-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A9xMzhbJiHg5Eg/7zZufOp8Q0eWosOJeF0t4pYoPcWz1isI19KhWjO12IGLwVyGK +rWDcIhYyEqR7+L6eRTT2w== 0000931763-97-001083.txt : 19970630 0000931763-97-001083.hdr.sgml : 19970630 ACCESSION NUMBER: 0000931763-97-001083 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 19970627 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLDCOM INC /GA/ CENTRAL INDEX KEY: 0000723527 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 581521612 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-27345 FILM NUMBER: 97631451 BUSINESS ADDRESS: STREET 1: 515 EAST AMITE ST CITY: JACKSON STATE: MS ZIP: 39201-2702 BUSINESS PHONE: 6013608671 FORMER COMPANY: FORMER CONFORMED NAME: LDDS COMMUNICATIONS INC /GA/ DATE OF NAME CHANGE: 19930916 FORMER COMPANY: FORMER CONFORMED NAME: RESURGENS COMMUNICATIONS GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CENTRAL CORP /GA/ DATE OF NAME CHANGE: 19890523 S-4/A 1 AMENDMENT #2 TO FORM S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 1997 REGISTRATION NO. 333-27345 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- AMENDMENT NO. 2 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------- WORLDCOM, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) GEORGIA 4813 58-1521612 (STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER) OF INCORPORATION OR ORGANIZATION) 515 EAST AMITE STREET JACKSON, MISSISSIPPI 39201-2702 (601) 360-8600 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ---------------- BERNARD J. EBBERS PRESIDENT AND CHIEF EXECUTIVE OFFICER WORLDCOM, INC. 515 EAST AMITE STREET JACKSON, MISSISSIPPI 39201-2702 (601) 360-8600 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ----------------
COPIES TO: P. BRUCE BORGHARDT, ESQ. R. RANDALL WANG, ESQ. ALLAN G. SPERLING, ESQ. GENERAL COUNSEL-- NICK H. VARSAM, ESQ. CLEARY, GOTTLIEB, STEEN CORPORATE DEVELOPMENT BRYAN CAVE LLP & WORLDCOM, INC. 211 NORTH BROADWAY HAMILTON 10777 SUNSET OFFICE DRIVE, SUITE 330 SUITE 3600 ONE LIBERTY PLAZA ST. LOUIS, MO 63127 ST. LOUIS, MO 63102 NEW YORK, NY 10006 (314) 909-4100 (314) 259-2000 (212) 225-2260
---------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement is declared effective. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED JUNE 27, 1997 PROSPECTUS AND CONSENT SOLICITATION WORLDCOM, INC. [LOGO OF WORLDCOM APPEARS HERE] OFFERS TO EXCHANGE $686,398,000 9 3/8% SENIOR NOTES OF WORLDCOM, INC. DUE JANUARY 15, 2004 FOR ANY AND ALL OUTSTANDING 9 3/8% SENIOR DISCOUNT NOTES OF MFS COMMUNICATIONS COMPANY, INC. DUE JANUARY 15, 2004 $671,850,000 8 7/8% SENIOR NOTES OF WORLDCOM, INC. DUE JANUARY 15, 2006 FOR ANY AND ALL OUTSTANDING 8 7/8% SENIOR DISCOUNT NOTES OF MFS COMMUNICATIONS COMPANY, INC. DUE JANUARY 15, 2006 AND CONSENT SOLICITATIONS WorldCom, Inc. ("WorldCom" or the "Company") hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and Consent Solicitation (together, the "Prospectus") and the accompanying Letters of Transmittal and Consent (each a "Letter of Transmittal"), to exchange (i) $871.597 principal amount of its 9 3/8% Senior Notes due January 15, 2004 ("WorldCom 2004 Notes") for each $1,000 principal amount at stated maturity of outstanding 9 3/8% Senior Discount Notes due January 15, 2004 ("MFS 2004 Notes") of MFS Communications Company, Inc., a wholly owned subsidiary of WorldCom ("MFS"), properly tendered for exchange and accepted and (ii) $737.912 principal amount of its 8 7/8% Senior Notes due January 15, 2006 ("WorldCom 2006 Notes" and, together with the WorldCom 2004 Notes, the "WorldCom Notes") for each $1,000 principal amount at stated maturity of outstanding 8 7/8% Senior Discount Notes due January 15, 2006 ("MFS 2006 Notes" and, together with the MFS 2004 Notes, the "MFS Notes") of MFS properly tendered for exchange and accepted (each such offer, an "Exchange Offer," and collectively, the "Exchange Offers"). Interest on the WorldCom Notes will accrue from July 15, 1997 (the "Interest Accrual Date") at the stated rate thereon. The principal amount of WorldCom Notes offered in exchange for the applicable series of MFS Notes is equal to the Accreted Value (as defined herein) of such MFS Notes as of the Interest Accrual Date. The Accreted Value, as of the Interest Accrual Date, per $1,000 principal amount at stated maturity, of the MFS 2004 Notes and the MFS 2006 Notes is $871.597 and $737.912, respectively. Concurrently with the Exchange Offers, WorldCom is soliciting consents ("Consents") from each registered holder of the MFS 2004 Notes and the MFS 2006 Notes (each such holder, a "Holder," and collectively, the "Holders") to certain amendments (the "Proposed Amendments") to the Indenture dated as of January 15, 1994 (as supplemented by a First Supplemental Indenture thereto dated as of March 31, 1995, the "1994 Indenture") and the Indenture dated as of January 15, 1996 (as supplemented by a First Supplemental Indenture thereto dated as of January 15, 1996, the "1996 Indenture" and, together with the 1994 Indenture, the "MFS Indentures"), under which the MFS Notes were issued (each such solicitation, a "Consent Solicitation," and collectively, the "Consent Solicitations"). No record date has been or will be set for purposes of giving Consents. (cover page continues) EACH EXCHANGE OFFER WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED (SUCH TIME AND DATE, AS EXTENDED, THE "EXPIRATION DATE" WITH RESPECT TO SUCH EXCHANGE OFFER). TENDERS OF MFS NOTES MAY NOT BE WITHDRAWN (AND THE RELATED CONSENTS THEREBY REVOKED) AT ANY TIME AFTER 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS THE APPLICABLE EXCHANGE OFFER IS EXTENDED AND CONTAINS NEW TERMS MATERIALLY ADVERSE TO THE TENDERING HOLDERS THEREOF. SEE "RISK FACTORS" COMMENCING ON PAGE 17 FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED IN EVALUATING THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. None of WorldCom, MFS or the Dealer Managers makes any recommendation as to whether or not Holders should exchange their MFS Notes pursuant to the Exchange Offers and provide Consents to the Proposed Amendments. THE JOINT DEALER MANAGERS FOR THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS ARE: SALOMON BROTHERS INC GOLDMAN, SACHS & CO. For assistance in connection with the Exchange Offers, please contact the appropriate party listed on the back cover hereof. The date of this Prospectus and Consent Solicitation is , 1997. (cover page continued) The Company hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and in the Letters of Transmittal, to pay each Holder who gives a valid Consent on or prior to the Expiration Date a cash fee in an amount equal to (i) with respect to such Holder's MFS 2004 Notes, 0. % of the Accreted Value, as of the Interest Accrual Date, of such MFS 2004 Notes and (ii) with respect to such Holder's MFS 2006 Notes, 0. % of the Accreted Value, as of the Interest Accrual Date, of such MFS 2006 Notes, in either case, with respect to which such Consent has been given (each such cash payment, a "Consent Payment"). HOLDERS OF MFS NOTES OF EITHER SERIES MAY GIVE THEIR CONSENT TO THE PROPOSED AMENDMENTS APPLICABLE TO THAT SERIES ONLY BY TENDERING SUCH MFS NOTES IN THE APPLICABLE EXCHANGE OFFER AND WILL BE DEEMED TO HAVE GIVEN SUCH CONSENT BY SO TENDERING. Consents from Holders of a majority in aggregate principal amount Outstanding (as defined herein) of MFS Notes of a series (the "Requisite Consent") must be received in order to amend the MFS Indenture governing that series as described herein, except with respect to the modification of the term "Change of Control," which requires Consents from Holders of not less than 75% of the aggregate principal amount Outstanding (as defined herein) of MFS Notes of a series (the "Supermajority Consent"). As used herein, "Accreted Value" shall have the meaning given such term in the applicable MFS Indenture. The Accreted Value of a series of MFS Notes as of the Interest Accrual Date is the sum of (i) the initial issue price of such MFS Notes plus (ii) the portion of the original issue discount applicable to such MFS Notes accreted from and including the original issue date thereof and to but excluding the Interest Accrual Date. See "The Proposed Amendments--Certain Definitions." The obligation of the Company, with respect to either series of MFS Notes, to consummate the applicable Exchange Offer and to make the Consent Payments is conditional upon, among other things, the receipt of the Requisite Consent to the Proposed Amendments with respect to both series of MFS Notes. See "The Exchange Offers--Conditions to the Exchange Offers" and "The Consent Solicitations--Consent Payments." The Company will not consummate the Exchange Offer with respect to the MFS 2004 Notes if less than $343.2 million of principal amount of WorldCom 2004 Notes would be issued in such Exchange Offer and will not consummate the Exchange Offer with respect to the MFS 2006 Notes if less than $336.0 million of principal amount of WorldCom 2006 Notes would be issued in such Exchange Offer. WorldCom Notes will be issued only in denominations of $1,000 and integral multiples thereof. If the aggregate principal amount of WorldCom Notes that otherwise would be issued in exchange for the MFS Notes of a series tendered by a Holder and accepted by the Company pursuant to an Exchange Offer is not an integral multiple of $1,000, such principal amount will be reduced to the nearest such multiple and the Company will pay to such Holder an amount in cash equal to the reduction of such principal amount. WorldCom Notes to be exchanged for MFS Notes pursuant to the Exchange Offers will be delivered and Consent Payments and other cash payments, if any, will be made on the third business day following the Expiration Date, or as soon as possible thereafter (the "Exchange Date"). The WorldCom Notes will be senior, unsecured obligations of the Company, will rank pari passu in right of payment with all other existing and future senior, unsecured indebtedness of the Company and will rank senior in right of payment to any future subordinated obligations of the Company. The WorldCom Notes will be effectively subordinated to any secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness. As of March 31, 1997, after giving effect to the issuance and sale by the Company of the April WorldCom Notes (as defined herein), the aggregate amount of indebtedness of the Company to which the WorldCom Notes would have ranked pari passu was approximately $3.18 billion and the aggregate amount of secured indebtedness of the Company was approximately $53 million. The WorldCom Notes will be structurally subordinated to all obligations of the Company's subsidiaries, including any MFS Notes not exchanged for WorldCom Notes in the Exchange Offers, to the extent of the assets of such subsidiaries. As of March 31, 1997, the aggregate amount of outstanding obligations of the Company's subsidiaries to which the holders of the WorldCom Notes would have been structurally subordinated (including trade payables but excluding intercompany indebtedness) was approximately $2.66 billion (of which $1.38 billion represented the carrying value of the MFS Notes). See "Risk Factors--Certain Considerations Relating to Holders Tendering in the Exchange Offers-- Structural Subordination of the WorldCom Notes" and "Description of the WorldCom Notes--Ranking." The financial terms of the WorldCom 2004 Notes and the WorldCom 2006 Notes will be substantially identical in all material respects to the financial terms of the MFS 2004 Notes and the MFS 2006 Notes, respectively, except that: (i) the MFS Notes are the sole obligations of MFS, while the WorldCom Notes will be the sole obligations of WorldCom; (ii) the MFS 2004 Notes and MFS 2006 Notes were originally issued at a discount and, except as described below, the principal amount thereof accretes in value until January 15, 1999 and January 15, 2001, respectively, while the WorldCom Notes will have a fixed principal amount; (iii) except as described below, no cash interest accrues on the MFS 2004 Notes and the MFS 2006 Notes until January 15, 1999 and January 15, 2001, respectively, while interest will begin to accrue on the WorldCom Notes on the Interest Accrual Date and will be payable in cash semi-annually in arrears on each January 15 and July 15, commencing July 15, 1997; and (iv) overdue principal and premium, if any, and interest on the overdue principal and any overdue premium of the MFS 2004 Notes and the MFS 2006 Notes bear interest at the rate of 10 3/8% and 9 7/8% per annum, respectively, while overdue principal and premium, if any, and interest on the overdue principal and any overdue premium of the WorldCom 2004 Notes and the WorldCom 2006 Notes will bear interest at 9 3/8% and 8 7/8% per annum, respectively. The WorldCom Indenture (as defined herein) will contain covenants that are substantially less restrictive than those that are currently in the MFS Indentures, and the WorldCom Notes will carry significantly reduced protections than now afforded to the MFS Notes. Pursuant to the MFS Indentures, MFS may elect, prior to July 15, 1997 (or a future Interest Payment Date, as such term is defined herein (see "The Proposed Amendments--Certain Definitions"), to commence the accrual of cash interest on either series of MFS Notes beginning on such date, at which time the outstanding principal amount of each of such MFS Notes at their respective stated maturities will equal the Accreted Value of such MFS Notes as of such date, and cash interest will be payable on January 15, 1998 (or the next succeeding Interest Payment Date, as the case may be) and on each Interest Payment Date thereafter. In the event any such election is made prior to the Expiration Date, MFS intends to issue a press release and file with the Securities and Exchange Commission a Current Report on Form 8-K publicly announcing the commencement of the accrual of cash interest on the MFS Notes beginning on July 15, 1997 (or a future Interest Payment Date, as the case may be). See "The Exchange Offers--Description of Differences Between the MFS Notes and the WorldCom Notes." The Company does not intend to list the WorldCom Notes on any national securities exchange. The Dealer Managers currently plan to make a market in the WorldCom Notes. However, there can be no assurance that the Dealer Managers will make such a market or that any active market in the WorldCom Notes will develop or be maintained. The receipt of WorldCom Notes, Consent Payments and other cash, if any, pursuant to the Exchange Offers and Consent Solicitations will be a taxable transaction for United States federal income tax purposes. See "Certain U.S. Federal Income Tax Consequences." NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, OR ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. AVAILABLE INFORMATION Each of WorldCom and MFS is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed by each of WorldCom and MFS may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices located at Northeast Regional Office, Seven World Trade Center, Suite 1300, New York, New York 10048 and Midwest Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials can also be obtained by mail from the Public Reference Section of the Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site that contains reports, proxy and information statements and other materials that are filed through the Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. This Web site can be accessed at http://www.sec.gov. Shares of the Company's Common Stock are listed on the Nasdaq National Market and the reports, proxy statements and other information filed by WorldCom also can be inspected at the offices of the National Association of Securities Dealers, Inc. (the "NASD"), at 1735 K Street, N.W., Washington, D.C. 20006. Upon completion of the Exchange Offers, application (on Form 15) to the Commission promptly will be made to deregister the common stock of MFS under the Exchange Act. As a result of such deregistration and the effectiveness of the Proposed Amendments, MFS no longer will be obligated to file periodic reports with the Commission. See "The Proposed Amendments." This Prospectus constitutes a part of a registration statement on Form S-4 (together with all amendments and exhibits thereto, the "Registration Statement") filed by WorldCom with the Commission under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the WorldCom Notes offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference is made to such Registration Statement and to the exhibits relating thereto for further information with respect to WorldCom, the WorldCom Notes, MFS and the MFS Notes. Any statements contained herein concerning the provisions of certain documents are not necessarily complete, and in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission for a more complete description of the matter involved. Each such statement is qualified in its entirety by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by WorldCom (formerly Resurgens Communications Group, Inc.) under File No. 0-11258 (formerly File No. 1-10415) and by MFS under File No. 33-72594 (formerly File No. 0-21594) pursuant to the Exchange Act are incorporated herein by reference: (a)(1) WorldCom's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the "WorldCom 1996 Form 10-K"); (2) WorldCom's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; and 3 (3) WorldCom's Current Reports on Form 8-K dated August 25, 1996 (filed August 26, 1996 and as amended on Forms 8-K/A filed November 4, 1996 and November 20, 1996), December 31, 1996 (filed January 15, 1997), March 18, 1997 (filed March 24, 1997), March 26, 1997 (filed April 2, 1997) and May 22, 1997 (filed June 6, 1997). (b)(1) MFS' Annual Report on Form 10-K for the year ended December 31, 1996; (2) MFS' Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; (3) MFS' Current Report on Form 8-K dated January 20, 1997 (filed January 24, 1997); and (4) MFS' Form 10 dated May 16, 1997 (filed May 16, 1997). All documents filed by WorldCom and MFS with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the termination of the offering of any securities offered hereby shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. See "Available Information." Any statement contained herein, or in a document incorporated or deemed to be incorporated herein by reference, shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document incorporated or deemed to be incorporated herein by reference, which statement is also incorporated herein by reference, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS (EXCLUDING EXHIBITS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION INCORPORATED HEREIN) WILL BE PROVIDED BY FIRST CLASS MAIL WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL REQUEST BY SUCH PERSON TO WORLDCOM, INC., 515 EAST AMITE STREET, JACKSON, MISSISSIPPI 39201-2702, ATTENTION: STEPHANIE Q. SCOTT, DIRECTOR OF FINANCIAL REPORTING (TELEPHONE: (601) 360-8600). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1997. TABLE OF CONTENTS AVAILABLE INFORMATION....................................................... 3 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................... 3 PROSPECTUS SUMMARY.......................................................... 5 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS................... 17 RISK FACTORS................................................................ 17 THE EXCHANGE OFFERS......................................................... 27 Purpose of the Exchange Offers............................................. 27 Terms of the Exchange Offers............................................... 27 Conditions of the Exchange Offers and the Consent Solicitations................................................. 28 Certain Consequences to Holders Not Tendering in the Exchange Offers.......................................... 29 Expiration Date; Extensions; Amendments.................................... 30 Effect of Tender........................................................... 30 Acceptance of MFS Notes for Exchange; Delivery of WorldCom Notes................................................ 30 Procedures for Tendering................................................... 31 Proper Execution and Delivery of Letters of Transmittal.................... 33 Withdrawal of Tenders and Revocation of Consents........................... 34 Exchange Agent............................................................. 35 Information Agent.......................................................... 36 Dealer Managers............................................................ 36
Other Fees and Expenses; Transfer Taxes................................... 36 Description of Differences Between the MFS Notes and the WorldCom Notes......................................... 37 THE CONSENT SOLICITATIONS.................................................. 55 Required Consents......................................................... 55 Consent Payments.......................................................... 56 THE PROPOSED AMENDMENTS.................................................... 57 Provisions to be Deleted.................................................. 57 Provisions to be Revised.................................................. 60 Definition to be Revised Upon Receipt of Supermajority Consent from Holders of Each Series of MFS Notes...................................................... 62 Certain Definitions....................................................... 63 DESCRIPTION OF THE WORLDCOM NOTES.......................................... 72 CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES............................... 84 United States Holders..................................................... 84 Non-U.S. Holders.......................................................... 86 INFORMATION REGARDING WORLDCOM............................................. 87 INFORMATION REGARDING MFS.................................................. 87 CERTAIN RELATED TRANSACTIONS............................................... 87 ACCOUNTING TREATMENT OF EXCHANGE OFFERS.................................... 87 LEGAL MATTERS.............................................................. 87 EXPERTS.................................................................... 87
4 PROSPECTUS SUMMARY The following summary does not purport to be complete and is qualified in its entirety by, and should be read in conjunction with, the more detailed financial information and Consolidated Financial Statements (including the notes thereto) incorporated by reference in this Prospectus. In particular, prospective purchasers should carefully consider the information set forth under "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors." WORLDCOM WorldCom is one of the four largest long distance telecommunications companies in the United States. The Company provides telecommunications services to business, government, telecommunications companies and consumer customers, through its network of fiber optic cables, digital microwave, and fixed and transportable satellite earth stations. WorldCom is one of the first major facilities-based telecommunications companies with the capability to provide businesses with high quality local, long distance, Internet, data and international communications services over its global networks. With service to points throughout the nation and the world, WorldCom provides telecommunications products and services including: switched and dedicated long distance and local products, 800 services, calling cards, domestic and international private lines, broadband data services, debit cards, conference calling, advanced billing systems, enhanced fax and data connections, high speed data communications, facilities management, local access to long distance companies, local access to ATM-based backbone service and interconnection via Network Access Points to Internet service providers. WorldCom's principal executive offices are located at 515 East Amite Street, Jackson, Mississippi 39201-2702, and its telephone number is (601) 360-8600. MFS MFS provides communications services domestically and internationally in the form of: (i) dedicated special access and private line circuits, local switched service and high speed data communications to large business customers; (ii) single source integrated local and long distance switched services, high speed data communications services and facilities management to medium and small businesses; (iii) local access to long distance companies; (iv) local access, ATM-based backbone service and interconnection via Network Access Points to Internet service providers; and (v) a comprehensive range of Internet-based services. MFS provides communications services by utilizing its international network platform, which consists of MFS-owned transmission and switching facilities and network capacity leased from the other carriers primarily in the United States and Western Europe. On August 12, 1996, MFS acquired UUNET Technologies, Inc. ("UUNET") through a merger of a subsidiary of MFS with and into UUNET. UUNET is a leading worldwide provider of a comprehensive range of Internet access options, applications, and consulting services tailored to meet the needs of businesses and professionals. UUNET makes available to customers a variety of products and services, including dedicated and dial-up Internet access, Web server hosting and content development services, client software and security products and training, all of which can be integrated by UUNET through its network integration and consulting services. UUNET enables Internet users to purchase access, applications and services, including integration services, through a single source. UUNET's products and services are supported by a technical staff that is highly experienced in Internet 5 operations and services. UUNET's network operations center monitors traffic across UUNET's network 24 hours per day, seven days per week. MFS provides network systems integration services primarily through MFS Network Technologies, Inc. ("MFS Network Technologies"). Initially created to design and build MFS' networks in a high quality and cost-effective manner, MFS Network Technologies provides network systems integration services for MFS and third parties which desire to deploy sophisticated networks, including intelligent transportation systems, voice and data networks, interactive distance learning networks, security systems and combined cable television- telephone networks. The principal executive offices of MFS are located at 11808 Miracle Hills Drive, Omaha, Nebraska 68154, a telephone number is (402) 231-3000. WORLDCOM/MFS MERGER On December 31, 1996, WorldCom, through a wholly owned subsidiary, merged with MFS (the "MFS Merger"). As a result of the MFS Merger, each share of MFS common stock was converted into the right to receive 2.1 shares of WorldCom common stock (the "Common Stock") or approximately 471.0 million shares of Common Stock in the aggregate. Each share of MFS Series A 8% Cumulative Convertible Preferred Stock ("MFS Series A Preferred Stock") was converted into the right to receive one share of Series A 8% Cumulative Convertible Preferred Stock of WorldCom ("WorldCom Series A Preferred Stock") or 94,992 shares of WorldCom Series A Preferred Stock in the aggregate. Each share of MFS Series B Convertible Preferred Stock was converted into the right to receive one share of Series B Convertible Preferred Stock of WorldCom ("WorldCom Series B Preferred Stock") or approximately 12.7 million shares of WorldCom Series B Preferred Stock in the aggregate. In addition, each depositary share representing 1/100th of a share of MFS Series A Preferred Stock was exchanged for a depositary share representing 1/100th of a share of WorldCom Series A Preferred Stock. Upon effectiveness of the MFS Merger, the then outstanding and unexercised options and warrants exercisable for shares of MFS common stock were converted into options and warrants, respectively, exercisable for shares of Common Stock having substantially the same terms and conditions as the MFS options and warrants, except that (i) the exercise price and the number of shares issuable upon exercise were divided and multiplied, respectively, by 2.1 and (ii) the holders of each then outstanding and unexercised MFS "Shareworks Plus Award" granted under the MFS 1993 Stock Plan instead received the cash value of such award in accordance with the terms of such plan. As a result of the MFS Merger, MFS became a wholly-owned subsidiary of WorldCom. Operationally and financially, WorldCom has been integrating MFS into the WorldCom organization. The Exchange Offers are an element of such integration efforts. Subsequent to the MFS Merger, WorldCom filed a shelf registration statement with the Commission (the "Shelf Registration Statement") in order to register and issue debt securities having an aggregate initial offering price of up to $3.0 billion. Pursuant to the WorldCom Indenture and the Shelf Registration Statement, WorldCom issued and sold senior notes having an aggregate principal amount of $2.0 billion (the "April WorldCom Notes") on April 1, 1997. The April WorldCom Notes contain covenants that are substantially identical to the WorldCom Notes offered hereby. 6 THE EXCHANGE OFFERS TERMS OF THE EXCHANGE OFFERS...................... The Company hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and in the Letters of Transmittal, to: (i) exchange $871.597 principal amount of WorldCom 2004 Notes for each $1,000 principal amount at stated maturity of outstanding MFS 2004 Notes properly tendered for exchange and accepted; and (ii) exchange $737.912 principal amount of WorldCom 2006 Notes for each $1,000 principal amount at stated maturity of outstanding MFS 2006 Notes properly tendered for exchange and accepted. The principal amount of WorldCom Notes offered in each Exchange Offer for the applicable series of MFS Notes is equal to the Accreted Value of such MFS Notes as of the Interest Accrual Date, and interest on such WorldCom Notes will accrue from the Interest Accrual Date at the stated interest rate on such WorldCom Notes. As of the Interest Accrual Date, the Accreted Value of the MFS 2004 Notes is $871.597 per $1,000 principal amount at stated maturity and the Accreted Value of the MFS 2006 Notes is $737.912 per $1,000 principal amount at stated maturity. WorldCom Notes will be issued only in denominations of $1,000 and integral multiples thereof. If the aggregate principal amount of WorldCom Notes that otherwise would be issued in exchange for the MFS Notes of a series tendered by a Holder and accepted by the Company pursuant to the Exchange Offers is not an integral multiple of $1,000, such principal amount will be reduced to the nearest such multiple and the Company will pay to such Holder an amount in cash equal to the reduction of such principal amount. See "The Exchange Offers." CONSENT SOLICITATIONS; CONSENT PAYMENTS....... Concurrently with the Exchange Offers, WorldCom is soliciting Consents to the Proposed Amendments to the 1994 Indenture and the 1996 Indenture from each Holder of the MFS 2004 Notes and the MFS 2006 Notes, respectively. HOLDERS OF MFS NOTES OF EITHER SERIES MAY GIVE THEIR CONSENT TO THE PROPOSED AMENDMENTS APPLICABLE TO THAT SERIES ONLY BY TENDERING SUCH MFS NOTES IN THE APPLICABLE EXCHANGE OFFER AND WILL BE DEEMED TO HAVE GIVEN SUCH CONSENT BY SO TENDERING. Consents from Holders of a majority in aggregate principal amount Outstanding of MFS Notes of a series (the "Requisite Consent") must be received in order to amend the MFS Indenture governing that series as described herein, except with respect to the modification of the term "Change of Control" which requires Consents from Holders of not less than 75% of the aggregate principal amount Outstanding of MFS Notes of a series (the "Supermajority Consent"). See "The Consent Solicitations" and "The Proposed Amendments." 7 The Company hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and in the Letters of Transmittal, to pay each Holder who gives a valid Consent on or prior to the Expiration Date a cash fee in an amount equal to (i) with respect to such Holder's MFS 2004 Notes, 0. % of the Accreted Value, as of the Interest Accrual Date, of such MFS 2004 Notes and (ii) with respect to such Holder's 2006 Notes, 0. % of the Accreted Value, as of the Interest Accrual Date, of such MFS 2006 Notes, in either case, with respect to which such Consent has been given. See "The Consent Solicitations-- Consent Payments." CONDITIONS TO THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS............... The obligation of the Company, with respect to either series of MFS Notes, to consummate the Exchange Offer and to make the Consent Payments is conditioned upon, among other things, the receipt of the Requisite Consent with respect to both series of MFS Notes. See "The Exchange Offers--Conditions to the Exchange Offers" and "The Consent Solicitations." The Company will not consummate the Exchange Offer with respect to the MFS 2004 Notes if less than $ of principal amount of WorldCom 2004 Notes would be issued in such Exchange Offer and will not consummate the Exchange Offer with respect to the MFS 2006 Notes if less than $ of principal amount of WorldCom 2006 Notes would be issued in such Exchange Offer. BACKGROUND AND REASONS FOR THE EXCHANGE OFFERS AND THE CONSENT SOLICITATIONS....... Since the MFS Merger, WorldCom has been operationally and financially integrating MFS into the WorldCom organization, which integration includes creating a single, more efficient, consolidated credit entity. The Exchange Offers are an element of this integration effort, and the Proposed Amendments are expected to provide greater financial and operating flexibility to the fully integrated organization. The Company believes that the failure to consummate the Exchange Offers and Consent Solicitations will not have a material adverse effect on the Company. See "The Exchange Offers--Purpose of the Exchange Offers" and "The Proposed Amendments." CERTAIN CONSEQUENCES TO HOLDERS TENDERING IN THE EXCHANGE OFFERS............. Holders whose MFS Notes are properly tendered and accepted in the Exchange Offers will receive WorldCom Notes. The WorldCom Notes will be senior, unsecured obligations of WorldCom and rank pari passu with all existing and future senior, unsecured indebtedness of WorldCom. In addition, the financial terms of the WorldCom Notes and the MFS Notes will be substantially identical in all material respects except that: (i) the MFS Notes are the sole obligations of MFS, while the WorldCom Notes will be the sole obligations of WorldCom; (ii) the MFS 2004 Notes and MFS 8 2006 Notes were originally issued at a discount and, except as described below, the principal amount thereof accretes in value until January 15, 1999 and January 15, 2001, respectively, while the WorldCom Notes will have a fixed principal amount; (iii) except as described below, no cash interest accrues on the MFS 2004 Notes and the MFS 2006 Notes until January 15, 1999 and January 15, 2001, respectively, while interest will begin to accrue on the WorldCom Notes on the Interest Accrual Date and will be payable in cash semi-annually in arrears on each January 15 and July 15, commencing July 15, 1997; and (iv) overdue principal and premium, if any, and interest on the overdue principal and any overdue premium of the MFS 2004 Notes and the MFS 2006 Notes bear interest at the rate of 10 3/8% and 9 7/8% per annum, respectively, while overdue principal and premium, if any, and interest on the overdue principal and any overdue premium of the WorldCom 2004 Notes and the WorldCom 2006 Notes will bear interest at 9 3/8% and 8 7/8% per annum, respectively. The WorldCom Indenture will contain covenants that are substantially less restrictive than those currently contained in the MFS Indentures, and the WorldCom Notes will carry significantly reduced protections than now afforded to the MFS Notes. Pursuant to the MFS Indentures, MFS may elect, prior to July 15, 1997 (or a future Interest Payment Date), to commence the accrual of cash interest on either series of MFS Notes beginning on such date, at which time the outstanding principal amount of each of such MFS Notes at their respective stated maturities will equal the Accreted Value of such MFS Notes as of such date, and cash interest will be payable on January 15, 1998 (or the next succeeding Interest Payment Date, as the case may be) and on each Interest Payment Date thereafter. In the event any such election is made prior to the Expiration Date, MFS intends to issue a press release and file with the Commission a Current Report on Form 8-K publicly announcing the commencement of the accrual of cash interest on the MFS Notes beginning on July 15, 1997 (or a future Interest Payment Date, as the case may be). See "Risk Factors--Certain Considerations Relating to Holders Tendering in the Exchange Offers" and "The Exchange Offers--Description of Differences Between the MFS Notes and the WorldCom Notes." CERTAIN CONSEQUENCES TO HOLDERS NOT TENDERING IN THE EXCHANGE OFFERS......... Consummation of the Exchange Offers and the adoption of the Proposed Amendments will have certain consequences to Holders of the MFS Notes who elect not to tender in the Exchange Offers, including, without limitation, that the covenants and certain other terms set forth in the MFS Indentures, as proposed to be amended, with respect to the MFS Notes will be substantially less restrictive, and afford less protection to such Holders, than those that are currently in the MFS Indentures. The Proposed Amendments would, among other things, eliminate (i) the covenants in each of the MFS 9 Indentures that (a) restrict the ability of MFS and its restricted subsidiaries to incur debt, incur liens, enter into sale and leaseback transactions, make restricted payments (including payment of dividends) or enter into transactions with affiliates and (b) restrict the ability of restricted subsidiaries of MFS to issue equity securities, to encumber their ability to pay dividends or to make certain loans or transfers of property to MFS or another restricted subsidiary of MFS and (ii) the separate financial reporting requirements contained in the MFS Indentures. If a Supermajority Consent with respect to a series of MFS Notes is received, the Proposed Amendments would also limit the circumstances in which a Change of Control will be deemed to occur and consequently limit the circumstances in which MFS would be required, as a result of a Change of Control or certain asset sales, to offer to repurchase such series of MFS Notes. See "The Proposed Amendments." In addition, the trading market for unexchanged MFS Notes could become more limited due to the reduction in the amount of the MFS Notes outstanding after the Exchange Offers, which may adversely affect the liquidity, market price and price volatility of such MFS Notes. See "Risk Factors--Certain Considerations Relating to Holders Not Tendering in the Exchange Offers." CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS.......... The receipt of WorldCom Notes, Consent Payments and other cash, if any, pursuant to the Exchange Offers and Consent Solicitations will be a taxable transaction for United States federal income tax purposes. See "Certain U.S. Federal Income Tax Consequences." EXPIRATION DATE............. The Exchange Offers will expire at 11:59 p.m., New York City time, on , 1997, unless the Exchange Offers (or either of them) are extended by the Company in its sole discretion, in which case the term "Expiration Date," with respect to an Exchange Offer, will mean the latest date and time to which such Exchange Offer is extended. See "The Exchange Offers--Expiration Date; Extensions; Amendments." EXCHANGE DATE............... WorldCom Notes to be exchanged for MFS Notes pursuant to the Exchange Offers will be delivered and the related Consent Payments and other cash payments, if any, will be made on the third business day following the Expiration Date, or as soon as possible thereafter. RECORD DATE................. No record date has been or will be set for purposes of giving Consents in either of the Consent Solicitations. SPECIAL CONSIDERATIONS FOR BENEFICIAL OWNERS........... Any beneficial owner whose MFS Notes are held by a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender such MFS Notes in the Exchange Offers should contact such nominee promptly and instruct such nominee to tender on such beneficial owner's behalf. See "The Exchange Offers--Procedures for Tendering." 10 PROCEDURES FOR TENDERING MFS NOTES AND GIVING THE RELATED CONSENT............. Each Holder of MFS Notes wishing to accept either of the Exchange Offers must complete, sign and date the appropriate Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with such MFS Notes and any other required documentation to Harris Trust and Savings Bank, as exchange agent, at its address set forth therein on or prior to the Expiration Date. By executing a Letter of Transmittal, the Holder will represent to and agree with the Company that, among other things, the MFS Notes tendered therewith are held by such Holder free and clear of all security interests, liens, restrictions, charges, encumbrances, conditional sale agreements or other obligations relating to their sale or transfer, and are not subject to any adverse claim when the same are accepted by the Company. See "The Exchange Offers--Procedures for Tendering." The proper completion, execution and delivery of a Letter of Transmittal with respect to MFS Notes of a series will constitute the giving of a Consent to the Proposed Amendments for such series. The WorldCom Notes issued in exchange for properly tendered and accepted MFS Notes will be delivered only in book-entry form through The Depository Trust Company ("DTC"). Accordingly, Holders who anticipate tendering and whose MFS Notes are not held custodially through DTC are urged to contact promptly a bank, broker or other intermediary that has the capability to hold securities custodially through DTC, to arrange for receipt of any WorldCom Notes to be delivered pursuant to the Exchange Offers and to obtain the information necessary to provide the required DTC participant and account information in the relevant Letter of Transmittal. See "The Exchange Offers--Procedures for Tendering--Book-Entry Delivery Procedures." GUARANTEED DELIVERY PROCEDURES.................. Holders of MFS Notes who wish to tender their MFS Notes and whose MFS Notes are not immediately available or who cannot deliver their MFS Notes, the Letter of Transmittal or any other documentation required by the Letter of Transmittal to the Exchange Agent on or prior to the Expiration Date may, nonetheless, tender their MFS Notes according to the guaranteed delivery procedures set forth under "The Exchange Offers--Guaranteed Delivery Procedures." ACCEPTANCE OF THE MFS NOTES; RETURN OF MFS NOTES......... Subject to the satisfaction or waiver of the conditions to each Exchange Offer, the Company will accept for exchange any and all MFS Notes that are properly tendered in such Exchange Offer on or prior to the Expiration Date. Any MFS Notes not accepted for exchange for any reason will be returned to the tendering Holder as promptly as practicable after the expiration or termination of the applicable Exchange 11 Offer. See "The Exchange Offers--Terms of the Exchange Offers." WITHDRAWAL AND REVOCATION RIGHTS...................... Tenders of MFS Notes in an Exchange Offer may not be withdrawn at any time after 11:59 p.m., New York City time, on , 1997, unless such Exchange Offer is extended and contains new terms materially adverse to the tendering Holders thereof. Valid withdrawal of a tendered MFS Note will constitute the revocation of the related Consent. Holders may not revoke a Consent without validly withdrawing the related MFS Note. See "The Exchange Offers--Withdrawal of Tenders" and "The Consent Solicitations." NO DISSENTERS' RIGHTS....... Holders of MFS Notes do not have any appraisal or dissenters' rights under the Delaware General Corporation Law or the applicable MFS Indenture in connection with the Exchange Offers. NO PROCEEDS TO COMPANY...... The Company will not receive any proceeds from the issuance of the WorldCom Notes offered hereby and has agreed to pay certain expenses of the Exchange Offers. See "The Exchange Offers-- Exchange Agent," "--Information Agent," "--Dealer Managers" and "--Other Fees and Expenses; Transfer Taxes." WorldCom will cause the MFS Notes surrendered in exchange for the WorldCom Notes to be retired and cancelled. Issuance of the WorldCom Notes will not result in any increase in the outstanding debt of the Company, on a consolidated basis. EXCHANGE AGENT.............. Harris Trust and Savings Bank (the "Exchange Agent"). The address and telephone numbers of the Exchange Agent are set forth on the back cover page of this Prospectus. INFORMATION AGENT........... MacKenzie Partners, Inc. (the "Information Agent"). Questions concerning tender procedures and requests for additional copies of this Prospectus, the Letters of Transmittal or Notices of Guaranteed Delivery should be directed to the Information Agent. The address and telephone numbers of the Information Agent are set forth on the back cover page of this Prospectus. DEALER MANAGERS............. Salomon Brothers Inc and Goldman, Sachs & Co. (the "Dealer Managers"). Questions concerning the terms of the Exchange Offers should be directed to the Dealer Managers. The addresses and telephone numbers of the Dealer Managers are set forth on the back cover page of this Prospectus. DEALER MANAGER MARKET ACTIVITY................... The Dealer Managers currently plan to make a market in the WorldCom Notes following the completion of the Exchange Offers and may buy and sell WorldCom Notes on a "when and if issued" basis prior to the completion of the Exchange Offers. However, there can be no assurance that the Dealer Managers will engage in such activities or that any active market in the WorldCom Notes will develop or be maintained. See "Risk Factors--Certain Considerations Relating to Holders Tendering in the Exchange Offers." 12 THE WORLDCOM NOTES The financial terms of the WorldCom 2004 Notes and the WorldCom 2006 Notes will be substantially identical in all material respects to the financial terms of the MFS 2004 Notes and the MFS 2006 Notes, respectively, except that: (i) the MFS Notes are the sole obligations of MFS, while the WorldCom Notes will be the sole obligations of WorldCom (ii) the MFS 2004 Notes and the MFS 2006 Notes were originally issued at a discount and, except as described below, the principal amount thereof accretes in value until January 15, 1999, and January 15, 2001, respectively, while the WorldCom Notes will have a fixed principal amount; (iii) except as described below, no cash interest accrues on the MFS 2004 Notes and the MFS 2006 Notes until January 15, 1999 and January 15, 2001, respectively, while interest will begin to accrue on the WorldCom Notes on the Interest Accrual Date and will be payable in cash semi-annually in arrears on each January 15 and July 15, commencing July 15, 1997; and (iv) overdue principal and premium, if any, and interest on the overdue principal and any overdue premium of the MFS 2004 Notes and the MFS 2006 Notes bear interest at the rate of 10 3/8% and 9 7/8% per annum, respectively, while overdue principal and premium, if any, and interest on the overdue principal and any overdue premium of the WorldCom 2004 Notes and the WorldCom 2006 Notes will bear interest at 9 3/8% and 8 7/8% per annum, respectively. The WorldCom Indenture will contain covenants that are substantially less restrictive than those that are currently in the MFS Indentures, and the WorldCom Notes will carry significantly reduced protections than those now afforded to the MFS Notes. Pursuant to the MFS Indentures, MFS may elect, prior to July 15, 1997 (or a future Interest Payment Date), to commence the accrual of cash interest on the MFS Notes beginning on such date, at which time the outstanding principal amount of either series of MFS Notes at their respective stated maturities will equal the Accreted Value of such MFS Notes as of such date, and cash interest will be payable on January 15, 1998 (or the next succeeding Interest Payment Date, as the case may be) and on each Interest Payment Date thereafter. In the event any such election is made prior to the Expiration Date, MFS intends to issue a press release and file with the Commission a Current Report on Form 8-K publicly announcing the commencement of the accrual of cash interest on the MFS Notes beginning on July 15, 1997 (or a future Interest Payment Date, as the case may be). See "The Exchange Offers--Description of Differences Between the MFS Notes and the WorldCom Notes." The following is a summary of certain terms of the WorldCom Notes:
MATURITY DATE INTEREST RATE INTEREST PAYMENT DATE ---------------- ------------- --------------------------- WorldCom 2004 Notes January 15, 2004 9 3/8% Payable semi-annually on January 15 and July 15 each year, commencing July 15, 1997. WorldCom 2006 Notes January 15, 2006 8 7/8% Payable semi-annually on January 15 and July 15 each year, commencing July 15, 1997.
