) issue by reclassification of its shares of Common Stock
any shares of Common Stock of the Company,
<PAGE> 20
then, in any such event, the Common Equivalent Rate and the Optional Conversion
Rate in effect immediately prior to such event shall each be adjusted so that
the holder of any shares of this Series shall thereafter be entitled to receive,
upon Mandatory Conversion or upon conversion at the option of the holder, the
number of shares of Common Stock of the Company which such holder would have
owned or been entitled to receive immediately following any event described
above had such shares of this Series been converted immediately prior to such
event or any record date with respect thereto. Such adjustment shall become
effective at the opening of business on the business day next following the
record date for determination of shareholders entitled to receive such dividend
or distribution in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
split, combination or reclassification. Such adjustment shall be made
successively.
(ii) If the Company shall, after the date hereof, issue
rights or warrants to all holders of its Common
Stock entitling them (for a period not exceeding
forty-five days from the date of such issuance) to
subscribe for or purchase shares of Common Stock at
a price per share less than the current market
price of the Common Stock, then in each case the
Common Equivalent Rate and Optional Conversion Rate
shall each be adjusted by multiplying the Common
Equivalent Rate and the Optional Conversion Rate,
in effect immediately prior to the date of issuance
of such rights or warrants, by a fraction, of which
the numerator shall be the number of shares of
Common Stock outstanding on the date of issuance of
such rights or warrants, immediately prior to such
issuance, plus the number of additional shares of
Common Stock offered for subscription or purchase
pursuant to such rights or warrants, and of which
the denominator shall be the number of shares of
Common Stock outstanding on the date of issuance of
such rights or warrants, immediately prior to such
issuance, plus the number of additional shares of
Common Stock which the aggregate offering price of
the total number of shares of Common Stock so
offered for subscription or purchase pursuant to
such rights or warrants would purchase at such
current market price (determined by multiplying
such total number of shares by the exercise price
of such rights or warrants and dividing the product
so obtained by such current market price). Such
adjustment shall become effective at the opening of
business on the business day next following the
record date for the determination of shareholders
entitled to receive such rights or warrants. To the
extent that shares of Common Stock are not
delivered after the expiration of such rights or
warrants, the Common Equivalent Rate shall be
readjusted to the Common Equivalent Rate which
would then be in effect had the adjustments been
made upon the issuance of such rights or warrants
been made upon the basis of delivery of only the
number of shares of Common Stock actually
delivered. Such adjustment shall be made
successively.
(iii) If the Company shall pay a dividend or make a
distribution to all holders of its Common Stock of
evidences of its indebtedness, securities of a
Subsidiary or other assets (excluding any dividends
or distributions referred to in clause (i) above or
any cash dividends other than Extraordinary Cash
Distributions (as hereinafter defined)) or shall
issue to all holders of its Common Stock rights or
warrants to subscribe for or purchase any of its
securities (other than those referred to in clause
(ii) above), then in each such case, the Common
Equivalent Rate and the Optional Conversion Rate
shall each be adjusted by multiplying the Common
Equivalent Rate and the Optional Conversion Rate in
effect on the record date mentioned below, by a
fraction of which the numerator shall be the
current market price per share of the Common Stock
on the record date for the determination of
shareholders entitled to receive such dividend or
distribution, and of which the denominator shall be
such current market price per share of Common Stock
less the fair market value (as determined by the
Board of Directors of the Company, whose good faith
determination shall be conclusive, and described in
a resolution adopted with respect thereto) as of
such record date of the portion of the assets or
evidences of indebtedness so distributed or of such
<PAGE> 21
subscription rights or warrants applicable to one
share of Common Stock. Such adjustment shall become
effective on the opening of business on the
business day next following the record date for the
determination of shareholders entitled to receive
such dividend or distribution. Such adjustment
shall be made successively.
(iv) Any shares of Common Stock issuable in payment of a
dividend shall be deemed to have been issued
immediately prior to the close of business on the
record date for such dividend for purposes of
calculating the number of outstanding shares of
Common Stock under clause (ii) above. For purposes
of any computation under clause (ii) and (iii)
above, the current market price per share of Common
Stock at any date shall be deemed to be the average
of the daily Closing Prices for the thirty
consecutive Trading Dates preceding the date in
question; provided, however, if any event that
results in an adjustment of the Common Equivalent
Rate occurs during such thirty-day period, the
current market price as determined pursuant to the
foregoing shall be appropriately adjusted to
reflect the occurrence of such event.
(v) The Company shall also be entitled to make upward
adjustments in the Common Equivalent Rate, the
Optional Conversion Rate and the Call Price, as the
Board of Directors in its good faith discretion
shall determine to be advisable, in order that any
stock dividends, subdivisions of shares,
distribution of rights to purchase stock or
securities, or distribution of securities
convertible into or exchangeable for stock (or any
transaction which could be treated as any of the
foregoing transactions pursuant to Section 305 of
the Internal Revenue Code of 1986, as amended)
hereafter made by the Company to its shareholders
shall not be taxable.
(vi) In any case in which clause (iii) above shall
require that an adjustment as a result of any event
become effective at the opening of business on the
business day next following a record date and the
date fixed for conversion pursuant to subparagraph
(4)(c) or redemption pursuant to subparagraph
(4)(b) occurs after such record date, but before
the occurrence of such event, the Company may in
its sole discretion, elect to defer, until after
the occurrence of such event, issuing to the holder
of any converted or redeemed shares of this Series
the additional shares of Common Stock issuable upon
such conversion or redemption over the shares of
Common Stock issuable before giving effect to such
adjustment.
(vii) All adjustments to the Common Equivalent Rate and
the Optional Conversion Rate shall be calculated to
the nearest 1/1000th of a share of Common Stock (or
if there is not a nearest 1/1000th of a share to
the next lower 1/1000th of a share). No adjustment
in the Common Equivalent Rate and the Optional
Conversion Rate shall be required unless such
adjustment would require an increase or decrease of
at least one percent therein; provided, however,
that any adjustments which by reason of this
subparagraph are not required to be made shall be
carried forward and taken into account in any
subsequent adjustments.
(e) Adjustment for Consolidation or Merger. In case of any
consolidation or merger to which the Company is a party (other than a merger or
consolidation in which the Company is the continuing corporation and in which
the Common Stock outstanding immediately prior to the merger or consolidation
remains unchanged), or in case of any sale or transfer to another corporation of
the property of the Company as an entirety or substantially as an entirety, or
in case of any statutory exchange of securities with another corporation (other
than in connection with a merger or acquisition), proper provision shall be made
so that each share of this Series shall, after consummation of such transaction,
be subject to (i) conversion at the option of the holder into the kind and
amount of securities, cash or other property receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock into which
such share of this Series might have been converted immediately prior to
consummation of such transaction, (ii) conversion on the Mandatory Conversion
Date into the kind and amount of
<PAGE> 22
securities, cash or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock into which such
share of this Series would have been converted if the conversion on the
Mandatory Conversion Date had occurred immediately prior to the date of
consummation of such transaction, and (iii) redemption on any redemption date in
exchange for the kind and amount of securities, cash or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock that would have been issuable at the Call Price in effect
on such redemption date upon a redemption of such shares immediately prior to
the consummation of such transaction, assuming that the public announcement of
such redemption had been made on the last possible date permitted by the terms
of this Series and applicable law; assuming in each case that such holder of
shares of this Series failed to exercise rights of election, if any, as to the
kind or amount of securities, cash or other property receivable upon
consummation of such transaction (provided that if the kind or amount of
securities, cash or other property receivable upon consummation of such
transaction is not the same for each non-electing share, then the kind and
amount of securities, cash or other property receivable upon consummation of
such transaction for each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares). The
kind and amount of securities into which the shares of this Series shall be
convertible after the consummation of such transaction shall be subject to
adjustment as described in the immediately preceding subparagraph 4(d) following
the date of consummation of such transaction. The Company shall not, without the
affirmative vote of more than the holders of two-thirds of all the outstanding
shares of this Series, become a party to any such transaction unless the terms
thereof are consistent with the foregoing.
(f) Notice of Adjustments. Whenever the Common Equivalent
Rate and Optional Conversion Rate are adjusted as herein provided, the Company
shall:
(i) forthwith compute the adjusted Common Equivalent
Rate and Optional Conversion Rate in accordance
herewith and prepare a certificate signed by an
officer of the Company setting forth the adjusted
Common Equivalent Rate and the Optional Conversion
Rate, the method of calculation thereof in
reasonable detail and the facts requiring such
adjustment and upon which such adjustment is based,
which certificate shall be conclusive, final and
binding evidence of the correctness of the
adjustment, and file such certificate forthwith
with the transfer agent for the shares of this
Series and the Common Stock; and
(ii) mail a notice to the holders of the outstanding
shares of this Series stating that the Common
Equivalent Rate and the Optional Conversion Rate
have been adjusted, the facts requiring such
adjustment and upon which such adjustment is based
and setting forth the adjusted Common Equivalent
Rate and Optional Conversion Rate, such notice to
be mailed at or prior to the time the Company mails
an interim statement to its shareholders covering
the fiscal quarter during which the facts requiring
such adjustment occurred, but in any event within
45 days of the end of such fiscal quarter.
(g) Notices. In case, at any time while any of the shares
of this Series are outstanding,
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock, excluding any
cash dividends; or
(ii) the Company shall authorize the issuance to all
holders of its Common Stock of rights or warrants
to subscribe for or purchase shares of its Common
Stock or of any other subscription rights or
warrants; or
(iii) the Company shall authorize any reclassification of
the Common Stock of the Company (other than a
subdivision or combination thereof) or of any
consolidation or merger to which the Company is a
party and for which approval of any shareholders of
the Company is required (except for a merger of the
Company into a Subsidiary solely for the purpose of
changing the corporate domicile of the Company to
another state of the United States and in
connection with which there is no
<PAGE> 23
substantive change in the rights or privileges of
any securities of the Company other than changes
resulting from differences in the corporate
statutes of the then existing and the new state of
domicile), or of the sale or transfer of all or
substantially all of the assets of the Company; or
(iv) there shall be commenced the voluntary or
involuntary dissolution, liquidation or winding up
of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the shares of this Series, and shall cause to be
mailed to the holders of shares of this Series at their last addresses as they
shall appear on the stock register, at least 10 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified, in the event that
more than one date is specified), a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities or other property (including cash),
if any, deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. The failure to give or receive
the notice required by this subparagraph (g) or any defect therein shall not
affect the legality or validity of any such dividend, distribution, right or
warrant or other action.
(h) Effective Date of Conversions and Redemptions. The
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon any conversion or redemption shall
be deemed to have become on the date of any such conversion or redemption the
holder or holders of record of the shares represented thereby; provided,
however, that any such surrender on any date when the stock transfer books of
the Company shall be closed shall constitute the person or persons in whose name
or names the certificate or certificates for such shares are to be issued as the
record holder or holders thereof for all purposes at the opening of business on
the next succeeding business day on which such stock transfer books are open.