ISSUER...................... WorldCom, Inc. RANKING..................... The WorldCom Notes will be senior, unsecured obligations of the Company, will rank pari passu in right of payment with all other existing and future senior, unsecured indebtedness of the Company and will rank senior in right of payment to any future subordinated obligations of the Company. The WorldCom Notes will be effectively subordinated to any secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness. As of March 31, 1997, after giving effect to the issuance and sale by the 13 Company of the April WorldCom Notes, the aggregate amount of indebtedness of the Company to which the WorldCom Notes would have ranked pari passu was approximately $3.18 billion and the aggregate amount of secured indebtedness of the Company was approximately $53 million. The WorldCom Notes will be structurally subordinated to all obligations of the Company's subsidiaries, including any MFS Notes not exchanged for WorldCom Notes in the Exchange Offers to the extent of the assets of such subsidiaries. As of March 31, 1997, the aggregate amount of outstanding obligations of the Company's subsidiaries to which the holders of WorldCom Notes would have been structurally subordinated (including trade payables but excluding intercompany indebtedness) was approximately $2.66 billion (of which $1.38 billion represented the carrying value of the MFS Notes). See "Risk Factors" and "Description of the WorldCom Notes-- Ranking." OPTIONAL REDEMPTION......... The WorldCom 2004 Notes and the WorldCom 2006 Notes will be redeemable at the option of the Company, on or after January 15, 1999 and January 15, 2001, respectively, in whole at any time or in part from time to time, at the prices set forth herein, plus accrued and unpaid interest, if any, to the date of redemption. See "Description of the WorldCom Notes--Optional Redemption." CERTAIN COVENANTS........... The WorldCom 2004 Notes and the WorldCom 2006 Notes will be entitled to the benefits of and governed by the Senior Indenture dated as of March 1, 1997 between WorldCom and Mellon Bank, N.A., as Trustee (as supplemented and described herein, the "WorldCom Indenture"). The WorldCom Indenture contains certain covenants which, subject to certain exceptions and qualifications, restrict the ability of the Company and its Restricted Subsidiaries to create liens, to enter into sale and leaseback transactions and to sell assets or merge with or into another company. See "Description of the WorldCom Notes--Limitation on Liens," "--Consolidation, Merger, Conveyance, Sale or Lease" and "--Certain Definitions." FORM........................ The WorldCom Notes will be available only in book-entry form through DTC. For additional information regarding the WorldCom Notes, please see "Description of the WorldCom Notes" and "Certain U.S. Federal Income Tax Consequences." RISK FACTORS Prospective investors should carefully consider certain factors relating to an investment in the WorldCom Notes. See "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors" beginning on page 17. 14 SELECTED HISTORICAL FINANCIAL DATA The following table presents selected historical financial data of WorldCom, MFS and UUNET. The historical data for each of the years in the five-year period ended December 31, 1996 are based on the audited historical financial statements of the respective companies, excluding UUNET for 1996 (see note 8 to the table below). The selected financial data for each of WorldCom, MFS and UUNET for the three month periods ended March 31, 1997 and 1996 have been obtained from unaudited financial statements and, in the opinion of the respective managements of WorldCom, MFS and UUNET, include all adjustments (of a normal and recurring nature) which are necessary to present fairly the data for such periods. This data should be read in conjunction with and is qualified in its entirety by the consolidated financial statements of each of WorldCom, MFS and UUNET and the related notes thereto, incorporated by reference herein. See "Available Information" and "Incorporation of Certain Documents by Reference." SELECTED HISTORICAL FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ------------------------------------------------------------------- ---------------------- 1996(1) 1995 1994 1993 1992 1997 1996 ---------- ---------- ---------- ---------- --------- ---------- ---------- WORLDCOM Revenues................ $4,485,130 $3,696,345 $2,245,663 $1,474,257 $ 948,060 $1,677,239 $1,034,060 Net income (loss) from continuing operations (after preferred dividend requirement): Total.................. (2,189,804)(2) 233,080(3) (151,779)(4) 112,638(4) 6,232(4) 43,054 85,802 Per common share: Primary................ (5.50) 0.64 (0.48) 0.41 0.03 0.05 0.22 Fully diluted.......... (5.50) 0.64 (0.48) 0.40 0.03 0.05 0.21 Dividends per common share.................. -- -- -- -- -- -- -- Total assets............ 19,861,977 6,656,629 3,441,474 3,236,718 1,241,278 19,595,269 6,816,942 Long-term debt.......... 4,803,581 3,391,598(5) 794,001 730,023 448,496 4,617,431 2,194,357 Shareholders' investment............. 12,959,976 2,187,681 1,827,410 1,911,800 478,823 13,021,153 2,295,295 Ratio of earnings to fixed charges(6)....... N/A 2.59:1 0.15:1 5.10:1 1.47:1 1.94:1 3.15:1 Deficiency of earnings to fixed charges....... 2,066,991 -- 52,597 -- -- -- -- THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ------------------------------------------------------------------- ---------------------- 1996 1995 1994 1993 1992 1997 1996 ---------- ---------- ---------- ---------- --------- ---------- ---------- MFS Revenues................ $1,115,006 $ 583,194 $ 286,747 $ 141,111 $ 108,707 $ 425,935 $ 186,316 Income (loss) from continuing operations (after preferred dividend requirement): Total.................. (1,867,459)(7) (282,962) (151,201) (15,769) (13,129) (82,192) (93,296) Per common share: Primary................ (11.22) (2.21) (1.21) (0.15) (0.15) (0.75) Fully diluted.......... (11.22) (2.21) (1.21) (0.15) (0.15) (0.75) Dividends per common share.................. -- -- -- -- -- -- -- Total assets............ 12,550,329 1,867,134 1,584,546 906,937 363,299 12,334,647 2,347,211 Long-term debt.......... 1,477,670 723,471 548,333 143 169 1,412,843 1,286,354 Shareholders' equity.... 10,287,586 830,332 770,103 811,105 298,516 10,190,119 754,582
15
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, --------------------------------------------- --------------------- 1996(8) 1995 1994 1993 1992 1997(8) 1996 -------- -------- ------- ------- ------- --------------------- UUNET Revenues................ $129,047 $ 94,461 $33,138 $24,019 $20,396 $ 43,013 Income (loss) from continuing operations (after preferred dividend requirement): Total.................. (14,373) (18,257) (7,988) (2,026) 1,074 233 Per common share (pro forma): Primary................ (0.44) (0.63) (0.35) -- -- Fully diluted.......... (0.44) (0.63) (0.35) -- -- 0.01 Dividends per common share.................. -- -- 0.01 -- 0.08 0.01 Total assets............ 137,610 29,625 10,585 8,285 156,278 Long-term debt.......... 13,686 15,269 3,310 974 18,045 Shareholders' equity.... 80,667 279 425 2,567 82,084
- -------- (1) On December 31, 1996, WorldCom completed the MFS Merger. The MFS Merger is being accounted for as a purchase; accordingly, the operating results for MFS are reflected from the date of acquisition. (2) WorldCom's results for 1996 include a $2.14 billion charge for in-process research and development related to the MFS Merger. The charge is based upon a valuation analysis of the technologies of MFS' worldwide information system, the Internet network expansion system of UUNET, and certain other identified research and development projects purchased in the MFS Merger. The expense includes $1.6 billion associated with UUNET and $0.54 billion related to MFS. Additionally, 1996 results include other after-tax charges of $121.0 million for employee severance, employee compensation charges, alignment charges, and costs to exit unfavorable telecommunications contracts and $343.5 million after-tax write-down of operating assets within the Company's non-core businesses. On a pre-tax basis, these charges totaled $600.1 million. (3) In 1995, Metromedia Company ("Metromedia") converted its Series 1 Preferred Stock into Common Stock, exercised warrants to acquire Common Stock and immediately sold its position of 61,699,096 shares of Common Stock in a public offering. In connection with the preferred stock conversion, WorldCom made a non-recurring payment of $15.0 million to Metromedia, representing a discount to the minimum nominal dividends that would have been payable on the Series 1 Preferred Stock prior to the September 15, 1996 optional call date of approximately $26.6 million (which amount includes an annual dividend requirement of $24.5 million plus accrued dividends to such call date). (4) As a result of the acquisitions of IDB Communications Group, Inc. ("IDB") in 1994 (the "IDB Merger") and of Advanced Telecommunications Corporation in 1992 (the "ATC Merger"), the Company initiated plans to reorganize and restructure its management and operational organization and facilities to eliminate duplicate personnel, physical facilities and service capacity, to abandon certain products and marketing activities, and to take further advantage of the synergies available to the combined entities. Also, during the fourth quarter of 1993, plans were approved to reduce IDB's cost structure and to improve productivity. Accordingly, in 1994, 1993 and 1992, the Company charged to operations the estimated costs of such reorganization and restructuring activities, including employee severance, physical facility abandonment and duplicate service capacity. These costs totaled $43.7 million in 1994, $5.9 million in 1993 and $79.8 million in 1992. Also, during 1994 and 1992, the Company incurred direct merger costs of $15.0 million and $7.3 million, respectively, related to the IDB Merger (in 1994) and the ATC Merger (in 1992). These costs include professional fees, proxy solicitation costs, travel and related expenses and certain other direct costs attributable to these mergers. (5) Long-term debt as of December 31, 1995 includes $1.1 billion related to the Company's previous credit facilities which were classified as a current maturity on the December 31, 1995 balance sheet. In June 1996, WorldCom replaced its then existing $3.41 billion credit facilities with a new $3.75 billion revolving credit facility with no reduction of principal for five years. (6) For the purpose of computing the ratio of earnings to fixed charges, earnings consist of income (loss) from continuing operations, and fixed charges consist of pre-tax interest (including capitalized interest) on all indebtedness, amortization of debt discount and expense and that portion of rental expense which the Company believes to be representative of interest. For the historical years ended December 31, 1994 and 1996, earnings were inadequate to cover fixed charges by the amounts shown. (7) MFS' results for 1996 include a $1.4 billion charge for in-process research and development related to its acquisition of UUNET. The charge is based on a valuation analysis of the technologies of the Internet network expansion system of UUNET and certain other identified research and development projects purchased in the acquisition. (8) MFS' acquisition of UUNET closed on August 12, 1996 and was accounted for as a purchase. Therefore, the year ended December 31, 1996 under the caption "UUNET" above represents UUNET's results of operations for the period from January 1, 1996 through August 12, 1996 and includes one-time merger related costs of $15.7 million. Subsequent to August 12, 1996, the operating results of UUNET are consolidated with MFS and are included under the caption "MFS" above in the balance sheet and results of operations of MFS. 16 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in "Risk Factors" and certain statements incorporated by reference from documents filed with the Commission by WorldCom and MFS, including any statements contained herein or incorporated by reference herein regarding the development of WorldCom's and MFS' businesses, the markets for WorldCom's and MFS' services and products, anticipated capital expenditures, regulatory reform and the effects of the MFS Merger, and other statements, including any forecasts, projections and synergies, contained or incorporated by reference herein regarding matters that are not historical facts, are or may constitute forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such statements are subject to risks and uncertainties and, therefore, actual results could differ materially from those expressed or implied by such statements. Factors that could cause actual results to differ materially (the "Cautionary Statements") include, but are not limited to, those discussed under "Risk Factors." All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the Cautionary Statements. RISK FACTORS In addition to the other information included in or incorporated by reference into this Prospectus, Holders of the MFS Notes should carefully consider the following risk factors before deciding to surrender MFS Notes in exchange for WorldCom Notes pursuant to the Exchange Offers. The considerations listed below are not intended to represent a complete list of the general or specific risks that may affect Holders who tender or fail to tender in the Exchange Offers or that relate to the Company or MFS. It should be recognized that other risks may be significant, now or in the future, and the risks set forth below may affect tendering or non-tendering Holders to a greater extent than indicated. CERTAIN CONSIDERATIONS RELATING TO HOLDERS TENDERING IN THE EXCHANGE OFFERS Liquidity of WorldCom Notes; No Prior Public Market for WorldCom Notes Upon consummation of the Exchange Offers and depending on the amount of the WorldCom Notes outstanding after the Exchange Offers (which will be no less than $343.2 million principal amount of WorldCom 2004 Notes and $336.0 million principal amount of WorldCom 2006 Notes), the trading market for the WorldCom Notes may be more limited than the trading market for the MFS Notes prior to the Exchange Offers, which might adversely affect the liquidity and market price of such WorldCom Notes. The Company does not plan to list the WorldCom Notes on any national securities exchange or interdealer quotation system sponsored by a national securities association. Although the MFS Notes are not so listed, there is currently a limited trading market for the MFS Notes. The WorldCom Notes are new securities for which there is currently no market. While the Dealer Managers intend to make a market for the WorldCom Notes, they are not obligated to do so and any market making may be discontinued at any time. There can be no assurance that an active trading market for the WorldCom Notes will develop or, if such market develops, as to the liquidity or sustainability of any such market. Structural Subordination of the WorldCom Notes WorldCom conducts a portion of its business through its subsidiaries. The Company is therefore dependent to some extent upon dividends and other payments from its subsidiaries to generate a portion of the funds necessary to meet its obligations, including the payment of principal and interest on the WorldCom Notes. As a result, the WorldCom Notes will be structurally subordinated to all obligations of the Company's subsidiaries, including any MFS Notes that are not exchanged in the Exchange Offers, to the extent of the assets of such subsidiaries. As of March 31, 1997, the aggregate 17 amount of outstanding obligationsof the Company's subsidiaries to which the holders of the WorldCom Notes would have been structurally subordinated (including trade payables but excluding intercompany indebtedness) was approximately $2.66 billion (of which $1.38 billion represented the carrying value of the MFS Notes). WorldCom expects that substantially all of its business will ultimately be conducted through its subsidiaries as a result of the transfer of operating assets to such subsidiaries. Thus, the Company expects that the amount of obligations of its subsidiaries will increase and that the Company will become increasingly dependent upon dividends and other payments from its subsidiaries. Recognition of Income to Holders Accepting Exchange Offers The receipt of WorldCom Notes, Consent Payments and other cash, if any, pursuant to the Exchange Offers and Consent Solicitations will be a taxable transaction for United States federal income tax purposes. See "Certain U.S. Federal Income Tax Consequences." CERTAIN CONSIDERATIONS RELATING TO HOLDERS NOT TENDERING IN THE EXCHANGE OFFERS Proposed Amendments to the MFS Indentures In the event that the Proposed Amendments are adopted with respect to a series of the MFS Notes, the covenants and certain other terms with respect to such series of MFS Notes will be substantially less restrictive, and will afford less protection to Holders, than those currently set forth in the MFS Indentures. The Proposed Amendments contemplated by the Consent Solicitations would, among other things, eliminate the covenants in each of the MFS Indentures that (a) restrict the ability of MFS and its restricted subsidiaries to incur debt, incur liens, enter into sale and leaseback transactions, make restricted payments (including payment of dividends) or enter into transactions with affiliates and (b) restrict the ability of restricted subsidiaries of MFS to issue equity securities, to encumber their ability to pay dividends or to make certain loans or transfers of property to MFS or another restricted subsidiary of MFS. In addition, the Proposed Amendments would eliminate the separate financial reporting requirements currently contained in the MFS Indentures and, upon receipt of a Supermajority Consent with respect to a series of MFS Notes, would redefine the term "Change of Control" as to such series. See "The Proposed Amendments." In the event the Proposed Amendments are adopted with respect to a series of MFS Notes, each non-exchanging Holder of such series of MFS Notes will be bound by the Proposed Amendments even if such Holder did not consent to the Proposed Amendments. The elimination or modification of the covenants contemplated in the Proposed Amendments would, among other things, permit WorldCom and MFS and their subsidiaries to take actions that could increase the credit risk with respect to MFS, and might adversely affect the liquidity, market price and price volatility of the MFS Notes or otherwise be adverse to the interests of the holders of the MFS Notes. See "The Proposed Amendments." Reduced Liquidity of MFS Notes Although the Company believes there is currently a limited trading market for the MFS Notes, no generally reliable public pricing information for the MFS Notes is available. The trading market for unexchanged MFS Notes could become even more limited or nonexistent due to the reduction in the amount of MFS Notes outstanding upon consummation of the Exchange Offers, which might adversely affect the liquidity, market price and price volatility of such MFS Notes. If a market for unexchanged MFS Notes exists or develops, such MFS Notes may trade at a discount to the price at which such MFS Notes would trade if the amount outstanding were not reduced, depending on prevailing interest rates, the market for similar securities and other factors. However, there can be no assurance that an active market in the unexchanged MFS Notes will exist, develop or be maintained and no assurance as to the prices at which the unexchanged MFS Notes may be traded. 18 CERTAIN CONSIDERATIONS REGARDING THE BUSINESS AND OPERATIONS OF WORLDCOM Prospective investors should carefully consider the following risk factors in evaluating the Company and its business before deciding to surrender MFS Notes in exchange for WorldCom Notes pursuant to the Exchange Offers. Risks of Increased Financial Leverage; Debt Service, Interest Rate Fluctuations, Possible Reduction in Liquidity, Dividend Restrictions and Other Restrictive Covenants At March 31, 1997, the Company had $4.62 billion of long-term debt (including capital leases and excluding current maturities) and a long-term debt to equity ratio of 0.35 to 1.0. The Company currently has a $3.75 billion five-year revolving credit facility (the "Credit Facility"). The Credit Facility has a five-year term and bears interest, payable in varying periods, depending on the interest period, not to exceed six months, at rates selected by the Company under the terms of the Credit Facility including a Base Rate or the LIBOR, plus applicable margin. The applicable margin for a LIBOR rate borrowing varies from 0.35% to 0.875% based upon a specified financial test. The Credit Facility is unsecured and requires compliance with certain financial and other operating covenants which limit, among other things, the incurrence of additional indebtedness by WorldCom and restricts the payment of cash dividends to WorldCom's shareholders. The Credit Facility is also subject to an annual commitment fee not to exceed 0.25% of any unborrowed portion of the Credit Facility. The Company is currently negotiating an amendment to the Credit Facility which would, among other things, increase the facility to $5.0 billion. There can be no assurance that WorldCom will be successful in amending the Credit Facility or that the terms thereof will be favorable to WorldCom. Increases in interest rates, economic downturns and other adverse developments, including factors beyond the Company's control, could impair its ability to service its indebtedness under the WorldCom Notes, the MFS Notes, the April WorldCom Notes or the Credit Facility. In addition, the cash flow required to service the Company's debt may reduce its ability to fund internal growth, additional acquisitions and capital improvements. In addition, the Credit Facility restricts the payment of cash dividends and otherwise limits the Company's financial flexibility. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the WorldCom 1996 Form 10-K. The Company has historically utilized cash flow from operations to finance capital expenditures and a mixture of cash flow, debt and stock to finance acquisitions. The Company expects to experience increased capital intensity due to network expansions and believes that funding needs in excess of internally generated cash flow will be met by utilization of the Credit Facility. Acquisition Integration A major portion of the Company's growth in recent years has resulted from acquisitions, which involve certain operational and financial risks. Operational risks include the possibility that an acquisition does not ultimately provide the benefits originally anticipated by management of the acquiror, while the acquiror continues to incur operating expenses to provide the services formerly provided by the acquired company. Financial risks involve the incurrence of indebtedness by the acquiror in order to effect the acquisition and the consequent need to service that indebtedness. In addition, the issuance of stock in connection with acquisitions dilutes the voting power and may dilute certain other interests of existing shareholders. In carrying out its acquisition strategy, the Company attempts to minimize the risk of unexpected liabilities and contingencies associated with acquired businesses through planning, investigation and negotiation, but such unexpected liabilities may nevertheless accompany acquisitions. There can be no assurance that the Company will be successful in identifying attractive acquisition candidates or completing additional acquisitions on favorable terms. Additionally, achieving the expected benefits of the MFS Merger will depend in part upon the integration of the businesses of WorldCom and MFS, together with UUNET, in an efficient manner, and 19 there can be no assurance that this will occur. The transition to a combined company will require substantial attention from management. The diversion of management attention and any difficulties encountered in the transition process could have an adverse effect on the revenues and operating results of the combined company. In addition, the process of combining the three organizations could cause the interruption of, or a disruption in, the activities of any or all of the companies' businesses, which could have a material adverse effect on their combined operations. There can be no assurance that the Company will realize any of the anticipated benefits of the MFS Merger. Contingent Liabilities WorldCom is subject to a number of legal and regulatory proceedings. While WorldCom believes that the probable outcome of these matters, or all of them combined, will not have a material adverse effect on WorldCom's consolidated results of operations or financial position, no assurance can be given that a contrary result will not be obtained. Risks of International Business The Company derives substantial revenues by providing international communications services to United States commercial and carrier customers. Such operations are subject to certain risks such as changes in United States or foreign government regulatory policies, disruption, suspension or termination of operating agreements, and currency fluctuations. In particular, the Company's revenues and costs of sales are sensitive to changes in international settlement rates and international traffic routing patterns. The rates that the Company can charge its customers for international services may decrease in the future due to the entry of new carriers with substantial resources, aggressiveness on the part of new or existing carriers, the widespread resale of international private lines, the provision of international services via non-traditional means including the Internet, the consummation of mergers and joint ventures among large international carriers that facilitate targeted pricing and cost reductions, and the rapid growth of international circuit capacity due to the deployment of new undersea fiber optic cables and new high capacity satellite systems in the Atlantic, Pacific and Indian Ocean regions. Risks of Overseas Business Operations The Company derives substantial revenues from providing services to customers in overseas locations, particularly the United Kingdom and Germany. Such operations are subject to certain risks such as changes in the legal and regulatory policies of the foreign jurisdiction, local political and economic developments, currency fluctuations, exchange controls, royalty and tax increases, retroactive tax claims, expropriation, and import and export regulations and other laws and policies of the United States affecting foreign trade, investment and taxation. In addition, in the event of any dispute arising from foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts and may not be successful in subjecting foreign persons or entities to the jurisdiction of the courts in the United States. WorldCom may also be hindered or prevented from enforcing its rights with respect to foreign governments because of the doctrine of sovereign immunity. There can be no assurance that the laws, regulations or administrative practices of foreign countries relating to WorldCom's ability to do business in that country will not change. Any such change could have a material adverse effect on the business and financial condition of WorldCom. Dependence on Availability of Transmission Facilities The future profitability of the Company will be dependent in part on its ability to utilize transmission facilities leased from others on a cost- effective basis. The MFS Merger, and the Company's acquisition of the network services operations of Williams Telecommunications Group, Inc. in January 1995 and 20 merger with IDB Communications Group, Inc. in December 1994 have reduced the leasing risk through the ownership of significant domestic and international facilities; however, due to the possibility of unforeseen changes in industry conditions, the continued availability of leased transmission facilities at historical rates cannot be assured. Rapid Technological Change; Dependence upon Product Development The telecommunications industry is subject to rapid and significant changes in technology. While WorldCom does not believe that, for the foreseeable future, these changes will either materially or adversely affect the continued use of fiber optic cable or materially hinder its ability to acquire necessary technologies, the effect of technological changes, including changes relating to emerging wireline and wireless transmission and switching technologies, on the businesses of WorldCom cannot be predicted. The market for UUNET's Internet-related products and services is characterized by rapidly changing technology, evolving industry standards, emerging competition and frequent new product and service introductions. There can be no assurance that UUNET will successfully identify new product and service opportunities and develop and bring new products and services to market in a timely manner. UUNET is also at risk from fundamental changes in the way Internet access services are marketed and delivered. UUNET's Internet service strategy assumes that the Transmission Control Protocol/Internet Protocol, utilizing fiber optic or copper-based telecommunications infrastructures, will continue to be the primary protocol and transport infrastructure for Internet-related services. Emerging transport alternatives include cable modems and satellite delivery of Internet information; alternative open protocol and proprietary protocol standards have been or are being developed. UUNET's pursuit of necessary technological advances may require substantial time and expense, and there can be no assurance that UUNET will succeed in adapting its Internet services business to alternate access devices, conduits and protocols. Regulation Risks The Company is subject to extensive regulation at the federal and state levels, as well as in various foreign countries in connection with certain overseas business activities. The regulatory environment varies substantially by jurisdiction. The Company is subject to varying degrees of federal, state, local and international regulation. In the United States, the Company is most heavily regulated by the states, especially for the provision of local exchange services. The Company must be separately certified in each state to offer local exchange and intrastate long distance services. No state, however, subjects the Company to price cap or rate of return regulation, nor is the Company currently required to obtain Federal Communications Commission ("FCC") authorization for installation or operation of its network facilities used for domestic services. FCC approval is required, however, for the installation and operation of its international facilities and services. The Company is subject to varying degrees of regulation in the foreign jurisdictions in which it conducts business including authorization for the installation and operation of its network facilities. Although the trend in federal, state, local and international regulation appears to favor increased competition, no assurance can be given that changes in current or future regulations adopted by the FCC, state or foreign regulators or legislative initiatives in the United States and abroad would not have a material adverse effect on the Company. On February 8, 1996, President Clinton signed the Telecommunications Act of 1996 (the "Telecom Act") which: permits, without limitation, the Bell System Operating Companies ("BOCs") to provide domestic and international long distance services to customers located outside of the BOCs' home regions; permits a petitioning BOC to provide domestic and international long distance service to customers within its home region upon a finding by the FCC that a petitioning BOC has satisfied 21 certain criteria for opening up its local exchange network to competition and that its provision of long distance services would further the public interest; and removes existing barriers to entry into local service markets. Additionally, there are significant changes in the manner in which carrier-to- carrier arrangements are regulated at the federal and state levels; procedures to revise universal service standards; and penalties for unauthorized switching of customers. The FCC has instituted proceedings addressing the implementation of this legislation. On August 8, 1996, the FCC released its FCC Interconnect Order which established nationwide rules designed to encourage new entrants to participate in the local service markets through interconnection with the Incumbent Local Exchange Carriers ("ILECs"), resale of the ILEC's retail services and unbundled network elements. These rules set the groundwork for the statutory criteria governing BOC entry into the long distance market. WorldCom cannot predict the effect such legislation or the implementing regulations will have on it or the industry. Motions to stay implementation of the FCC Interconnect Order were filed with the FCC and federal courts of appeal. Appeals challeging, among other things, the validity of the FCC Interconnect Order were filed in several federal courts of appeal and assigned to the Eight Circuit Court of Appeals for disposition. The Eighth Circuit Court of Appeals has stayed the pricing provisions of the FCC Interconnect Order. WorldCom cannot predict either the outcome of these challenges and appeals or the eventual effect on its business or the industry in general. On December 24, 1996, the FCC released a Notice of Proposed Rulemaking (the "NPRM") seeking to reform the FCC's current access charge policies and practices to comport with a competitive or potentially competitive local access service market. On May 7, 1997, the FCC announced that it will issue a series of orders that reform Universal Service Subsidy allocations, adopt various reforms to the existing rate structure for interstate access that are designed to reduce access charges, over time, to more economically efficient levels and rate structures. In particular, the FCC adopted changes to its rate structures for Common Line, Local Switching and Local Transport rate elements. The FCC generally removed from minute-of-use access charges costs that are not incurred on a per-minute-of-use-basis, with such costs being recovered through flat rated charges. Additional charges and details of the FCC's actions are to be addressed when Orders are released within the near future. Access charges are a principal component of the Company's line cost expense. The Company cannot predict whether or not results of this proceeding will have a material impact upon the financial position or results of operations of the Company. In the NPRM, the FCC tentatively concluded that information services providers (including among others Internet service providers) should not be subject to existing interstate access charges. However, the FCC recognized that these services and recent technological advances may be constrained by current regulatory practices that have their foundations in traditional services and technologies. The FCC issued on December 24, 1996, a Notice of Inquiry to seek comment on whether it should, in addition to access charge reform, consider actions relating to interstate information services and the Internet. Changes in the regulatory environment relating to the telecommunications or Internet-related services industry could have an adverse effect on the Company's Internet-related services business. The Telecom Act may permit telecommunications companies, BOCs or others to increase the scope or reduce the cost of their Internet access services. The Company cannot predict the effect that the Notice of Inquiry, the Telecom Act or any future legislation, regulation or regulatory changes may have on its business. In December 1996, the FCC adopted a new policy that will make it easier for United States international carriers to obtain authority to route international public switched voice traffic to and from the United States outside of the traditional settlement rate and proportionate return regimes. In February 1997, the United States entered into a World Trade Organization Agreement (the "WTO Agreement") that should have the effect of liberalizing the provision of switched voice telephone and 22 other telecommunications services in scores of foreign countries over the next several years. As a result of the WTO Agreement, WorldCom expects the FCC, among other things, to reexamine its policies regarding (i) the services that may be provided by foreign owned United States international common carriers, including carriers owned or controlled by foreign carriers that have market power in their home markets, and (ii) the provision of international switched voice services outside of the traditional settlement rate and proportionate return regimes. Although the FCC's new flexible settlement rate policy, and the WTO Agreement and any ensuing FCC policy changes, may result in lower costs to the Company to terminate international traffic, there is a risk that the revenues that the Company receives from inbound international traffic may decrease to an even greater degree. The implementation of the WTO Agreement may also make it easier for foreign carriers with market power in their home markets to offer United States and foreign customers end-to-end services to the disadvantage of WorldCom, which may face substantial obstacles in obtaining from foreign governments and foreign carriers the authority and facilities to provide such end-to-end services. The Company is or will be subject to the applicable laws and has obtained or will need to obtain the approval of the regulatory authority of each overseas country in which it provides or proposes to provide telecommunications services. The laws and regulatory requirements vary from country to country. Some countries have substantially deregulated various communications services, while other countries have maintained strict regulatory regimes. The application procedure to enter new markets can be time-consuming and costly, and terms of licenses vary for different countries. There can be no assurance that the Company will receive all authorizations or licenses necessary for new communications services or that delays in the licensing process will not adversely affect its business. Competition Virtually all markets for telecommunications services are extremely competitive, and the Company expects that competition will intensify in the future. In each of the markets in which it offers telecommunications services, the Company faces significant competition from carriers with greater market share and financial resources. The Company competes domestically with incumbent providers, which have historically dominated their local telecommunications markets, and long distance carriers, for the provision of long distance services. In certain markets the incumbent provider offers both local and long distance services. The ILECs presently have numerous advantages as a result of their historic monopoly control of the local exchange market. A continuing trend toward business combinations and alliances in the telecommunications industry may create significant new competitors to the Company. Many of the Company's existing and potential competitors have financial, personnel and other resources significantly greater than those of the Company. The Company also faces competition from one or more competitors in most markets in which it operates, including Competitive Access Providers operating fiber optic networks, in some cases in conjunction with the local cable television operator. Each of AT&T Corp. ("AT&T"), MCI Communications Corporation ("MCI") and Sprint Corporation has indicated its intention to offer local telecommunications services in major United States markets using its own facilities or by resale of the Local Exchange Carriers' or other providers' services. In addition, the Company competes with equipment vendors and installers and telecommunications management companies with respect to certain portions of its business. In overseas markets, the Company competes with incumbent providers, many of which still have special regulatory status and the exclusive rights to provide certain services, and virtually all of which have historically regulatory status and the exclusive rights to provide certain services, and virtually all of which have historically dominated their local, domestic long distance and international services markets. These incumbent providers have numerous advantages including existing facilities, customer loyalty, and substantial financial resources. The Company also competes with other service providers in overseas markets, many of which are affiliated with incumbent providers in other countries. Typically, the Company must devote extensive resources to obtaining regulatory approvals necessary 23 to operate in overseas markets, and then to obtaining access to and interconnection with the incumbent's network on a non-discriminatory basis. The Company may also be subject to additional competition due to the development of new technologies and increased availability of domestic and international transmission capacity. For example, even though fiber optic networks, such as that of the Company, are now widely used for long distance transmission, it is possible that the desirability of such networks could be adversely affected by changing technology. The telecommunications industry is in a period of rapid technological evolution, marked by the introduction of new product and service offerings and increasing satellite and fiber optic transmission capacity for services similar to those provided by the Company. The Company cannot predict which of many possible future product and service offerings will be important to maintain its competitive position or what expenditures will be required to develop and provide such products and services. Under the Telecom Act and ensuing federal and state regulatory initiatives, barriers to local exchange competition are being removed. The introduction of such competition, however, also establishes the predicate for the BOCs to provide in-region interexchange long distance services. The BOCs are currently allowed to offer certain "incidental" long distance service in-region and to offer out-of-region long distance services. Once the BOCs are allowed to offer in-region long distance services, they could be in a position to offer single sources local and long distance service similar to that being offered by the Company. The Company expects that the increased competition made possible by regulatory reform will result in certain pricing and margin pressures in the domestic telecommunications services business. The Company, through UUNET, also competes in the market for data communications services, including Internet access and on-line services. This market is also extremely competitive. The Company expects that competition will intensify in the future. The Company believes that its ability to compete successfully in this market depends on a number of factors, including: market presence; the ability to execute a rapid expansion strategy; the capacity, reliability and security of its network infrastructure; ease of access to and navigation on the Internet; the pricing policies of its competitors and suppliers, the timing of the introduction of new products and services by the Company and its competitors; UUNET's ability to support industry standards; and industry and general economic trends. The success of the Company in this market will depend heavily upon UUNET's ability to provide high quality Internet connectivity and value-added Internet services at competitive prices. The Company expects that all of the major on-line services providers and telecommunications companies will expand their current services to compete fully in the Internet access market. The Company believes that new competitors, including large computer hardware, software, media and other technology and telecommunications companies will enter the Internet access market, resulting in even greater competition for UUNET. Certain companies, including America Online, Inc., AT&T, MCI, BBN Corporation and PSINet, Inc., have obtained or expanded their Internet access products and services as a result of acquisitions and strategic investments. Such acquisitions may permit UUNET's competitors to devote greater resources to the development and marketing of new competitive products and services and the marketing of existing competitive products and services. UUNET expects these acquisitions and strategic investments to increase, thus creating significant new competitors to UUNET. As UUNET continues to expand Internet operations outside of the United States, UUNET will be forced to compete with and buy services from government- owned or subsidized telecommunications providers, some of which may enjoy an absolute monopoly on telecommunications services essential to its business. UUNET will also encounter competition from companies whose operating styles are substantially different from those that it usually experiences. For example, in the United Kingdom, the Company competes directly with: (1) telecommunications companies, such as British 24 Telecommunications plc, Mercury Communications Limited and others; (2) other Internet access providers, such as Demon Internet Limited and EUnet GB Limited; and (3) on-line services providers, such as CompuServe Corporation, America Online/Bertelsmann AG, Microsoft Corporation and AT&T. These foreign competitors may also possess a better understanding of their local markets and may have better working relationships with local telecommunications companies. There can be no assurance that UUNET can obtain similar levels of local knowledge, and failure to obtain that knowledge could place UUNET at a serious competitive disadvantage. Potential Liability of On-Line Service Providers The law in the United States relating to the liability of on-line service providers and Internet access providers for information carried on, disseminated through or hosted on their systems is currently unsettled. Several private lawsuits seeking to impose such liability are currently pending. In one case brought against an Internet access provider, Religious Technology Center v. Netcom On-Line Communication Services, Inc., the United States District Court for the Northern District of California ruled in a preliminary phase that under certain circumstances Internet access providers could be held liable for copyright infringement. The case has been settled by the parties. The Telecom Act prohibits and imposes criminal penalties and civil liability for using an interactive computer service for transmitting certain types of information and content, such as indecent or obscene communications. On June 12, 1996, however, a panel of three federal judges granted a preliminary injunction barring enforcement of this portion of the Telecom Act to the extent that enforcement is based upon allegations other than obscenity or child pornography as an impermissible restriction on the First Amendment's right of free speech. In addition, the United States Congress in consultation with the United States Patent and Trademark Office and the Administration's National Information Infrastructure Task Force, is currently considering legislation to address the liability of on-line service providers and Internet access providers, and numerous states have adopted or are currently considering similar types of legislation. The imposition upon Internet access providers of potential liability for materials carried on or disseminated through their systems could require UUNET to implement measures to reduce its exposure to such liability, which may require the expenditure of substantial resources or the discontinuation of certain product or service offerings. The Company believes that it is currently unsettled whether the Telecom Act prohibits and imposes liability for any services provided by UUNET should the content or information transmitted be subject to the statute. The law relating to the liability of on-line service providers and Internet access providers in relation to information carried, disseminated or hosted also is being discussed by the World Intellectual Property Organization in the context of ongoing consideration of updating existing, and adopting new, international copyright treaties. Similar developments are ongoing in the United Kingdom and other jurisdictions. The scope of authority of various regulatory bodies in relation to on-line services is at present uncertain. The Office of Telecommunications in the United Kingdom has recently published a consultative document setting out a number of issues for discussion, including the roles of traditional telecommunications and broadcasting regulators with respect to on-line services. The Securities Investment Board in the United Kingdom is investigating the status of on-line services and the transmission of investment information over networks controlled by access providers. Such transmissions may make an access provider liable for any violation of securities and other financial services legislation and regulations. Decisions regarding regulation, enforcement, content liability and the availability of Internet access in other countries may significantly affect the ability to offer certain services worldwide and the development and profitability of companies offering Internet and on-line services in the future. For example, an Internet access provider that competes with UUNET removed certain content from its services worldwide in reaction to law enforcement activities in Germany, and it has been reported that an Internet access provider in Germany has been advised by prosecutors that it may have liability for disseminating neo-Nazi writings by providing access to the Internet where these materials are available. 25 The increased attention focused upon liability issues as a result of these lawsuits, legislation and legislative proposals could affect the growth of Internet use. Any costs incurred as a result of liability or asserted liability for information carried on or disseminated through its systems could have a material adverse effect on the business, financial condition and results of operations of UUNET. Dependence upon Network Infrastructure; Risk of System Failure; Security Risks The success of the Company in marketing its services to business and government users requires that the Company provide superior reliability, capacity and security via its network infrastructures. These networks are subject to physical damage, power loss, capacity limitations, software defects, breaches of security (by computer virus, break-ins or otherwise) and other factors, certain of which have caused, and will continue to cause, interruptions in service or reduced capacity for the customers of such company. Similarly, UUNET's business relies on the availability of its network infrastructure for the provision of Internet access services. Interruptions in service, capacity limitations or security breaches could have a material adverse effect on the Company's business, financial condition and results of operations. Anti-Takeover Provisions The Second Amendment and Restated Articles of Incorporation of WorldCom contains provisions (a) requiring a 70% vote for approval of certain business combinations with certain 10% shareholders unless approved by a majority of the continuing Board of Directors or unless certain minimum price, procedural and other requirements are met; (b) restricting aggregate beneficial ownership of the capital stock of WorldCom by foreign shareholders to 20% of the total outstanding capital stock, and subjecting excess shares to redemption, and (c) authorizing WorldCom's Board of Directors to issue preferred stock in one or more classes without any action on the part of shareholders. In addition, WorldCom has adopted a rights plan (the "WorldCom Rights Plan") and in connection therewith entered into the Rights Agreement between WorldCom and The Bank of New York, as Rights Agent, dated as of August 25, 1996, as amended, which will cause substantial dilution to a person or group that attempts to acquire WorldCom on terms not approved by WorldCom's Board of Directors. Further, WorldCom's Bylaws (a) contain requirements regarding advance notice of nomination of directors by shareholders and (b) restrict the calling of special meetings by shareholders to those owning shares representing not less than 40% of the votes to be cast. These provisions, including the WorldCom Rights Plan, may have an "anti-takeover" effect. 26 THE EXCHANGE OFFERS PURPOSE OF THE EXCHANGE OFFERS Since the MFS Merger, WorldCom has been operationally and financially integrating MFS into the WorldCom organization, which integration includes creating a single, more efficient, consolidated credit entity. The Exchange Offers are an element of this integration effort, and the Proposed Amendments are expected to provide greater financial and operating flexibility to the fully integrated organization. The Company believes that the failure to consummate the Exchange Offers and the Consent Solicitations will not have a material adverse effect on the Company. See "The Proposed Amendments." TERMS OF THE EXCHANGE OFFERS Upon the terms and subject to the conditions set forth in this Prospectus and in the Letters of Transmittal and in accordance with applicable law, the Company offers to exchange (i) $871.597 principal amount of its WorldCom 2004 Notes for each $1,000 principal amount at stated maturity of MFS 2004 Notes validly tendered on or prior to the Expiration Date and not withdrawn as provided herein and (ii) $737.912 principal amount of its WorldCom 2006 Notes for each $1,000 principal amount at stated maturity of MFS 2006 Notes validly tendered on or prior to the Expiration Date and not withdrawn as provided herein. Interest on the WorldCom Notes will accrue from and including the Interest Accrual Date at the stated interest rate on such WorldCom Notes. The principal amount of WorldCom Notes offered in exchange for the applicable series of MFS Notes is equal to the Accreted Value of such MFS Notes as of the Interest Accrual Date. As of the Interest Accrual Date, the Accreted Value of the MFS 2004 Notes is $871.597 per $1,000 principal amount at stated maturity and the Accreted Value of the MFS 2006 Notes is $737.912 per $1,000 principal amount at stated maturity. The Accreted Value of a series of MFS Notes, as of the Interest Accrual Date, is the sum of (i) the initial issue price of such MFS Notes plus (ii) the portion of the original issue discount applicable to such MFS Notes accreted from and including the original issue date thereof and to but excluding the Interest Accrual Date. WorldCom Notes will be issued only in denominations of $1,000 and integral multiples thereof. If the aggregate principal amount of WorldCom Notes that otherwise would be issued in exchange for the MFS Notes of a series tendered by a Holder and accepted by the Company pursuant to an Exchange Offer is not an integral multiple of $1,000, such principal amount will be reduced to the nearest such multiple and the Company will pay to such Holder an amount in cash equal to the reduction of such principal amount. WorldCom Notes to be exchanged for MFS Notes pursuant to the Exchange Offers will be delivered and Consent Payments and other cash payments, if any, will be made on the Exchange Date. The financial terms of the WorldCom 2004 Notes and WorldCom 2006 Notes are substantially identical in all material respects to the financial terms of the MFS 2004 Notes and MFS 2006 Notes, respectively, except that: (i) the MFS Notes are the sole obligations of MFS, while the WorldCom Notes will be the sole obligations of WorldCom; (ii) the MFS 2004 Notes and the MFS 2006 Notes were originally issued at a discount and, except as described below, the principal amount thereof accretes in value until January 15, 1999 and January 15, 2001, respectively, while the WorldCom Notes will have a fixed principal amount; (iii) except as described below, no cash interest accrues on the MFS 2004 Notes and the MFS 2006 Notes until January 15, 1999 and January 15, 2001, respectively, while interest will begin to accrue on the WorldCom Notes on the Interest Accrual Date and will be payable in cash semi-annually in arrears on each January 15 and July 15, commencing July 15, 1997; and (iv) overdue principal and premium, if any, and interest on the overdue principal and any overdue premium of the MFS 2004 Notes and the MFS 2006 Notes bear interest at the rate of 10 3/8% and 9 7/8% per annum, respectively, while overdue principal and premium, if any, and interest on the overdue principal and any overdue premium of the WorldCom 2004 Notes and the WorldCom 2006 Notes will bear interest at 9 3/8% and 8 7/8% per annum, respectively. The WorldCom Indenture will contain covenants that are substantially less restrictive than those that are currently in the MFS Indentures and the 27 WorldCom Notes will carry significantly reduced protections than those now afforded to the MFS Notes. Pursuant to the MFS Indentures, MFS may elect, prior to July 15, 1997 (or a future Interest Payment Date), to commence the accrual of cash interest on either series of MFS Notes beginning on such date, at which time the outstanding principal amount of each of such MFS Notes at their respective stated maturities will equal the Accreted Value of such MFS Notes as of such date, and cash interest will be payable on January 15, 1998 (or the next succeeding Interest Payment Date, as the case may be) and on each Interest Payment Date thereafter. In the event any such election is made prior to the Expiration Date, MFS intends to issue a press release and file with the Commission a Current Report on Form 8-K publicly announcing the commencement of the accrual of cash interest on the MFS Notes beginning on July 15, 1997 (or a future Interest Payment Date, as the case may be). As of the date of this Prospectus, $787,519,000 in aggregate principal amount at stated maturity of the MFS 2004 Notes and $910,475,000 in aggregate principal amount at stated maturity of the MFS 2006 Notes were Outstanding. Only a Holder of the MFS Notes (or such Holder's legal representative or attorney-in-fact) as reflected on the records of the Trustee under the MFS Indentures may participate in the Exchange Offers and the Consent Solicitations. There is and will be no fixed record date for determining Holders of the MFS Notes entitled to participate in the Exchange Offers. The Company reserves the right, in its sole discretion, to purchase or make offers for any MFS Notes that remain outstanding subsequent to the Expiration Date and, to the extent permitted by applicable law, purchase MFS Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the Exchange Offers. Any purchase or offer by the Company will not be made except in accordance with applicable law and will in no event be made prior to the expiration of ten business days after the Expiration Date. CONDITIONS OF THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS Notwithstanding any other provisions of an Exchange Offer or Consent Solicitation, or any extension of such Exchange Offer or Consent Solicitation, the Company will not be required to issue WorldCom Notes or make any payments in respect of any properly tendered MFS Notes or properly given Consents, and may terminate such Exchange Offer or Consent Solicitation or, at its option, modify, extend or otherwise amend such Exchange Offer or Consent Solicitation with respect to such MFS Notes, if any of the following conditions has not been satisfied, prior to or concurrently with the consummation of such Exchange Offer or Consent Solicitation: (a) receipt of the Requisite Consents with respect to both series of MFS Notes; (b) there shall not have been any action taken or threatened, or any statute, rule, regulation, judgment, order, stay, decree or injunction promulgated, enacted, entered, enforced or deemed applicable to the Exchange Offers, the exchange of MFS Notes pursuant to the Exchange Offers (the "Exchange"), the Consent Solicitations or the Proposed Amendments by or before any court or governmental regulatory or administrative agency or authority tribunal, domestic or foreign, which (i) challenges the making of the Exchange Offers, the Exchange, the Consent Solicitations or the Proposed Amendments or might, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or might otherwise adversely affect in any material manner, the Exchange Offers, the Exchange, the Consent Solicitations or the Proposed Amendments or (ii) in the sole judgment of the Company, could materially adversely affect the business, condition (financial or otherwise), income, operations, properties, assets, liabilities or prospects of the Company and its subsidiaries, taken as a whole, or materially impair the contemplated benefits of the Exchange Offers, the Exchange, the Consent Solicitations or the Proposed Amendments to the Company or might be material to holders of MFS Notes in deciding whether to accept such Exchange Offers and give such Consents; (c) there shall not have occurred or be likely to occur any event affecting the business or financial affairs of the Company that, in the sole judgment of the Company, would or might prohibit, prevent, restrict or delay consummation of the Exchange Offers, the Exchange, the 28 Consent Solicitations or the Proposed Amendments or that will, or is reasonably likely to, materially impair the contemplated benefits of the Exchange Offers, the Exchange, the Consent Solicitations or the Proposed Amendments to the Company or might be material to Holders of MFS Notes in deciding whether to accept such Exchange Offers and give the related Consent; (d) there shall not have occurred (i) any general suspension of or limitation on trading in securities on the NYSE or in the over-the-counter market (whether or not mandatory), (ii) any material adverse change in the prices of the MFS Notes, (iii) a material impairment in the general trading market for debt securities, (iv) a declaration of a banking moratorium or any suspension of payments in respect of banks by federal or state authorities in the United States (whether or not mandatory), (v) a commencement of a war, armed hostilities or other national or international crisis directly or indirectly relating to the United States, (vi) any limitation (whether or not mandatory) by any governmental authority on, or other event having a reasonable likelihood of affecting, the extension of credit by banks or other lending institutions in the United States or (vii) any material adverse change in United States securities or financial markets generally, or in the case of any of the foregoing existing at the time of the commencement of the Exchange Offers, a material acceleration or worsening thereof; and (e) the Trustee under the MFS Indentures (the "MFS Trustee") shall have executed and delivered the supplemental indentures relating to the Proposed Amendments and shall not have objected in any respect to, or taken any action that could in the sole judgment of the Company adversely affect the consummation of, any of the Exchange Offers, the Exchange, the Consent Solicitations or the Company's ability to effect the Proposed Amendments nor shall the MFS Trustee have taken any action that challenges the validity or effectiveness of the procedures used by the Company in soliciting Consents (including the form thereof) or in making the Exchange Offers, the Exchange or the Consent Solicitations. If any of the foregoing conditions are not satisfied with respect to a particular series of MFS Notes, the Company may (i) terminate the Exchange Offer and the Consent Solicitation with respect to such series of MFS Notes and return all tendered MFS Notes of such series to the Holders thereof; (ii) extend such Exchange Offer and Consent Solicitation and retain all tendered MFS Notes and Consents until the Expiration Date, as extended, of such Exchange Offer and Consent Solicitation, subject, however, to the withdrawal rights of Holders, see "--Withdrawal of Tenders" and "--Expiration Date; Extensions; Amendments"; or (iii) waive the unsatisfied conditions with respect to such Exchange Offer and Consent Solicitation and accept all MFS Notes tendered and not previously withdrawn. The foregoing conditions are for the sole benefit of the Company and may be waived by the Company, in whole or in part, in its sole discretion. Any determination made by the Company concerning an event, development or circumstance described or referred to above shall be conclusive and binding. Notwithstanding any of the foregoing, the Company will not consummate the Exchange Offer with respect to the MFS 2004 Notes if less than $343.2 million of principal amount of WorldCom 2004 Notes would be issued in such Exchange Offer and will not consummate the Exchange Offer with respect to the MFS 2006 Notes if less than $336.0 million of principal amount of WorldCom 2006 Notes would be issued in such Exchange Offer. Except for the requirements of applicable federal and state securities laws, there are no federal or state regulatory requirements to be complied with or approvals to be obtained by the Company or MFS in connection with the Exchange Offers which, if not complied with, would have a material adverse effect on the Company. CERTAIN CONSEQUENCES TO HOLDERS NOT TENDERING IN THE EXCHANGE OFFERS Consummation of the Exchange Offers and the adoption of the Proposed Amendments with respect to the MFS Notes will have certain consequences to Holders of the MFS Notes who elect not 29 to tender in the Exchange Offers, including, without limitation, that the covenants and certain other terms set forth in the MFS Indentures, as proposed to be amended, with respect to the MFS Notes will be substantially less restrictive, and afford less protection to such Holders, than those that are currently in the MFS Indentures. See "Risk Factors--Certain Considerations Relating to Holders Not Tendering in the Exchange Offers." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 11:59 p.m., New York City time, on , 1997, subject to the right of the Company to extend such date and time for either or both Exchange Offers in its sole discretion, in which case the term "Expiration Date" shall mean, with respect to any such extended Exchange Offer, the latest date and time to which such Exchange Offer is extended. The Company reserves the right, in its sole discretion, (i) to delay accepting any validly tendered MFS Notes, (ii) to extend the Exchange Offers or (iii) to terminate or amend the Exchange Offers by giving oral or written notice of such delay, extension, termination or amendment to the Exchange Agent. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by a public announcement thereof which, in the case of an extension, will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. If the Exchange Offers are amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendment by means of a prospectus supplement that will be distributed to the Holders, and the Company will extend the Exchange Offers for a period of five to ten business days, depending upon the significance of the amendment and the manner of disclosure to the Holders, if the Exchange Offers would otherwise have expired during such five to ten business day period. Any change in the consideration offered to Holders of MFS Notes pursuant to either Exchange Offer shall be paid to all Holders whose MFS Notes have previously been tendered pursuant to such Exchange Offer. Without limiting the manner in which the Company may choose to make a public announcement of any delay, extension, amendment or termination of the Exchange Offers, the Company shall have no obligation to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release to an appropriate news agency, including, without limitation, the Dow Jones News Service. EFFECT OF TENDER Any tender by a Holder (and subsequent acceptance of such tender by the Company) that is not withdrawn prior to the Expiration Date will constitute an agreement between such Holder and the Company in accordance with the terms and subject to the conditions of the applicable Exchange Offer described herein and in the applicable Letter of Transmittal. The acceptance of an Exchange Offer by a tendering Holder of MFS Notes will constitute the agreement by such Holder to deliver good and marketable title to the tendered MFS Notes free and clear of all liens, charges, claims encumbrances, interests and restrictions of any kind. Holders of the MFS Notes do not have any appraisal or dissenters' rights under the Delaware General Corporation Law or the MFS Indentures in connection with the Exchange Offers. The Company intends to conduct the Exchange Offers in accordance with the applicable requirements of the Securities Act and the Exchange Act, and the rules and regulations of the Commission thereunder. ACCEPTANCE OF MFS NOTES FOR EXCHANGE; DELIVERY OF WORLDCOM NOTES The Company shall be deemed to have accepted validly tendered MFS Notes and properly given Consents which have not been withdrawn or revoked as provided in this Prospectus when, and if, the 30 Company has given oral or written notice thereof to the Exchange Agent. Subject to the terms and conditions of the Exchange Offers, delivery of WorldCom Notes, Consent Payments and other cash payments, if any, for MFS Notes so accepted will be made by the Exchange Agent on the Exchange Date upon receipt of such notice. The Exchange Agent will act as agent for tendering Holders for the purpose of receiving MFS Notes from and transmitting Consent Payments and WorldCom Notes to such Holders. If any tendered MFS Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offers or if MFS Notes are withdrawn or are submitted for a greater principal amount than the Holder thereof desires to exchange, such unaccepted, withdrawn or non-exchanged MFS Notes will be returned without expense to the tendering Holder thereof as promptly as practicable. PROCEDURES FOR TENDERING To tender in the Exchange Offers, a Holder of MFS Notes must complete, sign and date the applicable Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal or such facsimile to the Exchange Agent at the address set forth in the Letter of Transmittal for receipt on or prior to the Expiration Date. In addition, either (i) certificates for such MFS Notes along with the applicable Letter of Transmittal, must be received by the Exchange Agent on or prior to the Expiration Date (ii) a timely confirmation of a book-entry transfer (a "Book- Entry Confirmation") of such MFS Notes, if such procedure is available, into the Exchange Agent's account at DTC pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date or (iii) the Holder must comply with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF MFS NOTES, THE LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO AND RECEIPT BY THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE. DO NOT SEND THE LETTER OF TRANSMITTAL OR ANY MFS NOTES TO ANYONE OTHER THAN THE EXCHANGE AGENT. Any beneficial owner whose MFS Notes are held by a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such nominee promptly and instruct such nominee to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the applicable Letter of Transmittal and delivering such owner's MFS Notes, either make appropriate arrangements to register ownership of the MFS Notes in such owner's name or obtain a properly completed bond power from its nominee. The transfer of registered ownership may take considerable time and be difficult to complete prior to the Expiration Date. All WorldCom Notes will be delivered only in book-entry form through DTC. Accordingly, Holders who anticipate tendering other than through DTC are urged to contact promptly a bank, broker or other intermediary (that has the capability to hold securities custodially through DTC) to arrange for receipt of any WorldCom Notes to be delivered pursuant to the Exchange Offers and to obtain the information necessary to provide the required DTC participant and account information in the applicable Letter of Transmittal. The YELLOW Letter of Transmittal must be used to tender MFS 2004 Notes. The BLUE Letter of Transmittal must be used to tender MFS 2006 Notes. Holders who wish to tender MFS Notes of both series must complete a separate Letter of Transmittal in respect of each series of MFS Notes tendered. 31 Tender of MFS Notes Held in Physical Form. To tender MFS Notes held in physical form, the Holder thereof must: (i) complete and sign the applicable Letter of Transmittal in accordance with the instructions set forth therein; and (ii) deliver the properly completed and executed Letter of Transmittal and the MFS Notes in physical form to the Exchange Agent at the address set forth on the back cover page of this Prospectus on or prior to the Expiration Date. THE PROPER COMPLETION, EXECUTION AND DELIVERY OF A LETTER OF TRANSMITTAL WITH RESPECT TO PARTICULAR MFS NOTES WILL CONSTITUTE THE GIVING OF A CONSENT TO THE PROPOSED AMENDMENTS WITH RESPECT TO SUCH MFS NOTES. Book-Entry Delivery Procedures for Holders Tendering MFS Notes held with DTC. To tender MFS Notes held by a nominee with DTC, the beneficial owner thereof must: (i) inform such owner's nominee of such owner's interest in tendering such owner's MFS Notes pursuant to the Exchange Offers; (ii) instruct such nominee to effect a book-entry transfer of all MFS Notes to be tendered in the Exchange Offers by such owner into the Exchange Agent's account at DTC on or prior to the Exchange Date; (iii) instruct such nominee to complete and sign the applicable Letter of Transmittal in accordance with the instructions set forth therein; and (iv) instruct such nominee to deliver the properly completed and executed Letter of Transmittal (or a facsimile thereof) to the Exchange Agent on or prior to the Expiration Date. THE PROPER COMPLETION, EXECUTION AND DELIVERY OF A LETTER OF TRANSMITTAL WITH RESPECT TO PARTICULAR MFS NOTES WILL CONSTITUTE THE GIVING OF A CONSENT TO THE PROPOSED AMENDMENTS WITH RESPECT TO SUCH MFS NOTES. The Exchange Agent will establish promptly an account with respect to the MFS Notes at DTC for purposes of the Exchange Offers. The Exchange Agent and DTC have confirmed that any financial institution that is a participant in DTC's system may utilize DTC's Automated Tender Offer Program to tender MFS Notes. Any such financial institution may make a book-entry delivery of MFS Notes by causing DTC to transfer MFS Notes to the Exchange Agent's account. However, although delivery of MFS Notes may be effected through book-entry transfer at DTC, a properly completed and executed Letter of Transmittal, together with any other documents required by the Letter of Transmittal, must, in any case, be transmitted to, and received by, the Exchange Agent at its address set forth in the Letter of Transmittal on or prior to the Expiration Date, or the guaranteed delivery procedures described below must be complied with. MFS Notes will not be deemed surrendered until the Letter of Transmittal and signature guarantees, if any, is received by the Exchange Agent. DELIVERY OF A LETTER OF TRANSMITTAL TO DTC WILL NOT CONSTITUTE VALID DELIVERY TO THE EXCHANGE AGENT. Guaranteed Delivery Procedures. Holders who wish to tender their MFS Notes and (i) whose MFS Notes are not immediately available or (ii) who cannot deliver their MFS Notes, the Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date, may effect a tender if: (a) The tender is made by or through a firm or other entity identified in Rule 17Ad-15 under the Exchange Act, including (as such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities dealer, municipal securities broker, government securities dealer or government securities broker; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings institution that is a participant in a Securities Transfer Association recognized program (an "Eligible Institution"); (b) On or prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) substantially in the form provided by the Company setting forth the name and address of the Holder, and the principal amount of MFS Notes tendered, 32 stating that the tender is being made thereby and guaranteeing that, within two New York Stock Exchange trading days after the Expiration Date, the Letter of Transmittal (or a facsimile thereof), together with the certificate(s) representing the MFS Notes in proper form for transfer or a Book-Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal, will be delivered by the Eligible Institution to the Exchange Agent; and (c) Such properly executed Letter of Transmittal (or facsimile thereof), as well as the certificate(s) representing all tendered MFS Notes in proper form for transfer and all other documents required by the Letter of Transmittal are received by the Exchange Agent within two New York Stock Exchange trading days after the Expiration Date. Upon request to the Information Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their MFS Notes according to the guaranteed delivery procedures set forth above. PROPER EXECUTION AND DELIVERY OF LETTERS OF TRANSMITTAL Signatures on a Letter of Transmittal or notice of withdrawal described below (see "--Withdrawal of Tenders and Revocation of Consents"), as the case may be, must be guaranteed by an Eligible Institution unless the MFS Notes tendered pursuant thereto are tendered (i) by a Holder who has not completed the box entitled "Special Delivery Instructions" or "Special Issuance and Payment Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal are required to be guaranteed, such guarantee must be made by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an Eligible Institution. The YELLOW Letter of Transmittal must be used to tender MFS 2004 Notes. The BLUE Letter of Transmittal must be used to tender MFS 2006 Notes. Holders who wish to tender from both series must complete a separate Letter of Transmittal in respect of each series of MFS Notes tendered. If the Letter of Transmittal is signed by the Holder(s) of MFS Notes tendered thereby, the signature(s) must correspond with the name(s) as written on the face of the MFS Notes without alteration, enlargement or any change whatsoever. If any of the MFS Notes tendered thereby are held by two or more Holders, all such Holders must sign the Letter of Transmittal. If any of the MFS Notes tendered thereby are registered in different names on different MFS Notes, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If the certificates for WorldCom Notes issued pursuant to the Exchange Offers are to be registered in the name of, or payments are to be made to, a person other than the signatory on the Letter of Transmittal, or if MFS Notes that are not tendered for exchange pursuant to the Exchange Offers are to be returned to a person other than the Holder thereof, then certificates for such MFS Notes must be endorsed or accompanied by an appropriate instrument of transfer, signed exactly as the name of the registered owner appears on the certificates, with the signatures on the certificates or instruments of transfer guaranteed by an Eligible Institution. If the Letter of Transmittal is signed by a person other than the Holder of any MFS Notes listed therein, such MFS Notes must be properly endorsed or accompanied by a properly completed bond power, signed by such Holder exactly as such Holder's name appears on such MFS Notes. 