(i) No Fractional Shares. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon the
redemption or conversion of any shares of this Series or in respect of any
dividend paid in shares of Common Stock. In lieu of any fractional share
otherwise issuable in respect of all the shares of this Series of any holder
which are redeemed or converted on any redemption date or upon Mandatory
Conversion or any optional conversion or in respect of any dividend paid in
shares of Common Stock, the Company shall, at the election of the Company,
either (i) sell such fractional share, as agent for the person entitled thereto,
and distribute the proceeds of such sale, net of any discounts, commissions,
fees or expenses associated with such sale, to such person, all in accordance
with applicable rules under the Securities Act of 1933, as amended, or (ii) pay
to the person entitled thereto an amount in cash equal to the current value of
such fraction, calculated to the nearest one-hundredth (1/100) of a share, to be
computed (x) if the shares of this Series are listed on any national securities
exchange or the Nasdaq National Market, on the basis of the last sales price (or
the quoted closing bid price if there shall have been no sales) of the shares of
this Series on such exchange or the Nasdaq National Market (as the case may be)
on the date of any such conversion or redemption or the date of payment of any
such dividend, or (y) if the shares of this Series are not so listed, on the
basis of the mean between the closing bid and asked prices for the shares of
this Series on the date of any such conversion or redemption or the date of
payment of any such dividend, as reported by Nasdaq, or its successor, or (z) if
the shares of this Series are not so listed and if there are no such closing bid
and asked prices, on the basis of the fair market value per share as determined
in good faith by the Board of Directors.
(j) Reissuance. Shares of this Series that have been issued
and reacquired in any manner, including shares purchased, exchanged, redeemed or
converted, shall not be reissued as part of this Series and shall (upon
compliance with any applicable provisions of the laws of the State of Georgia)
have the status of authorized and unissued shares of the Preferred Stock
undesignated as to series and may be redesignated and reissued as part of any
series of Preferred Stock.
<PAGE> 24
(k) Definitions. As used herein:
(i) the term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions
in the State of New York are authorized or obligated by
law or executive order to close or are closed because of a
banking moratorium or otherwise;
(ii) the term "Capital Stock" means any capital stock of any
class or series (however designated) of the Company;
(iii) the term "Closing Price" on any day shall mean the closing
sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in each case on
the Nasdaq National Market or, if the Common Stock is not
listed or admitted to trading on the Nasdaq National
Market then on the principal national securities exchange
on which the Common Stock is listed or admitted to trading
(which shall be the national securities exchange on which
the greatest number of shares of Common Stock has been
traded during the five consecutive Trading Dates ending on
and including the date of determination), or, if not
quoted or listed or admitted to trading on any national
securities exchange or quotation system, the average of
the closing bid and asked prices of the Common Stock on
the over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated, or
a similar generally accepted reporting service, or if not
so available as determined in good faith by the Board of
Directors, on the basis of such relevant factors as it in
good faith considers appropriate;
(iv) the term "Exchange Preferred" means the Series B
Convertible Preferred Stock of the Company.
(v) the term "Extraordinary Cash Distributions" 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 Common Stock paid during the
consecutive 12-month period ending on and including such
date (other than cash dividends and cash distributions for
which an adjustment to the Common Equivalent Rate and the
Optional Conversion Rate was previously made) exceeds, on
a per share of Common Stock basis, 10% of the average
daily Closing Price of the Common Stock over such 12-month
period;
(vi) the term "Junior Stock" means any Capital Stock ranking as
to dividends or as to rights in liquidation, dissolution
or winding up of the affairs of the Company junior to the
shares of this Series;
(vii) the term "Parity Stock" means any Capital Stock ranking as
to dividends or as to rights in liquidation, dissolution
or winding up the affairs of the Company equally with the
shares of this Series;
(viii) the term "Subsidiary" means any corporation a majority of
the outstanding Voting Stock of which is owned, directly
or indirectly, by the Company or by one or more
Subsidiaries or by the Company and one or more
Subsidiaries. For this purpose, the term "Voting Stock"
means stock of any class or classes (however designated)
having ordinary voting power for the election of a
majority of the members of the board of directors (or
other governing body) of such corporation, other than
stock having such powers only by reason of the happening
of a contingency;
<PAGE> 25
(ix) the term "Trading Date" shall mean a date on which the
Nasdaq National Market (or any successor thereto) is open
for the transaction of business.
(l) Payment of Taxes. The Company shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on the redemption or conversion of
shares of this Series pursuant to this paragraph 4; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any registration of transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the registered holder of shares of
this Series redeemed or converted or to be redeemed or converted, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Company the amount of any such tax or has established, to
the satisfaction of the Company, that such tax has been paid.
(m) Reservation of Common Stock. The Company shall at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock and/or its issued Common
Stock held in its treasury, for the purpose of effecting any Mandatory
Conversion of the shares of this Series or any conversion of the shares of this
Series at the option of the holder, the full number of shares of Common Stock
then deliverable upon any such conversion of all outstanding shares of this
Series.
5. Liquidation Rights.
(a) In the event of the liquidation, dissolution, or
winding up of the Company, whether voluntary or involuntary, the holders of
shares of this Series then outstanding, after payment or provision for payment
of the debts and other liabilities of the Company and the payment or provision
for payment of any distribution on any shares of the Company having a preference
and a priority over the shares of this Series on liquidation, and before any
distribution to the holders of the Common Stock, or any other stock ranking
junior to the shares of this Series with respect to distributions upon
liquidation, dissolution or winding up, shall be entitled to be paid out of the
assets of the Company available for distribution to its shareholders, an amount
per share of this Series equal to the greater of (i) the sum of (a) the
liquidation value set forth in paragraph (1) above 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 Common Stock into which such shares of this
Series are convertible on the date of such liquidation, dissolution or winding
up, before any payment shall be made or any assets distributed to the holders of
any shares of the Company ranking junior to the shares of this Series upon
liquidation. In the event the assets of the Company available for distribution
to the holders of the shares of this Series upon any dissolution, liquidation or
winding up of the Company shall be insufficient to pay in full the liquidation
payments payable to the holders of outstanding shares of this Series and any
shares of Parity Stock, then the holders of all such shares of this Series shall
share ratably in such distribution of assets in accordance with the amount which
would be payable on such distribution if the amounts to which the holders of
outstanding shares of this Series and the holders of outstanding shares of such
shares of Parity Stock are entitled were paid in full. Except as provided in
this paragraph 5, holders of this Series shall not be entitled to any
distribution in the event of liquidation, dissolution or winding up of the
affairs of the Company.
(b) For the purposes of this paragraph 5, none of the
following shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of the Company:
(i) the voluntary sale, conveyance, lease, exchange or
transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of
the property or assets of the Company;
(ii) the consolidation or merger of the Company with or
into one or more other corporations, or other
associations;
(iii) the consolidation or merger of one or more
corporations or other associations with or into the
Company; or
(iv) the participation by the Company in a share exchange.
<PAGE> 26
6. Definition. As used herein, the term "Common Stock" shall mean any
stock of any class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and which is not subject
to redemption by the Company. However, shares of Common Stock issuable upon
conversion of shares of this Series shall include only shares of the class
designated as Common Stock as of the original date of issuance of shares of this
Series, or shares of the Company of any class or classes resulting from any
reclassification or reclassification thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from such reclassification bears to the total
number of shares of all classes resulting from all such reclassification.
7. No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of Capital Stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
<PAGE> 27
EXHIBIT B
Series B Convertible Preferred Stock
1. Designation and Amount. The shares of such series shall be
designated "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock"), and the number of shares constituting such series shall be 15,000,000.
2. Dividends.
(a) The holders of Series B Preferred Stock shall be entitled
to receive, when and as declared, out of the funds legally available for that
purpose, dividends per share of Series B Preferred Stock at the rate of 7.75
cents per annum, payable when and as the Board of Directors (the "Board of
Directors") of WorldCom, Inc. (the "Company") may determine, in cash, before any
dividends shall be set apart for or paid upon the common stock of the Company,
par value $.01 per share (the "Common Stock"), or any stock ranking as to
dividends junior to the Series B Preferred Stock (such stock being referred to
hereinafter collectively as "Junior Stock") in any year. All dividends declared
upon Series B Preferred Stock shall be declared pro rata per share and shall be
payable to holders of record as they appear on the stock books of the Company on
such record dates as shall be fixed by the Board of Directors. Notwithstanding
the foregoing, the Company may declare, set apart and pay dividends on shares of
the Company's Series A 8% Cumulative Convertible Preferred Stock (the "Series A
Preferred Stock") whether or not dividends have been declared, set apart or paid
on the shares of Series B Preferred Stock. The Board of Directors shall not be
required to declare any dividends on the Series B Preferred Stock and the
failure to declare any such dividends shall not constitute a default or
otherwise vest the holders of Series B Preferred Stock with any right, other
than the right to receive amounts in respect of accrued but unpaid dividends
pursuant to Sections 3, 5 and 7 hereof.
(b) Dividends on the Series B Preferred Stock shall be
cumulative and shall accrue on a daily basis, whether or not in any fiscal year
there shall be net profits or surplus available for the payment of dividends in
such fiscal year, so that if in any fiscal year or years, dividends in whole or
in part are not paid upon the Series B Preferred Stock, unpaid dividends shall
accumulate as against the holders of the Junior Stock. Accrued but unpaid
dividends shall not bear interest.
(c) Dividends (or amounts equal to accrued and unpaid
dividends) payable on the shares of Series B Preferred Stock shall be computed
on the basis of a 360-day year of twelve 30-day months.
(d) The Company shall not set apart for or pay upon the Common
Stock any Extraordinary Cash Dividend unless, at the same time, the Company
shall have set apart for or paid upon all shares of Series B Preferred Stock an
amount of cash per share of 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 had converted such share into shares of Common Stock pursuant to
Section 5 immediately prior to the record date for such Extraordinary Cash
Dividend. For purposes of this paragraph 2(d), "Extraordinary Cash Dividend"
shall mean, 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
Common Stock paid during the consecutive 12-month period ending on and including
such date exceeds, on a per share of Common Stock basis, 10% of the average
daily closing price of the Common Stock over such 12-month period.
3. Liquidation, Dissolution or Winding Up.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Company, no distribution shall be made (i) to the holders
of Junior Stock unless, prior thereto, the holders of the Series B Preferred
Stock shall have received $1.00 per share, plus an amount equal to unpaid
dividends thereon, including accrued dividends, whether or not declared, to the
date of such payment and subject to the payment in full of all amounts required
to be distributed to the holders of any other Preferred Stock of the Company
ranking on liquidation prior and in preference to the Series B Preferred Stock
(such Preferred Stock being referred to hereinafter as "Senior Preferred Stock")
or (ii) to the holders of stock ranking on a parity, either as to dividends or
upon liquidation with the Series B Preferred Stock, except distributions made
ratably on the Series B Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such
<PAGE> 28
liquidation. In the event the assets of the Company available for distribution
to the holders of the shares of the Series B Preferred Stock upon any
dissolution, liquidation or winding up of the Company shall be insufficient to
pay in full the liquidation payments payable to the holders of outstanding
shares of the Series B Preferred Stock and the holders of any shares of stock
ranking on a parity with the Series B Preferred Stock, then the holders of all
such shares of the Series B Preferred Stock shall share ratably in such
distribution of assets in accordance with the amount which would be payable on
such distribution if the amounts to which the holders of outstanding shares of
the Series B Preferred Stock and the holders of outstanding shares of such
shares of parity stock are entitled were paid in full. The Series A Preferred
Stock shall rank on a parity with the Series B Preferred Stock for purposes of
this paragraph 3(a).
(b) The merger or consolidation of the Company into or with
another company, the merger or consolidation of any other company into or with
the Company, or the sale, conveyance, mortgage, pledge or lease of all or
substantially all the assets of the Company shall not be deemed to be a
liquidation, dissolution or winding up of the Company for purposes of this
Section 3.
4. Voting.
(a) Each issued and outstanding share of Series B Preferred
Stock shall be entitled to one vote per share with respect to any and all
matters presented to the shareholders of the Company for their action or
consideration. Except as provided by law and by the provisions of paragraph 4(b)
below, holders of Series B Preferred Stock shall vote together with the holders
of Common Stock as a single class.
(b) The Company shall not amend, alter or repeal the
preferences, special rights or other powers or terms of the Series B Preferred
Stock so as to affect adversely the Series B Preferred Stock, without the
written consent or affirmative vote of the holders of at least a majority of the
then outstanding aggregate number of shares of Series B Preferred Stock, given
in writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class. 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 Series B Preferred Stock as to the right to receive either dividends or
amounts distributable upon liquidation, dissolution or winding up of the Company
shall not be deemed to affect adversely the Series B Preferred Stock.
5. Optional Conversion.
(a) Each share of Series B Preferred Stock may be converted at
any time, unless previously redeemed, at the option of the holder thereof, in
the manner hereinafter provided, into fully paid and nonassessable shares of
Common Stock at the rate of 0.0973912 shares (or an effective initial conversion
price of $10.268 per share of Common Stock) of Common Stock for each one share
of Series B Preferred Stock surrendered for conversion, or at such other rate as
may then be effective following adjustment pursuant to Section 6 hereof (the
"Conversion Rate").
(b) The Company shall not issue fractions of shares of Common
Stock upon conversion of Series B Preferred Stock or scrip in lieu thereof. If
any fraction of a share of Common Stock would, except for the provisions of this
paragraph 5(b), be issuable upon conversion of any Series B Preferred Stock, the
Company shall in lieu thereof at the election of the Company, either (i) sell
such fractional share, as agent for the person entitled thereto, and distribute
the proceeds of such sale, net of any discounts, commissions, fees or expenses
associated with such sale, to such person, all in accordance with all applicable
rules under the Securities Act of 1933, as amended, or (ii) pay to the person
entitled thereto an amount in cash equal to the current value of such fraction,
calculated to the nearest one-hundredth (1/100) of a share, to be computed (x)
if the Common Stock is listed on any national securities exchange or the Nasdaq
National Market, on the basis of the last sales price (or the quoted closing bid
price if there shall have been no sales) of the Common Stock on such exchange or
the Nasdaq National Market (as the case may be) on the date of conversion, or
(y) if the Common Stock is not so listed, on the basis of the mean between the
closing bid and asked prices for the Common Stock on the date of conversion as
reported by Nasdaq, or its successor, or (z) if the Common Stock is not so
listed and if there are no such closing bid and asked prices, on the basis of
the fair market value per share as determined by the Board of Directors.
(c) In order to exercise the conversion privilege, the holder
of any Series B Preferred Stock to be converted shall surrender his, her or its
certificate or certificates therefore to the principal office of the transfer
<PAGE> 29
agent for the Series B Preferred Stock (or if no transfer agent be at the time
appointed, then the Company at its principal office), and shall give written
notice to the Company at such office that the holder elects to convert the
Series B Preferred Stock represented by such certificates, or any number
thereof. Such notice shall also state the name or names (with address) in which
the certificate or certificates for shares of Common Stock that shall be
issuable on such conversion shall be issued. If so required by the Company,
certificates surrendered for conversion shall be endorsed or accompanied by
written instrument or instruments of transfer, in form satisfactory to the
Company. The date of receipt by the transfer agent (or by the Company if the
Company serves as its own transfer agent) of the certificates and notice shall
be the conversion date (the "Conversion Date"). As soon as practicable after
receipt of such notice and the surrender of the certificate or certificates for
Series B Preferred Stock as aforesaid, the Company shall cause to be issued and
delivered at such office to such holder, or on such holder's written order, a
certificate or certificates for the number of full shares of Common Stock
issuable on such conversion in accordance with the provisions hereof and cash as
provided in paragraph 5(b) in respect of any fraction of a share of Common Stock
otherwise issuable upon such conversion.
(d) The Company shall at all times when the Series B Preferred
Stock shall be outstanding reserve and keep available out of its authorized but
unissued stock, for the purposes of effecting the conversion of the Series B
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series B Preferred Stock.
(e) Shares of Series B Preferred Stock may not be converted
after the close of business on the business day preceding the date fixed for
redemption of such shares pursuant to Section 7.
(f) Upon any such conversion, the Company shall pay, out of
funds legally available therefor, to the person entitled thereto an amount equal
to all accrued but unpaid dividends to, but not including, the Conversion Date
in respect of the shares of Series B Preferred Stock surrendered for conversion,
which amount shall be payable, at the election of the Company, in cash or shares
of Common Stock. In the event the Company elects to pay such amount in shares of
Common Stock, the number of shares of Common Stock to be issued in respect of
unpaid dividends on each share of Series B Preferred Stock surrendered for
conversion shall, subject to paragraph 5(b), be determined by dividing (x) the
total amount of accrued but unpaid dividends to be paid on each such share of
Series B Preferred Stock by (y) the Fair Market Value of a share of Common
Stock. For purposes hereof, the term "Fair Market Value" shall mean (i) if the
Common Stock is listed on any national securities exchange or the Nasdaq
National Market, the average of the last sales price (or the quoted closing bid
price if there shall have been no sales) of the Common Stock on such exchange or
the Nasdaq National Market (as the case may be) for a period of 30 trading days
prior to the Conversion Date, or (ii) if the Common Stock is not so listed, on
the basis of the average of the mean between the closing bid and asked prices
for the Common Stock for each day in the 30 trading day period prior to the
Conversion Date, as reported by Nasdaq, or its successor, or (iii) if the Common
Stock is not so listed and if there are no such closing bid and asked prices, on
the basis of the fair market value per share as determined by the Board of
Directors.
(g) All shares of Series B Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be deemed to
be outstanding and all rights with respect to such shares, including the rights,
if any, to receive notices and to vote, shall forthwith cease and terminate
except only the right of the holder thereof to receive shares of Common Stock in
exchange therefor and payment of any accrued and unpaid dividends thereon. Any
shares of Series B Preferred Stock so converted shall be retired and canceled
and shall not be reissued, and the Company may from time to time take such
appropriate action as may be necessary to reduce the authorized Series B
Preferred Stock accordingly.
6. Adjustment Provisions.
(a) In case the Company shall at any time (x) subdivide
(whether by stock dividend, stock split or otherwise) its outstanding shares of
Common Stock into a greater number of shares or (y) combine its outstanding
shares of Common Stock into a smaller number of shares, the Conversion Rate in
effect immediately prior thereto shall be proportionately adjusted so that the
holder of any shares of Series B Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of capital stock of
the Company which the holder would have owned or have been entitled to receive
after the happening of any of the events described above, had such shares of
Series B Preferred Stock been converted immediately prior to the happening of
such event.
<PAGE> 30
In case the Company shall at any time prior to March 23, 1999 subdivide (whether
by stock dividend, stock split or otherwise) its outstanding shares of Common
Stock into a greater number of shares (each a "Subdivision"), the voting rights
of each share of Series B Preferred Stock shall be adjusted to provide that the
percentage of the aggregate voting power of the Common Stock represented by the
Series B Preferred Stock, shall be the same as such percentage immediately prior
to such Subdivision, with the holder of each share of Series B Preferred Stock
being entitled to the number of votes proportionate to such adjustment. The
adjustment made pursuant to this paragraph 4(a) shall become effective
immediately after the effective date of the event requiring such adjustment and
shall be made by the Board of Directors of the Company, whose judgment shall be
final, binding and conclusive absent manifest error. Such adjustment made
pursuant to this paragraph 6(a) shall become effective immediately after the
effective date of the event requiring such adjustment.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another company, or the sale of all or substantially all of its assets to
another company shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities, cash or other property with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holders of the Series B Preferred
Stock shall have the right to acquire and receive upon conversion of the Series
B Preferred Stock, which right shall be prior to the rights of the holders of
Junior Stock (but after and subject to the rights of holders of Senior Preferred
Stock, if any, and on parity with the rights of holders of Series A Preferred
Stock), such shares of stock, securities, cash or other property issuable or
payable (as part of the reorganization, reclassification, consolidation, merger
or sale) with respect to or in exchange for such number of outstanding shares of
the Company's Common Stock as would have been received upon conversion of the
Series B Preferred Stock at the Conversion Rate then in effect. The Company will
not effect any such consolidation, merger or sale, unless prior to the
consummation thereof the successor company (if other than the Company) resulting
from such consolidation or merger or the company purchasing such assets shall
assume by written instrument mailed or delivered to the holders of the Series B
Preferred Stock at the last address of each such holder appearing on the books
of the Company, the obligation to deliver to each such holder such shares of
stock, securities, cash or other property as, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
(c) In the event that:
(1) the Company shall declare any dividend upon its
Common Stock payable in stock or make any special dividend or
other distribution to the holders of its Common Stock, or
(2) there shall be any capital reorganization or
reclassification of the capital stock of the Company,
including any subdivision or combination of its outstanding
shares of Common Stock, or consolidation or merger of the
Company with, or sale of all or substantially all of its
assets to, another company, or
(3) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in accordance with such event, the Company shall give to the holders of
the Series B Preferred Stock:
(i) at least twenty (20) days prior written
notice of the date on which the books of the
Company shall close or a record shall be
taken for such dividend or distribution or
for determining rights to vote in respect of
any such reorganization, reclassification,
consolidation, merger, sale, dissolution,
liquidation or winding up; and
(ii) in the case of any such reorganization,
reclassification, consolidation, merger,
sale, dissolution, liquidation or winding
up, at least twenty (20) days prior written
notice of the date when the same shall take
place.
A notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend or distribution, the date on which the holders of
Common Stock shall be entitled thereto, and a notice in accordance
<PAGE> 31
with the foregoing clause (ii) shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be. Each such written notice shall be sent by mail, first class, postage
prepaid, addressed to the holders of the Series B Preferred Stock at the address
of each such holder as shown on the books of the Company.
(d) If any event occurs as to which, in the opinion of the
Board of Directors of the Company, the provisions of this Section 6 are not
strictly applicable or if strictly applicable would not fairly protect the
rights of the holders of the Series B Preferred Stock in accordance with the
essential intent and principles of such provisions, then the Board of Directors
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such rights as
aforesaid, but in no event shall any adjustment have the effect of decreasing
the Conversion Rate as otherwise determined pursuant to any of the provisions of
this Section 6 except in the case of a combination of shares of a type
contemplated in paragraph 6(a) and then in no event to a rate less than the
Conversion Rate as adjusted pursuant to paragraph 6(a).