33 If the Letter of Transmittal or any MFS Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, evidence satisfactory to the Company of their authority to so act must be submitted with the Letter of Transmittal. No alternative, conditional, irregular or contingent tenders or consents will be accepted. By executing the Letter of Transmittal (or facsimile thereof), the tendering Holders of MFS Notes waive any right to receive any notice of the acceptance for exchange of their MFS Notes. Tendering Holders should indicate in the applicable box in the Letter of Transmittal the name and address to which payments and/or substitute certificates evidencing MFS Notes for amounts not tendered or not exchanged are to be issued or sent, if different from the name and address of the person signing the Letter of Transmittal. If no such instructions are given, such payments and/or MFS Notes not tendered or not exchanged will be returned to such tendering Holder. All questions as to the validity, form, eligibility (including time of receipt) and acceptance and withdrawal of tendered MFS Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all tendered MFS Notes determined by it not to be in proper form or not to be properly tendered or any tendered MFS Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive, in its sole discretion, any defects, irregularities or conditions of tender as to particular MFS Notes, whether or not waived in the case of other MFS Notes. The Company's interpretation of the terms and conditions of the Exchange Offers and the Consent Solicitations (including the instructions in the Letters of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of MFS Notes must be cured within such time as the Company shall determine. Although the Company intends to notify Holders of defects or irregularities with respect to tenders of MFS Notes, neither the Company, the Exchange Agent nor any other person will be under any duty to give such notification or shall incur any liability for failure to give any such notification. Tenders of MFS Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. By tendering, each Holder of MFS Notes will represent to and agree with the Company that, among other things, the MFS Notes tendered are held by such Holder free and clear of all security interests, liens, restrictions, charges, encumbrances, conditional sale agreements or other obligations relating to their sale or transfer, and not subject to any adverse claim when the same are accepted by the Company. Any holder whose MFS Notes have been mutilated, lost, stolen or destroyed will be responsible for obtaining replacement securities or for arranging for indemnification with the MFS Trustee. Holders may contact the Information Agent for assistance with such matters. WITHDRAWAL OF TENDERS AND REVOCATION OF CONSENTS Except as otherwise provided herein, tenders of MFS Notes may be withdrawn at any time prior to 11:59 p.m., New York City time, on , 1997. Tenders of MFS Notes may not be withdrawn at any time after such time unless the applicable Exchange Offer is extended with changes in the terms of such Exchange Offer that are materially adverse to the tendering Holder, in which case tenders of MFS Notes may be withdrawn under the conditions described in the extension. The withdrawal of tendered MFS Notes will be deemed to be a revocation of the Consents related to such MFS Notes. 34 Withdrawal of MFS Notes Held in Physical Form. To withdraw a tender of MFS Notes in the Exchange Offers, a Holder of MFS Notes held in physical form must provide a written or facsimile transmission notice of withdrawal to the Exchange Agent at its address set forth herein prior to 11:59 p.m., New York City time, on , 1997, or such later time, if any, specified in an extension of the applicable Exchange Offer. Any such notice of withdrawal must (i) specify the name of the person who tendered the MFS Notes to be withdrawn, (ii) identify the MFS Notes to be withdrawn (including the certificate number or numbers and aggregate principal amount of such MFS Notes), (iii) be signed by the Holder in the same manner as the original signature on the Letter of Transmittal by which such MFS Notes were tendered (including any required signature guarantees) and (iv) if such MFS Notes are held by a new beneficial owner, include evidence satisfactory to the Company that the person withdrawing the tender has succeeded to the beneficial ownership of the MFS Notes. A purported notice of withdrawal which lacks any of the required information will not be an effective withdrawal of a tender previously made. Withdrawal of MFS Notes Held with DTC. To withdraw a tender of MFS Notes in the Exchange Offers, a beneficial owner of MFS Notes held with DTC must: (i) call such owner's nominee and instruct such nominee to withdraw such tender of MFS Notes by debiting the Exchange Agent's account at DTC of all MFS Notes to be withdrawn; and (ii) instruct such nominee to provide a written or facsimile transmission notice of withdrawal to the Exchange Agent at its address set forth herein prior to 11:59 p.m., New York City time, on , 1997, or such later time, if any, specified in an extension of the applicable Exchange Offer. Such notice of withdrawal must: (A) specify the name of the person who tendered the MFS Notes; (B) specify the aggregate principal amount of MFS Notes to be withdrawn; (C) specify the number of the account at DTC to be credited with the withdrawn MFS Notes; and (D) if such MFS Notes are held by a new beneficial owner, evidence satisfactory to the Company that the person withdrawing the tender has succeeded to the beneficial ownership of the MFS Notes. A purported notice of withdrawal which lacks any of the required information will not be an effective withdrawal of a tender previously made. All questions as to the validity, form and eligibility (including time of receipt) of any such notices of withdrawal will be determined by the Company, in its sole discretion, whose determination shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with withdrawals of tenders of MFS Notes must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person will be under any duty to give notification of any such defect or irregularity or shall incur any liability for failure to give any such notification. Withdrawals of tenders of MFS Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any MFS Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offers and the Consents with respect thereto not to have been validly given, and no WorldCom Notes will be issued with respect thereto unless the MFS Notes so withdrawn are validly retendered. Properly withdrawn MFS Notes may be retendered by following one of the procedures described above under "The Exchange Offers--Procedures for Tendering" at any time on or prior to the Expiration Date. EXCHANGE AGENT Harris Trust and Savings Bank has been appointed Exchange Agent for the Exchange Offers and Consent Solicitations. Letters of Transmittal, Notices of Guaranteed Delivery and all correspondence in connection with the Exchange Offers should be sent or delivered by each Holder or a beneficial owner's broker, dealer, commercial bank, trust company or other nominee to the Exchange Agent at the addresses and telephone numbers set forth in the applicable Letter of Transmittal. The Company will pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable, out-of-pocket expenses in connection therewith. 35 INFORMATION AGENT MacKenzie Partners, Inc. has been appointed as Information Agent for the Exchange Offers and the Consent Solicitations, and will receive customary compensation for its services. Questions concerning tender procedures and requests for additional copies of this Prospectus, the Letters of Transmittal or the Notices of Guaranteed Delivery should be directed to the Information Agent at the address and telephone numbers set forth on the back cover page of this Prospectus. Holders of MFS Notes may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Exchange Offers. DEALER MANAGERS The Company has retained Salomon Brothers Inc and Goldman, Sachs & Co. to act as Dealer Managers in connection with the Exchange Offers and Consent Solicitations and will pay a fee to the Dealer Managers for soliciting acceptances of the Exchange Offers, which fee is based on the Accreted Value, as of July 15, 1997, of all MFS Notes tendered and not validly revoked. The obligations of the Dealer Managers to perform such function are subject to certain conditions. The Company has agreed to indemnify the Dealer Managers against certain liabilities, including certain liabilities under the federal securities laws, or to contribute to payments that the Dealer Managers may be required to make in respect thereof. Any questions regarding the terms of the Exchange Offers or the Consent Solicitations should be directed to the Dealer Managers at the addresses and telephone numbers set forth on the back cover page of this Prospectus. The Dealer Managers currently plan to make a market in the WorldCom Notes following the completion of the Exchange Offers and may buy and sell WorldCom Notes on a "when and if issued" basis prior to the completion of the Exchange Offers. However, there can be no assurance that the Dealer Managers will engage in such activities or that any active market in the WorldCom Notes will develop or be maintained. See "Risk Factors--Certain Considerations Relating to Holders Tendering in the Exchange Offers." The Dealer Managers, from time to time, make markets in the MFS Notes. As of the date hereof, the Dealer Managers hold approximately % and % of the aggregate principal amount of Outstanding MFS 2004 Notes and MFS 2006 Notes, respectively. OTHER FEES AND EXPENSES; TRANSFER TAXES The expenses of soliciting tenders will be borne by the Company. The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, facsimile transmission, telephone or in person by the Dealer Managers and the Information Agent, as well as by officers and regular employees of the Company and its affiliates. Tendering Holders of MFS Notes will not be required to pay any fee or commission to the Dealer Managers. However, if a tendering Holder handles the transaction through its broker, dealer, commercial bank, trust company or other institution, such Holder may be required to pay brokerage fees or commissions. The Company will pay all transfer taxes, if any, applicable to the exchange of MFS Notes pursuant to the Exchange Offers. If, however, WorldCom Notes and/or substitute MFS Notes for amounts not tendered or not exchanged are to be delivered to, or are to be registered in the name of, any person other than the Holder of MFS Notes tendered, or if tendered MFS Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of the MFS Notes pursuant to an Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption 36 therefrom is not submitted with the appropriate Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder and/or withheld from any payments due with respect to the MFS Notes tendered by such Holder. DESCRIPTION OF DIFFERENCES BETWEEN THE MFS NOTES AND THE WORLDCOM NOTES The following is a summary comparison of the material terms of the MFS Notes and the WorldCom Notes. The description of the MFS Notes reflects the MFS Notes as currently constituted and does not reflect any changes to the covenants and other terms of the MFS Notes that may be effected pursuant to the Consent Solicitations. Such summary does not purport to be complete and is qualified in its entirety by reference to the WorldCom Indenture and the MFS Indentures. Capitalized terms appearing below within the descriptions of the MFS Notes and the WorldCom Notes and which are not otherwise defined herein have the same meanings as are given to such terms in the MFS Indentures and the WorldCom Indenture, respectively, copies of which are exhibits to the Registration Statement of which this Prospectus forms a part. Definitions of certain capitalized terms relating to the MFS Indentures are set forth under "The Proposed Amendments--Certain Definitions." Whenever particular sections or defined terms are referred to, it is intended that such sections or defined terms shall be incorporated by reference. For additional information regarding the WorldCom Notes and for definitions of certain capitalized terms used with respect to the WorldCom Notes but not heretofore defined, see "Description of the WorldCom Notes" below. ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - ------------------------------------------------------------------------------- ISSUER: MFS WorldCom INTEREST PAYMENT Interest on the MFS 2004 Notes Interest on the WorldCom DATES: is payable semi-annually on Notes will accrue from the January 15 and July 15 begin- Interest Accrual Date. In- ning on July 15, 1999, and in- terest on the WorldCom 2004 terest on the MFS 2006 Notes Notes is payable semi-annu- is payable semi-annually on ally on January 15 and July January 15 and July 15 begin- 15 beginning on January 15, ning on July 15, 2001; provid- 1998, and interest on the ed, however, that MFS may WorldCom 2006 Notes is pay- elect, prior to July 15, 1997 able semi-annually on Janu- (or a future Interest Payment ary 15 and July 15 beginning Date), to commence the accrual on January 15, 1998. (Sec- of cash interest beginning on tions 2(a)(iv) and 2(b)(iv) such date, at which time the of WorldCom Indenture) outstanding principal amount of each of the MFS Notes at their respective stated matu- rities will equal the Accreted Value of such MFS Notes as of such date, and cash interest will be payable on January 15, 1998 (or the next succeeding Interest Payment Date, as the case may be) and on each In- terest Payment Date thereaf- ter. (Sections 202 and 301 of 1994 Indenture, Section 2(a)(iv) of 1996 Indenture) - ------------------------------------------------------------------------------- 37 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - ------------------------------------------------------------------------------- OPTIONAL The MFS 2004 Notes are not re- The WorldCom 2004 Notes have REDEMPTION: deemable at the option of MFS the same redemption provi- prior to January 15, 1999. On sions as the MFS 2004 Notes, or after January 15, 1999, the and the WorldCom 2006 Notes MFS 2004 Notes are redeemable have the same redemption at the option of MFS, in whole provisions as the MFS 2006 at any time or in part from Notes, except that WorldCom time to time, at the following is the Issuer of the prices (expressed as percent- WorldCom Notes and has the ages of the principal amount optional right to redeem at Stated Maturity), if re- such notes. (Sections deemed during the twelve 2(a)(vi) and 2(b)(vi) of the months beginning January 15 of WorldCom Indenture) the years indicated below, in each case together with inter- est accrued to the redemption date:
YEAR PERCENTAGE ---- ---------- 1999.................. 103.52% 2000.................. 102.34% 2001.................. 101.17% 2002 and thereafter... 100.00%
(Section 203 of 1994 Inden- ture) The MFS 2006 Notes are not re- deemable at the option of MFS prior to January 15, 2001. On or after January 15, 2001, the MFS 2006 Notes will be redeem- able at the option of MFS, in whole at any time or in part from time to time, at the fol- lowing prices (expressed as percentages of the principal amount at Stated Maturity), if redeemed during the twelve months beginning January 15 of the years indicated below, in each case together with inter- est accrued to the redemption date:
YEAR PERCENTAGE ---- ---------- 2001.................. 103.32% 2002.................. 102.21% 2003.................. 101.11% 2004 and thereafter... 100.00%
(Section 2(a)(vi) of 1996 In- denture) CHANGE OF Upon the occurrence of a None CONTROL: Change of Control, each Holder will have the right - ------------------------------------------------------------------------------- 38 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- to require MFS to repurchase all or any part of such Hold- er's Notes at a purchase price in cash equal to 101 percent of the Accreted Value thereof on any Purchase Date occurring prior to January 15, 1999, in the case of the MFS 2004 Notes, and prior to January 15, 2001, in the case of the MFS 2006 Notes, plus any ac- crued and unpaid cash interest not otherwise included in Ac- creted Value to such Purchase Date, or 101 percent of the principal amount thereof at Stated Maturity (subject to possible reduction as provided in the MFS Indentures) on any Purchase Date occurring on or after January 15, 1999 and January 15, 2001, respective- ly, plus accrued and unpaid interest, if any, to such Pur- chase Date, in accordance with the procedures set forth in the MFS Indentures. (Section 1013 of 1994 Indenture; Sec- tion 5(r) of 1996 Indenture) LIMITATION OF MFS will not incur any Debt None DEBT: unless (i) after giving effect to such incurrence of Debt and the contemporaneous applica- tion of the proceeds thereof, no Default or Event of Default shall have occurred and be continuing at the time or would occur as a consequence of the incurrence of such Debt, and (ii) such Debt is Permitted Debt. (Section 1008 of 1994 Indenture; Section 5(e) of 1996 Indenture) LIMITATION OF MFS will not permit any of its None DEBT AND Restricted Subsidiaries to in- PREFERRED cur any Debt or issue any pre- STOCK OF ferred stock, except (a) Sub- RESTRICTED sidiary Vendor Debt; (b) Debt SUBSIDIARIES: and preferred stock of Re- stricted Subsidiaries out- standing as of January 26, 1994; (c) Debt and preferred stock of a Restricted Subsidi- ary issued to and held by MFS; (d) Interest Swap Obligations, provided that such obligations are related to payment obliga- tions on Debt otherwise per- mitted by the terms of this paragraph, and Currency Hedge Obligations; - -------------------------------------------------------------------------------- 39 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - ------------------------------------------------------------------------------- (e) Debt or preferred stock incurred in exchange for, or the proceeds of which are used to refinance, Restricted Sub- sidiary Debt or preferred stock referred to in clause (a) of this paragraph, subject to certain exceptions; (f) Debt or preferred stock of MFS Telecom, which is convertible into Capital Stock of MFS, is- sued to a Strategic Equity In- vestor; provided, however, that the proceeds of such incurrence or issuance are used as though such proceeds were Net Cash Proceeds in ac- cordance with the provisions of "Limitations on Asset Sales" (described below); and (g) Guarantees by Restricted Subsidiaries of Debt of MFS described in clause (a) of the definition of Permitted Debt. (Section 1009 of 1994 Inden- ture; Section 5(f) of 1996 In- denture) LIMITATIONS MFS will not, and will not Same as MFS Notes, except ON LIENS: permit any of its Restricted that, WorldCom may issue, Subsidiaries to enter into, assume or guarantee indebt- create, incur, assume or suf- edness secured by Liens on fer to exist any Liens of any Property that are not Per- kind, other than Permitted mitted Liens without equally Liens, on or with respect to and ratably securing the any of its Property or assets WorldCom Notes, provided now owned or hereafter ac- that the sum of all such in- quired, or any interest debtedness then being is- therein or any income or prof- sued, assumed or guaranteed its therefrom, unless the MFS together with such indebted- Notes are secured equally and ness theretofore issued, as- ratably with (or prior to) sumed or guaranteed that re- such Debt and any and all mains outstanding does not other Debt so secured by such exceed 15% of the Consoli- Property or assets for so long dated Net Tangible Assets as any and all other Debt is prior to the time such in- so secured. (Section 1012 of debtedness was issued, as- 1994 Indenture; Section 5(g) sumed or guaranteed. (Sec- of 1996 Indenture) tion 1004 of WorldCom Inden- ture) LIMITATIONS MFS will not, and will not Sale and Leaseback Transac- ON SALE AND permit any of its Restricted tions are considered Liens LEASEBACK Subsidiaries to enter into, and are subject to the cove- TRANSACTIONS: assume, Guarantee or otherwise nant restricting the ability become liable with respect to of the Company to incur any Sale and Leaseback Trans- Liens, as described above. action, unless (i) the obliga- (Section 1004 of WorldCom tion of MFS or such Restricted Indenture) Subsidiary with respect thereto is included as Debt and would be permitted under other covenants and any Liens granted thereby would be per- mitted by - ------------------------------------------------------------------------------- 40 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- other covenants, (ii) the net proceeds from such transaction are at least equal to the Fair Market Value of such Property being transferred, and (iii) the Net Cash Proceeds from such transaction are applied in accordance with other cove- nants. (Section 1016 of 1994 Indenture; Section 5(h) of 1996 Indenture) LIMITATIONS MFS will not, and will not None ON RESTRICTED permit any of its Restricted PAYMENTS: Subsidiaries to make any Re- stricted Payment unless, at the time of and after giving effect to the proposed Re- stricted Payment (i) no De- fault or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof; (ii) af- ter giving effect, on a pro forma basis, to such Re- stricted Payment and the incurrence of any Debt the net proceeds of which are used to finance such Restricted Pay- ment, MFS could incur at least $1.00 of additional Debt pur- suant to clause (h) or (i) of the definition of Permitted Debt; and (iii) after giving effect to such Restricted Pay- ment on a pro forma basis, the aggregate amount expended or declared for all Restricted Payments on or after January 26, 1994 does not exceed cer- tain formula amounts. (Section 1010 of 1994 Indenture; Sec- tion 5(i) of 1996 Indenture) LIMITATIONS MFS will not, and will not None ON DIVIDENDS permit any Restricted Subsidi- AND OTHER ary to cause or suffer to ex- PAYMENT ist or become effective or en- RESTRICTIONS ter into any encumbrance or AFFECTING restriction (other than pursu- RESTRICTED ant to law or regulation) on SUBSIDIARIES: the ability of any Restricted Subsidiary (i) to pay divi- dends or make any other dis- tributions in respect of its Capital Stock or pay any Debt or other obligation owed to MFS or any other Restricted Subsidiary of MFS; (ii) to make loans or advances to MFS or any Restricted Subsidiary of MFS; or (iii) to transfer any of its Property or assets to MFS or any other Restricted Subsidiary - -------------------------------------------------------------------------------- 41 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- of MFS, except pursuant to certain ordinary course of business exceptions. (Section 1014 of 1994 Indenture; Sec- tion 5(j) of 1996 Indenture) None LIMITATIONS MFS (i) shall not permit any ON ISSUANCE Restricted Subsidiary to issue AND SALE OF any Capital Stock other than CAPITAL STOCK to MFS or a Restricted Subsid- OF RESTRICTED iary, other than pursuant to SUBSIDIARIES: certain specified agreements in existence on January 26, 1994, unless MFS acquires at the same time not less than its Proportionate Interest in such issuance of Capital Stock and (ii) shall not permit any Person other than MFS or a Re- stricted Subsidiary to own any Capital Stock of any Re- stricted Subsidiary of MFS (other than directors' quali- fying shares), except for cer- tain specified transactions. (Section 1018 of 1994 Inden- ture; Section 5(k) of 1996 In- denture) LIMITATIONS MFS will not, and will not None ON ASSET permit any Restricted Subsidi- SALES: ary to, consummate an Asset Sale unless (i) MFS or such Restricted Subsidiary, as the case may be, receives consid- eration at the time of such Asset Sale at least equal to the Fair Market Value (as evi- denced by a resolution of the Board of Directors of MFS) of the Property or assets sold or otherwise disposed of, (ii) at least 85 percent of the con- sideration received by MFS or such Restricted Subsidiary for such Property or assets con- sists of Cash Proceeds (or, if less than 85 percent, the re- mainder of such consideration consists of Telecommunications Assets) and (iii) MFS or such Restricted Subsidiary, as the case may be, uses the Net Cash Proceeds in the manner set forth in the next paragraph. Within 360 days, in the case of the MFS 2004 Notes, or 300 days, in the case of the MFS 2006 Notes, after any Asset Sale, MFS or such Restricted Subsidi- ary, as the case may be, may at its op- - -------------------------------------------------------------------------------- 42 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- tion (a) reinvest an amount equal to the Net Cash Proceeds (or any portion thereof) from such disposition in Replace- ment Assets and/or (b) apply an amount equal to such Net Cash Proceeds (or remaining Net Cash Proceeds) to the per- manent reduction of any Debt of MFS ranking pari passu with the MFS Notes (including the MFS Notes) or Debt of any Re- stricted Subsidiaries of MFS. Any Net Cash Proceeds from any Asset Sale that are not used to reinvest in Replacement As- sets and/or repay any pari passu Debt of MFS as described above constitute "Excess Pro- ceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, MFS must offer to purchase to the extent of such Excess Proceeds on a pro rata basis from all Holders of the MFS Notes (and any unsecured Debt of MFS ranking pari passu with the MFS Notes and containing similar provisions requiring MFS to purchase such Debt) the MFS Notes (and such other Debt) at a purchase price equal to 100 percent of the Accreted Value thereof on any Purchase Date occurring prior to January 15, 1999, in the case of the MFS 2004 Notes, and January 15, 2001, in the case of the MFS 2006 Notes, plus any accrued and unpaid interest not otherwise included in Accreted Value to such Purchase Date, or 100 percent of the principal amount thereof at Stated Maturity (subject to possible reduction as provided in the MFS Indentures) on any Purchase Date occurring on or after January 15, 1999, in the case of the MFS 2004 Notes, and January 15, 2001, in the case of the MFS 2006 Notes, plus accrued and unpaid interest, if any, to such Purchase Date, in accordance with the procedures set forth in the MFS Indentures. (Section 1015 of 1994 Indenture; Section 5(l) of 1996 Indenture) - -------------------------------------------------------------------------------- 43 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- LIMITATIONS MFS will not, and will not None ON permit any of its Restricted TRANSACTIONS Subsidiaries to conduct any WITH business or enter into or per- AFFILIATES: mit to exist any transaction or series of related transac- tions with any Affiliate of MFS or such Restricted Subsid- iary, as the case may be, un- less (i) such business, trans- action or series of related transactions is in the best interest of MFS or such Re- stricted Subsidiary, (ii) such business, transaction or se- ries of related transactions is on terms no less favorable to MFS or such Restricted Sub- sidiary than those that could be obtained in a comparable arm's-length transaction with a Person that is not such an Affiliate and (iii) (a) with respect to such business, transaction or series of re- lated transactions that has a Fair Market Value or involves aggregate payments equal to, or in excess of, $10.0 million but less than $15.0 million, MFS delivers to the Trustee an Officer's Certificate stating that such business, transac- tion or series of related transactions complies with clauses (i) and (ii) above; and (b) with respect to such business, transaction or se- ries of related transactions that has a Fair Market Value or involves aggregate payments equal to, or in excess of, $15.0, million such business, transaction or series of transactions is approved by a majority of the Board of Di- rectors (including a majority of the Disinterested Direc- tors), which approval is set forth in a Board Resolution delivered to the Trustee cer- tifying that such business, transaction or series of re- lated transactions complies with clauses (i) and (ii) above. (Section 1011 of 1994 Indenture; Section 5(m) of 1996 Indenture) PROVISION OF Whether or not MFS is subject None FINANCIAL to Section 13(a) or 15(d) of INFORMATION: the Exchange Act, or any suc- cessor provision thereto, MFS shall file with the Commission the annual reports, quarterly reports and - -------------------------------------------------------------------------------- 44 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - ------------------------------------------------------------------------------- other documents which MFS would have been required to file with the Commission pur- suant to such Section 13(a) or 15(d) or any successor provi- sion thereto if MFS were sub- ject thereto, such documents to be filed with the Commission on or prior to the respective dates (the "Required Filing Dates") by which MFS would have been required to file them. MFS shall also in any event within 15 days of each Required Filing Date (i) transmit by mail to all Holders, as their names and addresses appear in the Security Register, without cost to such Holders, and (ii) file with the Trustee copies of the annual reports, quarterly reports and other documents (without exhibits) which MFS would have been required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act or any successor provisions thereto if MFS were subject thereto. (Section 1017 of 1994 Indenture; Section 5(n) of 1996 Indenture) WorldCom may consolidate CONSOLIDATION, MFS will not, and will not with, or sell, lease or MERGER, permit any Restricted convey all or substantially CONVEYANCE, Subsidiary to, in any all of its assets to, or TRANSFER OR transaction or series of merge with or into any other LEASE: transactions, consolidate with corporation, provided that or merge into any other Person (a) either WorldCom shall be (other than a merger of a the continuing corporation, Restricted Subsidiary into MFS or the successor corporation in which MFS is the continuing (if other than WorldCom) corporation or the merger of a formed by or resulting from Restricted Subsidiary into or any such consolidation or with a Restricted Subsidiary), merger or which shall have or sell, convey, assign, received the transfer of transfer, lease or otherwise such assets shall expressly dispose of all or assume payment of the substantially all of the principal of (and premium, Property and assets of MFS and if any) and interest on all the Restricted Subsidiaries the WorldCom Notes and the taken as a whole to any other performance and observance Person, unless: of all the covenants and (a) either (i) MFS shall be conditions of the WorldCom the continuing corporation or Indenture; and (b) WorldCom (ii) the corporation (if other or such successor than MFS) formed by such corporation shall not consolidation or into which immediately thereafter be in MFS is merged, or the Person default under the WorldCom which acquires, by sale, Indenture. (Section 801 of assignment, conveyance, WorldCom Indenture) transfer, lease or disposition, all or substantially all of the Property and assets of MFS and the Restricted - ------------------------------------------------------------------------------- 45 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - ------------------------------------------------------------------------------- Subsidiaries taken as a whole (such corporation or Person, the "Surviving Entity"), shall be a corporation organized and validly existing under the laws of the United States of America, any political subdivision thereof or any state thereof or the District of Columbia, and shall expressly assume, by a supplemental MFS Indenture, the due and punctual payment of the principal of (and premium, if any) and interest on all the Notes and the performance of MFS' covenants and obligations under the MFS Indentures; (b) immediately before and af- ter giving effect to such transaction or series of transactions on a pro forma basis no Event of Default or Default shall have occurred and be continuing or would re- sult therefrom; (c) immediately after giving effect to any such transaction or series of transactions on a pro forma basis as if such transaction or series of transactions had occurred on the first day of the determi- nation period, MFS (or the Surviving Entity if MFS is not continuing) would be permitted to incur $1.00 of additional Debt pursuant to paragraphs (h) or (i) of the definition of "Permitted Debt"; and (d) immediately after giving effect to such transaction or series of transactions on a pro forma basis, MFS (or the Surviving Entity if MFS is not continuing) shall have a Con- solidated Net Worth equal to or greater than the Consoli- dated Net Worth of MFS immedi- ately prior to such transac- tion. Upon any transaction, or se- Upon any transaction ef- ries of transactions that are fected in accordance with of the type described in, and the foregoing paragraph and are effected in accordance upon any such assumption by with, the foregoing paragraph the successor corporation, the Surviving Entity shall such successor corporation succeed to, and be substituted shall succeed to and be sub- for, and may exercise every stituted for WorldCom with right and power of, MFS under the same effect as if it had the MFS Indentures and the MFS been named as WorldCom in Notes with the same effect as the - ------------------------------------------------------------------------------- 46 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - ------------------------------------------------------------------------------- if such Surviving Entity had WorldCom Indenture, and been named as MFS in the MFS WorldCom, except in the case Indentures; and when a Surviv- of a lease, will be relieved ing Person duly assumes of any further obligations all of the obligations and under the WorldCom Indenture covenants of MFS pursuant to and the WorldCom Notes. the MFS Indentures and the MFS (Section 802 of WorldCom Notes, except in the case of a Indenture) lease, the predecessor Person shall be relieved of all such obligations. (Sections 801 and 802 of 1994 Indenture; Sec- tion 7 of 1996 Indenture) EVENTS OF The WorldCom Notes are sub- DEFAULT Each of the following is an ject to substantially simi- "Event of Default" with re- lar "Events of Default" as spect to a series of MFS Notes are described in paragraphs under the applicable MFS In- (a), (b), (e), (f) and (h) denture: under "MFS Notes--Events of Default". In addition under (a) default in the payment of the WorldCom Indenture, cer- any installment of interest tain events of default re- upon any MFS Notes of that se- sulting in the acceleration ries when it becomes due and of the maturity of indebted- payable, and the continuance ness aggregating in excess of such default for a period of $50,000,000 under any of 30 days; mortgages, indentures or in- struments under which (b) default in the payment of WorldCom may have issued, or the principal of (or premium, by which there may have been if any, on) any MFS Note of secured or evidenced, any that series at its Maturity, other indebtedness of whether at Stated Maturity or WorldCom; but only if such upon repurchase, acceleration, indebtedness is not dis- optional redemption or other- charged or such acceleration wise; is not rescinded or annulled are also considered "Events (c) default, on the applicable of Default." (Section 501 of Purchase Date, in the purchase WorldCom Indenture) of MFS Notes required to be purchased by MFS pursuant to an Offer to Purchase as to which an Offer has been mailed to Holders or the failure to make an Offer to Purchase as required in the applicable MFS Indentures; (d) MFS fails to comply with any of its covenants or agree- ments related to "Limitation on Debt" or "Limitation on Debt and Preferred Stock of Restricted Subsidiaries" or fails to perform or comply with the provisions of the ap- plicable MFS Indenture related to "Consolidation, Merger, Conveyance, Transfer or Lease"; (e) default in the perfor- mance, or breach, of any cove- nant or warranty of - ------------------------------------------------------------------------------- 47 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- MFS in the applicable MFS In- denture (other than a covenant or warranty a default in whose performance or breach is spe- cifically dealt with in (a), (b), (c) or (d) above) and continuance of such default or breach for a period of 60 days after specified written notice thereof has been given to MFS by the Trustee or to MFS and the Trustee by the Holders of at least 25 percent of the ag- gregate principal amount of the Outstanding MFS Notes of that series; (f) Debt of MFS or any Restricted Subsidiary is not paid when due within the applicable grace period, if any, or is accelerated by the holders thereof and, in either case, the principal amount of such unpaid or ac- celerated Debt exceeds $10.0 million; (g) the entry by a court of competent jurisdiction of one or more judgments or orders against MFS or any Restricted Subsidiary in an uninsured or unin- demnified aggregate amount in excess of $10.0 mil- lion which remains undis- charged, unwaived, unstayed, unbonded or unsatisfied for a period of 60 consecutive days; and (h) certain events of bank- ruptcy, insolvency, liquida- tion or reorganization, or court appointment of a custo- dian, trustee or other similar official of MFS or any Signif- icant Restricted Subsidiary or of all or substantially all of its property or property of significant restricted subsid- iaries. (Section 501 of 1994 Indenture; Section 4(a) of 1996 Indenture) If any Event of Default (other If any Event of Default un- than an Event of Default spec- der the WorldCom Indenture ified in clause (h) above) oc- with respect to WorldCom curs with respect to a series Notes of a series at the of MFS Notes and is continu- time outstanding occurs and ing, then and in every such is continuing, then in every case the Trustee or the Hold- such case the Trustee or the ers of not less than 25 per- holders of not less than 25 cent of the Outstanding aggre- percent in principal amount gate principal amount at of the outstanding WorldCom Stated Maturity (as such prin- Notes of such series may de- cipal amount may be reduced clare the principal for the - -------------------------------------------------------------------------------- 48 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - ------------------------------------------------------------------------------- MFS 2006 Notes pursuant to amount of all of the Section 2(a)(iv) of the 1996 WorldCom Notes of that se- Indenture) of MFS Notes of ries to be due and payable such series may declare the immediately by written no- Default Amount and any accrued tice thereof to WorldCom and unpaid interest on all MFS (and to the Trustee if given Notes of such series then Out- by the holders). Under cer- standing to be immediately due tain circumstances, the and payable, by a notice in holders of a majority in writing to MFS (and to the principal amount of out- Trustee if given by Holders), standing WorldCom Notes of and upon any such declaration, such series by notice to such Default Amount and any WorldCom and the Trustee may accrued interest will become rescind and annul an accel- and be immediately due and eration and its conse- payable. If any Event of De- quences. The WorldCom Inden- fault specified in clause (h) ture also provides that the above occurs with respect to a holders of not less than a series of MFS Notes, the Ac- majority in principal amount creted Value and accrued in- of the outstanding WorldCom terest, if any, on the MFS Notes of any series issued Notes of such series then Out- thereunder may waive certain standing shall become immedi- past defaults with respect ately due and payable without to such series and their any declaration or other act consequences. (Sections 502 on the part of the Trustee or and 513 of WorldCom any Holder. Until and includ- Indenture) ing January 15, 1999, in the case of the MFS 2004 Notes, or January 15, 2001, in the case of the MFS 2006 Notes, the "Default Amount" shall equal the Accreted Value thereof as of such date. On or after Jan- uary 15, 1999, in the case of the MFS 2004 Notes, or January 15, 2001, in the case of the MFS 2006 Notes, the Default Amount shall equal 100 percent of the principal amount thereof at the Stated Maturity (subject to reduction for the MFS 2006 Notes as aforesaid) thereof. Under certain circum- stances, the Holders of a ma- jority in principal amount at Stated Maturity (subject to reduction for the MFS 2006 Notes as aforesaid) of the Outstanding MFS Notes by no- tice to MFS and the Trustee may rescind and annul an ac- celeration and its conse- quences. The MFS Indentures provide that the Holders of not less than a majority in principal amount at Stated Ma- turity of the Outstanding MFS Notes may waive certain past defaults and their conse- quences. (Sections 502 and 513 of 1994 Indenture; Sections 4(b) and 4(c) of 1996 Inden- ture) - ------------------------------------------------------------------------------- 49 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- AMENDMENT AND MFS and the Trustee may, at Same as MFS, except that SUPPLEMENT: any time and from time to WorldCom and the Trustee time, without notice or con- may, at any time and from sent of any Holder, enter into time to time, without notice one or more indentures supple- or consent of any Holder, mental to either of the MFS also enter into one or more Indentures (1) to evidence the indentures supplemental to succession of another Person the WorldCom Indenture to to MFS and the assumption by supplement any of the provi- such successor of the cove- sions thereof to such extent nants of MFS under such MFS as shall be necessary to Indenture and contained in the permit or facilitate the de- MFS Notes, (2) to add to the feasance and discharge of covenants of MFS, for the ben- either series of WorldCom efit of the Holders, or to Notes pursuant to the surrender any right or power WorldCom Indenture, provided conferred upon MFS by such MFS that any such action shall Indenture, (3) to add any ad- not adversely affect the in- ditional Events of Default, terests of the Holders of (4) to provide for the WorldCom Notes. (Section uncertificated notes in addi- 901 of WorldCom Indenture) tion to or in place of certif- icated MFS Notes issued under such MFS Indenture, (5) to change or eliminate any of the provisions of such MFS In- denture, provided that any such change or elimination will become effective only when there is not Outstanding any MFS Note created prior to the execution of such supple- mental indenture which is en- titled to the benefit of such provision, (6) to evidence and provide for the acceptance of appointment under such MFS In- denture by a successor Trust- ee, (7) to secure the MFS Notes issued under such MFS Indenture, (8) to cure any am- biguity, to correct or supple- ment any provision in such MFS Indenture which may be defec- tive or inconsistent with any other provision therein or to add any other provisions with respect to matters or ques- tions arising under such MFS Indenture; provided such ac- tions will not adversely af- fect the interests of the Holders in any material re- spect, or (9) to comply with the requirements of the Com- mission in order to effect or maintain the qualification of such MFS Indenture under the Trust Indenture Act. (Section 901 of 1994 Indenture; Section 8(a) of 1996 Indenture) - -------------------------------------------------------------------------------- 50 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- With the consent of the Hold- The WorldCom Indenture also ers of not less than a major- generally requires the con- ity in principal amount at sent of the holders of at Stated Maturity (subject to least a majority in princi- reduction for the MFS 2006 pal amount of outstanding Notes as aforesaid) of the WorldCom Notes of a series Outstanding MFS Notes of a se- to supplement or amend the ries, MFS and the Trustee may WorldCom Indenture with re- enter into one or more inden- spect to that series, except tures supplemental to the MFS as described above and ex- Indenture under which such se- cept that the consent of the ries was issued for the pur- Holder of each Outstanding pose of adding any provisions WorldCom Note of each series to or changing in any manner is required to (1) change or eliminating any of the pro- the Stated Maturity of the visions of such MFS Indenture principal of, or any in- or the modifying in any manner stallment of principal of or of the rights of such Holders; interest on, any WorldCom provided, however, that no Note of such series, or re- such supplemental indentures duce the principal amount will, without the consent of thereof, or rate or amount the Holder of each Outstanding of interest thereon that MFS Note of that series, (1) would be due and payable change the Stated Maturity of upon Maturity thereof, or the principal of, or any in- adversely affect any right stallment of interest on, any of repayment at the option such MFS Note, or reduce the of the Holder of any principal amount thereof (or WorldCom Note of such se- premium, if any), or the in- ries, or change any Place of terest thereon that would be Payment where, or the cur- due and payable upon Maturity rency in which, any WorldCom thereof, or reduce the Default Note of such series or the Amount that would be due and interest thereon is payable, payable on acceleration of the or impair the right to in- Maturity thereof provided in stitute suit for the en- such MFS Indenture or change forcement of any such pay- the place of payment where, or ment on or after the Stated the coin or currency in which, Maturity thereof, (2) reduce any such MFS Note or any pre- the percentage in principal mium or interest thereon is amount of such Outstanding payable, or impair the right WorldCom Notes, the consent to institute suit for the en- of whose Holders is required forcement of any such payment for any such supplemental on or after the Stated Matu- indenture, or the consent of rity thereof, (2) reduce the whose Holders is required percentage in principal amount for any waiver with respect at Stated Maturity of such to such notes (or compliance Outstanding MFS Notes, the with certain provisions of consent of whose Holders is the WorldCom Indenture or necessary for any such supple- certain defaults thereunder mental indenture or required and their consequences) pro- for any waiver of compliance vided for in the WorldCom with certain provisions of Indenture, or reduce the re- such MFS Indenture or certain quirements of the WorldCom Defaults thereunder, (3) mod- Indenture with respect to ify the obligations of MFS to such WorldCom Notes for quo- make offers to purchase such rum or voting, or (3) to MFS Notes upon a Change of modify with respect to such Control or from the proceeds WorldCom Notes the provi- of Asset Sales, (4) subordi- sions regarding "Supplemen- nate in right of payment, or tal Indentures with Consent otherwise subordinate, such of Holders" or "Waiver of MFS Notes to any other indebt- Past Defaults", except to edness, (5) modify any pro increase - -------------------------------------------------------------------------------- 51 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- visions of such MFS Indenture any such percentage or to pro- relating to the calculation vide that certain provisions of Accreted Value or (6) mod- of the WorldCom Indenture can- ify any of the provisions of not be modified or waived the MFS Indentures providing without the unanimous consent for the execution of supple- of the Holders of such mental indentures requiring WorldCom Notes. (Section 902 the consent of Holders, of WorldCom Indenture) waiver of past defaults and waiver of certain covenants The WorldCom Indenture does (except to increase any per- not have any provisions that centage set forth therein); require the consent of the provided, further, that the Holders of not less than 75 consent of the Holders of not percent in principal amount of less than 75 percent of the Outstanding WorldCom Notes. principal amount at Stated Maturity (subject to reduc- tion as aforesaid) of the Outstanding MFS Notes of that series is required to make any amendment to the covenant described under "Change of Control." (Section 902 of 1994 Indenture; Section 8(b) of 1996 Indenture) SATISFACTION MFS may terminate its obliga- Same as MFS (Sections 401 and AND DISCHARGE tions under either MFS Inden- 1401-1405 of WorldCom Inden- OF THE ture when (i) either (A) all ture) INDENTURES; Outstanding MFS Notes issued DEFEASANCE under such MFS Indenture have AND COVENANT been delivered to the Trustee DEFEASANCE: for cancellation or (B) all such MFS Notes not thereto- fore delivered to the Trustee for cancellation have become due and payable, will become due and payable within one year or are to be called for redemption within one year under irrevocable arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of MFS, and MFS has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire indebt- edness on such MFS Notes, not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest to the date of deposit or Stated Maturity or date of redemption; (ii) MFS has paid or caused to be paid all sums payable by MFS under such MFS Indenture; and (iii) MFS has delivered an Officer's Certificate and an - -------------------------------------------------------------------------------- 52 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- Opinion of Counsel relating to compliance with the conditions set forth in such MFS Inden- ture. (Section 401 of 1994 In- denture; Section 3(a) of 1996 Indenture) MFS will be deemed to have paid and discharged the entire Debt on a series of MFS Notes and the MFS Indenture under which such MFS Notes were is- sued shall cease to be of fur- ther effect as to all Out- standing MFS Notes (except as to (i) rights of registration of transfer, substitution and exchange of such MFS Notes and MFS' right of optional redemption, (ii) rights of Holders to receive payments of principal of, premium, if any, and interest on such MFS Notes (but not the Change of Control Repurchase Price of such MFS Notes) and any rights of the Holders with respect to such amounts, (iii) the rights, obligations and immu- nities of the Trustee under such MFS Indenture and (iv) certain other specified provi- sions in such MFS Indenture (the foregoing exceptions (i) through (iv) are collectively referred to as the "Reserved Rights")) after the irrevoca- ble deposit by MFS with the Trustee, in trust for the ben- efit of the Holders, at any time prior to the Stated Matu- rity of such MFS Notes, of (A) money in an amount, (B) U.S. Government Obligations which through the payment of inter- est and principal will pro- vide, not later than one day before the due date of payment in respect of the MFS Notes, money in an amount, or (C) a combination thereof, suffi- cient to pay and discharge the principal of and interest on such MFS Notes then outstand- ing on the dates on which any such payments are due in ac- cordance with the terms of such MFS Indenture and of such MFS Notes. Defeasance may only be deemed to occur if certain conditions are satisfied, in- cluding, among other - -------------------------------------------------------------------------------- 53 Continuation of Description of Differences Between the MFS Notes and the WorldCom Notes ---------------------------------------------------------------- MFS NOTES WORLDCOM NOTES - -------------------------------------------------------------------------------- things, delivery by MFS to the Trustee of an opinion of out- side counsel acceptable to the Trustee to the effect that, among other things, (i) the deposit, defeasance and dis- charge will not be deemed, or result in, a taxable event for federal income tax purposes, with respect to the Holders and (ii) MFS' deposit will not result in the Trust or the Trustee being subject to regu- lation under the Investment Company Act of 1940. (Sections 1201-1206 of 1994 Indenture; Section 6 of 1996 Indenture) - -------------------------------------------------------------------------------- 54 THE CONSENT SOLICITATIONS Concurrently with the Exchange Offers, the Company is soliciting Consents from the Holders to the Proposed Amendments to the 1994 Indenture (under which the MFS 2004 Notes were issued) and the 1996 Indenture (under which the MFS 2006 Notes were issued). The proper completion, execution and delivery of a Letter of Transmittal by a Holder tendering MFS Notes pursuant to an Exchange Offer will constitute the Consent of such tendering Holder to the Proposed Amendments with respect to such MFS Notes. Holders may not deliver Consents without tendering their MFS Notes in the Exchange Offers. REQUIRED CONSENTS Consents from Holders of a majority in aggregate principal amount Outstanding of a series of MFS Notes must be received in order to amend the MFS Indenture governing that series in the manner contemplated by the Proposed Amendments as described herein, except with respect to the modification of the term "Change of Control," which requires Consents from Holders of not less than 75% of the aggregate principal amount Outstanding of MFS Notes of a series. Among other things, the Proposed Amendments would eliminate (i) the covenants in each of the MFS Indentures that (a) restrict the ability of MFS and its restricted subsidiaries to incur debt, incur liens, enter into sale and leaseback transactions, make restricted payments (including payment of dividends) or enter into transactions with affiliates and (b) restrict the ability of restricted subsidiaries of MFS to issue equity securities to encumber their ability to pay dividends or to make certain loans or transfers of property to MFS or another restricted subsidiary of MFS and (ii) the separate financial reporting requirements contained in the MFS Indentures, and, subject to receipt of a Supermajority Consent, would redefine the events constituting a "Change of Control" under the MFS Indentures. See "The Proposed Amendments." Among other conditions, receipt of the Requisite Consent with respect to both series of MFS Notes, the execution and delivery by the MFS Trustee of the supplemental indentures relating to the Proposed Amendments and the lack of any objection by the MFS Trustee as to MFS' ability to effect the Proposed Amendments are conditions to consummation of each Exchange Offer and payment of the Consent Payments by the Company. See "The Exchange Offers-- Conditions to the Exchange Offers." If the Requisite Consent or the Supermajority Consent, as the case may be, is received with respect to a series of MFS Notes and the Exchange Offer with respect to such series is consummated, then MFS and the MFS Trustee will execute a supplemental indenture setting forth the Proposed Amendments in respect of the MFS Notes of such series and the MFS Indenture, as so supplemented, will become operative on the Exchange Date. Each non-exchanging Holder of such series of MFS Notes will be bound by such supplemental indenture even if such Holder did not give its Consent. Each of the MFS Indentures, without giving effect to the Proposed Amendments, will remain in effect until the Proposed Amendments with respect thereto become operative on the Exchange Date. If the Exchange Offer for a series of MFS Notes is terminated or withdrawn, the Proposed Amendments in respect of such series will never become operative. See "The Proposed Amendments." Consents may be revoked at any time prior to 11:59 p.m., New York City time, on , 1997 by the withdrawal of a tender of MFS Notes in accordance with the instructions for such withdrawal (see "The Exchange Offer--Withdrawal of Tenders and Revocation of Consents"). Any withdrawal of a tender of MFS Notes shall also be deemed to be a revocation of the related Consent. Tenders of MFS Notes may not be withdrawn and the related Consents may not be revoked at any time after 11:59 p.m., New York City time, on , 1997, unless the applicable Exchange Offer is extended with changes in the terms of such Exchange Offer that are materially adverse to the tendering Holder, in which case tenders of MFS Notes may be withdrawn under the conditions described in the extension. 55 CONSENT PAYMENTS On the Exchange Date, the Company will pay each Holder who gives a valid Consent on or prior to the Expiration Date a Consent Payment equal to (i) with respect to such Holder's MFS 2004 Notes, 0. % of the Accreted Value, as of the Interest Accrual Date, of such MFS 2004 Notes and (ii) with respect to such Holder's MFS 2006 Notes, 0. % of the Accreted Value, as of the Interest Accrual Date, of such MFS 2006 Notes, in either case, with respect to which such Consent has been given. If, on or prior to the Expiration Date, a Holder's MFS Notes are not validly tendered and the related Consents are not validly given pursuant to an Exchange Offer and Consent Solicitation, such Holder will not receive a Consent Payment even if the Proposed Amendments become effective with respect to such Holder's MFS Notes. HOLDERS OF MFS NOTES OF EITHER SERIES MAY GIVE THEIR CONSENT TO THE PROPOSED AMENDMENTS APPLICABLE TO THAT SERIES ONLY BY TENDERING SUCH MFS NOTES IN THE APPLICABLE EXCHANGE OFFER AND WILL BE DEEMED TO HAVE GIVEN SUCH CONSENT BY SO TENDERING. THE PROPER COMPLETION, EXECUTION AND DELIVERY OF A LETTER OF TRANSMITTAL WITH RESPECT TO A PARTICULAR SERIES OF MFS NOTES WILL CONSTITUTE THE DELIVERY OF A CONSENT WITH RESPECT TO SUCH MFS NOTES. 56 THE PROPOSED AMENDMENTS WorldCom is soliciting the Consent of the Holders of MFS Notes to the Proposed Amendments. The 1994 Indenture and the 1996 Indenture contain substantially similar covenants and terms. What follows are summaries of (i) the covenants and terms proposed to be eliminated from each of the MFS Indentures pursuant to the Consent Solicitations and (ii) the covenants and terms proposed to be substantially revised pursuant to the Consent Solicitations (collectively, the "Proposed Amendments"). Capitalized terms appearing below which are not otherwise defined herein have the same meanings as are given to such terms in the MFS Indentures, copies of which have been filed as exhibits to the Registration Statement of which this Prospectus forms a part. The definition of certain capitalized terms used herein are set forth under "--Certain Definitions" below. The summaries do not purport to be complete and are qualified in their entirety by reference to the 1994 Indenture, the 1996 Indenture and the forms of the supplemental indenture to each of the 1994 Indenture and the 1996 Indenture that contain the Proposed Amendments with respect to the MFS Notes (and that are to be executed in respect of each series of MFS Notes by MFS and the MFS Trustee in the event the Requisite Consent or the Supermajority Consent, as the case may be, with respect to such series is obtained). The form of each such supplemental indenture has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part and is available from the Company upon request. Whenever particular sections or defined terms are referred to, it is intended that such sections or defined terms shall be incorporated by reference. PROVISIONS TO BE DELETED Pursuant to the Consent Solicitations, the Company is proposing to eliminate the following from each of the MFS Indentures with respect to each series of MFS Notes: Limitation on Debt. MFS will not, directly or indirectly, incur any Debt unless (i) after giving effect to such incurrence of Debt and the contemporaneous application of the proceeds thereof, no Default or Event of Default shall have occurred and be continuing at the time or would occur as a consequence of the incurrence of such Debt, and (ii) such Debt is Permitted Debt. (Section 1008 of 1994 Indenture; Section 5(e) of 1996 Indenture) Limitation of Debt and Preferred Stock of Restricted Subsidiaries. MFS will not permit any of its Restricted Subsidiaries to incur, directly or indirectly, any Debt or issue any preferred stock, except (a) Subsidiary Vendor Debt; (b) Debt and preferred stock of Restricted Subsidiaries outstanding as of January 26, 1994; (c) Debt and preferred stock of a Restricted Subsidiary issued to and held by MFS; (d) Interest Swap Obligations, provided that such obligations are related to payment obligations on Debt otherwise permitted by the terms of this covenant, and Currency Hedge Obligations; (e) Debt or preferred stock incurred in exchange for, or the proceeds of which are used to refinance, Restricted Subsidiary Debt or preferred stock referred to in clause (a) of this paragraph, provided that (i) the principal amount of such Debt or the liquidation value of such preferred stock so incurred does not exceed the principal amount or liquidation value of the Debt or preferred stock being exchange or refinanced, and (ii) the Debt or preferred stock so incurred has a stated maturity or final redemption date (if any) no earlier than the stated maturity or final redemption date (if any) of, and an Average Life that is no less than that of, the Debt or preferred stock being exchanged or refinanced; provided, further, that the Debt or preferred stock so incurred has no greater seniority and covenants not materially more restrictive in the aggregate than those of the Debt or preferred stock being exchanged or refinanced; (f) Debt or preferred stock of MFS Telecom, which is convertible into Capital Stock of MFS, issued to a Strategic Equity Investor; provided, however, that the proceeds of such incurrence or issuance are used as though such proceeds were Net Cash Proceeds in accordance with the provisions of the covenant described under "The Exchange Offers--Description of Differences Between the MFS Notes and the WorldCom Notes-MFS Notes-- Limitations on Asset Sales;" and (g) Guarantees by Restricted Subsidiaries of Debt of the Company described in clause (a) of the definition of Permitted Debt. (Section 1009 of 1994 Indenture; Section 5(f) of 1996 Indenture) 57 Limitation on Liens. MFS will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any Liens of any kind, other than Permitted Liens, on or with respect to any of its Property or assets now owned or hereafter acquired, or any interest therein or any income or profits therefrom, unless the Notes are secured equally and ratably with (or prior to) such Debt and any and all other Debt so secured by such Property or assets for so long as any and all other Debt is so secured. (Section 1012 of 1994 Indenture; Section 5(g) of 1996 Indenture) Limitations on Sale and Leaseback Transactions. MFS will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into, assume, Guarantee or otherwise become liable with respect to any Sale and Leaseback Transaction, unless (i) the obligation of MFS or such Restricted Subsidiary with respect thereto is included as Debt and would be permitted under the covenants described above under "--Limitation on Debt" or "-- Limitation of Debt and Preferred Stock of Restricted Subsidiaries," respectively, and any Liens granted thereby would be permitted by the covenant described above under "--Limitation on Liens," (ii) the net proceeds from such transaction are at least equal to the Fair Market Value of such Property being transferred, and (iii) the Net Cash Proceeds from such transaction are applied in accordance with the covenant described under "The Exchange Offers-- Description of Differences Between the MFS Notes and the WorldCom Notes--MFS Notes--Limitations on Asset Sales." (Section 1016 of 1994 Indenture; Section 5(h) of 1996 Indenture) Limitations on Restricted Payments. MFS will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment unless, at the time of and after giving effect to the proposed Restricted Payment (i) no Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof; (ii) after giving effect, on a pro forma basis, to such Restricted Payment and the incurrence of any Debt the net proceeds of which are used to finance such Restricted Payment, MFS could incur at least $1.00 of additional Debt pursuant to clause (h) or (i) of the definition of Permitted Debt; and (iii) after giving effect to such Restricted Payment on a pro forma basis, the aggregate amount expended or declared for all Restricted Payments on or after January 26, 1994 does not exceed the sum of (A) 50 percent of the Consolidated Net Income of MFS (or, if Consolidated Net Income shall be a deficit, minus 100 percent of such deficit) for the period (taken as one accounting period) beginning on the last day of the fiscal quarter immediately preceding January 26, 1994 and ending on the last day of the fiscal quarter immediately preceding the date of such Restricted Payment, and (B) 100 percent of the aggregate net cash proceeds received by MFS subsequent to January 26, 1994 from the issuance or sale (other than to a Restricted Subsidiary or a Joint Venture) of shares of its Qualified Capital Stock, including Qualified Capital Stock issued upon conversion of convertible Debt and from the exercise of options, warrants or rights to purchase such Qualified Capital Stock. The foregoing limitations do not prevent MFS from (i) paying a dividend on its Capital stock at any time within 60 days after the declaration thereof if, on the declaration date, MFS could have paid such dividend in compliance with the Indenture, and (ii) making Permitted Investments; provided that any Permitted Investments made pursuant to clause (a) of the definition of Permitted Investments will be deemed to be Restricted Payments for the purposes of clause (iii) of the preceding paragraph. For purposes of this covenant, if a particular Restricted Payment involves a non-cash payment, including a distribution of assets, then such Restricted Payment shall be deemed to be an amount equal to the cash portion of such Restricted Payment, if any, plus an amount equal to the Fair Market Value of the non-cash portion of such Restricted Payment as determined by the Board of Directors, whose good faith determination shall be conclusive and evidenced by a Board Resolution. Not later than the date of making any Restricted Payment, MFS shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon 58 which the required calculations were computed, which calculations may be based upon MFS' latest available financial statements. (Section 1010 of 1994 Indenture; Section 5(i) of 1996 Indenture) Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries. MFS will not, and will not permit any Restricted Subsidiary to, directly or indirectly, cause or suffer to exist or become effective or enter into any encumbrance or restriction (other than pursuant to law or regulation) on the ability of any Restricted Subsidiary (i) to pay dividends or make any other distributions in respect of its Capital Stock or pay any Debt or other obligation owed to MFS or any other Restricted Subsidiary of MFS; (ii) to make loans or advances to MFS or any Restricted Subsidiary of MFS; or (iii) to transfer any of its Property or assets to MFS or any other Restricted Subsidiary of MFS, except: (a) any encumbrance or restriction pursuant to an agreement in effect at the Issue Date; (b) any encumbrance or restriction pursuant to an agreement relating to an acquisition of Property, so long as the encumbrances or restrictions in any such agreement relate solely to the Property so acquired (and are not or were not created in anticipation of or in connection with the acquisition thereof); (c) any encumbrance or restriction relating to any Debt of any Restricted Subsidiary at the date on which such Restricted Subsidiary was acquired by MFS or any Restricted Subsidiary (other than Debt issued by such Restricted Subsidiary in connection with or in anticipation of its acquisition); (d) any encumbrance or restriction pursuant to an agreement effecting a permitted refinancing of Debt issued pursuant to an agreement referred to in the foregoing clauses (a) through (c), or permitted replacement or increase of Debt referred to in the foregoing clause (a), so long as the encumbrances and restrictions contained in any such refinancing agreement are not materially more restrictive than the encumbrances and restrictions contained in such agreements; (e) customary provisions restricting subletting or assignment of any lease of MFS or any Restricted Subsidiary or provisions in agreements that restrict the assignment of such agreement or any rights thereunder; and (f) any restriction on the sale or other disposition of assets or property securing Debt as a result of a Permitted Lien on such assets or Property. (Section 1014 of 1994 Indenture; Section 5(j) of 1996 Indenture) Limitations on Issuance and Sale of Capital Stock of Restricted Subsidiaries. MFS (i) shall not permit any Restricted Subsidiary to issue any Capital Stock other than to MFS or a Restricted Subsidiary, other than pursuant to certain specified agreements in existence on January 26, 1994, unless MFS acquires at the same time not less than its Proportionate Interest in such issuance of Capital Stock and (ii) shall not permit any Person other than MFS or a Restricted Subsidiary to own any Capital Stock of any Restricted Subsidiary of MFS (other than directors' qualifying shares), except for (a) Capital Stock of a Restricted Subsidiary sold in a transaction not prohibited by the covenant described under "The Exchange Offers--Description of Differences Between the MFS Notes and the WorldCom Notes--MFS Notes-- Limitations on Asset Sales," provided that such Restricted Subsidiary would remain a Restricted Subsidiary, (b) Capital Stock issued as permitted by clause (i) above, (c) Capital Stock issued and outstanding on January 26, 1994 and held by Persons other than MFS or any of its Restricted Subsidiaries, (d) Capital Stock of a Restricted Subsidiary issued and outstanding prior to the time that such Person becomes a Restricted Subsidiary so long as such Capital Stock was not issued in contemplation of such Person's becoming a Restricted Subsidiary of MFS or otherwise being acquired by MFS and (e) an issuance of preferred stock permitted under the covenant described above under "-- Limitation on Debt and Preferred Stock of Restricted Subsidiaries." (Section 1018 of 1994 Indenture; Section 5(k) of 1996 Indenture) 59 Limitations on Transactions with Affiliates. MFS will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, conduct any business or enter into or permit to exist any transaction or series of related transactions (including, but not limited to, the purchase, sale or exchange of Property, the making of any Investment, the giving of any Guarantee or the rendering of any service) with any Affiliate of MFS or such Restricted Subsidiary, as the case may be, unless (i) such business, transaction or series of related transactions is in the best interest of MFS or such Restricted Subsidiary, (ii) such business, transaction or series of related transactions is on terms no less favorable to MFS or such Restricted Subsidiary than those that could be obtained in a comparable arm's-length transaction with a Person that is not such an Affiliate and (iii) (a) with respect to such business, transaction or series of related transactions that has a Fair Market Value or involves aggregate payments equal to, or in excess of, $10.0 million but less than $15.0 million, MFS delivers to the Trustee an Officer's Certificate stating that such business, transaction or series of related transactions complies with clauses (i) and (ii) above; and (b) with respect to such business, transaction or series of related transactions that has a Fair Market Value or involves aggregate payments equal to, or in excess of, $15.0 million such business, transaction or series of transactions is approved by a majority of the Board of Directors (including a majority of the Disinterested Directors), which approval is set forth in a resolution delivered to the Trustee certifying that, in good faith, the Board of Directors believes that such business, transaction or series of transactions complies with clauses (i) and (ii) above. (Section 1011 of 1994 Indenture; Section 5(m) of 1996 Indenture) Provision of Financial Information. Whether or not MFS is subject to Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto, MFS shall file with the Commission the annual reports, quarterly reports and other documents which MFS would have been required to file with the Commission pursuant to such Section 13(a) or 15(d) or any successor provision thereto if MFS were subject thereto, such documents to be filed with the Commission on or prior to the respective dates (the "Required Filing Dates") by which MFS would have been required to file them. MFS shall also in any event (a) within 15 days of each Required Filing Date (i) transmit by mail to all Holders, as their names and addresses appear in the Security Register, without cost to such Holders, and (ii) file with the Trustee copies of the annual reports, quarterly reports and other documents (without exhibits) which MFS would have been required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act or any successor provisions thereto if MFS were subject thereto and (b) if filing such documents by MFS with the Commission is not permitted under the Exchange Act, promptly upon written request supply copies of such documents (without exhibits) to any prospective Holder. (Section 1017 of 1994 Indenture; Section 5(n) of 1996 Indenture) PROVISIONS TO BE REVISED Pursuant to the Consent Solicitations, WorldCom is proposing to substantially revise the definition of "Event of Default" contained in the MFS Indentures with respect to each series of MFS Notes. Events of Default. Each of the following is an "Event of Default" with respect to a series of MFS Notes under the applicable MFS Indenture: (a) default in the payment of any installment of interest upon any MFS Note of that series when it becomes due and payable, and the continuance of such default for a period of 30 days; (b) default in the payment of the principal of (or premium, if any, on) any MFS Note of that series at its Maturity, upon repurchase, acceleration, optional redemption, required repurchase; (c) default, on the applicable Purchase Date, in the purchase of MFS Notes required to be purchased by MFS pursuant to an Offer to Purchase as to which an Offer has been mailed to Holders or the failure to make an Offer to Purchase as required in the applicable MFS Indenture; (d) MFS fails to comply with any of its covenants or agreements in the MFS Indentures described in "--Provisions to be Deleted--Limitation on Debt" or "--Limitation on Debt and Preferred Stock of Restricted Subsidiaries" above, or fails to perform or comply with the provisions of the applicable MFS Indenture described in "The Exchange Offers--Description of Differences Between the MFS Notes and the WorldCom Notes--MFS Notes-- Consolidation, Merger, Conveyance, Transfer or Lease" above; 60 (e) default in the performance, or breach, of any covenant or warranty of MFS in the applicable MFS Indenture (other than a covenant or warranty a default in whose performance or whose breach is specifically dealt with in (a), (b), (c) or (d) above) and continuance of such default or breach for a period of 60 days after specified written notice thereof has been given to MFS by the Trustee or to MFS and the Trustee by the Holders of at least 25 percent of the aggregate principal amount of the Outstanding MFS Notes of that series; (f) Debt of MFS or any Restricted Subsidiary is not paid when due within the applicable grace period, if any, or is accelerated by the holders thereof and, in either case, the principal amount of such unpaid or accelerated Debt exceeds $10.0 million; (g) the entry by a court of competent jurisdiction of one or more judgments or orders against MFS or any Restricted Subsidiary in an uninsured or unindemnified aggregate amount in excess of $10.0 million which remains undischarged, unwaived, unstayed, unbonded or unsatisfied for a period of 60 consecutive days; (h) the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of MFS or any Significant Restricted Subsidiary in an involuntary case or proceeding under U.S. bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state, or foreign bankruptcy, insolvency, or other similar law or (ii) a decree or order adjudging MFS or any Significant Restricted Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of MFS or any Significant Restricted Subsidiary under U.S. bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state, or foreign bankruptcy, insolvency, or similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of MFS or any Significant Restricted Subsidiary or of any substantial part of the Property or assets of MFS of any Significant Restricted Subsidiary, or ordering the winding up or liquidation of the affairs of MFS or any Significant Restricted Subsidiary, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (i) (A) the commencement by MFS or any Significant Restricted Subsidiary of a voluntary case or proceeding under U.S. bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state, or foreign bankruptcy, insolvency or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or (B) the consent by MFS or any Significant Restricted Subsidiary to the entry of a decree or order for relief in respect of MFS or any Significant Restricted Subsidiary in an involuntary case or proceeding under U.S. bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state, or foreign bankruptcy, insolvency, or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against MFS or any Significant Restricted Subsidiary, or (C) the filing by MFS or any Significant Restricted Subsidiary of a petition or answer or consent seeking reorganization or relief under U.S. bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state, or foreign bankruptcy, insolvency or other similar law, or (D) the consent by MFS or any Significant Restricted Subsidiary to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of MFS or any Significant Restricted Subsidiary or of any substantial part of the Property or assets of MFS or any Significant Restricted Subsidiary, or the making by MFS or any Significant Restricted Subsidiary of an assignment for the benefit of creditors, or (E) the admission by MFS or any Significant Restricted Subsidiary in writing of its inability to pay its debts generally as they become due, or (F) the taking of corporate action by MFS or any Significant Restricted Subsidiary in furtherance of any such action. (Section 501 of 1994 Indenture; Section 4(a) of 1996 Indenture) The above referenced provision defining "Event of Default" is the existing provision within the MFS Indenture that will be replaced with the definition of Event of Default substantially similar to that set forth in the WorldCom Indenture; conforming changes would also be effected with respect to 61 certain defined terms. For a summary of such provision, see "Description of the WorldCom Notes--Events of Default; Notice and Waiver." In addition, under the Proposed Amendments, the existing provision of each MFS Indenture providing for the automatic acceleration of the Default Amount and any accrued and unpaid interest on all Outstanding MFS Notes issued under such MFS Indenture with respect to which any Event of Default described in paragraphs (h) or (i) above has occurred (Section 502 of the 1994 Indenture; Section 4(b) of the 1996 Indenture), shall be revised such that all Events of Default under such MFS Indenture, without exception, shall entitle the MFS Trustee or the Holders of not less than 25 percent of the Outstanding aggregate principal at Stated Maturity (subject to reduction) of MFS Notes of such series to declare any such Default Amount and accrued and unpaid interest to be immediately due and payable. DEFINITION TO BE REVISED UPON RECEIPT OF SUPERMAJORITY CONSENT FROM HOLDERS OF EACH SERIES OF MFS NOTES Pursuant to the Consent Solicitations, the Company is proposing to substantially revise the definition of "Change of Control" contained in the MFS Indentures with respect to each series of MFS Notes only if Consents from the Holders of at least 75% of the aggregate principal amount Outstanding of MFS Notes of such series are received. "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Peter Kiewit Sons, Inc., a Delaware corporation ("PKS"), or its Affiliates (in the case of the 1994 Indenture only), the Employee Group or an underwriter engaged in a firm commitment underwriting on behalf of MFS, is or becomes the "beneficial owner" (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act) plus all shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after a passage of time, directly or indirectly, of more than 35 percent of the total voting power of the Voting Stock of MFS and, in addition, beneficially owns more shares in MFS than beneficially owned by PKS (in the case of the 1994 Indenture only) and the Employee Group; or (b) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election by the Board of Directors or whose nomination for election by the stockholders of MFS was approved by a vote of a majority of the directors of MFS then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute 66 2/3 percent of the Board of Directors then in office; or (c) MFS shall cease to own, directly or indirectly, at least 51 percent of the outstanding Capital Stock of MFS Telecom; provided, however, that any sale, conveyance or transfer of Capital Stock of MFS Telecom must be to a Strategic Equity Investor; or (d) MFS sells, conveys, transfers or leases (either in one transaction or a series of related transactions) all or substantially all of its assets to a Person other than a Restricted Subsidiary; or (e) MFS or a Subsidiary sells, conveys, transfers or leases (either in one transaction or a series of related transactions) all or substantially all of the assets of MFS Telecom to a Person other than the Company or a Restricted Subsidiary. (Section 101 of 1994 Indenture; Section 1(d) of 1996 Indenture) The above referenced definition of "Change of Control" is the existing definition within the MFS Indenture that will be replaced with the following definition of Change of Control only if the Supermajority Consent is received. "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than WorldCom, Inc. or its Affiliates, or an underwriter engaged in a firm 62 commitment underwriting on behalf of MFS, is or becomes the "beneficial owner" (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act) plus all shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after a passage of time, directly or indirectly, of more than 50 percent of the total voting power of the Voting Stock of MFS and, in addition, beneficially owns more shares in MFS than beneficially owned by WorldCom, Inc.; or (b) MFS sells, conveys, transfers or leases (either in one transaction or a series of related transactions) all or substantially all of its assets to a Person other than an Affiliate. Upon a Change of Control, MFS has an obligation to make an offer to purchase outstanding MFS Notes at a purchase price in cash equal to 101% of the Accreted Value of such MFS Notes as of the applicable purchase date plus accrued but unpaid interest. (Section 1013 of the 1994 Indenture; Section 5(r) of the 1996 Indenture). By limiting the occurrences that create a Change of Control, MFS' obligation to make such an offer to purchase would be substantially reduced. CERTAIN DEFINITIONS Set forth below is a summary of certain of the defined terms used in the MFS Indentures. Reference is made to the applicable MFS Indenture (Section 101 of 1994 Indenture; Sections 101 and 1(d) of 1996 Indenture) for the full definition of all such terms, as well as any capitalized terms used herein for which no definition is provided. "Accreted Value" of any outstanding MFS Note as of or to any date of determination means an amount equal to the sum of (i) the issue price of such MFS Note as determined in accordance with Section 1273 of the Internal Revenue Code (the "Code") as in effect on the date such MFS Note was first issued plus (ii) the aggregate of the portions of the original issue discount (the excess of the amounts considered as part of the "stated redemption price at maturity" of such MFS Note within the meaning of Section 1273(a)(2) of the Code or any successor provisions, whether denominated as principal or interest, over the issue price of such MFS Note) that shall theretofore have accrued pursuant to Section 1272 of the Code (without regard to Section 1272(a)(7) of the Code) from the date of issue of such MFS Note (a) for each six-month or shorter period ending January 15 or July 15 prior to the date of determination and (b) for the shorter period, if any, from the end of the immediately preceding six- month or shorter period, as the case may be, to the date of determination, plus (iii) accrued and unpaid interest to the date such Accreted Value is paid (without duplication of any amount set forth in (ii) above), minus all amounts theretofore paid in respect of such MFS Note which amounts are considered as part of the "stated redemption price at maturity" of such MFS Note within the meaning of Section 1273(a)(2) of the Code or any successor provisions (whether such amounts paid were denominated principal or interest). "Affiliate" means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies of such Person (whether through ownership of securities or partnership or other ownership interest, by contract or otherwise), provided that, in any event, (a) any Person which owns directly or indirectly 10 percent or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 10 percent or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person and (b) each Unrestricted Subsidiary shall be deemed to be an Affiliate of MFS and of each other Subsidiary. Notwithstanding the foregoing, no individual shall be deemed to be an Affiliate of a Person solely by virtue of his or her being an officer or director (or 63 equivalent) of such Person and neither MFS nor any of its Restricted Subsidiaries shall be deemed to be Affiliates of each other. "Asset Sale" means, with respect to any Person, any transfer, conveyance, sale, lease or other disposition (including, without limitation, dispositions pursuant to any consolidation or merger, but excluding any Sale and Leaseback Transaction) by such Person or any of its Restricted Subsidiaries to any Person other than to such Person or its Restricted Subsidiaries in any single transaction or series of transactions of (i) shares of Capital Stock or other ownership interests of another Person (other than directors' qualifying shares) or (ii) any other Property or assets of such Person or any of its Restricted Subsidiaries other than sales of Property or assets in the ordinary course of business and consistent with past practices. For purposes of this definition, any series of related transactions that, if effected as a single transaction, would constitute an Asset Sale, shall be deemed to be a single Asset Sale when the last such transaction which is a part thereof is effected. The term "Asset Sale" (i) when used with respect to MFS, shall not include any asset disposition permitted as described above in "The Exchange Offers-- Description of Differences Between the MFS Notes and the WorldCom Notes-- Consolidation, Merger, Conveyance, Transfer or Lease" which constitutes a disposition of all or substantially all of the assets of MFS and the Restricted Subsidiaries taken as a whole, (ii) shall exclude any Asset Sale of less than or equal to $1.0 million, (iii) shall exclude sales of Investments defined in clause (b) of the definition of Permitted Investments and (iv) shall exclude the sale, conveyance, disposition or other transfer of the Capital Stock of an Unrestricted Subsidiary or other Investment described in clause (iv) of the definition of Restricted Payment, provided that such Investment was permitted by the terms of the applicable MFS indenture. "Average Life" means, as of any date, with respect to any Debt security, the quotient obtained by dividing (i) the sum of the products of (x) the number of years from such date to the dates of each scheduled principal payment (including any sinking fund or mandatory redemption payment requirements) of such Debt security multiplied in each case by (y) the amount of such principal payment by (ii) the sum of all such principal payments. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the Borough of Manhattan, The City of New York are authorized or obligated by law or executive order to close. "Capital Lease Obligation" of any Person means the obligation to pay rent or other payment amounts under a lease of (or other Debt arrangement conveying the right to use) real or personal property of such Person which is required to be classified and accounted for as a capital lease or a liability on the face of a balance sheet of such Person in accordance with GAAP and the stated maturity thereof shall be the date of the last payment of rent or any amount due under such lease prior to the first day upon which such lease may be terminated by the lessee without payment of a penalty. "Capital Stock" in any Person means any and all shares, interests, participations or other equivalents in the equity interest (however designated) in such Person and any rights (other than Debt securities convertible into an equity interest), warrants or options to acquire an equity interest in such Person. "Cash Proceeds" means, with respect to any Asset Sale by any Person or any sale of Capital Stock by MFS, the aggregate consideration received for such sale by such Person in the form of cash or, Eligible Cash Equivalents and, for a period not to exceed 300 days, in the case of the MFS 2006 Notes, and 360 days, in the case of the MFS 2004 Notes, from the related Asset Sale, Debt or Capital Stock of a Strategic Equity Investor. 64 "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person and, in the case of the MFS 2006 Notes, its Restricted Subsidiaries, as determined on a consolidated basis in accordance with GAAP, less amounts attributable to Redeemable Capital Stock of such Person. "Credit Agreement" means a secured or unsecured credit agreement providing for revolving credit loans, term loans and/or letters of credit between MFS and one or more lenders, as such agreement may be amended, modified, supplemented, refunded or replaced from time to time. "Debt" means at any time (without duplication), with respect to any Person, whether recourse is to all or a portion of the assets of such Person, and whether or not contingent, (i) any obligation of such Person for money borrowed, (ii) any obligation of such Person evidenced by bonds, debentures, notes, Guarantees or other similar instruments, including, without limitation, any such obligations Incurred in connection with acquisition of Property, assets or businesses, excluding trade accounts payable made in the ordinary course of business, (iii) any reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person, (iv) any obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business, which in either case are not more than 60 days overdue or which are being contested in good faith), (v) any Capital Lease Obligation of such Person, (vi) the maximum fixed redemption or repurchase price of Redeemable Capital Stock of such Person at the time of determination, (vii) any Interest Swap Obligations or Currency Hedge Obligations of such Person at the time of determination, (viii) any obligation to pay rent or other payment amounts of such Person with respect to any Sale and Leaseback Transaction to which such Person is a party and (ix) any obligation of the type referred to in clauses (i) through (viii) of this definition of another Person and all dividends and distributions of another Person the payment of which, in either case, such Person has Guaranteed or is responsible or liable, directly or indirectly, as obligor, Guarantor or otherwise. For purposes of the preceding sentence, the maximum fixed repurchase price of any Redeemable Capital Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were repurchased on any date on which Debt shall be required to be determined pursuant to the applicable MFS Indenture; provided, however, that if such Redeemable Capital Stock is not then permitted to be repurchased, the repurchase price shall be the book value of such Redeemable Capital Stock. The amount of Debt of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability of any Guarantees at such date; and in furtherance of the foregoing, for purposes of calculating the amount of the MFS Notes of a series outstanding at any date, the amount of the MFS Notes of a series shall be the Accreted Value thereof as of such date, unless cash interest has commenced to accrue prior to January 15, 1999 pursuant to the 1994 Indenture with respect to the MFS 2004 Notes and January 15, 2001 pursuant to the 1996 Indenture with respect to the MFS 2006 Notes, in which case the amount of the MFS 2004 Notes and the MFS 2006 Notes outstanding will be determined pursuant to the 1994 Indenture and the 1996 Indenture, respectively, and will not include any accrued and unpaid cash interest which would otherwise be included in Accreted Value because of clause (iii) of the definition thereof. "Debt to EBITDA Ratio" means, as at any date of determination, the ratio of (i) the aggregate amount of Debt of MFS and its Restricted Subsidiaries on a consolidated basis as at the date of determination to (ii) the aggregate amount of EBITDA of MFS and its Restricted Subsidiaries for the four preceding fiscal quarters for which financial information is available immediately prior to the date of determination; provided that any Debt incurred or retired by MFS or any of its Restricted Subsidiaries during the fiscal quarter in which the transaction date occurs shall be calculated as if such Debt was so incurred or retired on the first day of the fiscal quarter in which the date of determination occurs; and provided further that (x) if the transaction giving rise to the need to calculate the Debt to EBITDA Ratio would have the effect of increasing or decreasing Debt or EBITDA in the future, Debt or 65 EBITDA shall be calculated on a pro forma basis as if such transaction had occurred on the first day of such four fiscal quarter period preceding the date of determination, and (y) if during such four fiscal quarter period, MFS or any of its Restricted Subsidiaries shall have engaged in any Asset Sale, EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive), or increased by an amount equal to the EBITDA (if negative), directly attributable to the assets which are the subject of such Asset Sale and any related retirement of Debt as if such Asset Sale and related retirement of Debt had occurred on the first day of such period or (z) if during such four fiscal quarter period, MFS or any of its Restricted Subsidiaries shall have acquired any material assets out of the ordinary course of business, EBITDA shall be calculated on a pro forma basis as if such asset acquisition and related financing had occurred on the first day of such period. "Debt to Total Capital Ratio" means as of the date of determination the ratio of (i) the aggregate amount of Debt of MFS and its Restricted Subsidiaries on a consolidated basis as at the date of determination to (ii) the sum of (a) the total equity investment in MFS as of January 26, 1994 ($947.1 million), (b) the aggregate net proceeds to MFS from the issuance of any Qualified Capital Stock (including preferred stock) subsequent to January 26, 1994, (c) Subordinated Debt from a Control Group permitted under clause (m) of the definition of Permitted Debt and (d) net cash proceeds from the sales of Redeemable Capital Stock of MFS or Debt securities of MFS convertible into Qualified Capital Stock, in either case upon conversion thereof into Qualified Capital Stock; provided, however, that, for purposes of calculation of the Debt to Total Capital Ratio (i) Debt described by clause (c) above shall not be included if such Debt shall have been utilized to make a Permitted Investment under clause (a) of the definition of Permitted Investments; (ii) the net cash proceeds from the sale of Capital Stock of MFS, including Capital Stock issued upon the conversion of convertible Debt described in clauses (b) or (d) above, shall not be included if such proceeds have been utilized to make a Restricted Payment or a Permitted Investment under clause (a) of the definition of Permitted Investment and (iii) for purposes of this definition, notwithstanding the definition of Debt, the amount of the MFS 2004 Notes shall be the principal amount at the Stated Maturity of such MFS 2004 Notes. "Default" means any event, act or condition the occurrence of which is, or after notice or the passage of time or both would be, an Event of Default. "EBITDA" means with respect to any Person for any period, the sum for such Person for such period of Consolidated Net Income plus, to the extent reflected in the income statement of such Person for such period from which Consolidated Net Income is determined, without duplication, (i) Consolidated Interest Expense, (ii) income tax expense, (iii) depreciation expense, (iv) amortization expense and (v) any charge related to any premium or penalty paid in connection with redeeming or retiring any Debt prior to its stated maturity. "Employee Group" means a group of employees of MFS, which includes the Chief Executive Officer of MFS, who own, directly or indirectly, through an employee stock ownership plan or similar employee stock ownership arrangement, shares of MFS's Capital Stock. "Fair Market Value" means total consideration received or paid in any transaction or series of transactions as determined in good faith by the Board of Directors. "GAAP" means United States generally accepted accounting principles, consistently applied, as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, that are applicable to the circumstances as of the date of determination; provided, however, that, except as otherwise specifically provided, all calculations made for purposes of determining compliance with the terms of the provisions of the MFS Indentures shall utilize GAAP in effect at the time of preparation of, and in 66 accordance with the GAAP used to prepare, the historical financial statements of MFS on January 26, 1994. "Guarantee" means, as applied to any obligation of another Person, (i) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation, (ii) any direct or indirect obligation, contingent or otherwise, of a Person guaranteeing or having the effect of guaranteeing the obligations of any other Person in any manner and (iii) an agreement of a Person, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of non-performance) of all or any part of such obligation of another Person (and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings correlative to the foregoing). "Interest Payment Date" means January 15 and July 15 in each year. "Investment" by any Person means any direct or indirect loan, advance (or other extension of credit) or capital contribution to (by means of any transfer of cash or other Property to others or any other payments for Property of services for the account or use of others), the purchase or acquisition of any Capital Stock, bonds, notes, debentures or other securities of, the acquisition, by purchase or otherwise, of all or substantially all of the business or assets or stock or other evidence of beneficial ownership of, any Person or making of any Investment in any Person. Investments shall exclude accounts receivable and other extensions of trade credit on commercially reasonable terms in accordance with normal trade practices. "Issue Date" means the date on which the MFS Notes of a series are first authenticated and delivered under the applicable MFS Indenture. "Joint Venture" means a telecommunications company in which MFS holds not more than 50 percent of the shares of Voting Stock. "Lien" means, with respect to any Property or other asset, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien (statutory or other), charge, easement, encumbrance, preference, priority or other security or similar agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property or other asset (including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing). "Maturity", when used with respect to an MFS Note, means the date on which the principal of such MFS Note becomes due and payable as provided therein or in the applicable MFS Indenture, whether at the Stated Maturity, on the Change of Control Payment Date (in the case of the MFS 2006 Notes) or Purchase Date established pursuant to the terms of the applicable MFS Indenture with regard to a Change of Control Offer (in the case of the MFS 2006 Notes) or an Asset Sale Offer (in the case of the MFS 2006 Notes), as applicable, or an Offer to Purchase (in the case of the MFS 2004 Notes), or by declaration of acceleration, call for redemption or otherwise. "MFS Telecom" means MFS Telecom, Inc., a Delaware corporation, and its successors (including any Restricted Subsidiary to which all or substantially all of the assets of MFS Telecom are sold, transferred or conveyed). "Net Cash Proceeds" means, with respect to Asset Sales of any Property or other assets by a Person or its Restricted Subsidiaries, cash and cash equivalents received net of (i) all reasonable out-of-pocket expenses of such Person or such Restricted Subsidiary incurred in connection with such a sale, including, without limitation, all legal, title and recording tax expenses, commissions and other fees and expenses incurred (but excluding any finder's fee or brokers' fee payable to any Affiliate of such Person) and all federal, state, foreign and local taxes arising in connection with such an Asset 67 Sale that are paid or required to be accrued as liability under GAAP by such Person or its Restricted Subsidiaries, (ii) all payments made by such Person or its Restricted Subsidiaries on any Debt which is secured by such Properties or other assets in accordance with the terms of any Lien upon or with respect to such Properties or other assets or which must, by the terms of such Lien, or in order to obtain a necessary consent to such transaction or by applicable law, be repaid in connection with such Asset Sale, and (iii) all contractually required distributions and other payments made to minority interest holders (but excluding distributions and payments to Affiliates of such Person) in Restricted Subsidiaries of such Person as a result of such transaction; provided that, in the event that any consideration for a transaction (which would otherwise constitute Net Cash Proceeds) is required to be held in escrow pending determination of whether a purchase price adjustment will be made, such consideration (or any portion thereof) shall become Net Cash Proceeds only at such time as it is released to such Person or its Restricted Subsidiaries from escrow, and provided that any non-cash consideration received in connection with any transaction, which is subsequently converted to cash, shall be deemed to be Net Cash Proceeds at such time, for purposes of an Asset Sale and shall thereafter be applied in accordance with the covenant described in "The Exchange Offers -- Description of Differences Between the MFS Notes and the WorldCom Notes -- Limitation on Asset Sales." "Outstanding", when used with respect to the MFS Notes of a series, means, as of the date of determination, all such MFS Notes theretofore authenticated and delivered under the applicable MFS Indenture, except: (i) MFS Notes of such series theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) MFS Notes of such series for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than MFS or a Restricted Subsidiary) in trust for the Holders of such Securities; provided that, if such MFS Notes are to be redeemed, notice of such redemption has been duly given pursuant to the applicable MFS Indenture or provision therefor satisfactory to the Trustee has been made; (iii) MFS Notes of such series which have been paid pursuant to Section 306 of the applicable MFS Indenture or in exchange for or in lieu of which other MFS Notes of such series have been authenticated and delivered pursuant to such MFS Indenture, other than any such MFS Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such MFS Notes are held by a bona fide purchaser in whose hands such MFS Notes are valid obligations of MFS; and (iv) MFS Notes of such series as to which Defeasance has been effected pursuant to Section 1202 of the 1994 Indenture or Section 6(b) of the 1996 Indenture; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding MFS Notes of a series have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action under the applicable MFS Indenture as of any date, MFS Notes of such series owned by MFS or any other obligor upon such MFS Notes or any Affiliate or Restricted Subsidiary of MFS or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only MFS Notes of a series so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such MFS Notes and that the pledgee is not MFS or any other obligor upon such MFS Notes or any Affiliate or Restricted Subsidiary of MFS or of such other obligor. "Permitted Debt" means (a) Debt permitted to be borrowed under the Credit Agreement in an aggregate principal amount up to $150.0 million outstanding at any one time; (b) Debt under Interest Swap Obligations, provided that such obligations are related to payment obligations on other Permitted Debt, and Currency Hedge Obligations; (c) Debt of MFS to any Restricted Subsidiary of MFS (but only so long as such Debt is held by such restricted Subsidiary); (d) Guarantees and letters of credit incurred in the ordinary course of business and consistent with industry practices; (e) Debt outstanding under the MFS Notes of a series; (f) Debt of MFS outstanding as of the Issue Date of the applicable series of MFS Notes other than Debt to be repaid with the proceeds of the offering of such series of 68 MFS Notes; (g) Debt incurred in connection with a prepayment or redemption of the MFS Notes of a series pursuant to a Change of Control provided that the principal amount of such Debt does not exceed 101% of the principal amount of the MFS Notes of a series prepaid (plus the amount of reasonable expenses incurred in connection therewith) and that such Debt (i) has an Average Life to Stated Maturity equal to or greater than the remaining Average Life to Stated Maturity of the MFS Notes of a series and (ii) does not mature prior to the Stated Maturity of the MFS Notes of a series; (h) Debt incurred on or prior to December 31, 1998 if, after giving effect to the incurrence and application of the proceeds thereof, the Debt to Total Capital Ratio would not exceed 1.0; (i) Debt incurred after December 31, 1998 if after giving pro forma effect to the incurrence and application of the proceeds thereof, the Debt to EBITDA Ratio would not equal or exceed 5 to 1 in the case of any such incurrence; (j) Debt incurred (including in the case of discount or paid in kind Debt for the MFS 2006 Notes any accretion on such Debt or notes payable in respect of such Debt) to finance the construction or acquisition of Telecommunications Assets, provided that the net cash proceeds from the issuance of such Debt do not exceed 100 percent of the lesser of cost or Fair Market Value of such Telecommunications Assets constructed or acquired; (k) Debt not otherwise permitted by this definition incurred in exchange for, or the proceeds of which are used to refinance Debt referred to in clauses (d) through (i) in the case of the MFS 2004 Notes, and (d) through (j) in the case of the MFS 2006 Notes of this definition, provided that (i) such Debt is in an aggregate principal amount not in excess of the aggregate principal amount then outstanding of the Debt being refinanced plus any amounts related to prepayment or redemption premiums and fees related thereto; (ii) such Debt is scheduled to mature no earlier than the Debt being refinanced; and (iii) such Debt has an Average Life at the time such Debt is incurred that is equal to or greater than the Average Life of the Debt being refinanced; provided, further, that such Debt does not have a higher relative ranking to the MFS Notes of a series than the MFS Notes of a series have to the Debt being refinanced and the covenants relating to such Debt are not materially more restrictive in the aggregate than those of the Debt being refinanced; (l) Debt not otherwise described in this definition in an amount not to exceed $25.0 million outstanding at any one time; and (m) Subordinated Debt invested by a Control Group. "Permitted Investments" means (a) Investments in Joint Ventures in an aggregate amount not to exceed the sum of (i) Invested Capital, (ii) the aggregate net cash proceeds received by MFS and its Restricted Subsidiaries as distributions on or from the sale or disposition of any such Investments made in Joint Ventures since January 26, 1994, and (iii) $25.0 million; (b) Eligible Cash Equivalents; (c) Investments in assets used in the ordinary course of business; (d) Investments in any Person as a result of which such Person becomes a Restricted Subsidiary; (e) Investments pursuant to any agreement or obligation of MFS or a Restricted Subsidiary, in effect on the Issue Date, to make such Investments; (f) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers' compensation, performance and other similar deposits; (g) loans and advances to employees made in the ordinary course of business and consistent with past practice; (h) Interest Swap Obligations and Currency Hedge Obligations; (i) bonds, notes, debentures or other securities received as a result of Asset Sales permitted under the covenant limiting MFS' ability to engage in Asset Sales as described in the applicable covenant; (j) Investments in existence at January 26, 1994; and (k) Investments incurred in the ordinary course of business as partial payment for constructing a network using principally Telecommunications Assets, provided, however, that MFS and its Restricted Subsidiaries have received at least 85 percent of the aggregate consideration therefrom in cash or cash equivalents. "Permitted Liens" means (a) Liens securing Debt incurred under the Credit Agreement provided that (i) such Debt was incurred in compliance with clause (a) of the definition of Permitted Debt; (b) Liens securing Debt incurred under clause (j) of the definition of Permitted Debt and Subsidiary Vendor Debt; (c) Liens on Property of a Person existing at the time such Person is merged with or into or consolidated with MFS or becomes a Restricted Subsidiary (and not incurred in anticipation of such transaction); provided that such Liens are not extended to the Property and assets of MFS and its 69 Restricted Subsidiaries, other than the acquired Restricted Subsidiary; (d) Liens on Telecommunications Assets existing during the time of the construction thereof; (e) Liens incurred to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business consistent with industry practice; (f) Liens existing as of the Issue Date; (g) any Lien on Property and assets of MFS in favor of the United States of America or any state thereof, or any instrumentality of either, to secure certain payments pursuant to any contract or statute; (h) any Lien for taxes or assessments or other governmental charges or levies not then due and payable (or which, if due and payable, are being contested in good faith and for which adequate reserves are being maintained, to the extent required by GAAP); (i) any title exception, easement or other similar Lien that does not materially impair the use of the property subject thereto in the ordinary course of business of MFS or any of its Restricted Subsidiaries, as applicable; (j) any Lien to secure obligations under workmen's compensation laws or similar legislation, including any Lien with respect to judgments which are not currently dischargeable; (k) any statutory warehousemen's, materialmen's or other similar Liens for sums not then due and payable (or which, if due and payable, are being contested in good faith and with respect to which adequate reserves are being maintained, to the extent required by GAAP); (l) Liens on Receivables, provided that the outstanding amount of the Debt secured by such Liens would not represent more than 80 percent of Eligible Receivables; and (m) Liens to secure any permitted extension, renewal, refinancing or refunding (or successive extensions, renewals, refinancings or refundings), in whole or in part, of any Debt secured by Liens referred to in the foregoing clauses (b) through (e); provided that such Liens do not extend to any other Property or assets and the principal amount of the Debt secured by such Liens is not increased. "Person" means any individual, Corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Property" means, with respect to any Person, any interest of such Person in any kind of property or assets, whether real, personal or mixed, or tangible or intangible, excluding Capital Stock in any other Person. "Redeemable Capital Stock" of any Person means any equity security of such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or otherwise (including on the happening of an event), is required to be redeemed or is redeemable at the option of the holder thereof, in whole or in part (including by operation of a sinking fund), or is exchangeable for Debt, in whole or in part at any time, prior to the Stated Maturity of the MFS Notes of a series. "Replacement Asset" means, with respect to any Asset Sale, a Property or asset that, as determined by the Board of Directors as evidenced by a Board Resolution, is used or will be used in the telecommunications business of MFS or a Restricted Subsidiary. "Restricted Payment" means (i) a dividend or other distribution declared and paid on the Capital Stock of MFS or to MFS' stockholders (in their capacity as such), or declared and paid to any Person other than MFS or a Restricted Subsidiary of MFS on the Capital Stock of any Restricted Subsidiary of MFS, in each case, other than dividends, distributions or payments made solely in Qualified Capital Stock of MFS or such Restricted Subsidiary, (ii) a payment made by MFS (other than a payment made solely in Qualified Capital Stock of MFS) or any of its Restricted Subsidiaries (other than a payment to MFS or any Restricted Subsidiary of MFS or a payment made solely in Qualified Capital Stock of such Restricted Subsidiary or of MFS) to purchase, redeem, acquire or retire any Capital Stock of MFS or of a Restricted Subsidiary, (iii) a payment made by MFS or of any of its Restricted Subsidiaries (other than a payment made solely in Qualified Capital Stock of MFS) to redeem, repurchase, defease (including an in-substance or legal defeasance) or otherwise acquire or retire for value (including pursuant to mandatory repurchase covenants), prior to any scheduled maturity, scheduled sinking fund 70 or mandatory redemption payment, Debt of MFS which is subordinate (whether pursuant to its terms or by operation of law) in right of payment to either series of the MFS Notes and which was scheduled to mature on or after the Stated Maturity of either series of the MFS Notes or (iv) an Investment in any Person, including an Unrestricted Subsidiary, other than (a) a Permitted Investment, (b) an Investment by MFS in another Restricted Subsidiary or (c) an Investment by a Restricted Subsidiary in MFS or a Restricted Subsidiary. For calculation purposes upon any Person becoming a Restricted Subsidiary, all investments in that person shall not be considered to be Restricted Payments. "Restricted Subsidiary" of any Person means (i) any corporation other than an Unrestricted Subsidiary more than 50% of the outstanding shares of Voting Stock of which is owned or controlled, directly or indirectly, by such person or (ii) any limited partnership other than an Unrestricted Subsidiary of which such Person or any Restricted Subsidiary of such Person is a general partner or (iii) any other Person (other than a corporation or limited partnership) other than an Unrestricted Subsidiary in which such Person, or one or more other Restricted Subsidiaries of such Person, or such Person and one or more other Restricted Subsidiaries thereof, directly or indirectly, have more than 50% of the outstanding partnership or similar interests or have the power, by contract or otherwise, to direct or cause the direction of the policies, management and affairs thereof. "Sale and Leaseback Transaction" means, with respect to any Person, any direct or indirect arrangement pursuant to which Property is sold or transferred by such Person or a Restricted Subsidiary of such Person and is thereafter leased back from the purchaser or transferee thereof by such Person or one of its Restricted Subsidiaries. "Stated Maturity" when used with respect to an MFS Note or any installment of interest thereon, means the date specified in such MFS Note as the fixed date on which the principal of such MFS Note or such installment of interest is due and payable. "Strategic Equity Investor" means a Telecommunications Company rated investment grade by Standard & Poor's Ratings Group and Moody's Investors Service, Inc. and having a Total Market Capitalization (as defined) of debt and equity of at least $10.0 billion. "Subsidiary" means, with respect to any Person, (i) any corporation more than 50 percent of the outstanding shares of Voting Stock of which is owned, directly or indirectly, by such Person, or by one or more other Subsidiaries of such Person, or by such Person and one or more other Subsidiaries of such Person, (ii) any general partnership, joint venture or similar entity, more than 50 percent of the outstanding partnership or similar interests of which are owned, directly or indirectly, by such Person, or by one or more other Subsidiaries of such Person, or by such Person and one or more other Subsidiaries of such Person and (iii) any limited partnership of which such Person or any Subsidiary of such Person is a general partner. "Subsidiary Vendor Debt" means Debt incurred (which, with respect to the MFS 2006 Notes, includes in the case of discount or paid in kind Debt any accretion on such Debt or notes payable in respect of such Debt) by a Restricted Subsidiary to finance the construction or acquisition of Telecommunication Assets or the acquisition of the Capital Stock of a Restricted Subsidiary substantially all the assets of which are Telecommunications Assets, provided that the net cash proceeds from the issuance of such Debt do not exceed 100 percent of the lesser of cost or Fair Market Value of such Telecommunications Assets so constructed or acquired (at the time of incurrence in the case of the MFS 2004 Notes); provided, further, however, that if an acquired Restricted Subsidiary has outstanding previously incurred Debt, such previously incurred Debt will also constitute Subsidiary Vendor Debt if and only if such previously incurred Debt was not incurred in contemplation of such acquisition and all such Debt is non-recourse to MFS and its Restricted Subsidiaries other than the acquired Restricted Subsidiary. 71 "Telecommunications Assets" means, with respect to any Person, any asset that is utilized by such Person, directly or indirectly, for the design, development, installation, integration, management or provision of telecommunications systems and/or services, including without limitation, any businesses or services in which MFS is currently engaged. Telecommunications Assets shall include stock, joint venture or partnership interests where substantially all of the assets of the entity being acquired consist of Telecommunications Assets. "Unrestricted Subsidiary" means (i) any Subsidiary of MFS (a) which at the time of determination shall be an Unrestricted Subsidiary (as designated by the Board of Directors of MFS, as provided below), (b) which shall be engaged in the same or similar line of business as MFS and its Restricted Subsidiaries, and (c) all the Debt of which shall be non-recourse to MFS and its Subsidiaries other than its Unrestricted Subsidiaries and (ii) any Subsidiary of an Unrestricted Subsidiary; provided that notwithstanding clause (i)(c) above, MFS or a Restricted Subsidiary of MFS may guarantee, endorse, agree to provide funds for the payment or maintenance of, or otherwise become directly or indirectly liable with respect to, Debt of an Unrestricted Subsidiary but only to the extent that MFS or such Restricted Subsidiary could make an Investment in such Unrestricted Subsidiary pursuant to the covenant described under "The Exchange Offers--Description of Differences Between the MFS Notes and the WorldCom Notes--Limitations on Restricted Payments" and any such Guarantee, endorsement or agreement shall be deemed an incurrence of Debt by MFS for purposes of the covenant described under "The Exchange Offers-- Description of Differences Between the MFS Notes and the WorldCom Notes-- Limitation of Debt." The Board of Directors of MFS may designate any newly acquired or newly formed Subsidiary to be an Unrestricted Subsidiary unless such Subsidiary owns any capital stock of, or owns or holds any Lien on any property of, any other Subsidiary of MFS which is not an Unrestricted Subsidiary (other than a Subsidiary of the type referred to in clause (ii) above). "Voting Stock" means, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitling the holders thereof (whether at all times or at the times that such class of Capital Stock has voting power by reason of the happening of any contingency) to vote in the election of members of the board of directors or comparable body of such Person. DESCRIPTION OF THE WORLDCOM NOTES The WorldCom Notes will be issued under the WorldCom Indenture, as supplemented. The following summary of certain provisions of the WorldCom Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and to all of the provisions of the WorldCom Indenture, including the definitions of certain terms therein and those terms made a part of the WorldCom Indenture by reference to the Trust Indenture Act as in effect on the date of the WorldCom Indenture. The WorldCom Indenture is by its terms subject to and governed by the Trust Indenture Act. Unless otherwise indicated, references under this caption to sections are references to the WorldCom Indenture. Whenever particular sections or defined terms are referred to, it is intended that such sections or defined terms shall be incorporated herein by reference. A copy of the WorldCom Indenture may be obtained from the Company and is also filed as an exhibit to the Registration Statement of which this Prospectus is a part. The definitions of certain capitalized terms used in the following summary are set forth below under "-- Certain Definitions". For purposes of the description of the WorldCom Notes, the term "Company" refers to WorldCom, Inc. and does not include its subsidiaries except for purposes of financial data determined on a consolidated basis. General The WorldCom 2004 Notes will be limited in aggregate principal amount to $ million and will mature on January 15, 2004. Interest on the WorldCom 2004 Notes will accrue at the rate of 9 3/8% 72 per annum. The WorldCom 2006 Notes will be limited in aggregate principal amount to $ million and will mature on January 15, 2006. Interest on the WorldCom 2006 Notes will accrue at the rate of 8 7/8% per annum. Interest on the WorldCom Notes will be payable semi-annually on January 15 and July 15, commencing on January 15, 1998, to the persons who are registered holders of the WorldCom Notes at the close of business on the immediately preceding December 31 and June 30, respectively. Interest on the WorldCom Notes will accrue from and including the Interest Accrual Date. Interest will be calculated on the basis of a 360-day year of twelve 30-day months. Principal and interest will be payable at one or more offices of the Paying Agent, one of which will be in the City of New York, but, at the option of the Company, interest may be paid by check mailed to the registered holders at their registered addresses. The WorldCom Notes will be issued without coupons and in book-entry form only, in denominations of $1,000 and integral multiples thereof. Unless otherwise designated by the Company, the Trustee shall act as Paying Agent. Ranking The WorldCom Notes will be senior, unsecured obligations of the Company, will rank pari passu in right of payment with all other existing and future senior, unsecured indebtedness of the Company and will rank senior in right of payment to any future subordinated obligations of the Company. The WorldCom Notes will be effectively subordinated to any secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness. As of March 31, 1997, after giving effect to the issuance and sale by the Company of the April WorldCom Notes, the aggregate amount of indebtedness of the Company to which the WorldCom Notes would have ranked pari passu was approximately $3.18 billion and the aggregate amount of secured indebtedness of the Company was approximately $53 million. The WorldCom Notes will be structurally subordinated to all obligations of the Company's subsidiaries, including any MFS Notes not exchanged for WorldCom Notes in the Exchange Offers, to the extent of the assets of such subsidiaries. As of March 31, 1997, the aggregate amount of the outstanding obligations of the Company's subsidiaries to which the holders of WorldCom Notes would have been structurally subordinated (including trade payables but excluding intercompany indebtedness) was approximately $2.66 billion; of this amount, (i) $699.9 million represented the carrying value of the MFS 2004 Notes and (ii) $678.7 million represented the carrying value of the MFS 2006 Notes. See "Risk Factors." Optional Redemption The WorldCom 2004 Notes will not be redeemable at the option of the Company prior to January 15, 1999. On or after January 15, 1999, the WorldCom 2004 Notes will be redeemable at the option of the Company, in whole at any time or in part from time to time, at the following prices (expressed in percentages of the principal amount thereof), if redeemed during the twelve months beginning January 15 of the years indicated below, in each case together with interest accrued to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date):
YEAR PERCENTAGE ---- ---------- 1999.......................................................... 103.52% 2000.......................................................... 102.34% 2001.......................................................... 101.17% 2002 and thereafter........................................... 100.00%
The WorldCom 2006 Notes will not be redeemable at the option of the Company prior to January 15, 2001. On or after January 15, 2001, the WorldCom 2006 Notes will be redeemable at the option of 73 the Company, in whole at any time or in part from time to time, at the following prices (expressed in percentages of the principal amount thereof), if redeemed during the twelve months beginning January 15 of the years indicated below, in each case together with interest accrued to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date):
YEAR PERCENTAGE ---- ---------- 2001.......................................................... 103.32% 2002.......................................................... 102.21% 2003.......................................................... 101.11% 2004 and thereafter........................................... 100.00%
If less than all of the WorldCom Notes of either series are to be redeemed, the Trustee will select the WorldCom Notes or portions thereof in each series to be redeemed pro rata, by lot or by any other method that the Trustee shall deem fair and appropriate. (Section 1103 of the WorldCom Indenture) Notice of redemption will be mailed at least 30 days but no more than 60 days before the redemption date to each Holder of WorldCom Notes to be redeemed at its registered address. (Section 1104 of the WorldCom Indenture) On or after the redemption date, the WorldCom Notes shall cease to accrue interest, if the Company makes the redemption payment. Consolidation, Merger, Conveyance, Sale or Lease The Company may consolidate with, or sell, lease or convey all or substantially all of its assets to, or merge with or into any other corporation, provided that (a) either the Company shall be the continuing corporation, or the successor corporation (if other than the Company) formed by or resulting from any such consolidation or merger or which shall have received the transfer of such assets shall expressly assume payment of the principal of (and premium, if any) and interest on all the WorldCom Notes and the performance and observance of all the covenants and conditions of the WorldCom Indenture; and (b) the Company or such successor corporation shall not immediately thereafter be in default under the WorldCom Indenture (Section 801 of the WorldCom Indenture). Limitation on Liens The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, or suffer to be created or to exist, any Lien (other than Permitted Liens) upon any of its Property or assets, whether now owned or hereafter acquired, or any interest therein or any income or profits therefrom, unless it has made or will make effective provision whereby the WorldCom Notes will be secured by such Lien equally and ratably with (or prior to) all other indebtedness of the Company or any Restricted Subsidiary secured by such Lien for so long as any such other indebtedness of the Company or any Restricted Subsidiary shall be so secured. Notwithstanding the foregoing, the Company may, and may permit any Restricted Subsidiary to, issue, assume or guarantee indebtedness secured by Liens on Property that are not Permitted Liens without equally and ratably securing the WorldCom Notes, provided that the sum of all such indebtedness then being issued, assumed or guaranteed together with such indebtedness theretofore issued, assumed or guaranteed that remains outstanding does not exceed 15% of the Consolidated Net Tangible Assets immediately prior to the time such indebtedness was issued, assumed or guaranteed (Section 1004 of the WorldCom Indenture). Events of Default; Notice and Waiver Each of the following is an "Event of Default" under the WorldCom Indenture with respect to a series of WorldCom Notes: (a) default for 30 days in the payment of any installment of interest on any WorldCom Note of that series; 74 (b) default in the payment of the principal of (or premium, if any, on) any WorldCom Note of that series at its Maturity; (c) default in the performance of any other covenant of the Company in the WorldCom Indenture with respect to a WorldCom Note of that series (other than a covenant a default on whose performance is otherwise specifically dealt with in the provisions relating to Events of Default) continued for 60 days after written notice as provided in the WorldCom Indenture; (d) certain events of default resulting in the acceleration of the maturity of indebtedness aggregating in excess of $50,000,000 under any mortgages, indentures (including the WorldCom Indenture) or instruments under which the Company may have issued, or by which there may have been secured or evidenced, any other indebtedness (including any other series of securities issued under the WorldCom Indenture) of the Company, but only if such indebtedness is not discharged or such acceleration is not rescinded or annulled; and (e) certain events of bankruptcy, insolvency or reorganization, or court appointment of a receiver, liquidator or trustee of the Company or all or substantially all of its property (Section 501 of the WorldCom Indenture). Within 90 days after the occurrence of any default under the WorldCom Indenture, the Trustee shall transmit notice of such default (unless cured or waived) known to the Trustee to the holders of the WorldCom Notes; provided, however, the Trustee may withhold notice to the holders of WorldCom Notes of any default with respect to such series (except a default in the payment of the principal of (or premium, if any) or interest on any WorldCom Note or in the payment of any sinking fund installment in respect of any WorldCom Note) if the Responsible Officers of the Trustee consider such withholding to be in the interest of such holders (Section 601 of the WorldCom Indenture). If an Event of Default under the WorldCom Indenture with respect to a series of WorldCom Notes at the time outstanding occurs and is continuing, then in every such case the Trustee or the holders of not less than 25% in principal amount of the outstanding WorldCom Notes of that series may declare the principal amount of all of the WorldCom Notes of that series to be due and payable immediately by written notice thereof to the Company (and to the Trustee if given by the holders). However, at any time after such a declaration of acceleration with respect to such series of WorldCom Notes (or of all securities then outstanding under the WorldCom Indenture, as the case may be) has been made, but before a judgment or decree for payment of the money due has been obtained by the Trustee prior to the Stated Maturity thereof, the holders of a majority in principal amount of outstanding WorldCom Notes of such series (or of all securities then outstanding under the WorldCom Indenture, as the case may be) may, subject to certain conditions, rescind and annul such acceleration if all Events of Default, other than the non-payment of accelerated principal (or specified portion thereof), with respect to WorldCom Notes of such series (or of all securities then outstanding under the WorldCom Indenture, as the case may be) have been cured or waived as provided in the WorldCom Indenture. The WorldCom Indenture also provides that the holders of not less than a majority in principal amount of the outstanding WorldCom Notes of any series issued thereunder (or of all securities then outstanding under the WorldCom Indenture, as the case may be) may waive certain past defaults with respect to such series and its consequences (Section 513 of the WorldCom Indenture). Within 120 days after the close of each fiscal year, the Company must file with the Trustee a statement, signed by specified officers, stating whether or not such officers have knowledge of any default under the WorldCom Indenture and, if so, specifying each such default and the nature and status thereof (Section 1006 of the WorldCom Indenture). Subject to provisions in the WorldCom Indenture relating to its duties in case of default, the Trustee is under no obligation to exercise any of its rights or powers under the WorldCom Indenture at the request or direction of any holders of any series of WorldCom Notes then outstanding under the WorldCom Indenture, unless such holders shall have offered to the Trustee reasonable security or 75 indemnity (Section 602 of the WorldCom Indenture). Subject to such provisions for indemnification and certain limitations contained in the WorldCom Indenture, the holders of not less than a majority in principal amount of the outstanding WorldCom Notes of any series issued thereunder (or of all Securities then outstanding under the WorldCom Indenture, as the case may be) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any trust or power conferred upon the Trustee (Section 512 of the WorldCom Indenture). Amendment and Supplement The WorldCom Indenture contains provisions permitting WorldCom and the Trustee to enter into one or more indentures supplemental to the WorldCom Indenture without the consent of the holders of the WorldCom Notes for certain purposes, including the following: (a) to evidence the succession of another entity to the Company and the assumption by such entity of the covenants of the Company contained in the WorldCom Indenture and the WorldCom Notes; (b) to add to the covenants of the Company for the benefit of the holders of the WorldCom Notes or to surrender any right or power conferred upon the Company in the WorldCom Indenture; (c) to add any additional Events of Default for the benefit of the holders of the WorldCom Notes; provided, however, that in respect of any such additional Events of Default such supplemental indenture may provide for a particular period of grace after default or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default or may limit the right of the holders of a majority in aggregate principal amount of that or those series of WorldCom Notes to which such additional Events of Default apply to waive such default; (d) to add to or change any of the provisions of the WorldCom Indenture to permit or facilitate the issuance of the WorldCom Notes in uncertificated or bearer form; (e) to change or eliminate any provisions of the WorldCom Indenture which do not affect the rights of any holders of securities issued in connection with the WorldCom Indenture; (f) to provide security for the WorldCom Notes; (g) to evidence and provide for the acceptance of an appointment of a successor Trustee with respect to the WorldCom Notes and to add to or change any of the provisions of the WorldCom Indenture to provide for or facilitate the administration of the trusts under the WorldCom Indenture by more than one Trustee; (h) to cure any ambiguity, to correct or supplement any provision of the WorldCom Indenture which may be defective or inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under the WorldCom Indenture which shall not be inconsistent with the provisions of the WorldCom Indenture and which additional provisions shall not adversely affect the interests of the holders of the WorldCom Notes; or (i) to supplement any of the provisions of the WorldCom Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of the WorldCom Notes in accordance with terms and conditions of the WorldCom Indenture provided that any such action shall not adversely affect the interests of the holders of the WorldCom Notes in any material respect (Section 901 of the WorldCom Indenture). The WorldCom Indenture also contains provisions permitting WorldCom and the Trustee, with the consent of the holders of not less than a majority in principal amount of all the outstanding WorldCom Notes affected by the terms of any such supplemental indenture, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the WorldCom Indenture or of modifying in any manner the rights of the holders of such WorldCom Notes, except that, without the consent of the holders of each such WorldCom Note, no such supplemental indenture shall, (a) change the Stated Maturity of the principal of (or premium, if any, on) or any installment of principal of or interest on such WorldCom Notes; (b) reduce the principal amount of such WorldCom Notes or the rate or amount of interest thereon or any additional amounts payable in respect thereof pursuant to the WorldCom Indenture or such WorldCom Notes, or any premium payable upon the redemption thereof; (c) change any obligation of the Company to pay additional amounts pursuant to Section 1007 of the WorldCom Indenture (except as otherwise contemplated by the WorldCom Indenture); (d) adversely affect any right of repayment at the option of the holder of 76 such WorldCom Notes; (e) change any place of payment where, or the currency or currencies, currency unit or units or composite currency or currencies in which, such WorldCom Notes or any premium or the interest thereon is payable; (f) impair the right to institute suit for the enforcement of any such payment on or after the stated maturity thereof (or in the case of redemption or repayment at the option of the holder of such WorldCom Notes, on or after the Redemption Date or the Repayment Date, as the case may be); (g) reduce the percentage in principal amount of the outstanding WorldCom Notes of such series, the consent of whose holders is required for any such supplemental indenture, or the consent of whose holders is required for any waiver with respect to such series or compliance with certain provisions of the WorldCom Indenture or certain defaults thereunder and their consequences; (h) reduce the quorum or voting requirements as contained in the WorldCom Indenture with respect to such WorldCom Notes; or (i) modify any of the provisions of the WorldCom Indenture relating to supplemental indentures thereof or waiver of past defaults with respect to such WorldCom Notes except to increase any such percentage or to provide that certain other provisions of the WorldCom Indenture cannot be modified or waived with respect to such WorldCom Notes without the consent of the holders of each such WorldCom Note (Section 902 of the WorldCom Indenture). It is not necessary for the holders of the WorldCom Notes to approve the particular form of any proposed supplemental indenture, but it is sufficient if such holders approve the substance thereof. Every supplemental indenture executed pursuant to the WorldCom Indenture will conform to the requirements of the Trust Indenture Act as then in effect. (Section 905 of the WorldCom Indenture) Satisfaction and Discharge of the WorldCom Indenture, Covenant Defeasance The Company may, at its option, elect to have either or both of (a) the defeasance provision of the WorldCom Indenture or (b) the covenant defeasance provision of the WorldCom Indenture apply to a series of WorldCom Notes upon compliance with the applicable conditions set forth in the WorldCom Indenture. (Section 1401 of the WorldCom Indenture) The Company shall be deemed to have been discharged from its obligations with respect to a series of WorldCom Notes on the date the conditions set forth below are satisfied (hereinafter, "defeasance"), except for the following obligations which shall survive until otherwise terminated or discharged pursuant to the WorldCom Indenture: (i) the rights of holders of such WorldCom Notes to receive, solely from the trust fund described in Section 1404 of the WorldCom Indenture, payments in respect of the principal of (and premium, if any) and interest, if any, on such WorldCom Notes when such payments are due, (ii) the Company's obligations with respect to such WorldCom Notes under Sections 305, 306, 1002 and 1003 of the WorldCom Indenture and with respect to the payment of additional amounts, if any, as contemplated by Section 1007 of the WorldCom Indenture, (iii) the rights, powers, trusts, duties and immunities of the Trustee under the WorldCom Indenture and (iv) the obligations contained in the article of the WorldCom Indenture relating to defeasance and covenant defeasance. The Company shall be released from its obligations under any covenant with respect to such WorldCom Notes on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"). (Sections 1402 and 1403 of the WorldCom Indenture) The following are the conditions that must be satisfied prior to defeasance or covenant defeasance: (a) the Company shall irrevocably have deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, money and/or Government Obligations sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, (i) the principal of (and premium, if any) and interest, if any, on the WorldCom Notes to be defeased on the Stated Maturity of such principal or installment of principal or interest and (ii) any mandatory sinking fund payments or analogous payments applicable to such WorldCom Notes; (b) such defeasance or 77 covenant defeasance shall not result in a breach or violation of, or constitute a default under, the WorldCom Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound; (c) no Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to such WorldCom Notes shall have occurred and be continuing on the date of such deposit, or if applicable, at any time during the period ending on the 91st day after the date of such deposit; (d) the Company shall have delivered to the Trustee an opinion of counsel to the effect that the holders of such WorldCom Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance or covenant defeasance, as applicable, and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance, as applicable, had not occurred; (e) the Company shall have delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that all conditions precedent to the defeasance or the covenant defeasance (as the case may be) have been complied with and an opinion of counsel to the effect that either (i) as a result of a deposit pursuant to subsection (a) above, registration is not required under the Investment Company Act of 1940, as amended, by the Company, with respect to the trust funds representing such deposit or by the Trustee for such trust funds or (ii) all necessary registrations under said Act have been effected; and (f) such defeasance or covenant defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations which may be imposed on the Company in connection therewith pursuant to Section 301 of the WorldCom Indenture. (Section 1404 of the WorldCom Indenture) WorldCom may exercise its defeasance option with respect to the WorldCom Notes notwithstanding its prior exercise of its covenant defeasance option. In the event the Company effects covenant defeasance with respect to any WorldCom Notes and such WorldCom Notes are declared due and payable because of the occurrence of any Event of Default other than the Events of Default described in clause (c) under "--Events of Default; Notice and Waiver" above, the amount of money in which such WorldCom Notes are payable, and Government Obligations on deposit with the relevant Trustee, will be sufficient to pay amounts due on such WorldCom Notes at the time of their Stated Maturity but may not be sufficient to pay amounts due on such WorldCom Notes at the time of the acceleration resulting from such Event of Default. However, the Company would remain liable to make payment of such amounts due at the time of acceleration. The Trustee Mellon Bank, N.A., the Trustee under the WorldCom Indenture, from time to time may extend credit to the Company in the ordinary course of business. The Trustee's current address is Two Mellon Bank Center, Room 325, Pittsburgh, PA 15259. Except during the continuance of an Event of Default, the Trustee is required to perform only such duties as are specifically set forth in the WorldCom Indenture. During the existence of an Event of Default, the Trustee is required to exercise such of the rights and powers vested in it by the WorldCom Indenture, and to use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. The Trust Indenture Act contains certain limitations on the rights of the Trustee, should it become a creditor of the Company to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any "conflicting interest" (as defined in the Trust Indenture Act) it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The holders of a majority in principal amount of the outstanding WorldCom Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy 78 available to the Trustee, subject to certain exceptions. (Section 512 of the WorldCom Indenture) The WorldCom Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the WorldCom Indenture at the request of any of the holders of the WorldCom Notes, unless such holders shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (Section 602 of the WorldCom Indenture) No Personal Liability of Stockholders, Officers or Directors No stockholder, employee, officer, director or incorporator as such, past, present or future of the Company shall have any personal liability in respect of the obligations of the Company under the WorldCom Indenture or the WorldCom Notes by reasons of his or its status as such stockholder, employee, officer, director or incorporator. Delivery and Form The WorldCom 2004 Notes and the WorldCom 2006 Notes initially will be represented by one or more global securities ("Global Securities") deposited with DTC and registered in the name of the nominee of DTC, except as set forth below. Each of the WorldCom Notes will be issued in denominations of $1,000 and integral multiples thereof, in book-entry form only. Unless and until certificated WorldCom Notes are issued under the limited circumstances described below, no beneficial owner of a WorldCom Note shall be entitled to receive a definitive certificate representing a WorldCom Note. So long as DTC or any successor depository (collectively, the "Depository") or its nominee is the registered holder of the Global Securities, the Depository, or such nominee, as the case may be, will be considered to be the sole owner or holder of the WorldCom Notes for all purposes of the Indenture. Investors' interests in the Global Securities will be represented through financial institutions acting on their behalf as direct and indirect participants in the Depository. Such participants may include Morgan Guaranty Trust Company of New York, Brussels, Belgium office ("Euroclear") or Cedel Bank societe anonyme. Except as provided below, owners of beneficial interests in a Global Security will not be entitled to have WorldCom Notes represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of WorldCom Notes in certificated form and will not be considered the owners or holders thereof under the WorldCom Indenture. The laws of some states require that certain purchasers of securities take physical delivery of such securities in certificated form; accordingly, such laws may limit the transferability of beneficial interests in a Global Security. Accordingly, each person owning a beneficial interest in a Global Security must rely on DTC's procedures and, if such person is not a participant, on the procedures of the participant through which such person owns its interest, to exercise any rights of a holder under the WorldCom Indenture. If the Company requests any action of holders or if an owner of a beneficial interest in a Global Security desires to take any action that a holder is entitled to take under the WorldCom Indenture, DTC will authorize the participants holding the relevant beneficial interests to give or take such action, and such participants will otherwise act upon the instructions of beneficial owners holding through them. If DTC is at any time unwilling or unable to continue as depository or if at any time DTC ceases to be a clearing agency registered under the Exchange Act if so required by applicable law or regulation, and, in either case, a successor depository is not appointed by the Company within 90 days, the Company will issue individual WorldCom Notes in certificated form in exchange for the Global Securities. In addition, the Company may at any time, and in its sole discretion, determine not to have any WorldCom Notes represented by one or more Global Securities, and, in such event, will issue individual WorldCom Notes in certificated form in exchange for the relevant Global Securities. In any such instance, an owner of a beneficial interest in a Global Security will be entitled to physical delivery 79 of individual WorldCom Notes in certificated form of like tenor and rank, equal in principal amount to such beneficial interest and to have such WorldCom Notes in certificated form registered in its name. WorldCom Notes so issued in certificated form will be issued in denominations of $1,000 or any integral multiple thereof, and will be issued in registered form only, without coupons. The following is based on information furnished by DTC: DTC will act as securities depository for the WorldCom Notes. The WorldCom Notes will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully registered WorldCom Note certificate is issued with respect to each $200 million of principal amount of the WorldCom Notes of a series, and an additional certificate is issued with respect to any remaining principal amount of such series. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations ("Direct Participants"). DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Commission. Purchases of WorldCom Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the WorldCom Notes on DTC's records. The ownership interest of each actual purchaser of each WorldCom Note ("Beneficial Owner") is in turn recorded on the Direct and Indirect Participants' records. A Beneficial Owner does not receive written confirmation from DTC of its purchase, but such Beneficial Owner is expected to receive a written confirmation providing details of the transaction, as well as periodic statements of its holdings, from the Direct or Indirect Participant through which such Beneficial Owner entered into the transaction. Transfers of ownership interests in WorldCom Notes are accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners do not receive certificates representing their ownership interests in WorldCom Notes, except in the event that use of the book-entry system for the WorldCom Notes is discontinued. To facilitate subsequent transfers, the WorldCom Notes are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of the WorldCom Notes with DTC and their registration in the name of Cede & Co. will effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the WorldCom Notes; DTC records reflect only the identity of the Direct Participants to whose accounts WorldCom Notes are credited, which may or may not be the Beneficial Owners. The Participants remain responsible for keeping account of their holdings on behalf of their customers. Delivery of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners are governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. 