(e) Whenever the Conversion Rate shall be adjusted pursuant to
this Section 6, the Company shall forthwith file at each office designated for
the conversion of Series B Preferred Stock, a statement, signed by the Chairman
of the Board, the President, any Vice President or Treasurer of the Company,
showing in reasonable detail the facts requiring such adjustment and the
Conversion Rate that will be effective after such adjustment. The Company shall
also cause a notice setting forth any such adjustments to be sent by mail, first
class, postage prepaid, to each record holder of Series B Preferred Stock at his
or its address appearing on the stock register. If such notice relates to an
adjustment resulting from an event referred to in paragraph 6(c), such notice
shall be included as part of the notice required to be mailed and published
under the provisions of paragraph 6(c) hereof.
7. Redemption.
The Company shall have the right to redeem shares of Series B
Preferred Stock pursuant to the following provisions:
(a) The Company shall not have any right to redeem shares of
the Series B Preferred Stock prior to September 30, 2001. Thereafter, the
Company shall have the right, at its sole option and election, out of funds
legally available therefor, to redeem the shares of Series B Preferred Stock, in
whole or in part, at any time and from time to time at a redemption price of
$1.00 per share plus an amount equal to all accrued and unpaid dividends thereon
(the "Redemption Price"), whether or not declared, to the redemption date;
provided, that any amount due in respect of all or any portion of the Redemption
Price, including accrued dividends, may be paid in cash or shares of Common
Stock as determined by the Board of Directors. In the event the Board of
Directors elects to pay any portion of the Redemption Price in shares of Common
Stock, the number of shares of Common Stock to be issued shall be determined in
accordance with the provisions of paragraph 5(f).
(b) If less than all of the Series B Preferred Stock at the
time outstanding is to be redeemed, the shares so to be redeemed shall be
selected by lot, pro-rata or in such other manner as the Board of Directors may
determine to be fair and proper.
(c) Notice of any redemption of the Series B Preferred Stock
(including notice of whether such redemption shall be paid in cash or shares of
Common Stock) shall be mailed at least 30 days, but not more than 60 days prior
to the date fixed for redemption to each holder of Series B Preferred Stock to
be redeemed, at such holder's address as it appears on the books of the Company.
In order to facilitate the redemption of the Series B Preferred Stock, the Board
of Directors may fix a record date for the determination of holders of Series B
Preferred Stock to be redeemed, or may cause the transfer books of the Company
to be closed for the transfer of the Series B Preferred Stock, not more than 60
days prior to the date fixed for such redemption.
(d) On the redemption date specified in the notice given
pursuant to paragraph 7(c), the Company shall, and at any time after such notice
shall have been mailed and before such redemption date the Company may, deposit
for the pro-rata benefit of the holders of the shares of the Series B Preferred
Stock so called for redemption, funds in an amount equal to the portion of the
Redemption Price, if any, to be paid in cash with a bank or trust company in the
Borough of Manhattan, The City of New York, having a capital and surplus of at
least
<PAGE> 32
$50,000,000. Any monies so deposited by the Company and unclaimed at the end of
one (1) year from the date designated for such redemption shall revert to the
general funds of the Company. After such reversion, any such bank or trust
company shall, upon demand, pay over to the Company such unclaimed amounts and
thereupon such bank or trust company shall be relieved of all responsibility in
respect thereof to such holder and such holder shall look only to the Company
for the payment of the redemption price. Any interest accrued on funds so
deposited pursuant to this paragraph 7(d) shall be paid from time to time to the
Company for its own account.
(e) Upon the deposit of funds pursuant to paragraph 7(d) in
respect of shares of the Series B Preferred Stock called for redemption, or, in
the event that the Board of Directors elects to pay all or part of the
Redemption Price in shares of Common Stock, on the date fixed for redemption,
notwithstanding that any certificates for such shares shall not have been
surrendered for cancellation, the shares represented thereby shall no longer be
deemed outstanding, the rights to receive dividends thereon shall cease to
accrue from and after the date of redemption designated in the notice of
redemption and all rights of the holders of the shares of the Series B Preferred
Stock called for redemption shall cease and terminate, excepting only the right
to receive the Redemption Price therefor and the right to convert such shares
into shares of Common Stock until the close of business on the business day
preceding the redemption date, as provided in Section 5.
8. Reissuance. Shares of this Series that have been issued and
reacquired in any manner including shares purchased, exchanged, redeemed or
converted shall not be reissued as part of this Series and shall upon compliance
with any applicable provisions of the laws of the State of Georgia have the
status of authorized and unissued shares of the Preferred Stock undesignated as
to series and may be redesignated and reissued as part of any series of
Preferred Stock.
<PAGE> 33
EXHIBIT C
Series 3 Junior Participating Preferred Stock
Section 1. Designation and Amount.
There shall be a series of the Preferred Stock which shall be
designated as the "Series 3 Junior Participating Preferred Stock," par value
$.01 per share, and the number of shares constituting such series shall be
2,500,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
shares of Series 3 Junior Participating Preferred Stock to a number less than
that of the shares then outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock of the Company ranking prior and superior to the
Series 3 Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series 3 Junior Participating Preferred Stock, in
preference to the holders of shares of Common Stock, par value $.01 per share of
the Company (the "Common Stock"), and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
any regular quarterly dividend payment date as shall be established by the Board
of Directors (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series 3 Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $10.00 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series 3 Junior Participating Preferred Stock.
In the event the Company shall at any time after August 25, 1996 (the "Rights
Declaration Date") declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series 3 Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series 3 Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on
the Series 3 Junior Participating Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series 3 Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series 3 Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be
<PAGE> 34
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series 3
Junior Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may, in accordance with applicable law, fix
a record date for the determination of holders of shares of Series 3 Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than such
number of days prior to the date fixed for the payment thereof as may be allowed
by applicable law.
Section 3. Voting Rights.
The holders of shares of Series 3 Junior Participating
Preferred Stock shall have the following voting rights:
(A) Each share of Series 3 Junior Participating Preferred
Stock shall entitle the holder thereof to 1,000 votes on all matters submitted
to a vote of the stockholders of the Company. In the event the Company shall at
any time after the Rights Declaration Date declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes to which holders of shares of Series 3 Junior
Participating Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in the Company's
Second Amended and Restated Articles of Incorporation, as amended, or by law,
the holders of shares of Series 3 Junior Participating Preferred Stock, the
holders of shares of Common Stock, and the holders of shares of any other
capital stock of the Company having general voting rights, shall vote together
as one class on all matters submitted to a vote of stockholders of the Company.
(C) Except as otherwise set forth herein or in the Company's
Second Amended and Restated Articles of Incorporation, as amended, and except as
otherwise provided by law, holders of Series 3 Junior Participating Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series
3 Junior Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series 3 Junior Participating Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
3 Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series 3 Junior Participating Preferred Stock, except dividends paid
ratably on the Series 3 Junior Participating Preferred Stock and all
such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) except as permitted in Section 4(A)(iv) below,
redeem or purchase or otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series 3 Junior Participating
Preferred Stock, provided that the Company may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in
<PAGE> 35
exchange for shares of any stock of the Company ranking junior (either
as to dividends or upon dissolution, liquidation or winding up) to the
Series 3 Junior Participating Preferred Stock; and
(iv) purchase or otherwise acquire for consideration
any shares of Series 3 Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the Series 3 Junior
Participating Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares.
Any shares of Series 3 Junior Participating Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. The Company shall
cause all such shares upon their cancellation to be authorized but unissued
shares of Preferred Stock which may be reissued as part of a new series of
Preferred Stock, subject to the conditions and restrictions on issuance set
forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Company ranking prior and superior to the
Series 3 Junior Participating Preferred Stock with respect to liquidation, upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Company, no distribution shall be made to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series 3 Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Series 3 Junior Participating Preferred Stock shall have
received $1,000.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series 3 Liquidation Preference"). Following the payment of
the full amount of the Series 3 Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series 3 Junior
Participating Preferred Stock, unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series 3 Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
C below to reflect such events as stock dividends, and subdivisions,
combinations and consolidations with respect to the Common Stock) (such number
in clause (ii) being referred to as the "Adjustment Number"). Following the
payment of the full amount of the Series 3 Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series 3 Junior Participating
Preferred Stock and Common Stock, respectively, holders of Series 3 Junior
Participating Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such
Series 3 Junior Participating Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event there are not sufficient assets available to
permit payment in full of the Series 3 Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series 3 Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event
there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(C) In the event the Company shall at any time after the
Rights Declaration Date declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such
<PAGE> 36
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc.
In case the Company shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series 3 Junior Participating
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 1,000 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Company
shall at any time after the Rights Declaration Date declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series 3 Junior Participating Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
are outstanding immediately prior to such event.
Section 8. Redemption.
The shares of Series 3 Junior Participating Preferred Stock
shall not be redeemable.
Section 9. Ranking.
The Series 3 Junior Participating Preferred Stock shall rank
junior to all other series of the Company's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Fractional Shares.
Series 3 Junior Participating Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series 3 Junior Participating Preferred Stock.
<PAGE> 37
EXHIBIT D
SERIES C $2.25 CUMULATIVE CONVERTIBLE
EXCHANGEABLE PREFERRED STOCK
-------------------
SECTION 1. Designation. There is hereby created a series of
preferred stock, $.01 par value per share, of MCI WORLDCOM, Inc. (the
"Corporation") to be known as "Series C $2.25 Cumulative Convertible
Exchangeable Preferred Stock" (the "Series C Preferred Stock").
SECTION 2. Number of Shares. The number of shares of Series C
Preferred Stock authorized for issuance is 3,750,000.
SECTION 3. Stated Capital. The amount to be represented in
stated capital at all times for each share of Series C Preferred Stock shall be
$.01.
SECTION 4. Dividends. (a) (i) The holders of shares of Series
C Preferred Stock shall be entitled to receive dividends at the rate of $2.25
per annum per share of Series C Preferred Stock, which shall be fully cumulative
and shall accrue without interest. Dividends shall be payable in cash quarterly
on January 15, April 15, July 15, and October 15 of each year (commencing on
January 15, 2000) (and, in the case of any accrued but unpaid dividends, at such
additional times and for such interim periods, if any, as determined by the
Board of Directors), except that if any such date is a Saturday, Sunday or legal
holiday then such dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday on which banks in the State of New York are
permitted to be closed (a "Business Day"), to holders of record as they appear
on the stock books of the transfer agent for the Corporation (the "Transfer
Agent") on the applicable record date, which shall be not more than 60 nor less
than 10 days preceding the payment date for such dividends, as are fixed by the
Board of Directors, but only when, as and if declared by the Board of Directors
out of funds at the time legally available for the payment of dividends. The
amount of dividends payable per share of Series C Preferred Stock for each
quarterly dividend period shall be computed by dividing the annual dividend
amount per share by four. The amount of dividends payable for any period that is
shorter or longer than a full quarterly dividend period shall be computed on the
basis of a 360-day year of twelve 30-day months. Holders of shares of Series C
Preferred Stock shall not be entitled to receive any dividends, whether payable
in cash, property or stock, which are in excess of the cumulative dividends
provided for herein.
(ii) Notwithstanding Section 4(a)(i) above, (A) if the
quarterly dividend payable on October 15, 1999 to the holders of $2.25
Cumulative Convertible Exchangeable Preferred Stock, par value $.01 per share
("SkyTel Preferred Stock"), of SkyTel Communications, Inc., a Delaware
corporation ("SkyTel"), shall have been declared, then the first quarterly
dividend of the Series C Preferred Stock payable on January 15, 2000 shall be
<PAGE> 38
equal to $0.5625 per share of Series C Preferred Stock, and (B) if the quarterly
dividend payable to the holders of SkyTel Preferred Stock on October 15, 1999
shall not have been declared, then the first quarterly dividend of the Series C
Preferred Stock payable on January 15, 2000 shall be equal to $1.125 per share
of Series C Preferred Stock. Thereafter, dividends shall accrue as set forth in
Section 4(a)(i).
(b) No dividends or other distributions, other than dividends
payable solely in shares of the Corporation's Common Stock, par value $.01 per
share (the "Common Stock") or other capital stock of the Corporation ranking
junior to the Series C Preferred Stock as to dividends (collectively, "Junior
Dividend Stock") and rights to acquire the foregoing, shall be paid or declared
and set apart for payment on any shares of Junior Dividend Stock, and no
purchase, redemption or other acquisition shall be made by the Corporation of
any shares of Junior Dividend Stock, unless and until all accrued and unpaid
dividends on the Series C Preferred Stock shall have been paid or declared and
set apart for payment.
(c) No dividends, other than dividends payable solely in
shares of Junior Dividend Stock and rights to acquire the foregoing, shall be
paid or declared and set apart for payment on any class or series of the
Corporation's capital stock ranking, as to dividends on a parity with the Series
C Preferred Stock (collectively, "Parity Dividend Stock") for any period and no
purchase, redemption or other acquisition shall be made by the Corporation of
any shares of Parity Dividend Stock unless and until full cumulative dividends
have been, or contemporaneously are, paid or declared and set apart for such
payment on the Series C Preferred Stock for all dividend payment periods
terminating on or prior to the date of payment of such dividends on the Parity
Dividend Stock. When dividends are not paid in full upon the Series C Preferred
Stock and the Parity Dividend Stock (other than the Corporation's Series B
Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred
Stock")), all dividends paid or declared and set aside for payment upon shares
of Series C Preferred Stock and such other Parity Dividend Stock shall be paid
or declared and set aside for payment pro rata so that the amount of dividends
paid or declared and set aside for payment per share on the Series C Preferred
Stock and such other Parity Dividend Stock shall in all cases bear to each other
the same ratio that accrued and unpaid dividends per share on the shares of
Series C Preferred Stock and such other Parity Dividend Stock bear to each
other. Except as limited by the previous sentence, the Series B Preferred Stock
shall be Parity Dividend Stock for all purposes herein.
(d) The restrictions contained in this Section 4 shall not be
deemed to restrict repurchases of capital stock of the Corporation from
employees or consultants pursuant to employee stock option plans and the
conversion of capital stock of the Corporation into, or the exchange of capital
stock of the Corporation for, Junior Dividend Stock.
(e) Holders of shares of Series C Preferred Stock called for
redemption on a redemption date falling between a dividend payment record date
and the associated dividend payment date shall, in lieu of receiving such
dividend on the dividend payment date fixed therefor, receive such dividend
payment together with all other accrued and unpaid dividends on the date fixed
for redemption (unless such holders convert such shares to Common Stock pursuant
to Section 9 hereof).
2
<PAGE> 39
(f) Any reference to "distribution" contained in this Section
4 shall not be deemed to include any stock dividend or distributions made in
connection with any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
SECTION 5. Liquidation Preference. (a) In the event of a
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of shares of Series C Preferred Stock shall be entitled
to receive out of the assets of the Corporation, whether such assets are stated
capital or surplus of any nature, an amount equal to the dividends accrued and
unpaid thereon to the date of final distribution to such holders, whether or not
declared, without interest, and a sum equal to $50.00 per share, and no more,
before any payment shall be made or any assets distributed to the holders of
Common Stock or any other class or series of capital stock ranking junior to the
Series C Preferred Stock as to a liquidation, dissolution or winding up of the
Corporation ("Junior Liquidation Stock"). No full preferential payment on
account of any liquidation, dissolution or winding up of the Corporation shall
be made to the holders of any class or series of capital stock ranking on parity
with the Series C Preferred Stock in the event of a liquidation, dissolution or
winding up of the Corporation ("Parity Liquidation Stock") unless there shall
likewise be paid at the same time to the holders of the Series C Preferred Stock
the full amounts to which the holders of all outstanding shares of Series C
Preferred Stock are entitled with respect to such distribution. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of the shares
of Series C Preferred Stock and any shares of Parity Liquidation Stock shall be
insufficient to pay in full the preferential amount aforesaid and liquidating
payments, then such assets, or the proceeds thereof, shall be distributed among
the holders of shares of Series C Preferred Stock and of any shares of Parity
Liquidation Stock ratably in accordance with the full respective preferential
amounts that would be payable on such shares of Series C Preferred Stock and
such shares of Parity Liquidation Stock if all amounts payable thereon were paid
in full. Neither a consolidation or merger of the Corporation with another
entity nor a sale or transfer of all or part of the Corporation's assets for
cash, securities or other property will be considered a liquidation, dissolution
or winding up of the Corporation. The Series B Preferred Stock shall be Parity
Liquidation Stock for purposes of this Section 5(a).
(b) Written notice of any liquidation, dissolution or winding
up of the Corporation, stating the payment date or dates when the place or
places where the amounts distributable in such circumstances shall be payable,
shall be given by first class mail, postage prepaid, not less than 30 days prior
to any payment date stated therein, to the holders of record of the Series C
Preferred Stock at their respective addresses as the same shall appear on the
stock books of the Transfer Agent.
SECTION 6. Voting Rights. (a) Except as herein provided or as
otherwise required by law, holders of Series C Preferred Stock shall have no
voting rights. Whenever, at any time or times, dividends payable on the shares
of Series C Preferred Stock at the time outstanding shall be cumulatively in
arrears for such number of dividend periods that shall in the aggregate contain
not less than 540 days, the holders of all outstanding shares of Series C
Preferred Stock and any shares of Parity Dividend Stock upon which like voting
rights have been conferred and are exercisable (the Series C Preferred Stock and
any such Parity Dividend Stock, collectively for purposes of this Section 6, the
"Defaulted Preferred Stock"), shall be entitled to
3
<PAGE> 40
elect two directors of the Corporation at the Corporation's next annual meeting
of shareholders and at each subsequent annual meeting of shareholders; provided,
however, the shares of Defaulted Preferred Stock shall be entitled to exercise
their voting rights at a special meeting of the holders of shares of Defaulted
Preferred Stock as set forth in paragraphs (b) and (c) of this Section 6. At
elections for such directors, each holder of Series C Preferred Stock shall be
entitled to one vote for each share held (the holders of shares of any other
series of Defaulted Preferred Stock ranking on such a parity being entitled to
such number of votes, if any, for each share of stock held as may be granted to
them). Upon the vesting of such right of the holders of Defaulted Preferred
Stock, the maximum authorized number of members of the Board of Directors shall
automatically be increased by two and the two vacancies so created shall be
filled by vote of the holders of outstanding Defaulted Preferred Stock as
hereinafter set forth. The right of holders of Defaulted Preferred Stock, voting
separately as a class without regard to series, to elect members of the Board of
Directors as aforesaid shall continue until such time as all dividends
accumulated and unpaid on Defaulted Preferred Stock shall have been paid or
declared and funds set aside for payment in full, at which time such right shall
terminate, except as herein or by law expressly provided, subject to revesting
in the event of each and every subsequent default of the character above
mentioned.
(b) Whenever such voting right shall have vested, such right
may be exercised initially either at a special meeting of the holders of shares
of Defaulted Preferred Stock called as hereinafter provided, or at any annual
meeting of shareholders held for the purpose of electing directors, and
thereafter at such meeting or by the written consent of such holders pursuant to
Section 14-2-704 of the Georgia Business Corporation Code.
(c) At any time when such voting right shall have vested in
the holders of shares of Defaulted Preferred Stock entitled to vote thereon, and
if such right shall not already have been initially exercised, an officer of the
Corporation shall, upon the written request of 10% of the holders of record of
shares of such Defaulted Preferred Stock then outstanding, addressed to the
Secretary of the Corporation, call a special meeting of holders of shares of
such Defaulted Preferred Stock. Such meeting shall be held at the earliest
practicable date upon the notice required for special meetings of shareholders
at the place for holding annual meetings of shareholders of the Corporation or,
if none, at a place designated by the Secretary of the Corporation. If such
meeting shall not be called by the proper officers of the Corporation within 30
days after the personal service of such written request upon the Secretary of
the Corporation, or within 30 days after mailing the same within the United
States, by registered mail, addressed to the Secretary of the Corporation at its
principal office (such mailing to be evidenced by the registry receipt issued by
the postal authorities), then the holders of record of 10% of the shares of
Defaulted Preferred Stock then outstanding may designate in writing any person
to call such meeting at the expense of the Corporation, and such meeting may be
called by such person so designated upon the notice required for special
meetings of shareholders and shall be held at the same place as is elsewhere
provided in this paragraph. Any holder of shares of Defaulted Preferred Stock
then outstanding that would be entitled to vote at such meeting shall have
access to the stock books of the Transfer Agent for the purpose of causing a
meeting of shareholders to be called pursuant to the provisions of this
paragraph. Notwithstanding the provisions of this paragraph, however, no such
special meeting shall be called or held during a period within 45 days
immediately preceding the date fixed for the next annual meeting of
shareholders.
4
<PAGE> 41
(d) Subject to the provisions hereof, the directors elected
pursuant to this Section shall serve until the next annual meeting or until
their respective successors shall be elected and qualified. Any director elected
by the holders of Defaulted Preferred Stock may be removed by, and shall not be
removed otherwise than by, the vote of the holders of a majority of the
outstanding shares of the Defaulted Preferred Stock who were entitled to
participate in such election of directors, voting as a separate class without
regard to series, at a meeting called for such purpose or by written consent as
permitted by law and the Articles of Incorporation and Bylaws of the
Corporation. If the office of any director elected by the holders of Defaulted
Preferred Stock, voting as a class, without regard to series, becomes vacant by
reason of death, resignation, retirement, disqualification or removal from
office or otherwise, the remaining director elected by the holders of Defaulted
Preferred Stock, voting as a class, without regard to series, may choose a
successor who shall hold office for the unexpired term in respect of which such
vacancy occurred. Upon any termination of the right of the holders of Defaulted
Preferred Stock to vote for directors as herein provided, the term of office of
all directors then in office elected by the holders of Defaulted Preferred
Stock, voting as a class, without regard to series, shall terminate immediately.
Whenever the terms of office of the directors elected by the holders of
Defaulted Preferred Stock, voting as a class, without regard to series, shall so
terminate and the special voting powers vested in the holders of Defaulted
Preferred Stock shall have expired, the number of directors shall be such number
as may be provided for in the Bylaws irrespective of any increase made pursuant
to the provisions of this Section 6.