80 Redemption notices shall be sent to Cede & Co. If less than all of the WorldCom Notes within an issue are being redeemed, DTC's practice is to determine by lot the amount of interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. consents or votes with respect to the WorldCom Notes. Under its usual procedures, DTC mails a proxy (an "Omnibus Proxy") to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the WorldCom Notes are credited on the record date (identified on a list attached to the Omnibus Proxy). Principal, premium, if any, and interest payments on the WorldCom Notes are made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings as shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners are governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and are the responsibility of such Participant and not of DTC, the applicable Trustee or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest to DTC is the responsibility of the Company or the applicable Trustee, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the WorldCom Notes at any time by giving reasonable notice to the Company or the applicable Trustee. Under such circumstances, in the event that a successor securities depository is not appointed, WorldCom Note certificates are required to be printed and delivered. The Company may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, WorldCom Note certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources (including DTC) that the Company believes to be reliable, but the Company takes no responsibility for the accuracy thereof. None of the Company, the Dealer Managers or any agent, the Trustee or any applicable paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in a Global Security, or for maintaining, supervising or reviewing any records relating to such beneficial interest. Same-Day Settlement and Payment So long as the WorldCom Notes are represented by the Global Securities, all payments of principal and interest will be made by the Company in immediately available funds. The WorldCom Notes will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the WorldCom Notes that is effected through DTC will be required to settle in immediately available funds. Certain Definitions Set forth below is a summary of certain of the defined terms used herein and defined in Section 101 of the WorldCom Indenture. Reference is made to the WorldCom Indenture for the full definition of all such terms, as well as any capitalized terms used herein for which no definition is provided. "Capital Lease Obligations" means indebtedness represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP and 81 the amount of such indebtedness shall be the capitalized amount of such obligations determined in accordance with GAAP. For purposes of the covenant relating to Limitations on Liens, a Capital Lease Obligation shall be deemed secured by a Lien on the Property being leased. "Capital Stock" means, with respect to any person, any and all shares or other equivalents (however designated) of corporate stock, partnership interest or any other participation, right, warrant, option or other interest in the nature of an equity interest in such person, but excluding any debt security convertible or exchangeable into such equity interest. "Consolidated Net Tangible Assets" means the consolidated total assets of the Company and its Subsidiaries as reflected in the Company's most recent balance sheet prepared in accordance with GAAP, less (i) current liabilities (excluding current maturities of long-term debt and Capital Lease Obligations) and (ii) goodwill, trademarks, patents and minority interests of others. "GAAP" means United States generally accepted accounting principles as in effect as of the date of determination, unless stated otherwise. "Government Obligations" means securities which are (i) direct obligations of the United States of America or the government which issued the foreign currency in which the Debt Securities of a particular series are payable, for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or such government which issued the foreign currency in which the Debt Securities of such series are payable, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America or such other government, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of any such Government Obligation held by such custodian for the account of the holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of interest on or principal of the Government Obligation evidenced by such depository receipt. "Lien" means, with respect to any Property of any person, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement or zoning restriction (other than any easement or zoning restriction not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing or any Sale and Leaseback Transaction. "Permitted Liens" means (i) Liens existing on the date of the Indenture; (ii) Liens on Property existing at the time of acquisition thereof or to secure the payment of all or any part of the purchase price thereof or to secure any indebtedness incurred prior to, at the time of or within 270 days after the acquisition of such Property for the purpose of financing all or any part of the purchase price thereof; (iii) Liens securing indebtedness owing by a Restricted Subsidiary to the Company or any wholly- owned Subsidiary of the Company; (iv) Liens on Property of any entity, or on the stock, indebtedness or other obligations of such entity, existing at the time (a) such entity becomes a Restricted Subsidiary, (b) such entity is merged into or consolidated with the Company or a Restricted Subsidiary or (c) the Company or a Restricted Subsidiary acquires all or substantially all of the assets of such entity; provided that no such Lien extends to any other Property; (v) Liens on Property to secure any indebtedness incurred to provide funds for all or any part of the cost of development of or improvements to such Property; (vi) Liens on the Property of the Company or any of its Subsidiaries securing (a) nondelinquent performance of bids or contracts (other than for borrowed money, obtaining of advances or credit or the securing of debt), 82 (b) contingent obligations on surety and appeal bonds and (c) other nondelinquent obligations of a like nature, in each case, incurred in the ordinary course of business; (vii) Liens securing Capital Lease Obligations, provided that (a) any such Lien attaches to the Property within 270 days after the acquisition thereof and (b) such Lien attaches solely to the Property so acquired; (viii) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit account or other funds, provided that such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board and such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depository institution; (ix) pledges or deposits under worker's compensation laws, unemployment insurance laws or similar legislation; (x) statutory and tax Liens for sums not yet due or delinquent or which are being contested or appealed in good faith by appropriate proceedings; (xi) Liens arising solely by operation of law and in the ordinary course of business, such as mechanics', materialmen's, warehousemen's and carriers' Liens and Liens of landlords or of mortgages of landlords on fixtures and movable Property located on premises leased in the ordinary course of business; (xii) Liens on personal Property, other than shares of stock or indebtedness of any Restricted Subsidiary, to secure loans maturing not more than one year from the date of the creation thereof and on accounts receivable associated with a receivables financing program of the Company or any of its Subsidiaries; and (xiii) any renewal, extension or replacement (in whole or in part) for any Lien permitted pursuant to exceptions (i) through (xii) above or of any indebtedness secured thereby, provided that such extension, renewal or replacement Lien shall be limited to all or any part of the same Property that secured the Lien extended, renewed or replaced (plus improvements on such Property). "Property" means, with respect to any person, any interest of such person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, Capital Stock in any other person (but excluding Capital Stock or other securities issued by such first mentioned person). "Receivables Subsidiary" means a special purpose wholly-owned Subsidiary created in connection with any transactions that may be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey, grant a security interest in or otherwise transfer undivided percentage interests in its receivables. "Restricted Subsidiary" means any Subsidiary of the Company if (i) such Subsidiary has substantially all of its Property in the United States (other than its territories and possessions) and (ii) at the end of the most recent fiscal quarter of the Company, the aggregate amount, determined in accordance with GAAP consistently applied, of securities of, loans and advances to, and other investments in, such Subsidiary held by the Company and its other Subsidiaries exceeded 10% of the Company's Consolidated Net Tangible Assets; provided, however, that the term Restricted Subsidiary shall not include (a) any of MFS Communications Company, Inc. or its Subsidiaries unless and until such time as such corporation is designated by the Company as a "Restricted Subsidiary" or otherwise similarly treated under the Company's $3.75 billion five-year revolving credit facility or any other agreement of the Company for indebtedness for borrowed money or (b) any Receivables Subsidiary. "Sale and Leaseback Transaction" means, with respect to any person, any direct or indirect arrangement pursuant to which Property is sold or transferred by such person or a Restricted Subsidiary of such person and is thereafter leased back from the purchaser or transferee thereof by such person or one of its Restricted Subsidiaries. "Subsidiary" means a corporation a majority of the outstanding voting stock of which is owned, directly or indirectly, by the Company or one or more other Subsidiaries of the Company. For the purposes of this definition, "voting stock" means stock having voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. 83 CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES The following is a discussion of certain material U.S. federal income tax consequences resulting from the Exchange Offers and Consent Solicitations. The discussion is based on U.S. federal income tax laws, regulations, rulings and decisions now in effect, all of which are subject to change possibly with retroactive effect. The discussion assumes that as to any holder, the WorldCom Notes and MFS Notes are capital assets as of the Exchange Date. This discussion does not address state, local, foreign or other tax laws and does not purport to cover all aspects of U.S. federal income taxation that may be relevant to, or the actual tax effect that any of the matters described herein will have on, certain holders (including insurance companies, tax-exempt organizations, financial institutions, securities- dealers, subsequent purchasers of WorldCom Notes and taxpayers subject to the alternative minimum tax) who may be subject to special rules not discussed below. HOLDERS OF MFS NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES OF THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS AND OF THE CONTINUED HOLDING AND DISPOSITION OF MFS NOTES. UNITED STATES HOLDERS As used herein, the term "U.S. Holder" means the beneficial owner of MFS Notes or WorldCom Notes that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a U.S. domestic corporation or (iii) otherwise subject to U.S. federal income tax on a net income basis in respect of the MFS Notes or WorldCom Notes. Tax Consequences of the Exchange Offers and Consent Solicitations The exchange of MFS Notes for WorldCom Notes (and cash in lieu of a WorldCom Note in a principal amount that is not an integral multiple of $1,000) and Consent Payments pursuant to the Exchange Offers and Consent Solicitations will be a taxable transaction for United States federal income tax purposes. Accordingly, a tendering U.S. Holder should generally recognize gain or loss equal to the difference between the sum of the cash (including the Consent Payments) and the issue price of the WorldCom Notes received (except to the extent of any accrued original issue discount ("OID") on the MFS Notes not previously included in the U.S. Holder's income, which will be taxable as ordinary interest income) and the U.S. Holder's adjusted tax basis in the MFS Notes. Such gain or loss will be long-term capital gain or loss if the U.S. Holder's holding period is more than one year, and short-term capital gain or loss if the U.S. Holder's holding period is one year or less, except such gain will be subject to tax as ordinary income to the extent of any accrued "market discount" on the MFS Notes not previously included in income. In general, unless a U.S. Holder acquired its MFS Notes at their original issuance, market discount is the excess, if any, of the "adjusted issued price," or Accreted Value, of such MFS Notes over the U.S. Holder's tax basis therein at the time of acquisition (unless the amount of such excess is less than a specified de minimis amount, in which case market discount is considered zero). In general, market discount accrues on a straight-line basis, unless a taxpayer elects to accrue market discount on a constant-yield basis. As illustrated above, the amount of gain or loss recognized as a result of the exchange of the MFS Notes for WorldCom Notes and cash will depend in part on the "issue price" of the WorldCom Notes. Where a new debt instrument is issued in exchange for property (including an old debt instrument), the determination of the issue price of the new debt instrument depends on whether either the new debt instrument or the property for which it is exchanged is "publicly traded." If neither the WorldCom Notes nor the MFS Notes are publicly traded, the issue price of the WorldCom Notes will be their "stated principal amount." A debt instrument's stated principal amount is the aggregate amount of all payments under the debt instrument, excluding any amount of stated interest. If, however, the WorldCom Notes are publicly traded, their issue price will be their fair market value at the time they are issued. If the WorldCom Notes are not publicly traded, but the MFS Notes are publicly traded, the 84 issue price of the WorldCom Notes will be the fair market value of the MFS Notes exchanged therefor. For purposes of this discussion, a debt instrument is publicly traded if (i) it is listed on a national securities exchange, an interdealer quotation system sponsored by a national securities association (such as NASDAQ), or a designated foreign exchange or board of trade, (ii) it is traded either on a board of trade designated as a contract market by the Commodities Futures Trading Commission or on an interbank market, (iii) it appears on a "quotation medium," i.e., a system of general circulation (including a computer listing available to subscribing brokers and dealers) that provides a reasonable basis to determine fair market value by disseminating either recent price quotations of one or more identified brokers, dealers or traders or actual prices of recent sales (but not "yellow sheets") or (iv) it is a debt instrument that is "readily quotable" in that price quotations are readily available from dealers, brokers or traders. Newly issued debt instruments are treated as publicly traded property at the time of their issuance if the debt instruments are publicly traded at any time during the 60-day period ending 30 days after their issuance. Any temporary restriction on trading, a purpose of which is to avoid characterization of debt instruments as publicly traded property for federal income tax purposes, is ineffective regardless of whether the temporary restriction is imposed by the issuer. If either the WorldCom Notes or the MFS Notes are publicly traded, the WorldCom Notes may be treated as having been issued at a discount or at a premium. U.S. Holders should consult their tax advisors to determine how, and to what extent, any such discount or premium, if any, will be included in such U.S. Holder's income (in the case of any discount) or amortized (in the case of any premium). Basis and Holding Period A U.S. Holder's tax basis in the WorldCom Notes will equal the issue price of the WorldCom Notes. The holding period of the WorldCom Notes will commence on the day after the WorldCom Notes are acquired by the U.S. Holder. Payment of Interest Assuming the WorldCom Notes will not be issued with OID, interest on the WorldCom Notes generally will be taxable to the U.S. Holder as ordinary income at the time that it is paid or accrued, in accordance with the U.S. Holder's method of accounting for U.S. federal income tax purposes. Sale, Exchange or Redemption In general, a U.S. Holder of a WorldCom Note will recognize gain or loss upon the sale, exchange, redemption, retirement or other disposition of the WorldCom Note measured by the difference between the amount realized on the disposition (to the extent such amount does not represent accrued but unpaid interest) and the U.S. Holder's adjusted basis in the WorldCom Note. A U.S. Holder's adjusted basis in a WorldCom Note will generally equal the issue price of the WorldCom Note. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder holds the WorldCom Note for more than one year prior to disposition, and short-term capital gain or loss if the U.S. Holder holds the WorldCom Note for less than one year prior to disposition. U.S. Holders Not Tendering in an Exchange Offer For U.S. Holders of the MFS Notes who do not elect to exchange their MFS Notes for the WorldCom Notes pursuant to the Exchange Offers, the proposed modifications to the MFS Notes (see "The Proposed Amendments") should not be treated as a taxable exchange of the MFS Notes for the new MFS Notes. Backup Withholding Backup withholding of U.S. federal income tax at a rate of 31% may apply to payments made pursuant to the Exchange Offers and Consent Solicitations, to payments of principal and interest made 85 in respect of WorldCom Notes, and to payments of proceeds from the sale, exchange, redemption, retirement or other disposition of WorldCom Notes to or through certain brokers, unless, in general, the beneficial owner of the MFS Notes or the WorldCom Notes, as the case may be, complies with certain information reporting procedures or is an exempt recipient. Any amount withheld from a payment to a beneficial owner pursuant to these backup withholding rules may be allowed as a refund or credit against the beneficial owner's U.S. federal income tax. NON-U.S. HOLDERS As used herein, the term "Non-U.S. Holder" means a beneficial owner of MFS Notes or WorldCom Notes other than a U.S. Holder. For these purposes, a "Non- U.S. Holder" does not include a nonresident alien, foreign corporation or other foreign entity, to the extent that the income or gain with respect to the Exchange Offers and Consent Solicitations or the WorldCom Notes is "effectively connected with the conduct of a trade or business within the United States." To the extent that such income or gain is "effectively connected with the conduct of a trade or business within the United States," then the nonresident alien, foreign corporation or other foreign entity, generally will be subject to tax as discussed above for U.S. Holders except to the extent that an applicable treaty otherwise provides. In addition, foreign corporations may also, under certain circumstances, be subject to a "branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate). In general, any gain or loss realized on the exchange of MFS Notes for WorldCom Notes (and cash in lieu of a WorldCom Note in a principal amount that is not an integral multiple of $1,000) and Consent Payments by a Non-U.S. Holder pursuant to the Exchange Offers and Consent Solicitations will not be subject to United States federal income or withholding taxes unless, in the case of an individual, such holder is present in the United States for 183 days in the taxable year of the Exchange and certain other conditions are met. Subject to the discussion of backup withholding below, payments of interest on the WorldCom Notes to a Non-U.S. Holder generally will not be subject to U.S. federal income or withholding taxes, provided that (i) such Non-U.S. Holder does not actually or constructively own 10 percent or more of the total combined voting power of all classes of stock of the Company, (ii) such Non- U.S. Holder is not a controlled foreign corporation for U.S. tax purposes that is related to the Company actually or constructively through stock ownership and (iii) the Non-U.S. Holder certifies, under penalties of perjury, that it is not a United States person for U.S. federal income tax purposes and provides its name and address in accordance with applicable requirements. Any capital gain realized on the sale, exchange, redemption, retirement or other disposition of WorldCom Notes by a Non-U.S. Holder generally will not be subject to United States federal income or withholding taxes unless, in the case of an individual, such holder is present in the United States for 183 days in the taxable year of the Exchange and certain other conditions are met. Payments made pursuant to the Exchange Offers and Consent Solicitations, payments of principal and interest made in respect of WorldCom Notes and payments of proceeds from the sale, exchange, redemption, retirement or other disposition of WorldCom Notes to a Non-U.S. Holder generally will not be subject to a backup withholding tax of 31% or to information reporting requirements unless, in general, the holder fails to comply with certain reporting procedures or otherwise fails to establish an exemption from such tax or reporting requirements under applicable provisions of the Internal Revenue Code of 1986, as amended. The backup withholding and information reporting rules described above are under review by the United States Treasury and their application to the WorldCom Notes could be changed by future regulations. 86 INFORMATION REGARDING WORLDCOM Information regarding the Company is contained in its filings with the Commission pursuant to the Exchange Act. See "Available Information" and "Incorporation of Certain Documents by Reference." On June 19, 1997, James Q. Crowe accepted the position of President and Chief Executive Officer of Kiewit Diversified Group, Inc., a coal mining and telecommunications company and wholly-owned subsidiary of Peter Kiewit Sons', Inc., a construction and mining company, and therefore resigned as Chairman of the Board and as a director of the Company effective June 26, 1997. INFORMATION REGARDING MFS Information regarding MFS is contained in its filings with the Commission pursuant to the Exchange Act. See "Available Information" and "Incorporation of Certain Documents by Reference." CERTAIN RELATED TRANSACTIONS During fiscal 1994, 1995 and 1996, WorldCom, MFS and/or UUNET entered into certain interconnection or other services agreements with each other and certain of their affiliates in the ordinary course of their businesses. However, each of WorldCom, MFS and UUNET believe that the terms and conditions of such interconnection or other services agreements were no less favorable to WorldCom, MFS or UUNET than those that would have been available to WorldCom, MFS or UUNET in comparable, arm's-length transactions at the date of such agreements. Subsequent to the MFS Merger, WorldCom and MFS have engaged in customary intercompany transactions, including certain intercompany indebtedness of WorldCom to MFS represented by a subordinated demand promissory note issued on March 4, 1997 in an amount not to exceed $500,000,000 and bearing interest at the rate of 0.5% plus the 30-day LIBOR rate per annum, and certain intercompany accounts receivable. ACCOUNTING TREATMENT OF EXCHANGE OFFERS The Exchange will be accounted for by the Company as an exchange of debt as provided for under generally accepted accounting principles. LEGAL MATTERS Certain legal matters with respect to the Exchange Offers and the Consent Solicitations will be passed upon for WorldCom by Bryan Cave llp, St. Louis, Missouri, and for the Dealer Managers by Cleary, Gottlieb, Steen & Hamilton, New York, New York. EXPERTS The consolidated financial statements and schedule of the Company as of December 31, 1996 and 1995, and for each of the years in the three-year period ended December 31, 1996, have been audited by Arthur Andersen llp, independent public accountants, as indicated in their report with respect thereto, and are included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, and are incorporated herein by reference, in reliance upon the authority of such firm as experts in accounting and auditing in giving said reports. The consolidated financial statements of MFS Communications Company, Inc. as of December 31, 1996 and for the period then ended (See Note 1 to the MFS Communications Company, Inc. Form 10-K), and for the year ended December 31, 1996, have been audited by Arthur Andersen llp, independent public accountants, as indicated in their report with respect thereto, and are included in the MFS Annual Report on Form 10-K for the fiscal year ended December 31, 1996, and are 87 incorporated herein by reference, in reliance upon the authority of such firm as experts in accounting and auditing in giving said reports. The consolidated financial statements of MFS as of December 31, 1995 and 1994 and for each of the three years in the period ended December 31, 1995, included in WorldCom's Current Report on Form 8-K/A dated August 25, 1996 (filed November 4, 1996) and incorporated by reference into this registration statement and the consolidated financial statements of MFS as of December 31, 1995 and for the two years in the period ended December 31, 1995 included in the MFS Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated by reference in this registration statement, have been incorporated in reliance on the report of Coopers & Lybrand l.l.p., independent accountants, given upon the authority of that firm as experts in accounting and auditing. The consolidated financial statements of UUNET Technologies, Inc. as of December 31, 1995 and 1994 and for each of the three years in the period ended December 31, 1995, included in WorldCom's Current Report on Form 8-K/A dated August 25, 1996 (filed November 4, 1996) and incorporated by reference into this registration statement, have been audited by Arthur Andersen llp, independent public accountants, as indicated in their reports with respect thereto and are incorporated herein by reference in reliance upon the authority of said firm as experts in giving said reports. 88 Any questions concerning the terms of the Exchange Offers should be directed to the Joint Dealer Managers, SALOMON BROTHERS INC GOLDMAN, SACHS & CO. Seven World Trade Center 85 Broad Street New York, New York 10048 New York, New York 10004 (212) 783-3738 (collect) (212) 902-8200 (collect) (800) 558-3745 (toll free) (800) 828-3182 (toll free) Attention: Liability Management Attention: Liability Management Group Group Any questions concerning tender procedures or requests for additional copies of this Prospectus, the Letters of Transmittal, or Notices of Guaranteed Delivery may be directed to the Information Agent, MACKENZIE PARTNERS, INC. 156 Fifth Avenue New York, New York 10010 (212) 929-5500 (collect) (800) 322-2885 (toll free) MFS Notes tendered, together with the requisite Letters of Transmittal and any other required documents, must be delivered to the Exchange Agent, HARRIS TRUST AND SAVINGS BANK By Registered or Certified Mail: Hand Delivery or Overnight Delivery: By Facsimile: Harris Trust and Savings Bank Harris Trust and Savings Bank (212) 701-7636 c/o Harris Trust Company of New York c/o Harris Trust Company of New York P.O. Box 1010 77 Water Street Confirm by telephone: Wall Street Station 4th Floor (212) 701-7624 New York, New York 10268 New York, New York 10004
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 14-2-202(b)(4) of the Georgia Business Corporation Code (the "Georgia Code") provides that a corporation's articles of incorporation may include a provision that eliminates or limits the personal liability of directors for monetary damages to the corporation or its shareholders for breach of their duty of care and other duties as directors; 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 duties, any business opportunity of the corporation, engaging in intentional misconduct or a knowing violation of law, obtaining 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 WorldCom or any shareholder to seek an injunction or other nonmonetary relief in the event of a breach of a director's duty to the corporation and its shareholders. Additionally, Section 14-2-202(b)(4) applies only to claims against a director arising out of his role as a director, and does not relieve a director from liability arising from his role as an officer or in any other capacity. The provisions of Article Ten of WorldCom's Second Amended and Restated Articles of Incorporation are similar in all substantive respects to those contained in Section 14-2-202(b)(4) of the Georgia Code as outlined above. Article Ten further provides that the liability of directors of WorldCom shall be limited to the fullest extent permitted by amendments to Georgia law. Sections 14-2-850 to 14-2-859, inclusive, of the 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 WorldCom for liability incurred by him in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including, subject to certain limitations, civil actions brought as derivative actions by or in the right of WorldCom) in which he is made a party by reason of being a director of WorldCom and for directors who, at the request of WorldCom, act as directors, officers, partners, trustees, employees or agents of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The Section permits indemnification if the director acted in a manner he believed in good faith to be in or not opposed to the best interest of WorldCom and, in addition, in criminal proceedings, if he had no reasonable cause to believe his 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. However, if the director is adjudged liable to WorldCom in a derivative action or on the basis that personal benefit was improperly received by him, the director is not entitled to indemnification by the corporation; provided that the director may be entitled to indemnification for reasonable expenses as determined by a court in accordance with the provisions of Section 14-2-854, or unless WorldCom's Second Amended and Restated Articles of Incorporation or Bylaws, or a contract or resolutions approved by WorldCom's shareholders pursuant to Section 14-2-856, authorizes indemnification. Section 14-2-852 of the Georgia Code provides that unless limited by the articles of incorporation, directors who are successful with respect to any claim brought against them, which claim is brought because they are or were directors of WorldCom, are entitled to mandatory indemnification against reasonable expenses incurred in connection therewith. Conversely, if the charges made in any action are sustained, the determination of whether the required standard of conduct has been met will be made, in accordance with the provisions of Section 14-2-855 of the Georgia Code, as follows: (i) by the majority vote of a quorum of the members of the board of directors not a party to such action at that time, (ii) if a quorum cannot be obtained, by a committee thereof duly designated by the board of II-1 directors, consisting of two or more directors not a party to such action at that time, (iii) by duly selected special legal counsel, or (iv) by the shareholders, but, in such event, the shares owned by or voted under the control of directors who are at the time parties to the proceeding may not be voted. Section 14-2-857 of the Georgia Code provides that an officer of WorldCom (but not an employee or agent generally) who is not a director has the mandatory right of indemnification granted to directors under Section 14-2- 852, as described above. In addition, WorldCom may, as provided by WorldCom's Second Amended and Restated Articles of Incorporation, 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 WorldCom's Bylaws and Article Twelve of WorldCom's Second Amended and Restated Articles of Incorporation are consistent with the foregoing provisions of the Georgia Code. However, WorldCom's Second Amended and Restated Articles of Incorporation prohibit indemnification of a director who did not believe in good faith that his actions were in, or not contrary to, WorldCom's best interests. WorldCom's Bylaws extend the indemnification available to officers under the Georgia Code to employees and agents. ITEM 21(A). EXHIBITS. See Exhibit Index. ITEM 21(B). FINANCIAL STATEMENT SCHEDULES. All financial statement schedules of WorldCom and MFS which are required to be included herein are included in the Annual Report of WorldCom on Form 10-K for the fiscal year ended December 31, 1996 or the Annual Report on Form 10-K of MFS for the fiscal year ended December 31, 1996, respectively, which are incorporated herein by reference. ITEM 22. UNDERTAKINGS. (1) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants 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 registrants 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 of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (2) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (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. II-2 (3) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (4) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. (5) The undersigned registrant hereby undertakes: (a) To file, during any period in which offers and 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; (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 and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in "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 7(a)(i) and 7(a)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, 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 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (b) That for the purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) 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. II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF JACKSON, STATE OF MISSISSIPPI, ON JUNE 26, 1997. WORLDCOM, INC. /s/ Scott D. Sullivan By: _________________________________ Scott D. Sullivan Chief Financial Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
NAME TITLE DATE ---- ----- ---- * ___________________________________________ Director June 26, 1997 CARL J. AYCOCK * ___________________________________________ Director June 26, 1997 MAX E. BOBBITT * ___________________________________________ Director, President and June 26, 1997 Chief Executive Officer (Principal Executive Officer) BERNARD J. EBBERS * ___________________________________________ Director June 26, 1997 FRANCESCO GALESI * ___________________________________________ Director June 26, 1997 RICHARD R. JAROS
II-4
NAME TITLE DATE ---- ----- ---- * Director June 26, 1997 ------------------------------------------ STILES A. KELLETT, JR. * Director June 26, 1997 ------------------------------------------ DAVID C. MCCOURT * Director June 26, 1997 ------------------------------------------ JOHN A. PORTER * Director June 26, 1997 ------------------------------------------ WALTER SCOTT, JR. * Director June 26, 1997 ------------------------------------------ JOHN W. SIDGMORE /s/ Scott D. Sullivan Director and Chief Financial June 26, 1997 ------------------------------------------ Officer (Principal Financial SCOTT D. SULLIVAN Officer and Principal Accounting Officer) * Director June 26, 1997 ------------------------------------------ LAWRENCE C. TUCKER * Director June 26, 1997 ------------------------------------------ MICHAEL B. YANNEY *By: /s/ Scott D. Sullivan ------------------------------------- SCOTT D. SULLIVAN, ATTORNEY-IN-FACT
II-5 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ------- ----------- 1.1 Form of Dealer Managers Agreement between WorldCom, Inc. ("WorldCom") and Salomon Brothers Inc and Goldman, Sachs & Co. 2.1 Amended and Restated Agreement and Plan of Merger by and among WorldCom, HIJ Corp. and MFS Communications Company, Inc. ("MFS") dated as of August 25, 1996 (attached as Appendix I to the Joint Proxy Statement/Prospectus included in WorldCom's Registration Statement on Form S-4 (Registration No. 333-16015) and incorporated by reference herein)** 4.1 Second Amended and Restated Articles of Incorporation of WorldCom (including preferred stock designations) as of December 31, 1996 (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K of WorldCom (File No. 0-11258) dated December 31, 1996 (filed January 15, 1997)) 4.2 Restated Bylaws of WorldCom (incorporated herein by reference to Exhibit 4.2 to the Annual Report on Form 10-K filed by WorldCom (File No. 0-11258) for the fiscal year ended December 31, 1996) 4.3 Amended and Restated Credit Agreement among WorldCom, NationsBank of Texas, N.A. (Managing Agent and Administrative Agent), Bank of America Illinois, The Bank of New York, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Chemical Bank, Credit Lyonnais New York Branch, First Union National Bank of North Carolina, The Industrial Bank of Japan, Limited, Atlanta Agency, The First National Bank of Chicago, The Long-Term Credit Bank of Japan, Limited, New York Branch, Toronto Dominion (Texas), Inc., and Wachovia Bank of Georgia N.A. (Agents) and the Lenders named therein (Lenders) dated as of June 28, 1996, (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by WorldCom (File No. 0-11258) for the quarter ended June 30, 1996) 4.4 First Amendment to Amended and Restated Credit Agreement and Consent to MFS Acquisition (incorporated herein by reference to Exhibit 10.2 to the Annual Report on Form 10-K filed by WorldCom (File No. 0-11258) for the fiscal year ended December 31, 1996) 4.5 Indenture of WorldCom to Mellon Bank, N.A. dated as of March 1, 1997 for Senior Debt Securities (incorporated herein by reference to Exhibit 4.6 to the Quarterly Report on Form 10-Q filed by WorldCom (File No. 0-11258) for the quarter ended March 31, 1997) 4.6 Form of 7.55% Senior Note due 2004 (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K dated March 26, 1997 filed by WorldCom (File No. 0-11258)) 4.7 Form of 7.75% Senior Note due 2007 (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K dated March 26, 1997 filed by WorldCom (File No. 0-11258)) 4.8 Form of 7.75% Senior Note due 2027 (incorporated herein by reference to Exhibit 4.3 to the Current Report on Form 8-K dated March 26, 1997 filed by WorldCom (File No. 0-11258)) 4.9 Form of First Supplemental Indenture of WorldCom to Mellon Bank, N.A. Relating to 9 3/8% Senior Notes Due 2004 and 8 7/8% Senior Notes Due 2006 (including form of 9 3/8% Senior Note Due 2004 attached as Exhibit A thereto and form of 8 7/8% Senior Note Due 2006 attached as Exhibit B thereto) 4.10 Indenture of MFS to IBJ Schroder Bank & Trust Company dated January 15, 1994 for 9 3/8% Senior Discount Notes Due 2004 (incorporated herein by reference to Exhibit 10.2 to MFS' Current Report on Form 8-K dated January 26, 1994 (File No. 0-21594)) 4.11 First Supplemental Indenture of MFS to IBJ Schroder Bank & Trust Company dated as of March 31, 1995 for Due 2004 (incorporated herein by reference to Exhibit 10.3 to MFS' Current Report on Form 8-K dated April 27, 1995 (File No. 0-21594)) 4.12 Indenture of MFS to IBJ Schroder Bank & Trust Company dated January 15, 1996 for Senior Discount Notes (incorporated herein by reference to Exhibit 4.1 to MFS' Current Report on Form 8-K dated January 23, 1996 (File No. 0-21594))
II-6
EXHIBIT NO. DESCRIPTION ------- ----------- 4.13 First Supplemental Indenture of MFS to IBJ Schroder Bank & Trust Company dated as of January 15, 1996 for 8 7/8% Senior Discount Notes Due 2006 (incorporated herein by reference to Exhibit No. 4.2 to MFS' Current Report on Form 8-K dated January 23, 1996 (File No. 0-21594)) 4.14 Form of Second Supplemental Indenture of MFS to IBJ Schroder Bank & Trust Company for 9 3/8% Senior Discount Notes Due 2004 4.15 Form of Second Supplemental Indenture to IBJ Schroder Bank & Trust Company dated as of January 15, 1996 for 8 7/8% Senior Discount Notes Due 2006 5.1 Legality Opinion of P. Bruce Borghardt, Esq. 8.1 Tax Opinion of Bryan Cave LLP *12.1 Statement regarding Computation of Ratio of Earnings to Fixed Charges 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Coopers & Lybrand LLP 23.3 Consent of Arthur Andersen LLP 23.4 Consent of Arthur Andersen LLP 23.5 Consent of P. Bruce Borghardt, Esq. (included in Exhibit 5.1) 23.6 Consent of Bryan Cave LLP (included in Exhibit 8.1) *24.1 Power of Attorney *25.1 Statement of Eligibility of Mellon Bank, N.A. on Form T-1 with respect to the WorldCom Indenture 99.1 Letter of Transmittal and Consent with respect to the MFS 2004 Notes 99.2 Letter of Transmittal and Consent with respect to the MFS 2006 Notes 99.3 Notice of Guaranteed Delivery with respect to MFS 2004 Notes 99.4 Notice of Guaranteed Delivery with respect to MFS 2006 Notes 99.5 Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees 99.6 Letter to Clients
- -------- * Previously filed. ** The Registrant hereby agrees to furnish supplementally a copy of any omitted schedules to this Agreement to the Securities and Exchange Commission upon its request. II-7 EX-1.1 2 DEALER MANAGERS AGREEMENT EXHIBIT 1.1 WorldCom, Inc. Dealer Managers Agreement June [ ], 1997 Salomon Brothers Inc Seven World Trade Center New York, New York 10048 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Ladies and Gentlemen: WorldCom, Inc., a Georgia corporation (the "Company"), plans to make an offer to exchange (i) its 9-3/8% Senior Notes due January 15, 2004 (the "WorldCom 2004 Notes") for any and all outstanding 9-3/8% Senior Discount Notes due January 15, 2004 (the "MFS 2004 Notes") of MFS Communications Company, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("MFS"), properly tendered, and (ii) its 8-7/8% Senior Notes due January 15, 2006 (the "WorldCom 2006 Notes" and, together with the WorldCom 2004 Notes, the "WorldCom Notes") for any and all outstanding 8-7/8% Senior Discount Notes due January 15, 2006 of MFS (the "MFS 2006 Notes" and, together with the MFS 2004 Notes, the "MFS Notes") properly tendered (each an "Exchange Offer" and collectively, the "Exchange Offers"), in each case on the terms and subject to the conditions set forth in the Prospectus (as hereinafter defined). Concurrently with the Exchange Offers, the Company is soliciting consents ("Consents") from (i) the holders of the MFS 2004 Notes to certain amendments to the indenture dated as of January 15, 1994 (as supplemented by the First Supplemental Indenture thereto dated as of March 31, 1995, the "1994 Indenture") between MFS and IBJ Schroder Bank & Trust Company (the "MFS Trustee") pursuant to which the MFS 2004 Notes were issued and (ii) the holders of the MFS 2006 Notes to certain amendments to the indenture dated as of January 15, 1996 (as supplemented by the First Supplemental Indenture thereto dated as of January 15, 1996, the "1996 Indenture") between MFS and the MFS Trustee pursuant to which the MFS 2006 Notes were issued (each a "Solicitation" and collectively, the "Solicitations"). The WorldCom Notes are to be issued pursuant to the Senior Indenture (the "Original Indenture"), dated as of March 1, 1997 between the Company and Mellon Bank, N.A., as trustee (the "Trustee"), as supplemented by a first supplemental indenture establishing the terms of the WorldCom Notes (the "First Supplemental Indenture" and together with the Original Indenture, the "Indenture"). The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement (File No. 333-27345) on Form S-4 for the registration of the WorldCom Notes under the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the "Act") and the offering thereof pursuant to the Exchange Offers, including a prospectus relating to such offering. The Company proposes to file with the Commission one of the following: (i) prior to effectiveness of such registration statement, an amendment to such registration statement, including the form of final prospectus or (ii) a final prospectus in accordance with Rule 424(b) under the Act ("Rule 424(b)"). As filed, such amendment and form of final prospectus, or such final prospectus, shall be in the form furnished to you prior to the execution of this Dealer Managers Agreement (the "Agreement") or, to the extent not completed at the time of execution of this Agreement, in such form as the Company and you shall agree to prior to the filing thereof. Such registration statement either has been declared effective by the Commission or will be declared effective by the Commission prior to the date that the Prospectus is first distributed to the holders of the MFS Notes (the "Commencement Date"). The term "Registration Statement" means the aforementioned registration statement, including incorporated documents, exhibits and financial statements, as amended to the date of execution of this Agreement (or, if not effective at such execution time, in the form in which it shall become effective) and, in the event any post-effective amendment thereto becomes effective prior to the Exchange Date (as defined in the Prospectus), shall also mean such registration statement as so amended. The term "Prospectus" means the prospectus relating to the aforementioned offering that is first filed pursuant to Rule 424(b) after the execution of this Agreement or, if no filing pursuant to Rule 424(b) is required, shall mean the form of final prospectus relating to such offering included in the Registration Statement when it was declared effective. Any reference herein to the Registration Statement or the Prospectus shall include, in each case, the material, if any, incorporated by reference therein on or before the effective date or issue date of such Registration Statement or Prospectus; any reference herein to the terms "amend", "amendment" or "supplement" with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing of any document under the Securities Exchange Act of 1934, as amended and the applicable rules and regulations of the Commission thereunder (collectively, the "Exchange Act") after the effective date of the Registration Statement or the issue date of the Prospectus, as the case may be, deemed to be incorporated therein by reference. The term "you" or "your" as used herein, unless the context otherwise requires, shall mean Salomon Brothers Inc and Goldman, Sachs & Co. Section 1. Appointment as Dealer Managers. ------------------------------ (a) Each of you, severally, and the Company hereby agree that each of you (the "Dealer Managers") will act, in accordance with your customary practices, as the exclusive Dealer Managers for the Exchange Offers and the Solicitations including, without limitation, the solicitation of tenders pursuant to the Exchange Offers, the solicitation of Consents pursuant to the Solicitations and assisting in the distribution of the Prospectus. Nothing contained in this Agreement shall constitute the Dealer Managers partners or joint venturers with the Company or any of its subsidiaries. (b) The Company agrees that it will not file, use or publish any material in connection with either Exchange Offer or either Solicitation, or refer to either of you in any such material, without first consulting each of you. The Company will promptly inform each of you of any litigation or administrative action with respect to either Exchange Offer or either Solicitation. Each of you agrees not to give any written information to beneficial owners or 2 holders of the MFS Notes in connection with the Exchange Offers and Solicitations other than any written information which has been previously approved by the Company in writing, it being understood that each of the following documents are approved by the Company: (i) the Prospectus and documents incorporated by reference in the Prospectus; and (ii) the Ancillary Documents (as defined below in Section 2(b)). Each of you agrees not to make any representations to beneficial owners or holders of MFS Notes in connection with the Exchange Offers and Solicitations that are inconsistent with the Prospectus or the Ancillary Documents. (c) Each of you, severally, agree that all actions taken by you as a Dealer Manager will comply in all material respects with all applicable laws, regulations and rules of the United States including, without limitation, the applicable rules and regulations of the registered national securities exchanges of which you are a member and of the National Association of Securities Dealers, Inc. You further agree to be regarded as the broker-dealers that are making the Exchange Offers on behalf of the Company to holders of MFS Notes in any states of the United States in which it is required that such offers be made by or through a registered or licensed broker-dealer, and you represent that you are registered or licensed in each of such states. (d) The Company acknowledges and agrees that (i) the Dealer Managers, in their sole discretion, may continue to own or dispose of, in any manner they may elect, any MFS Notes they may beneficially own at the date hereof or hereafter acquire, in any such case, subject to applicable law, and (ii) in particular, the Dealer Managers have no obligation to the Company, pursuant to this Agreement or otherwise, to tender or refrain from tendering MFS Notes beneficially owned by them in either Exchange Offer (and thereby deliver Consents in the related Solicitation). The Dealer Managers acknowledge and agree that if either Exchange Offer or either Solicitation is not consummated for any reason, the Company shall have no obligation, pursuant to this Agreement or otherwise, to acquire any MFS Notes from the Dealer Managers or to otherwise hold the Dealer Managers harmless with respect to any losses they may incur in connection with the resale to any third parties of any MFS Notes. Section 2. Representations and Warranties. The Company represents ------------------------------ and warrants to each of you as of the date hereof that: (a) The Company meets the requirements for the use of Form S-4 under the Act. The Registration Statement has become effective or will become effective prior to the Commencement Date, as applicable; if the Registration Statement has become effective, no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission. (b) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act, and incorporated by reference in the Prospectus, or in the Prospectus as supplemented, complied or will comply when so filed in all material respects with the Exchange Act, (ii) each part of the Registration Statement, when such part became effective (each such date, the "Effective Date"), did not contain, and each such part, when amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact 3 required to be stated therein or necessary to make the statements therein not misleading, (iii) on the Effective Date the Registration Statement did or will, and when the Prospectus is first filed (if required) in accordance with Rule 424(b) and on the Exchange Date, the Prospectus (and any supplements thereto) did or will, comply in all material respects with the Act, the Exchange Act, and the Trust Indenture Act of 1939, as amended, and the applicable rules and regulations of the Commission thereunder (collectively, the "Trust Indenture Act") and (iv) on the Effective Date, the Prospectus, if not filed pursuant to 424(b), did not or will not, and on the date of any filing pursuant to Rule 424(b) and on the Exchange Date, the Prospectus (together with any supplement thereto) will not, and on each of such dates the Letters of Transmittal and Consent, Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9, Notices of Guaranteed Delivery, Letter to Brokers, Letter to Clients (each of the foregoing, substantially in the form attached hereto as Exhibit E) and, if in existence on such date, any press release or "tombstone" advertisement issued by the Company in connection with this transaction (collectively, the "Ancillary Documents") did not and will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no -------- ------- representations or warranties as to (A) the information contained in or omitted from the Registration Statement, the Prospectus (or any supplement thereto) or the Ancillary Documents in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of either of you specifically for inclusion in the Registration Statement, the Prospectus (or any supplement thereto) or the Ancillary Documents or (B) to that part, if any, of the Registration Statement that constitutes the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act. The only information furnished in writing to the Company by or on behalf of the Dealer Managers is described in Section 6(b) hereof. (c) No action has been taken and no statute, rule, regulation or order has been enacted, adopted or issued by any governmental agency or body that would prevent the issuance of the WorldCom Notes, suspend the effectiveness of the Registration Statement, prevent or suspend the use of the Prospectus (or any supplement thereto), or suspend the sale of the WorldCom Notes in any jurisdiction; provided, however, that to the extent this representation relates to state securities or "blue sky" laws and laws of jurisdictions other than the United States and its political subdivisions, it shall be limited to the knowledge of the Company. No injunction, restraining order or order of any nature by a Federal or state court of competent jurisdiction has been issued and served on the Company or any of its subsidiaries with respect to the Company or any of the subsidiaries that relates to any document incorporated in the Registration Statement, that would prevent or suspend the issuance or sale of the WorldCom Notes, the effectiveness of the Registration Statement, or the use of the Prospectus (or any supplement thereto). (d) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, except as set forth in the Prospectus (as supplemented), neither the Company nor any of the Subsidiaries has incurred any liabilities or obligations, direct or contingent, that are material to the Company and the Subsidiaries taken as a whole, nor entered into any material transaction not in the ordinary course of business, and there 4 has not been, singularly or in the aggregate, any material adverse change in the properties, business, results of operations, financial condition, affairs or business prospects of the Company and its Subsidiaries taken as a whole (a "Material Adverse Change"). Without limiting the foregoing, neither the Company nor any of its Subsidiaries has sustained since the date of the latest audited financial statements included, or incorporated by reference, in the Prospectus (as supplemented) any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus (as supplemented); and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as set forth in the Prospectus (as supplemented), there has not been any material change in the capital stock or long-term debt of the Company or any of the Subsidiaries. (e) The Subsidiaries of the Company listed on Exhibit A hereto (individually a "Subsidiary" and collectively, the "Subsidiaries") are the only Significant Subsidiaries of the Company (within the meaning of Rule 405 under the Act). Each of the Company and the Subsidiaries (x) has been duly organized and is validly existing as a corporation in good standing under the laws of its jurisdiction of organization, (y) has the requisite corporate power and authority to carry on its business as it is currently being conducted and as described in the Prospectus (as supplemented), and to own, lease and operate its properties and (z) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the operation, ownership or leasing of property or the conduct of its business requires such qualification, except where any failure to be so qualified or be in good standing would not, singularly or when aggregated with failures to be qualified elsewhere, have a material adverse effect on the properties, business, results of operations, financial condition, affairs or prospects of the Company and its Subsidiaries taken as a whole (a "Material Adverse Effect"). The Company has the requisite power and authority to authorize the offering of the WorldCom Notes to be sold by it, to execute, deliver and perform this Agreement and to issue, sell and deliver the WorldCom Notes to be sold by it. (f) The Company has an authorized capitalization as set forth in the Prospectus (as supplemented), and all of the issued shares of capital stock of the Company have been duly and validly authorized and are fully paid and non- assessable. All of the issued and outstanding shares of capital stock of each Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and (except as set forth in the Prospectus (as supplemented)) are owned, directly or through Subsidiaries, by the Company, free and clear of any liens, claims or encumbrances ("Liens"). There are no outstanding subscriptions, rights, warrants, options, calls, convertible securities, commitments of sale or Liens related to or entitling any person to purchase or otherwise to acquire any shares of the capital stock of any Subsidiary, except as set forth in the Prospectus (as supplemented). (g) This Agreement has been duly authorized and validly executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms (assuming the due execution and delivery of this Agreement by the Dealer Managers). 5 (h) The Original Indenture has been duly qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by the Company, and constitutes the valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity. (i) The First Supplemental Indenture has been or will be prior to the Exchange Date duly qualified under the Trust Indenture Act and has been or will be prior to the Exchange Date duly authorized, executed and delivered by the Company, and does or will prior to the Exchange Date constitute the valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity. (j) The WorldCom Notes have been or will be prior to the Exchange Date duly authorized, and, when executed by the Company and authenticated by the Trustee in accordance with the terms of the Indenture, and delivered to the holders of MFS Notes who tender their MFS Notes in accordance with the terms of the Exchange Offers, will be entitled to the benefits of the Indenture and will conform in all material respects to the description thereof in the Prospectus (as supplemented) and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their respective terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity. (k) The performance by the Company of the Exchange Offers and the Solicitations, and the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Original Indenture, the First Supplemental Indenture, the Indenture and the WorldCom Notes will not (x) conflict with or result in a breach or violation of any of the respective charters or by-laws of the Company or any of the Subsidiaries or (y) after giving effect to the waivers and consents obtained on or prior to the date hereof, if any, conflict with or result in a breach or violation of any term or provision of, constitute a default or cause an acceleration of any obligation under, or result in the imposition or creation of (or the obligation to create or impose) a Lien with respect to, any bond, note, debenture or other evidence of indebtedness or any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which it or any of them is bound, or to which any properties of the Company or any of the Subsidiaries is subject, or (z) contravene any order of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their properties, or violate or conflict with any statute, rule or regulation or administrative or court decree applicable to the Company or any of the Subsidiaries, or any of their respective properties except, in the case of state public utility commissions exercising jurisdiction over the Company or any of its Subsidiaries ("State Regulatory Agencies"), where such contravention, violation or conflict would not have a Material Adverse Effect. No authorization, approval or consent or order of, or 6 filing, registration or qualification with, any court or governmental body or agency is required for the performance by the Company of either Exchange Offer or either Solicitation or its obligations under this Agreement, the Indenture, or the WorldCom Notes except (i) such as may have been or will be obtained prior to the Commencement Date under the Act, (ii) such as may be required by and made with or obtained prior to the Commencement Date from the National Association of Securities Dealers, Inc. (the "NASD") or state securities or "blue sky" laws or regulations or have been obtained and made prior to the Commencement Date under the Act and (iii) in the case of authorizations, approvals, consents, registrations or qualifications required by State Regulatory Agencies, where the failure to obtain such authorizations, approvals, consents, registrations or qualifications would not have a Material Adverse Effect. (l) There is no action, suit or proceeding before or by any court, arbitrator or governmental official, agency or body, domestic or foreign, pending against or affecting the Company or any of the Subsidiaries, or any of their respective properties, that is required to be disclosed in the Registration Statement or the Prospectus (as supplemented) and is not so disclosed, or that, if determined adversely, is reasonably expected to affect adversely the performance by the Company of the Exchange Offers or the Solicitations or issuance of the WorldCom Notes or in any manner draw into question the validity of this Agreement, the Exchange Offers, the Solicitations or the WorldCom Notes or to result, singularly or when aggregated with other pending actions and actions known to be threatened, in a Material Adverse Effect, or that is reasonably expected to materially and adversely affect the consummation of the Exchange Offers or the Solicitations as contemplated in the Prospectus (as supplemented), and, to the best of the Company's knowledge, no such proceedings are contemplated or threatened. No contract or document of a character required to be described in the Registration Statement or the Prospectus (as supplemented) or to be filed as an exhibit to the Registration Statement is not so described or filed and the statements included or incorporated in the Registration Statement and the Prospectus (as supplemented) describing any legal proceedings or material contracts or agreements relating to the Company fairly summarize such matters. (m) The firm of accountants that has certified or shall certify the applicable consolidated financial statements and supporting schedules of the Company filed or to be filed as part of the Registration Statement or the Prospectus (as supplemented) are independent public accountants with respect to the Company and its subsidiaries, as required by the Act. The consolidated historical statements and any pro forma information, together with related --- ----- schedules and notes, if any, included in the Registration Statement or the Prospectus (as supplemented) comply as to form in all material respects with the requirements of the Act. Such historical financial statements fairly present the consolidated financial position of the Company and its Subsidiaries at the respective dates indicated and the results of their operations and their cash flows for the respective periods indicated, in accordance with generally accepted accounting principles ("GAAP"), except as otherwise expressly stated therein, as consistently applied throughout such periods. Such pro forma ---- ----- information has been prepared on a basis consistent with such historical financial statements, except for the pro forma adjustments specified therein, --- ----- and gives effect to assumptions made on a reasonable basis and fairly presents and gives effect to the transactions described therein pertaining to such pro --- forma information. The other financial and statistical information and data - ----- included in the Registration Statement and in the Prospectus 7 (as supplemented), historical and pro forma, are, in all material respects, --------- accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company. (n) Each of the Company and the Subsidiaries has all certificates, consents, exemptions, orders, permits, licenses, authorizations, or other approvals (each, an "Authorization") of and from, and has made all declarations and filings with, all Federal, state, local and other governmental authorities, all self-regulatory organizations and all courts and other tribunals, necessary or required to own, lease, license and use its properties and assets and to conduct its business in the manner described in the Registration Statement and the Prospectus (as supplemented), except to the extent that the failure to obtain or file any such Authorizations would not, singularly or in the aggregate, reasonably be expected to have a Material Adverse Effect. All such Authorizations are in full force and effect with respect to the Company and the Subsidiaries, and the Company and the Subsidiaries are in compliance in all material respects with the terms and conditions of all such Authorizations and with the rules and regulations of the regulatory authorities and governing bodies having jurisdiction with respect thereto. (o) Except as disclosed in the Prospectus (as supplemented), no holder of any security of the Company has or will have any right to require the registration of such security by virtue of the filing of the Registration Statement or any transactions contemplated by this Agreement other than any such right that has been expressly waived in writing. No holder of any of the outstanding shares of capital stock of the Company or other person is entitled to preemptive or other rights to subscribe for the WorldCom Notes. (p) Subsequent to the initial filing of the Registration Statement, the Company did not and will not, except as contemplated by this Agreement, (i) take, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company or MFS to facilitate the sale or resale of the WorldCom Notes; or (ii) sell, bid for, purchase, or pay anyone any compensation for soliciting purchases of, the WorldCom Notes, the MFS Notes or any other debt securities of the Company or MFS which were offered, or will be offered, by the Company pursuant to a registration statement filed under the Act or pursuant to the exemption from registration provided by Rule 144A promulgated under the Act. (q) The Company has, or has arranged to obtain, sufficient funds available and authority to use such funds under applicable law to pay, in accordance with the terms and subject to the conditions of the Exchange Offers and the Solicitations, the cash portion of the purchase price for the WorldCom Notes, any related consent fee and all fees and expenses related thereto; the Company will cause each MFS Note accepted pursuant to the Exchange Offers to be cancelled promptly thereafter. (r) The Company has complied with and will comply with, in all material respects, all laws, regulations and rules and corporate requirements applicable to the Exchange Offers, the Solicitations and this Agreement and the Company has provided or filed, as applicable, all exchange and other notices required to be provided or filed by the Company in 8 connection with the Exchange Offers and the Solicitations. The Exchange Offer and the Solicitation with respect to the MFS 2004 Notes are in full compliance with all provisions of the 1994 Indenture and the Exchange Offer and the Solicitation with respect to the MFS 2006 Notes are in full compliance with all provisions of the 1996 Indenture. (s) At such time as the second supplemental indenture, as contemplated in the Prospectus (as supplemented), to the 1994 Indenture (the "1994 Second Supplemental Indenture") is executed by MFS and the MFS Trustee (assuming receipt of the Requisite Consent or the Supermajority Consent, as the case may be, as such terms are defined in the Prospectus (as supplemented)) (x) the 1994 Second Supplemental Indenture will be duly authorized, executed and delivered by MFS, (y) assuming the due authorization, execution and delivery of the 1994 Second Supplemental Indenture by the MFS Trustee, the 1994 Second Supplemental Indenture will constitute a valid amendment to the 1994 Indenture that is permitted by the terms of the 1994 Indenture and that conforms in all material respects to the description thereof contained in the Prospectus (as supplemented) and (z) assuming the due authorization, execution and delivery of the 1994 Second Supplemental Indenture by the MFS Trustee, the 1994 Indenture as amended by the 1994 Second Supplemental Indenture, will constitute a valid and legally binding obligation of MFS, enforceable against MFS in accordance with its terms subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity. (t) At such time as the second supplemental indenture, as contemplated in the Prospectus (as supplemented), to the 1996 Indenture (the "1996 Second Supplemental Indenture") is executed by MFS and the MFS Trustee (assuming receipt of the Requisite Consent or the Supermajority Consent, as the case may be, as such terms are defined in the Prospectus (as supplemented)) (x) the 1996 Second Supplemental Indenture will be duly authorized, executed and delivered by MFS, (y) assuming the due authorization, execution and delivery of the 1996 Second Supplemental Indenture by the MFS Trustee, the 1996 Second Supplemental Indenture will constitute a valid amendment to the 1996 Indenture that is permitted by the terms of the 1996 Indenture and that conforms in all material respects to the description thereof contained in the Prospectus (as supplemented) and (z) assuming the due authorization, execution and delivery of the 1996 Second Supplemental Indenture by the MFS Trustee, the 1996 Indenture as amended by the 1996 Second Supplemental Indenture, will constitute a valid and legally binding obligation of MFS, enforceable against MFS in accordance with its terms subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity. Section 3. Agreements. The Company agrees with each of you, and in ---------- the case of paragraph (f) of this Section 3, each of you agree with the Company: (a) The Company will use its reasonable efforts to maintain the effectiveness of the Registration Statement, and to cause any amendment thereof to be declared effective by the Commission. Between the date of entering into this Agreement and the termination of the offering of the WorldCom Notes pursuant to the Exchange Offers, the Company will not file (x) any amendment to the Registration Statement, (y) any document incorporated in the Prospectus, 9 or (z) any supplement to the Prospectus without first providing each of you with a copy of such amendment or supplement, and will not file such amendment or supplement if either of you reasonably objects to such filing. Subject to the foregoing sentence, if filing of the Prospectus is required under Rule 424(b), the Company will cause the Prospectus, properly completed, and any supplement thereto to be filed with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed and will provide evidence satisfactory to each of you of such timely filing. The Company will promptly advise each of you (i) when the Registration Statement, and any amendment thereto, shall have become effective, (ii) when the Prospectus, and any supplement thereto or any document incorporated therein, shall have been filed (if required) with the Commission pursuant to Rule 424(b), (iii) when, prior to termination of the offering of the WorldCom Notes pursuant to the Exchange Offers, any amendment to the Registration Statement shall have been filed or become effective, (iv) of any request by the Commission for any amendment of the Registration Statement or supplement to the Prospectus or for any additional information, (v) of the issuance by the Commission of any order relating to any document incorporated in the Prospectus or any stop order suspending the effectiveness of the Registration Statement or the Company becoming aware of the institution or threatening of any proceeding for any such purpose and (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the WorldCom Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will use its reasonable efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. (b) As soon as practicable, the Company will make generally available to its security holders and to the Dealer Managers an earnings statement or statements of the Company and its Subsidiaries which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. (c) To furnish each of you, without charge, two manually or facsimile signed copies of the Registration Statement (as originally filed) and each amendment thereto (including exhibits thereto and documents incorporated therein by reference) and, during the period mentioned in paragraph (d) below, as many copies of the Prospectus, any documents incorporated therein by reference, and any supplements thereto as each of you may reasonably request. (d) If, at any time prior to the Termination Date (as defined in Section 11 of this Agreement), any event occurs as a result of which the Prospectus as then supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary to amend the Registration Statement or supplement the Prospectus to comply with the Act, the Exchange Act, the Company will (i) promptly prepare and file with the Commission, subject to the second sentence of paragraph (a) of this Section 3, an amendment or supplement which will correct such statement or omission or effect such compliance and (ii) give each of the Dealer Managers immediate notice, confirmed in writing, to cease the Exchange Offers and the Solicitations. 10 (e) The Company will cooperate with the Dealer Managers and counsel for the Dealer Managers in connection with obtaining, and use its reasonable efforts to obtain, qualification of the WorldCom Notes for offering and sale under the laws of such jurisdictions as the Dealer Managers may designate, will maintain such qualifications in effect so long as required for the distribution of the Dealer Managers, and will pay the fee of the NASD, if any, in connection with its review of the offering; provided, however, that the Company shall not be required to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the WorldCom Notes have been qualified as above provided. The Company will promptly advise you of the receipt by the Company of any notification with respect to the suspension of the qualification of the WorldCom Notes for sale in any such state or jurisdiction or the initiating or threatening of any proceeding for such purpose. (f) During the period beginning on the Commencement Date and continuing to and including the Termination Date, the Company will not offer, sell, contract to sell or otherwise dispose of any debt securities of the Company which were offered, or will be offered, by the Company pursuant to a registration statement filed under the Act or pursuant to the exemption from registration provided by Rule 144A promulgated under the Act (other than the WorldCom Notes) without the prior written consent of Salomon Brothers Inc. The foregoing shall not restrict the Company from borrowings under existing or new revolving credit agreements and lines of credit and issuances of commercial paper or interest rate swaps. Section 4. Conditions of the Dealer Managers' Obligations. The ---------------------------------------------- obligations of the Dealer Managers under this Agreement are at all times subject to the following conditions: (a) That, at the Commencement Date and the Exchange Date, the Company shall have furnished to the Dealer Managers opinions of the General Counsel--Corporate Development or other authorized legal representative of the Company, addressed to the Dealer Managers and dated the Commencement Date and the Exchange Date, respectively, substantially to the effect described in Exhibit B hereto, opinions of Bryan Cave LLP, special counsel to the Company, addressed to the Dealer Managers and dated the Commencement Date and the Exchange Date, respectively, substantially to the effect described in Exhibit C hereto, and opinions of Kelley Drye & Warren LLP, special communications counsel to the Company, addressed to the Dealer Managers and dated the Commencement Date and the Exchange Date, respectively, substantially to the effect described in Exhibit D hereto. (b) That, at the Exchange Date, the Dealer Managers shall have received an opinion of counsel for the Dealer Managers, addressed to the Dealer Managers and dated the Exchange Date, in form and substance satisfactory to the Dealer Managers. (c) That the representations and warranties of the Company in this Agreement shall be true and correct in all material respects and that the statements of the Company made in any certificates pursuant to Section 4(h) of this Agreement shall be accurate (and in the case of 11 certificates pursuant to any other provision of this Agreement, accurate in all material respects or where statements or representations contained therein are qualified as to materiality, accurate), in either case, on the Commencement Date and at all times thereafter up to and including the Exchange Date with the same effect as if made on the Commencement Date or at such time, respectively, and the Company shall have complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Commencement Date and the Exchange Date; it is understood that the agreement of any Dealer Manager to act in such capacity at a time when it should know that any such representation or warranty is or may be untrue or incorrect in a material respect shall be without prejudice to any rights it has to subsequently to cease so to act by reason of such untruth or incorrectness. (d) That no order relating to any document incorporated in the Prospectus (as supplemented) or any stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for such purpose shall have been instituted or, to the Company's knowledge, threatened. (e) That subsequent to the execution and delivery of this Agreement and on or prior to the Exchange Date, there shall not have occurred any downgrading, nor shall any notice have been given to the Company of (A) any intended or potential downgrading or (B) any review or possible change that does not indicate the direction of a possible change, in the rating accorded any of the Company's securities by any of Standard & Poor's Ratings Group, Moody's Investors Service, Inc. or any other "nationally recognized statistical rating organization" (as defined for purpose of Rule 436(g) under the Act). (f) Subsequent to the date of the most recent financial statements included in the Prospectus (exclusive of any supplement thereto), there shall have occurred no Material Adverse Change, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto). (g) That, at the Commencement Date and at the Exchange Date, there shall not have been (i) any change or decrease specified in the letter to be delivered pursuant to (i) of this Section 5, except as disclosed or contemplated in the Prospectus (exclusive of any supplement thereto), or (ii) any change, or any development involving a prospective change, in or affecting the business or properties of the Company and the Subsidiaries the effect of which, in any case referred to in clause (i) or (ii) above, is, in the judgment of each of the Dealer Managers, so material and adverse as to make it impractical or inadvisable to proceed with the Exchange Offers and Solicitations or the delivery of the WorldCom Notes as contemplated by the Registration Statement (exclusive of any amendment thereto) and the Prospectus (exclusive of any supplement thereto). (h) That, at the Commencement Date and at the Exchange Date, the Company shall have furnished to the Dealer Managers a certificate of the Company, signed by the Chief Executive Officer, the President, the Chief Operating Officer or any Senior Vice-President and by the principal financial or accounting officer, the Treasurer or the Controller of the Company, each in his official capacity as an officer of the Company and not as an individual, dated 12 respectively as of the Commencement Date and the Exchange Date, to the effect of subparagraphs (c) through (g) of this Section 4. (i) That, at the Commencement Date and at the Exchange Date, the Company's independent public accountants shall have furnished to the Dealer Managers a letter or letters, dated respectively as of the Commencement Date and the Exchange Date, in form and substance satisfactory to the Dealer Managers. (j) That the Company shall have delivered to the Dealer Managers and their counsel such documents as they may reasonably request relating to the Exchange Offers, the Solicitations, the issuance and sale of the WorldCom Notes or otherwise related to the matters contemplated hereby. (k) No stop order or restraining order shall have been issued and no litigation shall have been commenced or threatened with respect to the Exchange Offers, the Solicitations or with respect to any of the transactions in connection with, or contemplated by, the Exchange Offers, the Solicitations or this Agreement before any agency, court or other governmental body of any jurisdiction which you, in good faith after consultation with us, believe renders it inadvisable for you to continue to act hereunder. (l) The Company shall have obtained all consents, approvals, authorizations and orders of, and shall have duly made all registrations, qualifications and filings with, any court or regulatory authority or other governmental agency or instrumentality in the United States required in connection with the making and consummation of the Exchange Offers and the Solicitations and the execution, delivery and performance of this Agreement, and will have available funds, and authorization to use such funds under applicable law, to pay the cash portion of the purchase price of the MFS Notes that it may become committed to purchase pursuant to the Exchange Offers, to make Consent Payments (as defined in the Prospectus) that it may become committed to pay in connection with the Solicitations and, in each case, to pay all related fees and expenses. (m) If any of the conditions specified in this Section 4 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Dealer Managers and their counsel, this Agreement and all obligations of the Dealer Managers hereunder may be cancelled at, or at any time prior to, the Exchange Date by either of the Dealer Managers. Notice of such cancellation shall be given to the Company in writing or by telephone or fax confirmed in writing. Section 5. Payment of Fees and Reimbursement of Dealer Managers' ----------------------------------------------------- Expenses. We agree to pay each of you a fee in connection with each Exchange - -------- Offer and the related Solicitation as set forth on Schedule A hereto. We will also promptly reimburse you, regardless of whether any MFS Notes are tendered or accepted pursuant to the Exchange Offers, for your reasonable out-of-pocket expenses in preparing for and performing your functions as Dealer Managers, including the reasonable fees, costs and out-of-pocket expenses of a single 13 firm as counsel for their representation of you in connection herewith. You shall provide to the Company documentation with reasonable detail in connection with and at the time of your request for reimbursement for such expenses. Section 6. Indemnification and Contribution. -------------------------------- (a) The Company agrees to indemnify and hold harmless each Dealer Manager, each officer and director of each Dealer Manager and each person who controls any Dealer Manager within the meaning of the Act against any and all losses, claims, expenses, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, expenses, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, Prospectus or the Prospectus (as supplemented if the Company shall have furnished any supplements thereto) or in any Ancillary Document, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, expense, damage, liability or action; provided, -------- however, the Company will not be liable in any such case to the extent that any - ------- such loss, claim, expense, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Dealer Manager specifically for inclusion in such document. This indemnity agreement is in addition to any liability which the Company may otherwise have. (b) Each of the Dealer Managers severally agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement, and each person who controls the Company within the meaning of the Act, to the same extent as the foregoing indemnity from the Company to each Dealer Manager, but only with reference to written information furnished to the Company by or on behalf of such Dealer Manager specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which any Dealer Manager may otherwise have. The Dealer Managers and the Company acknowledge and agree that the information set forth (i) in the third to last sentence on the cover page of the Prospectus which specifies the identity of the Dealer Managers for the Exchange Offers and the Solicitations; (ii) in the second sentence of the penultimate paragraph on the continuation cover page of the Prospectus which describes the Dealer Managers' intentions to make a market in the WorldCom Notes; (iii) in the first sentence of the back cover page of the Prospectus which specifies the identity of the Dealer Managers for the Exchange Offers and the Solicitations, and gives their respective addresses and phone numbers; (iv) under the captions "Prospectus Summary - Dealer Managers", "Prospectus Summary - Dealer Manager Market Activity," and "the Exchange Offers - Dealer Managers"; (v) in paragraphs [ ], [ ] and [ ] of the Ancillary Documents, is the only 14 information furnished to the Company by or on behalf of the Dealer Managers specifically for inclusion in the documents referred to in the foregoing indemnity. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above except to the extent such failure results in an increase in the amount of the liability of the indemnifying party or the forfeiture or impairment of any substantial rights or defenses of the indemnifying party and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to appoint counsel satisfactory to such indemnified party to represent the indemnified party in such action (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that if the defendants in any such action include both the - -------- ------- indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to appoint counsel to defend such action and approval by the indemnified party of such counsel, the indemnifying party will not be liable to such indemnified party under this Section 6 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (plus any local counsel), approved by each of the Dealer Managers in the case of paragraph (a) of this Section 6, representing the indemnified parties under such paragraph (a) who are parties to such action), (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). An indemnifying party will not, without the prior written consent of each of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. 15 (d) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in paragraph (a) or (b) of this Section 6 is due in accordance with its terms but is for any reason held by a court to be unavailable from the Company on grounds of policy or otherwise, the Company and the Dealer Managers shall contribute to the aggregate losses, claims, expenses, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively, the "Losses") to which the Company and one or more of the Dealer Managers may be subject (i) in such proportion as is appropriate to reflect the relative benefits received (or anticipated to be received) by the Company on the one hand and the Dealer Managers on the other from the Exchange Offers and the Solicitations provided, however, that in no case shall any Dealer Manager be ----------------- responsible for any amount in excess of the fee received (or anticipated to be received) by such Dealer Manager hereunder or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Dealer Managers on the other in connection with the statements or omissions which resulted in such losses, claims, demands or liabilities as well as any other relevant equitable considerations. The relative benefits received (or anticipated to be received) by the Company on the one hand and the Dealer Managers on the other shall be deemed to be in the same proportion as the aggregate consideration payable (or anticipated to be paid) by the Company in cash or securities in the Exchange Offers and the Solicitations (before deducting expenses) bears to the total compensation payable (or anticipated to be paid) by the Company to the Dealer Managers, in each case, pursuant to this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Dealer Managers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, expenses, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Company and the Dealer Managers agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. For purposes of this Section 6, each person who controls a Dealer Manager within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of a Dealer Manager shall have the same rights to contribution as such Dealer Manager, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). The Dealer Managers' obligations in this subsection (d) to contribute are several in proportion to their respective rights to receive a percentage of the aggregate fees payable to the Dealer Managers hereunder and not joint. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or 16 proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this paragraph (d), notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have hereunder or otherwise than under this paragraph (d). Section 7. Survival. The respective agreements, representations, -------- warranties, indemnities and other statements of the Company or its officers and of the Dealer Managers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Dealer Manager or the Company or any of the officers, directors or controlling persons referred to in Section 6 hereof, and Sections 1, 2, 3(b), 5, 6, 7, 8, 9 and 10 hereof shall survive the termination or cancellation of this Agreement. Section 8. Notices. All communications hereunder will be in writing ------- and effective only on receipt, and, if sent to the Dealer Managers, will be mailed, delivered or faxed and confirmed to them, at Salomon Brothers Inc, 7 World Trade Center, New York, NY 10048, to the attention of Scott Miller (fax: 212-783-4142) or, if sent to the Company, will be mailed, delivered or faxed and confirmed to it at 515 East Amite Street, Jackson, Mississippi 39201, to the attention of Stephanie Q. Scott, Director of Financial Reporting (fax: 601-360- 8671) with a copy mailed, delivered or faxed to P. Bruce Borghardt, General Counsel-Corporate Development (fax: 314-909-4101). Section 9. Successors. This Agreement will inure to the benefit of ---------- and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 6 hereof, and no other person will have any right or obligation hereunder. Section 10. Applicable Law. This Agreement will be governed by and -------------- construed in accordance with the substantive laws of the State of New York without regard to such state's rules concerning conflicts of laws. Any right to trial by jury with respect to any claim or proceeding related to or arising out of this engagement or any transactions or conduct in connection herewith, is waived. Section 11. Termination. This Agreement shall terminate with respect ------------ to each Exchange Offer and the related Solicitation upon the earliest to occur of (i) the Exchange Date, (ii) the earliest date on which the Dealer Managers shall have both (a) given notice to the Company that any of the conditions specified in Section 4 have not been fulfilled in all material respects as of any date such conditions are required to be fulfilled pursuant to Section 4 with respect to such Exchange Offer and the related Solicitation and (b) given notice that the conditions specified pursuant to clause (ii)(a) of this sentence have not been satisfied within a time satisfactory to the Dealer Managers following the date of notice given pursuant to clause (ii)(a) of this sentence or (iii) the date on which the Company terminates or withdraws such Exchange Offer and the related Solicitation for any reason (the earliest to occur of clauses (i), (ii) or (iii) being referred to as the "Termination Date"). 17 Section 12. General. ------- This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. WORLDCOM, INC. By: -------------------------------- Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. SALOMON BROTHERS INC By: ---------------------- Name: Title: GOLDMAN, SACHS & CO. By: ---------------------- Name: Title: 18 SCHEDULE A If, as of the expiration or termination of the applicable Exchange Offer and Solicitation, a majority in aggregate principal amount at stated maturity of the Outstanding (as defined in the 1994 Indenture) MFS 2004 Notes have been tendered (and not validly revoked) in such Exchange Offer and Solicitation, then the Dealer Managers shall be entitled to receive an aggregate fee equal to 0.25% of the aggregate Accreted Value (as defined in the Prospectus), as of July 15, 1997, of all MFS 2004 Notes tendered (and not validly revoked) as of such expiration or termination. Of the foregoing amount, the Company shall pay 60% to Salomon Brothers Inc and 40% to Goldman, Sachs & Co. The parties acknowledge that 0.25% of the Accreted Value, as of July 15, 1997, of an MFS 2004 Note having a principal amount of $1,000 at stated maturity is equal to [$ ]. If, as of the expiration or termination of the applicable Exchange Offer and Solicitation, a majority in aggregate principal amount at stated maturity of the Outstanding (as defined in the 1996 Indenture) MFS 2006 Notes have been tendered (and not validly revoked) in such Exchange Offer and Solicitation, then the Dealer Managers shall be entitled to receive an aggregate fee equal to 0.25% of the aggregate Accreted Value (as defined in the Prospectus), as of July 15, 1997, of all MFS 2006 Notes tendered (and not validly revoked) as of such expiration or termination. Of the foregoing amount, the Company shall pay 60% to Salomon Brothers Inc and 40% to Goldman, Sachs & Co. The parties acknowledge that 0.25% of the Accreted Value, as of July 15, 1997, of an MFS 2004 Note having a principal amount of $1,000 at stated maturity is equal to [$ ]. 19 EXHIBIT A WORLDCOM, INC. SIGNIFICANT SUBSIDIARIES ------------------------
Name Jurisdiction in which Organized - ---- ------------------------------- WorldCom Network Services, Inc. Delaware MFS Communications Company, Inc. Delaware IDB WorldCom, Inc. Delaware UUNET Technologies, Inc. Delaware
20 EXHIBIT B The opinion of General Counsel-Corporate Development for the Company shall be substantially to the effect that: (1) The Significant Subsidiaries on Exhibit A to the Dealer Managers Agreement (the "Subsidiaries") are the only Significant Subsidiaries (within the meaning of Rule 405 under the Act) of the Company. Each of the Company and the Subsidiaries has been duly incorporated or formed and is validly existing as a corporation in the jurisdiction of its incorporation or formation, and has all consents, authorizations, approvals, orders, certificates, permits and exemptions (together, "Authorizations") of and from, has made all declarations and filings with, all federal, state, local and other governmental authorities, all self-regulatory organizations, and all courts or other tribunals, and has the corporate power and authority, necessary to conduct its business and to own lease, license and use its property and assets in the manner described in the Prospectus except to the extent that the lack of such Authorizations would not have a material adverse effect on the Company and its Subsidiaries, taken as a whole. The Company has the requisite corporate power and authority to authorize the Exchange Offers and the Solicitations, to execute, deliver and perform the Dealer Managers Agreement and to issue, offer, sell and deliver the WorldCom Notes. (2) All the outstanding shares of capital stock of each Subsidiary have been duly and validly authorized and are duly issued and are fully paid and nonassessable, and have not been issued and are not owned or held in violation of any statutory preemptive right of stockholders; to the knowledge of such counsel after due inquiry such shares are not held in violation of any other preemptive right of stockholders; and all outstanding shares of capital stock of the Subsidiaries are owned by the Company either directly or through wholly- owned Subsidiaries free and clear of any perfected security interest and, to my knowledge after due inquiry, any other material security interests, stockholders' agreements or voting trusts. (3) To the knowledge of such counsel, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of the Subsidiaries, or any of their respective properties, of a character required to be disclosed in the Registration Statement or the Prospectus that is not adequately disclosed in the Registration Statement or the Prospectus, and there is no contract or other document of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement, which is not described or filed as required. (4) (A) As of the Commencement Date, an opinion to the effect that neither the performance by the Company of the Exchange Offers or the Solicitations and the execution and delivery by the Company of, and the performance by the Company of its obligations under, the Dealer Managers Agreement and the Original Indenture (as supplemented by the First Supplemental Indenture, if and when executed by the Company and the Trustee) nor the issuance and sale of the WorldCom Notes, nor the execution and delivery by MFS of, and the 21 performance by MFS of its obligations under, the 1994 Indenture (as supplemented by the 1994 Second Supplemental Indenture, if and when executed by MFS and the MFS Trustee) or the 1996 Indenture (as supplemented by the 1996 Second Supplemental Indenture, if and when executed and delivered by MFS and the MFS Trustee) nor the consummation of any other of the transactions contemplated in the Dealer Managers Agreement nor the fulfillment of the terms thereof will conflict with, result in a breach of or constitute a default under the articles of incorporation or the bylaws of the Company or MFS or the terms of any agreement filed as an exhibit to the Registration Statement or the Prospectus to which the Company or any of its Subsidiaries is a party or by which the Company is bound or any of its properties is subject, or any judgment, order or regulation known to such counsel to be applicable to the Company or any of its Subsidiaries, or any of their properties, of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties, except in the case of any judgment, order or regulation of any State Regulatory Agency (as defined in the Dealer Managers Agreement) to the extent that any such conflict, breach or default would not have a Material Adverse Effect on the Company and its Subsidiaries. (B) As of the Exchange Date, an opinion to the effect that neither the performance by the Company of the Exchange Offers or the Solicitations and the execution and delivery by the Company of, and the performance by the Company of its obligations under, the Dealer Managers Agreement and the Original Indenture (as supplemented by the First Supplemental Indenture) nor the issuance and sale of the WorldCom Notes, nor the execution and delivery by MFS of, and the performance by MFS of its obligations under, the 1994 Indenture (as supplemented by the 1994 Second Supplemental Indenture) or the 1996 Indenture (as supplemented by the 1996 Second Supplemental Indenture) nor the consummation of any other of the transactions contemplated in the Dealer Managers Agreement nor the fulfillment of the terms thereof will conflict with, result in a breach of or constitute a default under the articles of incorporation or the bylaws of the Company or MFS or the terms of any agreement filed as an exhibit to the Registration Statement or the Prospectus to which the Company or any of its Subsidiaries is a party or by which the Company is bound or any of its properties is subject, or any judgment, order or regulation known to such counsel to be applicable to the Company or any of its Subsidiaries, or any of their properties, of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties, except in the case of any judgment, order or regulation of any State Regulatory Agency (as defined in the Dealer Managers Agreement) to the extent that any such conflict, breach or default would not have a Material Adverse Effect on the Company and its Subsidiaries. (5) To my knowledge, no consent, approval, authorization, license, certificate, permit or order of, or filing, registration or qualification with, any court or governmental agency or body is required for the performance of the Exchange Offers, the Solicitations or any of the transactions contemplated under the Dealer Managers Agreement, except such as have been obtained under the Act and such as may be required by the Federal Communications Commission or similar state regulatory authorities or under the blue sky laws of any jurisdiction in connection with the Exchange Offers and the Solicitations (as to which such counsel expresses 22 no opinion regarding such requirements or the consequence of any failure to comply with the same on any of the foregoing opinions herein) as described in the Prospectus and such other approvals as have been obtained. Such counsel shall also state that he has not checked the accuracy or completeness of, or otherwise verified, the information furnished with respect to other matters in the Registration Statement or the Prospectus. He has generally reviewed and discussed with certain other officers and employees of and counsel for the Company the information so furnished. On the basis of such communication, review and discussion, but without independent check or verification, except as stated, nothing has come to his attention that would lead him to believe that (i) the Registration Statement (other than the financial statements and related schedules and other financial and statistical information contained therein, omitted therefrom, or incorporated by reference therein, as to which he need not express a belief), except for that part of the Registration Statement that constitutes the Statement of Eligibility and Qualification (Form T-1 under the Trust Indenture Act), contains, or on the date of the effectiveness of the Registration Statement did contain, any untrue statement of a material fact or omits, or on the date of the effectiveness of the Registration Statement did omit, to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading or (ii) the Prospectus (except as aforesaid) on the date such opinion is given contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (iii) the Registration Statement or the Prospectus (other than the financial statements and related schedules and other financial and statistical information contained therein, omitted therefrom as to which such counsel need not express a belief) did not comply as to form in all material respects with the Act, the Exchange Act and the Trust Indenture Act, as applicable. As used in this opinion, the term "Prospectus" shall refer to the Prospectus as supplemented on the date such opinion is given. 23 EXHIBIT C The opinion of Bryan Cave LLP shall be substantially to the effect that: (1) The Original Indenture, in the case of an opinion delivered at the Commencement Date, and the Indenture, in the case of an opinion delivered at the Exchange Date has been duly qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by the Company and is a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), and except to the extent enforceability of any indemnification provisions may be limited by public policy. (2) The WorldCom Notes have been duly authorized and, when executed by the Company and authenticated by the Trustee in accordance with the provisions of the Indenture and delivered in exchange for the MFS Notes in accordance with the Exchange Offers will be valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms, and will be entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), and except to the extent enforceability of any indemnification provisions may be limited by public policy, and, in the case of the opinion delivered as of the Exchange Date, all conditions precedent to the issuance of the WorldCom Notes provided for in the Indenture have been complied with and the terms of the WorldCom Notes have been established in conformity with the provisions of the Indenture. (3) The MFS Notes outstanding after completion of the Exchange Offers and the Solicitations will be valid and legally binding obligations of MFS, enforceable against MFS in accordance with their respective terms, and will be entitled to the benefits of the 1994 Indenture as supplemented by the 1994 Second Supplemental Indenture or the 1996 Indenture as supplemented by the 1996 Second Supplemental Indenture, as the case may be, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), and except to the extent enforceability of any indemnification provisions may be limited by public policy. (4) (A) As of the Commencement Date, an opinion to the effect that if the holders of a majority in aggregate principal amount outstanding (or the holders of at least 75% of the aggregate principal amount outstanding with respect to the modification of the term "Change in Control") of the MFS 2004 Notes consent to the Proposed Amendments to the 1994 Indenture, then the 1994 Second Supplemental Indenture, if executed and delivered in the manner and in the 24 form contemplated in the Prospectus, will be a valid amendment to the 1994 Indenture, permitted by the terms of the 1994 Indenture; assuming due authorization and execution by the parties thereto the 1994 Indenture as amended by the 1994 Second Supplemental Indenture, will constitute a valid and binding obligation of MFS, enforceable against MFS in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), and except to the extent enforceability of any indemnification provisions may be limited by public policy. (B) As of the Exchange Date, an opinion to the effect that the 1994 Second Supplemental Indenture (x) is duly authorized, executed and delivered by MFS and (y) is a valid amendment to the 1994 Indenture, permitted by the terms of the 1994 Indenture; the 1994 Indenture as amended by the 1994 Second Supplemental Indenture constitutes a valid and binding obligation of MFS, enforceable against MFS in accordance with its terms, subject to the applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (5) At the Commencement Date and the Exchange Date, opinions regarding the MFS 2006 Notes, the 1996 Indenture and the 1996 Second Supplemental Indenture substantially similar to the opinions required by paragraph 4 above regarding the MFS 2004 Notes, the 1994 Indenture and the 1994 Second Supplemental Indenture. (6) The Dealer Manager Agreement has been duly authorized and validly executed and delivered by the Company and is a valid and legally binding agreement of the Company. (7) The statements under "Description of the WorldCom Notes" in the Prospectus which purport to summarize the terms of the Indenture and the WorldCom Notes do fairly summarize the material terms of the Indenture and the WorldCom Notes. (8) The Registration Statement has become effective under the Act; any required filing of the Prospectus and any supplement or amendment thereto has been made in the manner and within the time period required by the Act and the rules thereunder; and, to our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued, no proceedings for that purpose have been instituted or threatened, and the Registration Statement and the Prospectus (excluding financial and statistical information contained therein or omitted therefrom and any information incorporated by reference therein) appear on their face to have been appropriately responsive in all material respects to the applicable requirements of the Act. The Company met the requirements for the use of Form S-4 at the time it filed the Registration Statement. 25 EXHIBIT D The opinion of the Kelley Drye & Warren LLP shall be substantially to the effect that: The Company and its Significant Subsidiaries have the consents, approvals authorizations, licenses, certificates or permits required by the FCC, if any, for the performance of the Exchange Offers and the Solicitations, and the consummation of the transactions contemplated in the Dealer Managers Agreement. Where necessary, if at all, the Company and its Significant Subsidiaries have the consents, approvals, authorizations, licenses, certificates, or permits required by the State Regulatory Agencies for the consummation of the transactions contemplated in the Agreement, where the failure to obtain such a consent, approval, authorization, license, certificate, permit or order would have a Material Adverse Effect. 26 EXHIBIT E 27 EX-4.9 3 SUPPLEMENTAL INDENTURE EXHIBIT 4.9 ------------------------------------------ WORLDCOM, INC. To MELLON BANK, N.A. Trustee ------------------------------------------ First Supplemental Indenture Dated as of ______________, 1997 to Indenture Dated as of March 1, 1997 ------------------------------------------ Relating to $686,398,000 9-3/8% Senior Notes Due January 15, 2004 and to $671,850,000 8-7/8% Senior Notes Due January 15, 2006 ------------------------------------------ FIRST SUPPLEMENTAL INDENTURE, dated as of _________________, 1997 ("First Supplemental Indenture"), to the Indenture, dated as of March 1, 1997, between WorldCom, Inc., a corporation duly organized and existing under the laws of the State of Georgia (hereinafter called the "Company"), having its principal office at 515 East Amite Street, Jackson, Mississippi 39201 and MELLON BANK, N.A., a corporation duly organized and existing under the laws of the United States, as Trustee hereunder (hereinafter called the "Trustee"), having its Corporate Trust Office at Two Mellon Bank Center, Pittsburgh, Pennsylvania 15259. RECITALS OF THE COMPANY WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated as of March 1, 1997 (the "Indenture"), providing for the issuance from time to time of its senior debt securities (the "Securities") to be issued in one or more series as therein provided; WHEREAS, Section 901 of the Indenture provides that the Company, when authorized by or pursuant to a Board Resolution, and the Trustee, at any time and from time to time, may enter into an indenture supplemental to the Indenture without the consent of any Holders (as defined in the Indenture) to establish the form or terms of the Securities of any series; WHEREAS, the Company has duly authorized the creation of (i) an issue of its Securities to be known as the 9-3/8% Senior Notes Due January 15, 2004 (the "9-3/8% Notes") and (ii) an issue of its Securities to be known as the 8-7/8% Senior Notes Due January 15, 2006 (the "8-7/8% Notes" and, together with the 9-3/8% Notes, the "Notes") and to provide therefor the Company has duly authorized the execution and delivery of this First Supplemental Indenture; and WHEREAS, all things necessary to make the Notes, when executed by the Company and authenticated and delivered in accordance with Section 303 of the Indenture and duly issued by the Company, the valid obligations of the Company, and to make this First Supplemental Indenture a valid agreement of the Company, in accordance with their and its terms, have been done; NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes as follows: 1. Definitions. ----------- (a) Capitalized terms used but not defined in this First Supplemental Indenture shall have the meanings ascribed to them in the Indenture. (b) References in this First Supplemental Indenture to section numbers shall be deemed to be references to section numbers of this First Supplemental Indenture unless otherwise specified. (c) In the case of capitalized terms defined in this First Supplemental Indenture that are also defined in the Indenture, the meanings ascribed to such terms in this First Supplemental Indenture shall apply with respect to the Notes. 2. The Securities. -------------- (a) In accordance with Section 301 of the Indenture, there is hereby created a series of Securities under the Indenture with the following terms: (i) the title of the Securities created hereby is the "9-3/8% Senior Notes Due January 15, 2004"; (ii) the aggregate principal amount of the 9-3/8% Notes which may be authenticated and delivered (except for 9-3/8% Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other 9-3/8% Notes pursuant to Sections 304, 305, 306 or 906 of the Indenture) is limited to $686,398,000; (iii) the principal of the 9-3/8% Notes shall be payable on January 15, 2004 unless earlier repaid in accordance with the Indenture, as modified by this First Supplemental Indenture; (iv) the 9-3/8% Notes shall accrue interest at the rate of 9-3/8% per annum (computed on the basis of a 360-day year consisting of twelve 30-day months), and interest on the 9-3/8% Notes will accrue from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid, from July 15, 1997, as the case may be, and will be payable in cash semi-annually in arrears on January 15 and July 15 of each year (the "Interest Payment Dates"), commencing on January 15, 1998, to the Holders of record on the immediately preceding December 31 and June 30, respectively (the "Regular Record Dates"), until principal thereof is paid or duly provided for. Interest on any overdue principal or premium shall be payable on demand; (v) the Place of Payment of the 9-3/8% Notes, and the place where the 9-3/8% Notes may be surrendered for registration of transfer and where the 9-3/8% Notes may be surrendered for exchange and where notices or demands may be served to or upon the Company with respect to the 9-3/8% Notes, shall be the Corporate Trust Office of the Trustee in the City of Pittsburgh, Pennsylvania and at the office of an affiliate of the Trustee in New York, New York, which office on the date hereof is located at 120 Broadway, 13th Floor, New York, New York 10271; (vi) the 9-3/8% Notes will not be redeemable at the option of the Company prior to January 15, 1999. On or after January 15, 1999, the 9-3/8% Notes will be redeemable at the option of the Company, in whole at any time or in part from time to time, at the following prices (expressed in percentages of the principal amount thereof) in Dollars, if redeemed during the twelve months beginning January 15 of the years indicated below, in each case together with 2 interest accrued to the Redemption Date (subject to the right of Holders of record on the relevant Regular or Special Record Date to receive interest due on the relevant Interest Payment Date):
Year Percentage ---- ---------- 1999.......................... 103.52% 2000.......................... 102.34% 2001.......................... 101.17% 2002 and thereafter........... 100.00%
On and after the Redemption Date, interest will cease to accrue on the 9-3/8% Notes (or any portion thereof) if so called for redemption. (vii) there shall be no sinking fund provided for the 9-3/8% Notes; (viii) the 9-3/8% Notes shall be issuable only in denominations of $1,000 principal amount and any integral multiple thereof; (ix) the Trustee shall act as Security Registrar and Paying Agent with respect to the 9-3/8% Notes; (x) payment of the principal of (and premium, if any) or interest on the 9-3/8% Notes shall be denominated and payable only in Dollars; (xi) no payment on the 9-3/8% Notes shall be determined with reference to an index, formula or other such method; (xii) no Additional Amounts shall be payable in respect of the 9-3/8% Notes; (xiii) except as stated in this First Supplemental Indenture, the 9-3/8% Notes do not contain any provisions granting special rights to the Holders thereof; (xiv) with respect to the 9-3/8% Notes, there shall not be any deletions from, modifications of or additions to the Events of Default or covenants of the Company set forth in the Indenture; (xv) the 9-3/8% Notes shall be issuable only as Registered Securities without coupons and in book-entry form; the 9-3/8% Notes shall not be Bearer Securities; the 9-3/8% Notes shall be issuable initially by one or more global Securities in permanent global form without coupons and deposited with and registered in the name of (or in the name of the nominee of) The Depository Trust Company, New York, New York, acting as the depositary for the 9-3/8% Notes (together with any successor depositary, the "Depositary"); and the form of the 9-3/8% Notes is attached hereto as Exhibit A; (xvi) the provisions of Sections 1402 and 1403 of the Indenture shall apply to the 9-3/8% Notes without modification thereof; 3 (xvii) no portion of the 9-3/8% Notes is convertible into Common Stock or Preferred Stock; and (xviii) (a) the provisions of Sections 109, 110, 111 and 112 of the Indenture shall not apply to the 9-3/8% Notes, and in lieu thereof the provisions set forth below in Sections 3, 4, 5 and 6, respectively, shall apply to the 9-3/8% Notes; (b) the provisions of Articles Twelve and Thirteen and of Sections 307(b) and 308 of the Indenture shall not apply to the 9-3/8% Notes; and (c) the additional provisions set forth below in Sections 7 through 10 shall apply to the 9-3/8% Notes. (b) In accordance with Section 301 of the Indenture, there is hereby created a series of Securities under the Indenture with the following terms: (i) the title of the Securities created hereby is the "8-7/8% Senior Notes Due January 15, 2006"; (ii) the aggregate principal amount of the 8-7/8% Notes which may be authenticated and delivered (except for 8-7/8% Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other 8-7/8% Notes pursuant to Sections 304, 305, 306 or 906 of the Indenture) is limited to $671,850,000; (iii) the principal of the 8-7/8% Notes shall be payable on January 15, 2006 unless earlier repaid in accordance with the Indenture, as modified by this First Supplemental Indenture; (iv) the 8-7/8% Notes shall accrue interest at the rate of 8-7/8% per annum (computed on the basis of a 360-day year consisting of twelve 30-day months), and interest on the 8-7/8% Notes will accrue from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid, from July 15, 1997, as the case may be, and will be payable in cash semi-annually in arrears on January 15 and July 15 of each year (the "Interest Payment Dates"), commencing on January 15, 1998, to the Holders of record on the immediately preceding December 31 and June 30, respectively (the "Regular Record Dates"), until principal thereof is paid or duly provided for. Interest on any overdue principal or premium shall be payable on demand; (v) the Place of Payment of the 8-7/8% Notes, and the place where the 8-7/8% Notes may be surrendered for registration of transfer and where the 8-7/8% Notes may be surrendered for exchange and where notices or demands may be served to or upon the Company with respect to the 8-7/8% Notes, shall be the Corporate Trust Office of the Trustee in the City of Pittsburgh, Pennsylvania and at the office of an affiliate of the Trustee in New York, New York, which office on the date hereof is located at 120 Broadway, 13th Floor, New York, New York 10271; 4 (vi) the 8-7/8% Notes will not be redeemable at the option of the Company prior to January 15, 1999. On or after January 15, 1999, the 8-7/8% Notes will be redeemable at the option of the Company, in whole at any time or in part from time to time, at the following prices (expressed in percentages of the principal amount thereof) in Dollars, if redeemed during the twelve months beginning January 15 of the years indicated below, in each case together with interest accrued to the Redemption Date (subject to the right of Holders of record on the relevant Regular or Special Record Date to receive interest due on the relevant Interest Payment Date):
Year Percentage ---- ---------- 2001.......................... 103.32% 2002.......................... 102.21% 2003.......................... 101.11% 2004 and thereafter........... 100.00%
On and after the Redemption Date, interest will cease to accrue on the 8-7/8% Notes (or any portion thereof), if so called for redemption. (vii) there shall be no sinking fund provided for the 8-7/8% Notes; (viii) the 8-7/8% Notes shall be issuable only in denominations of $1,000 principal amount and any integral multiple thereof; (ix) the Trustee shall act as Security Registrar and Paying Agent with respect to the 8-7/8% Notes; (x) payment of the principal of (and premium, if any) or interest on the 8-7/8% Notes shall be denominated and payable only in Dollars; (xi) no payment on the 8-7/8% Notes shall be determined with reference to an index, formula or other such method; (xii) no Additional Amounts shall be payable in respect of the 8-7/8% Notes; (xiii) except as stated in this First Supplemental Indenture, the 8-7/8% Notes do not contain any provisions granting special rights to the Holders thereof; (xiv) with respect to the 8-7/8% Notes, there shall not be any deletions from, modifications of or additions to the Events of Default or covenants of the Company set forth in the Indenture; (xv) the 8-7/8% Notes shall be issuable only as Registered Securities without coupons and in book-entry form; the 8-7/8% Notes shall not be Bearer Securities; the 8-7/8% Notes shall be issuable initially by one or more global Securities in permanent global form without coupons and deposited with and registered in the name of (or in the name of the nominee of) the Depositary; and the form of the 8-7/8% Notes is attached hereto as Exhibit B; 5 (xvi) the provisions of Sections 1402 and 1403 of the Indenture shall apply to the 8-7/8% Notes without modification thereof; (xvii) no portion of the 8-7/8% Notes is convertible into Common Stock or Preferred Stock; and (xviii) (a) the provisions of Sections 109, 110, 111, and 112 of the Indenture shall not apply to the 8-7/8% Notes, and in lieu thereof the provisions set forth below in Sections 3, 4, 5 and 6, respectively, shall apply to the 8-7/8% Notes; (b) the provisions of Articles Twelve and Thirteen and of Sections 307(b) and 308 of the Indenture shall not apply to the 8-7/8% Notes; and (c) the additional provisions set forth below in Sections 7 through 10 shall apply to the 8-7/8% Notes. (c) All of the covenants, agreements and provisions of this First Supplemental Indenture shall be deemed to be and construed as part of the Indenture to the same extent as if fully set forth verbatim therein and shall be fully enforceable in the manner provided in the Indenture. To the extent not expressly amended or modified by this First Supplemental Indenture, the Indenture shall remain in full force and effect. 3. Separability Clause. In case any provision in the Indenture, as ------------------- modified by this First Supplemental Indenture, or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 4. Benefits of Indenture. Nothing in the Indenture, this First --------------------- Supplemental Indenture or the Notes, express or implied, shall give to any Person other than the parties hereto, any Security Registrar, any Paying Agent, any Authenticating Agent, and their successors hereunder or thereunder and the Holders of the Notes, any benefit or any legal or equitable right, remedy or claim under the Indenture, this First Supplemental Indenture or the Notes. This First Supplemental Indenture may not be used to interpret another indenture, loan agreement or debt agreement of the Company or any of its Subsidiaries (other than the Indenture). Any such indenture, loan or debt agreement may not be utilized to interpret this First Supplemental Indenture. 5. Governing Law. The Indenture, as modified by this First Supplemental ------------- Indenture, and the Notes shall be governed by and construed in accordance with the law of the State of New York without regard to the conflicts of laws principles thereof. The Indenture, as modified by this First Supplement Indenture, is subject to the provisions of the TIA that are required to be part of the Indenture, as modified by this First Supplemental Indenture, and shall, to the extent applicable, be governed by such provisions. 6. Legal Holidays. In any case where any Interest Payment Date, -------------- Redemption Date, Stated Maturity or Maturity of the Notes shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of the Indenture, as modified by this First Supplemental Indenture, or the Notes) payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity or Maturity, provided that no interest shall accrue on -------- 6 the amount so payable for the period from and after such Interest Payment Date, Redemption Date, Stated Maturity or Maturity, as the case may be, to the date of such payment. 7. Conflict with Trust Indenture Act. If any provision of the Indenture, --------------------------------- as modified by the First Supplemental Indenture, limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be part of and govern the Indenture, as modified by the First Supplemental Indenture, the latter provision shall control. If any provision of the Indenture, as modified by the First Supplemental Indenture, modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to the Indenture, as modified this First Supplemental Indenture, as so modified or to be excluded, as the case may be. 8. CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" ------------- numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to the Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. 9. No Recourse Against Others. No recourse shall be had for the payment -------------------------- of the principal of (or premium, if any) or interest, if any, on the Notes, the Indenture or this First Supplemental Indenture, or any part hereof or thereof, or for any claim based hereon or thereon or otherwise in respect hereof or thereof, or of the indebtedness represented hereby or thereby, or upon any obligation, covenant or agreement under the Notes, the Indenture or this First Supplemental Indenture, against, and no personal liability whatsoever shall attach to, or be incurred by, any incorporator, shareholder, officer or director, as such, past, present or future, of (i) the Company or (ii) any predecessor or successor corporation (either directly or through the Company or a predecessor or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise. Each Holder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes. 10. Counterparts. This instrument may be executed in any number of ------------ counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 11. Effect of Headings. The section headings herein are for convenience ------------------ only and shall not affect the construction hereof. 12. Effectiveness. This First Supplemental Indenture shall become ------------- effective in accordance with the provisions of Article Nine of the Indenture. IN WITNESS WHEREOF, parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed, all as of the day and year first above written. 7 [SEAL] WORLDCOM, INC. By:________________________________ Title: Chief Financial Officer [SEAL] MELLON BANK, N.A. By:_________________________________ Title: Vice President 8 EXHIBIT A --------- Form of Face of Security ------------------------ GLOBAL NOTE Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to WorldCom, Inc. (the "Company") or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. WORLDCOM, INC. 9-3/8% Senior Note Due January 15, 2004 Principal Amount No._______________ $ CUSIP ____________ WORLDCOM, INC., a corporation duly organized and existing under the laws of the State of Georgia (herein called the "Company," which term includes any successor corporation under the Indenture referred to below), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _________ Dollars on January 15, 2004 (the "Stated Maturity"), and to pay interest thereon from the most recent Interest Payment Date to which interest has been paid or duly provided for or, if no interest has been paid, from July 15, 1997, payable semiannually in arrears on January 15 and July 15 in each year (each, an "Interest Payment Date"), commencing on January 15, 1998, and at Maturity, at the rate of 9-3/8% per annum, until the principal hereof is paid or duly provided for. Each payment of interest in respect of an Interest Payment Date shall include interest accrued through the day prior to such Interest Payment Date. The interest so payable, and paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be December 31 or June 30 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date, at the office or agency of the Company maintained for such purpose in the City of New York, New York. Interest shall be computed on the basis of a 360- day year consisting of twelve 30-day months. Except as otherwise provided in the Indenture, any such interest not so paid or duly provided for shall forthwith cease to be payable to the Holder on the related Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful A-1 manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. If any Interest Payment Date, any Redemption Date, the Stated Maturity or the Maturity shall not be a Business Day (as hereinafter defined), payment of the amount due on this Note on such date may be made on the next succeeding Business Day; and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such Interest Payment Date, such Redemption Date, the Stated Maturity or the Maturity, as the case may be, to such Business Day. Payment of the principal of (and premium, if any) and interest on this Note at Maturity shall be made upon presentation hereof at the office or agency of the Company, one of which will be maintained in Pittsburgh, Pennsylvania (which initially will be the Corporate Trust Office of Mellon Bank, N.A. in Pittsburgh, Pennsylvania) or at such other office or agency permitted under the Indenture, including the office or agency of the Company maintained for such purpose in the City of New York, New York. Payment of the principal of (and premium, if any) and interest on this Note shall be payable in immediately available funds; provided however, that payment of interest may be made at the option of the Company by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. Payment of the principal of (and premium, if any) and interest, if any, on this Note, as aforesaid, shall be made in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. Interest payable on any Interest Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the case may be, with respect to the portion of this Note held for its account by Cede & Co. or a successor depositary, as the case may be, for the purpose of permitting such party to credit the interest received by it in respect of this Note to the accounts of the beneficial owners hereof. This Note is one of a duly authorized issue of unsecured senior debt securities of the Company known as the Company's 9-3/8% Senior Notes Due January 15, 2004 limited to the aggregate principal amount of $686,398,000 (herein called the "Notes" or the "Securities"), issued under an Indenture dated as of March 1, 1997 (such Indenture as originally executed and delivered and as supplemented by the First Supplemental Indenture dated _____________, 1997 being herein called the "Indenture") from the Company to Mellon Bank N.A., as trustee (herein called the "Trustee," which term includes any successor trustees under the Indenture), to which Indenture, all indentures supplemental thereto and all Board Resolutions relating thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. The acceptance of this Note shall be deemed to constitute the consent and agreement of the Holder hereof to all of the terms and provisions of the Indenture. All capitalized terms used in this Note which are not defined herein shall have the meaning assigned to them in the Indenture. This Note shall not be redeemable at the option of the Company prior to January 15, 1999. On or after January 15, 1999, this Note will be redeemable at the option of the Company, in whole at any time or in part from time to time, at the following prices (expressed in percentages of the principal amount thereof), if redeemed during the twelve months beginning January 15 of the years indicated below, in each case together with interest accrued to the A-2 Redemption Date (subject to the right of Holders of record on the relevant Regular or Special Record Date to receive interest due on the relevant Interest Payment Date):
Year Percentage ---- ---------- 1999.......................... 103.52% 2000.......................... 102.34% 2001.......................... 101.17% 2002 and thereafter........... 100.00%
Notice of redemption shall be given by mail to Holders of the Notes, not less than 30 days nor more than 60 days prior to the Redemption Date, all as provided in the Indenture. As provided in the Indenture, on or prior to the Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, the Notes to be redeemed on such date. In the event of redemption of this Note in part only, a new Note or Notes, of like tenor, for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender hereof, all as provided in the Indenture. On and after the Redemption Date, interest will cease to accrue on this Note (or any portion thereof) if so called for redemption. Reference is made to the further provisions of this Note set forth on the reverse hereof, which provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. WORLDCOM, INC. Attested: By:__________________________ President and Chief Executive Officer ________________________ Secretary This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: ____________________, 1997 MELLON BANK, N.A., as Trustee By:__________________________ Authorized Representative A-3 Reverse Of Note --------------- WORLDCOM, INC. 9-3/8% Senior Note Due January 15, 2004 If an Event of Default with respect to Notes shall occur and be continuing, the principal of all Notes may be declared due and payable in any manner and with the effect provided in the Indenture. The Notes do not have the benefit of any sinking fund obligations and do not provide for repayment at the option of the Holders. The Company's obligations under this Note and under the covenants provided in the Indenture are subject to defeasance and discharge as provided in the Indenture. The Indenture permits, with certain exceptions as thereby provided, the Trustee to enter into one or more supplemental indentures for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture or of modifying in any manner the rights of the Holders of Securities, in any such case, with the consent of the Holders of not less than a majority in aggregate principal amount of all Outstanding Securities affected by such supplemental indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each of the Outstanding Securities affected thereby, affect certain rights of such Holders as more fully described in the Indenture. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities then Outstanding, on behalf of the Holders of all Securities affected thereby, to waive certain past defaults by the Company under the Indenture and their consequences. In addition, without the consent of any Holder of a Security, the Indenture and the Securities may be amended and supplemented to cure any defect, ambiguity or inconsistency, make other changes which will not adversely affect in any material respect the rights of the Holders or certain other matters specified in the Indenture. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of not less than 25 percent in principal amount of the Notes Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Notes Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to certain suits described in the Indenture, including any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or any premium or interest hereon on or after A-4 the respective due dates expressed herein (or, in the case of redemption, on or after the Redemption Date). No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Note at the times, place and rate, in the coin or currency, and in the manner, herein prescribed. The Notes are issuable only in registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000, and in book-entry form. The Notes may be represented by one or more global Notes deposited with DTC and registered in the name of the nominee of DTC, with certain limited exceptions. So long as DTC or any successor depository or its nominee is the registered Holder of a global Note, DTC, such depository or such nominee, as the case may be, will be considered to be the sole Holder of the Notes for all purposes of the Indenture. Except as provided below, an owner of a beneficial interest in a global Note will not be entitled to have Notes represented by such global Note registered in such owner's name, will not receive or be entitled to receive physical delivery of the Notes in certificated form and will not be considered the owner or Holder thereof under the Indenture. Each person owning a beneficial interest in a global Note must rely on DTC's procedures and, if such person is not a participant, on the procedures of the participant through which such person owns its interest, to exercise any rights of a Holder under the Indenture. If the Company requests any action of Holders or if an owner of a beneficial interest in a global Note desires to take any action that a Holder is entitled to take under the Indenture, DTC will authorize the participants holding the relevant beneficial interests to give or take such action, and such participants will otherwise act upon the instructions of beneficial owners holding through them. If at any time DTC notifies the Company that it is unwilling or unable to continue as depository for the global Note or Notes or if at any time DTC ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, if so required by applicable law or regulation, the Company shall appoint a successor depository with respect to such global Note or Notes. If (x) a successor depository for such global Note or Notes is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such unwillingness, inability or ineligibility, (y) an Event of Default has occurred and is continuing and the beneficial owners representing a majority in principal amount of the Notes represented by such global Note or Notes advise DTC to cease acting as depository for such global Note or Notes or (z) the Company, in its sole discretion, determines at any time that all Outstanding Notes (but not less than all) issued or issuable in the form of one or more global Notes shall no longer be represented by such global Notes, then the Company shall execute, and the Trustee shall authenticate and deliver, definitive Notes of like series, rank, tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such global Note or Notes. If any beneficial owner of an interest in a permanent global Note is otherwise entitled to exchange such interest for Notes of such series and of like tenor and principal amount of another authorized form and denomination, as contemplated by the Indenture and provided that any applicable notice provided in the permanent global Note shall have been given, then without unnecessary delay but in any event not later than the earliest date on which such interest may be so exchanged, the Company shall execute, and the Trustee shall authenticate and deliver, definitive Notes in aggregate principal amount equal to the principal amount of such beneficial owner's interest in such permanent global Note. On or after the earliest date on which such interests may be so A-5 exchanged, such permanent global Note shall be surrendered for exchange by DTC or such other depository as the Company shall specify to the Trustee; provided, however, that no such exchanges may occur during a period beginning at - --------- -------- the opening of business 15 days before any selection of Notes to be redeemed and ending on the relevant Redemption Date if the Note for which exchange is requested may be among those selected for redemption. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in this Note in global form or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by any depository, as a Holder, with respect to this Note in global form or impair, as between such depository and owners of beneficial interests in such global Note, the operation of customary practices governing the exercise of the rights of such depository (or its nominee) as Holder of such global Note. THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. As used herein, "Business Day", when used with respect to any Place of Payment or any other particular location referred to in this Note or in the Indenture, means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in that Place of Payment or particular location are authorized or required by law, regulation or executive order to be closed. The Company may cause CUSIP numbers to be printed on the Notes as a convenience to Holders of Notes. No representation is made as to the accuracy of such numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed thereon. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory until the Trustee or authenticating agent signs the certificate of authenticity on the Notes. No recourse shall be had for the payment of the principal of (or premium, if any) or interest, if any, on this Note, or any part hereof, or for any claim based hereon or otherwise in respect hereof, or of the indebtedness represented hereby, or upon any obligation, covenant or agreement under the Indenture, against, and no personal liability whatsoever shall attach to, or be incurred by, any incorporator, shareholder, officer or director, as such, past, present or future, of (i) the Company or (ii) any predecessor or successor corporation (either directly or through the Company or a predecessor or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that the Indenture and all of the Notes are solely corporate obligations and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of the Indenture and the issuance of the Notes. A-6 EXHIBIT B --------- Form of Face of Security ------------------------ GLOBAL NOTE Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to WorldCom, Inc. (the "Company") or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. WORLDCOM, INC. 8-7/8% Senior Note Due January 15, 2006 Principal Amount No._______________ $ CUSIP_____________ WORLDCOM, INC., a corporation duly organized and existing under the laws of the State of Georgia (herein called the "Company," which term includes any successor corporation under the Indenture referred to below), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of _________________________ Dollars on January 15, 2006 (the "Stated Maturity"), and to pay interest thereon from the most recent Interest Payment Date to which interest has been paid or duly provided for or, if no interest has been paid, from July 15, 1997, payable semiannually in arrears on January 15 and July 15 in each year (each, an "Interest Payment Date"), commencing on January 15, 1998 and at Maturity, at the rate of 8-7/8% per annum, until the principal hereof is paid or duly provided for. Each payment of interest in respect of an Interest Payment Date shall include interest accrued through the day prior to such Interest Payment Date. The interest so payable, and paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be December 31 or June 30 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date, at the office or agency of the Company maintained for such purpose in the City of New York, New York. Interest shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Except as otherwise provided in the Indenture, any such interest not so paid or duly provided for shall forthwith cease to be payable to the Holder on the related Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may B-1 be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. If any Interest Payment Date, any Redemption Date, the Stated Maturity or the Maturity shall not be a Business Day (as hereinafter defined), payment of the amount due on this Note on such date may be made on the next succeeding Business Day; and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such Interest Payment Date, such Redemption Date, the Stated Maturity or the Maturity, as the case may be, to such Business Day. Payment of the principal of (and premium, if any) and interest on this Note at Maturity shall be made upon presentation hereof at the office or agency of the Company, one of which will be maintained in Pittsburgh, Pennsylvania (which initially will be the Corporate Trust Office of Mellon Bank, N.A. in Pittsburgh, Pennsylvania) or at such other office or agency permitted under the Indenture, including the office or agency of the Company maintained for such purpose in the City of New York, New York. Payment of the principal of (and premium, if any) and interest on this Note shall be payable in immediately available funds; provided however, that payment of interest may be made at the option of the Company by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. Payment of the principal of (and premium, if any) and interest, if any, on this Note, as aforesaid, shall be made in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. Interest payable on any Interest Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the case may be, with respect to the portion of this Note held for its account by Cede & Co. or a successor depositary, as the case may be, for the purpose of permitting such party to credit the interest received by it in respect of this Note to the accounts of the beneficial owners hereof. This Note is one of a duly authorized issue of unsecured senior debt securities of the Company known as the Company's 8-7/8% Senior Notes Due January 15, 2006 limited to the aggregate principal amount of $671,850,000 (herein called the "Notes" or the "Securities"), issued under an Indenture dated as of March 1, 1997 (such Indenture as originally executed and delivered and as supplemented by the First Supplemental Indenture dated _____________, 1997 being herein called the "Indenture") from the Company to Mellon Bank N.A., as trustee (herein called the "Trustee," which term includes any successor trustees under the Indenture), to which Indenture, all indentures supplemental thereto and all Board Resolutions relating thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. The acceptance of this Note shall be deemed to constitute the consent and agreement of the Holder hereof to all of the terms and provisions of the Indenture. All capitalized terms used in this Note which are not defined herein shall have the meaning assigned to them in the Indenture. This Note shall not be redeemable at the option of the Company prior to January 15, 2001. On or after January 15, 2001, this Note will be redeemable at the option of the Company, in whole at any time or in part from time to time, at the following prices (expressed in percentages of the principal amount thereof), if redeemed during the twelve months beginning January 15 of the years indicated below, in each case together with interest accrued to the Redemption Date (subject to the right of Holders of record on the relevant Regular or Special Record Date to B-2 receive interest due on the relevant Interest Payment Date):
Year Percentage ---- ---------- 2001.......................... 103.32% 2002.......................... 102.21% 2003.......................... 101.11% 2004 and thereafter........... 100.00%
Notice of redemption shall be given by mail to Holders of the Notes, not less than 30 days nor more than 60 days prior to the Redemption Date, all as provided in the Indenture. As provided in the Indenture, on or prior to the Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, the Notes to be redeemed on such date. In the event of redemption of this Note in part only, a new Note or Notes, of like tenor, for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender hereof, all as provided in the Indenture. On and after the Redemption Date, interest will cease to accrue on this Note (or any portion thereof) if so called for redemption. Reference is made to the further provisions of this Note set forth on the reverse hereof, which provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. WORLDCOM, INC. Attested: By:__________________________ President and Chief Executive Officer ________________________ Secretary This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: ____________________, 1997 MELLON BANK, N.A., as Trustee By:__________________________ Authorized Representative B-3 Reverse Of Note --------------- WORLDCOM, INC. 8-7/8% Senior Note Due January 15, 2006 If an Event of Default with respect to Notes shall occur and be continuing, the principal of all Notes may be declared due and payable in any manner and with the effect provided in the Indenture. The Notes do not have the benefit of any sinking fund obligations and do not provide for repayment at the option of the Holders. The Company's obligations under this Note and under the covenants provided in the Indenture are subject to defeasance and discharge as provided in the Indenture. The Indenture permits, with certain exceptions as thereby provided, the Trustee to enter into one or more supplemental indentures for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture or of modifying in any manner the rights of the Holders of Securities, in any such case, with the consent of the Holders of not less than a majority in aggregate principal amount of all Outstanding Securities affected by such supplemental indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each of the Outstanding Securities affected thereby, affect certain rights of such Holders as more fully described in the Indenture. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities then Outstanding, on behalf of the Holders of all Securities affected thereby, to waive certain past defaults by the Company under the Indenture and their consequences. In addition, without the consent of any Holder of a Security, the Indenture and the Securities may be amended and supplemented to cure any defect, ambiguity or inconsistency, make other changes which will not adversely affect in any material respect the rights of the Holders or certain other matters specified in the Indenture. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of not less than 25 percent in principal amount of the Notes Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Notes Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to certain suits described in the Indenture, including any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or any premium or interest hereon on or after B-4 the respective due dates expressed herein (or, in the case of redemption, on or after the Redemption Date). No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest, if any, on this Note at the times, place and rate, in the coin or currency, and in the manner, herein prescribed. The Notes are issuable only in registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000, and in book-entry form. The Notes may be represented by one or more global Notes deposited with DTC and registered in the name of the nominee of DTC, with certain limited exceptions. So long as DTC or any successor depository or its nominee is the registered Holder of a global Note, DTC, such depository or such nominee, as the case may be, will be considered to be the sole Holder of the Notes for all purposes of the Indenture. Except as provided below, an owner of a beneficial interest in a global Note will not be entitled to have Notes represented by such global Note registered in such owner's name, will not receive or be entitled to receive physical delivery of the Notes in certificated form and will not be considered the owner or Holder thereof under the Indenture. Each person owning a beneficial interest in a global Note must rely on DTC's procedures and, if such person is not a participant, on the procedures of the participant through which such person owns its interest, to exercise any rights of a Holder under the Indenture. If the Company requests any action of Holders or if an owner of a beneficial interest in a global Note desires to take any action that a Holder is entitled to take under the Indenture, DTC will authorize the participants holding the relevant beneficial interests to give or take such action, and such participants will otherwise act upon the instructions of beneficial owners holding through them. If at any time DTC notifies the Company that it is unwilling or unable to continue as depository for the global Note or Notes or if at any time DTC ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, if so required by applicable law or regulation, the Company shall appoint a successor depository with respect to such global Note or Notes. If (x) a successor depository for such global Note or Notes is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such unwillingness, inability or ineligibility, (y) an Event of Default has occurred and is continuing and the beneficial owners representing a majority in principal amount of the Notes represented by such global Note or Notes advise DTC to cease acting as depository for such global Note or Notes or (z) the Company, in its sole discretion, determines at any time that all Outstanding Notes (but not less than all) issued or issuable in the form of one or more global Notes shall no longer be represented by such global Notes, then the Company shall execute, and the Trustee shall authenticate and deliver, definitive Notes of like series, rank, tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such global Note or Notes. If any beneficial owner of an interest in a permanent global Note is otherwise entitled to exchange such interest for Notes of such series and of like tenor and principal amount of another authorized form and denomination, as contemplated by the Indenture and provided that any applicable notice provided in the permanent global Note shall have been given, then without unnecessary delay but in any event not later than the earliest date on which such interest may be so exchanged, the Company shall execute, and the Trustee shall authenticate and deliver, definitive Notes in aggregate principal amount equal to the principal amount of such beneficial owner's interest in such permanent global Note. On or after the earliest date on which such interests may be so B-5 exchanged, such permanent global Note shall be surrendered for exchange by DTC or such other depository as the Company shall specify to the Trustee; provided, however, that no such exchanges may occur during a period beginning at - --------- -------- the opening of business 15 days before any selection of Notes to be redeemed and ending on the relevant Redemption Date if the Note for which exchange is requested may be among those selected for redemption. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in this Note in global form or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by any depository, as a Holder, with respect to this Note in global form or impair, as between such depository and owners of beneficial interests in such global Note, the operation of customary practices governing the exercise of the rights of such depository (or its nominee) as Holder of such global Note. THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. As used herein, "Business Day", when used with respect to any Place of Payment or any other particular location referred to in this Note or in the Indenture, means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in that Place of Payment or particular location are authorized or required by law, regulation or executive order to be closed. The Company may cause CUSIP numbers to be printed on the Notes as a convenience to Holders of Notes. No representation is made as to the accuracy of such numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed thereon. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory until the Trustee or authenticating agent signs the certificate of authenticity on the Notes. No recourse shall be had for the payment of the principal of (or premium, if any) or interest, if any, on this Note, or any part hereof, or for any claim based hereon or otherwise in respect hereof, or of the indebtedness represented hereby, or upon any obligation, covenant or agreement under the Indenture, against, and no personal liability whatsoever shall attach to, or be incurred by, any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or of any predecessor or successor corporation (either directly or through the Company or a predecessor or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that the Indenture and all of the Notes are solely corporate obligations and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of the Indenture and the issuance of the Notes. B-6 EX-4.14 4 SECOND SUPPLEMENTAL INDENTURE EXHIBIT 4.14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MFS COMMUNICATIONS COMPANY, INC. and IBJ SCHRODER BANK & TRUST COMPANY Trustee ________________________________ SECOND SUPPLEMENTAL INDENTURE Dated as of _______, 1997 to INDENTURE Dated as of January 15, 1994 ________________________________ $788,320,000 Principal Amount at Stated Maturity of 9-3/8% Senior Discount Notes Due 2004 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THIS SECOND SUPPLEMENTAL INDENTURE, dated as of _______, 1997 (the "Second Supplement"), by and between MFS COMMUNICATIONS COMPANY, INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called "MFS" or the "Company"), having its principal office at 3555 Farnam Street, Suite 200, Omaha, Nebraska 68131, and IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation, as Trustee (herein called the "Trustee"). WHEREAS, pursuant to the terms of the Indenture, dated as of January 15, 1994 (the "Original Indenture"), as supplemented and amended by the First Supplemental Indenture, dated as of March 31, 1995 (the "First Supplement" and, together with the Original Indenture, the "Indenture"), between the Company and the Trustee, the Company has issued $788,320,000 principal amount at Stated Maturity of its 9-3/8% Senior Discount Notes Due 2004 (herein called the "Securities"); and WHEREAS, effective as of December 31, 1996, pursuant to the terms of that certain Amended and Restated Agreement and Plan of Merger (the "Merger Agreement"), dated as of August 25, 1996, by and among WorldCom, Inc., a Georgia corporation ("WorldCom"), HIJ Corp., a Delaware corporation and a wholly owned subsidiary of WorldCom ("Merger Sub"), and MFS, Merger Sub was merged with and into MFS, which thereby became a wholly owned subsidiary of WorldCom; WHEREAS, WorldCom is offering (the "Offer"), upon the terms and subject to the conditions set forth in the Prospectus and Consent Solicitation (together, the "Prospectus") dated ______, 1997 and the accompanying Letter of Transmittal and Consent, to exchange (the "Exchange") [$________ ] principal amount of its 9-3/8% Senior Notes due January 15, 2004 for each $1,000 principal amount at Stated Maturity of outstanding Securities; WHEREAS, Section 902 of the Original Indenture provides that the Company, when authorized by a Board Resolution, may with the consent of the Holders of not less than a majority in principal amount at Stated Maturity of the Outstanding Securities, and subject to Section 903 of the Original Indenture, the Trustee shall enter into an indenture or indentures supplemental to the Original Indenture, in form satisfactory to the Trustee, to add any provisions to or change in any manner or eliminate any of the provisions of the Indenture or modify in any manner the rights of the Holders of Securities, except with respect to certain matters set forth therein, [and except that the consent of Holders of not less than 75% in principal amount at Stated Maturity of the Outstanding Securities is required to make any amendment to Section 1013 of the Original Indenture and the definition of "Change of Control"] /1/ WHEREAS, Holders of Securities who tender their Securities pursuant to the Offer will be deemed, as a condition to a valid tender, to have given their consent to certain proposed amendments to the Indenture as described in the Prospectus; - -------------------------------------- /1/ Bracketed language will be included in this supplemental indenture only if a Supermajority Consent is obtained by WorldCom in connection with the Offer and the Exchange. WHEREAS, as a condition to the Exchange, Holders of a majority in aggregate principal amount of Outstanding Securities must have consented (the "Requisite Consent") to amend the Indenture as described in the Prospectus; [WHEREAS, with respect to the modification of the term "Change in Control," the Holders of 75% of the aggregate principal amount of Outstanding Securities must have consented to such modification (the "Supermajority Consent");]/1/ WHEREAS, the Board of Directors of the Company has authorized the execution of this Second Supplement and its delivery to the Trustee; and WHEREAS, all acts and things necessary, including the receipt of the Requisite Consent [and the Supermajority Consent]/2/ to make this Second Supplement the valid, binding and legal obligation of the Company in accordance with its terms have been done. NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH: Section 101. Definitions. Except as otherwise expressly provided ------------ herein, capitalized terms used herein shall have the meanings ascribed to them in the Indenture. Section 102. Amendment of Indenture. ---------------------- (a) Section 1008 (Limitation on Debt) of the Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (b) Section 1009 (Limitation on Incurrence of Debt and Preferred Stock of Restricted Subsidiaries) of the Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (c) Section 1010 (Limitation on Restricted Payments) of the Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (d) Section 1011 (Transactions with Affiliates) of the Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." - --------------------------- /2/ Bracketed language will be included in this supplemental indenture only if a Supermajority Consent is obtained by WorldCom in connection with the Offer and the Exchange. 