(e) So long as any shares of the Series C Preferred Stock
remain outstanding and in addition to any other vote required by law, the vote
or consent of the holders of at least a majority of the shares of Series C
Preferred Stock then outstanding given in person or by proxy either in writing
(as permitted by law and the Articles of Incorporation and Bylaws of the
Corporation) or at any special or annual meeting, shall be necessary to permit,
effect or validate any one or more of the following:
(i) the creation or issuance, or any increase in the
authorized number of shares of any class or series of stock ranking
prior to the Series C Preferred Stock either as to dividends ("Senior
Dividend Stock") or upon liquidation, dissolution or winding up of the
Corporation ("Senior Liquidation Stock"), or any security convertible
into or exercisable or exchangeable for Senior Dividend Stock or Senior
Liquidation Stock; or
(ii) the amendment, alteration or repeal of any of
the provisions of the Articles of Incorporation of the Corporation
(including this Exhibit D) that would adversely affect any right,
preference, privilege or voting power of the Series C Preferred Stock;
provided, however, that any increase in the amount of authorized
preferred stock or the creation and issuance of other series of Parity
Dividend Stock, Parity Liquidation Stock, Junior Dividend Stock or
Junior Liquidation Stock shall not be deemed to affect adversely such
rights, preferences or voting powers.
SECTION 7. Optional Redemption. (a) The Corporation at its
option may redeem shares of Series C Preferred Stock out of funds legally
available for the purpose, in whole or in part, at any time, at the redemption
prices per share referred to below in effect on the date
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<PAGE> 42
fixed for redemption (the "Redemption Date") during the period beginning on
October 15 of the years shown below, plus an amount equal to the dividends
accrued and unpaid on the shares of Series C Preferred Stock to be redeemed,
whether or not declared, to the Redemption Date:
<TABLE>
<CAPTION>
If Redeemed During The 12-Month
Period Beginning October 15, Redemption Price Per Share
------------------------------- --------------------------
<S> <C>
1998 ...................................................... $51.00
1999 ...................................................... $50.75
2000 ...................................................... $50.50
2001 ...................................................... $50.25
2002 and thereafter ....................................... $50.00
</TABLE>
(b) In the event the Corporation shall redeem shares of Series
C Preferred Stock, a notice of such redemption shall be given by first-class
mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to
the Redemption Date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock books of the Transfer
Agent. Each such notice shall state: (i) the Redemption Date; (ii) the number of
shares of Series C Preferred Stock to be redeemed and, if less than all the
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price; (v) that payment will be made upon presentation and surrender
of certificates evidencing such Series C Preferred Stock; (vi) the then current
conversion price and the date on which the right to convert such shares of
Series C Preferred Stock will expire; (vii) that dividends on the shares to be
redeemed shall cease to accrue following such Redemption Date; (viii) that such
redemption is at the option of the Corporation; and (ix) that dividends accrued
to and including the Redemption Date will be paid as specified in said notice.
Notice having been mailed as aforesaid, on and after the Redemption Date, unless
the Corporation shall be in default in providing money for the payment of the
redemption price (including an amount equal to any accrued and unpaid dividends
to and including the Redemption Date), (x) dividends on the shares of the Series
C Preferred Stock so called for redemption shall cease to accrue, (y) said
shares shall be deemed no longer outstanding, and (z) all rights of the holders
thereof as shareholders of the Corporation (except the right to receive from the
Corporation the monies payable upon redemption, without interest thereon, upon
surrender of the certificates evidencing such shares) shall cease. The
Corporation's obligation to provide monies in accordance with the preceding
sentence shall be deemed fulfilled if, on or before the Redemption Date, the
Corporation shall deposit with a bank or trust company having an office or
agency in the Borough of Manhattan, City of New York, and having a capital and
surplus of at least $50,000,000, the principal amount of funds necessary for
such redemption, in trust for the account of the holders of the shares to be
redeemed (and so as to be and continue to be available therefor), with
irrevocable instructions and authority to such bank or trust company that such
funds be applied to the redemption of the shares of Series C Preferred Stock so
called for redemption. Any interest accrued on such funds shall be paid to the
Corporation from time to time. Any funds so deposited and unclaimed at the end
of three years from such Redemption
6
<PAGE> 43
Date shall be released or repaid to the Corporation, after which, subject to any
applicable laws relating to escheat or unclaimed property, the holder or holders
of such shares of Series C Preferred Stock so called for redemption shall look
only to the Corporation for payment of the redemption price.
Upon surrender in accordance with said notice of the
certificates for any such shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at the applicable
redemption price aforesaid. If fewer than all the outstanding shares of Series C
Preferred Stock are to be redeemed, shares to be redeemed shall be selected by
the Corporation from outstanding shares of Series C Preferred Stock not
previously called for redemption by lot or pro rata or by any other equitable
method determined by the Board of Directors in its sole discretion. If fewer
than all the shares represented by any certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
Notwithstanding the foregoing, if the Corporation's notice of
redemption has been given pursuant to this Section 7 and any holder of shares of
Series C Preferred Stock shall, prior to the close of business on the third
Business Day preceding the Redemption Date, give written notice to the
Corporation pursuant to this Section 7(b) hereof of the conversion of any or all
of the shares to be redeemed held by such holder (accompanied by a certificate
or certificates for such shares, duly endorsed or assigned to the Corporation),
then the conversion of such shares to be redeemed shall become effective as
provided in Section 9.
(c) The election by the Corporation to redeem shares of Series
C Preferred Stock pursuant to Section 7(b) hereof shall become irrevocable only
on the relevant Redemption Date.
SECTION 8. Exchange. (a) In addition to the optional
redemption rights of the Corporation as set forth in Section 7 above, the
Corporation shall have the right to exchange the Series C Preferred Stock in
whole, but not in part, on any dividend payment date for the Corporation's 4.5%
Convertible Subordinated Debentures due 2003 (the "Debentures") to be issued
substantially in the form set forth in the indenture (the "Debenture Indenture")
filed as an exhibit to the Corporation's Registration Statement on Form S-4,
Registration No. 333-85919, filed with the Securities and Exchange Commission on
August 26, 1999.
(b) No such exchange shall be made unless all dividends
accrued and payable on the Series C Preferred Stock have been paid or declared
and such amount set aside for their payment prior to the date fixed for such
exchange (the "Exchange Date"). Holders of outstanding shares of Series C
Preferred Stock will be entitled to receive $50.00 principal amount of
Debentures in exchange for each share of Series C Preferred Stock held by them
at the time of exchange; provided that the Debentures will be issuable in
denominations of $1,000.00 and integral multiples thereof. If the exchange
results in an amount of Debentures that is not an integral multiple of
$1,000.00, the amount exceeding the closest integral multiple of $1,000.00 will
be paid in cash by the Corporation.
7
<PAGE> 44
(c) Notice of such exchange of shares of Series C Preferred
Stock shall be mailed at least 30 days but not more than 60 days prior to the
Exchange Date to each holder of Series C Preferred Stock, at such holder's
address as it appears on the books of the Corporation. The notice shall specify
the Exchange Date and the place where certificates for shares of Series C
Preferred Stock are to be surrendered for Debentures and shall state that
dividends on Series C Preferred Stock will cease to accrue on the Exchange Date.
(d) Prior to giving notice of intention to exchange pursuant
to subsection 8(c) above, the Corporation and a bank or trust company selected
by the Corporation shall execute and deliver an indenture substantially in the
form of the Debenture Indenture with such changes as may be required by law,
stock exchange rule, or usage that do not materially and adversely affect the
rights of the holders of the Debentures (the "Indenture"). Prior to any exchange
of shares of Series C Preferred Stock pursuant to subsection 8(a) above, any
amendments or supplements to the Indenture which materially and adversely affect
the rights of the holders of the Debentures shall be consented to by the holders
of more than 50 percent of the then outstanding shares of Series C Preferred
Stock. A copy of the Indenture may be inspected by the holders of any shares of
Series C Preferred Stock at the offices of the Corporation during normal
business hours. The Corporation will not give notice of its intention to
exchange pursuant to subsection 8(c) above unless it shall file at the office or
agency of the Corporation maintained for the exchange of shares of Series C
Preferred Stock an opinion of counsel that the Indenture has been duly
authorized, executed and delivered by the Corporation, has been duly qualified
under the Trust Indenture Act of 1939 (or that such qualification is not
necessary) and constitutes a valid and binding instrument enforceable against
the Corporation in accordance with its terms (subject to bankruptcy, insolvency,
reorganization or other laws of general applicability relating to or affecting
creditors' rights and to the general principles of equity; and subject to such
other qualifications as are then customarily contained in opinions of counsel
experienced in such matters); and to the effect that the Debentures have been
duly authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered in exchange for the shares of Series C
Preferred Stock, will constitute valid and binding obligations of the
Corporation entitled to the benefits of the Indenture (subject as aforesaid);
and that under the laws of the State of Georgia, the Debentures will be treated
as on a parity with the indebtedness of the Corporation to its general unsecured
creditors, except to the extent subordinated in the Indenture; and that the
exchange of Debentures for the Series C Preferred Stock will not violate the
laws of the State of Georgia; and that neither the execution and delivery of the
Indenture or the Debentures nor compliance with the terms, conditions or
provisions of such instruments will result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument, known to such counsel,
to which the Corporation or any of its subsidiaries is a party or by which it or
any of them is bound, or any decree, judgment, order, rule or regulations known
to counsel, of any court or governmental agency or body having jurisdiction over
the Corporation and such subsidiaries or any of their property; and that
issuance of the Debentures in exchange for the shares of Series C Preferred
Stock is exempt from registration under the Securities Act of 1933, as amended
(the "Securities Act").
(e) If on the Exchange Date the Corporation has taken all
action required to authorize the issuance of the Debentures in exchange for the
Series C Preferred Stock, then,
8
<PAGE> 45
notwithstanding that the certificates for such shares have not been surrendered
for cancellation, from and after the Exchange Date, all of the shares of Series
C Preferred Stock shall no longer be deemed outstanding and all rights relating
to such shares shall terminate, except only the right to receive dividends
accrued and unpaid to the Exchange Date and, upon surrender of certificates
therefor, the right to receive the Debentures, and the person or persons
entitled to receive the Debentures issuable upon the exchange shall be treated
for all purposes as the registered holder or holders of such Debentures. Upon
due surrender of a certificate representing shares of Series C Preferred Stock,
the holder thereof shall receive the principal amount of Debentures to which
such holder is thereby entitled plus any amounts of cash which may be due
hereunder.
(f) The election of the Corporation to exchange the Series C
Preferred Stock for the Debentures shall become irrevocable only on the Exchange
Date.
SECTION 9. Conversion at Option of Holder. (a) Each share of
Series C Preferred Stock may be converted, at any time and at the option of the
holder, into fully paid, non-assessable shares of Common Stock of the
Corporation on and subject to the terms and conditions of this Section 9.
(b) The number of shares of Common Stock issuable upon
conversion of each share of the Series C Preferred Stock shall be equal to the
quotient obtained by dividing (i) $50.00 by (ii) the Conversion Price (as
hereinafter defined) in effect on the date of conversion (calculated as to each
conversion to the nearest 1/100th of a share). The Conversion Price shall
initially equal (i) $45.00 divided by (ii) the exchange ratio applicable to the
common stock, par value $.01 per share, of SkyTel, in the merger of SkyTel with
and into Empire Merger Inc., a wholly owned subsidiary of the Corporation;
provided, however, that such Conversion Price shall be adjusted and readjusted
from time to time as provided in this Section 9 and, as so adjusted and
readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by this Section 9.
(c) Except as may be provided by the Board of Directors, upon
conversion of the Series C Preferred Stock, the Corporation is not obligated to
make any payment or adjustment with respect to dividends accrued on the Series C
Preferred Stock through the date of conversion unless the holder of the shares
of Series C Preferred Stock being converted was the record holder of such shares
on the record date for the payment of such dividends.
(d) Upon surrender to the Corporation at the office of the
Transfer Agent or such other place or places, if any, as the Board of Directors
may determine, of certificates duly endorsed to the Corporation or in blank for
shares of Series C Preferred Stock to be converted together with appropriate
evidence of the payment of any transfer or similar tax, if required, and written
instructions to the Corporation requesting conversion of such shares and
specifying the name and address of the person, corporation, firm or other entity
to whom such shares of Common Stock are to be issued, the Corporation shall
issue (i) the number of full shares of Common Stock issuable upon conversion
thereof as of the time of such surrender and as promptly as practicable
thereafter will deliver certificates for such shares of Common Stock, and (ii)
cash for any remaining fraction of a share of Common Stock in an amount equaling
the Current Market Price (as hereinafter defined) on the date such shares are
tendered for conversion.
9
<PAGE> 46
Upon surrender of a certificate representing shares of Series C Preferred Stock
to be converted in part, in addition to the foregoing, the Corporation shall
also issue to such holder a new certificate representing any unconverted shares
of Series C Preferred Stock represented by the certificate surrendered for
conversion.
(e) The Corporation shall pay all documentary, stamp, or
similar issue or transfer tax due on the issue of shares of Common Stock
issuable upon conversion of the Series C Preferred Stock; provided, however,
that the holder of shares of Series C Preferred Stock so converted shall pay any
such tax which is due because such shares are to be issued in the name other
than that of such holder.
(f) The Conversion Price in effect at any time shall be
adjusted as follows:
(i) If the Corporation shall, at any time or from
time to time, effect a subdivision of the outstanding Common Stock, the
Conversion Price in effect immediately before such subdivision shall be
proportionately decreased and, conversely, if the Corporation shall, at
any time or from time to time, effect a combination of the outstanding
Common Stock, the Conversion Price in effect immediately before such
combination shall be proportionately increased. Any adjustment under
this subsection shall become effective at the close of business on the
record date fixed for the applicable subdivision or combination.
(ii) In the event the Corporation shall, at any time
or from time to time, make or issue to all holders of shares of Common
Stock (or fix a record date for the determination of holders of Common
Stock entitled to receive) a dividend or other distribution payable in
shares of Common Stock, then the Conversion Price then in effect shall
be decreased as of the time of such issuance (or, in the event such a
record date shall have been fixed, as of the close of business on such
record date) in accordance with the following formula:
O
-----
C* = C x O + N
where:
C* = the adjusted Conversion Price.
C = the current Conversion Price.
O = the number of shares of Common Stock outstanding
immediately prior to the applicable issuance (or the
close of business on the record date).
N = the number of additional shares of Common Stock
issued in payment of such dividend of distribution.
(iii) In the event the Corporation shall, at any time
or from time to time, issue or sell (or be deemed pursuant to Section
9(g) hereto to have issued or sold) to all
10
<PAGE> 47
holders of shares of Common Stock any shares of Common Stock
for a consideration per share that is less than the Current
Market Price immediately prior to such issuance or sale (or
deemed issuance or sale), then the Conversion Price then in
effect shall be decreased as of the time of such issuance or
sale (or deemed issuance or sale) in accordance with the
following formula:
NxP
-----
C* = C x O + M
----------
O+N
where:
C* = the adjusted Conversion Price.
C = the current Conversion Price.
O = the number of shares of Common Stock outstanding on
the date of the applicable issuance or sale (or
deemed issuance or sale).
N = the number of additional shares of Common Stock
issued or sold (or deemed issued or sold).
P = the aggregate consideration per share received
and/or to be received for each additional share of
Common Stock issued or sold (or deemed issued or
sold).
M = the Current Market Price per share of Common Stock.
(g) For purposes of determining the adjusted Conversion Price
under Section 9(f), the following principles shall be applicable:
(i) If the Corporation in any manner grants to all
holders of shares of Common Stock any rights or options (collectively,
"Options") to subscribe for or to purchase Common Stock or other
securities convertible into or exercisable or exchangeable for Common
Stock (collectively, "Convertible Securities") and the aggregate
consideration payable with respect to the issuance of such Options and
with respect to the later conversion, exercise or exchange thereof for
Common Stock is less than the Current Market Price in effect
immediately prior to the granting of such Options, then the maximum
number of shares of Common Stock issuable upon the exercise of such
Options (and, if appropriate, upon the subsequent conversion, exercise
or exchange of such Convertible Securities) shall be deemed to be
outstanding and such Options shall be deemed to have been issued and
sold for an aggregate consideration per share determined by dividing
(A) the aggregate amount received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Corporation
upon the exercise of all such Options (and, if appropriate, the minimum
aggregate amount of additional consideration payable upon the
conversion, exercise or exchange of such
11
<PAGE> 48
Convertible Securities), by (B) the maximum number of shares of Common
Stock issuable upon the exercise of all such Options (and, if
appropriate, upon the conversion, exercise or exchange of such
Convertible Securities). No further adjustment of the Conversion Price
shall be made when Common Stock or Convertible Securities are issued
upon the exercise of such Options or when Common Stock is issued upon
the conversion, exercise or exchange of such Convertible Securities.
(ii) If the Corporation in any manner issues to all
holders of shares of Common Stock any rights to subscribe for or to
purchase Convertible Securities and the aggregate consideration for
which Common Stock is issuable upon the conversion, exercise or
exchange of such Convertible Securities is less than the Current Market
Price in effect immediately prior to the issuance of such Convertible
Securities, then the maximum number of shares of Common Stock issuable
upon the conversion, exercise or exchange of such Convertible
Securities shall be deemed to be outstanding and such Convertible
Securities shall be deemed to have been issued and sold for an
aggregate consideration per share determined by dividing (A) the
aggregate amount received or receivable by the Corporation as
consideration for the issuance of such Convertible Securities, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon the conversion, exercise or exchange of all such
Convertible Securities, by (B) the maximum number of shares of Common
Stock issuable upon the conversion, exercise or exchange of such
Convertible Securities. No further adjustment of the Conversion Price
shall be made when Common Stock is issued upon the conversion, exercise
or exchange of such Convertible Securities.
(iii) If the purchase 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, and such change is not due solely
to the operation of anti-dilution provisions similar in nature to those
set forth in this Section 9, then the Conversion Price in effect at the
time of such change shall be readjusted to the Conversion Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may
be, at the time initially granted, issued or sold.
(iv) Upon the expiration of any Option or the
termination of any right to convert, exercise or exchange any
Convertible Securities without the conversion, exercise or exchange of
any such Option or right, the Conversion Price then in effect hereunder
will be adjusted to the Conversion 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.
(v) 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 will be deemed to be the net
amount received by the Corporation therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a
12
<PAGE> 49
consideration other than cash, the amount of such consideration other
than cash received by the Corporation will be the fair value of such
consideration, as determined in good faith by the Board of Directors.
(vi) If Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold
together with other stock or securities or other assets of the
Corporation for a consideration that covers both, the consideration
received by the Corporation for any Common Stock, Options or
Convertible Securities shall be computed as the portion of the
consideration so received that may be reasonably determined in good
faith by the Board of Directors to be allocable to such Common Stock,
Options or Convertible Securities, as the case may be.
(vii) Anything herein to the contrary
notwithstanding, no adjustment will be made to the Conversion Price by
reason of (A) the issuance of Common Stock, Options or Convertible
Securities to employees or directors of the Corporation pursuant to
employee benefit plans or otherwise, or the issuance of Common Stock
upon the conversion, exercise or exchange thereof, (B) the issuance of
Common Stock upon the conversion, exercise or exchange of Options or
Convertible Securities issued and outstanding on the date these
Articles of Amendment are filed with the Secretary of State of the
State of Georgia, (C) the issuance of any securities pursuant to and in
accordance with the Rights Agreement dated August 25, 1996 between the
Corporation and The Bank of New York, as amended (or any successor
agreement), or (D) the issuance of Common Stock upon the conversion of
the Series C Preferred Stock.
(h) For purposes of this Exhibit D, the term "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
daily Closing Prices of the Common Stock for the 30 consecutive trading days
commencing 45 trading days before such date. The "Closing Price" for each
trading day shall be the last reported sales price regular way or, in case no
sale takes place on such day, the average of the closing bid and asked prices
regular way on such day, in either case as reported on the principal national
securities exchange (which for this purpose shall include The Nasdaq National
Market system ("NASDAQ/NMS")) on which the Common Stock is listed or admitted
for trading, or if not listed or admitted to trading on any national securities
exchange, the average of the high bid and low asked prices on such day as
reported by the National Association of Securities Dealers, Inc. through the
National Association of Securities Dealers Automated Quotation system
("NASDAQ"), or if the National Association of Securities Dealers, Inc. through
NASDAQ shall not have reported any bid and asked prices for the Common Stock on
such day, the average of the bid and asked prices for such day as furnished by
any New York Stock Exchange member firm selected from time to time by the
Corporation for such purpose, or if no such bid and asked prices can be obtained
from any such firm, the fair market value of one share of the Common Stock on
such day as determined in good faith by the Board of Directors.
(i) No adjustment in the Conversion Price need be made unless
the adjustment would require an increase or decrease of at least 1% in the
Conversion Price; provided, however, that any adjustments that are not made
shall be carried forward and taken into
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<PAGE> 50
account in any subsequent adjustment. All calculations under this Section 9
shall be made either to the nearest cent or to the nearest 1/100th of a share.
(j) No adjustment need be made for a change in the par value
of the Common Stock.
(k) Whenever the Conversion Price is adjusted, the Corporation
shall promptly mail to holders of Series C Preferred Stock a notice of
adjustment briefly stating the facts requiring the adjustment and the manner of
computing it.
(l) In case of any consolidation or merger of the Corporation
with any other entity (other than a wholly-owned subsidiary of the Corporation),
or in the case of any sale or transfer of all or substantially all of the assets
of the Corporation, or in the case of any share exchange pursuant to which all
of the outstanding shares of Common Stock are converted into other securities or
property, the Corporation shall make appropriate provision or cause appropriate
provision to be made so that holders of each share of Series C Preferred Stock
then outstanding shall have the right thereafter to convert such share of Series
C Preferred Stock into the kind and amount of shares of stock and other
securities and property receivable upon such consolidation, merger, sale,
transfer or share exchange by a holder of the number of shares of Common Stock
into which such share of Series C Preferred Stock might have been converted
immediately prior to the effective date of such consolidation, merger, sale,
transfer or share exchange. If in connection with any such consolidation,
merger, sale, transfer or share exchange, each holder of shares of Common Stock
is entitled to elect to receive either securities, cash or other assets upon
completion of such transaction, the Corporation shall provide or cause to be
provided to each holder of Series C Preferred Stock the right to elect to
receive the securities, cash or other assets into which the Series C Preferred
Stock held by such holder shall be convertible after completion of any such
transaction on the same terms and subject to the same conditions applicable to
holders of the Common Stock (including, without limitation, notice of the right
to elect, limitations on the period in which such election shall be made and the
effect of failing to exercise the election). The Corporation shall not effect
any such transaction unless the provisions of this paragraph have been
fulfilled. The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share exchanges.