2 (e) Section 1012 (Limitations on Liens) of the Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (f) Section 1014 (Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries) of the Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (g) Section 1016 (Limitations on Sale and Leaseback Transactions) of the Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (h) Section 1017 (Provision of Financial Information) of the Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (i) Section 1018 (Limitations on Issuance and Sale of Capital Stock of Restricted Subsidiaries) of the Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (j) Section 501 (Events of Default) of the Indenture is hereby amended and restated in its entirety to read as follows: " "Event of Default", wherever used herein means any one of the following events (whatever the reason for such Event of Default and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Security when such interest becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of (or premium, if any, on) any Security when it becomes due and payable at its Maturity; or (3) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture with respect to any Security (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the 3 Outstanding Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (4) a default under any bond, debenture, note or other evidence of indebtedness of the Company or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness of the Company (including this Indenture), whether such indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay an aggregate principal amount exceeding $50,000,000 of such indebtedness when due and payable after the expiration of any applicable grace period with respect thereto and shall have resulted in such indebtedness in an aggregate principal amount exceeding $50,000,000 becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 10 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 10% in principal amount of the Outstanding Securities of that series a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder; provided, however, that if such default under such bond, debenture, note, -------- ------- mortgage, indenture or other instrument or evidence of indebtedness shall be remedied or cured by the Company or waived pursuant to such agreement or instrument, then, unless the Stated Maturity of the Securities shall have been accelerated as provided herein, the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon remedied, cured or waived without further action upon the part of either the Trustee or the Holders; or (5) the Company pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; or (6) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company in an involuntary case, (B) appoints a Custodian of the Company or for all or substantially all of its property, or 4 (C) orders the liquidation of the Company, and, in any such case, such order or decree remains unstayed and in effect for 90 days. The term "Bankruptcy Law" means title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or other similar official under any "Bankruptcy Law." (k) The first paragraph of Section 502 (Acceleration of Maturity; Rescission and Annulment) of the Indenture is hereby amended and restated to read as follows: "If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount at Stated Maturity of the Outstanding Securities may declare the Default Amount of all the Securities to be due and payable immediately by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such Default Amount shall become immediately due and payable." [(l) The definition of "Change of Control" contained in Section 101 of the Indenture is hereby amended and restated in its entirety to read as follows: "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than WorldCom, Inc., a Georgia corporation ("WorldCom"), or its Affiliates or an underwriter engaged in a firm commitment underwriting on behalf of the Company, is or becomes the "beneficial owner" (as such term is used in Rules 13d-3 and13d-5 under the Exchange Act) plus all shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after a passage of time, directly or indirectly, of more than 50 percent of the total voting power of the Voting Stock of the Company and, in addition, beneficially owns more shares in the Company than beneficially owned by WorldCom and the Employee Group; or (b) the Company sells, conveys, transfers or leases (either in one transaction or a series of related transactions) all or substantially all of its assets to a Person other than an Affiliate."]/3/ Section 103. Construction with Indenture. All of the covenants, --------------------------- agreements and provisions of this Second Supplement shall be deemed to be and construed as part of the Indenture and vice versa to the same extent as if fully set forth verbatim therein and herein and shall be fully enforceable in the manner provided in the Indenture. Except as provided in this Second Supplement, the Indenture shall remain in full force and effect and the terms and conditions thereof are hereby confirmed. - ------------------------------- /3/ This Section 102(l) will be included in this supplemental indenture only if a Supermajority Consent is obtained by WorldCom in connection with the Offer and the Exchange. 5 Section 104. Conflict with Trust Indenture Act. If any provision --------------------------------- hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be part of and govern the Indenture or this Second Supplement, the latter provision shall control. If any provision hereof modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Second Supplement as so modified or to be excluded, as the case may be. Section 105. Effect of Headings. The Section headings herein are for ------------------ convenience only and shall not affect the construction hereof. Section 106. Separability Clause. In case any provision in this ------------------- Second Supplement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. Section 107. Benefit of Second Supplement and Indenture. Nothing in ------------------------------------------ this Second Supplement or the Indenture or in the Securities, express or implied, shall give to any Person other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Second Supplement or the Indenture. Neither this Second Supplement nor the Indenture may be used to interpret another indenture, loan agreement or debt agreement of the Company or any of its Subsidiaries. No such other indenture or loan or debt agreement may be utilized to interpret this Second Supplement or the Indenture. Section 108. Governing Law. This Second Supplement shall be governed ------------- by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York, without regard to principles of conflicts of law. The Company hereby irrevocably submits to the jurisdiction of any New York state court sitting in the Borough of Manhattan in The City of New York or any Federal court sitting in the Borough of Manhattan in The City of New York in respect of any suit, action or proceeding arising out of or relating to this Second Supplement, and irrevocably accepts for itself and in respect of its Property, generally and unconditionally, jurisdiction of the aforesaid courts. The Company irrevocably waives, to the fullest extent that it may effectively do so under applicable law, trial by jury and any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of the Trustee or any Holder of the Securities to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. Section 109. No Recourse Against Others. A director, officer, -------------------------- employee, stockholder or incorporator, as such, of the Company shall not have any liability for any obligations of the Company under this Second Supplement or for any claim based on, in respect or by reason of such obligations or their creation. 6 Section 110. Duplicate Originals. All parties may sign any number of ------------------- copies or counterparts of this Second Supplement. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement. Section 111. Effectiveness. This Second Supplement shall become ------------- effective in accordance with the provisions of Article Nine of the Indenture. IN WITNESS WHEREOF, the parties hereto have caused this Second Supplement to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. (SEAL) MFS COMMUNICATIONS COMPANY, INC. By: -------------------------------- Attest: Title: ------------------------------ - ---------------------------- (SEAL) IBJ SCHRODER BANK & TRUST COMPANY By: -------------------------------- Title: ------------------------------ Attest: - ---------------------------- 7 STATE OF ____________ ) ss.: COUNTY OF __________ ) On the ___ day of _______, 1997, before me personally came _________, to me known, who, being by me duly sworn, did depose and say that he/she is the ______________ of MFS COMMUNICATIONS COMPANY, INC., one of the corporations described in and which executed the foregoing instrument; that he/she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he/she signed his/her name thereto by like authority. --------------------------------- STATE OF _____________ ) ss.: COUNTY OF ___________ ) On the ___ day of _______, 1997, before me personally came _________, to me known, who, being by me duly sworn, did depose and say that he/she is _______________ of IBJ SCHRODER BANK & TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that he/she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he/she signed his/her name thereto by like authority. --------------------------------- 8 EX-4.15 5 SECOND SUPPLEMENTAL INDENTURE EXHIBIT 4.15 ================================================================================ MFS COMMUNICATIONS COMPANY, INC. and IBJ SCHRODER BANK & TRUST COMPANY Trustee ________________________________ SECOND SUPPLEMENTAL INDENTURE Dated as of ______, 1997 to INDENTURE Dated as of January 15, 1996 ________________________________ $924,000,000 Principal Amount at Stated Maturity of 8-7/8% Senior Discount Notes Due 2006 ================================================================================ THIS SECOND SUPPLEMENTAL INDENTURE, dated as of _____, 1997 (the "Second Supplement"), by and between MFS COMMUNICATIONS COMPANY, INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called "MFS" or the "Company"), having its principal office at 3555 Farnam Street, Suite 200, Omaha, Nebraska 68131, and IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation, as Trustee (herein called the "Trustee"). WHEREAS, pursuant to the terms of the Indenture, dated as of January 15, 1996 (the "Original Indenture"), as supplemented and amended by the First Supplemental Indenture, dated as of January 15, 1996 (the "First Supplement" and, together with the Original Indenture, the "Indenture"), between the Company and the Trustee, the Company has issued $924,000,000 principal amount at Stated Maturity of its 8-7/8% Senior Discount Notes Due 2006 (herein called the "Notes"); and WHEREAS, effective as of December 31, 1996, pursuant to the terms of that certain Amended and Restated Agreement and Plan of Merger (the "Merger Agreement"), dated as of August 25, 1996, by and among WorldCom, Inc., a Georgia corporation ("WorldCom"), HIJ Corp., a Delaware corporation and a wholly owned subsidiary of WorldCom ("Merger Sub"), and MFS, Merger Sub was merged with and into MFS, which thereby became a wholly owned subsidiary of WorldCom; WHEREAS, WorldCom is offering (the "Offer"), upon the terms and subject to the conditions set forth in the Prospectus and Consent Solicitation (together, the "Prospectus") dated ______, 1997 and the accompanying Letter of Transmittal and Consent, to exchange (the "Exchange") [$ ] principal -------------- amount of its 8-7/8% Senior Notes due January 15, 2006 ("WorldCom 2006 Notes") for each $1,000 principal amount at Stated Maturity of outstanding Notes; WHEREAS, Section 8(b) of the First Supplement provides that the Company, when authorized by a Board Resolution, may with the consent of the Holders of not less than a majority in principal amount at Stated Maturity of the Outstanding Notes, and subject to Section 903 of the Original Indenture, the Trustee shall enter into an indenture or indentures supplemental to the Original Indenture, in form satisfactory to the Trustee, to add any provisions to or change in any manner or eliminate any of the provisions of the Indenture or modify in any manner the rights of the Holders of Notes, except with respect to certain matters set forth therein, [and except that the consent of Holders of not less than 75% in principal amount at Stated Maturity of the Outstanding Notes is required to make any amendment to Section 5(r) of the First Supplement and the definition of "Change of Control"];/1/ WHEREAS, Holders of Notes who tender their Notes pursuant to the Offer will be deemed, as a condition to a valid tender, to have given their consent to certain proposed amendments to the Indenture as described in the Prospectus; - ------------------------ /1/ Bracketed language will be included in this supplemental indenture only if a Supermajority Consent is obtained by WorldCom in connection with the Offer and the Exchange. WHEREAS, as a condition to the Exchange, Holders of a majority in aggregate principal amount of Outstanding Notes must have consented (the "Requisite Consent") to amend the Indenture as described in the Prospectus; [WHEREAS, with respect to the modification of the term "Change in Control," the Holders of 75% of the aggregate principal amount of Outstanding Notes must have consented to such modification (the "Supermajority Consent");]/1/ WHEREAS, the Board of Directors of the Company has authorized the execution of this Second Supplement and its delivery to the Trustee; and WHEREAS, all acts and things necessary, including the receipt of the Requisite Consent [and the Supermajority Consent]/1/, to make this Second Supplement the valid, binding and legal obligation of the Company in accordance with its terms have been done. NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH: Section 101. Definitions. Except as otherwise expressly provided ------------ herein, capitalized terms used herein shall have the meanings ascribed to them in the Indenture. Section 102. Amendment of First Supplement. ----------------------------- (a) Section 5(e) (Limitation on Debt) of the First Supplement is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (b) Section 5(f) (Limitation of Debt and Preferred Stock of Restricted Subsidiaries) of the First Supplement is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (c) Section 5(g) (Limitation on Liens) of the First Supplement is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (d) Section 5(h) (Limitation on Sale and Leaseback Transactions) of the First Supplement is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." - ------------------------ /1/ Bracketed language will be included in this supplemental indenture only if a Supermajority Consent is obtained by WorldCom in connection with the Offer and the Exchange. 2 (e) Section 5(i) (Limitations on Restricted Payments) of the First Supplement is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (f) Section 5(j) (Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries) of the First Supplement is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (g) Section 5(k) (Limitations on Issuance and Sale of Capital Stock of Restricted Subsidiaries) of the First Supplement Indenture is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (h) Section 5(m) (Transactions with Affiliates) of the First Supplement is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (i) Section 5(n) (Provision of Financial Information) of the First Supplement is hereby amended and restated in its entirety to read as follows: "Intentionally omitted." (j) Section 4(a) (Events of Default) of the First Supplement is hereby amended and restated in its entirety to read as follows: "Each of the following is an "Event of Default" whenever used with respect to the Notes (whatever the reason for such Event of Default and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Note, when such interest becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of (or premium, if any, on) any Note when it becomes due and payable at its Maturity; or (3) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture with respect to any Note (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the 3 Outstanding Notes a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (4) a default under any bond, debenture, note or other evidence of indebtedness of the Company or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness of the Company (including this Indenture), whether such indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay an aggregate principal amount exceeding $50,000,000 of such indebtedness when due and payable after the expiration of any applicable grace period with respect thereto and shall have resulted in such indebtedness in an aggregate principal amount exceeding $50,000,000 becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 10 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 10% in principal amount of the Outstanding Securities of that series a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder; provided, however, that if such default under such bond, debenture, note, -------- ------- mortgage, indenture or other instrument or evidence of indebtedness shall be remedied or cured by the Company or waived pursuant to such agreement or instrument, then, unless the Stated Maturity of the Notes shall have been accelerated as provided herein, the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon remedied, cured or waived without further action upon the part of either the Trustee or the Holders; or (5) the Company pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; or (6) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company in an involuntary case, (B) appoints a Custodian of the Company or for all or substantially all of its property, or 4 (C) orders the liquidation of the Company, and, in any such case, such order or decree remains unstayed and in effect for 90 days. The term "Bankruptcy Law" means title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or other similar official under any Bankruptcy Law." (k) The first paragraph of Section 4(b) of the First Supplement is hereby amended and restated in its entirety to read as follows: "If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount at Stated Maturity of the Outstanding Notes may declare the Default Amount of all the Notes to be due and payable immediately by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such Default Amount shall become immediately due and payable." [(l) The definition of "Change of Control" contained in Section 1(d) of the First Supplement is hereby amended and restated in its entirety to read as follows:/*/ "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than WorldCom, Inc., a Georgia corporation ("WorldCom"), or its Affiliates or an underwriter engaged in a firm commitment underwriting on behalf of the Company, is or becomes the "beneficial owner" (as such term is used in Rules 13d-3 and13d-5 under the Exchange Act) plus all shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after a passage of time, directly or indirectly, of more than 50 percent of the total voting power of the Voting Stock of the Company and, in addition, beneficially owns more shares in the Company than beneficially owned by WorldCom and the Employee Group; or (b) the Company sells, conveys, transfers or leases (either in one transaction or a series of related transactions) all or substantially all of its assets to a Person other than an Affiliate."]/2/ Section 103. Construction with Indenture. All of the covenants, --------------------------- agreements and provisions of this Second Supplement shall be deemed to be and construed as part of the Indenture to the same extent as if fully set forth verbatim therein and shall be fully enforceable in the manner provided in the Indenture. Except as provided in this Second Supplement, the Indenture shall remain in full force and effect and the terms and conditions thereof are hereby confirmed. - ---------------------------- /*/ This Section 102(l) will be included in this supplemental indenture only if a Supermajority Consent is obtained by WorldCom in connection with the Offer and the Exchange. 5 Section 104. Conflict with Trust Indenture Act. If any provision --------------------------------- hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be part of and govern the Indenture or this Second Supplement, the latter provision shall control. If any provision hereof modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Second Supplement as so modified or to be excluded, as the case may be. Section 105. Effect of Headings. The Section headings herein are for ------------------ convenience only and shall not affect the construction hereof. Section 106. Separability Clause. In case any provision in this ------------------- Second Supplement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. Section 107. Benefit of Second Supplement and Indenture. Nothing in ------------------------------------------ this Second Supplement or the Indenture or in the Notes, express or implied, shall give to any Person other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Second Supplement or the Indenture. Neither this Second Supplement nor the Indenture may be used to interpret another indenture, loan agreement or debt agreement of the Company or any of its Subsidiaries. No such other indenture or loan or debt agreement may be utilized to interpret this Second Supplement or the Indenture. Section 108. Governing Law. This Second Supplement shall be governed ------------- by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York, without regard to principles of conflicts of law. The Company hereby irrevocably submits to the jurisdiction of any New York state court sitting in the Borough of Manhattan in The City of New York or any Federal court sitting in the Borough of Manhattan in The City of New York in respect of any suit, action or proceeding arising out of or relating to this Second Supplement, and irrevocably accepts for itself and in respect of its Property, generally and unconditionally, jurisdiction of the aforesaid courts. The Company irrevocably waives, to the fullest extent that it may effectively do so under applicable law, trial by jury and any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of the Trustee or any Holder of the Notes to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. Section 109. No Recourse Against Others. A director, officer, -------------------------- employee, stockholder or incorporator, as such, of the Company shall not have any liability for any obligations of the Company under this Second Supplement or for any claim based on, in respect or by reason of such obligations or their creation. 6 Section 110. Duplicate Originals. All parties may sign any number of ------------------- copies or counterparts of this Second Supplement. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement. Section 111. Effectiveness. This Second Supplement shall become ------------- effective in accordance with the provisions of Article Nine of the Indenture. IN WITNESS WHEREOF, the parties hereto have caused this Second Supplement to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. (SEAL) MFS COMMUNICATIONS COMPANY, INC. By:____________________________________ Title:_________________________________ Attest: _________________________ (SEAL) IBJ SCHRODER BANK & TRUST COMPANY By:____________________________________ Title:_________________________________ Attest: _________________________ 7 STATE OF ____________ ) ss.: COUNTY OF __________ ) On the ___ day of _____, 1997, before me personally came _________, to me known, who, being by me duly sworn, did depose and say that he/she is the ______________ of MFS COMMUNICATIONS COMPANY, INC., one of the corporations described in and which executed the foregoing instrument; that he/she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he/she signed his/her name thereto by like authority. _______________________________ STATE OF _____________ ) ss.: COUNTY OF ___________ ) On the __ day of _____, 1997, before me personally came _____________, to me known, who, being by me duly sworn, did depose and say that he/she is _______________ of IBJ SCHRODER BANK & TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that he/she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he/she signed his/her name thereto by like authority. _______________________________ 8 EX-5.1 6 OPINION OF P. BRUCE BORGHARDT EXHIBIT 5.1 June 26, 1997 Board of Directors of WorldCom, Inc. 515 East Amite Street Jackson, Mississippi 39201 Ladies and Gentlemen: I am General Counsel - Corporate Development of WorldCom, Inc., a Georgia corporation (the "Company"), and have acted as counsel in connection with the Registration Statement on Form S-4 (Registration No. 333-27345), as amended (the "Registration Statement"), originally filed by the Company on May 16, 1997 with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the exchange of up to $686,398,000 9 3/8 % Senior Notes due January 15, 2004 of the Company for any and all outstanding 9 3/8% Senior Discount Notes due January 15, 2004 of MFS Communications Company, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("MFS"), and up to $671,850,000 8 7/8% Senior Notes due January 15, 2006 of the Company for any and all outstanding 8 7/8% Senior Discount Notes due January 15, 2006 of MFS, and the solicitation of consents of holders of MFS Notes to certain amendments to the respective indentures applicable to each series of such MFS Notes. Terms not defined herein shall have the meanings contained in the Prospectus. 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 and Bylaws of the Company, certificates of public officials, certificates and statements of officers of the Company, and such other corporate records, documents, certificates and instruments as I have deemed necessary or appropriate to enable me to render the opinions expressed herein. I have assumed the genuineness of all signatures on all documents examined by me, the authenticity of all documents submitted to me as originals, and the conformity to authentic originals of all documents submitted to me as certified or photostatic copies. I have also assumed the due authorization, execution and delivery of all documents. Based upon the foregoing and in reliance thereon and subject to the limitations and qualifications stated herein and to the effectiveness of the Registration Statement under the Securities Act, I am of the opinion that: 1. The Company is a corporation validly existing under the laws of the State of Georgia; and 2. Each of the WorldCom Notes when duly executed, authenticated and issued as provided in the WorldCom Indenture and delivered against payment, will constitute valid and legally binding obligations of the Company and will be enforceable in accordance with their terms and entitled to the benefits of the WorldCom Indenture except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors generally, and by general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or other equitable remedies, regardless of whether enforceability is considered in a proceeding in equity or at law. 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. 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 Notes. 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 EX-8.1 7 OPINION OF BRYAN CAVE LLP EXHIBIT 8.1 June 26, 1997 WorldCom, Inc. 515 East Amite Street Jackson, Mississippi 39201 Gentlemen: We have acted as special tax counsel to WorldCom, Inc., a Georgia corporation (the "Company"), in connection with the Offers to Exchange (the "Exchange Offers") WorldCom, Inc. 9-3/8% Senior Notes due January 15, 2004, for all outstanding MFS Communications Company, Inc. 9-3/8% Senior Discount Notes due January 15, 2004, and WorldCom, Inc. 8-7/8% Senior Notes due January 15, 2006, for all outstanding MFS Communications Company, Inc. 8-7/8% Senior Discount Notes due January 15, 2006 (the "Exchange Offers"), as described in the Prospectus (the "Prospectus") included as a part of the Registration Statement (Form S-4) filed with the Securities and Exchange Commission on June 27, 1997 (the "Registration Statement"). In connection therewith, you have requested our opinion regarding whether the discussion of the federal income tax consequences set forth in the Prospectus under the caption "Certain Federal Income Tax Consequences" fairly describes the material federal income tax consequences of the Exchange Offers. Except as otherwise indicated herein, all capitalized terms used in this letter have the same meaning assigned to them in the Prospectus. In rendering our opinion, we have examined the Prospectus and such other documents as we have considered relevant for purposes of this opinion. We have assumed that the Prospectus reflects all the material facts and our opinion is expressly conditioned on, among other things, the accuracy as of the date hereof, and the continuing accuracy, of all of such facts, information, covenants, statements and representations through and as of the effective date of the Exchange Offers. Any material changes in the facts referred to, set forth or assumed herein or in the Prospectus may affect the conclusions stated herein. We have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such documents. WorldCom, Inc. June 26, 1997 Page 2 In rendering our opinion, we have considered the applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations promulgated thereunder by the Treasury Department (the "Regulations"), pertinent judicial authorities, rulings of the Internal Revenue Service (the "Service") and such other authorities as we have considered relevant. It should be noted that such laws, Code, Regulations, judicial decisions and administrative interpretations are subject to change at any time and, in some circumstances, with retroactive effect. A material change in any of the authorities upon which our opinion is based could affect our conclusions herein. Based solely upon and subject to the foregoing, we are of the opinion that the statements in the Prospectus under the caption "Certain Federal Income Tax Consequences" fairly describes the material federal income tax consequences of the Exchange Offers. Except as expressly set forth above, we express no other opinion. This opinion is for your benefit and is not to be used, circulated, quoted or otherwise referred to for any purpose except that we consent to the filing of this opinion as Exhibit 8.1 of the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933. Very truly yours, /s/ Bryan Cave LLP ------------------------------- Bryan Cave LLP JPB/bmr EX-23.1 8 CONSENT OF ARTHUR ANDERSON EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTS As independent public accountants, we hereby consent to the incorporation by reference in this Amendment No. 2 to Registration Statement No. 333-27345, of our report dated February 26, 1997, included in WorldCom, Inc.'s Form 10-K for the year ended December 31, 1996 and to all references to our Firm in this registration statement. ARTHUR ANDERSEN LLP Jackson, Mississippi, June 24, 1997 EX-23.2 9 CONSENT OF COOPERS & LYBRAND EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this registration statement on Form S-4 (File No. 333-27345) of WorldCom, Inc. of our report dated February 14, 1996, on our audits of the consolidated financial statements of MFS Communications Company, Inc. as of December 31, 1995 and for the years ended December 31, 1995 and 1994 which report is included in MFS Communication Company's Annual Report on Form 10-K, and of our report dated February 14, 1996, on our audits of the consolidated financial statements of MFS Communications Company, Inc. as of December 31, 1995 and 1994 and for the three years in the period ended December 31, 1995 which report is included in WorldCom Inc.'s Current Report on Form 8-K/A dated August 25, 1996 (as amended on November 4, 1996). We also consent to the reference to our firm under the caption "Experts". Coopers & Lybrand L.L.P. Omaha, Nebraska June 24, 1997 EX-23.3 10 CONSENT OF ARTHUR ANDERSON EXHIBIT 23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Amendment No. 2 to Registration Statement No. 333-27345, of our reports dated February 20, 1997, included in MFS Communications Company, Inc.'s Form 10-K for the year ended December 31, 1996 and to all references to our Firm in this registration statement. ARTHUR ANDERSEN LLP Omaha, Nebraska, June 24, 1997 EX-23.4 11 CONSENT OF ARTHUR ANDERSON EXHIBIT 23.4 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Amendment No. 2 to Registration Statement No. 333-27345, of our report dated January 31, 1996 on the Consolidated Financial Statements of UUNET Technologies, Inc. included in WorldCom, Inc.'s Current Report on Form 8- K dated August 25, 1996 as amended by Form 8-K/A filed November 4, 1996 and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP Washington, D.C., June 24, 1997 EX-99.1 12 MFS COMMUNICATIONS LETTER OF TRANSMITTAL EXHIBIT 99.1 [YELLOW] LETTER OF TRANSMITTAL AND CONSENT To Tender and to Give Consent in Respect of 9 3/8% Senior Discount Notes due January 15, 2004 CUSIP No. 55272T-AA-9 of MFS COMMUNICATIONS COMPANY, INC. In Exchange for 9 3/8% Senior Notes due January 15, 2004 of WORLDCOM, INC. Pursuant to the Prospectus and Consent Solicitation dated ________, 1997 THE EXCHANGE OFFER (AS DEFINED BELOW) WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED (SUCH TIME AND DATE, AS EXTENDED, THE "EXPIRATION DATE" WITH RESPECT TO SUCH EXCHANGE OFFER). TENDERS OF MFS 2004 NOTES MAY NOT BE WITHDRAWN (AND THE RELATED CONSENTS THEREBY REVOKED) AT ANY TIME AFTER 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS THE APPLICABLE EXCHANGE OFFER IS EXTENDED AND CONTAINS NEW TERMS MATERIALLY ADVERSE TO THE TENDERING HOLDERS THEREOF. Delivery To: Harris Trust and Savings Bank, Exchange Agent By Registered or Certified Mail: Overnight or Hand Delivery: Facsimile Transmission: Harris Trust and Savings Bank Harris Trust and Savings Bank (212) 701-7636 c/o Harris Trust Company of New York c/o Harris Trust Company of New York P.O. Box 1010 77 Water Street Wall Street Station 4th Floor Confirm by Telephone: New York, NY 10268 New York, NY 10004 (212) 701-7624
Questions regarding the Exchange Offer or completion of this Letter of Transmittal may be directed to MacKenzie Partners, Inc., the Information Agent for the Exchange Offer, at (800) 322-2885 (toll free). Delivery of this Letter of Transmittal and Consent (this "Letter of Transmittal") to an address, or transmission of instructions via a facsimile number, other than as set forth above or other than in accordance with the instructions herein, will not constitute valid delivery. The instructions accompanying this Letter of Transmittal should be read carefully before this Letter of Transmittal is completed. This Letter of Transmittal is to be used in connection with (i) the physical delivery of MFS 2004 Notes (as defined herein) to Harris Trust and Savings Bank, as exchange agent (the "Exchange Agent"), or (ii) the delivery of MFS 2004 Notes by book-entry transfer to the account of the Exchange Agent at The Depository Trust Company ("DTC"), in accordance with the procedures described in the Prospectus and Consent Solicitation dated __________, 1997 (together, the "Prospectus") under the heading "The Exchange Offers--Procedures for Tendering." All capitalized terms used and not defined herein have the meanings ascribed to them in the Prospectus. Pursuant to the Prospectus, receipt of which is hereby acknowledged, WorldCom, Inc. (the "Company") is offering to exchange $871.597 principal amount of WorldCom 2004 Notes for each $1,000 principal amount at stated maturity of outstanding MFS 2004 Notes properly tendered for exchange and accepted. If the aggregate principal amount of WorldCom 2004 Notes that otherwise would be issued in exchange for the MFS 2004 Notes tendered by a Holder and accepted by the Company pursuant to the Exchange Offer is not an integral multiple of $1,000, such principal amount will be reduced to the nearest such multiple and the Company will pay to such Holder an amount in cash equal to the reduction of such principal amount. The Company is also offering, pursuant to the Prospectus, to pay each Holder who gives a valid Consent (as defined herein) to the Proposed Amendments (as defined herein) on or prior to the Expiration Date a cash fee in an amount equal to 0.__% of the Accreted Value, as of July 15, 1997 (the "Interest Accrual Date"), of such Holder's MFS 2004 Notes with respect to which Consent has been given. Holders may give their Consent to the Proposed Amendments only by tendering MFS 2004 Notes in the Exchange Offer, will be required to consent as a condition to a valid tender and will be deemed to have given such Consent by so tendering. The proper completion, execution and delivery of this Letter of Transmittal will constitute a Consent to the Proposed Amendments with respect to the MFS 2004 Notes. Upon the terms and subject to the conditions of the Exchange Offer, the Company will accept for exchange all MFS 2004 Notes that are properly tendered (and not withdrawn) on or prior to 11:59 p.m., New York City time, on the Expiration Date. Holders who are unable to properly tender their MFS 2004 Notes (including delivery of this Letter of Transmittal and all other documents required hereby) on or prior to the Expiration Date, may nevertheless tender their MFS 2004 Notes (and thereby consent to the Proposed Amendments) according to the guaranteed delivery procedures set forth in the Prospectus under the heading "The Exchange Offers--Procedures for Tendering--Guaranteed Delivery Procedures." See Instruction 2. Holders who wish to tender their MFS 2004 Notes (and thereby consent to the Proposed Amendments) pursuant to this Letter of Transmittal must, at a minimum, fill in the necessary account information in the table below entitled "Account Information" (the "Account Information Table"), complete columns (1) through (3) in the table below entitled "Description of MFS 2004 Notes Tendered and In Respect of Which Consent Is Given" (the "Description Table") and complete and sign in the box below entitled "SIGN HERE." If only columns (1) through (3) are completed in the Description Table, the Holder will be deemed to have consented to the Proposed Amendments in respect of, and to have tendered, all MFS 2004 Notes listed in the Description Table. If a Holder wishes to tender less than all of such MFS 2004 Notes delivered to the Exchange Agent, column (4) of the Description Table must be completed in full. See Instruction 4. 2 In order to effect a valid tender of MFS 2004 Notes the undersigned must complete the Account Information Table below. WorldCom 2004 Notes will be delivered only in book-entry form through DTC and only to the DTC account of the undersigned or the undersigned's custodian. Accordingly, if the undersigned tenders (i) by book-entry transfer to the Exchange Agent's account at DTC, the first box in the account information table must be checked and any WorldCom 2004 Notes will be delivered to the DTC participant from which tender was effected, or (ii) by physical delivery of certificates to the Exchange Agent, the second box in the account information table must be checked and any WorldCom 2004 Notes will be delivered to the DTC participant indicated by the Holder in such table. Failure to provide the information necessary to effect delivery of WorldCom 2004 Notes will render such Holder's tender defective and the Company will have the right, which it may waive, to reject such tender. ATTENTION ANY TENDERING HOLDER WHOSE MFS 2004 NOTES WILL NOT BE DELIVERED TO THE EXCHANGE AGENT THROUGH DTC: Because WorldCom 2004 Notes will be delivered only in book-entry form through DTC, you are urged to contact promptly a bank, broker or other intermediary (that has the facility to hold securities custodially through DTC) to arrange for receipt of any WorldCom 2004 Notes delivered pursuant to the Exchange Offer and to obtain the information necessary to complete the Account Information Table. TO VALIDLY COMPLETE THE LETTER OF TRANSMITTAL (AND THEREBY CONSENT TO THE PROPOSED AMENDMENTS), COMPLETE PAGES ____ AND ____, COMPLETE AND SIGN PAGE ____, AND (IF NECESSARY) COMPLETE AND SIGN PAGES ____, ____ AND ____. THE INSTRUCTIONS STARTING ON PAGE ____ FORM A PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER AND RELATED CONSENT SOLICITATION AND SHOULD BE READ CAREFULLY. ACCOUNT INFORMATION (Complete One Method of Tender Only*) VIA DTC [_] Check here if tendered MFS 2004 Notes are being delivered by book-entry transfer to the Exchange Agent's account at DTC and complete the following: Name of DTC Participant --------------------------------------------------------- DTC Participant Number --------------------------------------------------------- VIA PHYSICAL DELIVERY [_] Check here if tendered MFS 2004 Notes are being delivered in physical form and complete the following: Name of Registered Holder(s) --------------------------------------------------- DTC Participant Receiving WorldCom 2004 Notes**: Name of DTC Participant ------------------------------------------------ DTC Participant Number ------------------------------------------------ Customer Account Number ------------------------------------------------ DTC Participant Contact Name/Phone Number ------------------------------- - ------------------------------------------------------------------------------- * Failure to complete one, and only one, method of tender will render the undersigned's tender defective. ** Failure to provide the information necessary to effect delivery of WorldCom 2004 Notes will render the undersigned's tender defective. [_] Check here if this Letter of Transmittal and the MFS 2004 Notes tendered hereby are being delivered pursuant to a Notice of Guaranteed Delivery previously delivered in accordance with the Guaranteed Delivery Procedures described in Instruction 2 hereof. 3 List below the MFS 2004 Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and principal amount of MFS 2004 Notes should be listed on a separate signed schedule affixed hereto. DESCRIPTION OF MFS 2004 NOTES TENDERED AND IN RESPECT OF WHICH CONSENT IS GIVEN (SEE INSTRUCTIONS 3 AND 4)
Name(s) and Address(es) of Holder(s) (please fill in exactly as name appears MFS Notes Tendered and In Respect on the face of the MFS 2004 Notes of Which Consent is Given tendered or on a security position (attach additional signed schedule if necessary) listing with respect thereto) Aggregate Principal Certificate Principal Amount Number(s)* Amount at Stated at Stated Maturity of Maturity MFS 2004 Note(s) Tendered and in Respect of Which Consent is Given (if less than all)** (1) (2) (3) (4) Total
* Need not be completed if MFS 2004 Notes are being tendered by book-entry transfer. ** You must consent to the Proposed Amendments in respect of all MFS 2004 Notes tendered by you; completion of column (3) will constitute a Consent to the Proposed Amendments in respect of such MFS 2004 Notes, unless less than all MFS 2004 Notes are to be tendered as specified in column (4), in which case Consents only with respect to such lesser amount of MFS 2004 Notes shall be given. See Instruction 4. The principal amount at stated maturity of MFS 2004 Notes tendered hereby must be in denominations of $1,000 and any integral multiple thereof. See Instruction 4. 4 NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The undersigned hereby (i) consents (the "Consent") to the proposed amendments described in the Prospectus (the "Proposed Amendments"), to the Indenture, dated as of January 15, 1994 (as supplemented by First Supplemental Indenture dated as of March 31, 1995, the "1994 Indenture"), between MFS Communications Company, Inc. ("MFS") and IBJ Schroder Bank & Trust Company, as Trustee (the "MFS Trustee"), pursuant to which the 9 3/8% Senior Discount Notes due January 15, 2004 of MFS (the "MFS 2004 Notes") indicated above were issued, and (ii) tenders to the Company the MFS 2004 Notes indicated above in exchange for 9 3/8% Senior Notes due January 15, 2004 of the Company (the "WorldCom 2004 Notes") in a ratio equal to $871.597 principal amount of WorldCom 2004 Notes per $1,000 principal amount at stated maturity of the MFS 2004 Notes, upon the terms and subject to the conditions set forth in the Prospectus (receipt of which is hereby acknowledged) and in this Letter of Transmittal, both of which together constitute the Company's offer (the "Exchange Offer") to exchange WorldCom 2004 Notes for MFS 2004 Notes properly tendered. Interest on the WorldCom 2004 Notes will accrue from the Interest Accrual Date. The principal amount of WorldCom 2004 Notes being offered in exchange for the MFS 2004 Notes tendered hereby is equal to the Accreted Value (as defined in the Prospectus) of such MFS 2004 Notes as of the Interest Accrual Date. WorldCom 2004 Notes will be issued only in denominations of $1,000 and integral multiples thereof. If the aggregate principal amount of WorldCom 2004 Notes that otherwise would be issued in exchange for the MFS 2004 Notes tendered by a Holder and accepted by the Company pursuant to the Exchange Offer is not an integral multiple of $1,000, such principal amount will be reduced to the nearest such multiple and the Company will pay to such Holder an amount in cash equal to the reduction of such principal amount. In connection with the undersigned's Consent, the undersigned shall receive a cash fee in an amount equal to 0.___% of the Accreted Value, as of the Interest Accrual Date, of the undersigned's MFS 2004 Notes with respect to which Consent has been given (a "Consent Payment"). The undersigned understands that (i) the Proposed Amendments will be adopted with respect to the MFS 2004 Notes tendered herewith and (ii) the applicable Consent Payment will be paid to such Holder, in both cases, only upon consummation of the Exchange Offer with respect to such MFS 2004 Notes. The WorldCom 2004 Notes will be delivered by book-entry transfer to the DTC account of the undersigned or the undersigned's custodian as specified in the Account Information Table above, and the appropriate Consent Payment, and other cash payment, if any, will be made by check to the undersigned (unless specified otherwise "Special Delivery Instructions" or "Special Issuance and Payment Instructions" below) in New York (Clearing House) funds, on the third business day following the Expiration Date (the "Exchange Date"), or as soon as possible thereafter. The undersigned acknowledges that tendering MFS 2004 Notes in accordance with the Exchange Offer constitutes a Consent to the Proposed Amendments with respect to all MFS 2004 Notes so tendered. Subject to, and effective upon, acceptance for exchange of the MFS 2004 Notes tendered hereby in accordance with the terms of the Exchange Offer, the undersigned hereby sells, assigns and transfers to or upon the order of the Company all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of the undersigned's status as a Holder of, all MFS 2004 Notes tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of the undersigned [(with full knowledge that the Exchange Agent also acts as the agent of the Company)], with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such MFS 2004 Notes or transfer ownership of such MFS 2004 Notes on the account books maintained by DTC, in either such case, together with all accompanying evidences of transfer and authenticity, to or upon the order of the Company, (b) present such MFS 2004 Notes for transfer of ownership on the books of the Company, (c) deliver the Consent contained herein to the MFS Trustee, and (d) receive all benefits and otherwise exercise all rights of beneficial ownership of such MFS 2004 Notes, all in accordance with the terms of the Exchange Offer as described in the Prospectus. The undersigned hereby represents and warrants that: (a) the undersigned (i) has full power and authority to tender the MFS 2004 Notes tendered hereby and to sell, assign and transfer all right, title and interest in and to such MFS 2004 Notes and (ii) either has full power and authority to consent to the Proposed Amendments or is delivering a duly executed Consent (which is included in this Letter of Transmittal) from a person or entity having such power and authority; and (b) the Company will acquire good, indefeasible and unencumbered title to such MFS 2004 Notes, free and clear of all security interests, liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations and not subject to any adverse claim or right, when the same are accepted by the Company. The undersigned, upon request, will execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the sale, assignment and transfer to the Company of the MFS 2004 Notes tendered hereby or to perfect the undersigned's Consent to the Proposed Amendments. 5 The undersigned understands that, upon the terms and subject to the conditions of the Exchange Offer, MFS 2004 Notes properly tendered and accepted and not withdrawn in accordance with the terms and conditions of the Exchange Offer will be exchanged for WorldCom 2004 Notes. The undersigned understands that, under certain circumstances, the Company may not be required to accept any of the MFS 2004 Notes tendered (including any such MFS 2004 Notes tendered after the Expiration Date). If any MFS 2004 Notes are not accepted for exchange for any reason or if MFS 2004 Notes are withdrawn or are submitted for a greater principal amount than the undersigned desires to exchange, such unexchanged, withdrawn or non-exchanged MFS 2004 Notes will be returned without expense to the undersigned (or, in the case of MFS 2004 Notes by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry transfer procedures described in the Prospectus) as promptly as practicable after the expiration or termination of the Exchange Offer. The undersigned understands that tenders of MFS 2004 Notes pursuant to the procedures described in the Prospectus under the headings "The Exchange Offers-- Procedures for Tendering" and "Proper Execution and Delivery of Letters of Transmittal" and "The Consent Solicitations" and in the instructions hereto and acceptance hereof by the Company will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions described in the Prospectus. All authority conferred or deemed to be conferred by this Letter of Transmittal shall not be affected by and shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy, and personal and other legal representatives of the undersigned. Tenders of MFS 2004 Notes may not be withdrawn (and the related Consents thereby revoked) at any time after 11:59 p.m., New York City time, on , 1997, unless the Exchange Offer is extended and contains new terms materially adverse to the tendering Holders thereof. A purported notice of withdrawal will be effective only if delivered to the Exchange Agent in accordance with the specific procedures set forth in the Prospectus under the heading "The Consent Solicitations - Required Consents" and "The Exchange Offers - Withdrawal Of Tenders And Revocation Of Consents." Consents may only be revoked by withdrawal of a tender of MFS 2004 Notes. Please credit all WorldCom 2004 Notes issued for any MFS 2004 Notes exchanged to the DTC account of the undersigned or the undersigned's custodian as specified in the Account Information Table above. Unless otherwise indicated under "Special Issuance and Payment Instructions," please issue the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2004 Notes exchanged and issue any MFS 2004 Notes not tendered or not exchanged in the name of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2004 Notes exchanged and deliver any MFS 2004 Notes not tendered or not exchanged (unless tender was effected by book-entry transfer, in which case credit such MFS 2004 Notes to the DTC account from which tender was effected) to the undersigned at the address shown below the undersigned's signature. In the event that "Special Issuance and Payment Instructions" is completed, please issue the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2004 Notes exchanged and/or issue any MFS 2004 Notes not tendered or not exchanged in the name of the person so indicated. In the event that "Special Delivery Instructions" is completed, please mail the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2004 Notes exchanged and/or deliver any certificates for MFS 2004 Notes not tendered or not exchanged (unless tender was effected by book-entry transfer, in which case credit such MFS 2004 Notes to the DTC account from which tender was effected) to the person at the address so indicated. The undersigned recognizes that the Company has no obligation under the "Special Issuance and Payment Instructions" provision or the "Special Delivery Instructions" provision of this Letter of Transmittal to effect the transfer of any MFS 2004 Notes from the name of the Holder thereof if the Company does not accept for exchange any of the principal amount of the MFS 2004 Notes tendered pursuant to this Letter of Transmittal. 6 SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 4, 5, 6 and 7) To be completed ONLY if MFS 2004 Notes to be issued in the principal amount of MFS 2004 Notes not tendered or not exchanged and/or the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2004 Notes exchanged, are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown below the undersigned's signature. Please issue (check one or both) [ ] check [ ] MFS 2004 Notes not tendered or not exchanged, to: Name(s)............................................................. (Please Type or Print) .................................................................... (Please Type or Print) Address............................................................. .................................................................... (Zip Code) SPECIAL ISSUANCE AND PAYMENT INSTRUCTIONS (See Instructions 1, 4, 5, 6 and 7) To be completed ONLY if MFS 2004 Notes to be returned in the principal amount of MFS 2004 Notes not tendered and not exchanged and/or the check for the appropriate Consent Payment for any MFS 2004 Notes exchanged, and other cash payments, if any, are to be issued in the name of someone other than the undersigned. Please issue (check one or both) [ ] check [ ] MFS 2004 Notes not tendered or not exchanged, to: Name(s)............................................................. (Please Type or Print) .................................................................... (Please Type or Print) Address............................................................ .................................................................... (Zip Code) ................................................................................ (Employer Identification or Social Security Number(s) of Payee) (Please also complete the enclosed Substitute Form W-9 herein) SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) (Complete Accompanying Substitute Form W-9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signature(s) of Owner Date Area Code and Telephone Number.......................................... Employer Identification or Social Security Number:...................... (Please complete Substitute Form W-9 herein.) If a holder is tendering any MFS 2004 Notes, this Letter of Transmittal must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the MFS 2004 Notes or on a securities position listing or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If the signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, please set forth at the line entitled "Capacity" full title and submit evidence satisfactory to the Exchange Agent and the Company of such person's authority to so act. See Instruction 5. Name(s):........................................................................ ................................................................................ (Please Type or Print) Capacity (full title):.......................................................... Address:........................................................................ ................................................................................ (Including Zip Code) SIGNATURE GUARANTEE (If required -- See Instructions 1 and 5) Signature(s) Guaranteed by an Eligible Institution:........................................................ (Authorized Signature) ................................................................................ (Title) ................................................................................ (Name and Firm) ................................................................................ (Address) Dated:...................................................................., 1997 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. SIGNATURE GUARANTEES. All signatures on this Letter of Transmittal must be guaranteed by a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, including (as such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities dealer, municipal securities broker, government securities dealer or government securities broker; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings institution that is a participant in a Securities Transfer Association recognized program (each an "Eligible Institution"); however no guarantee of signature is required if the MFS 2004 Notes tendered hereby are tendered (a) by a record Holder who has not completed the box entitled "Special Issuance and Payment Instructions," or the box entitled "Special Delivery Instructions" or (b) for the account of an Eligible Institution. If the record Holder of the MFS 2004 Notes tendered hereby is a person other than the signer of this Letter of Transmittal, see Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND MFS 2004 NOTES; GUARANTEED DELIVERY PROCEDURES; ISSUANCE OF WORLDCOM 2004 NOTES IN BOOK-ENTRY FORM. All physically tendered MFS 2004 Notes, or a confirmation of a book-entry transfer into the Exchange Agent's account at DTC of all MFS 2004 Notes delivered electronically or Notice of Guaranteed Delivery for tenders of MFS 2004 Notes, together with a properly completed and duly executed Letter of Transmittal, and any other documents required by this Letter of Transmittal, should be mailed or delivered to the Exchange Agent at its address set forth on the front page hereof and must be received by the Exchange Agent prior to 11:59 p.m., New York City time, on the Expiration Date. Holders of MFS 2004 Notes whose certificates for MFS 2004 Notes are not immediately available or who cannot deliver their certificates and all other required documents to the Exchange Agent on or prior to the Expiration Date, or who cannot complete the procedure for book-entry transfer on a timely basis, may tender their MFS 2004 Notes pursuant to the guaranteed delivery procedures set forth in the Prospectus under the heading "The Exchange Offers--Procedures for Tendering--Guaranteed Delivery Procedures". Pursuant to such procedures, (i) such tender must be made by or through an Eligible Institution, (ii) on or prior to the Expiration Date, the Exchange Agent must receive from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery), substantially in the form provided by the Company, setting forth the name and address of the Holder of MFS 2004 Notes, the certificate number(s) of such MFS 2004 Notes, and the principal amount at stated maturity of MFS 2004 Notes tendered, stating that the tender is being made thereby and guaranteeing that within two New York Stock Exchange ("NYSE") trading days after the Expiration Date, the Letter of Transmittal (or a facsimile thereof) together with the certificates for all physically tendered MFS 2004 Notes or a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation"), as the case may be, and any other documents required by this Letter of Transmittal will be delivered by the Eligible Institution with the Exchange Agent, and (iii) such properly executed Letter of Transmittal (or facsimile thereof) as well as the certificates for all physically tendered MFS 2004 Notes, in proper form for transfer, or Book-Entry Confirmation, as the case may be, and all other documents required by this Letter of Transmittal, are received by the Exchange Agent within two NYSE trading days after the Expiration Date. Because all WorldCom 2004 Notes will be delivered only in book-entry form through DTC, the appropriate DTC participant name and number (along with any other required account information) to permit such delivery must be provided in the Account Information Table. Failure to do so will render a tender of MFS 2004 Notes defective, and the Company will have the right, which it may waive, to reject such tender. Holders who anticipate tendering by a method other than through DTC are urged to promptly contact a bank, broker or other intermediary (that has the facility to hold securities custodially through DTC) to arrange for receipt of any WorldCom 2004 Notes delivered pursuant to the Exchange Offer and to obtain the information necessary to complete the Account Information Table. THE METHOD OF DELIVERY OF MFS 2004 NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO AND RECEIPT BY THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE. DO NOT SEND THE LETTER OF TRANSMITTAL OR ANY MFS 2004 NOTES TO ANYONE OTHER THAN THE EXCHANGE AGENT. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. All tendering Holders, by execution of this Letter of Transmittal, waive any right to receive any notice of the acceptance of their tender, except as expressly provided in the Prospectus. 3. INADEQUATE SPACE. If the space provided in the Description Table is inadequate, the numbers and principal amounts at stated maturity of the MFS 2004 Notes tendered should be listed on a separate signed schedule and attached hereto. 4. PARTIAL TENDERS AND CONSENTS. Tenders of MFS 2004 Notes will be accepted only in integral multiples of $1,000. The aggregate principal amount at stated maturity of all MFS 2004 Notes delivered to the Exchange Agent will be deemed to have been tendered and a Consent given with respect thereto unless otherwise indicated in the Description Table. Book-entry transfers to the Exchange Agent should be made in the exact principal amount at stated maturity of MFS 2004 Notes tendered and in respect of which a Consent is given. With respect to a tender of MFS 2004 Notes held in 8 physical form, if the tender is made with respect to less than the entire principal amount at stated maturity of the MFS 2004 Notes delivered herewith, enter the principal amount at stated maturity (in integral multiples of $1,000) of the MFS 2004 Notes that are to be tendered and in respect of which a Consent is given in the column in the Description Table entitled "Principal Amount at stated maturity Tendered and in Respect of Which Consent is Given" In such case, a new MFS 2004 Note for the principal amount at stated maturity of the untendered MFS 2004 Notes will be issued. 5. SIGNATURES ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. IF THIS LETTER OF TRANSMITTAL IS SIGNED BY A PERSON OTHER THAN THE RECORD HOLDER, A CONSENT IN THE FORM PROVIDED IN THIS LETTER OF TRANSMITTAL MUST BE OBTAINED FROM THE RECORD HOLDER WITH THE SIGNATURE GUARANTEED BY AN ELIGIBLE INSTITUTION. If this Letter of Transmittal is signed by the record Holder(s) of the MFS 2004 Notes tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the MFS 2004 Notes or on a security position listing with respect thereto without any alteration, enlargement or change whatsoever. If any of the tendered MFS 2004 Notes are held by two or more record Holders, all such persons must sign this Letter of Transmittal. If any of the tendered MFS 2004 Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal and any necessary accompanying documents as there are different registrations. If this Letter of Transmittal is signed by the record Holder(s) of the MFS 2004 Notes tendered and if any MFS 2004 Notes not tendered or not exchanged are to be returned to the undersigned, then no endorsements of MFS 2004 Notes or separate bond powers or other instruments of transfer are required to effect a valid tender. If the Letter of Transmittal is signed by someone other than the record Holder or if any MFS 2004 Notes not tendered or not exchanged are to be returned to someone other than the undersigned, then endorsement of the MFS 2004 Notes or separate bond powers or other instruments of transfer (signed exactly as the name of the registered owner appears on the certificates), will be required to effect a valid tender. Signatures on any such MFS 2004 Notes or bond powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal, any Consent or any MFS 2004 Notes or bond powers or other instruments of transfer are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person(s) acting in a fiduciary or representative capacity, such person(s) should so indicate when signing, unless waived by the Company, and must submit proper evidence satisfactory to the Company of their authority so to act. 6. TRANSFER TAXES. The Company will pay or cause to be paid security transfer taxes, if any, with respect to the sale and transfer of any MFS 2004 Notes to it pursuant to the Exchange Offer. If, however, payment of the appropriate Consent Payment or other cash payment, if any, is made to, or WorldCom 2004 Notes and/or substitute MFS 2004 Notes for amounts not tendered or not exchanged are to be delivered to, or are to be registered in the name of, any person other than the Holder of MFS 2004 Notes tendered, or if tendered MFS 2004 Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the transfer or sale of MFS 2004 Notes to the Company pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered Holder or any other persons) shall be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the appropriate Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder and/or withheld from any payments due with respect to the MFS 2004 Notes tendered by such Holder. 7. SPECIAL ISSUANCE AND PAYMENT AND DELIVERY INSTRUCTIONS. If MFS 2004 Notes representing the aggregate principal amount at stated maturity of MFS 2004 Notes not tendered or not exchanged under the Exchange Offer and/or checks for the appropriate Consent Payment and other cash, if any, for any MFS 2004 Notes exchanged, are to be issued in the name of a person other than the undersigned, or if such MFS 2004 Notes and/or checks are to be sent to someone other than the undersigned or to the undersigned at a different address than that appearing below the signature of the undersigned in the signature box above, the boxes entitled "Special Issuance and Payment Instructions" and "Special Delivery Instructions" in this Letter of Transmittal must be completed as appropriate. Regardless of any information appearing in "Special Issuance and Payment Instructions" or "Special Delivery Instructions," all WorldCom 2004 Notes will be delivered only in book-entry form through DTC and only to the DTC account of the undersigned or the undersigned's custodian. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or additional copies of the Prospectus, this Letter of Transmittal or the Notice of Guaranteed Delivery should be directed to the Information Agent at the address and telephone number set forth on the back cover page hereof and on the back cover page of the Prospectus. 9. SUBSTITUTE FORM W-9. Each Holder tendering MFS 2004 Notes (or other payee) is required to provide the Exchange Agent with the Holder's correct taxpayer identification number ("TIN"), generally the Holder's Social Security or federal Employer Identification Number, and with certain other information, on Substitute Form W-9, which is provided herein, or, alternatively, to establish another basis for exemption from backup withholding. Foreign individuals claiming an exemption from these backup withholding and reporting requirements must submit a statement signed under penalty of perjury attesting as to that status. Forms for such statement can be obtained from the Information Agent. Additionally, a Holder must cross out item (2) in the Certification box on Substitute Form W-9 if the Holder is subject to backup withholding. Failure to provide the information on the form may subject the Holder to a $50 penalty imposed by the Internal Revenue Service and 31% federal income tax backup withholding on the payments made to the Holder or other payee with respect to the WorldCom 2004 Notes and payments received pursuant to the Exchange Offer and related Consent Solicitation. If the Holder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future, such Holder shall write "Applied For" in the space provided in Part I of the form. If the Exchange Agent 9 is not provided with a TIN within 60 days thereafter, the Exchange Agent will withhold 31% on all such WorldCom 2004 Notes and payments until a TIN is provided to the Exchange Agent. See the Prospectus under the heading "Certain U. S. Federal Income Tax Considerations." 10. DETERMINATION OF VALIDITY. The Company will determine, in its sole discretion, all questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance and withdrawal of any tender of MFS 2004 Notes, which determination shall be final and binding on all parties. The Company reserves the absolute right to reject any and all tenders determined by it not to be in proper form or not to be properly tendered or the acceptance of which, or exchange for which, would, in the opinion of counsel to the Company, be unlawful. The Company also reserves the right, in its sole discretion, to waive any defects, irregularities or conditions of tenders in any tender of MFS 2004 Notes of any particular holder whether or not similar defects, irregularities or conditions are waived in the case of other holders. The Company's interpretation of the terms and conditions of the Exchange Offer and the related Consent Solicitation (including this Letter of Transmittal and the instructions hereto) will be final and binding. No tender of MFS 2004 Notes will be deemed to have been validly made until all defects or irregularities with respect to such tender have been cured or waived. Although the Company intends to notify holders of defects or irregularities with respect to tenders of MFS 2004 Notes, neither the Company, any employees, agents, affiliates or assigns of the Company, the Exchange Agent, nor any other person shall be under any duty to give such notification or incur any liability for failure to give any such notification. IMPORTANT: THIS LETTER OF TRANSMITTAL TOGETHER WITH THE MFS 2004 NOTES TENDERED AND ANY OTHER DOCUMENTS REQUIRED BY THIS LETTER OF TRANSMITTAL MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO 11:59 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. 10 PAYER'S NAME: HARRIS TRUST & SAVINGS BANK Social Security Number SUBSTITUTE FORM W-9 Part I -- PLEASE PROVIDE or YOUR TAXPAYER IDENTIFICATION NUMBER IN Employer Identification THE BOX AT THE RIGHT AND Number CERTIFY BY SIGNING AND DATING BELOW ----------------------- Department of the Treasury (If awaiting TIN write Internal Revenue Service "Applied For") Payer's Request for Part II -- For Payees exempt from backup Taxpayer withholding, see Instruction 9 above and the Identification Number "Instructions for Certification of Taxpayer (TIN) and Certifications Identification Number on Substitute Form W-9" enclosed herewith and complete as Instructed therein. Certifications -- Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or a Taxpayer Identification Number has not been issued to me and either (a) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administration office or (b) I intend to mail or deliver an application in the near future). I understand that if I do not provide a Taxpayer Identification Number to the payer, 31% of all reportable payments made to me thereafter will be withheld until I provide a number to the payer and that, if I do not provide my Taxpayer Identification Number within sixty (60) days, such retained amounts shall be remitted to the Internal Revenue Service ("IRS") as backup withholding. (2) I am not subject to backup withholding either because I have not been notified by the IRS that I am subject to backup withholding as a result of a failure to report all interest or dividends or the IRS has notified me that I am no longer subject to backup withholding. Certification Instruction -- You must cross out Item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to withholding you received another notification form the IRS that you are no longer subject to backup withholding, do not cross out Item (2). Name ___________________________________________________________________________ (Please Print) Address________________________________________________________________________ _____________________________________________________________________________ (Include Zip Code) Signature________________________________________________Date__________________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER AND RELATED CONSENT SOLICITATION. PLEASE REVIEW INSTRUCTION 9 AND THE "INSTRUCTIONS FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS. 11 Any questions concerning the terms of the Exchange Offers and Consent Solicitations may be directed to the Joint Dealer Managers, Salomon Brothers Inc Seven World Trade Center New York, New York 10006 Telephone: (800) 558-3745 (toll free) Telephone: (212) 783-3738 (call collect) Attention: Liability Management Group and Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Telephone: (800) 828-3182 (toll free) Telephone: (212) 902-8200 (call collect) Attention: Liability Management Group Any questions concerning the completion of this form, or tender procedures or requests for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Information Agent for the Exchange Offer and Related Consent Solicitation, MacKenzie Partners, Inc. 156 Fifth Avenue New York, New York 10010 Telephone: (800) 322-2885 (toll free) Telephone: (212) 929-5500 (call collect) MFS 2004 Notes tendered, together with this Letter of Transmittal and any other required documents, must be delivered to the Exchange Agent at its address set forth on the front page hereof. 12 EX-99.2 13 MFS COMMUNICATIONS LETTER OF TRANSMITTAL EXHIBIT 99.2 [BLUE] LETTER OF TRANSMITTAL AND CONSENT To Tender and to Give Consent in Respect of 8 7/8% Senior Discount Notes due January 15, 2006 CUSIP No. 55272T-AB-7 of MFS COMMUNICATIONS COMPANY, INC. In Exchange for 8 7/8% Senior Notes due January 15, 2006 of WORLDCOM, INC. Pursuant to the Prospectus and Consent Solicitation dated ________, 1997 THE EXCHANGE OFFER (AS DEFINED BELOW) WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED (SUCH TIME AND DATE, AS EXTENDED, THE "EXPIRATION DATE" WITH RESPECT TO SUCH EXCHANGE OFFER). TENDERS OF MFS 2006 NOTES MAY NOT BE WITHDRAWN (AND THE RELATED CONSENTS THEREBY REVOKED) AT ANY TIME AFTER 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS THE APPLICABLE EXCHANGE OFFER IS EXTENDED AND CONTAINS NEW TERMS MATERIALLY ADVERSE TO THE TENDERING HOLDERS THEREOF. Delivery To: Harris Trust and Savings Bank, Exchange Agent
By Registered or Certified Mail: Overnight or Hand Delivery: Facsimile Transmission: Harris Trust and Savings Bank Harris Trust and Savings Bank (212) 701-7636 c/o Harris Trust Company of New York c/o Harris Trust Company of New York P.O. Box 1010 77 Water Street Wall Street Station 4th Floor Confirm by Telephone: New York, NY 10268 New York, NY 10004 (212) 701-7624
Questions regarding the Exchange Offer or completion of this Letter of Transmittal may be directed to MacKenzie Partners, Inc., the Information Agent for the Exchange Offer, at (800) 322-2885 (toll free). Delivery of this Letter of Transmittal and Consent (this "Letter of Transmittal") to an address, or transmission of instructions via a facsimile number, other than as set forth above or other than in accordance with the instructions herein, will not constitute valid delivery. The instructions accompanying this Letter of Transmittal should be read carefully before this Letter of Transmittal is completed. This Letter of Transmittal is to be used in connection with (i) the physical delivery of MFS 2006 Notes (as defined herein) to Harris Trust and Savings Bank, as exchange agent (the "Exchange Agent"), or (ii) the delivery of MFS 2006 Notes by book-entry transfer to the account of the Exchange Agent at The Depository Trust Company ("DTC"), in accordance with the procedures described in the Prospectus and Consent Solicitation dated __________, 1997 (together, the "Prospectus") under the heading "The Exchange Offers--Procedures for Tendering." All capitalized terms used and not defined herein have the meanings ascribed to them in the Prospectus. Pursuant to the Prospectus, receipt of which is hereby acknowledged, WorldCom, Inc. (the "Company") is offering to exchange $737.912 principal amount of WorldCom 2006 Notes for each $1,000 principal amount at stated maturity of outstanding MFS 2006 Notes properly tendered for exchange and accepted. If the aggregate principal amount of WorldCom 2006 Notes that otherwise would be issued in exchange for the MFS 2006 Notes tendered by a Holder and accepted by the Company pursuant to the Exchange Offer is not an integral multiple of $1,000, such principal amount will be reduced to the nearest such multiple and the Company will pay to such Holder an amount in cash equal to the reduction of such principal amount. The Company is also offering, pursuant to the Prospectus, to pay each Holder who gives a valid Consent (as defined herein) to the Proposed Amendments (as defined herein) on or prior to the Expiration Date a cash fee in an amount equal to 0.__% of the Accreted Value, as of July 15, 1997 (the "Interest Accrual Date"), of such Holder's MFS 2006 Notes with respect to which Consent has been given. Holders may give their Consent to the Proposed Amendments only by tendering MFS 2006 Notes in the Exchange Offer, will be required to consent as a condition to a valid tender and will be deemed to have given such Consent by so tendering. The proper completion, execution and delivery of this Letter of Transmittal will constitute a Consent to the Proposed Amendments with respect to the MFS 2006 Notes. Upon the terms and subject to the conditions of the Exchange Offer, the Company will accept for exchange all MFS 2006 Notes that are properly tendered (and not withdrawn) on or prior to 11:59 p.m., New York City time, on the Expiration Date. Holders who are unable to properly tender their MFS 2006 Notes (including delivery of this Letter of Transmittal and all other documents required hereby) on or prior to the Expiration Date, may nevertheless tender their MFS 2006 Notes (and thereby consent to the Proposed Amendments) according to the guaranteed delivery procedures set forth in the Prospectus under the heading "The Exchange Offers--Procedures for Tendering--Guaranteed Delivery Procedures." See Instruction 2. Holders who wish to tender their MFS 2006 Notes (and thereby consent to the Proposed Amendments) pursuant to this Letter of Transmittal must, at a minimum, fill in the necessary account information in the table below entitled "Account Information" (the "Account Information Table"), complete columns (1) through (3) in the table below entitled "Description of MFS 2006 Notes Tendered and In Respect of Which Consent Is Given" (the "Description Table") and complete and sign in the box below entitled "SIGN HERE." If only columns (1) through (3) are completed in the Description Table, the Holder will be deemed to have consented to the Proposed Amendments in respect of, and to have tendered, all MFS 2006 Notes listed in the Description Table. If a Holder wishes to tender less than all of such MFS 2006 Notes delivered to the Exchange Agent, column (4) of the Description Table must be completed in full. See Instruction 4. 2 In order to effect a valid tender of MFS 2006 Notes the undersigned must complete the Account Information Table below. WorldCom 2006 Notes will be delivered only in book-entry form through DTC and only to the DTC account of the undersigned or the undersigned's custodian. Accordingly, if the undersigned tenders (i) by book-entry transfer to the Exchange Agent's account at DTC, the first box in the account information table must be checked and any WorldCom 2006 Notes will be delivered to the DTC participant from which tender was effected, or (ii) by physical delivery of certificates to the Exchange Agent, the second box in the account information table must be checked and any WorldCom 2006 Notes will be delivered to the DTC participant indicated by the Holder in such table. Failure to provide the information necessary to effect delivery of WorldCom 2006 Notes will render such Holder's tender defective and the Company will have the right, which it may waive, to reject such tender. ATTENTION ANY TENDERING HOLDER WHOSE MFS 2006 NOTES WILL NOT BE DELIVERED TO THE EXCHANGE AGENT THROUGH DTC: Because WorldCom 2006 Notes will be delivered only in book-entry form through DTC, you are urged to contact promptly a bank, broker or other intermediary (that has the facility to hold securities custodially through DTC) to arrange for receipt of any WorldCom 2006 Notes delivered pursuant to the Exchange Offer and to obtain the information necessary to complete the Account Information Table. TO VALIDLY COMPLETE THE LETTER OF TRANSMITTAL (AND THEREBY CONSENT TO THE PROPOSED AMENDMENTS), COMPLETE PAGES ____ AND ____, COMPLETE AND SIGN PAGE ____, AND (IF NECESSARY) COMPLETE AND SIGN PAGES ____, ____ AND ____. THE INSTRUCTIONS STARTING ON PAGE ____ FORM A PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER AND RELATED CONSENT SOLICITATION AND SHOULD BE READ CAREFULLY. ACCOUNT INFORMATION (Complete One Method of Tender Only*) VIA DTC [_] Check here if tendered MFS 2006 Notes are being delivered by book-entry transfer to the Exchange Agent's account at DTC and complete the following: Name of DTC Participant -------------------------------------------------------- DTC Participant Number -------------------------------------------------------- VIA PHYSICAL DELIVERY [_] Check here if tendered MFS 2006 Notes are being delivered in physical form and complete the following: Name of Registered Holder(s) --------------------------------------------------- DTC Participant Receiving WorldCom 2006 Notes**: Name of DTC Participant ------------------------------------------------- DTC Participant Number ------------------------------------------------- Customer Account Number ------------------------------------------------- DTC Participant Contact Name/Phone Number ------------------------------- - ------------------------------------------------------------------------------- * Failure to complete one, and only one, method of tender will render the undersigned's tender defective. ** Failure to provide the information necessary to effect delivery of WorldCom 2006 Notes will render the undersigned's tender defective. [_] Check here if this Letter of Transmittal and the MFS 2006 Notes tendered hereby are being delivered pursuant to a Notice of Guaranteed Delivery previously delivered in accordance with the Guaranteed Delivery Procedures described in Instruction 2 hereof. 3 List below the MFS 2006 Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and principal amount of MFS 2006 Notes should be listed on a separate signed schedule affixed hereto. DESCRIPTION OF MFS 2006 NOTES TENDERED AND IN RESPECT OF WHICH CONSENT IS GIVEN (SEE INSTRUCTIONS 3 AND 4)
Name(s) and Address(es) of Holder(s) (please fill in exactly as name appears MFS Notes Tendered and In Respect on the face of the MFS 2006 Notes of Which Consent is Given tendered or on a security position (attach additional signed schedule if necessary) listing with respect thereto) Aggregate Principal Certificate Principal Amount Number(s)* Amount at Stated at Stated Maturity of Maturity MFS 2006 Note(s) Tendered and in Respect of Which Consent is Given (if less than all)** (1) (2) (3) (4) Total
* Need not be completed if MFS 2006 Notes are being tendered by book-entry transfer. ** You must consent to the Proposed Amendments in respect of all MFS 2006 Notes tendered by you; completion of column (3) will constitute a Consent to the Proposed Amendments in respect of such MFS 2006 Notes, unless less than all MFS 2006 Notes are to be tendered as specified in column (4), in which case Consents only with respect to such lesser amount of MFS 2006 Notes shall be given. See Instruction 4. The principal amount at stated maturity of MFS 2006 Notes tendered hereby must be in denominations of $1,000 and any integral multiple thereof. See Instruction 4. 4 NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The undersigned hereby (i) consents (the "Consent") to the proposed amendments described in the Prospectus (the "Proposed Amendments"), to the Indenture, dated as of January 15, 1996 (as supplemented by First Supplemental Indenture dated as of January 15, 1996, the "1996 Indenture"), between MFS Communications Company, Inc. ("MFS") and IBJ Schroder Bank & Trust Company, as Trustee (the "MFS Trustee"), pursuant to which the 8 7/8% Senior Discount Notes due January 15, 2006 of MFS (the "MFS 2006 Notes") indicated above were issued, and (ii) tenders to the Company the MFS 2006 Notes indicated above in exchange for 8 7/8% Senior Notes due January 15, 2006 of the Company (the "WorldCom 2006 Notes") in a ratio equal to $737.912 principal amount of WorldCom 2006 Notes per $1,000 principal amount at stated maturity of the MFS 2006 Notes, upon the terms and subject to the conditions set forth in the Prospectus (receipt of which is hereby acknowledged) and in this Letter of Transmittal, both of which together constitute the Company's offer (the "Exchange Offer") to exchange WorldCom 2006 Notes for MFS 2006 Notes properly tendered. Interest on the WorldCom 2006 Notes will accrue from the Interest Accrual Date. The principal amount of WorldCom 2006 Notes being offered in exchange for the MFS 2006 Notes tendered hereby is equal to the Accreted Value (as defined in the Prospectus) of such MFS 2006 Notes as of the Interest Accrual Date. WorldCom 2006 Notes will be issued only in denominations of $1,000 and integral multiples thereof. If the aggregate principal amount of WorldCom 2006 Notes that otherwise would be issued in exchange for the MFS 2006 Notes tendered by a Holder and accepted by the Company pursuant to the Exchange Offer is not an integral multiple of $1,000, such principal amount will be reduced to the nearest such multiple and the Company will pay to such Holder an amount in cash equal to the reduction of such principal amount. In connection with the undersigned's Consent, the undersigned shall receive a cash fee in an amount equal to 0.___% of the Accreted Value, as of the Interest Accrual Date, of the undersigned's MFS 2006 Notes with respect to which Consent has been given (a "Consent Payment"). The undersigned understands that (i) the Proposed Amendments will be adopted with respect to the MFS 2006 Notes tendered herewith and (ii) the applicable Consent Payment will be paid to such Holder, in both cases, only upon consummation of the Exchange Offer with respect to such MFS 2006 Notes. The WorldCom 2006 Notes will be delivered by book-entry transfer to the DTC account of the undersigned or the undersigned's custodian as specified in the Account Information Table above, and the appropriate Consent Payment, and other cash payment, if any, will be made by check to the undersigned (unless specified otherwise "Special Delivery Instructions" or "Special Issuance and Payment Instructions" below) in New York (Clearing House) funds, on the third business day following the Expiration Date (the "Exchange Date"), or as soon as possible thereafter. The undersigned acknowledges that tendering MFS 2006 Notes in accordance with the Exchange Offer constitutes a Consent to the Proposed Amendments with respect to all MFS 2006 Notes so tendered. Subject to, and effective upon, acceptance for exchange of the MFS 2006 Notes tendered hereby in accordance with the terms of the Exchange Offer, the undersigned hereby sells, assigns and transfers to or upon the order of the Company all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of the undersigned's status as a Holder of, all MFS 2006 Notes tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of the undersigned [(with full knowledge that the Exchange Agent also acts as the agent of the Company)], with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such MFS 2006 Notes or transfer ownership of such MFS 2006 Notes on the account books maintained by DTC, in either such case, together with all accompanying evidences of transfer and authenticity, to or upon the order of the Company, (b) present such MFS 2006 Notes for transfer of ownership on the books of the Company, (c) deliver the Consent contained herein to the MFS Trustee, and (d) receive all benefits and otherwise exercise all rights of beneficial ownership of such MFS 2006 Notes, all in accordance with the terms of the Exchange Offer as described in the Prospectus. The undersigned hereby represents and warrants that: (a) the undersigned (i) has full power and authority to tender the MFS 2006 Notes tendered hereby and to sell, assign and transfer all right, title and interest in and to such MFS 2006 Notes and (ii) either has full power and authority to consent to the Proposed Amendments or is delivering a duly executed Consent (which is included in this Letter of Transmittal) from a person or entity having such power and authority; and (b) the Company will acquire good, indefeasible and unencumbered title to such MFS 2006 Notes, free and clear of all security interests, liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations and not subject to any adverse claim or right, when the same are accepted by the Company. The undersigned, upon request, will execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the sale, assignment and transfer to the Company of the MFS 2006 Notes tendered hereby or to perfect the undersigned's Consent to the Proposed Amendments. 5 The undersigned understands that, upon the terms and subject to the conditions of the Exchange Offer, MFS 2006 Notes properly tendered and accepted and not withdrawn in accordance with the terms and conditions of the Exchange Offer will be exchanged for WorldCom 2006 Notes. The undersigned understands that, under certain circumstances, the Company may not be required to accept any of the MFS 2006 Notes tendered (including any such MFS 2006 Notes tendered after the Expiration Date). If any MFS 2006 Notes are not accepted for exchange for any reason or if MFS 2006 Notes are withdrawn or are submitted for a greater principal amount than the undersigned desires to exchange, such unexchanged, withdrawn or non-exchanged MFS 2006 Notes will be returned without expense to the undersigned (or, in the case of MFS 2006 Notes by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry transfer procedures described in the Prospectus) as promptly as practicable after the expiration or termination of the Exchange Offer. The undersigned understands that tenders of MFS 2006 Notes pursuant to the procedures described in the Prospectus under the headings "The Exchange Offers-- Procedures for Tendering" and "Proper Execution and Delivery of Letters of Transmittal" and "The Consent Solicitations" and in the instructions hereto and acceptance hereof by the Company will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions described in the Prospectus. All authority conferred or deemed to be conferred by this Letter of Transmittal shall not be affected by and shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy, and personal and other legal representatives of the undersigned. Tenders of MFS 2006 Notes may not be withdrawn (and the related Consents thereby revoked) at any time after 11:59 p.m., New York City time, on , 1997, unless the Exchange Offer is extended and contains new terms materially adverse to the tendering Holders thereof. A purported notice of withdrawal will be effective only if delivered to the Exchange Agent in accordance with the specific procedures set forth in the Prospectus under the heading "The Consent Solicitations - Required Consents" and "The Exchange Offers - Withdrawal Of Tenders And Revocation Of Consents." Consents may only be revoked by withdrawal of a tender of MFS 2006 Notes. Please credit all WorldCom 2006 Notes issued for any MFS 2006 Notes exchanged to the DTC account of the undersigned or the undersigned's custodian as specified in the Account Information Table above. Unless otherwise indicated under "Special Issuance and Payment Instructions," please issue the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2006 Notes exchanged and issue any MFS 2006 Notes not tendered or not exchanged in the name of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2006 Notes exchanged and deliver any MFS 2006 Notes not tendered or not exchanged (unless tender was effected by book-entry transfer, in which case credit such MFS 2006 Notes to the DTC account from which tender was effected) to the undersigned at the address shown below the undersigned's signature. In the event that "Special Issuance and Payment Instructions" is completed, please issue the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2006 Notes exchanged and/or issue any MFS 2006 Notes not tendered or not exchanged in the name of the person so indicated. In the event that "Special Delivery Instructions" is completed, please mail the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2006 Notes exchanged and/or deliver any certificates for MFS 2006 Notes not tendered or not exchanged (unless tender was effected by book-entry transfer, in which case credit such MFS 2006 Notes to the DTC account from which tender was effected) to the person at the address so indicated. The undersigned recognizes that the Company has no obligation under the "Special Issuance and Payment Instructions" provision or the "Special Delivery Instructions" provision of this Letter of Transmittal to effect the transfer of any MFS 2006 Notes from the name of the Holder thereof if the Company does not accept for exchange any of the principal amount of the MFS 2006 Notes tendered pursuant to this Letter of Transmittal. 6 SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 4, 5, 6 and 7) To be completed ONLY if MFS 2006 Notes to be issued in the principal amount of MFS 2006 Notes not tendered or not exchanged and/or the check for the appropriate Consent Payment and other cash payments, if any, for any MFS 2006 Notes exchanged, are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown below the undersigned's signature. Please issue (check one or both) [ ] check [ ] MFS 2006 Notes not tendered or not exchanged, to: Name(s).......................................................... (Please Type or Print) ................................................................. (Please Type or Print) Address.......................................................... ................................................................. (Zip Code) SPECIAL ISSUANCE AND PAYMENT INSTRUCTIONS See Instructions 1, 4. 5. 6 and 7) To be completed ONLY if MFS 2006 Notes to be returned in the principal amount of MFS 2006 Notes not tendered and not exchanged and/or the check for the appropriate Consent Payment for any MFS 2006 Notes exchanged, and other cash payments, if any, are to be issued in the name of someone other than the undersigned. Please issue (check one or both) [ ] check [ ] MFS 2006 Notes not tendered or not exchanged, to: Name(s)............................................................ (Please Type or Print) ................................................................... (Please Type or Print) Address............................................................ ................................................................... (Zip Code) (Employer Identification or Social Security Number(s) of Payee) (Please also complete the enclosed Substitute Form W-9 herein) SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) (Complete Accompanying Substitute Form W-9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signature(s) of Owner Date Area Code and Telephone Number.............................................. Employer Identification or SocialSecurity Number:........................... (Please complete Substitute Form W-9 herein.) If a holder is tendering any MFS 2006 Notes, this Letter of Transmittal must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the MFS 2006 Notes or on a securities position listing or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If the signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, please set forth at the line entitled "Capacity" full title and submit evidence satisfactory to the Exchange Agent and the Company of such person's authority to so act. See Instruction 5. Name(s):........................................................................ ................................................................................ (Please Type or Print) Capacity (full title):.......................................................... Address:........................................................................ ................................................................................ (Including Zip Code) SIGNATURE GUARANTEE (If required -- See Instructions 1 and 5) Signature(s) Guaranteed by an Eligible Institution:........................................................ (Authorized Signature) ................................................................................ (Title) ................................................................................ (Name and Firm) ................................................................................ (Address) Dated:...................................................................., 1997 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. SIGNATURE GUARANTEES. All signatures on this Letter of Transmittal must be guaranteed by a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, including (as such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities dealer, municipal securities broker, government securities dealer or government securities broker; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings institution that is a participant in a Securities Transfer Association recognized program (each an "Eligible Institution"); however no guarantee of signature is required if the MFS 2006 Notes tendered hereby are tendered (a) by a record Holder who has not completed the box entitled "Special Issuance and Payment Instructions," or the box entitled "Special Delivery Instructions" or (b) for the account of an Eligible Institution. If the record Holder of the MFS 2006 Notes tendered hereby is a person other than the signer of this Letter of Transmittal, see Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND MFS 2006 NOTES; GUARANTEED DELIVERY PROCEDURES; ISSUANCE OF WORLDCOM 2006 NOTES IN BOOK-ENTRY FORM. All physically tendered MFS 2006 Notes, or a confirmation of a book-entry transfer into the Exchange Agent's account at DTC of all MFS 2006 Notes delivered electronically or Notice of Guaranteed Delivery for tenders of MFS 2006 Notes, together with a properly completed and duly executed Letter of Transmittal, and any other documents required by this Letter of Transmittal, should be mailed or delivered to the Exchange Agent at its address set forth on the front page hereof and must be received by the Exchange Agent prior to 11:59 p.m., New York City time, on the Expiration Date. Holders of MFS 2006 Notes whose certificates for MFS 2006 Notes are not immediately available or who cannot deliver their certificates and all other required documents to the Exchange Agent on or prior to the Expiration Date, or who cannot complete the procedure for book-entry transfer on a timely basis, may tender their MFS 2006 Notes pursuant to the guaranteed delivery procedures set forth in the Prospectus under the heading "The Exchange Offers--Procedures for Tendering--Guaranteed Delivery Procedures". Pursuant to such procedures, (i) such tender must be made by or through an Eligible Institution, (ii) on or prior to the Expiration Date, the Exchange Agent must receive from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery), substantially in the form provided by the Company, setting forth the name and address of the Holder of MFS 2006 Notes, the certificate number(s) of such MFS 2006 Notes, and the principal amount at stated maturity of MFS 2006 Notes tendered, stating that the tender is being made thereby and guaranteeing that within two New York Stock Exchange ("NYSE") trading days after the Expiration Date, the Letter of Transmittal (or a facsimile thereof) together with the certificates for all physically tendered MFS 2006 Notes or a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation"), as the case may be, and any other documents required by this Letter of Transmittal will be delivered by the Eligible Institution with the Exchange Agent, and (iii) such properly executed Letter of Transmittal (or facsimile thereof) as well as the certificates for all physically tendered MFS 2006 Notes, in proper form for transfer, or Book-Entry Confirmation, as the case may be, and all other documents required by this Letter of Transmittal, are received by the Exchange Agent within two NYSE trading days after the Expiration Date. Because all WorldCom 2006 Notes will be delivered only in book-entry form through DTC, the appropriate DTC participant name and number (along with any other required account information) to permit such delivery must be provided in the Account Information Table. Failure to do so will render a tender of MFS 2006 Notes defective, and the Company will have the right, which it may waive, to reject such tender. Holders who anticipate tendering by a method other than through DTC are urged to promptly contact a bank, broker or other intermediary (that has the facility to hold securities custodially through DTC) to arrange for receipt of any WorldCom 2006 Notes delivered pursuant to the Exchange Offer and to obtain the information necessary to complete the Account Information Table. THE METHOD OF DELIVERY OF MFS 2006 NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO AND RECEIPT BY THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE. DO NOT SEND THE LETTER OF TRANSMITTAL OR ANY MFS 2006 NOTES TO ANYONE OTHER THAN THE EXCHANGE AGENT. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. All tendering Holders, by execution of this Letter of Transmittal, waive any right to receive any notice of the acceptance of their tender, except as expressly provided in the Prospectus. 3. INADEQUATE SPACE. If the space provided in the Description Table is inadequate, the numbers and principal amounts at stated maturity of the MFS 2006 Notes tendered should be listed on a separate signed schedule and attached hereto. 4. PARTIAL TENDERS AND CONSENTS. Tenders of MFS 2006 Notes will be accepted only in integral multiples of $1,000. The aggregate principal amount at stated maturity of all MFS 2006 Notes delivered to the Exchange Agent will be deemed to have been tendered and a Consent given with respect thereto unless otherwise indicated in the Description Table. Book-entry transfers to the Exchange Agent should be made in the exact principal amount at stated maturity of MFS 2006 Notes tendered and in respect of which a Consent is given. With respect to a tender of MFS 2006 Notes held in 8 physical form, if the tender is made with respect to less than the entire principal amount at stated maturity of the MFS 2006 Notes delivered herewith, enter the principal amount at stated maturity (in integral multiples of $1,000) of the MFS 2006 Notes that are to be tendered and in respect of which a Consent is given in the column in the Description Table entitled "Principal Amount at stated maturity Tendered and in Respect of Which Consent is Given" In such case, a new MFS 2006 Note for the principal amount at stated maturity of the untendered MFS 2006 Notes will be issued. 5. SIGNATURES ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. IF THIS LETTER OF TRANSMITTAL IS SIGNED BY A PERSON OTHER THAN THE RECORD HOLDER, A CONSENT IN THE FORM PROVIDED IN THIS LETTER OF TRANSMITTAL MUST BE OBTAINED FROM THE RECORD HOLDER WITH THE SIGNATURE GUARANTEED BY AN ELIGIBLE INSTITUTION. If this Letter of Transmittal is signed by the record Holder(s) of the MFS 2006 Notes tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the MFS 2006 Notes or on a security position listing with respect thereto without any alteration, enlargement or change whatsoever. If any of the tendered MFS 2006 Notes are held by two or more record Holders, all such persons must sign this Letter of Transmittal. If any of the tendered MFS 2006 Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal and any necessary accompanying documents as there are different registrations. If this Letter of Transmittal is signed by the record Holder(s) of the MFS 2006 Notes tendered and if any MFS 2006 Notes not tendered or not exchanged are to be returned to the undersigned, then no endorsements of MFS 2006 Notes or separate bond powers or other instruments of transfer are required to effect a valid tender. If the Letter of Transmittal is signed by someone other than the record Holder or if any MFS 2006 Notes not tendered or not exchanged are to be returned to someone other than the undersigned, then endorsement of the MFS 2006 Notes or separate bond powers or other instruments of transfer (signed exactly as the name of the registered owner appears on the certificates), will be required to effect a valid tender. Signatures on any such MFS 2006 Notes or bond powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal, any Consent or any MFS 2006 Notes or bond powers or other instruments of transfer are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person(s) acting in a fiduciary or representative capacity, such person(s) should so indicate when signing, unless waived by the Company, and must submit proper evidence satisfactory to the Company of their authority so to act. 6. TRANSFER TAXES. The Company will pay or cause to be paid security transfer taxes, if any, with respect to the sale and transfer of any MFS 2006 Notes to it pursuant to the Exchange Offer. If, however, payment of the appropriate Consent Payment or other cash payment, if any, is made to, or WorldCom 2006 Notes and/or substitute MFS 2006 Notes for amounts not tendered or not exchanged are to be delivered to, or are to be registered in the name of, any person other than the Holder of MFS 2006 Notes tendered, or if tendered MFS 2006 Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the transfer or sale of MFS 2006 Notes to the Company pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered Holder or any other persons) shall be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the appropriate Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder and/or withheld from any payments due with respect to the MFS 2006 Notes tendered by such Holder. 7. SPECIAL ISSUANCE AND PAYMENT AND DELIVERY INSTRUCTIONS. If MFS 2006 Notes representing the aggregate principal amount at stated maturity of MFS 2006 Notes not tendered or not exchanged under the Exchange Offer and/or checks for the appropriate Consent Payment and other cash, if any, for any MFS 2006 Notes exchanged, are to be issued in the name of a person other than the undersigned, or if such MFS 2006 Notes and/or checks are to be sent to someone other than the undersigned or to the undersigned at a different address than that appearing below the signature of the undersigned in the signature box above, the boxes entitled "Special Issuance and Payment Instructions" and "Special Delivery Instructions" in this Letter of Transmittal must be completed as appropriate. Regardless of any information appearing in "Special Issuance and Payment Instructions" or "Special Delivery Instructions," all WorldCom 2006 Notes will be delivered only in book-entry form through DTC and only to the DTC account of the undersigned or the undersigned's custodian. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or additional copies of the Prospectus, this Letter of Transmittal or the Notice of Guaranteed Delivery should be directed to the Information Agent at the address and telephone number set forth on the back cover page hereof and on the back cover page of the Prospectus. 9. SUBSTITUTE FORM W-9. Each Holder tendering MFS 2006 Notes (or other payee) is required to provide the Exchange Agent with the Holder's correct taxpayer identification number ("TIN"), generally the Holder's Social Security or federal Employer Identification Number, and with certain other information, on Substitute Form W-9, which is provided herein, or, alternatively, to establish another basis for exemption from backup withholding. Foreign individuals claiming an exemption from these backup withholding and reporting requirements must submit a statement signed under penalty of perjury attesting as to that status. Forms for such statement can be obtained from the Information Agent. Additionally, a Holder must cross out item (2) in the Certification box on Substitute Form W-9 if the Holder is subject to backup withholding. Failure to provide the information on the form may subject the Holder to a $50 penalty imposed by the Internal Revenue Service and 31% federal income tax backup withholding on the payments made to the Holder or other payee with respect to the WorldCom 2006 Notes and payments received pursuant to the Exchange Offer and related Consent Solicitation. If the Holder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future, such Holder shall write "Applied For" in the space provided in Part I of the form. If the Exchange Agent 9 is not provided with a TIN within 60 days thereafter, the Exchange Agent will withhold 31% on all such WorldCom 2006 Notes and payments until a TIN is provided to the Exchange Agent. See the Prospectus under the heading "Certain U. S. Federal Income Tax Considerations." 10. DETERMINATION OF VALIDITY. The Company will determine, in its sole discretion, all questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance and withdrawal of any tender of MFS 2006 Notes, which determination shall be final and binding on all parties. The Company reserves the absolute right to reject any and all tenders determined by it not to be in proper form or not to be properly tendered or the acceptance of which, or exchange for which, would, in the opinion of counsel to the Company, be unlawful. The Company also reserves the right, in its sole discretion, to waive any defects, irregularities or conditions of tenders in any tender of MFS 2006 Notes of any particular holder whether or not similar defects, irregularities or conditions are waived in the case of other holders. The Company's interpretation of the terms and conditions of the Exchange Offer and the related Consent Solicitation (including this Letter of Transmittal and the instructions hereto) will be final and binding. No tender of MFS 2006 Notes will be deemed to have been validly made until all defects or irregularities with respect to such tender have been cured or waived. Although the Company intends to notify holders of defects or irregularities with respect to tenders of MFS 2006 Notes, neither the Company, any employees, agents, affiliates or assigns of the Company, the Exchange Agent, nor any other person shall be under any duty to give such notification or incur any liability for failure to give any such notification. IMPORTANT: THIS LETTER OF TRANSMITTAL TOGETHER WITH THE MFS 2006 NOTES TENDERED AND ANY OTHER DOCUMENTS REQUIRED BY THIS LETTER OF TRANSMITTAL MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO 11:59 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. 10 PAYER'S NAME: HARRIS TRUST & SAVINGS BANK Social Security Number SUBSTITUTE FORM W-9 Part I -- PLEASE PROVIDE or YOUR TAXPAYER IDENTIFICATION NUMBER IN Employer Identification THE BOX AT THE RIGHT AND Number CERTIFY BY SIGNING AND DATING BELOW ---------------------- Department of the Treasury (If awaiting TIN write Internal Revenue Service "Applied For") Payer's Request for Part II -- For Payees exempt from backup Taxpayer withholding, see Instruction 9 above and the Identification Number "Instructions for Certification of Taxpayer (TIN) and Certifications Identification Number on Substitute Form W-9" enclosed herewith and complete as Instructed therein. Certifications -- Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or a Taxpayer Identification Number has not been issued to me and either (a) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administration office or (b) I intend to mail or deliver an application in the near future). I understand that if I do not provide a Taxpayer Identification Number to the payer, 31% of all reportable payments made to me thereafter will be withheld until I provide a number to the payer and that, if I do not provide my Taxpayer Identification Number within sixty (60) days, such retained amounts shall be remitted to the Internal Revenue Service ("IRS") as backup withholding. (2) I am not subject to backup withholding either because I have not been notified by the IRS that I am subject to backup withholding as a result of a failure to report all interest or dividends or the IRS has notified me that I am no longer subject to backup withholding. Certification Instruction -- You must cross out Item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to withholding you received another notification form the IRS that you are no longer subject to backup withholding, do not cross out Item (2). Name ___________________________________________________________________________ _______________________________________________________________________________ (Please Print) Address________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (Include Zip Code) Signature___________________________________________________Date_______________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER AND RELATED CONSENT SOLICITATION. PLEASE REVIEW INSTRUCTION 9 AND THE "INSTRUCTIONS FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS. 11 Any questions concerning the terms of the Exchange Offers and Consent Solicitations may be directed to the Joint Dealer Managers, Salomon Brothers Inc Seven World Trade Center New York, New York 10006 Telephone: (800) 558-3745 (toll free) Telephone: (212) 783-3738 (call collect) Attention: Liability Management Group and Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Telephone: (800) 828-3182 (toll free) Telephone: (212) 902-8200 (call collect) Attention: Liability Management Group Any questions concerning the completion of this form, or tender procedures or requests for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Information Agent for the Exchange Offer and Related Consent Solicitation, MacKenzie Partners, Inc. 156 Fifth Avenue New York, New York 10010 Telephone: (800) 322-2885 (toll free) Telephone: (212) 929-5500 (call collect) MFS 2006 Notes tendered, together with this Letter of Transmittal and any other required documents, must be delivered to the Exchange Agent at its address set forth on the front page hereof. 12 EX-99.3 14 NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.3 NOTICE OF GUARANTEED DELIVERY For Tender of 9-3/8% Senior Discount Notes Due January 15, 2004 CUSIP No. 55272T-AA-9 of MFS COMMUNICATIONS COMPANY, INC. In Exchange for 9-3/8% Senior Notes Due January 15, 2004 of WORLDCOM, INC. and Related Consent Solicitation - ------------------------------------------------------------------------------- THE EXCHANGE OFFER (AS DEFINED BELOW) WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON ___________, 1997, UNLESS EXTENDED (SUCH TIME AND DATE AS EXTENDED, THE "EXPIRATION DATE"). TENDERS OF MFS 2004 NOTES MAY NOT BE WITHDRAWN (AND THE RELATED CONSENTS THEREBY REVOKED) AT ANY TIME AFTER 11:59 P.M., NEW YORK CITY TIME, ON ______________, 1997, UNLESS THE EXCHANGE OFFER IS EXTENDED AND CONTAINS NEW TERMS MATERIALLY ADVERSE TO THE TENDERING HOLDERS THEREOF. - ------------------------------------------------------------------------------- This form, or one substantially equivalent hereto, must be used by a Holder of 9-3/8% Senior Discount Notes due January 15, 2004 ("MFS 2004 Notes") of MFS Communications Company, Inc. ("MFS") who wishes to tender MFS 2004 Notes, and thereby consent to certain proposed amendments to the indenture under which such notes were issued (the "Proposed Amendments") as described in the Prospectus and Consent Solicitation, dated ____________, 1997 (the "Prospectus"), pursuant to the guaranteed delivery procedures described in the Prospectus under the heading "The Exchange Offers -- Procedures for Tendering -- Guaranteed Delivery Procedures," relating to the offer (the "Exchange Offer") by WorldCom, Inc. ("WorldCom") to exchange its 9-3/8% Senior Notes due January 15, 2004, for MFS 2004 Notes and in Instruction 2 to the related Letter of Transmittal and Consent (the "Letter of Transmittal"). Any Holder who wishes to tender MFS 2004 Notes pursuant to such guaranteed delivery procedures must ensure that Harris Trust and Savings Bank, as Exchange Agent (the "Exchange Agent"), receives such form, and any other required documents, on or prior to the Expiration Date. Such form may be sent to the Exchange Agent by facsimile transmission, mail or hand delivery, and must include a guarantee by an Eligible Institution (as defined below) in the form set forth at the end of this Notice of Guaranteed Delivery. All capitalized terms used and not defined herein have the meanings ascribed to them in the Prospectus. Delivery To: Harris Trust and Savings Bank, Exchange Agent
By Registered or Certified By Overnight or Hand By Facsimile Transmission: Mail: Delivery: Harris Trust and Harris Trust and (212) 701-7636 Savings Bank Savings Bank c/o Harris Trust Company c/o Harris Trust Company of New York of New York P.O. Box 1010 77 Water Street Confirm by Telephone: Wall Street Station 4th Floor New York, NY 10268 New York, NY 10004 (212) 701-7624
Questions regarding the Exchange Offer or completion of this Notice of Guaranteed Delivery should be directed to MacKenzie Partners, Inc., the Information Agent for the Exchange Offer, at (800) 322-2885 (toll free). DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, receipt of which is hereby acknowledged, the undersigned hereby tenders to WorldCom and consents to the Proposed Amendments with respect to the principal amount at stated maturity of MFS 2004 Notes specified below pursuant to the guaranteed delivery procedures set forth in the Prospectus and in Instruction 2 of the related Letter of Transmittal. Listed below are the MFS 2004 Notes to which this Notice of Guaranteed Delivery relates. If the space provided below is inadequate, the certificate numbers and principal amount at stated maturity of MFS 2004 Notes are listed on a separate signed schedule affixed hereto.
- ------------------------------------------------------------------------------------------------------ DESCRIPTION OF MFS 2004 NOTES (1) (2) - ------------------------------------------------------------------------------------------------------ Aggregate Principal Name(s) and Address(es) of Holder(s) Certificate Amount at Stated (Please fill in, if blank) Number(s)* Maturity of MFS 2004 Note(s) Tendered by Guaranteed Delivery Procedures - ------------------------------------------------------------------------------------------------------ --------------------------------------------- --------------------------------------------- --------------------------------------------- --------------------------------------------- Total - ------------------------------------------------------------------------------------------------------
* Need not be completed if MFS 2004 Notes will be tendered by book-entry transfer in accordance with the instructions contained in the Letter of Transmittal. If MFS Notes will be tendered by book-entry transfer through The Depository Trust Company, the Depository Trust Company Account Participant shall be: _________________ - ------------------------------------------------------------------------------- All authority herein conferred or deemed to be conferred hereby shall not be affected by and shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. - ------------------------------------------------------------------------------- 2 PLEASE SIGN AND COMPLETE Name of Holder: _______________________________________________________________ Signature(s): _________________________________________________________________ : _________________________________________________________________ Name(s) (please print): _______________________________________________________ Address: ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ Area Code and Telephone Number: _______________________________________________ Date: _________________________________________________________________________ GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm that is a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office correspondent in the United States or any "eligible guarantor" institution within the meaning of Rule 17Ad- 15 of the Securities Exchange Act of 1934, as amended, hereby guarantees to deposit with the Exchange Agent, at one of its addresses set forth above, a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees, together with certificates evidencing the MFS 2004 Notes tendered hereby or timely confirmation of the book-entry transfer of the MFS 2004 Notes into the Exchange Agent's account at the book-entry transfer facility described in the Prospectus under the caption "The Exchange Offers -- Procedures for Tendering" and in the Letter of Transmittal, and any other documents required by the Letter of Transmittal, all by 11:59 p.m., New York City time, within two New York Stock Exchange, Inc. trading days after the Expiration Date. - ------------------------------------------------------------------------------- SIGN HERE Name of Firm: _________________________________________________________________ Authorized Signature: _________________________________________________________ Name (please print): __________________________________________________________ Title:_________________________________________________________________________ Address: ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ Area Code and Telephone Number: _______________________________________________ Date:__________________________________________________________________________ - ------------------------------------------------------------------------------- DO NOT SEND MFS NOTES WITH THIS FORM. ACTUAL SURRENDER OF MFS NOTES MUST BE MADE PURSUANT TO, AND ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS. 3 INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY 1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed and duly executed copy of this Notice of Guaranteed Delivery (or facsimile thereof) and any other documents required by this Notice of Guaranteed Delivery must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date. The method of delivery of this Notice of Guaranteed Delivery and any other required documents to the Exchange Agent is at the election and risk of the holder, and the delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. Instead of delivery by mail, it is recommended that the holder use an overnight or hand delivery service, properly insured. In all cases sufficient time should be allowed to assure timely delivery. 2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of Guaranteed Delivery is signed by the Holder(s) of the MFS 2004 Notes specified herein, the signature(s) must correspond with the name(s) as written on the face of the MFS 2004 Notes or on a security position listing with respect thereto without any alteration, enlargement or change whatsoever. If any of the tendered MFS 2004 Notes are held by two or more Holders, all such persons must sign this Notice of Guaranteed Delivery. If any of the tendered MFS 2004 Notes are registered in different names, it will be necessary to complete, sign and submit as many separate Notices of Guaranteed Delivery as there are different registrations. If this Notice of Guaranteed Delivery is signed by a person other than the Holder(s) of any MFS 2004 Notes specified herein or a participant of the book-entry transfer facility, this Notice of Guaranteed Delivery must be accompanied by appropriate bond powers, signed as the name of the Holder(s) appears on the MFS 2004 Notes or signed as the name of the participant shown on the DTC's security position listing. If this Notice of Guaranteed Delivery or any bond powers or other instruments of transfer are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person(s) acting in a fiduciary or representative capacity, such person(s) should so indicate when signing and, unless waived by the Company, the Company or Exchange Agent must submit proper evidence satisfactory to the Company of their authority so to act. 3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or additional copies of the Prospectus or the applicable Letter of Transmittal or Notice of Guaranteed Delivery should be directed to the Information Agent at the telephone number set forth on the cover hereof or at the address and telephone number set forth on the back cover page of the Letter of Transmittal and on the back cover page of the Prospectus. 4 EX-99.4 15 NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.4 NOTICE OF GUARANTEED DELIVERY For Tender of 8-7/8% Senior Discount Notes Due January 15, 2006 CUSIP No. 55272T-AB-7 of MFS COMMUNICATIONS COMPANY, INC. In Exchange for 8-7/8% Senior Notes Due January 15, 2006 of WORLDCOM, INC. and Related Consent Solicitation - ------------------------------------------------------------------------------- THE EXCHANGE OFFER (AS DEFINED BELOW) WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON ___________, 1997, UNLESS EXTENDED (SUCH TIME AND DATE AS EXTENDED, THE "EXPIRATION DATE"). TENDERS OF MFS 2006 NOTES MAY NOT BE WITHDRAWN (AND THE RELATED CONSENTS THEREBY REVOKED) AT ANY TIME AFTER 11:59 P.M., NEW YORK CITY TIME, ON ______________, 1997, UNLESS THE EXCHANGE OFFER IS EXTENDED AND CONTAINS NEW TERMS MATERIALLY ADVERSE TO THE TENDERING HOLDERS THEREOF. - ------------------------------------------------------------------------------- This form, or one substantially equivalent hereto, must be used by a Holder of 8-7/8% Senior Discount Notes due January 15, 2006 ("MFS 2006 Notes") of MFS Communications Company, Inc. ("MFS") who wishes to tender MFS 2006 Notes, and thereby consent to certain proposed amendments to the indenture under which such notes were issued (the "Proposed Amendments") as described in the Prospectus and Consent Solicitation, dated ____________, 1997 (the "Prospectus"), pursuant to the guaranteed delivery procedures described in the Prospectus under the heading "The Exchange Offers -- Procedures for Tendering -- Guaranteed Delivery Procedures," relating to the offer (the "Exchange Offer") by WorldCom, Inc. ("WorldCom") to exchange its 8-7/8% Senior Notes due January 15, 2006, for MFS 2006 Notes and in Instruction 2 to the related Letter of Transmittal and Consent (the "Letter of Transmittal"). Any Holder who wishes to tender MFS 2006 Notes pursuant to such guaranteed delivery procedures must ensure that Harris Trust and Savings Bank, as Exchange Agent (the "Exchange Agent"), receives such form, and any other required documents, on or prior to the Expiration Date. Such form may be sent to the Exchange Agent by facsimile transmission, mail or hand delivery, and must include a guarantee by an Eligible Institution (as defined below) in the form set forth at the end of this Notice of Guaranteed Delivery. All capitalized terms used and not defined herein have the meanings ascribed to them in the Prospectus. Delivery To: Harris Trust and Savings Bank, Exchange Agent
By Registered or Certified By Overnight or Hand By Facsimile Transmission: Mail: Delivery: Harris Trust and Harris Trust and (212) 701-7636 Savings Bank Savings Bank c/o Harris Trust Company c/o Harris Trust Company of New York of New York P.O. Box 1010 77 Water Street Confirm by Telephone: Wall Street Station 4th Floor New York, NY 10268 New York, NY 10004 (212) 701-7624
Questions regarding the Exchange Offer or completion of this Notice of Guaranteed Delivery should be directed to MacKenzie Partners, Inc., the Information Agent for the Exchange Offer, at (800) 322-2885 (toll free). DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, receipt of which is hereby acknowledged, the undersigned hereby tenders to WorldCom and consents to the Proposed Amendments with respect to the principal amount at stated maturity of MFS 2006 Notes specified below pursuant to the guaranteed delivery procedures set forth in the Prospectus and in Instruction 2 of the related Letter of Transmittal. Listed below are the MFS 2006 Notes to which this Notice of Guaranteed Delivery relates. If the space provided below is inadequate, the certificate numbers and principal amount at stated maturity of MFS 2006 Notes are listed on a separate signed schedule affixed hereto.
- ------------------------------------------------------------------------------------------------------ DESCRIPTION OF MFS 2004 NOTES (1) (2) - ------------------------------------------------------------------------------------------------------ Aggregate Principal Name(s) and Address(es) of Holder(s) Certificate Amount at Stated (Please fill in, if blank) Number(s)* Maturity of MFS 2006 Note(s) Tendered by Guaranteed Delivery Procedures - ------------------------------------------------------------------------------------------------------ --------------------------------------------- --------------------------------------------- --------------------------------------------- --------------------------------------------- Total - ------------------------------------------------------------------------------------------------------
* Need not be completed if MFS 2006 Notes will be tendered by book-entry transfer in accordance with the instructions contained in the Letter of Transmittal. If MFS Notes will be tendered by book-entry transfer through The Depository Trust Company, the Depository Trust Company Account Number shall be: _________________ - ------------------------------------------------------------------------------- All authority herein conferred or deemed to be conferred hereby shall not be affected by and shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. - ------------------------------------------------------------------------------- 2 PLEASE SIGN AND COMPLETE Name of Holder: _______________________________________________________________ Signature(s): _________________________________________________________________ : _________________________________________________________________ Name(s) (please print): _______________________________________________________ Address: ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ Area Code and Telephone Number: _______________________________________________ Date: _________________________________________________________________________ GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm that is a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office correspondent in the United States or any "eligible guarantor" institution within the meaning of Rule 17Ad- 15 of the Securities Exchange Act of 1934, as amended, hereby guarantees to deposit with the Exchange Agent, at one of its addresses set forth above, a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees, together with certificates evidencing the MFS 2006 Notes tendered hereby or timely confirmation of the book-entry transfer of the MFS 2006 Notes into the Exchange Agent's account at the book-entry transfer facility described in the Prospectus under the caption "The Exchange Offers -- Procedures for Tendering" and in the Letter of Transmittal, and any other documents required by the Letter of Transmittal, all by 11:59 p.m., New York City time, within two New York Stock Exchange, Inc. trading days after the Expiration Date. - ------------------------------------------------------------------------------- SIGN HERE Name of Firm: _________________________________________________________________ Authorized Signature: _________________________________________________________ Name (please print): __________________________________________________________ Title:_________________________________________________________________________ Address: ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ Area Code and Telephone Number: _______________________________________________ Date:__________________________________________________________________________ - ------------------------------------------------------------------------------- DO NOT SEND MFS NOTES WITH THIS FORM. ACTUAL SURRENDER OF MFS NOTES MUST BE MADE PURSUANT TO, AND ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS. 3 INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY 1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed and duly executed copy of this Notice of Guaranteed Delivery (or facsimile thereof) and any other documents required by this Notice of Guaranteed Delivery must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date. The method of delivery of this Notice of Guaranteed Delivery and any other required documents to the Exchange Agent is at the election and risk of the holder, and the delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. Instead of delivery by mail, it is recommended that the holder use an overnight or hand delivery service, properly insured. In all cases sufficient time should be allowed to assure timely delivery. 2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of Guaranteed Delivery is signed by the Holder(s) of the MFS 2006 Notes specified herein, the signature(s) must correspond with the name(s) as written on the face of the MFS 2006 Notes or on a security position listing with respect thereto without any alteration, enlargement or change whatsoever. If any of the tendered MFS 2006 Notes are held by two or more Holders, all such persons must sign this Notice of Guaranteed Delivery. If any of the tendered MFS 2006 Notes are registered in different names, it will be necessary to complete, sign and submit as many separate Notices of Guaranteed Delivery as there are different registrations. If this Notice of Guaranteed Delivery is signed by a person other than the Holder(s) of any MFS 2006 Notes specified herein or a participant of the book-entry transfer facility, this Notice of Guaranteed Delivery must be accompanied by appropriate bond powers, signed as the name of the Holder(s) appears on the MFS 2006 Notes or signed as the name of the participant shown on the DTC's security position listing. If this Notice of Guaranteed Delivery or any bond powers or other instruments of transfer are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person(s) acting in a fiduciary or representative capacity, such person(s) should so indicate when signing and, unless waived by the Company, the Company or Exchange Agent must submit proper evidence satisfactory to the Company of their authority so to act. 3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or additional copies of the Prospectus or the applicable Letter of Transmittal or Notice of Guaranteed Delivery should be directed to the Information Agent at the telephone number set forth on the cover hereof or at the address and telephone number set forth on the back cover page of the Letter of Transmittal and on the back cover page of the Prospectus. 4 EX-99.5 16 LETTER TO BROKERS EXHIBIT 99.5 WORLDCOM, INC. OFFER TO EXCHANGE $686,398,000 9 3/8% Senior Notes of WorldCom, Inc. due January 15, 2004 For Any and All Outstanding 9 3/8% Senior Discount Notes of MFS Communications Company, Inc. due January 15, 2004 CUSIP No. 55272T-AA-9 And $671,850,000 8 7/8% Senior Notes of WorldCom, Inc. due January 15, 2006 For Any and All Outstanding 8 7/8% Senior Discount Notes of MFS Communications Company, Inc. due January 15, 2006 CUSIP No. 55272T-AB-7 And CONSENT SOLICITATIONS - -------------------------------------------------------------------------------- EACH EXCHANGE OFFER WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED (SUCH TIME AND DATE, AS EXTENDED, THE "EXPIRATION DATE" WITH RESPECT TO SUCH EXCHANGE OFFER). TENDERS OF MFS NOTES MAY NOT BE WITHDRAWN (AND THE RELATED CONSENTS THEREBY REVOKED) AT ANY TIME AFTER 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS THE APPLICABLE EXCHANGE OFFER IS EXTENDED AND CONTAINS NEW TERMS MATERIALLY ADVERSE TO THE TENDERING HOLDERS THEREOF. - -------------------------------------------------------------------------------- To: Brokers, Dealers, Commercial Banks, July ____, 1997 Trust Companies and Other Nominees: Salomon Brothers Inc and Goldman, Sachs & Co. are acting as Dealer Managers for WorldCom, Inc. (the "Company") in connection with the Company's offers to exchange (i) $871.597 principal amount of its 9-3/8% Senior Notes due January 15, 2004 ("WorldCom 2004 Notes") for each $1,000 principal amount at stated maturity of outstanding 9-3/8% Senior Discount Notes due January 15, 2004 ("MFS 2004 Notes") of MFS Communications Company, Inc. ("MFS") and (ii) $737.912 principal amount of its 8-7/8% Senior Notes due January 15, 2006 ("WorldCom 2006 Notes" and together with the WorldCom 2004 Notes, "WorldCom Notes") for each $1,000 principal amount at stated maturity of outstanding 8-7/8% Senior Discount Notes due January 15, 2006 ("MFS 2006 Notes") and together with the MFS 2004 Notes, "MFS Notes") of MFS (each such offer, an "Exchange Offer," and collectively the "Exchange Offers"). If the aggregate principal amount of WorldCom Notes that otherwise would be issued in exchange for the MFS Notes of a series tendered by a holder and accepted by the Company pursuant to the Exchange Offers is not an integral multiple of $1,000, such principal amount will be reduced to the nearest such multiple and the Company will pay to such holder an amount in cash equal to the reduction of such principal amount. Concurrently with the Exchange Offers, the Company is soliciting consents from holders of each series of MFS Notes to certain amendments (the "Proposed Amendments") to the indenture governing such series of MFS Notes, as described in the Prospectus (as defined below). Holders of MFS Notes of either series may give their consent to the Proposed Amendments applicable to that series only by tendering such MFS Notes in the applicable Exchange Offer, will be required to so consent as a condition to a valid tender and will be deemed to have given such consent by so tendering. Each holder who gives a valid consent will receive a Consent Payment fee in an amount equal to (i) with respect to such holder's MFS 2004 Notes, 0. % of the Accreted Value, as of July 15, 1997 (the "Interest Accrual Date"), of such MFS 2004 Notes and (ii) with respect to such holder's MFS 2006 Notes, 0. % of the Accreted Value, as of the Interest Accrual Date, of such MFS 2006 Notes, in either case, with respect to which such consent has been given. All capitalized terms used and not defined herein have the meanings ascribed to them in the Prospectus. The Company's obligation to consummate either Exchange Offer, and to make Consent Payments, is conditioned on, among other things, receipt of consents from holders of a majority in aggregate principal amount outstanding of both series of MFS Notes. The Company may, in its sole discretion, waive any condition with respect to an Exchange Offer and accept for exchange any MFS Notes tendered. Notwithstanding the foregoing, the Company will not consummate the Exchange Offer with respect to the MFS 2004 Notes if less than $ of principal amount of WorldCom 2004 Notes would be issued in such Exchange Offer and will not consummate the Exchange Offer with respect to the MFS 2006 Notes if less than $ of principal amount of WorldCom 2006 Notes would be issued in such Exchange Offer. We are requesting that you promptly contact your clients for whom you hold MFS Notes regarding the Exchange Offers. For your information and for forwarding to your clients, we are enclosing the following documents: 1. The Prospectus and Consent Solicitation dated July ____, 1997 (the "Prospectus"); 2. The YELLOW Letter of Transmittal to be used to tender MFS 2004 Notes and consent to the Proposed Amendments with respect to such Notes; 3. The BLUE Letter of Transmittal to be used to tender MFS 2006 Notes and consent to the Proposed Amendments with respect to such Notes; 4. The Notice of Guaranteed Delivery to be used, if necessary, in connection with the Exchange Offer for the MFS 2004 Notes; 5. The Notice of Guaranteed Delivery to be used, if necessary, in connection with the Exchange Offer for the MFS 2006 Notes; 6. A form of letter which may be sent to your clients for whose accounts you hold MFS Notes, with space provided for obtaining such clients' instructions with regard to the Exchange Offers; 7. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 8. Return envelopes addressed to Harris Trust and Savings Bank, as Exchange Agent (the "Exchange Agent") for the Exchange Offers. To tender MFS Notes in an Exchange Offer, and thereby deliver a consent in the related Consent Solicitation, certificates for the MFS Notes to be tendered (or confirmation of a book-entry transfer of such MFS Notes to the Exchange Agent's account at The Depository Trust Company ("DTC")), a completed and signed copy of the relevant Letter of Transmittal and any other required documents, must be received by the Exchange Agent on or prior to 11:59 p.m., New York City time, on the Expiration Date, in accordance with the instructions set forth in the Prospectus and the relevant Letter of Transmittal. The completion, execution and delivery of the applicable Letter of Transmittal with respect to particular MFS Notes will constitute the delivery of a consent with respect to such MFS Notes. Holders whose MFS Notes are not immediately available or who cannot deliver their MFS Notes and all other required documents to the Exchange Agent on or prior to the Expiration Date may nevertheless tender their MFS Notes (and thereby consent to the applicable Proposed Amendments) by delivering the applicable Notice of Guaranteed Delivery and any other required documents pursuant to the guaranteed delivery procedures described in the Prospectus. Subject to satisfaction or waiver of the conditions to an Exchange Offer, the Company will exchange (and thereby purchase) any and all MFS Notes that are properly tendered in such Exchange Offer and not withdrawn. WorldCom Notes will be delivered only in book-entry form through DTC. Accordingly, if you anticipate tendering MFS Notes you must either have in place, or arrange for, facilities to receive WorldCom Notes through DTC. WorldCom Notes will be delivered and Consent Payments and other cash payments, if any, will be made by check (in New York next day funds) on the third business day following the Expiration Date or as soon as possible thereafter. Tendering holders of MFS Notes will not be required to pay any fee or commission to the Dealer Managers. However, if a tendering holder handles the transaction through its broker, dealer, commercial bank, trust company or other institution, such holder may be required to pay brokerage fees or commissions. The Company will pay or cause to be paid all transfer taxes applicable to the exchange of MFS Notes pursuant to the Exchange Offers, except as set forth in the Prospectus and Instruction 6 of the Letters of Transmittal. Any inquiries you may have with respect to the terms of the Exchange Offers may be directed to Salomon Brothers Inc or Goldman Sachs & Co., as the Dealer Managers, at their respective address and telephone number set forth in the Prospectus. Any inquiries with respect to tender procedures, or requests for additional copies of the enclosed materials, should be directed to MacKenzie Partners, Inc., the Information Agent for the Exchange Offers, at its address and telephone number set forth in the Prospectus. Very truly yours, SALOMON BROTHERS INC GOLDMAN, SACHS & CO. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY, THE DEALER MANAGERS, THE EXCHANGE AGENT, THE INFORMATION AGENT OR ANY OF THEIR AFFILIATES OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON THEIR BEHALF WITH RESPECT TO THE EXCHANGE OFFERS, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTERS OF TRANSMITTAL. Enclosures 2 EX-99.6 17 LETTER TO CLIENTS EXHIBIT 99.6 WORLDCOM, INC. OFFER TO EXCHANGE $686,398,000 9 3/8% Senior Notes of WorldCom, Inc. due January 15, 2004 For Any and All Outstanding 9 3/8% Senior Discount Notes of MFS Communications Company, Inc. due January 15, 2004 CUSIP No. 55272T-AA-9 And $671,850,000 8 7/8% Senior Notes of WorldCom, Inc. due January 15, 2006 For Any and All Outstanding 8 7/8% Senior Discount Notes of MFS Communications Company, Inc. due January 15, 2006 CUSIP No. 55272T-AB-7 And CONSENT SOLICITATIONS - -------------------------------------------------------------------------------- EACH EXCHANGE OFFER WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED (SUCH TIME AND DATE, AS EXTENDED, THE "EXPIRATION DATE" WITH RESPECT TO SUCH EXCHANGE OFFER). TENDERS OF MFS NOTES MAY NOT BE WITHDRAWN (AND THE RELATED CONSENTS THEREBY REVOKED) AT ANY TIME AFTER 11:59 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS THE APPLICABLE EXCHANGE OFFER IS EXTENDED AND CONTAINS NEW TERMS MATERIALLY ADVERSE TO THE TENDERING HOLDERS THEREOF. - -------------------------------------------------------------------------------- To Our Clients: Enclosed for your consideration is a Prospectus and Consent Solicitation dated __________, 1997 (together the "Prospectus") and the Letters of Transmittal pursuant to which WorldCom, Inc., a Georgia corporation (the "Company"), is offering to exchange (i) $871.597 principal amount of its 9-3/8% Senior Notes due January 15, 2004 ("WorldCom 2004 Notes") for each $1,000 principal amount at stated maturity of outstanding 9-3/8% Senior Discount Notes due January 15, 2004 ("MFS 2004 Notes") of MFS Communications Company, Inc. ("MFS") and (ii) $737.912 principal amount of its 8-7/8% Senior Notes due January 15, 2006 ("WorldCom 2006 Notes" and together with WorldCom 2004 Notes, "WorldCom Notes") for each $1,000 principal amount at stated maturity of outstanding 8-7/8% Senior Discount Notes due January 15, 2006 ("MFS 2006 Notes" and together with MFS 2004 Notes, "MFS Notes") of MFS (each such offer, an "Exchange Offer," and collectively the "Exchange Offers"). If the aggregate principal amount of WorldCom Notes that otherwise would be issued in exchange for the MFS Notes of a series tendered by a holder and accepted by the Company pursuant to the Exchange Offers is not an integral multiple of $1,000, such principal amount will be reduced to the nearest such multiple and the Company will pay to such holder an amount in cash equal to the reduction of such principal amount. Concurrently with the Exchange Offers, the Company is soliciting consents from holders of each series of MFS Notes to certain amendments (the "Proposed Amendments") to the indenture governing such series of MFS Notes, as described in the Prospectus. Holders of MFS Notes of either series may give their consent to the Proposed Amendments applicable to that series only by tendering such MFS Notes in the applicable Exchange Offer, will be required to so consent as a condition to a valid tender and will be deemed to have given such consent by so tendering. Each holder who gives a valid consent will receive a cash fee in an amount equal to (i) with respect to such holder's MFS 2004 Notes, 0. % of the Accreted Value, as of July 15, 1997 (the "Interest Accrual Date"), of such MFS 2004 Notes and (ii) with respect to such holder's MFS 2006 Notes, 0. % of the Accreted Value, as of the Interest Accrual Date, of such MFS 2006 Notes, in either case, with respect to which such consent has been given. All capitalized terms used and not defined herein have the meanings ascribed to them in the Prospectus. This material is being forwarded to you as the beneficial owner of either MFS 2004 Notes or MFS 2006 Notes (or both) held by us for your account or benefit. A tender of any of your MFS Notes, and delivery of a consent with respect thereto, may be made only by us as the registered holder thereof and only pursuant to your instructions. Therefore, the Company urges beneficial owners of MFS Notes held by a broker, dealer, commercial bank, trust company or other nominee to contact such nominee promptly if they wish to tender their MFS Notes, and thereby deliver a consent with respect thereto, in an Exchange Offer. The Letters of Transmittal are being furnished to you for your information only and cannot be used by you to tender MFS Notes held by us for your account. Accordingly, we request instructions as to whether you wish us to tender any or all of your MFS Notes held by us for your account, and thereby deliver a consent with respect thereto, pursuant to the terms and subject to the conditions set forth in the Prospectus and the relevant Letter of Transmittal. In the event you choose to have us so tender such MFS Notes, you must provide instructions to that effect by completing, signing and returning to us the instruction form below. Your instructions to us should be forwarded as promptly as possible in order to provide us with sufficient time to permit us to tender your MFS Notes on your behalf in accordance with the provisions of the Exchange Offers. An envelope to return your instructions to us is enclosed. Please note that if you want us to tender some but not all of the MFS Notes held by us for your account, you must indicate on the instruction form the MFS Notes you want us to tender identified by series and principal amount. The principal amount at stated maturity of MFS Notes of any series may be tendered only in denominations of $1,000. The Prospectus contains important information which you are urged to review carefully before making any decision with respect to an Exchange Offer. Your attention is directed to the following: 1. Each Exchange Offer is for any and all outstanding MFS Notes of the relevant series of MFS Notes. The obligation of the Company to consummate either Exchange Offer, and make Consent Payments, is conditioned on, among other things, receipt of consents from holders of a majority in aggregate principal amount outstanding of both series of MFS Notes. The Company may, in its sole discretion, waive any condition with respect to an Exchange Offer and accept for exchange any MFS Notes tendered. Notwithstanding the foregoing, the Company will not consummate the Exchange Offer with respect to the MFS 2004 Notes if less than $ of principal amount of WorldCom 2004 Notes would be issued in such Exchange Offer and will not consummate the Exchange Offer with respect to the MFS 2006 Notes if less than $ of principal amount of WorldCom 2006 Notes would be issued in such Exchange Offer. 2. The tender of MFS Notes of a series pursuant to the Exchange Offers will constitute giving a consent to the Proposed Amendments with respect to such series and, upon acceptance for exchange of such MFS Notes, the holder thereof will receive a cash fee for so consenting as described previously in this letter. 3. Each Exchange Offer will expire at 11:59 p.m., New York City time, on the Expiration Date. Tenders of MFS Notes may not be withdrawn (and the related consents thereby revoked) at any time after 11:59 p.m., New York City time on _________, 1997, unless the applicable Exchange Offer is extended and contains new terms materially adverse to the tendering holders thereof. Withdrawal of tendered MFS Notes will be deemed a revocation of the consent to which such MFS Notes relate. If you wish to withdraw any MFS Notes that you instructed us to tender you should contact us immediately. 4. Any transfer taxes incident to the transfer of MFS Notes to the Company will be paid by the Company pursuant to the Exchange Offers, except as provided in the Prospectus and Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the terms of the Exchange Offers may be directed to Salomon Brothers Inc. or Goldman Sachs & Co., as Dealer Managers, at their respective address and telephone number set forth in the Prospectus. Any inquiries with respect to tender procedures, or requests for additional copies of the enclosed materials, should be directed to MacKenzie Partners, Inc., the Information Agent for the Exchange Offers, at its address and telephone number set forth in the Prospectus. Very truly yours, _______________________________ 2 INSTRUCTIONS The undersigned hereby acknowledges receipt of your letter, dated July ___, 1997 and the material referred to therein relating to the Exchange Offers and the Consent Solicitations made by WorldCom, Inc. with respect to certain Senior Discount Notes of MFS Communications Company, Inc. The undersigned further acknowledges that he or she understands the terms of the Exchange Offers and Consent Solicitations as set forth in the Prospectus and the relevant Letter(s) of Transmittal The undersigned hereby instructs you to tender (and thereby deliver a consent with respect to) the MFS Notes indicated below, pursuant to the terms and subject to the conditions of the relevant Exchange Offer and Consent Solicitation. Check one box: Box 1: [ ] Please tender all MFS Notes held by you for the account of the undersigned. Box 2: [ ] Please tender only those MFS Notes held by you for the account of the undersigned as indicated in the box immediately below. - -------------------------------------------------------------------------------- Please complete this box, if, and only if, you have checked Box 2 above. Please tender the following MFS Notes held by you for the account of the undersigned: Principal Amount at Stated Maturity in Integral Multiples of $1,000. [ ] MFS 9 3/8% Senior Discount Notes due 2004 $____________________________ [ ] MFS 8 7/8% Senior Discount Notes due 2006 $____________________________ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PLEASE SIGN HERE: Date _____________________ Signature: ___________________ Signature: _____________________________ (if more than one beneficial owner) Name: ________________________ Name: __________________________________ (please print) (if more than one beneficial owner)(please print) Address: _____________________________________________________________________ ______________________________________________________________________________ Telephone: __________________________________________ (include area code) Employer Identification or Social Security Number: ___________________________ All beneficial owners of the MFS Notes to be tendered by us must sign this instruction form. - -------------------------------------------------------------------------------- 3 -----END PRIVACY-ENHANCED MESSAGE-----