(m) The Corporation shall reserve and at all times keep
available, free from preemptive rights, out of its authorized but unissued
stock, for the purpose of effecting the conversion of the Series C Preferred
Stock, such number of its shares of duly authorized Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding shares of
Series C Preferred Stock.
SECTION 10. Redemption Upon Fundamental Change. (a) If a
Fundamental Change (as defined in paragraph (c) of this Section 10) occurs, each
holder of Series C Preferred Stock shall have the right, at the holder's option,
to require the Corporation to repurchase all of such holder's Series C Preferred
Stock, or any portion thereof that has an aggregate liquidation value that is a
multiple of $50.00, on the date (the "Repurchase Date") selected by the
Corporation that is not less than ten nor more than 20 days after the Final
Surrender Date (as defined in paragraph (b) of this Section 10), at a price per
share equal to $50.00, plus an amount
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<PAGE> 51
equal to accrued and unpaid dividends to the Repurchase Date. The Corporation
may, at its option, pay all or any portion of the repurchase price upon a
Fundamental Change in shares of Common Stock of the Corporation or any successor
corporation. For purposes of calculating the number of shares of common stock
issuable upon such redemption, the value of any such common stock shall be equal
to the average of the Closing Prices of such common stock for the five Trading
Dates ending on the third Trading Date immediately preceding the Repurchase
Date. Payment may not be made in shares of common stock unless such shares (i)
have been, or will be, registered on or prior to the Final Surrender Date (as
defined in paragraph (b) of this Section 10) under the Securities Act or are
freely tradable pursuant to an exemption thereunder and (ii) are listed on a
United States national securities exchange or quoted through the NASDAQ/NMS at
the time of payment.
(b) Within 30 days after the occurrence of a Fundamental
Change, the Corporation must mail to all holders of record of the Series C
Preferred Stock a notice containing the information set out in paragraph (b) of
Section 7, except that, for purposes of this Section 10 only, instead of stating
that such redemption is at the option of the Corporation, the notice shall
describe the occurrence of such Fundamental Change and of the repurchase right
arising as a result thereof. The Corporation must cause a copy of such notice to
be published in a daily newspaper of national circulation (which shall be The
Wall Street Journal, if then in circulation). At least two Business Days prior
to the Repurchase Date, the Corporation must publish a similar notice stating
whether and to what extent the repurchase price will be paid in cash or shares
of common stock. To exercise the repurchase right, a holder of Series C
Preferred Stock must surrender, on or before the date that is, subject to any
contrary requirements of applicable law, 60 days after the date of mailing of
the applicable notice (the "Final Surrender Date"), the certificates
representing the Series C Preferred Stock with respect to which the right is
being exercised, duly endorsed for transfer to the Corporation, together with a
written notice of election.
(c) The term "Fundamental Change" shall mean either of the
following:
(i) a "person" or "Group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) becoming, in one transaction or a series
of related transactions, the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of Voting Shares (as defined in this
paragraph (c)) of the Corporation entitled to exercise more than 50% of
the total voting power of all outstanding Voting Shares of the
Corporation (including any Voting Shares that are not then outstanding
of which such person or Group is deemed the beneficial owner); or
(ii) any consolidation of the Corporation with, or
merger of the Corporation into, any other entity, any merger of another
entity into the Corporation, or any sale, lease or transfer of all or
substantially all of the assets of the Corporation to another entity
(other than a merger (a) that results in the holders of Common Stock of
the Corporation immediately prior to giving effect to such transaction
owning shares of capital stock of the surviving corporation in such
transaction representing in excess of 40% of the total voting power of
all shares of capital stock of such surviving corporation
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<PAGE> 52
entitled to vote generally in the election of directors and (b) in
which the shares of the surviving corporation held by such holders are,
or immediately upon issuance will be, listed on a national securities
exchange or quoted through the NASDAQ/NMS and are not subject to any
right of repurchase by the issuer thereof or any third party and are
not otherwise subject to any encumbrance as a result of such
transaction, provided, that the surviving corporation (x) amends its
charter or certificate of incorporation to include the Series C
Preferred Stock and its terms as set forth herein or (y) if the Series
C Preferred Stock has been exchanged for the Debentures, assumes or
guarantees the Corporation's obligations under the Debentures);
provided, however, that a Fundamental Change shall not occur if either (i) for
any five Trading Dates during the ten Trading Days immediately preceding either
the public announcement by the Corporation of such transaction or the
consummation of such transaction, the Closing Price of the Common Stock is at
least equal to 105% of the conversion price in effect on such trading days or
(ii) at least 90% of the consideration (excluding cash payments for fractional
shares) in such transaction or transactions to the holders of Common Stock
consists of shares of common stock that are, or immediately upon issuance will
be, listed on a national securities exchange or quoted through the NASDAQ/NMS,
and as a result of such transaction or transactions, the Series C Preferred
Stock becomes convertible into such common stock.
(d) An election by a holder of Series C Preferred Stock to
have the Corporation redeem shares of Series C Preferred Stock pursuant to
subsection 10(a) shall become irrevocable at the close of business on the
Repurchase Date.
(e) The Corporation agrees that it will not complete any
Fundamental Change described in subsection 10(c) unless proper provision has
been made to satisfy its obligations under this Section 10.
For purposes of this Section 10, "Voting Shares" is defined to mean all
outstanding shares of any class or classes (however designated) of capital stock
entitled to vote generally in the election of members of the Board of Directors.
SECTION 11. Limitation and Rights Upon Insolvency.
Notwithstanding any other provision of this Exhibit D, the Corporation shall not
be required to pay any dividend on, or to pay any amount in respect of any
redemption of, the Series C Preferred Stock at a time when immediately after
making such payment the Corporation is or would be rendered insolvent (as
defined by applicable law), provided that the obligation of the Corporation to
make any such payment shall not be extinguished in the event the foregoing
limitation applies.
SECTION 12. Shares to be Retired. Any share of Series C
Preferred Stock converted, redeemed or otherwise acquired by the Corporation
shall be retired and canceled and shall upon cancellation be restored to the
status of authorized but unissued shares of preferred stock, subject to
reissuance by the Board of Directors as Series C Preferred Stock or as shares of
preferred stock of one or more other series.
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<PAGE> 53
SECTION 13. Record Holders. The Corporation and the Transfer
Agent may deem and treat the record holder of any shares of Series C Preferred
Stock as the true and lawful owner thereof for all purposes, and neither the
Corporation nor the Transfer Agent shall be affected by any notice to the
contrary.
SECTION 14. Notice. Except as may otherwise be provided for
herein, all notices referred to herein shall be in writing, and all notices
hereunder shall be deemed to have been given upon, the earlier of receipt of
such notice or three Business Days after the mailing of such notice if sent by
registered mail (unless first-class mail shall be specifically permitted for
such notice under the terms of these Articles of Incorporation) with postage
prepaid, addressed: if to the Corporation, to its offices at 500 Clinton Center
Drive, Clinton, Mississippi 39056, Attention: Corporate Secretary, or to an
agent of the Corporation designated as permitted by this Articles of
Incorporation or, if to any holder of the Series C Preferred Stock, to such
holder at the address of such holder of the Series C Preferred Stock as listed
in the stock record books of the Corporation (which may include the records of
the Transfer Agent); or to such other address as the Corporation or holder, as
the case may be, shall have designated by notice similarly given.
17
<PAGE> 1
EXHIBIT 5.1
October 1, 1999
Board of Directors of
MCI WORLDCOM, Inc.
500 Clinton Center Drive
Clinton, Mississippi 39056
Ladies and Gentlemen:
I am General Counsel - Corporate Development of MCI WORLDCOM, Inc., a
Georgia corporation (the "Company"), and am familiar with the Post-Effective
Amendment No. 1 on Form S-8 to Registration Statement No. 333-85919 on Form S-4
(collectively, the "Registration Statement") to be filed by the Company with the
Securities and Exchange Commission (the "Commission") under the securities Act
of 1933, as amended (the "Act"), with respect to 815,000 shares (the "Shares")
of Common Stock, par value $.01, of the Company ("Common Stock") which are to
issued upon exercise of options granted under the MCI WorldCom/SkyTel 1990
Executive Incentive Plan, the MCI WorldCom/SkyTel 1988 Executive Incentive Plan
and the MCI WorldCom/SkyTel Long-Term Management Incentive Plan (the "Plans").
In connection herewith, I have examined and relied without
investigation as to matters of fact upon the Registration Statement, the Second
Amended and Restated Articles of Incorporation, as amended, and the Restated
Bylaws of the Company, certificates, statements and results of inquiries of
public officials and other officers and representatives of the Company, and such
other documents, corporate records, certificates, opinions 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 legal competence and capacity of each person that
executed documents, 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.
Based upon the foregoing, and in reliance thereon and subject to the
qualifications, exceptions and limitations stated herein, I am of the opinion
that when the Registration Statement, including any amendments thereto, shall
have become effective under the Act, and the Shares have been issued in
accordance with the terms of the Plan, then the Shares will be validly issued,
fully paid and nonassessable.
This opinion is not rendered with respect to any laws other than the
latest codification of the Georgia Business Corporation Code available to me.
This opinion has not been prepared by an attorney admitted to practice in
Georgia.
I hereby consent to the filing of this opinion as Exhibit 5.1 to the
aforesaid Registration Statement on Form S-8. 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/ P. Bruce Borghardt
P. Bruce Borghardt
General Counsel - Corporate Development
MCI WORLDCOM, Inc.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accounts, we hereby consent to the incorporation by
reference in this registration statement on Form S-8, to be filed on or around
October 1, 1999, of our report dated February 10, 1999, included in MCI
WORLDCOM, Inc.'s Form 10-K for the year ended December 31, 1998, and to all
references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Jackson, Mississippi,
October 1, 1999.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of MCI WORLDCOM, Inc. of our report dated April 9, 1998,
related to the consolidated financial statements of MCI Communications
Corporation as of December 31, 1997 and 1996, and for the three years ended
December 31, 1997, which appears in MCI WORLDCOM, Inc.'s Current Report on Form
8 K/A-3 dated November 9, 1997 (filed May 28, 1998).
/s/ PricewaterhouseCoopers LLP
Washington, D.C.
October 1, 1999
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
MCI WORLDCOM, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-8 of MCI WORLDCOM, Inc. of our report dated February 18, 1998 relating to the
consolidated balance sheet of Brooks Fiber Properties, Inc. and subsidiaries as
of December 31, 1997, and the related consolidated statements of operations,
changes in shareholders' equity, and cash flows for each of the years in the
two-year period ended December 31, 1997, which report appears in MCI WORLDCOM,
Inc.'s Form 10-K for the year ended December 31, 1998.
/s/ KPMG LLP
St. Louis, Missouri
October 1, 1999
<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-8, to be filed on or around
October 1, 1999, of our reports dated February 20, 1997, on the Consolidated
Financial Statements of MFS Communications Company, Inc. included in MCI
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.
/s/ ARTHUR ANDERSEN LLP
Omaha, Nebraska,
October 1, 1999.
